Investing in Baltimore

April 20, 2009

I have an innovative plan for Baltimore’s vacant and abandoned houses that I would like to put into the public forum: give them away.

Any house that is owned by the City, or that has an outstanding tax lien of over two years and is unoccupied, should be available for purchase by the general public for a nominal sum (less than $100). These properties, as they stand currently, are less than worthless. They actively de-value other homes in the area, as well as attract rats, garbage, drug addicts, drug dealers, thieves and prostitutes. As such, the City should not be treating these properties as if they have some value on the open market, which is the assumption that programs like SCOPE and Project 5000 operate under.

However, if the barrier to owning these properties is sufficiently lowered, we create a very desirable situation for homeownership. Economic empowerment through property ownership, sweeping neighborhood improvement, and community re-investment would be available to individuals and families alike. There would be an influx of new residents and capital seeking to take advantage of this environment.

An auction system should be established for transferring these properties from the public to private domain. The opening bid should be $1. This will keep the cost to entry sufficiently low, while ensuring that there is adequate competition for desirable diamond-in-the-rough properties.

Current city residents should receive priority, via a one year window after the program starts. During this one year window, a potential homeowner would have to show proof of residence in Baltimore City to purchase a property. After this one year period, anyone could purchase properties.

There will be a condition upon purchasing the property that it must be used as a residency within two years of purchase, or the City will have the right to return the property to the purchase pool.

A baseline assessment would need to be determined on each property, using the current assessment methodologies. The new owner of the property would be taxed on the assessed value. A property assessed at $10,000 at time of purchase would owe $226.80 per year to the City, based on current property tax rates. This generates revenue for City operations, thus extracting some value from these currently valueless properties.

Such a plan has the following advantages over the current state of affairs:

  • Extremely favorable environment for re-investment and re-population
  • Extremely favorable environment for creating home improvement jobs
  • Reduced maintenance and policing costs for the city
  • Tax revenue generated where there is currently none

While the exact mechanisms of operating this plan must be fine tuned, we have the ability to change an undesirable situation into a very desirable situation with this policy.  Certainly this plan has its flaws and loopholes to be taken advantage of by the ill-intentioned; however, I cannot see any reason that such a course of action could be any worse than the current state of affairs in our blighted neighborhoods.

Leave your thoughts in the comments – what are the flaws in the plan? Where can we improve? Just want to show your support? Please do!

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13 Responses to “Investing in Baltimore”

  1. Martin Johnson Says:

    This is a great idea, but you need to ensure the following:

    1.) The properties should be owner-occupied.
    2.) Property owners must commit to spending the money necessary to rehab the home so it meets code within a year of purchase.
    3.) Property owners that do not meet these requirements will lose their property.

    The city also needs to seize homes that are currently boarded up and left undeveloped. There’s no reason that properties on North Avenue, for example, are unoccupied.

    The city should also commit to creating public space in neighborhoods that have many empty houses. You could remove half a block of housing in a neighborhood and create a city park.

  2. Steve Says:

    Hi Martin,
    Thanks for the feedback. I hope to keep the policy as simple as possible, and use the existing city administrative structures to their fullest degree. I agree that stipulating that the property must be used a residency within two years from purchase (which implies that it is up to code), or the owner forfeits the property back to the city, will ensure that slumlords cannot sit on the properties indefinitely.

    So long as the properties are maintained to code, and inhabited, I’m not concerned with who owns the property. At this point, I don’t think we should lock out legitimate investors with an owner-occupancy requirement.

  3. Joe Says:

    Totally agree, however Steve was correct on all three of his revisions. Without a owner-occupied situation you leave the door open to slum-lords who will devalue neighborhoods almost as much as empty houses. I would argue that an empty well-secured house is actually better than a drug house (I live next to both) and owner occupancy means this won’t be used by speculators that will do the bare minimum on the structure and then rent for a profit to government backed subsidy programs.

    I’d also disagree with you when you say it doesn’t matter who owns the property. Absentee landlords are a huge problem in this city and lead to the empty houses that the city eventually takes over, so your solution might just be a temporary occupancy if the wrong people decide to buy these houses.

    If you just want to increase the tax base I feel putting anyone in the house is a great idea, but if you want to really improve a neighborhood, you need owner-occupancy, especially in the initial building phase.

    Other than that it’s a great solution and I hope it gains momentum.

    Good Luck!

  4. Steve Says:

    Hi Joe,
    Thank you for your support!

    That’s a very interesting point about Section 8 housing that you make. I think it would be reasonable to bar these properties from being used for Section 8 rentals for some time period after their purchase.

    Our goal is to make Baltimore a more livable city for all its residents. I want to make our neighborhoods better places to live – increasing the tax base is a tool to make that happen, not an end goal in itself.

  5. Detra Says:

    Steve’s plan is good. I agree with Martin, the properties should be owner occupied. Baltimore has an over abundance of slum landlords and landlords living in other cities that don’t have a clue what’s going on with the properties here nor do they care. The purchasers must show financial ability to rehab the properties to code.

  6. Steve Says:

    Hi Detra,
    Thanks for the feedback!

    It seems that the issue with the city is code enforcement. Getting slumlords to maintain their properties via tax liens and fines has been ineffective, resulting in the current state of decrepit affairs.

    The Outer Harbor Initiative is a movement to address this issue that is gaining traction. They are having a hearing this Thursday at City Hall at 4pm. I’ll be there, and any additional support we can show for the cause will be appreciated and effective!

