Wednesday, April 9, 2008

Dayton Vacancy Crisis II: Funding Demolitions

The ReBuild Ohio report is quite detailed in terms of numbers associated with Dayton’s demolition program. And it does say the city plans on stepping up demolitions to 300/year. Based on that rate the backlog of board-ups as of 2007 will be reduced in about five years.

But were will the money come from?

Here is a proposal to pay for the increased demolitions via an ED/GE earmark. Or,in other words, yer humble host takes an excursion into amateur policy wonkery.

The ED/GE fund is a countywide fund comprised of contributions by local governments and is split into an economic development and revenue sharing sub-funds. The economic development part of the fund is used to pay for various one-time capital investments (infrastructure, etc); it would be this part of the fund that should be used for demolitions, as demolition has the flavor of capital investment, but in reverse.

The following diagram looks at the housing market in a very general sense as a filtering process, where people move to newer and larger housing, from city to suburb, and suburb to suburb. The top of the filtering process is new housing in outer suburbs, while the bottom are vacant units, usually in the city, which eventually get boarded up and demolished.

The fiscal result of the process is that newer suburbs have increased revenue, older suburbs have stable revenue, and the city has declining revenue, thus less fiscal resource to pay for demolitions.

So if all the suburbs plus the city contribute to the ED/GE pool, it could be used to correct a countywide market that results in growth in some places but fails to remove inventory in others, via a commitment to a slice of the ED/GE fund to remove inventory and permit property recycling.

How was demolition paid for in the past, what about abandoned property owners paying for demolitions, and how much do demolitions cost?

Using rounded 2006 numbers, here is how the city paid for demolitions, via a Federal community development block grant (CDBG) and out of the general fund. About 18.1% of the demolition costs were recouped from property owners, so the city does try to get reimbursed.

The net result was that the demolition program cost about $753.5K in 2006

Sizing an ED/GE Property Recycling Fund

At 134 demolitions that year, this translates, on average to $5,723/demolition as a unit cost.

Using this $5.2K unit cost, and applying the goal of 300 demolitions per year, results in $1.7M per year needed for the next five years to clear the backlog of boarded-up properties

Subtracting the 2006 funding (assuming the CDBG continues and the city continues to kick in general fund dollars) leaves a shortfall. Taking the city/Fed split, and applying this to the shortfall would result in about $277,400 of additional general fund contribution.

The balance, $679,100, would need to come from somewhere else, and given the cash-strapped Feds won’t have the dollars, and the right wing Ohio legislature won’t act, this would have to be sourced locally.

The proposal is that this number be the basis of an ED/GE property recycling sub-fund. However, since ED/GE is to be revenue sharing, an ED/GE sub-fund for property recycling would need to include money for the suburbs. Since the need may be less, add $100K to the sub-fund.

Here is what the program would look like. The red shaded area would be the ED sub-fund, and the black line would be the Dayton demo program.

There seems to be a $2M topline for the ED sub- fund. Out of that around 38% would be earmarked for property recycling, the bulk allocated to Dayton’s demo program. After five the bow wave of Dayton demolitions would subside and the allocation could be revisited or eliminated.

As one can see, the city, via the general fund and the Federal CDBG, would still be contributing the majority of funds to the demolition program. The $100K seems small, but it could address 14 spot removal per year in the suburbs, assuming they don’t have the board-up problem Dayton has, or it contribute to things like shopping center removal.

It seems like a paltry amount, but taking around 30% of the ED fund just for one city and for one program, over the course of five years would probably be politically unworkable.

Yet, the concept of a countywide fund would mean the issue of abandonment and obsolescence be addressed countywide as it’s a countywide, or really metropolitan-wide housing filtering process that has failed at recycling property at the bottom of the market.


Anonymous said...

I've toyed with the idea of mandating a impact fee of paying for a demo in exchange for being able to add inventory until we have population growth.
Would be very unpopular with the HBA etc- but, might be the only way to stop total overbuilding.
I don't know where you get the time to do all the research and posting Jeffrey.

Jefferey said...

I vaguely recall impact fees being an issue in Beavercreek, but not sure what happened there.

As for time, I am finding this blog stuff is filling up my spare time, and it's starting to be overkill. Maybe one or two solid posts a week rather than a weeks worth of filler.

Anonymous said...

There is more good Dayton-oriented, local issue content in a week on this blog than there is in a year of the Dayton Daily News. I seriously wish some major news medium -- tv, print, radio, I don't care -- would cover even a tenth of the issues Jeffrey covers.

Greg Hunter said...

anonymous - Well said and it would be wonderful if the major news outlets challenged Daytonians to know this history.

I wonder if we could arrange to give away groups of homes to non profit organizations or groups that could rehab a whole community. It would be great to have some regulated yet free form rehabilitation with some degree of ethnic or family compound. Why tear them all down, maybe tear down some and re arrange the zoning to allow alternative use.

Admin said...

Jeffrey, I know what you mean about this consuming all your time. But if the passion is there please feel free to continue, I truley enjoy your nearly daily (and sometimes 2 a day) posts, it keeps us thinking. I feature a web site each week in my Totally Trotwood email news and Daytonology is getting the nod this Friday. I some of my 1,500 readers will come check this site out.

kevin said...

FWIW: My wife has taken role of Street Captains in South Park. We try to zero in on the absentee landlords and make their life hell. We know who the housing inspector is and keep his mailbox full of violations. We will force them to sell and we'll rehab. Historic preservations have their value. We also can get people pumped about community and making a difference. We have great neighbors here. Great neighbors with great friends that love to know what's going on down here. They want to hear good news.

Check out

Cheers, Jeff.