Neighbors join forces to buy Patterson Park building

Residents of Baltimore's Patterson Park have gone to unusual lengths to protect the fabric of their neighborhood.

When blight and drugs rapidly spread across the community in the 1990s in a way all too familiar for Baltimore, a resident kick-started a middle-class revival by buying and renovating rowhouses — hundreds of them. The effort turned boarded-up and vacant buildings into homes again.

Then the housing bust this decade caused the nonprofit development company he founded to take a U-turn from wildly successful to bankrupt. Now its unsold homes are being auctioned off, and lenders are trying to find buyers for its commercial properties. The nonprofit's headquarters — which had become a popular neighborhood gathering place — is vacant and dark.

Not to be deterred, neighbors are again fighting for their community. While they can't simply pick up where the community development corporation left off, eight residents decided to pool their own money and buy the gathering place — for about $400,000, including closing costs and other incidentals.

It was an extraordinary act in a sometimes un-neighborly era, when investing in your community typically doesn't mean much more than starting a neighborhood watch or cleaning up streets. The acquisition "is a big commitment," observed John McIlwain, a senior resident fellow at the Urban Land Institute in Washington.

None of the neighbors-turned-partners had ever owned anything pricier than a rowhouse until their offer to buy the headquarters building was accepted by the lender this month. They haven't managed commercial real estate, either. What they do have is a shared conviction that the fate of the building is important to Patterson Park — enough to stake their savings on it.

"We just believe in the neighborhood that much," said Steve Gondol, one of the purchasers, whose day job is at the nonprofit organization Live Baltimore.

Patterson Park has become a Sesame Street sort of place, a close-knit collection of blocks where residents turn out in force to plant trees, clean alleys and have fun together. Many moved in during the past decade, attracted by the rapid revitalization, affordable rowhouses and 137-acre park.

That's why the Patterson Park Community Development Corp.'s collapse at the end of 2008 sent shock waves through the neighborhood it helped build. The concern wasn't only that the nonprofit would no longer be there to promote the area and woo newcomers. Residents also were anxious about who would buy the nonprofit's remaining portfolio of partially renovated homes, rented-out buildings and other properties — more than 100 in all.

Residents especially wanted to know who would end up with the beautifully renovated headquarters. Its location at Baltimore Street and Linwood Avenue is symbolic for a neighborhood once known as "Baltimore-Linwood." The first-floor restaurant there — called "Three…" — doubled as the community living room until it closed in December, hurt by the recession.

The worry was that the property would sit vacant for years. Or get bought up by someone who would want to drastically change the building's use. Carlos Plazas, an accounting manager who became one of the eventual purchasers, said residents were convinced a restaurant could succeed there but knew that others might not agree.

Neighbors kept hoping for a white-knight group to buy the place and make it a neighborhood focal point again. Then four individuals and two couples had a wild and scary idea: They could become that group.

"We all got swept into this by the seat of our pants," said Jen Di Mattina, 29, a project coordinator for a medical ethics review board who joined the partnership with husband, Joe.

"Expediency trumped judgment," added fellow purchaser Owen Gray, 35, laughing.

It reminded them so strongly of the folk tale about the little red hen — who plants wheat seed, harvests the grain and turns it into bread all by herself — that they named themselves Red Hen LLC.

When the building went on the auction block in February, they were the highest bidders. But M&T Bank didn't accept their $298,000 offer. It was a fraction of the more than $790,000 the bank was owed, let alone the building's $1 million appraisal before the market slumped.

The bank thought it could do better. Another auction was scheduled for May.

The Red Hen folks used the time well. They sought advice from Healthy Neighborhoods Inc. and other groups interested in community development. They lined up prospective tenants, including a restaurateur. They pored through books about limited liability corporations. And they kept making offers to M&T.

"Persistent," said Paul Cooper with Alex Cooper Auctioneers, which ran the first auction and was on tap to handle the second. "Very persistent."

They got a contract on the eve of the auction, after the Patterson Park Neighborhood Association sent a pointed letter to M&T, urging the bank to seriously negotiate. (The purchasers say that intervention came as a surprise.)

Their euphoria is tinged with stress. They're financing some of the purchase, but it's still a lot of cash. "There's some people that have committed a good portion of their financial health to this," said Gondol, 32, who went in with his wife, Marisa Vilardo.

Charles B. Duff, president of Jubilee Baltimore, a nonprofit developer, knows exactly how that feels. He and Mount Vernon neighbors organized to buy a sagging commercial building on Charles Street in 2003 because they feared the landmark would otherwise be torn down. They beat out the competition with a $600,000 bid for the property and an associated business.

