Baltimore Grapples With Blight Quandary (Wall Street Journal)

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Baltimore Grapples With Blight Quandary (Wall Street Journal)

BALTIMORE—In 2011, the city sold a vacant row house in East Baltimore’s Oliver neighborhood to a developer who promised to restore it within 18 months. It is still boarded up.

“It’s gotten worse,” said 60-year-old Patsy Jones, who rents the attached house next door on North Caroline Street and says rain falling through the vacant home’s collapsed roof regularly soaks her basement.

David Borinsky, who bought the house along with 12 others for $26,000, said he planned to renovate it but the market has proved too weak on Ms. Jones’s block to justify the costs—though he thinks that is starting to change.

Baltimore’s sea of vacant homes is one of many entrenched socioeconomic problems thrust into the national spotlight after last month’s riots following the funeral of 25-year-old Freddie Gray, who died of injuries sustained in police custody.

Nearly 17,000 homes, or about 8% of the city’s housing stock, are deemed unfit for habitation. That doesn’t include thousands more considered livable but sitting empty. Baltimore’s population of roughly 620,000 has fallen by about 35% since the 1950s, contributing to blight.

Many urban areas grapple with widespread vacancies, which depress values of surrounding homes and are seen as magnets for criminal activity. In recent years, cities and counties across the U.S. have devised new programs to tackle the problem, which housing advocates say worsened with the foreclosure crisis and the 2007-09 recession.

While comprehensive statistics on vacancies across the U.S. aren’t readily available, Baltimore’s record shows the challenges. Between 2010, when it started a new program, and 2013, the city sold 410 vacant houses for rehab; more than 40% don’t have use-and-occupancy permits, according to a Wall Street Journal analysis. That usually means a house is empty. The Journal limited its analysis to pre-2014 sales, because housing experts say rehabs can easily take a year.

City officials said occupancy-permit figures don’t reflect the progress on some empty homes and stressed the inherent uncertainties in real-estate deals. Still, they conceded missteps and acknowledged they haven’t enforced legal provisions that allow the city to retake homes if developers miss rehab deadlines—but said they are now savvier with developers.

“We didn’t have the capacity to do consistent monitoring,” Deputy Housing Commissioner Julie Day said, adding that her agency recently hired someone to track whether developers follow through.

Baltimore has taken a three-pronged approach to tackling vacancies: enforcing city code more stringently by levying fines and persuading judges to force auctions if owners don’t renovate; demolishing more than 1,500 houses, with hundreds more to be razed in coming years; and marketing some of its own vacant inventory, which accounts for about 15% of the total.

Beefed-up code enforcement has helped turn around the Oliver neighborhood, according to Mr. Borinsky, who said he has rehabbed about 40 houses there in the past several years.

Baltimore officials deserve credit for a higher-than-50% success rate on vacant homes sold by the city, said Frank Alexander, an Emory University law professor who co-founded the Center for Community Progress, a nonprofit that advises local governments on addressing vacant properties. “But they cannot fail to deal with those for which there has been no progress,” he said. While he said he understands officials’ reluctance to take properties back, failing to do so means the problem continues.

In Cleveland, the Cuyahoga Land Bank keeps the deeds of homes it sells until promised work is done. “All you have to do is lock the doors, essentially,” program director Dennis Roberts said. Since 2010, it has sold more than 600 houses that way with few problems, officials said. (Land banks are public or quasi-public entities that manage and sell vacant structures and lots.)

But most cities’ programs rely on post-sale mechanisms to ensure progress: Baltimore puts the deadline in the deed. Ms. Day said some buyers mortgage the homes, making reversion impractical. Some buyers have agreed to give houses back to the city.

Baltimore Housing Commissioner Paul Graziano said a focus on whole-block revitalization has yielded successes in several areas of the city, including the transformation of a long-derelict stretch of Broadway north of Johns Hopkins Hospital that he calls “mind-boggling.”

“Anywhere we believe there is a market, we will sell a property,” Ms. Day said.

More than 800 of the city’s 16,745 vacant homes are in Sandtown-Winchester, the site of Mr. Gray’s arrest and some of the worst looting of the protests.

Developer Robert DePonte said he fears lingering damage to Baltimore’s image—made worse by what he called hyperbolic news coverage—could harm his investments and the gains made in the East Baltimore neighborhood where he is working. “It wasn’t a city on fire,” he said.

Mr. DePonte has rehabbed five of the 10 houses he bought from the city in 2012 and 2013. The pace is slow, he said, because this is a side business for him and the work he does is extensive. After sinking $80,000 to $120,000 into each overhaul, he said he now gets monthly rents of $1,200 to $1,800, above the neighborhood average.

Some developers say the city’s packaging of properties complicates their efforts.

In 2010, AHC Greater Baltimore, an affordable-housing developer, set out to revive a block on Violet Avenue near an apartment building it overhauled in northwest Baltimore. City officials agreed to sell there but insisted AHC also buy several other homes blocks away, said its director, Andrew Vincent. Ms. Day said she doesn’t recall requiring the group to purchase them.

Mr. Vincent said it made no sense to tackle three of the others due to surrounding blight. While nearly the entire block of Violet is now renovated, those three remain boarded up.

On North Caroline Street, Ms. Jones said she is tired of having a wet basement in her rental home, a three-story row house built more than a century ago.

Mr. Borinsky said the house next door to hers was in bad shape when he bought it from the city in 2011. Records show the city deemed it unsafe to occupy in 2003. Most houses on the block are occupied, and he said he expects that by the end of this summer, the market will improve to a point where he can seriously explore rehabbing the long-vacant house.

But Mr. Borinsky said such decisions come down to economic considerations.

“I can’t be an arm of the housing department, robotically renovating these houses they let me buy,” he said. “I want to. I try to. It’s not realistic.”

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