It sounded like — and still is — a good idea: Hire nonprofit community development groups in Toledo to build and renovate hundreds of single-family homes for poor households.
To raise money for construction, give these groups federal tax credits that they can sell at a discount to banks and big insurers seeking to cut their tax bills. In the process, place needy families in safe and affordable housing, train them in home ownership and maintenance, stabilize city neighborhoods, create jobs, and attract investment.
The problem lay less in conception than in execution: Some of the Toledo groups hired to build the houses were fully competent, and their projects have succeeded. But too many other groups received their contracts primarily because of political connections, and their shoddy work got scant oversight from government regulators or the buyers and brokers of the tax credits.
In a special report this summer, The Blade examined 819 houses built by the tax-credit program in Toledo over the past 15 years. They cost taxpayers $114 million — nearly $140,000 apiece.
More than one-sixth of the homes were vacant: burned out, boarded up, stripped. Tenants in other mismanaged projects complained of slow repairs and neglect by the groups responsible for them.
Six of the program’s 21 projects had vacancy rates of 25 percent or higher. More than 50 homes in the Warren Sherman Flats tax-credit project face foreclosure.
As a result of The Blade’s series, the Ohio Housing Finance Authority — which runs the tax-credit program in the state — vowed to improve its oversight and step up inspections of the homes.
Now an Ohio corporation that syndicates tax-credit projects seeks to persuade the Lucas Metropolitan Housing Authority to acquire 83 homes in three central-city developments. Corporation officials argue that few of these houses are vacant and that they are prepared to invest in renovating the homes. They claim that the tax-credit projects that include the houses are relatively stable and can fulfill their original mission with competent management.
Authority officials are responding with appropriate caution. They argue, correctly, that the authority should not be expected to assume the costs of previous developers’ mismanagement.
Toledo should not withdraw from the tax-credit program, which has demonstrated success. City officials properly are seeking new owners and managers for several of the most troubled projects.
But all of the tax-credit projects, and the Toledo program in general, require greater oversight and accountability — not only from the city but also from state government, the credit buyers and brokers, and the Internal Revenue Service and U.S. Treasury Department, which run the tax-credit program. The emphasis must remain on proven performance, not political clout.