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Vacants to Value program quietly cuts homeowner incentive and tells applicants to get in line

Vacants to Value program quietly cuts homeowner incentive and tells applicants to get in line
A worker removes debris next door to the home Nic Thornton and Jason Hill are buying on East Lanvale Street. (J.M. Giordano/City Paper)

Jason Hill and Nic Thornton are planning to get married on Oct. 1. In December they plan to close the purchase of their first home, on the 300 block of E. Lanvale Street, a block north of the Copycat building. But now they're $10,000 short.

"We're going to have to either get a second mortgage, or go back to our families," says Hill, a federal employee and D.C. resident. "We put down $20,000 already, but the rule in real estate is, you have to pay your closing costs."

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Hill and Thornton are two prospective buyers of Baltimore houses rehabbed under Mayor Stephanie Rawlings-Blake's vaunted Vacants to Value initiative who were shocked last month when Baltimore Housing abruptly announced that a $10,000 grant to buyers was gone.

"At this time, the incentive has been exhausted, and we are not accepting any additional applications," read the announcement, quietly posted on the department's Facebook page on Aug. 17. "We will take names and contact information for buyers should any additional funds become available over the next ten months."

Vacants to Value, launched in 2010, is among Rawlings-Blake's most celebrated programs. She has touted it as a model program to other cities and even in the White House, and it has long been part of her goal to bring 10,000 new families to the city—families like Thornton and Hill. The program seeks to force owners of dilapidated houses to either sell or renovate them by increasing code enforcement on the sometimes dangerous structures and imposing fines. When developers buy the houses, they are given a year to rebuild, and the city supports them by marketing to owner-occupants. The $10,000 "bonus program," was part of that effort.

The announcement ending the bonus program surprised buyers and developers, who had not been given any warning of the change. In years past the program funded dozens of buyers. Its abrupt shut-down just five weeks into the new fiscal year throws into doubt the plans and finances of small developers who have depended on the program.

"I have two developers who were about to list houses and were going to list them as V2V," says Tracey Clark, a Realtor with Berkshire Hathaway Home Services. "To have a month into the fiscal year, and say we're out of funds, makes no sense."

Avendui Lacovara, a realtor who has sold more than 40 V2V houses over the past three years, says that until now, all of the buyers qualified for the $10,000 incentive.

"With only five or 10 grants and only available in July, it changes the dynamic of the market," Lacovara says. "I don't think the developers were told. They did these redevelopments thinking [the $10,000 incentive] would be there."

The incentive helped drive sales, Lacovara says, but it also brought intangible benefits. "In terms of marketing the community, it's a much more valuable program," she says, "because it gets people to look at certain neighborhoods, and certain blocks, and even if they don't end up there, they get their agents familiar with the neighborhoods."

After three years of the incentive, developers and real estate agents were finally becoming familiar with it, Lacovara says: "I would have thought the change could have been rolled out in a more user-friendly way."

As of last week, no one knew why the bonus program had been cut. According to city budget documents, the Vacants to Value program budget had actually increased from $2.75 million in fiscal 2016 to $3.43 million this year. The program is set to hire two new employees, for a total of 52. And that doesn't count a state program that will inject $18.5 million into Baltimore's demolition effort.

In short, the budget documents show a shift away from homeowner incentives and toward demolition, which is always an urgent need. This spring a man died when a vacant house he'd parked next to fell on him, crushing him inside a prized classic Cadillac. Shortly after that, Baltimore Housing Deputy Director Michael Braverman said the city had completed 32 emergency demolitions during fiscal year 2016, with two months left to go in the budget year. By year's end the count had increased to 166—about five times the city's normal annual rate. But city and development officials declined to discuss the policy decisions that drove the budget changes. And, indeed, few even knew about them.

"I really don't know anything," says Linda Harrington, Deputy Director of Jubilee Baltimore, a non-profit that works on neighborhood redevelopment. "I was just as surprised as you were that the money had dried up, and contacted them to confirm. They were just taking names to put them on a waiting list… We've had a realtor call us expressing how it's going to hurt their sales because people were really banking on it."

City Councilman Bill Henry, who chairs the Council's Housing and Community Development committee, said two weeks ago that he had just heard of the budget cuts and did not know how it happened. Uncharacteristically, he did not respond to follow-up calls or emails last week.

Baltimore Housing Spokeswoman Tania Baker confirmed the cut and said the department had learned it was coming as early as last February, "but it wasn't confirmed until the budget book came out."

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Contrary to what the actual budget documents appear to say, Baker says there is no specific Vacants to Value Budget. "The money for the Booster Program is listed as a line item under the Baltimore Homeownership Incentive Program," she writes in an email to City Paper. "In FY 16, the V2V Booster program had $960,000 in grants available to fund 96 cases compared to $300,000 in grants available to fund 30 cases in FY17. The overall funding for homeownership incentives was reduced by over one million dollars prior to the cuts used to fund youth initiatives. We have been continually advocating for the program and wish that we had more funding in the budget. However, this was a decision that the administration made looking at the City's budget in its entirety."

The adopted fiscal year 2015 budget says the incentive program had nearly $570,000 with an "aim to provide homeownership incentives to 600 homebuyers. The amount increased to $649,824 in 2016, plus an additional $2.7 million in capital funding, plus a federal fund appropriate of $1.5 million, according to the adopted budget. That is more than $4.8 million allocated last year for all homeownership incentives.

The words "homeowner incentive" do not appear in the current budget.

Hill says he and his husband-to-be will manage. They are dedicated to moving to Baltimore. "We just love the energy of the place," he says. "I feel worse about the families whose finances are so marginal and who may have depended on the program as the key to getting into a house."

Despite the incentive cut, V2V continues to be a centerpiece of the outgoing mayor's redevelopment policy.

On Aug. 9, the city announced it had sold 19 more vacant properties to developers who would have a year to renovate. Nine sold for the minimum bid of $5,000; one—1007 Charles St., went for $440,000.

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The next auction is scheduled for Sept. 27.

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