Following World War II, industrial cities across the Northeast and Midwest of the United States, known as the Rust Belt, experienced massive population loss and economic instability due to suburbanization and deindustrialization. The mass exodus to the suburbs left Cleveland, Ohio, a wasteland of abandoned properties that were used primarily as dumping grounds, creating eyesores and preventing productive economic development. In Ohio, the property tax collection was not the responsibility of the city but rather the county government, leaving Cleveland dependent on Cuyahoga County to take action. Burdensome foreclosure procedures mandated by outdated restrictive laws made it virtually impossible for Cuyahoga County to collect taxes on its 35,000 delinquent and abandoned properties, most located within Cleveland. By 1987, unpaid property taxes in Cuyahoga County surged towards $100 million, threatening to destroy Cuyahoga County's favorable credit rating and generating a loss of revenue that Cleveland could not afford.
In response, the County Commissioners established a Task Force for the Government Action of Urban Land Project, a cooperative and dynamic city-county partnership. The Project focuses on assembling massive tracts of land in blighted areas of the City and making these properties available to developers for new construction by streamlining the foreclosure process in a constitutionally sound manner. Foreclosures that formerly took years are now completed in eight months. The properties are then sold at a sheriff's sale with a minimum acceptable bid being equal to the amount of delinquent taxes and the costs of the foreclosure action, discouraging land speculation.
The property remaining after the auction is placed into Cleveland's Land Bank, which contained 5,000 properties as 1993. Using incentives to make the properties attractive for development, such as pooling smaller parcels, Cleveland markets the Land Bank properties to private developers and nonprofit housing groups. Taxes are removed from property in the Land Bank, protecting the County's bond rating by reducing the amount of delinquent taxes. Prime real estate is made available to developers for about $200 per parcel with a comparable parcel in the suburbs costing approximately $40,000. The program enables developers and neighborhood groups to create affordable $80,000 homes only five minutes from downtown Cleveland.
To further entice businesses and homebuyers back into the city, Cleveland enacted innovative procedures to cut red tape and to smooth developers' dealings with the City's bureaucracy. Five major lending institutions agreed to provide more than $16 million in credit at a preferred rate for buyers of new homes in Cleveland. The City itself implemented a neighborhood development bond program to support public infrastructure improvements connected with housing construction and adopted new incentives to help reduce homebuyers' monthly mortgage costs, which ended up being the lowest unsubsidized community development mortgage rate in the country.
By 1993, the Urban Land Project had generated a flood of new housing and real estate development in the City of Cleveland, increasing jobs, housing and tax revenue. New single-family homes were being constructed within Cleveland at the fastest rate since the end of the Korean War. Over 72 new multi-parcel urban projects were in various stages of construction or planning by mid-1993. In addition, three new large shopping centers had been developed in inner-city locations on land-banked properties, and the City's largest local food chain had opened four new supermarkets in Cleveland neighborhoods. The program effectively diminished the exodus of city residents to the suburbs and actually brought suburbanites back into the city. The principles and practices of the Urban Land Project possess the potential to revitalize cities across America, particularly in the Rust Belt, where abandoned land has destroyed the community's economy and spirit.