This project was funded by a grant from the Pulitzer Center and provided by Eye on Ohio, the nonprofit, non-partisan Ohio Center for Journalism.
Al Jenkins has what neighbors call “the nicest house in the neighborhood.” The renovated historic structure has fresh gray paint and neat landscaping. A side lawn looks like this, too. Jenkins fenced it in and cut the grass. But the City of Cleveland Land Bank will not sell him the property. He said they told him they were saving him for future development.
Down the street from Jenkins, across from the Cleveland Clinic, bulldozers are buzzing around new construction on land the town has given to a land bank developer and purchased property. The new Addis View apartments will cost around $ 2,000 for a two bedroom in a zip code with a median income of $ 29,225 according to census data.
Jenkins is happy with the new development. He is not just a neighbor, but a heavily invested small business owner in the neighborhood.
“Anything that comes to this neighborhood will be a plus for us,” Jenkins said.
Its block looks like Swiss cheese: historic houses interspersed with lots of vacant land. Jenkins came from a suburb in 1982. He was tired of spending all his factory income on housing. He eventually bought and repaired many other rental homes.
So why give properties in the same area to one company and not Jenkins?
The city of Cleveland did not respond to multiple requests for comment. (Note that the city’s land bank is not to be confused with the Cuyahoga County land bank, which said it does not have such a policy.)
Using machine learning methods, Eye on Ohio looked at reclamation of properties in multiple counties to delve deeper into a process that transformed the rust belt over several years.
Certain factors, such as proximity to valuable properties or the school district, made a property more likely to be selected for remediation in some counties. And in some regions, those responsible for economic recovery are the same people in charge of this remediation.
In the six counties analyzed, the amount of taxes owed did not play a practical role, or the model became more accurate by choosing plots with less tax owed, even taking into account outliers. (Although houses in poor condition may be worth less and, as a result, owe less in taxes.)
In Cuyahoga County, out of all tax-overdue properties in 2018, 2019 and / or 2020, a total of 2,793 were foreclosed by the government or ended up in the land bank by donation or foreclosure (including the plots combined together) until September 2021.
These real estate properties owed a median of 79% of the lot’s value, lying well above the median of all tax-overdue properties, at 3.3%. They owed an average of $ 22,327, far more than the average of $ 9,774 for all delinquent properties.
However, the authorities did not choose only the most dilapidated to remedy it. Of the 2,793 properties most important in terms of amount and percentage of taxes due, few ended up in the land reserve.
Entire categories were excluded, including trailers, even though trailers were one of the residences most behind on property taxes.
In absolute numbers, plots going to the land bank in African American neighborhoods outnumbered those in school districts where most students are white: only 72 properties in predominantly white school districts, compared with 2,721 in color districts.
But by keeping the amount owed and the location of high-value properties constant, the model predicted that an overdue property in a predominantly white neighborhood would be chosen over a minority property. Homes in predominantly white neighborhoods and the land bank owed less money as a percentage of their land value (139%) than homes in minority neighborhoods (351%, although the median is lower).
By keeping the amount owed and school district constant, plots were more likely to end up in the land reserve if they had more plots valued at $ 10 million or more within 500 meters (1 640 feet) from their location.
Al Jenkins properties are less than 500 meters from the Cleveland Clinic. Patricia White is even closer.
“It makes me sick,” said White, whose home adjoins a new development. She said her father lived in the former on-site apartment complex, which fell into disrepair in the 1990s. “There isn’t a lot of affordable housing.
According to the National Land Bank Network of the Center for Community Progress, there are more than 200 land banks across the country. Eighty-two of these are Ohio County land banks, and several towns in Ohio also have land banks.
Land banks began in Colorado in the 1970s. They were then adopted, particularly in the communities of the Rust Belt, which have continued to expand their reach. In 2009, Ohio passed Senate Bill 353, authorizing a “new breed of county land bank.” In the words of creator Gus Frangos, they have become land banks “on steroids”.
“This new class of CIC – a county land bank – encompasses not only economic and industrial development, but also community development, which is often needed to start or ‘set the table’ for economic development,” Frangos wrote in a continuing legal document from 2018. Land bank education course.
Land banks are now essential public bodies. They turn dilapidated and often abandoned properties into viable homes – before attracting pests and crime.
