High rehab costs

Jack BeVier, the private contractor who isn't involved in these projects, says he could rehab the houses for $200,000 or less. He doesn't blame Mi Casa or the city but rather the requirements imposed when federal dollars are used, which push up costs by, for example, requiring higher wages for construction workers.

"There are so many strings attached to it, it drives the cost up to a ridiculous level," said BeVier, a partner in the Dominion Group.

Engel, the assistant housing commissioner, said the housing authority must follow those rules. He also said ownership units cost more to develop than rentals but said Johnston Square needs more ownership. "In this case," he said, "there was federal money to really help make that work."

In fact, plans to restore the 30 houses lay dormant until the stimulus money became available to Mi Casa.

The $9 million budget for the 30 houses breaks down this way: $5 million in federal stimulus money; $2 million from the city's share of federal Community Development Block Grant funds and $2 million from private sources, including The Reinvestment Fund.

Zurbrigg of Mi Casa noted that these houses are big, with three finished floors and around 2,000 square feet. Some are so dilapidated that only the brick facade can be saved.

She defended the cost per square foot as "quite reasonable" — $128 a square foot in hard construction costs and $160 in total development costs, which includes architectural drawings. On Friday she said Mi Casa's Baltimore contractor has revised the hard cost figure downward to $106 a square foot. BeVier insists, though, that he could do the work for $75 a square foot in hard costs.

Jim French, whose development company will build the 74 apartments of new construction on Greenmount, does not share BeVier's view. If anything, he says the rehab costs sound low.

"That's all they're spending is $300,000 a house?" he said. "Do you know what it costs to renovate a building that's substantially deteriorated and needs rehab? Those numbers don't surprise me."

Already, the rehabilitation of the 10 apartments on Preston has shown how costs can spiral upward.

The budget was $1.3 million when the housing authority chose Mi Casa in 2007. By the time they signed a contract months later, the projected cost had risen to around $1.5 million. It has since jumped to $1.86 million, all covered by federal funds except for $176,000 that the authority had to borrow.

Both sides say the costs increased as Mi Casa and its contractor realized the full extent of the deterioration. Other changes were mandated by Baltimore Gas and Electric, Zurbrigg says, and the housing authority ordered new interior wood framing and joists due to mold and pigeon waste.

But tensions have risen along with the expenses.

In December, Michelle Porter, the housing authority's planning and development director, sent Zurbrigg a barbed letter. If Mi Casa had provided "a realistic budget" of total costs, she wrote, "the agency may have made different business decisions regarding the feasibility of the project given the original proposal."

The sales pitch

On Tuesday evening, the community development group hosted a meeting for anyone interested in possibly buying one of the first 12 Preston Street rehabs. Realtor Erica Solomon of Long and Foster told the 15 people who sat on folding metal chairs that these will be essentially new homes.

The houses will have "three-plus" bedrooms and "two-plus" bathrooms, she said. They'll be energy-efficient and feature "gourmet kitchens," balconies, hardwood floors and central air. Open floor plans will be ideal for entertaining.

"At $70,000, it's unbelievable," she said. " Honestly, I wish I could buy one."

Some will be sold to buyers with household income up to about $66,000 for a family of four, while others will be reserved for those with household income of $41,000 for a family of four.

When Solomon opened the floor to questions, Al Williams spoke first: "I'm very interested in how can we go about applying."

Williams is a truck driver for Amtrak. He and his wife, Maketha, an administrative assistant, had been living in New Jersey but were flooded out. Now they're staying in Baltimore with family and see these houses as a way to sink roots.

Zurbrigg was there, too. "They're going to be beautiful homes," she said, "and very, very affordable."

Listening was Clifford Gaddy, 67, a retired postal worker. He's eyeing one future rehab property: 826 E. Preston. Turns out he lived there as a boy decades ago.

"I would love to get that house," he said. "That's where I was raised up at. This is coming back home."


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