March 12, 2022 — Cleveland, OH — Cleveland resident Jeff Barge is urging Mayor Justin Bibb, Economic Development Director Jeffrey Epstein and the Cleveland City Council to consider using some of the American Recovery Money to buy part of the 1,500 unit Montlack apartment investors portfolio to preserve affordable housing in the city of Cleveland.
Word of the sale leaked just this week in Crain’s Cleveland Business.
According to Crain, public records and offering materials indicate that owner Kirt Montlack aims to shed 29 properties spanning almost 1,500 units. The largest asset is Stuart House, a 296-unit complex on Cleveland’s West Side.
There is no formal asking price for the buildings, according to Crain. But the unofficial, or whisper, the figure for the portfolio is roughly $100 million, said Crain’s.
The large properties are being pitched as standalone deals, while the smaller buildings are being offered up in bundles by Institutional Property Advisors Midwest, an Independence-based division of the Marcus & Millichap brokerage, said Crain’s.
Eleven of the listings in Cleveland and Shaker Heights are located on the north side of Shaker Square, in a neighborhood where community activists are anxious about an influx of far-flung investors buying up rental properties, according to Crain’s.
According to Crain’s, most of the complexes are what brokers and buyers would describe as value-added plays — opportunities to invest in updates and, in turn, raise rents. Many of the one- and two-bedroom units rent for $700 to $900 a month. The average rental rate is about $1 per square foot.
That pricing reflects the age of the buildings, constructed between the early 1900s and the 1960s; vintage bathrooms; basic kitchens; and the lack of perks like in-suite washers and dryers, said Crain’s.
“The danger is that new buyers will come in and jump the prices up 20 or 30 percent in one swoop, forcing many longtime Cleveland residents out of their apartments,” said Barge, a Cleveland-based writer and publicist.
“Those displaced renters could translate in hundreds of lost votes for Mayor Bibb in the next election.”
The City of Cleveland has historically ignored the needs of its renters, according to Barge, preferring to concentrate virtually all of its housing resources on homeowners and create opportunities for homeownership.
Yet 60 percent of Cleveland residents are renters, and a major affordability crisis is approaching that could cause widespread hardship, according to Barge. “This crisis is entirely avoidable, but the city has to become proactive when it comes to its renters.”
Because of its financial bulk, the city of Cleveland could probably purchase the properties for 5 to 10 percent down, with no additional subsidies needed as they already have a substantial cash flow, according to Barge.
Back in September, the city of Cleveland released a housing study called Cleveland 2030 that set a goal of the city acquiring or preserving over 46,000 moderate housing units over the next ten years. “In order to meet that goal, Cleveland is going to have to enter the housing market as a major buyer of existing properties,” said Barge.
According to Cleveland 2030, the goals of the plans are to:
–Ensure equitable access to housing resources
–Enable equitable development without displacement
–Protect renters fro forced moves and severe rent burdens.
No actions have been taken to implement the plan to date, according to Barge.
Those having a say in the plan on the city level include Mayor Bibb, Development Director Jeffrey Epstein, City Planning Director Joyce Huang, Strategist Bradford Davy, Housing Director Sally Martin and Political Strategist Ryan Puente.
Members of the City Council voting on such a proposal would include Joseph Jones; Kevin Bishop, Kerry McCormack Deborah Gray, Richard Starr, Blaine Griffin, Stephanie Howse, Michel Polensek, Kevin Conwell, Anthony Hairston, Brian Mooney, Rebecca Maurer, Kris Harsh, Jasmin Santana, Jenny Spencer, Brian Kazy, and Charles Slife.
“Cities such as Austin have seen rents rise 40 percent in a single year, with Miami and Ft. Lauderdale seeing single year rises of 35 percent,” said Barge. “Right now, Cleveland is like a deer staring into the headlights of an oncoming car, knowing this housing tragedy is about to happen here too but paralyzed into inaction.”
“Mr. Montlake has been an admirable custodian of these properties for Cleveland residents to date. Now it’s time for Cleveland to pick up the burden on behalf of its renters, instead of giving all of its tax dollars to homeowners,” says Barge.”Again, over 60 percent of city residents are renters, and we vote.”
Barge notes in passing that 50 percent of the residents of Cleveland are senior citizens, who also rely on these rentals.
According to Barge, the management of this housing should be retained by the present executives, as opposed to the housing being turned over to the CMHA, which has a poor reputation for maintaining housing. “Current residents would obviously be encouraged to stay under the existing rental structure”
