Proponent Testimony — House Bill 155, House Economic and Workforce Development Committee (April 21, 2021)

Summary

Proponent testimony on House Bill 155 to the House Economic and Workforce Development Committee, dated April 21, 2021, on behalf of the Ohio Land Bank Association. The testimony says county land banks have grown from one county land bank, Cuyahoga, to 59 land banks today and have helped demolish over 40,000 vacant and abandoned residential structures. It estimates approximately 10,000 abandoned commercial and industrial buildings in the state of Ohio. It states that, as of this date, the State of Ohio has not contributed any general fund revenue to abandoned properties and blight remediation, and that the funding in House Bill 155 would be extraordinarily helpful.

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                PROPONENT TESTIMONY—HOUSE BILL 155
  HOUSE ECONOMIC AND WORKFORCE DEVELOPMENT COMMITTEE
                                  APRIL 21, 2021




Chair Edwards, Vice-Chair Powell, Ranking Member Upchurch and members of
the House Economic and Workforce Development Committee, thank you for the
opportunity to address you on House Bill 155. We come to you on behalf of the
Ohio Land Bank Association seeking the opportunity to continue the work we have
been doing across the state.


Ohio County Land Reutilization Corporations, commonly referred to as county
land banks, have played a critical role in the past eight years in helping to eliminate
blight, re-purpose thousands of vacant properties, stabilize housing values and
restore lost property tax revenue for Ohio communities. This tool, created by SB
353 in December of 2008, has grown from one county land bank—Cuyahoga-to 59
land banks today. The map on the following page depicts the 59 Ohio counties
with county land banks.
The work of blight removal was kicked off in January of 2012 by then Attorney
General Mike DeWine, who committed the majority of the landmark “Robo-
Signing” settlement to Ohio communities for the removal of distressed properties.
The blight fighting effort received a second boost in federal assistance though the
repurposing of Hardest Hit Funds in June of 2013, and a second commitment in
January of 2016. These combined efforts raised approximately $400,000,000.
When added to commitments made at the local level in places like Cuyahoga and
Richland counties the total raised approaches $450 million dollars. These funds
have helped county land banks demolish over 40,000 vacant and abandoned
residential structures. It is undeniable that the foreclosure crisis of 2004-2009, and
the ensuing “Great Recession” played a major role in causing much of this
abandonment--and destabilizing communities all over Ohio. Billions of dollars in
equity were lost by Ohio property owners whose subprime and predatory mortgage
loans went into default and foreclosure. An even greater tragedy was experienced
by adjacent and adjoining property owners in those same communities: they never
took out a bad mortgage, but suffered the same losses as a result of the
abandonment and blight caused in their neighborhood by these risky mortgages.
The graph on the following page depicts the dramatic drop in property values on
the East side of Cleveland during the foreclosure crisis.
Land banks focused initially on these vacant and abandoned residential properties,
in part because they were easier to acquire, and in part because the dollars made
available by the state and the federal government limited demolition dollars to
residential properties. Unfortunately, land banks have been unable--except on a
limited basis, and based on their own resources-- to deal with millions of square
feet of vacant and abandoned commercial and industrial properties.
Commercial and industrial properties in Ohio have been ceasing their operations—
and facing abandonment—for decades. From small machine shops to the
ubiquitous retail properties--with ground floor retail and apartments above, to the
giant industrial complexes in cities like Youngstown, Cleveland, Dayton and
Toledo, properties have been abandoned by the thousands in Ohio communities.
They stand as a reminder of what made Ohio great, but because so many have been
vacant for so long all they do now is remind these communities of their economic
decline. They have long since stopped paying property taxes, but are a drag on
community resources as they are often magnets for criminal activity, such as arson
fires and violent crimes. While many of these facilities (because of zoning
requirements) are located outside of traditional neighborhoods, a significant
number, especially old schools and old hospitals are located within residential
communities and pose a special risk to those adjoining neighborhoods. For many
of these properties there is no market-based re-use solution, no incentive for
private investment to save them. Quite simply, many of these properties require
demolition. But the cost of these demolitions can run in the millions of dollars,
not just because of the size of some of these structures—but because of the
environmental issues these properties pose. (A notable example of this problem is
the New Boston Coke facility, a former steel plant and coal tar distillation plant in
Portsmouth, Ohio which closed over 20 years ago. The 22-acre site is located
directly on the Ohio River. It is adjacent to the Portsmouth water filtration plant.
It is an environmental nightmare and the cost of removing the building and
cleaning the site may run upwards of 40 million dollars. Community leaders have
struggled for year to find a way to clean this site, but their pleas have been
ignored.)