Various studies show that they can stabilize house prices. And very little funding comes from taxpayers. The bulk of their income comes from tax overdue properties.
“The key problem in a place like Toledo is the changes that are taking place in industrialization. We simply have too many buildings for our community. Thus, in 1970, the city of Toledo had 384,000 inhabitants. By 2019, that number had fallen to 273,000. So we’ve seen a population decline of over 25% in 50 years. Now it’s Econ 101 to recognize that if you have homes for almost 400,000 people but only humans close to 300,000, you have oversupply of housing and insufficient demand. So what the land banks did, by changing the number of properties in the city, they pushed up property values, ”said Shelley Cavalieri, professor of real estate law at the University of Toledo.
“Distressed properties reduce the sale of nearby homes by about 5%. When the land reserve takes possession and does some basic mowing and planking, it reduces that by about one percent. Once a demolition is complete and a vacant lot is owned by a land bank, this reduces that by an additional 2%. “
But land banks have also created tensions between officials with more decrepit property than they could ever fix and residents who still see their neighborhood as a top priority.
This reproach is particularly strong for the beneficiaries of the land bank perceived as having cut the line.
In 2018, Cuyahoga County Land Bank divested Coventry Park Apartments on Superior Road to Coventry Park Apartments, LLC, a company owned by Steven Pontikos, nephew of Gus Frangos. Pontikos then sold it for $ 1.5 million.
In 2014, the land bank also transferred a property to 14078 Superior, LLC, another entity owned by Pontikos. In 2021, the LLC sold it personally to Pontikos for $ 0.
East Cleveland gave Pontikos two properties in 2017. It transferred them in 2019 to its own entities: 14048 Superior, LLC and 1520 Belmar, LLC.
In 2012, the land bank donated a parcel to East Cleveland, which donated the land again to Pontikos in 2017. Once again, it transferred the parcel to its wholly owned 14042 Superior, LLC, in 2019. East Cleveland, Pontikos and Frangos did it. not respond to requests for comment.
The Cuyahoga County Land Bank said it has a detailed conflict of interest policy.
“The Cuyahoga Land Bank assesses available properties on a case-by-case basis to determine whether acquiring the property would further the land bank’s mission under its agreement and plan with Cuyahoga County. We also follow the advice of our community partners such as representatives of local government, community development corporations, faith-based societies and other non-profit corporations that carry out community development work, ”said Douglas Sawyer, Deputy General Counsel. of Cuyahoga County Land Reutilization Corp.
“The Coventry Park Apartment properties you are referring to were forfeited to the state of Ohio after they suffered a tax foreclosure and were not sold in the Sheriff’s Sale. Mr. Pontikos’ company contacted the land bank and expressed interest in acquiring the properties through the land bank so that his company could renovate the properties and restore them to productive use, ”wrote Sawyer.
He said the land bank staff found Pontikos to be well qualified and financially capable of undertaking the large amount of work required for these properties to be renovated and productive again. Land bank staff knew that Pontikos was an extended relative of Frangos and concluded that this fact did not prevent his otherwise qualified company from dealing with the land bank.
“In return for the company’s promise to renovate the properties, the land bank agreed to acquire the properties against forfeiture and sell them to the company for a total of $ 50,000. (The county website shows a sale amount of $ 0 because transfers outside of a county land reuse company are exempt transfers and therefore no sales price is entered by the county. at the time of transfer). The properties have been successfully renovated and now generate nearly $ 85,000 per year in property taxes. Transfers like this are exactly what the land bank is tasked with doing – returning distressed properties and confiscated properties to productive use, ”Sawyer wrote.
In Montgomery County, of 34,627 plots overdue in 2018, less than 1% (281) went to the land bank or were seized by the city for tax seizure at the end of 2021. Two hundred and seventy- eight of these properties owed money, with a median of $ 4,049 and an average of $ 9,395.
Yet of the 281 worst offenders that year in terms of the amount of taxes owed, only seven were actually seized. These packages owed an average of $ 78,207 and a median $ 53,577. Three years later, 80.9% of them are still delinquents.
Unlike Cuyahoga County, in Montgomery County, for two plots owed in roughly the same amount, proximity to the most expensive real estate didn’t matter – and neither did the racial makeup of the school district. The net amount of delinquency was hardly significant.
Jim Crowley, Ron Calhoun, Sara Stoudt and Rich Weiss contributed to this project.