In the fall of 1999, Tony Brancatelli and the Slavic Village Development Corporation turned to Cleveland’s Housing Court when it sued the owner of 11 severely neglected houses in its racially diverse, working-class neighborhood. The defendant unwittingly believed a television infomercial touting a method to amass a fortune in real estate with little or no money down. Instead of becoming wealthy, he ended up bankrupt and owning a concentration of open, vacant, and dilapidated structures.
The Court found these nuisance properties were not only harmful to the public, but also jeopardized the progress Slavic Village had made in stabilizing neighborhood home values and homeownership rates. Using Ohio’s receivership statute, the Court appointed the Slavic Village as receiver of the properties, making the CDC responsible for turning all 11 properties back into productive use. Slavic Village quickly secured the properties to keep out vandals, arsonists, drug dealers and curious neighborhood kids. Each was assessed for structural soundness. Those beyond repair were slated for demolition; those salvageable were set for rehabilitation.
Six years later, eight of the receivership properties are ready-to-build lots. Three houses have been rehabilitated and are now occupied. While the result is far from perfect, it’s far better than what would have occurred without such creative intervention.
Few cases before Cleveland’s Housing Court are as dramatic as the Slavic Village receivership. Yet this case confirms the optimistic hope for better outcomes held by community activists when Housing Court was envisioned over 25 years ago.
During the late 1970s, two young progressive legislators, City Councilman James Rokakis and State Senator Charles Butts, argued that a special jurisdiction court was needed in Cleveland to distinguish civil evictions and criminal housing code violations from the widely diverse general municipal court docket. They believed housing-related cases had a detrimental impact on Cleveland’s neighborhoods and that they required consideration beyond what was then received in the municipal courts. Neighborhood residents and their allies – public interest lawyers, equity planners and community development corporation directors – enthusiastically joined the successful campaign to convince other city and state officials that a housing court was needed. So in 1980 the creation of Cleveland Municipal Housing Court by Ohio’s General Assembly was viewed as both an important urban reform and a grassroots advocacy victory.
During its first year, the Housing Court, with a staff of four (one judge, magistrate, bailiff and court specialist), heard 599 criminal cases and 6,452 civil actions. Criminal cases involve code violations and civil cases are primarily landlord-tenant disputes. Twenty-five years later, the Housing Court (now with 45 employees and still one judge) processes over 4,200 criminal cases and nearly 12,000 civil actions each year.
The new Housing Court offered much greater consistency over its cases. The same judge presided throughout each matter. The more focused jurisdiction enabled the Judge, magistrates and other Housing Court officials to develop true expertise in applicable points of law. The Housing Court’s process for finding case-specific, effective resolutions gained public confidence and, therefore, increased use of the Court to settle disputes. Before creation of Housing Court, all housing related matters were handled on rotation by the 12 judges on the Municipal Court bench. In criminal matters, each segment of a case – arraignment, trial, sentencing and post-sentencing hearings – could be heard by a different judge. Each judge might bring a different approach to various stages of the same case. Landlord-tenant matters were also handled in a less than ideal manner; pre-Housing Court, they were sprinkled throughout the civil docket with small claims, consumer fraud, minor traffic accidents and a host of other legal matters.
Over the years, attorneys and court officials looked for innovative solutions that benefit both the parties before the Court and the community at large. In the early 1980s, for example, city attorneys urged the Court to use its injunctive powers to prevent heat shut-offs during the frigid Cleveland winter. Since the 1990s, CDCs have been appointed by the Court as receivers of abandoned properties (e.g., the Slavic Village receivership). This year, the Court will invoke its broad jurisdiction to resolve mortgage foreclosure cases involving properties already before the Court. Each novel approach to housing cases explored by the Court contributes to its growing caseload.
Caseload size also reflects the persistent poverty in Cleveland. The U.S. Census Bureau reports that in 1970 Cleveland’s poverty rate was at 17.3 percent, rose in 1980 to 22.1 percent, climbed yet higher by 1990 to 28.3 percent and declined slightly by 2000 to a still alarmingly high rate of 26.3 percent. According to a recent census analysis by the Brookings Institution profiling Cleveland, the city’s unemployment rate is the second highest among large U.S. cities, and median household income is the third lowest. Though Cleveland’s highly competent community development system has produced impressive housing unit increases along with a measurable rise in property values in many city neighborhoods, Brookings reports that, “with such low incomes, many of Cleveland’s families fail to benefit from the city’s relatively affordable rental and ownership opportunities.”
