Wednesday, May 30, 2001

Worthy goal faces historic obstacles




By John Eckberg
The Cincinnati Enquirer

        When Mayor Charlie Luken announced that he wanted 1,000 new homes built in Cincinnati in 2001, many thought that it was an aggressive strategy for a worthy goal.

        If a significant percentage of homes were owner-occupied, it would help neighborhoods thrive, stem the city's falling population and perhaps bring new retail stores and commercial developments.

        But 1,000 new homes, even if all were owner-occupied, won't help improve Cincinnati's 35 percent home-ownership rate, one of the lowest in the nation. More than 1,600 new single-family houses are needed to increase that rate by just 1 percentage point.

[photo] Sandra Woosley has a view of the skyline from the bed-and-breakfast she lives in and operates in Price Hill.
(Gary Landers photo)
| ZOOM |
        Getting more people to own more homes may be among the most daunting challenges for city leaders as qualified home-buyers continue to bolt for new houses, convenience and stable property values in the suburbs.

        The city faces myriad obstacles:

        • A large supply of rental property encourages tenants.

        • An aging housing stock.

        • Poor-performing schools discourage potential owners.

        • High costs for limited land deter developers.

        “Increasing ownership means you have to increase the number of houses. But before that becomes viable, people have to want to be in the city, and services have to be there: groceries, delis and dry cleaners,” adds Dan Brady, owner of Tri-state Mortgage in Montgomery and a 20-year veteran of residential development in Southwest Ohio.

        A proposed comprehensive master plan, which is expected to cost $350,000, will look at housing citywide — as well as such issues as land use, transportation, infrastructure and economic development.

        The last comprehensive master plan was in 1982, and officials say the new plan might help find ways to increase home ownership when it's finished next year.

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        Leaders in Cincinnati and the nation say a truly healthy city is one that has a blend of renters and homeowners. The mix is needed to attract a blend of residents and workers: from young professional singles to older, more established families.

        But officials would prefer more homeowners. Peg Moertl, director of Cincinnati's Department of Neighborhood Services, says when people invest in homes, they invest in their neighborhoods and communities prosper.

        “You want to build stability in a neighborhood so that people are not just moving here and then moving out as soon as they have a chance,” she says.
       

Losing population
        Recently released 2000 Census data underscore the urgency to increase housing to attract new residents, some local leaders say.

        Between 1990 and 2000, Cincinnati lost 9 percent of its population; only nine major U.S. cities lost population faster. From 364,000 people in 1990, the city was home to 331,000 people 10 years later.

        At the same time, the Census found that the city has 3,000 fewer housing units than in 1990. Many units were public housing complexes that were functionally obsolete, others were likely demolished, and some might have deteriorated until they became uninhabitable.

        “It is a trend that plays out over 20 or 30 years,” says Dot Christenson, executive director of the Better Housing League.

        Experts cite a variety of reasons for Cincinnati's low homeownership rate:

        • A large supply of apartment buildings and historically low rents keep people from buying homes.

        “Multifamily housing is a standard Cincinnati pattern” that started 100 years ago, Ms. Moertl says. At the time, owners often occupied one apartment and rented the rest. Others saw the success of income-producing real estate and copied it.

        Rents are relatively low because of the large supply. While a person might pay $1.20 a square foot in Chicago, he would pay only 70 cents to rent here, says Dave Lockard, multihousing specialist for CB Richard Ellis, the world's largest real estate services firm, with an office in downtown Cincinnati.

        • Outlying suburbs offer new or nearly new houses with four bedrooms and two baths — the kind of housing people want.

        Cincinnati's housing is old — about 70 to 80 years old within five miles of Clifton, says Norm Miller, a finance and real estate professor at the University of Cincinnati.

        City lots also are small, says Jim King, president and chief executive director of the Community Redevelopment Group, which has developed 250 units of single-family, townhouse and condominium housing in the city.

        “And you never know what you're getting: lead and asbestos,” Mr. King says. “Even with a vacant lot, preparing the site can be an issue.”

        • Better schools elsewhere keep families with kids from buying.

        Realtors consistently rate quality schools as a prime draw for families looking to relocate. Yet Cincinnati schools, with a few exceptions, are perceived as failing.

        The Ohio Department of Education ranked city schools in a state of “academic emergency,” the lowest of four ratings, for the 1999-2000 school year. The system is still ranked that way by the department.

        “That's not unusual among Ohio's big city districts. All are in academic emergency,” said Janet Walsh, communications manager for the district, which cites headway on 16 of 27 indicators used by the department to rate districts.

        • Little open space for residential development pushes up high land costs.

        “The city is essentially built up, meaning there is not a lot of developable land available,” Ms. Moertl says. “We are not in a position to annex, which is how cities like Columbus have grown.”

        The inability of Cincinnati, with its 79 square miles, to annex — its last annexation was in 1914 — has fixed the city's borders, limited economic development and hobbled political power. All affect owner-occupied housing rates.

        “You find that I-275 redefined the functional boundaries of the city, but Cincinnati is stuck politically with the ridiculous situation of the core city not having the tax resources, leadership potential and energy centers,” said Dan Hurley, principal of Applied History Associates, a public history consulting firm in College Hill.

