Bruce blog Q&A with Tom Bier

We had 7,000 new housing starts in Greater Cleveland versus 1,500 in the city of Cleveland last year. How many of those 5,500 new housing starts outside of the city were located in proximity to other cities or established metropolitan areas such as inner-ring suburbs versus built on new greenfields?

A vast majority, probably 90 percent, are built on land that has never been built on before. Not many are built in inner-ring suburbs, probably not more than a couple of hundred per year.
Most of them are going to be in cities. But, Avon is a city. So is North Ridgeville.

They are in incorporated areas because that’s where the sewers are. If they’re in unincorporated areas, like Geauga, they probably have minimum five-acre lots with septic tanks. When you do the totals, about two-thirds of the housing is located in cities, but that includes Avon or Brunswick.

How does it affect Cleveland’s economic picture if people living in Cleveland’s suburbs move to these new housing developments?

Cleveland’s new housing serves to offset the losses for people moving out. Moving out is common and that’s not going to change. They’re moving out of suburbs too. Virtually every one (household) that goes out there’s another that comes in—that’s not the case in Cleveland.

There’s more money leaving Cuyahoga County than going in. Geauga County today is the second wealthiest county in Ohio. It wasn’t that way twenty years ago. Some still use Cleveland as employment center, sure, but it’s a loss to Cuyahoga.

How much of a factor is new housing starts on figuring out the regional economic picture?

The issue is where new housing is located. We’re always going to have 7,000 (new annual) houses. It’s about how it affects the tax base. The fact that Shaker can do almost no building means they can’t grow their tax base. Geauga County is growing its tax base. Cleveland, with its new construction, is offsetting its (property) tax base.

This is a definable process of change, and the place that’s farthest along in change is the city. But older suburbs in time can find themselves in the same situation.

How much housing redevelopment took place in the city and is that factored in to new wealth being created in the city?

The big thing that affects the city’s tax base is income tax. Property tax affects the schools. If Cleveland does not recycle its real estate, it can’t grow its property tax. Even though it's tax abated, the schools still get more from new home then a vacant lot, and by the time tax abatement is over they’ll gain more.

The biggest change in Cleveland’s economic picture is income tax. The reason Pittsburgh is trouble is because they only charge income tax to those who live in the city. Of course, then, people are going to move out. Every time the Cleveland Clinic builds a new facility, it gets more workers paying their 2 percent income tax. If you think you have a sick city now, imagine what Cleveland would be like if it didn’t have its income tax base.

How does the state’s policies work against more infill housing development in the city and what are some incentives that work to bring more balance to this question of sprawl versus infill development?

What works against the city is the state policy that in Cleveland we need redevelopment and buildings need redevelopment and the state’s policy says, that’s your problem Cleveland. The State of Ohio has no responsibility for the city’s problems and the county has no responsibility for the city’s problem. So Cleveland is left on its own, and it’s a heck of a difficult job to recycle places when they’ve been built.

What can the city of Cleveland do?

The people who leave Cleveland do it because they’re becoming successful. They’re selling their $90,000 Cleveland home and can afford a $175,000 home in Avon—they’re not going to stop doing that.

For Cleveland, it’s a (housing) supply issue. A lot of people who have a one-car want a two-car garage. It hurts as long as Cleveland is not producing more and more of its own supply of housing.

But they’re up against difficulties of having to do it where there are no greenfields. Greenfields are so easy to build on. It comes down to where does the city get the money to cover the extra cost in redevelopment – right now its Cleveland’s responsibility.

Do we all subsidize sprawl?

The utility companies don’t lay all of the cost (for infrastructure) on the new home buyer. When East Ohio Gas runs pipes out there, those costs are spread across the entire system, and I think the electric companies do the same thing too.

How about the building of new roads and highways—same story?

The point about road is that highway interchanges don’t cost that much, something like $25 million, but they have an enormous impact because they open up so much land for development. The roads themselves don’t cost much. Besides, the city is making out too with the Innerbelt.

What do you think about solutions such as adopting a regional government to replace our central city-suburban ring structure— will that make ratios in housing starts less meaningful?

If you’re going to have a regional financing tool, it’s still not going to change the pattern of where houses are built. To me the issue is one where the city of Cleveland is stuck, and in another 50 to 100 years, Lakewood is stuck to contend with abandonment. So many homes will be decrepit and abandoned.

The state has to take an active role in redevelopment. It all comes down to money to pay for demolition and all of that. The state should say, look, Northeast Ohio, this is your problem; we give you the power to tax yourself as a region. Go ahead and do that.

How is the city going to work this issue out when the suburban communities are asking ‘what’s in it for us’?

You have to convince enough people that its possible. Look, Legacy Village exists because of the region, because of all the other suburbs around. The region created Legacy Village—they took advantage of the fact that the region created demand for it. The region is then entitled to some of tax that’s produced by it. Not all because Lyndhuyrst has to live with the problems like traffic. So, Lyndhurst gets half and the other half is used for old places that need redevelopment. I think there’s sufficient reason to consider this—but do you think the folks in Lyndhurst want to pay attention to this? The only basis on which to have that conversation is the county level—it’s the county that’s in trouble.