Affordable Housing in Cleveland
Thank you, Councilman Griffin, for the opportunity to share my observations and suggestions with you and the Mayor’s Action Center on the issues of affordable housing and private sector investment in the City of Cleveland (City.)
I spent 40 years in management positions in the environmental business and think I have a pretty good idea of how the private sector operates. Part of my responsibilities involved land acquisition and property development in rural Lorain County, so I know something about those issues but am certainly no expert.
But I have been greatly concerned about these issues in Cleveland. My wife and I have lived in Little Italy for nine years, after living in Cleveland Heights for over forty. Since moving here we have become very involved in issues surrounding housing for many reasons, one of which being the explosion of high-end rental housing that has been forced into the area in which we live.
As such, I have spent ample time researching and studying the issues and trying to understand just how the City has come to be in the situation it is in. It is a complex and involved sixty-year history of deindustrialization, disinvestment, flight to the suburbs and population loss, but some things remain pretty clear and not too hard to figure out.
These are my observations and suggestions.
First, let me acknowledge your efforts, Councilman, being a champion for affordable housing and equitable economic development in Ward 6. There are many examples I could point to, but the recent investments being made in Buckeye-Shaker and Fairfax are good ones, where the investments appear to be equitable and will likely benefit all the residents.
To your point regarding people wanting government to foot the bill and the need for private investment, I would say that private investment can only do so much and is constrained by its very nature. Private investment is conditioned on factors of risk / reward and profit and loss. Investors invest for one reason: to make money. The risk with respect to a project defines the expectation of reward. Where there is high risk, there is an expectation for high reward.
Inducing private investment then comes with transaction costs, and those transaction costs will be higher where there is a perception of high risk. Because real estate investment is by its nature highly profitable and relatively low risk in many places, inducing investment in poorer neighborhoods where there is a perception of more risk is problematic. This isn’t rocket science, and I’m not telling you anything you don’t understand.
A point I would make about the private sector is that it has basically been running the civic agenda in Cleveland for the last 40 years since it wrested control (by its own admission) from Mayor Dennis Kucinich and does so through various foundations, non-profits and our equivalent of a chamber of commerce. The public sector has had ample opportunity to address issues like equitable housing and poverty, but it has had other priorities, such as supporting billionaire owned sports franchises and downtown development.
And the private sector has done just fine. We all know how they’ve done. Take a ride through Gates Mills, Hunting Valley or Chagrin Falls. Then take a ride around Cleveland’s east side. The income and wealth disparity is astounding. The private sector has done well, and still decades old systemic problems have not been addressed.
After over forty years of the private sector driving the political, civic, philanthropic and development agenda, Cleveland remains the poorest large city in the United States, our schools underperform, affordable housing is in crisis, we still have a huge lead poisoning issue to address and climate crisis resiliency is a massive concern, especially in poor neighborhoods.
My point is the private sector’s main priority by definition is profit and its own preservation, which is why the public and non-profit sectors need to step up and re-establish control of the civic agenda and move dramatically and without reservation to protect the community’s most vulnerable population.
So, this is where the public and non-profit sectors must continue to intervene and provide the opportunities for neighborhoods to help themselves and local investors, developers and contractors, especially those of the BIPOC community, to provide jobs and make a reasonable return on their work.
Incentives must be increased for local actors in the BIPOC community. Little is gained when the economic vitality that could be retained in the neighborhood is siphoned off and sent to the suburbs, out of the state or out of the country. So, the Mayor’s Office and City Council needs to assure that is not happening the way it has.
These are some suggestions I have to help assure neighborhoods thrive and that fair and equitable housing is available to all Cleveland residents:
· Take a hard look at the Cleveland 2030 Equity Housing Plan. It is both a telling indictment of the status quo in housing and a solid battle plan for moving forward. Can it be implemented faster with a higher level of resources?
· Priorities matter. There should be no higher priorities in the Mayor’s office or City Council than jobs in poor neighborhoods, poverty, equitable housing, safe streets and protecting the City’s most vulnerable population. If you can shift resources even subtly away from the glitzy big projects that preferentially help the well-to-do to those projects that help average people and the poor, that could have a huge impact. Even a fraction of what we give to the billionaire sports owners would help a lot.
· Restrict or eliminate tax abatement to developers building high end rental housing and then acting as landlords after the fact.
· Reign in and prosecute predatory landlords and provide eviction protection for renters.
· Target tax abatement to people that want to rehab their own homes.
· Target tax abatement to neighborhoods with excess poverty and help those that have received the tax abatement manage their property and taxes once tax abatement goes away.
· Provide more loan availability for people in poorer neighborhoods to get into a home or rehab an existing home.
· Eliminate property tax for people over sixty-five with income below $50,000 per year per individual or $100,000 per couple, so they can afford to stay in their homes.
· Much more needs to be done in educational assistance and job training in poor neighborhoods so young people stay, prosper and decide to raise families there in affordable housing.
· Expect much more philanthropic help from the non-profit community, especially from large employers like the Cleveland Clinic. I would say that there have been hopeful signs lately with the Fairfax project and the Clinic’s commitment to the lead poising issue that they are starting to get it, but that comes after decades of not doing enough to help their neighbors in Hough, Glenville, Fairfax and other areas around University Circle. They do not have a solid track record of community assistance, but maybe that’s changing with new leadership. They just had the best year financially they have ever had. They can do even more now to help the poor people that live next door to them. How many people do they actually employ from the surrounding neighborhoods? What can they do to help them qualify for a job? Every non-profit institution in University Circle that benefits from a tax advantaged status can do a lot more for the neighborhoods. University Circle institutions have done exceptionally well, carefully protecting themselves and feathering just their nest, going all the way back to the Hough and Glenville riots in the late sixties.
· Pay close attention to Lee Weingart’s campaign for County Executive. He is out of the box fast with a platform that is targeted to poverty in the neighborhoods. Hopefully, his doing so will focus the campaign on these issues of poverty, private sector investment, housing and economic development. I’m not suggesting I support his candidacy. I am suggesting he has targeted issues that must be addressed and may have ideas that can help.
· No amount of civic boosterism, positivity, wishful thinking and marketing flimflam is going to change the facts that need to be addressed: increase jobs availability for people in the neighborhoods, reduce poverty over time, provide affordable housing for all Clevelanders, improve the schools, reduce lawlessness and gun violence, act to protect the City’s most vulnerable. It’s a matter of staying focused on priorities and not letting the private sector drive an agenda that doesn’t address these issues as Job #1. When everything is a priority, nothing is a priority.
That’s a lot, but thank you for the opportunity. In sum, I think the key is putting jobs for poor people, poverty, affordable housing, safe streets and protecting the most vulnerable at the top of the agenda in the Mayor’s Office and City Council. That way, they cannot be pushed aside by other competing priorities, especially those with the pretense of helping all but preferentially helping those that are already doing just fine.
Thank you,
Arthur Hargate
