Middle Neighborhoods Initiative targets edge communities for redevelopment

Cleveland neighborhoods like Bellaire-Puritas, Old Brooklyn and Lee-Harvard may not attract as much attention as Ohio City, Tremont or University Circle…

By Lee Chilcote

Photo of Old Brooklyn courtesy of the Cleveland Foundation

Cleveland neighborhoods like Bellaire-Puritas, Old Brooklyn and Lee-Harvard may not attract as much attention as Ohio City, Tremont or University Circle, where swank housing, breweries and hipster restaurants have flourished in the last 10 years, but these unsexy city neighborhoods are no less important to the city’s future.

Yet despite being threatened by blight, these so-called “middle neighborhoods,” or areas that are on the edge between growth and decline and are generally considered affordable, too often aren’t getting the help they need. They haven’t benefited much from the city’s redevelopment tools, such as tax abatement for new construction or HUD funding for affordable housing, and many have slipped into decline.

The city’s new Middle Neighborhoods Initiative (MNI) aims to change that. During a presentation to Cleveland City Council’s Development, Planning and Sustainability Committee this past week, Department of Community Development director Tania Menesse and project director Jason Powers said the new effort has the potential to help push neighborhoods that are at the tipping point into growth mode.

“These are neighborhoods where families choose to stay, and that have generations of families living there, and through some of the most difficult times, they’ve really kept the city afloat,” said Menesse. “These aren’t the trendy neighborhoods, but they have this gap and we don’t have the tools, we don’t have the solutions where we can help to stimulate the market in those areas.”

“Partially because of aging homes and infrastructure, we now see a need to repair those homes and streets,” said Powers, who developed his analysis through a year-long study. The MNI presentation was originally slated for March, but the coronavirus delayed those plans. “These are neighborhoods that have a lot of strength and just need a little extra support.”

According to a 2018 article in Shelterforce, “Middle neighborhoods house a third to half of urban America in the cities we’ve examined. Many are home to predominantly African-American families, such as Greater Chatham in Chicago, Belair-Edison in Baltimore, and Lee Harvard in Cleveland, while others such as Slavic Village in Cleveland trace their roots to Eastern European immigrants. Many others are among the most racially and socioeconomically diverse in the nation.”

Neighborhoods like Old Brooklyn, Bellaire Puritas and Lee Harvard could benefit from the city’s Middle Neighborhoods Initiative

Neighborhoods like Old Brooklyn, Bellaire Puritas and Lee Harvard could benefit from the city’s Middle Neighborhoods Initiative

The MNI is part of an examination of the city’s housing policies that includes the recent tax abatement study as well as an upcoming 10-year housing planning process. The abatement study recommends capping abated values for single-family homes at $300,000, establishing community benefits agreements with multi-family developers, and using other tools to spread development more evenly across the city. “Given the cost of construction, a tax abatement alone is not going to spur investment beyond these hot neighborhoods,” Menesse told city council during a meeting last week. “We need to help incentivize development in other neighborhoods with other tools.”

“The city’s middle neighborhoods are basically non-existent,” says Jason Powers.

“The city’s middle neighborhoods are basically non-existent,” says Jason Powers.

The MNI has two basic components. First, Powers and others have worked with CWRU and other partners on a tool that will allow investors to analyze neighborhoods from a multi-faceted point of view, pulling together various publicly available sources of data from tree canopy coverage to existing home sales to identify middle neighborhoods that are ripe for reinvestment.

What’s special about this tool is that it will allow public and private partners to get highly specific about which middle neighborhoods to target in the city, zooming in on a block-by-block level to identify areas where tools such as redeveloped housing, storefront renovation, tree planting and code enforcement will be the difference-maker between stagnation and stability.  

Second, the MNI will offer much-needed financing tools such as construction gap subsidies and high loan-to-value (LTV) loans for homeowners that will be aimed at stimulating the market in these neighborhoods.

The city’s middle neighborhoods have been supplanted by inner ring suburbs.

The city’s middle neighborhoods have been supplanted by inner ring suburbs.

Powers said this effort is crucial to attracting and retaining residents in the city of Cleveland.  “The answer to the question of where are Cleveland’s middle neighborhoods is that they’re basically nonexistent,” he said, warning that areas like Buckeye-Shaker, North Collinwood, Cudell and Slavic Village will only get weaker without help. “Cleveland’s middle neighborhoods are places that were stronger 15-20 years ago in values but now they’ve stagnated down and they’ve been replaced by the first ring suburbs.”

In a follow-up interview, Powers said that in addition to the citywide economic analysis tool, the city is already offering a construction gap subsidy program that aims to bridge the gap between the cost of development and homes sales prices in middle neighborhoods (so far, the city has received about 20 applications). Additionally, the upcoming high loan-to-value (LTV) loan program will allow home buyers to invest in neighborhoods where bank appraisals don’t capture after-rehab value by using philanthropic dollars. It is inspired by a similar program in Baltimore.

Although it’s too early to judge the success of Cleveland’s efforts, Baltimore’s program has yielded results, write authors Paul Brophy and Frank Woodruf in Shelterforce. “The Healthy Neighborhoods Program in Baltimore has been working for 15 years to stabilize 42 middle neighborhoods in that city through a loan pool of mostly private lenders,” write authors Paul Brophy and Frank Woodruf. “Careful and routine measurements of market data indicate that most of Baltimore’s middle neighborhoods, threatened with decline, have stabilized. The most problematic neighborhoods are those with weak market demand. Only two neighborhoods have recovered through a change in neighborhood character, namely through millennials moving in. Most neighborhoods are attracting buyers who are much like those already living there. A similar program, operated by the Greater Milwaukee Foundation, shows similar success.”

Mark Sissman, President of Healthy Neighborhoods, says the program has helped middle income neighborhoods compete with the suburbs and other parts of Baltimore. Through the effort, lenders offer home buyers mortgages that are one percent below market. They also don’t require mortgage insurance and don’t have income restrictions. “We did this very radical thing: we went to the bank leadership and asked them to invest in middle neighborhoods,” he says, adding that he thinks Cleveland’s on the right track.

For neighborhoods like Bellaire-Puritas, the MNI could help them avoid stagnation by retaining existing residents and attracting new ones. “The traditional model for redevelopment does not fit our neighborhood, and we’ve been frustrated by that,” says Brian Gillooly, executive director of Bellaire Puritas Development Corporation (BCDC), a diverse, working-class neighborhood of predominantly small, one and a half story homes. “I feel like we’ve been waiting for this kind of approach for a long time.”

“Our residents can’t get money to put a new deck or a room on their house,” adds Melissa Miller, community development director with BPDC. “So if a family is getting too big for their house in West Park, they might choose to move to Brook Park. What’s great about the appraisal gap financing piece is that if they want to add that extra half bath, this would still make it possible [to stay] even though the sales comps don’t support it.”

Jeff Verespej, executive director of Old Brooklyn CDC, says the MNI is sorely needed but he worries that the city might not put enough resources into it to make it effective. “We’ve been banging on the table for the high LTV product for a number of years, but it needs to come with full commitment from the city,” he says, arguing that Cleveland will reap a return on its investment through increased tax values. There’s not enough money in the $1.2 million construction gap financing program, he says. “If you don’t make enough of an investment, we may be left holding the bag for something none of us can afford.”

To be successful, the city needs to grow more holistically, not just in a few areas, Powers says. “For every doctor that moves into Tremont, if we lose seven firefighters somewhere else, we’re not growing as a city,” he said. “There will be something for every ward in the Middle Neighborhoods Initiative. The only way to move the needle is through targeted investment.”

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