The village of Newburgh Heights, a small, inner-ring Cleveland suburb, has faced decades of decline. Since the year 2000, its population fell approximately 15 percent to just under 2,100 people. The tax base shrank and property prices plummeted, bringing the town to the brink of bankruptcy. Mayor Trevor Elkins knew something creative had to be done to bring in new residents and brighten the town’s prospects.
In December of 2018, Newburgh Heights Village Council approved a proposal—the first of its kind in the nation—to offer home buyers student loan repayment assistance in an effort to attract higher-income, long-term residents to become a part of the community and grow with it. The program offers repayment of 50 percent of student loan debt or $50,000, whichever is lower. There are also some stipulations. The first payout occurs at 80 percent after 10 years with 100 percent being vested after 15 and only homes valued at $50,000 or higher are eligible.
The program is designed to be self-funded, but some of the current residents still had their concerns about how it would affect them.
“What happened is that people—the old-time residents—said ‘nobody paid for my school, nobody paid for my career, why should I do that for someone else?’ or ‘are my taxes going to go up to cover this cost?,” Elkins states. “We explained to the current residents that new property owners, whether building a new house or buying an existing house, are not costing us money. In fact, they’re generating revenue that wouldn’t have been here without this incentive.”
Elkins was also quick to point out that the alternative isn’t very palatable.
“Without growth and broadening the tax base, when we do have to come back to the residents for additional revenue the burden is always larger the smaller the population,” he explains. “Broaden the tax base, make that pinch a little less painful the next time. We don’t want to hit that tipping point where we need to start over.”
Elkins himself admits this program isn’t a panacea for all the issues they’re facing as a community. Rather, this incentive is part of a package of proposals to help revitalize the city. When Elkins came into office in 2011, he understood that the turnaround would take time and require a foundation.
“Newburgh Heights didn’t get this way overnight,” Elkins explains. “It took 30 years of not planning for the long term to get to a place where we were very nearly insolvent… We aggressively went after public money for sewers, roads, demolitions. [We] did foundation work quickly and aggressively to show residents even though it’s long term, you can see tangible short-term success that will lay a foundation to layer these growth incentives on top. Start with incentives, you put them on top of nothing.”
It’s essential for Newburgh Heights to have the right mix of homes for sale that people will want to buy, but currently only seven properties fit the criteria for the student loan program. It’s been been a hard sell to get developers to build new homes in the village, so some incentive had to be given in the form of a tax abatement. At the same time, there are incentives to encourage current residents to improve their homes.
“If you do a renovation that improves your property value as a current homeowner, then you get that abatement as well,” Elkins says. “Last year, we also created a home maintenance grant program for residents of 55 years-plus and military veterans. Basically, a 50 percent grant up to $1,000. So, if that resident were to put $2,000 into house, we’ll give them a check for $1,000. [This is] just to help people do things like put new porches on, patch driveways, that sort of thing.”
One possible side effect of rising property values is gentrification that could price current residents out of their own neighborhood. Even with new home builds, Elkins is confident that those already living in Newburgh Heights won’t be adversely affected. He anticipates the city has room for an additional 30-to-35 houses in the next five years and that number increasing to 50-to-75 if a 13-acre lot is acquired from the City of Cleveland.
“[That’s] a large number for a community that hasn’t seen any new construction in 50-plus years, but really not a number that’s going to move the needle on gentrification,” Elkins explains. “We don’t anticipate even with that to drive the market to the point where someone who’s lived here for 40 years would say ‘I can’t stay here.’”
The plan makes sense. Incentivizing people with higher incomes to move to Newburgh Heights and stay at least 10 years means more tax revenue, rising property prices over time, and a safer, more stable community with a higher quality of municipal services and amenities. In the past year, the first pizza shop the town has had in more than 25 years opened and the hope is to see more small business growth as the local economy improves, further strengthening the neighborhood.
The program has been approved for five years after which it’ll be evaluated for renewal. The city expects to start taking applications the first half of February 2019. Time will tell if this plan, along with the other initiatives, will reverse the fortunes of Newburgh Heights.