CLEVELAND, Ohio – Cleveland could be setting aside $4.5 million to build 50 new houses in the city.
The money, which comes from the city’s allotment of American Rescue Plan Act dollars, would go to Greater Cleveland Habitat for Humanity. Legislation allocating the money passed the Development, Planning and Sustainability Committee during a Tuesday meeting.
The goal of the program is to build 50 new homes in Wards 2, 4, 8, 11 and 15, though it is unclear how many homes will be built in each ward. Wards 2, 4 and 8 are southeast of downtown, while wards 11 and 15 are west of downtown.
From the city’s perspective, that translates to $90,000 in ARPA money per home. It’s a substantial chunk of the roughly $260,000 it costs the nonprofit to build a new home, Greater Cleveland Habitat for Humanity CEO John Litten said during a Tuesday committee meeting.
The ARPA dollars, if approved, will help fund Habitat for Humanity’s larger goal of building or rehabilitating 400 homes from 2023 to 2027, according to a presentation given during the committee meeting.
Cleveland’s potential financial support would also help Habitat approach its $33 million funding goal for building 400 Cleveland homes in the next four years.
“This is a huge leverage point” for the nonprofit to seek funding from other sources, Litten said, adding he was “pretty confident” Habitat for Humanity can reach that goal of raising an additional $6.6 million.
Habitat for Humanity serves people who make between 30% to 80% of the area median income and sets them up on zero-interest mortgages that do not exceed 30% of their income. Homes are sold at the appraised value set by an independent appraiser, Litten said. In return for the home, recipients are required to volunteer 200 hours of their time and stay current on payments.
The legislation also sets aside $500,000 to help Habitat for Humanity purchase a piece of property at 2110 W. 110th Street in Cleveland. That is currently the home of the nonprofit’s ReStore, which sells home supplies at a discounted rate.
That property is home to an old industrial site once owned by West Virginia Pulp & Paper Co, then by Weyerhaeuser Company. Today, that property is owned by Cleveland Shades, LLC, which has received several permits for improvement since buying the property in 2003, according to county property records.
A different approach
While councilmembers commended, and six have already sponsored, the legislation, many also voiced support for a more cost-effective way to increase the city’s housing stock.
One possible solution that received support from Councilmembers Mike Polensek, Stephanie Howse and Kris Harsh was either funding or incentivizing pre-built homes.
Many cited the lower cost of manufactured or modular homes as a way to make the city’s investment go further. Manufactured homes, which are fully built in a factory, tend to be cheaper than traditionally built homes, according to personal finance company SoFi.
Modular homes are similar to manufactured homes, but not the same. Significant portions of a modular home are built in a factory, but still need some on-site assembly. Modular homes are also typically cheaper than traditional homes, according to Rocket Mortgage.
The relatively low cost of homes was a selling point for Polensek and Howse, both of whom said many residents in their wards wouldn’t be able to afford a newly built traditional home.
“There might be areas of the city, where $300,000, $400,000 houses can be built and sold. That’s not going to happen in Ward 8, unless it’s on the lake, and I don’t have lots on the lake,” Polensek said. “What I need is affordable housing.”
However, a combination of city ordinances and administrative hurdles make it difficult for developers to install and improve manufactured homes in Cleveland, said Harsh, who holds a real estate license.
What’s more, manufactured homes such as the traditional trailer homes are considered private property, not real property, Harsh said. From a tax perspective, that means trailer homes are treated the same way as a new car in someone’s driveway, Harsh said.
“The only thing stopping us is a will, because we can make affordable housing available in Cleveland,” Harsh said.
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