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Published: Sunday, 7/1/2012 - Updated: 2 years ago

Editorial

Bleak house

Here are two models for building and maintaining single-family homes for poor households in Toledo:

● Hire nonprofit community development groups that display more political clout than administrative competence. Pay them fat fees to manage home-construction projects funded by generous taxpayer subsidies, although they often farm out that work. Give the projects scant oversight by state, local, or federal regulators, or by privately owned banks and insurance companies that get big tax credits for participating in the program.

● Hire community organizations that have long track records of sound property management, careful screening of potential occupants, and painstaking education of these tenants in the basics of home upkeep.

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Guess which model works better.

A Blade special report, "Renewal to Blight," looked at 819 houses that were built or renovated for low-income Toledo families in the past 15 years. Those houses cost American taxpayers $114 million -- nearly $140,000 a home.

Most of these subsidies were in the form of federal tax credits awarded to the homes' developers. The developers raised money to build the houses by selling the credits at a discount, via brokers, to large companies looking to cut their tax bills.

More than one-sixth of the Toledo houses are empty, the newspaper's investigation found; of these, most are burned out, boarded up, or stripped. They drag down the community, encourage crime and vandalism, and require city taxpayers to bear costs that the developers have walked away from.

Other homes funded by the program are fulfilling its goals: placing disadvantaged Toledoans in safe, modern, and affordable housing, preparing these renters for home ownership, and improving neighborhoods, creating jobs, and stimulating investment. It isn't hard to tell what makes the difference, whether the local economy is good or bad.

Tenants and neighbors afflicted by the vacant and blighted homes, as well as local housing activists, blame poor management -- financial and physical -- by several of the development groups. They cite slow (if any) repairs of the occupied homes, failure to maintain the empty ones, and a lack of interest by the developers in reviewing their performance or working to serve tenants better.

Yet several of these poorly performing groups have continued to get various grants approved by Toledo City Council. The Blade's report suggests that the private companies that buy the tax credits, and the brokers that handle the sales, largely disclaim responsibility for ensuring that the houses built by the program remain occupied and livable.

The Ohio Housing Finance Agency, which administers the tax credit program, is charged with inspecting houses in the program every three years, but sometimes takes twice as long. Agency officials call Toledo's problems with the program "an unfortunate exception." Even if that's true, that doesn't mitigate the agency's lack of oversight here.

And if Toledo is any example, the Internal Revenue Service and U.S. Treasury Department, which oversee the tax-credit program, need to take a greater interest in how it is operating. That includes clawing back more of the tax credits linked to vacant or badly maintained houses.

There should be greater incentives for developers that work well. United North operates five tax-credit projects in North Toledo that have a collective vacancy rate of 2 percent, compared with nearly 40 percent for projects run by Warren Sherman Area Council and Organized Neighbors Yielding Excellence (ONYX).

United North and other successful groups say they stress the fundamentals: hands-on management, tenant screening, instruction in home repair and financial literacy, and close contact with tenants to gauge their satisfaction. Again, it isn't that complicated.

To its credit, the city is seeking new owners and managers for several of the most troubled projects. The problems identified by The Blade do not justify the city's withdrawal from the tax-credit program, because Toledo's experience shows it can work well.

But there must be much tougher public accountability for each project and the program generally. This is more likely to occur if the focus is on developers' performance, not their political influence.



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