Ohio’s plan to use $60 million in federal foreclosure-crisis money to tear down vacant or abandoned homes was approved Thursday by the U.S. Department of Treasury.
U.S. Sen. Sherrod Brown (D., Ohio) called the decision “a critical step forward in rebuilding neighborhoods devastated by the housing crisis,” while U.S. Rep. Marcy Kaptur (D., Toledo) said it “will help alleviate the demolition bottleneck.”
The Ohio Housing Finance Agency, which had $375 million of $570 million it received in 2010 under the Obama Administration’s Hardest Hit Fund program, intends to make demolition funds available in 16 counties with established land banks.
Lucas County is one of them.
A staffer for U.S. Sen. Rob Portman (R., Ohio) issued a statement which said Mr. Portman also welcomes the agreement, but “wants to ensure in this period of constrained budgets that every penny is used wisely and that dollars are stretched as far as they can go.”
The Obama Administration put forward the Hardest Hit Fund program to help provide mortgage-payment relief to homeowners threatened by foreclosure.
Foreclosures had been on the rise in many parts of the country for years. But the crisis became more acute after the Wall Street collapse of 2008, when real estate investments plummeted at a time many homeowners were out of work.
Officials said the demolitions will help stabilize Ohio neighborhoods. Demolition costs are expected to average $12,000 per property. The decision means about 5,000 more blighted homes can be torn down statewide, officials said.
Ohio has about 100,000 homes that need to come down, Mr. Brown said in a letter to Treasury Secretary Jacob Lew.
About 3,000 are in Toledo.
In a report to Congress, the Government Accountability Office said vacant properties can reduce the value of nearby homes by as much as 10 percent.
Earlier this year Ohio received $93 million as part of a nationwide legal settlement with mortgage companies over the “robo-signing” of foreclosures that helped trigger the 2008 crisis. Attorney General Mike DeWine dedicated $75 million to housing demolition, of which $3.7 million was earmarked for Toledo. That amount was matched by $3.2 million from the county land bank and $400,000 from Toledo. The plan is to raze 900 homes in 18 months.
Normally, the city struggles to demolish 300 vacant homes a year.