Updated housing strategy goes after bad landlords, focuses on struggling neighborhoods

His first step revived home construction. Now, Akron Mayor Dan Horrigan is minding neighborhoods where housing markets remain on the verge of collapse.

With the release of a new housing strategy Wednesday, Horrigan is pushing for private and public investment in working-class neighborhoods that have yet to benefit from Akron's housing revival.

Planning to Grow Akron 2.0 — an update on the first version from 2017  — promises a lot: better housing code enforcement, stiffer fines for absentee landlords, smoother zoning and permitting processes, a landlord-tenant council, a comprehensive strategy for homelessness by 2022, a housing trust fund to help with home improvements and a comprehensive review of every vacant property and all 84,000 residential structures in the city.

Horrigan also is pledging continued support for nonprofit organizations like East Akron Neighborhood Development Corp., The Well CDC, Akron Civic Commons and the Knight Foundation, whose missions in Summit Lake and Middlebury are to stabilize housing in neighborhoods where city planners say the "real estate market has collapsed."

Akron is directly applying its "limited resources" to what it calls “middle neighborhoods.” Officials believe the city and nearby neighborhoods within it could rise or fall depending on the fortunes of these stable but struggling neighborhoods.

"When middle neighborhoods decline, typically we see homes quickly losing value and previously owner-occupied housing shifting rapidly to renter-occupied housing," Jason Segedy told the Beacon Journal. "We often see crime and other signs of public disorder — graffiti, vandalism — increase and an erosion in the quantity and quality of retail businesses. When they strengthen, we see the opposite — a stabilization and steady increase in housing values, owner-occupants staying put, decreases in crime and other signs of public disorder, and a noticeable improvement in the retail climate."

Help for housing in the middle

Starting with specific portions of Goodyear Heights, Kenmore, North Hill and West Akron, the mayor wants to couple private investment and philanthropy with public infrastructure projects and new policies that would encourage lenders, developers and residents to invest in functionally broken housing markets.

This new plan to bring more equity to the city’s housing market would explore the creation of a housing trust fund to assist new home construction and rehabilitation.

The city might participate in something like the Cleveland Restoration Society's Heritage Home Program, which helps Clevelanders maintain or improve their older homes by providing technical assistance and low-interest loans.

Other programs Akron is interested in are Cleveland's Construction Gap Financing Program and the Cuyahoga County Land Bank's Construction Gap Grant Program, which provide grants of up to $45,000 to help prospective homebuyers cover appraisal gaps. That's the difference between the market value of a home and what a bank is willing to lend.

Appraisal gaps have intensified as low-interest rates drive up demand and home prices. Akron, which has been cited multiple times as in the top 10 hottest housing markets in America, has seen home sale prices nearly double from $56,000 in 2015 to $101,000 last year.

To fund these home loan and grant assistance programs, the mayor would explore local sources, regular federal funding or some of the $153 million Akron is expecting in the next year from the American Rescue Act.

The city also wants to encourage the historic designation of neighborhoods, which allows developers to apply for tax credits, and the adaptive reuse of old buildings. New zoning would allow more mixing of retail and residential, especially in middle neighborhoods.

And the city is planning to work more collaboratively with the Summit County Land Bank on the acquisition and reuse of the thousands of vacant Akron properties the two entities have come to own after a decade of aggressively demolishing homes after the housing crisis.

Impact on landlords

The mayor hopes to announce plans for the formation of a landlord-tenant commission next month, city spokeswoman Ellen Lander Nischt said. The appointments will be made by the mayor with input from City Council.

While the temporary commission gets started, the new housing strategy calls for revisiting housing code compliance, including how laws are written, often ignored and not always enforced.

Court records and city utility billing information show that landlords, despite filing evictions and collecting rent, fail to register hundreds and possibly thousands of rental properties each year in Akron. Failure to register is a misdemeanor punishable by a $500 fine and up to 60 days in jail. A second violation is $750 and up to 90 days in jail.

"Despite the Department of Neighborhood Assistance’s best efforts, many of Akron’s rental properties still go unregistered," the new housing report states. "Stiffer penalties for non-compliance may be necessary."

"Legislation should be put in place to more effectively address out-of-town investors who own blighted properties in the city and continuously violate the city’s code enforcement standards," the report also states.

Better enforcement and compliance will require more housing inspectors to proactively go after bad actors, instead of waiting for tenants and neighbors to complain. Nischt said the mayor is having conversations about "staffing and organizational challenges" and will consider input from the landlord-tenant commission.

Inequity and imbalance in Akron's housing markets

While raising new home construction from the dead, the mayor’s first major housing initiative made clear the inequity and imbalance in the city’s neighborhood housing markets.

Authored by City Planner Segedy, the city released a report on the state of housing in Akron a year after Horrigan took office. The outlook wasn’t good.

By the numbers, residential construction died in the late 1990s. New home construction was slower than during the Great Depression. The city was shedding residents for a sixth-straight decade. The population had dropped 30% since the collapse of the rubber industry.

Horrigan vowed that his legacy would not be the management of his city’s decline.

Following his first Planning to Grow Akron report, Horrigan and council exempted property taxes for new residential construction for 15 years. Developers pounced on tax breaks, which couldn’t be more aggressively structured under Ohio law.

Before Horrigan took office, Akron was averaging fewer than 20 new home permits a year. There are now 1,800 housing units being planned, under construction or completed.

Except for Stoney Pointe Commons transitional units for the homeless population, Habitat for Humanity’s single-family subsidized units clustered in Kenmore and hundreds of high-end downtown apartments, developers are primarily chasing tax breaks in Akron’s Ward 8, an already stable housing market in northwest Akron with the city’s highest median incomes and home values.

The average price of a new home in the abatement program is $300,000.

“It was accurately anticipated that vacant parcels in the portions of the city with higher property values would be in high demand,” the city’s report stated.

Tax breaks will remain

The tax breaks are a tradeoff. Schools and other publicly funded agencies wait 16 years before collecting taxes on home construction that might otherwise not have happened. The program has grown exponentially since introduced in 2017. The $1.8 million in new residential construction seeking abatement that year about doubled in 2018 and again in 2019 before tripling in 2020 to $33.6 million.

The Homes on Hickory are a standing testament to the program’s success in Akron.

For the decade after the Great Recession, developers couldn’t sell a single one of these lots despite their scenic location in the Merriman Valley, proximity to downtown, location in the city’s highest performing elementary school, fresh sidewalks, curbs and lighting or new sewer and power lines ready to plug into new homes.

After four years of abatements that can knock up to a third of the price and length of a mortgage, these 54 single-family units and town homes are now sold out.

The Planning to grow Akron 2.0 report calls for better marketing of the abatement. But officials said it's too early to talk about restricting the tax breaks to areas still overlooked by developers.

"In our opinion, we are nowhere close to a place where we can claim victory in certain parts of our city when it comes to housing development," said James Hardy, director of the Office of Integrated Development.

Reach reporter Doug Livingston at dlivingston@thebeaconjournal.com or 330-996-3792.