Door to Door: How a set of broken steps illustrates Cleveland's dance with out-of-town investors

When Mayor Justin Bibb and Sen. Sherrod Brown walked the Union-Miles neighborhood last week to spread the word about tax credits, a different issue soon intervened.

On Kingsford Avenue, Bibb and Brown ascended the crumbling front steps of a house that illuminates Cleveland’s struggle to hold back blight.

Part of one step had caved in, revealing the rusted metal wire that ought to be holding the concrete together. The gutters were broken. Around one upper window above the driveway, the siding had peeled away.

Sen. Sherrod Brown and Mayor Justin Bibb examine a hole in the concrete steps of a Cleveland house. [Nick Castele / Ideastream Public Media]

Bibb and Brown met one of the tenants, Viola Cannon, on her porch. She said she planned to call the city about the hole in the steps.

“The city of Cleveland came to you,” Brown replied. One of the mayor’s aides took down the address.

The landlord is a Florida-based limited-liability company called Exitos Capital, property and business records show. Its mailing address is a UPS Store in a shopping strip in Tampa.

Out-of-town and LLC investors, no doubt drawn to Cleveland’s relatively cheap real estate, are attracting the attention – and worry – of city leaders and housing advocates.

Businesses are making up an increasing share of the homebuyers in the city, particularly on the East Side. That’s according to a recent study by the Vacant and Abandoned Property Action Council, a coalition of housing advocates.

“The result of this rise in investor ownership is a housing submarket that is largely rental, no longer controlled by local actors, and with limited opportunities for new home owners and the associated benefits of stability, health, and wealth building,” the authors wrote.

On Tuesday, I tweeted a picture of Brown and Bibb looking down at the hole in the steps. Brown, the chairman of the Senate banking committee, amplified the image further on social media on Thursday.

“Private equity and other out-of-town investors buy homes, jack up rents, and neglect repairs and safety issues in Cleveland and around the country,” he tweeted. “Crumbling steps are just the beginning of the problem. They’re symptoms of a larger issue.”

A fix arrives

Ten minutes before noon on Good Friday, Viola Cannon called me. Workers were out fixing her front steps, she said.

I set out for her house immediately. When I arrived, the workers were laying a new set of wooden steps into the space where broken concrete had stood just the day before.

A hole in the steps of a house in Cleveland's Union-Miles neighborhood. [Nick Castele / Ideastream Public Media]

Cannon told me the steps had begun to deteriorate during the winter last year. The ice and salt of this past winter delivered the death blow.

She said her daughter had called the landlord on her behalf about two months ago to ask about the steps and the broken siding. I asked Cannon, who will turn 60 later this year, if she had been avoiding that front walk-up.

“No, was still walking down the front – just holding on,” she said. Holding on, that is, to the wooden handrail that’s seen better days.

Cannon praised her property manager for being responsive to her needs. It was the manager who told her that he would fix the steps, she said.

And after past complaints, she said, the landlord offered her the option of moving to a different property. But Cannon, who uses Section 8 housing vouchers, declined. She likes her quiet street and was worried about crime in the new neighborhood, she said.

Cannon said she has lived in the house for about eight years. Over that time, the property has changed hands twice, according to county records. Now the house is for sale again. It is currently listed for $54,900 on the online realty site Zillow.

Because he’s not based in town, the current owner isn’t in touch with the living conditions here in Cleveland, Cannon said. Her house needs more than a new set of front steps. Large stretches of the gutters are still gone, and the stripped-away siding needs to be replaced.

“The owner, they buy property and they leave the state, and they don’t do what they need to do,” Cannon said.

Damaged siding on a house in Cleveland's Union-Miles neighborhood. [Nick Castele / Ideastream Public Media]

A swift entry into Cleveland, followed by citations

The story of Exitos Capital, the current owner of Cannon’s home, shows the difficulty the city faces in reaching out-of-town investors – and the challenges those investors can encounter in keeping track of their holdings.

The company jumped into the Cleveland market in March 2018. That month, Exitos bought 27 properties – all from the same seller – for $611,000, according to county records. The company obtained more houses through 2018, until it owned a total of 43, by my count.

Then the citations came. From November 2018 through September last year, the city filed 21 housing misdemeanors against Exitos, by my count of cases in Cleveland Municipal Housing Court records.

Meanwhile, the company was selling off its properties. In March 2020, Exitos sold 17 parcels for $559,000 to Home Partners LLC, a subsidiary of the Reno, Nev.-based investment firm Hughes Private Capital, according to property and business documents.

In housing court, Exitos was a no-show for most of its citations. Eventually, the court placed liens against Exitos for unpaid fines and penalties, according to county court records.

By the summer of 2021, Exitos had hired a local attorney, Jazmyn J. Stover, to settle its affairs with the court. Stover told me that Exitos didn’t know about its housing court cases initially. An employee had left the company on bad terms, making off with passwords, she said.

In Cleveland's Union-Miles neighborhood, Mayor Justin Bibb and Sen. Sherrod Brown speak with a woman who said she was buying properties in the area.  [Nick Castele / Ideastream Public Media]

In a filing with housing court last year, Stover wrote that the housing violations were “not of a serious nature,” nor were they ongoing infractions. She wrote that the company resolved the issue with its property manager once it learned of them.

“Exitos failed to appear at its hearings because it was unaware of the violations,” Stover wrote in the filing. “Indeed, an employee (unbeknownst to Exitos) changed the statutory agent for service of process and left Exitos without providing the principals with any information related to the change.”

Business records in Florida do indicate that someone left the company. The person listed as CEO of Exitos stopped appearing on state business filings in 2020.

Today, Exitos Capital is listed as the owner of 12 properties, including the house on Kingsford.

At his State of the City speech last week, Bibb said he’d like to require new landlords to maintain a local agent. That step, he said, would help the city hold property owners accountable.

And there are plenty of other investors buying and selling properties in Cleveland.

On that walk through Union-Miles, right after they met Viola Cannon, Bibb and Brown bumped into two women outside a nearby house. One was local; the other was from Reno, they said.

“What you guys doing here?” Bibb asked.

“We buy properties,” one replied.

“I hope you guys are going to be investing the right way,” Bibb said. “I’m going to check on your properties and make sure.”

The mayor’s tone was friendly, but the issue facing his administration is heavier than a set of concrete steps.

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