CINCINNATI -- Ohio boasts that it’s the “Birthplace of Aviation,” home state of the first man to walk on the moon and first to enact laws that protect working women. The first electric traffic light flashed signals in Cleveland in 1914, and the first professional baseball team was founded in Cincinnati in 1869.
And now – take a deep breath, sit down and brace yourself – Ohio has become the first state to outlaw the use of plywood to secure buildings whose owners are facing an “expedited foreclosure” as defined very carefully in legislation that was signed into law last month.
Substantial and vitally important? Parade-worthy? Going viral? Yawn-inducing?
Only time will tell, and the clock won’t start until April 4, when legislation sponsored by Madeira State Rep. Jonathan Dever and signed by Gov. John Kasich takes effect.
The 67-page law actually does far more than prohibit – in some cases – the use of plywood and covers a number of issues that were cobbled together during the waning days of the Ohio General Assembly that concluded its term at the end of 2016, according to Dever, a Republican and an attorney who routinely defends homeowners who are facing foreclosure.
The law includes sections that focus on the Ohio Uniform Commercial Code, property foreclosures, local ballot initiatives, coverage of autism services, and the reimbursement of members of child abuse and child neglect regional prevention councils.
But just one sentence on page 28 – “No person shall use plywood to secure real property that is deemed vacant and abandoned…” has gotten media attention that spans the continent from Washington, D.C., to Tacoma, Washington.
Although the legislation says nothing about what kind of material should be used as a substitute for plywood, there’s plenty of speculation that owners of foreclosed property may decide to follow the lead of Fannie Mae, the federally backed mortgage financing agency that now uses “clearboarding” to secure buildings where vandalism or theft are likely.
Rather than using plywood, clearboarding calls for the use of transparent sheets of polycarbonate plastic over window openings or doors to keep vandals or thieves on the outside.
There seems to be general agreement that the plastic sheets are tough to break and don’t deteriorate the way plywood does.
Dever said he added the plywood prohibition to the legislation – most of which had been approved in another bill last year – at the last minute at the request of a member of the Ohio Senate.
“The rationale from the senator was that when you use plywood to board up a building it’s like a red light that says no one is there, and it can drive down the value of the property,” Dever said. “You want it to sell for the highest value (in foreclosure).”
“We’re trying to create an awareness that you’re losing value in a neighborhood when you have abandoned and vacant homes” that are boarded up with plywood, he said.
Dever stressed that the legislation doesn’t specify that property owners have to “clearboard” property and stressed that the plywood ban pertains only to homes that meet the “expedited foreclosure” guidelines.
“I don’t care what you use – just pull the curtains shut. Nine of out 10 times these properties are vandalized before they go to (a foreclosure) sale,” Dever said.
It may take a while before mortgage companies become aware of the new regulations that prohibit the use of plywood, Dever said. He added that the expedited foreclosure law, which passed last year without the plywood ban, is relatively new and he did not know if it’s been used yet in Hamilton County.
Art Dahlberg, Director of the Buildings and Inspections Department for the city of Cincinnati, said he is not aware of any banks that have used the expedited foreclosure process in Hamilton County.
Dahlberg said the city already has an ordinance that addresses how plywood is used on foreclosed property.
Under terms of that ordinance, “banks are already under an obligation to not use plywood coverings to board windows in the right-of-way so as to minimize the outward appearance of vacancy. … The city’s ordinance, unlike the new state law, does not prohibit plywood coverings on the side or back of a vacant residential property in foreclosure,” Dahlberg said in an email.
Because the state law doesn’t include anything about enforcement and penalties, Dahlberg said the city “has not yet determined, what role, if any, it has in enforcement.”
Even without enforcement or penalty clauses, Dever said he thinks the courts and mortgage holders will work out agreements that satisfy the intent of the legislation.
Fannie Mae made it clear that the agency supports clearboarding.
“The whole idea is that plywood is not as durable (as plastic) and blight is a problem, and we want to be a good neighbor,” said Aleksandres Rozens, a spokesman for Fannie Mae in New York. Like Dever, he said using plywood over a window, for example, may signal to passersby that a home is vacant and, perhaps, vulnerable.
Fannie Mae has clearboarded about 11,000 homes in the U.S. over the last 18 months and now requires the use of the plastic material on other vacant properties where the agency is a stakeholder, Rozens said.
At this point, Dahlberg said Cincinnati does not plan to follow the Fannie Mae lead and adopt clearboarding unless it’s required by state law, which now only addresses property going through the expedited foreclosure process.
“Additionally, we have limited resources available to barricade unsecured properties,” Dahlberg said in an email. “In the case of a foreclosure, that onus should fall on the property owner or the bank. In other instances, considering the limited local funds available, the city will continue to use the safest and most cost-effective method to secure properties – i.e. plywood.”
Two of the firms that supply the material to Fannie Mae are a Florida company called Cyprexx, which sells a product called InvisiBoard, and SecureView, a Cleveland firm that has advocated for the use of its products in Ohio and elsewhere in the country.
"Fannie Mae’s decision to reimburse for the use of clearboarding to secure all vacant properties is a game-changer," Robert Klein, founder and chairman of SecureView, Safeguard Properties and Community Blight Solutions, said in a prepared statement. "It will have a tremendous impact on returning properties to the market more quickly in a more stable and marketable condition."
"Despite the higher upfront cost of clearboarding, servicers save in the long term because of the product’s ability to maintain the value of the property and shorten the disposition process,” Klein said.
Most estimates put the price of a 4-by-8-foot sheet of polycarbonate at about $115 while the same-size sheet of half-inch plywood would be about $15 at Home Deport, for example.
SecureView sells the polycarbonate and a system for its installation. Safeguard Properties works with mortgage companies to secure vacant and abandoned properties, and Community Blight Solutions advocates for the use of the clearboarding procedure.
Marilyn Thompson, a spokeswoman for the APA-Engineered Wood Association in Tacoma, a trade group whose members include plywood manufacturers, pointed out that her organization “noticed a significant price difference (in the cost of clearboarding) and we wondered if it’s a burden on property owners.”
“I think it’s too soon as an industry to see if there’s any impact” of the Ohio law or the Fannie Mae policy, Thompson said.
She said she won’t know if plywood sales show any significant decline until she hears from retailers.