  7. Karen Says:

    I agree wholeheartedly that we should be focused on solutions to the vacant properties issue in Baltimore. Not every landlord that provides affordable rental opportunities to low income tenants is a slumlord, however.
    Owner occupancy is a noble goal but there is a 2 year waiting list in the city for housing for low income families. Homeownership is not an option for them in the near future. A provision for reputable landlords or property management groups to acquire these properties would increase the inventory of low income rentals and remove the blight of boarded and vacant properties in distressed neighborhoods.
    Referencing code enforcement: it is a cumbersome process and has not been particularly effective. Tread gently because the punative impact often is felt by the homeowner who does care and may not have the funds to address some issue. In the most egregious cases of abandonment and neglect of properties, the owner is not available for enforcement.

  8. Andrew Says:

    When my partner and I were house hunting 4 years back we learned just HOW many abandoneds are owned by the city – correct me if I’m wrong but there are roughly 50 to 60 THOUSAND units of housing vacant and abandoned here in Baltimore. So… Yes, provisions ought be made, could be made to allow renters first crack at home ownership. But that DOESN’T change the primary problem – Baltimore’s population is stagnant (it increased by miniscule amounts over the past two years for the first time and even the Base Realignment isn’t going to significantly impact the **city** population.

    For instance – if you move people from rentals, under some other owner’s stead, then that leaves THOSE vacated houses empty. We would need roughly ONE HUNDRED THOUSAND NEW RESIDENTS to fill the vacants, no matter which way you cut it. It a typical growth rate, even at the best of times for a city, we could generously expect, oh, I don’t know 3-6% population growth? That would take TEN YEARS to happen – It’s not going to happen.

    So, never mind the call for moving people from one to another set of houses – it DOESN’T solve the problem of the over abundance of houses (or at least there will STILL be MASSIVE stocks of empty/unoccupied houses – and STILL owned by absentee landlords).

    TEAR THEM DOWN.

    I don’t know, but Baltimore needs to get over the fact that the city isn’t what it used to be. And it’s not going to be that thing again. Instead imagined lower density neighborhoods, replete with GREEN spaces on lots that have had these decaying pieces of shit left to rot on them removed. These are, in SOME cases worth saving – but not 50,000 of them. Now I’m not advocating they be torn down “willy nilly” in the neighborhoods of the dispossessed, or with out care of social and cultural impact. But let’s be realistic MOST of these properties are garbage heaps. They simply demand too much investment for rehabbing them and you are NOT going to get that to happen in a timely manner.

    And the city’s SCOPE property sales system is not inadequate, it’s ridiculously unfunctional – it moves less than .3% of vacants onto market (If I recall, because we did the math and figured it was going to take the city SIXTY YEARS to sell the stock they have at that rate).

    So it’s a noble cause to get people into housing that is there own. But that’s not going to happen either – housing assistance agencies note that NOW they’ve figure that homeownership is a difficult path and that affordable rental properties are the FIRST step. Giving people $1 homes was a nice idea, and there were homesteading conditions, etc. And look where it brought us. So, OK, City of Baltimore, pick blocks you already own, fix ’em, teach skills and labor building (PAY the people a decent wage too) have sweat equity opportunities perhaps, and get some of these into the hands of people that need them. Then TEAR THE REST DOWN.

  9. Steve Says:

    Hi Andrew,
    Thanks for weighing in!

    While dollar homes are not the exclusive tool for transforming the quality of life and economic opportunities throughout the city, I do believe that such a program will spur population growth. Dollar homes are a VERY attractive incentive to move to Baltimore. While a large number of city owned properties are closer to demolition than renovation, there are a significant number that are in decent shape, and are in close proximity to established neighborhoods. These are the properties we should let the market identify and acquire. I have no doubt that the dollar home program could attract 1000 resident homeowners within two years of inception. It’s a start.

    The demolition concept is very compelling. Having a clean slate of land to run as parkland or developable parcels is attractive. Could you outline a strategy for accomplishing this? I’d be happy to add a blog post on the idea to the front page.

    • Andrew Says:

      Hi Steve,

      Thanks for the constructive reply – I will write up something more comprehensive and post back – will be going to Clifton tomorrow eveningI hope. Cheers.

      May 6, 2009
      6:00pm – 8:00pm
      Heritage High School
      on the Lake Clifton Campus
      2801 Saint Lo Drive
      Baltimore, MD 21213

  10. BSLW Says:

    One of the problems I see with the way the city runs the housing program — houses that are condemned are sometimes re-sold. Look at our blog entries on 1135 and 1137 Nanticoke Street in Washington Village. Twice, and with two different owners) these homes were condemned. Nothing remains of the homes except each is nothing but a poorly-braced front facade.

    Unless a property has some kind of “promise” or excellent potential for redevelopment, homes like 1135 and 1137 need to be torn down. This block of Nanticoke Street would be a perfect place for a small community park, garden, or other greenspace. There’s no reason whatsoever for these two properties (or what’s left of them) to remain.

    Condemnation and then demolition should be options for the properties that are beyond repair, opening up a potential environmental benefit for the surrounding residents.

  11. Steve Says:

    How does the condemnation process work? Is a condemned house under city ownership, or is it still private property? If it’s still private property, then the city doesn’t have much control over the sale of the property, just the ability to collect liens and fines.

    Demolition makes sense for large swaths of city owned properties, where a significant amount of land can be opened up for use. I’ve heard demolishing single properties is cost prohibitive for the public (around $5k per property) because of the care needed to not damage surrounding properties.

    I agree that more parks and greenspace would be great for the city, so working incentives for that sort of development into a plan makes a lot of sense.


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