Afterward, Duff said: "I had such a case of buyer's remorse." The building needed nearly $1.7 million in structural repairs and rehabilitation.

But the residents, with help from nonprofits, government agencies and banks, made it work. A wine shop rents the ground floor space; people live upstairs. No one has lost money, and they will probably make some down the road, Duff said.

He's happy to hear that Patterson Park neighbors — who have the advantage of buying an already renovated property — also are putting their money where they live.

"I think the group in Patterson Park is part of the next Baltimore," Duff said. "I think this is the way Baltimore is going to work — I hope it is — with a lot of neighborly cooperation of a very serious kind."

The roots of that collaboration for Patterson Park go back to the early 1990s. Ed Rutkowski, a neighborhood leader, was alarmed to see the once-solid streets declining, with drug dealers, prostitutes and slumlords taking over as longtime residents fled. Vacant houses were both a cause and an effect. So he and three neighbors started buying the properties.

In 1996, Rutkowski turned that effort into the Patterson Park Community Development Corp.

Matt Gonter, who bought a CDC house nine years later, has a clear memory of going to a party in 1995 just south of the park that gives the neighborhood its name. The street was so sketchy, he grabbed everything valuable from his car and rushed to get inside the house. And that was the better part of the area.

"If you told me back then that I'd be living on the north side of the park, I would have told you you were insane," Gonter said. The CDC "turned the place nobody would consider living in before into a desirable neighborhood."

The group rehabbed more than 300 homes over its lifetime, said Mark Tough, who joined the CDC in 2004 and served as acting executive director after Rutkowski left at the end of 2007. Between its work and the rehabbing by private investors who rushed in as the housing market heated up, the CDC was running out of rowhomes to acquire. It picked up vacant commercial properties. Leaders thought about pushing into new neighborhoods in need of turnaround.

But when the real estate market busted, the value of its properties plummeted. Like so many homeowners, the CDC was underwater on its mortgages — dozens of them.

It filed for bankruptcy protection in February 2009, indebted to many, from small building contractors to big foundations to former employees. Tough loaned the CDC $110,000, according to bankruptcy filings, and it's unclear whether he'll get any of it back.

The nonprofit's demise angered some residents, particularly newer buyers left with worthless warranties, problems in need of fixing and unfulfilled promises. The upscale "Envirowhomes" the CDC was building on Decker Avenue were supposed to have green roofs, but the slow-growing grass was to be planted after all the properties on the block were done — and the organization collapsed while still working on the final homes.

Brian Sellers, who bought an Envirowhome in early 2008 for about $280,000, said he understands that bankruptcies happen and work is inevitably left undone. What bothers him, he said, is that residents were left in the dark as problems mounted, and received no parting words of advice at the bitter end.

"It was like the captain of the team just quit, and he didn't tell anyone," said Sellers, 33, who had been sold on the CDC's pitch to be "part of a movement" to revitalize the neighborhood.

Residents wrung their hands after the bankruptcy. Then they got to work. Neighborhood association leaders organized annual home tours to fill the marketing void, learned how to apply for grants to fund projects and reached out to other nonprofits to team up on community improvement.

"It was kind of amazing how quickly we rallied and said, 'OK, what are we going to do to make up for this?' " said Helene Luce, who moved to Patterson Park in 2006 and organized popular weekly trivia nights at the neighborhood restaurant before it closed.

The CDC's founder, who left the organization to become executive director of the Patterson Park Public Charter School, thinks the nonprofit's lasting legacy is the infusion of new residents drawn by the rehabbed homes. Rutkowski is convinced that Patterson Park will be fine without its former anchor.

"What the CDC did … was to bring in young people who care a great deal about their neighborhood and are willing to fight for it," he said.

All of the purchasers of the headquarters building had moved in after the CDC was formed. Some bought CDC homes. Tough said he's thrilled — as a former CDC leader and current Patterson Park resident — that his neighbors will take over as the new owners when the deal closes in July.

That's the dominant feeling in the neighborhood. Mark Coggiano, a resident since 2003, was struck anew by the "awesome" outcome when he came upon the purchasers in an ebullient gaggle in front of the building last week.

If the economy wasn't so rough, he's sure even more residents would have come to the table with money. Patterson Park is just that sort of place.

Said Gondol: "I am always amazed at the roll-up-your-sleeves mentality."

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