While caseload and staff size have changed dramatically over the years, some fundamental things about Housing Court remain the same. Since the beginning, there has been a genuine sensitivity, not only to each citizen appearing before it, but also to the impact the case may have on the surrounding neighborhood.
Each of the six Housing Court judges who have served in the last 25 years stressed the importance of code compliance over revenue collection when resolving cases. “This is much more than a court,” observes Brancatelli, executive director of Slavic Village. “This is a system that truly works…to make people accountable. It also finds every opportunity for a person to succeed with real estate rather than just punish people for failure.”
Jeff Ramsey, of the Detroit Shoreway Development Corporation, agrees. “This court’s purpose is not to punish – it’s about coming to a resolution that benefits the property owner and community together.”
Raymond Pianka currently serves as Cleveland’s Housing Court Judge. His tenure, which began in 1996, typifies the Court’s evolution from a grassroots reform into a community institution.
Like his predecessors, Judge Pianka strives for consistency and even-handedness in sentencing. He makes certain that tensions are balanced in each case. For example, sufficient time must be allotted for repairs but must not drag on indefinitely; fines must be high enough to encourage property owners to make repairs but not strain their finances to the breaking point.
Shortly after taking office, Pianka noticed a high number of indigent and elderly defendants appearing before him who were unable to maintain or repair their properties. In 1998 he established the Selective Intervention Program to assist such owners in correcting the conditions of their property. When such a case appears before the Court, participants are allowed to develop a compliance contract that specifies what repairs must be undertaken, identifies the method of financing and sets dates for completion. Once conditions of the contract are met, their cases are dismissed. If participants fail to comply, their cases are returned to the Court’s criminal docket.
The Mediation Program, a civil docket counterpart to the Selective Intervention Program, was established a few years later. Under this program, landlords and tenants in civil actions can attempt to resolve their dispute in the presence of a trained mediator, without a formal court hearing.
Cleveland’s Housing Court has occasionally employed alternative methods of sentencing, such as house arrest or requiring community service hours in lieu of fines, in cases where steep fines or jail time will not achieve a desired outcome. Sentencing consideration usually involves an assessment of neighborhood impact. Occasionally, Court is convened at the site in question so that the judge can better understand the impact on the community. It is not uncommon for other neighborhood property owners or neighborhood development representatives to testify in these cases.
The Court’s neighborhood outreach runs much deeper than the infrequent sessions away from the courthouse or the occasional admission of testimony from the community. The Court established the Neighborhood Code Enforcement Advocates Consortium to foster effective relationships between community organizations and the Court. Fifty citizens, most affiliated with Cleveland CDCs, currently serve on the Consortium as advocates. The group meets with the Judge and other Court officials on a quarterly basis to share ideas and to become familiar with the law and its procedures so that they can effectively meet housing challenges in their neighborhoods.
Katy Hough, a code enforcement/safety issues coordinator with the Tremont West Development Corporation, explains the responsibilities of the Consortium: “The work of code enforcement advocates is usually complaint driven. Situations come up at public meetings, through the block clubs or are called in to the councilman’s office. We follow the status of cases by calling the inspectors; we even sometimes monitor court proceedings. We often work to match a homeowner to city grant and loan programs.”
“Attendance depends on the speaker, but we usually get around 30 people to attend each meeting,” says Hough. “It’s a great way for the advocates to…do a better job. Last month we heard from Safeguard, a company hired by the banks to secure and maintain foreclosed properties. And before that, a representative from the Department on Aging discussed the growing phenomenon of hoarding, particularly among seniors, who compulsively collect and store things like newspapers and old cans – to the point that a nuisance is created.” Each meeting is at a different venue and topics range from the City’s exterior code enforcement inspections to operation of the Drug House Task Force to local issues with the Section 8 housing program.
