Key Facts
Location: Zanesville, Ohio
Partners: City of Zanesville, Zanesville Community Improvement Corporation
Summary
The Zanesville Community Improvement Corporation (CIC) is overseen by an independent board consisting of city officials and members of the public as the city’s nonprofit development arm. The CIC has piloted a residential renovation program, seeded with city demolition funds, that is self-sustaining, cost-effective, and adaptable. Rehabilitating tax-foreclosed homes has allowed the city to preserve its housing stock and revitalize its inner-city neighborhoods.
Context
In 2019, the city of Zanesville and Muskingum County, along with their local Port Authority and Chamber of Commerce, conducted a housing study, which indicated that Zanesville had a housing deficit of approximately 300 units across all price points.
That study became their first step in establishing a number of housing initiatives, including the rehabilitation of long-vacant homes that have been tax foreclosed. Restoring properties that are still repairable will bring those homes back into the city’s tax base, while also addressing the needs and concerns of residents in blighted neighborhoods. The City’s CIC was tasked with running the rehabilitation program. The CIC uses a variety of methods to seek out properties, including finding houses with back taxes or delinquent utility bills because these are good indicators that a property is unoccupied. Several properties have been donated to the CIC by property owners who are unable to maintain their properties, all of which have been rapidly deteriorating.
Financing and Other Supports for Success
The city has been proactive in assistance, adjusting zoning codes in favor of development, awarding the Zanesville CIC with approximately $300,000 of American Rescue Plan Act (ARPA) funding in 2023, and transferring 28 city-owned homes and 40 vacant lots to the CIC.
Historically, the City was spending approximately $100,000 per year from its general fund on emergency and planned demolitions. Using a comparable amount of would-be demolition funds through ARPA to instead seed this pilot, the Zanesville CIC has successfully rehabilitated five homes and sold them. The CIC has recouped the City’s initial investment through successful sales.
Additional houses are currently undergoing rehab or are being considered for future rehabilitation.
Program Specifics
Using demolition dollars to rehabilitate tax-foreclosed homes, the Zanesville CIC has begun to increase homeownership within the city. This program stipulates that homes refurbished by the CIC must be sold to an owner-occupant, who then must sign an agreement to not sell the home for at least five years, unless selling to another owner-occupant. There are no income restrictions on the buyers, although they have tended to be moderate income to this point.
Initially the properties are cleaned by the city’s weed and litter control crew. Then major internal repair work is done by a local contractor. This strategy is part of the city and CIC’s commitment to use local contractors. Additionally, the CIC has put roofs on a number of properties to help preserve them for future rehab. While a major expense, investing in roofs will save money in the long term by slowing future deterioration, if not pausing it entirely.
The projects that do receive internal rehabs are then put up to bid and sold at market rate, allowing the CIC to sustain the program through reinvestment. Using the profits of the previous sale means that the city has not had to provide additional financial support for the program beyond its initial investment.
On average, renovating a single-family home costs the CIC $75,000, and they are then able to sell it at approximately $130,000. They don’t seek the largest profit margin, but net profit is necessary to continue the program. An investment of $150,000 can fund the rehabilitation of at least one, if not two homes.
A home on Abington Avenue before and after the Zanesville CIC refurbished it. – Credit: Chris Crook, Zanesville CIC
Strategic Benefits
One of the advantages of this model of rehabilitating properties is that there is a great deal of flexibility regarding the sale of the property, as CICs are not subject to the same public bid process as municipalities. This means that CICs are able to tap into more conventional marketing strategies.
This approach has provided increased tax revenue thanks to vacant lots coming back “online”. Not only that, the CIC is also exempt from capital gains tax, meaning there is no financial penalty on the property sales.
Lastly, the program can be scaled up utilizing port authorities, community development corporations (CDCs), and land banks. Acquiring tax-foreclosed properties before they deteriorate beyond repair also helps stabilize the neighborhood, and an active public sector can encourage private investment and further improve market conditions.
Overcoming Challenges
In addition to this model’s advantages, there are several challenges to take into consideration as well.
Firstly, there are staffing concerns. To effectively run this model, the city needed a dedicated staffer to coordinate between contractors, realtors, and public engagement efforts. To ensure the success of the program, the city of Zanesville hired a new Redevelopment Administrator. Although a position within the city’s Community Development Department, the redevelopment administrator is responsible for the CIC’s day to day operation, including acquiring properties and supervising cleanouts.
Secondly, acquiring properties through strategic tax foreclosure is not ideal, because the properties will then go through Sherriff’s Sale. If there is a property with substantial taxes, then it will be routed through the landbank, otherwise the CIC will pay the tax directly.
Additionally, the redevelopment administrator is also responsible for the city’s blight program, which is another route the CIC can acquire properties through. If the property owner is not responsive to the request to donate the property, then the Planning Commission will determine if the property is blighted enough to begin eminent domain proceedings.
However, the eminent domain process can be time-intensive and have extensive requirements for prior documentation of blight conditions. In order to address this issue, the city has developed a formal process to declare a property blighted, streamlining the acquisition proceedings for the CIC. Establishing agreements with land banks or utilizing fee simple acquisitions can also expedite the process and eliminate barriers.
The CIC has avoided using the eminent domain process to acquire properties whenever possible. Their goal is not to acquire properties, but rather to make sure that blighted properties are being properly dealt with by their owners. In the few instances where the CIC has utilized the process, the properties were fully rehabilitated, sold by the property owners, and are now occupied after being abandoned for five or more years.
Time is Money
Overall, the most critical element of success in implementing a rehabilitation program is proactivity. Properties become more costly to rehabilitate the longer they remain vacant. Establishing contact with owners, when possible, and acquiring the properties before the blight is irreparable can make a significant difference in the overall cost of a project. Early acquisition has been a huge factor in keeping costs low for the Zanesville CIC. Preemptive adjustments to zoning and streamlining policies keeps project timelines from dragging and further lowers costs.
More Information
Community Improvement Corporation | Zanesville, OH
Improvements to Zanesville's housing stock one key to future growth
City looking to sell parcels of unused land
And a big thank you to Chris Crook for his help in developing this Good Ideas entry.