Report shows investment in Baltimore African-American neighborhoods hasn't overcome racist policies of past

Saddled with the legacy of racist policies of the past, poorer African-American neighborhoods in Baltimore receive far less investment than their white neighbors, according to a new report from the Urban Institute.

The conclusions aren’t new or that surprising to observers, government officials or the report’s authors, but the report puts specific, and often harsh, numbers to the disparity that exists between Baltimore’s predominantly black and poor neighborhoods and its predominantly white and wealthier ones.

“We absolutely document a longstanding and stark segregation in how investment is distributed within the city,” said Brett Theodos, the report’s lead author and a principal research associate in the Urban Institute’s Metropolitan Housing and Communities Policy Center. “The report shows this across a range of different types of investment.”

The report found that Baltimore, the nation’s 30th-largest city, has low average income, has lost population for decades and relies on a large social services sector to buoy the economy. One in three jobs is with a nonprofit employer. The mix made it “an important place to examine the geography of opportunity in an American city,” said the report, funded by the Annie E. Casey Foundation.

Using lending as an indicator of investment, the report found that Baltimore is in the middle of the national pack for lending for multifamily, commercial and industrial properties. It’s ahead of bigger Los Angeles and San Antonio, but at just 36 percent of per capita lending levels in Washington.

Within Baltimore, such investment is unevenly split by race, income and geography. The city’s overall poverty rate is 23.1 percent, almost double the national average, with far lower rates in largely white neighborhoods and far higher rates in largely black ones. Baltimore County’s rate is 9 percent, and the state rate is 9.7 percent.

Specific findings show that nearly across the board, far more investment went to whiter, wealthier neighborhoods, sometimes at rates many times those in poorer neighborhoods with more African-American residents.

There were more permits for building, rehabbing and demolition in whiter and wealthier neighborhoods. Sales prices were higher, too. There were also more loans for residential developers and property owners in whiter, wealthier neighborhoods and more lending to commercial development in areas that already had such development.

Public sector and so-called mission investment was more spread around, with heavy investment in high-poverty areas and in predominantly black neighborhoods. But this was just a small slice of the investment pie.

Those who study disparities say modern-day policies, while not always as overtly racist, still steer money away from areas that need it the most.

Lawrence Brown, an associate professor in Morgan State University’s School of Community Health and Policy, was not involved in the report but coined a term cited in its title — the “black butterfly,” which describes the segregated wings of East and West Baltimore.

The segregation is a legacy of overtly racist city housing policies dating to the early 1900s that prohibited homeowners in white areas from selling to blacks.

Many of the report’s maps show it’s in the butterfly where investment lags. And Brown blames the policies of public and private institutions that continue past inequalities.

He said government doesn’t police financial institutions ignoring or taking advantage of people in poorer black communities. And he challenged the report’s findings that public investment was evenly spread, citing examples of hefty tax breaks for developers who invest only in more thriving communities.

Small lending programs and efforts to direct jobs and purchasing to minorities are insufficient, he said.

“Have we done enough? Absolutely not,” Brown said. “Billion of dollars have been denied to black neighborhoods. … We do not pay enough attention to racial implications of public policy.”

Marceline White, executive director of the Maryland Consumer Rights Coalition, agreed that Baltimore is still living with “redlining” and other racist policies, and that institutions are in many ways “doubling, tripling or quadrupling down” on those policies. That helps make mortgages and auto loans unaffordable for residents in some neighborhoods.

Along with Brown, she singled out lax enforcement of the Community Reinvestment Act, a federal law that encourages commercial banks to lend in the low-income segments of their communities.

White suggested that Baltimore consider establishing its own public bank, which has been used elsewhere to offer “more creative” lending on a broad scale to those with credit blemishes or other problems that can put off traditional private lenders. And she suggested the city consider pressuring anchor institutions such as universities and hospitals to increase the payments they make in lieu of property taxes to levels collected in other major cities.

Stephen J.K. Walters, a professor of economics at Loyola University Maryland, said he sees present-day tax policy as a broad hurdle.

“What's unfortunate is that the [report] completely ignores the single strongest factor in repelling capital investment in all the city's neighborhoods: its noncompetitive property tax rate,” he said. “No matter where you are in Baltimore, you are never more than 4 or 5 miles from a property tax rate that is less than half the city's.”

He said a developer considering investing $1 million in the city could save $13,800 a year in property taxes by locating in the county. Baltimore officials acknowledge this every time they give a big developer a large tax break, he said.

“These targeted incentives are not fair, since they rarely reach the small businessperson or homeowner, and they are not enough to attract investment widely over the city's 80-plus square miles,” Walters said.

Lester Davis, spokesman for City Council President Bernard C. “Jack” Young, said city leaders have taken steps to try to reverse the trends.

He cited creation of Mayor Catherine Pugh’s Neighborhood Impact Investment Fund, a $52 million pool of money to back building projects and businesses in neighborhoods that struggle for investment. He pointed to Young’s $12 million Youth Fund, which aims to make grants accessible to groups in low-income neighborhoods that lack employment, mentorship and training opportunities.

The council also pursued “racial equity” legislation to ensure that agencies were treating people and neighborhoods the same.

Some of the moves were an outgrowth of a 2017 analysis by the Planning Department that found predominantly white neighborhoods were expected to get almost twice as much capital spending from five years’ worth of city budgets as mostly minority neighborhoods.

“Obviously this is something we’ve talked a lot about,” Davis said of such inequalities.

“It’s encouraging there is so much activity going on,” he said. The Urban Institute “report is sobering, but for someone doing meaningful policy in the city, it couldn’t come as a surprise. The needle is moving in the direction of remedies for these long-standing problems.”


Other findings of "The Black Butterfly": Racial Segregation and Investment Patterns in Baltimore

The report was published this week by the Urban Institute

— Neighborhoods where fewer than half of residents are black get almost four times the investment received by neighborhoods that are more than 85 percent black. Those areas with less poverty get one and half times as much investment as high-poverty areas.

— There are more permits for building, rehabbing and demolition in whiter neighborhoods with the exception of some areas in East Baltimore near the port of Baltimore and Johns Hopkins Hospital, for example. Sales prices in whiter neighborhoods are significantly higher.

— There are more loans for residential developers in whiter neighborhoods, and the volume of loans to owners in largely white areas is more than double that in neighborhoods where fewer than half of residents are African-American. The same goes for areas with high concentrations of poverty.

— Commercial lending is concentrated in the central business district, industrial areas on the waterfront and existing retail centers. Such commercial lending levels were five times higher per household in areas where fewer than half of the residents are black. It’s the same for small business lending. One exception was small business lending in high-poverty areas, which was a bit higher than in low-poverty tracts.

— Public-sector investment was spread around, with intensive concentrations in high-poverty areas and in predominantly black neighborhoods. So-called mission investment was also more prevalent in high-poverty areas with more African-American residents. But this public and mission investment was just a fraction of overall investment in Baltimore.


meredith.cohn@baltsun.com

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