The advocates have suggested subjects for special videotapes on housing and neighborhood topics that have been produced by the Court for broadcast on the local access cable television channel. These and other materials are made available at local libraries and community centers and on the Internet.
The Court’s approach to its cases and its openness to community input is not surprising given the background of its judge. Pianka grew up in Cleveland, spent a decade on Cleveland’s City Council and served as chair of its Community and Economic Development Committee. Before holding elective office, he was founding executive director of the Detroit Shoreway Development Corporation, one of Cleveland’s most effective CDCs.
With a practical judicial approach honed over a quarter of a century, a well-suited judge and a network of supportive city agencies and community-based housing organizations, Cleveland Housing Court has emerged as a reliable civic institution. It has not been a panacea for all the city’s ills, but it has, case by case, made Cleveland a safer and healthier place to live.
Receivership: A Primer for CD Practitioners
By Frank Ford
In 1985 Eric Hoddersen, then executive director of the Union-Miles Development Corporation (UMDC) in Cleveland, faced a dilemma. UMDC invested time and money turning around one key street in the neighborhood. The CDC bought and renovated several homes, organized the neighbors and helped dozens of residents with UMDC’s Free Paint, Home Repair and Weatherization programs. Now, all of that seemed in jeopardy: one remaining abandoned house seemed untouchable. The owners, a husband and wife, were both deceased. Their heirs were scattered – many could not be found, and those that could had no interest in a property burdened with liens from outstanding property taxes and medical bills.
This property had entered the Twilight Zone of neighborhood revitalization. One hope was Ohio’s recently enacted receivership law, ORC 3767.41, which gave CDCs standing to sue owners of abandoned buildings to abate the public nuisance and be appointed receiver if the owner failed to act. UMDC filed a test case in the new Cleveland Housing Court and was named receiver. UMDC completed a full renovation, foreclosed on its receiver’s lien, bid the amount of its lien at the Sheriff’s sale, took title to the property and then sold the property to a new homebuyer.
What is Receivership? Receivership is a legal remedy developed centuries ago in England to protect the rights of creditors in debtor-creditor cases, e.g., if an owner of property was sued by creditors, the court appointed a receiver to manage the property, collect rents, make repairs, etc.
A unique aspect of receivership is that money expended by the receiver – for renovating the property, for example – is a priority lien over other debts against the property. A two-fold rationale supported this. First, but for the receiver, the asset would deteriorate, reducing the ability of all creditors to collect. The receiver, acting to protect all creditors, should stand first in line to be reimbursed. Second, because the receiver acts as an “Officer of the Court,” the receiver’s expenses are court costs – which are traditionally satisfied ahead of any liens.
Receivership and Abandoned Buildings. Receivership was employed for the first time in 1937 when New York City adopted an ordinance providing for receivers to protect the general public against the effects of abandoned buildings. A year later the ordinance was struck down as an unconstitutional violation of the due process rights of mortgagees. In the decades following World War II, urban cities experienced increased absentee ownership and property abandonment. In 1962 New York again adopted a receivership ordinance, this time addressing the concerns of the earlier court decision. This ordinance was upheld as it gave lien holders prior notice and an opportunity to be heard. Since then more than a dozen states have adopted receivership laws.
How receivership works. Receivership is not a lawsuit, i.e. in legal terminology, it’s neither a “complaint” nor a “cause of action.” Receivership is a remedy that courts employ after a lawsuit has been filed. With abandoned property cases, receivership comes after a lawsuit alleges that the property is a public nuisance. The party bringing the lawsuit – a neighbor, local municipality or a CDC – seeks an injunction requiring the owner to repair the property and “abate” the nuisance. If the owner fails to comply, the suing party asks the court to appoint a receiver (frequently a CDC) who is given possession and authority to renovate the property. Funds expended by the receiver, or funds borrowed, are secured by a receiver’s lien. After renovation – and abatement of the nuisance – the party holding the receiver’s lien (CDC or lender) forecloses on the receiver’s lien.
Frank Ford is vice president for research and development at Neighborhood Progress Inc. in Cleveland, OH. www.neighborhoodprogress.org