The Equity Factor

Renters Are Getting a Stake in Cleveland Real Estate

Franchising an equity program born in Cincinnati.

(Photo by Rob Sinclair)

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Cincinnati’s unique experiment in renter equity, which gives apartment-dwellers a stake in the property system, is franchising to other cities. First stop: Cleveland.

In Cincinnati’s Over-the-Rhine neighborhood, the nonprofit Cornerstone Corporation for Shared Equity has been offering a renter equity program for years. Residents fulfill commitments in their lease agreement: work assignments on the property, making timely rent payments, following house rules and participating in tenant meetings. In return, they earn financial credits that they can exchange for cash after five years. The fund is replenished by savings owed to low turnover and high occupancy rates. Renters can earn up to $10,000 over 10 years. They can continue earning credits after they begin withdrawing.

It’s a simple system with big results. Long-term residents maintain the property well. Renters build equity in the place they live in, akin to homeowners, which eases their financial insecurity. And the city signals that renters, too, have a stake in the civic landscape; they aren’t just placeholders until “permanent residents” can be found.

Now Cleveland has picked up the model. The Northeast Shores Development Corporation is a CDC in the North Shore Collinwood neighborhood. Since 1994, it has worked to help both residents and retailers own their property and build roots in the community. Brian Friedman, NSDC’s executive director, says that the neighborhood has “the fifth- or sixth-most apartment spaces citywide,” and most of the rental housing is not particularly family-friendly. It is cost-prohibitive to convert many of the neighborhood’s low-demand apartments into condominiums, but NSDC didn’t want to be in the rental business either. It cuts against its ethic of facilitating ownership.

“We literally stumbled on the rental equity model” in Cincinnati, Friedman says. “It was the sheer dumb luck of a bus tour at a conference [two years ago], and it was blatantly obvious that that was the missing piece.”

So, Friedman and the NSDC team became the first licensee of the rental equity model. The project was jumpstarted with $350,000 from the City of Cleveland’s Housing Trust Fund and additional support from the Kresge Foundation and a property mortgage with a financial institution dedicated to community development. NSDC leaders traveled to Cincinnati for official training, and slowly moved through the process of hammering out agreements — always with an eye for how they were creating a model that could be replicated by other licensed cities nationwide. This is part of a larger strategy from Cincinnati’s renter equity team. The nonprofit Renting Partnerships was formed in 2012 by Cornerstone’s former management team with the hopes of scaling up the program.

Friedman pointed out that while both Collinwood and Over-the-Rhine are urban neighborhoods, they are quite different from each other — and that, he says, is part of the “grand experiment” here. Is the model agile enough to fit the unique needs of different communities?

The Cleveland version does indeed have a few twists. While it is transferring some of its existing units to the exchange systems, as current residents leave and new ones come in, NSDC also developed a new project tailored to artists. The Glencove Building has been vacant since 2005, but NSDC is rehabilitating it as a live-and-work space for six artists. Rent is $700 per month for a two-bedroom unit and on-site gallery space. With the renter equity model built in, tenants can withdraw up to $4,136 in cash from their accumulated credits after five years. The focus on artists fits with the larger initiative to energize Collinwood’s Waterloo Arts and Entertainment District as a regional destination.

The program officially launched on June 11th, and August was the first month that an equity statement was sent out, accounting for earned credits. The first tenant in the program was Christian Mickovic, a painter and multimedia artist who is a Cleveland native, but new to North Collinwood.

“I’m here because I believe in the city, and it really is an exciting place to be right now,” Mickovic told the NSDC team. “I see great work happening across multiple generations and multiple disciplines. We’ve got a great group of young painters here in particular that I’m excited about.”

Eventually, 16 local units will be on the renter equity model.

“It’s going very well,” says Camille Maxwell, NSDC’s assistant director, about the early days of the program. “The tenants are very excited about being involved in their community, to be physically involved in making sure that their community is strong.”

Maxwell’s also noticed that the program also cuts against the tendency for renters to be isolated from one another in their separate units; it creates a shared network that builds a sense of friendliness in a common home. That’s what’s happening in Over-the-Rhine, as well. A 2013 report from the Ohio Housing Finance Agency, which examined the impact of renter equity in Cincinnati, found that tenants rated “community atmosphere” as the highest benefit of the program.

Another change in Cleveland: NSDC gave its existing property manager a new job title. She’s now the community assets manager. Because rather than simply watching over property in Collinwood, her role now is to look beyond the physical structures and connect community residents with neighborhood assets — not temporarily, but for keeps.

The Equity Factor is made possible with the support of the Surdna Foundation.

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Anna Clark is a journalist in Detroit. Her writing has appeared in Elle Magazine, the New York Times, Politico, the Columbia Journalism Review, Next City and other publications. Anna edited A Detroit Anthology, a Michigan Notable Book. She has been a Fulbright fellow in Nairobi, Kenya and a Knight-Wallace journalism fellow at the University of Michigan. She is also the author of THE POISONED CITY: Flint’s Water and the American Urban Tragedy, published by Metropolitan Books in 2018.

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Tags: affordable housingincome inequalitycleveland

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