Some things take time

On the evening of July 9, Lolly the Trolley threaded its way through Cleveland Heights’ Noble neighborhood, stopping every few minutes in front of a vacant and dilapidated house. The trolley’s passengers were not tourists. They were Cleveland Heights City Council members and staff, hosted by Greater Cleveland Congregations (GCC), an ecumenical social justice organization.

GCC determined in 2016 that “ongoing decay of many Cleveland Heights houses and buildings” was one of the “most pressing issues” facing our city. Now the organization was highlighting 19 problem properties in the north end of town. GCC members wanted officials to see the peeling paint, sagging steps, missing shingles, listing garages, piles of trash, uncut grass and overgrown shrubbery—unmistakable signs of blight.

Next, they wanted the city to act. While GCC suggested some 30 possible measures, high on the list was legislation mandating that when a bank forecloses it must deposit a bond with the city to ensure the upkeep of the vacant property.

Initiated in Springfield, Mass., in 2001, foreclosure bond legislation reached Ohio in 2013, beginning in Youngstown. Canton followed in 2015, to be joined later by Massillon, Warren and Lorain.

As Youngstown was implementing its legislation, a group of Cleveland Heights residents were researching the same remedy. In October 2013, 10 residents, joined by Council Member Cheryl Stephens and council candidates Jeff Coryell and Fran Mentch, met to discuss similar legislation for Cleveland Heights. Encouraged by Stephens and Coryell, the group set its sights on passage within three to six months.

Unfortunately, then-Housing Director Rick Wagner and then-Mayor Dennis Wilcox dismissed the foreclosure bond concept out-of-hand. They assumed it would cause banks to refuse loans to prospective Cleveland Heights homebuyers.

It seemed the idea was dead, but in 2015 Council Member Kahlil Seren asked the law department to draft a foreclosure bond ordinance. In March 2018, tired of waiting, he decided to write the legislation himself. Mayor Carol Roe assigned the issue to the Housing and Transportation Committee, chaired by Council Member Mary Dunbar.

At a committee hearing a few weeks later, Housing Director Allan Butler, like his predecessor, opposed the legislation out of concern for how banks might react.

In response, Stephens pulled out her phone and gave Butler three contacts at local banks. Ultimately, he reported, the bankers all said foreclosure bonds would not affect their institutions’ loan underwriting practices.

Meanwhile, GCC had been advocating foreclosure bonds since 2017. It organized the trolley tour, and coordinated a conference call with Canton City Prosecutor Jason Reese, who wrote that city’s foreclosure bond legislation. Call participants included Butler, council members Dunbar and Michael Ungar, and two GCC members.

On a recording of the call, Reese admitted that he was initially skeptical about the measure, but once it went into effect he was astonished at how well it worked:

• Canton holds $3.5 million in foreclosure bonds, and has collected $336,000 in service charges with which to maintain vacant houses. Blighted properties have been cleaned up, and the program brings in more than it costs.

• Banks have demanded better performance from contractors they pay to maintain foreclosed properties.

• Foreclosures have plummeted, from an average of 100 per year in 2015 through 2017, to 16 in the first half of 2018. (Cleveland Heights had 180 foreclosures in 2017.)

Effects have been most noticeable in the lowest-income parts of Canton. Said Reese, “Just like blight spreads, so does pride.”

At Ungar’s request, a GCC member created a spreadsheet showing how seven foreclosed houses on the tour could have been repaired and maintained, had Cleveland Heights had foreclosure bonds in place.

As we write, CH City Council is on vacation, but we are optimistic it will pass this legislation. It will position Cleveland Heights to curb blight caused by bank foreclosures today, and be ready for future financial downturns.