        “The new types of businesses are all growing up in places defined outside the Cincinnati boundaries.”

        The cost of land in Cincinnati, when it's available, is high, and so, too, are the costs of demolishing buildings, Mr. Lockard says.

        “The other issue we have to consider in the city limits is topography,” Mr. Lockard says. “Hillsides are difficult and expensive to build on, or you can't build at all. In Columbus and Indianapolis there is flat terrain.”

PLANNING STARTED
   Work has only just begun on a $350,000 master housing plan for Cincinnati, and results aren't expected until sometime next year.
   Yet some conclusions already are evident, says Peg Moertl, director of Cincinnati's Department of Neighborhood Services, which is writing the plan:
   • Land uses may have to change. Obsolete retail and commercial buildings might have to be leveled and homes built on the sites instead.
   • State grants will be needed to help pay costs of converting former industrial sites into use for residential development.
   Ms. Moertl says such “brownfield redevelopment” is important. “We need to promote housing development on those sites,” she says.
   • While owner-occupancy rates may be significant, that is not nearly as important as another aspect of housing, Ms. Moertl says.
   “The number of people who buy a first home in the city and then their second home in the city is a more meaningful number,” she says.
   “You want to build stability in a neighborhood so that people are not just moving here and then moving out as soon as they have a chance.”
        The Census Bureau reports that Cincinnati has 17,917 vacant housing units, although the Cincinnati Department of Building and Inspections makes a distinction between vacant buildings and problem vacant buildings, said William Langevin, director of buildings and inspections.

        “It's perfectly lawful and reasonable to have unoccupied vacant buildings,” Mr. Langevin said. “It's when they are vandalized, open to trespassers, blighting and encourage crime that building and inspections takes corrective action.”

        The number of problem vacant buildings is close to 900.

        “It's a fluid number. Sixteen years ago we had 1,600 problem vacant buildings,” Mr. Langevin said. A robust economy and real estate market helped reduce the number of problem vacant buildings.

        Ms. Moertl said the planning department has nearly completed a neighborhood-by-neighborhood inventory of buildings, which will give leaders more insight about policies to get the buildings inhabited.

        Also, many of the 17,917 units might include portions of commercial buildings that once held apartments, she said. She said the national homeownership rate is about 60 percent and that a citywide owner-occupied goal may follow completion of the master plan.
       

Subsidies needed

        Mr. King, the Avondale and Walnut Hills developer, says city subsidies are essential to build homes for people earning between $30,000 and $45,000 a year — where the greatest need exists.

        Median household income in the city for 2000 has not been released by the Census Bureau, although Cincinnati Public Schools earlier this year estimated a citywide median household income of $23,831, which is far below Mr. King's target market.

        Mr. King cites estimates to build a typical single-family house: A neighborhood lot can cost $30,000, while site preparation, attorney fees and other predevelopment costs add another $12,000.

        Construction of an 1,800-square-foot, three-bedroom house costs $60,000, for a total project cost of $102,000 in a neighborhood where houses might sell for $60,000-$80,000.

        “The banker needs that appraised value of $80,000,” Mr. King says. That's why his company asks for a $25,000 public subsidy for each house it builds to avoid heavy losses.

        Charles C. Cain, vice president of Insured Land Title, a residential and commercial title insurance and property closings firm based in Kenwood, agrees that costs add up quickly.

        “Numerous builders have given up after three to five houses,” Mr. Cain says. “They say they just can't do it anymore, it's so much easier to go to Clermont, Butler or Warren counties.”

        Despite the problems, Mr. King's development company has brought success to Cedar Meadows, a 48-house development on Glenwood Avenue near Vine Street in Avondale.

        The first house there sold in 1992 for $72,000. Now, it's worth $130,000, he says.

        “Our goal was to encourage people to come back,” Mr. King says. “It was successful. We have residents there who have moved back to Cincinnati from 20 different communities.”

        Deloris Dula, 70, bought a new townhome in Cedar Meadows in 1992. “I wasn't looking for a home, but I went by during an open house,” she says. “It struck a nerve.”

        On the other side of town, Sandra Woosley, 59, takes great pride in her bed-and-breakfast, Cincinnati Suite.

        She started to redevelop the Gabriel Avenue house in Lower Price Hill in 1995. She lives in one side of the house and uses the other for the bed-and-breakfast. Dramatic views of the city and river are right outside the windows.

        Including sweat equity and improvements like a new roof, paint, air conditioning, decor, landscaping, carpeting and fixtures, Ms. Woosley estimates that the house is an investment of more than $150,000.

        Sometimes, she says, she can't help but be discouraged. Of the eight houses on her dead-end street, only three are occupied by owners. She would like to see more because nearby properties are run-down.

        Her husband, Herb, calls the place GAOTG — “Gabriel Avenue Overlooking the Ghetto.”

        “He's a pessimist and says this property will never come around,” Ms. Woosley says. “But I love it here. It's the best view of the city. We don't have any crime here. It's safe.

        “But it would certainly be nice if everybody took pride in their property, cut the grass and picked up the litter. It sure would be nice.”

       
       
       



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