Ohio's largest county aims to fight foreclosures

COLUMBUS, Ohio (AP) -- Ohio's largest county is about to embark on an experiment in which government becomes the owner of foreclosed and abandoned properties, fixes them up and turns them back over to private owners.

The Ohio House on Wednesday voted 88-6 to enable Cuyahoga County, home to foreclosure-ravaged Cleveland, to create a locally financed land bank to improve a glut of decaying neighborhoods. The bill is now headed to the Senate, where it was expected to pass easily on Thursday.

Other large counties in Ohio with big urban areas - including Lucas, Hamilton and Montgomery - will closely watch the Cuyahoga land bank in the coming months, hoping they, too, will get the chance to gain another tool in the fight against foreclosures.

The ongoing foreclosure crisis is destroying many urban neighborhoods, especially in Cleveland, which the U.S. Census Bureau said was the second most impoverished big city in the country in 2007. Properties sit vacant, falling prey to thieves seeking valuable materials such as copper wiring. The decay depresses the home values of surrounding properties, making it difficult for anyone to sell a home. Entire blocks become blighted.

The land bank would be able to sweep up these properties by taking ownership of unreedemed tax foreclosed properties. Proponents say it will help counteract the growing, destructive practice of speculators buying up foreclosed properties - often sight unseen - and flipping them to a new buyer, without making improvements.

"It's not a solution to the economic crisis or the foreclosure crisis," said state Rep. Matt Dolan, a Republican from Novelty. "It's a tool that will help."

What Cuyahoga County will create is modeled after a similar program in Genesee County, Michigan. But it's never been done in Ohio, which has a different government structure and tax policies. Tax revenue would represent the bulk of local funding for the land banks.

Cuyahoga County Treasurer Jim Rokakis has been aggressively promoting the land bank idea, successfully lobbying state lawmakers to approve the program.

There was some initial skepticism about increasing government power and essentially turning counties into landlords with control over private property. But that skepticism subsided.

"Whenever meaningful reform is advanced, there are skeptics," said Lucas County Treasurer Wade Kapszukiewicz. "I'm convinced that it will work, and now we have that chance for Cuyahoga County to show it can work."

Cuyahoga expects to raise about $8 million to $9 million. Many counties are interested in having their own land banks, but it is only feasible for the largest of them because the funds must be raised locally.

"Certain counties will never have the funding stream," said state Sen. Tom Patton of Strongsville, a sponsor of the land bank bill.

Cuyahoga's land bank will be funded through interest and penalties paid on delinquent tax penalties, which aren't usually factored into county budgets. That revenue will be much smaller in other counties, which must explore ways to fund their own programs.

"We have a whole lot more homework to do," said Montgomery County Treasurer Carolyn Rice. "Without it we don't have many options to deal with the problem of abandoned and vacant properties."

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