Recently, GOPC partnered with the Lincoln Institute of Land Policy to report on equitable development interventions that can be used to improve equity outcomes within the context of weak real estate markets found in legacy cities within the United States. The equitable development strategies we profiled attempt to make safe, secure, and affordable housing attainable for residents of color and low-income residents through increased production, maximizing benefits associated with affordable housing, or capitalizing on market opportunities.
As part of that report, GOPC identified examples of equitable development not only in Ohio, but around the United States. Below is one of the case studies identified in the report. This example is from Cleveland.
Tremont West Development Corporation (TWDC), a nonprofit neighborhood community development corporation (CDC) in Cleveland, has modified the linkage fee tool, a flexible tool at the disposal of local governments and nongovernmental community partners which attempt to link the production of affordable housing to new development, to take advantage of favorable hyper-local market strength and their access to land to push developers for more affordable housing production in a high-opportunity Cleveland neighborhood.
Responding to growth in market rate construction in the 2010s, TWDC and a second CDC, Ohio City Inc., commissioned a white paper to find ways to increase the production of missing middle housing in ways that fostered economic diversity, inclusivity, and sustainability in the high-opportunity neighborhoods they represent. The study found that the City of Cleveland’s housing market, one of the hardest hit markets during the 2008 financial crisis, was showing only modest signs of recovery a decade later. The same study found the highest sales prices in the city concentrated in a few downtown neighborhoods, including Ohio City and Tremont.
The white paper concluded that both neighborhoods had strong markets, relative to other Cleveland neighborhoods and could support such a program. Additionally, the CDCs recognized that the federal Opportunity Zones program also created favorable investment conditions.
Informed by the white paper’s findings, TWDC engaged the City of Cleveland in discussions around how they could partner to create workforce housing intended for households earning 50 percent to 120 percent of area median income (AMI). The documentation of market strength in the white paper helped the CDC persuade officials that land held by the city landbank within the neighborhood was a key tool that could be further leveraged to achieve these goals.
Since 2017, the City has allowed TWDC to pursue affordability agreements with developers looking to purchase city land bank-owned lots within the neighborhood. The CDC is responsible for enforcing affordability agreements, and the City retains the right, through City Council or Mayoral administration, to approve the release of publicly owned property as they see fit. As further incentive, the city land bank parcels are offered to developers at below-market rate prices. The CDC program also includes a guide for calculating unit requirements depending on the intended scale and type of a proposed development. Additionally, TWDC has strong working relationships with many of the area developers working in the neighborhood, which allows TWDC to negotiate effective agreements in a desirable market.
CDC staff uses the parameters established in concert with the city to begin negotiations from a predictable starting point, already calculating the affordable dwelling unit production requirements based on the scale of a new project. A developer will then adjust designs to meet the affordable unit requirements, and an individualized agreement is set. In one instance, a developer planned to construct a building with ten residential units on one site while demolishing a structure with two units on a separate site. Recognizing the value of preserving existing, inhabited units, TWDC negotiated that the developer could fulfill their affordability requirement by transferring ownership of the two units to the CDC and build the remaining ten new market rate units without further adjustments.
Flexibility in TWDC’s negotiation process captures a return on investment for the community while protecting the market strength and the viability of each project. These agreements are unique to existing production match tools, like linkage/impact fees, because they do not have an in-lieu or pay out alternative to producing on-site affordable units, a deliberate effort by the CDC to ensure and preserve the presence of affordably-priced housing in a high-opportunity neighborhood.