Saturday, July 07, 2001

New plan to stem flight from county

Low-interest loans for middle-income homeowners

By Ken Alltucker
The Cincinnati Enquirer

        Interest is growing in a plan to fix up aging houses in Hamilton County's older suburbs. A plan that would offer low-interest loans to middle-income homeowners — a rapidly disappearing group in suburbs ringing the city — has support from a group of urban developers, politicians and anti-sprawl activists.

Todd Trivett of Mount Lookout, who wants to build a family room off his kitchen, could benefit from a low-interest loan.
(Tony Jones photo)
| ZOOM |
        The proposal before Hamilton County commissioners also is drawing interest for its unusual approach to urban redevelopment: Rather than relying on multimillion-dollar riverfront development and costly low-income housing programs, this plan zeroes in on homeowners who are leaving the county for new houses elsewhere.

        “A program like this is very much needed and should be successful,” says Tom Moeller, Madeira city manager and head of Hamilton County's First Suburbs consortium.

        “The county is losing population,” he says. “This is a way to provide incentives” for people to stay in Hamilton County, which lost 2.4 percent of its population during the 1990s — the biggest drop of any county in Ohio.

        A 1999 Cleveland State University study identified 11 “first suburbs,” including Deer Park, Silverton and North College Hill, at greatest risk of decline because of older housing, lack of new tax sources, crumbling roads and clogged sewers.

        New census figures offer fresh evidence of the problem - dropping home ownership rates in some of the communities and fewer households in all but Mariemont. Meanwhile, a decade of unprecedented U.S. prosperity buoyed home ownership rates in suburban counties at a much faster rate.

        The home improvement program, proposed by Hamilton County Commissioner Todd Portune, is modeled after a similar initiative in Cuyahoga County, Ohio, used to improve home ownership rates and stem population loss. Since mid-1999, more than $34 million in loans helped spruce up nearly 3,000 homes in Cuyahoga County.

        The program would pledge Hamilton County's investment dollars to lower interest rates by 3 percentage points on conventional home-improvement loans.

        The county would agree to buy a low-interest certificate of deposit at a local bank. In turn, the bank would offer cheaper loans to Hamilton County homeowners. The banks would take on all risk and have the right to accept or reject applicants.

        The risk to Hamilton County is that it would earn less from some of its direct investments.

        The potential payoff would come from investing in the community. Expected benefits include higher home ownership rates, more stable neighborhoods, increased property taxes, better school districts and fewer people trodding the well-worn path to suburban Warren, Butler and Clermont counties.

        Hamilton County's overall home ownership rate increased just 1.6 percentage point over the past decade to 59.8 percent. Home ownership varies widely among Hamilton County communities, from Madeira's 91.7 percent to Lincoln Heights' 35.2 percent.

        “Nothing at all is out there to help the suburban and first suburban communities of Hamilton County,” Mr. Portune says. “This is the only thing that is targeted in a way that helps families and helps the middle class of our community.”

        Guidelines for the program - including who would be eligible for low-interest loans - are being developed.

        The older communities are being targeted because many don't have the means to draw on new tax sources and aren't eligible for federal funds to combat poverty. There's little developable land in these communities to attract lucrative corporate and employee earnings taxes.

        The first suburbs are “in the early stages of what happened in the inner city years ago,” says Tom Bier, a housing researcher at Cleveland State. More than 50 private business, real estate, government, development and civic leaders met last month to craft the guidelines of the program. They agreed the program should be offered countywide to owners of homes with a market value of $250,000 or less.

        That would make the vast majority of homes in older suburbs such as Norwood, Golf Manor and Cheviot eligible. But owners of homes in more affluent neighborhoods such as Indian Hill and Hyde Park would not, if their homes have market values greater than $250,000.

        Though the program targets older suburbs, homeowners in Cincinnati and all Hamilton County suburbs also could use it to fix up their homes.

        Over the past decade, Hamilton County's population dropped from 866,228 to 845,303, with most people leaving for Warren, Butler and Clermont counties.

        Those leaving the county earned $2.5 billion more in annual income than newcomers to Hamilton County - leaving Hamilton County's municipalities fewer tax dollars to provide services for a poorer population.

        Kathy Schwab, who oversees housing for Downtown Cincinnati Inc., says the program would encourage owners to refurbish homes instead of selling or leaving them vacant.

        Mr. Portune must get support from Commissioners John Dowlin and Tom Neyer to pass the program. Though no date has been scheduled, Mr. Portune favors a vote this fall. If only two of three commissioners favor the program, it would also need approval of the county's investment advisory committee, headed by Hamilton County Treasurer Rob Goering.

        Mr. Portune's goal is to begin the program by January.

        Mr. Dowlin has questioned the cost of administering the program and whether it will bring sufficient benefit to risk lower investment earnings.

        Cuyahoga County officials say it's too early to tell whether their program, begun in 1999, has improved property values significantly. The county will review the program after five years and decide whether to renew it.


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