Cleveland Launches Pilot Program To Combat 'Appraisal Gap'
The City of Cleveland is launching a pilot program to boost homebuilding in the city’s neglected neighborhoods, and the new program passed city council Monday despite some strong criticism.
A million dollars will be taken from the city’s general fund and used to close the gap between the cost of building a new house or rehabbing a vacant one and the often lower appraised value of that house at sale. It’s meant to make it worthwhile for a developer or house flipper to invest in neighborhoods where home prices haven’t rebounded.
But the program as introduced to council isn’t limited to particular neighborhoods. It doesn’t put a cap on the income for eligible participants. And it was introduced and voted on at Monday’s council meeting, without going through the normal committee process.
Councilman Matt Zone was one of two councilmembers to vote no.
“First of all we haven’t even had a hearing on this. Then an amendment was made at the table today to include new construction. Now you’re asking let’s just approve it and put a million dollars over on the side and come up with standards later," said Zone during Monday's hearing.
Supporters of the program argued that it won’t be used for higher priced homes. The money available to each participant is $30,000. And it’s rushed vote was meant to make the program available in time for this year’s building season.