It is worth noting that in spite of the substantial progress made on the removal of
blighted residential structures in Ohio, the problem is far from being resolved. A
study done by the Western Reserve Land Conservancy in 2013 estimated that there
were over 100,000 vacant and abandoned residential structures in the state of
Ohio. A more recent study in 2019, responded to by less than a third of Ohio
counties revealed that 25,891 residential units still await demolition. Based on
further contacts with county land banks and local building departments, and
expanding the demolition need to the thousands of abandoned house trailers— this
number, while reduced significantly, is still in excess of 50,000 units. So the need
for blight removal dollars is still there.



Many of the structures in need of demolition are in key locations that could
provide an economic boost to the surrounding communities. One such example is
Chapman Avenue, in East Cleveland. On the section of this street north of Euclid
Avenue, every single apartment building is abandoned and trash ranging from
pallets to couches to old mattresses is strewn about the street. These dilapidated
buildings are extremely hazardous to the surrounding community. The pictures on
the following page provide a snapshot of tens of thousands of square feet worth of
some of the worst urban blight in the state.
Demolishing the apartment buildings on Chapman Avenue has impacts well
beyond improving the quality of life for community members living in the
immediate surrounding area. The University Circle neighborhood, containing
University Hospital and the Cleveland Clinic, is located a few short miles from
Chapman Avenue. With these two ever-expanding, massive employers close by,
Chapman Avenue is an ideal spot for new housing that caters to those employed in
University Circle. In fact, a developer in the area has already stated that if the
apartment buildings will be torn down, he will move his headquarters to this
location and begin to explore partnerships with the institutions that make up
University Circle—University Hospitals, CWRU, the Cleveland Clinic—and
others for additional space as they are all land locked in the circle and have no
room for expansion there.



While there has been progress with residential units there has been virtually none
with commercial and industrial properties. We estimate the number of abandoned
commercial and industrial units/buildings in the state of Ohio to be approximately
10,000 buildings. We believe the total square footage of these buildings
approaches 100,000,000 square feet. A recent survey by Western Reserve Land
Conservancy received responses from 29 of the land bank counties—which at that
time totaled 56 counties. That survey obtained responses from about one third of
Ohio counties and revealed almost 4,500 abandoned buildings with approximately
40,000,000 square feet of space. They range from the smaller commercial
structures with ground floor retail and one or two floor of apartments, to industrial
complexes in excess of 1,000,000 square feet. The cost of demolishing these
buildings, using an $8.00 per square foot demolition cost, (an average based on
what the Cuyahoga County land bank spends on demolition) would be
$800,000,000—but that is not the only cost facing these communities. It is actually
considerably higher than that as many of these buildings have asbestos issues. In
addition, some are even more toxic than that as we cite in this paper with examples
like the New Boston Coke Plant in Warren, or the abandoned St. Joe’s hospital
complex pictured below.
The Ohio Land Bank Association asks on behalf of its members and Ohio
communities for the commitment of $100 million over the next two years, as
outlined in House Bill 155, to begin to deal with the nightmarish conditions that so
many of these abandoned structures pose for Ohio cities, villages and townships.
Because the blighted property problem continues to be an issue with residential
structures, we are looking for funding that is flexible that we would generally
characterize as nuisance abatement funding. This funding would have to include
environmental clean-up dollars as so many of these properties pose environmental
risks. The nuisance abatement categorization might also give these land banks the
flexibility to save properties by preserving them, as opposed to demolishing them.
County land banks have rehabilitated thousands of Ohio single family homes
through innovative programs like the Deed in Escrow program in Cuyahoga
County, and many counties have asked that monies allocated allow that flexibility
as well.



As of this date, the State of Ohio has not contributed any general fund revenue to
the problem of abandoned properties and blight remediation. The monies
contributed by then Attorney General Mike DeWine in 2012 were dollars from a
legal settlement known as the “Robo-signing” lawsuit. Local and county
governments have contributed revenues from their coffers to help resolve these
issues, but on a limited basis as their resources are limited. The federal dollars
provided through the reallocation of Hardest Hit Fund dollars have been
completely expended, but efforts to raise more resources are continuing. The
funding provided by House Bill 155 would be extraordinarily helpful and, based on
experience, would help to stabilize these communities and create new
opportunities.


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