Ken Lurie: "We're helping [inner-city] residents to share in the American dream..."
But in 1991, Lurie attended a National City Bank symposium on public/private partnerships. “At the symposium, I first learned that community development corporations (CDCs) could be an important ally to a builder,” he recalled. “Community groups can be a vital link to the city and neighborhood residents. Now, I couldn’t imagine operating without a CDC as my partner.”
Lurie formed his company, Rysar Properties, shortly after the failure of his family’s business, where he had been employed since graduating from college. Although he knew little about house renovation, a friend approached him about buying and rehabilitating two dilapidated houses on Cleveland’s East Side. They didn’t make much money and the partnership dissolved, leaving Lurie to contemplate whether he wanted to continue in the business. “It was a difficult start,” said Lurie. “At that point, the banks wouldn’t even talk to me. I literally couldn’t borrow a penny.”
Nevertheless, over the past seven years, Lurie has rehabbed nearly 400 houses and has built 60 new homes in Cleveland’s low-income and minority neighborhoods. In the process, he has earned widespread recognition for his ability to forge successful collaborations with community development groups, lenders, and home buyers.
Jim Pressler, executive director of Fairfax Renaissance Development Corporation, a CDC serving Cleveland’s Fairfax neighborhood, agreed that partnerships between nonprofit community groups and builders can be very effective in redevelopment efforts. “But only if the partnership is based on integrity, understanding, and a desire to work together,” he stated. “It’s very important that the partners recognize and utilize each other’s strengths.”
In Pressler’s view, private builders, such as Lurie, bring technical expertise and resources to the development partnership. The CDCs, in turn, contribute in several ways: They can facilitate federal and regional construction financing, provide access to city mortgage incentives, and work with developers to acquire vacant lots. “These partnerships work best when all parties have a strong interest in rebuilding the fabric of the community,” explained Pressler.
Fairfax, one of Cleveland’s oldest —and most neglected— neighborhoods, was designated three years ago as one of 18 Empowerment Zones throughout the U.S., making it eligible for federal redevelopment funds. “By rehabbing and building homes,” said Pressler, “we’re revitalizing the core of the neighborhood. We’re getting rid of vacant lots and chasing out drug dealers. This brings back middle-income residents who help to stabilize the neighborhood.”
Ward 6 Councilwoman Patricia Britt, who represents the Fairfax area on Cleveland City Council, said the neighborhood’s eligibility for federal redevelopment funding has attracted many builders. Still, noted Britt, “Developers who wish to operate in Fairfax should be willing to accommodate the community’s wishes and input. For example, our residents want front porches on their homes —those porches are the eyes and ears of the neighborhood. It’s very important that builders include the residents in the development process. Often, the local people only know about a project when the bulldozers come into their neighborhood.”
Echoing Britt’s sentiments, Lurie said, “It’s essential to get the community’s buy-in on projects. A very effective way of gaining the neighborhood’s trust is to hire local residents to fill construction jobs. The residents then feel a sense of pride in the housing.”
A trademark of Lurie’s firm is the assistance it provides to prospective home purchasers. “We work closely with our customers,” he explained. “Many of them have never been through the mortgage loan procedure. They’re sometimes nervous, so we counsel the loan applicants and navigate them through the process. We feel that we’re helping them to share in the American dream of owning a home.”
In Lurie’s view, the linchpin of any community redevelopment effort is lender participation. “Without the banks’ support, I wouldn’t be in business,” he stated. “In recent years, the lenders have really stepped up to the plate. They’ve given good mortgage incentives, such as below-market interest rates and no closing costs.”
Lurie added that the City of Cleveland has also provided incentives for home purchasers. “When it comes to home ownership, the city is putting its money where its mouth is. It has given tax abatements to builders and offered attractive mortgage financing programs.”
(L to R) Kenneth Hale, of Fairfax Renaissance Development Corp.; Ken Lurie, of Rysar Properties; and Jim Pressler, also of Fairfax Renaissance survey new housing in the Fairfax neighborhood. Lurie built 12 new homes last year in the Cleveland neighborhood. (Photos by Hal Mitcheltree)
Robert Hudecek, vice president and manager of community development lending at KeyBank, said inner-city redevelopment is not for everybody. “Since the incubation period for revitalization projects can take up to two years,” cautioned Hudecek, “builders and community groups have to be patient. Before we lend into this market, we thoroughly examine the players, the market, and the investment risk.”
When analyzing partnerships, Hudecek said he looks for developers who have both technical sense and business acumen. “And, in judging CDCs,” he added, “we make sure that the organization has the skills and resources to fulfill its role in the project. I’ve seen many cases where CDCs had the right idea, but no follow- through.”
Over the past several years, Hudecek said he has noted increased skill levels among developers, bankers, and other participants in the community redevelopment field. “For the most part, the training has improved. We’re nearly at a point where this industry, as a whole, is being seen as a viable career choice.”