City of Cleveland to help lease-purchase tenants who were defrauded by their landlord


View of downtown from the former St. Luke’s hospital campus in Buckeye-Shaker.

View of downtown from the former St. Luke’s hospital campus in Buckeye-Shaker.

It’s a happy ending to a sad, sordid chapter in the city’s history: Cleveland City Council last week voted to use $750,000-800,000 from its Neighborhood Transformation Initiative to help low-income tenants in the city’s Buckeye neighborhood stay in their homes. About 40 lease-purchase renters were defrauded by their former landlord, the Buckeye Shaker Square Development Corporation (BSSDC). The city will provide them with low-dollar mortgages and forgivable down payment assistance so they can become homeowners.

BSSDC had close ties to Ward 4 council member Ken Johnson, who earlier this year was arrested and indicted by the US Department of Justice on 15 charges, including six counts of federal program theft and assisting with the preparation of false tax returns. Allegedly, Johnson submitted false statements every month to accrue more than $127,000 over the last few years.

According to a Feb. 19, 2019 article by Mark Naymik of Cleveland.com, the nonprofit CDC took over management of the properties in 2018, and soon afterwards it quit paying taxes. Last year, the tenants were surprised to learn that their homes were in foreclosure and would be slated for auction. That’s when the city, Ward 6 Council member Blaine Griffin, and nonprofit partners stepped in to help.

“Working with the receiver and the court overseeing the decision about the Buckeye properties, we’ve come to the model where the properties can be sold to residents for $25,000,” the city’s economic development director, David Ebersole, told council at its July 14 meeting. Cleveland Citywide Development Corporation would issue $25,000 mortgages on the properties, half of which would be forgivable if the tenants stay there for the next 5 years. In addition, there will be a down payment assistance program of $5,000 that would be forgivable, too.

“These programs, combined with other work we’re doing around home repair, will allows residents thrown into a somewhat awkward situation through no fault of their own to stay in their homes and ultimately strengthen the neighborhood,” said Ebersole.

Griffin, the Ward 6 councilperson, praised the city’s efforts over the past 6-8 months. “When Buckeye Shaker Development Corporation dissolved, we as a community started getting calls about all of these people whose homes started going up for auction,” he said. “They’ve lived there in some cases 15-20 years. There were speculators trying to get these homes. We were able to get the receiver to stop the auction, then work with the homeowners on a path to homeownership.”

Here are the details:

According to ordinance 457-2021, through the “Buckeye Pathway to Homeownership Program,” the city will use housing bonds from its Neighborhood Transformation Initiative to assist these homeowners.

The ordinance states, “As a result of the decline of Buckeye Shaker Area Development Corp. around 80 homes and 10 commercial properties were placed in receivership. The homes were a part of the LIHTC (Low Income Housing Tax Credits) project called Cleveland New Homes I of which the residents entered into lease purchase agreements. About half of the homes are now vacant. There are around 30 residents who are interested in buying their homes. The administration has developed a program that provides a pathway to homeownership for the residents interested in purchasing their home out of receivership.”

The ordinance promises that the city will:

  • Work with nonprofit partners to determine the residents’ ability to pay

  • Use the existing contract between Cleveland Citywide Development Corp and Community Housing Solutions to make necessary repairs

  • Contract with CHN Housing Partners to provide a down payment assistance program in the form of “soft second mortgage” (forgivable) for 20% of purchase price of home

  • Administer partially forgivable mortgage loans of up to $20,000 for eligible residents

Although he’s running for his seat in November, Johnson has been suspended from his office pending an appeal, and Marion Anita Gardner is now the interim Ward 4 representative on city council. Sixteen people are running for the Ward 4 slot in Cleveland City Council, including Johnson. A lesser-known aspect of the scandal is that John Hopkins, 57, the former executive director of the Buckeye-Shaker Square Development Corp., was also charged with conspiracy to commit theft. 

According to Naymik’s Feb. 19, 2021 article in Cleveland.com, BSSDC managed “about 75 homes that were built as part of a wave of construction in the 1990s by partnerships between developers, who tapped low-income housing tax credits, and community development corporations. These partnerships, typically controlled by the community development corporations, leased the houses to low-income families with provisions allowing the tenants to buy the homes at below-market prices after 15 years. Cleveland invested about $775,000 in the homes managed by BSSDC.”

Despite the tawdry details of the situation, Griffin told his colleagues on council that he’s pleased with the result. “Ladies and gentleman, this is what we are here in government to do,” he said. “This may be the most important piece of legislation I have worked on during my time in council.”

Lee Chilcote is editor of The Land.

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