Five years in, city Vacants to Value program showing mixed results

In the Oliver neighborhood of East Baltimore, a row of once-decrepit vacant houses is rehabbed and gleaming. New townhouses are going up at Bond and East Preston streets — once a major drug corner — while more are planned for a vacant lot the next block up.

Across town in the Upton neighborhood, vacant houses did not meet the same fate. Investors bought homes in the almost completely vacant 600 block of Pitcher St. four years ago and began rehabbing a couple before abandoning the effort, according to neighbors. On Monday, the city began demolishing them.

Five years ago, Baltimore Mayor Stephanie Rawlings-Blake promised that the city would rehabilitate or demolish thousands of the city's vacant houses. Her signature Vacants to Value program has received national recognition.

Next week, the city is planning a summit to celebrate the program's success. And in a report released Wednesday, the Baltimore-based Abell Foundation says Vacants to Value has helped transform several neighborhoods.

But the foundation also says that the city has in some cases "overstated the reach" of the program.

"I really think this is a good program and the next mayor should not scrap it," said Joan Jacobson, the author of the report. "It's a much better way to sell houses than any other program the city has used.

"However, there are problems that need to be fixed. And one big problem is a lack of financing. And the city needs to be more accurate and transparent about its success."

City officials point to three neighborhoods that have seen significant transformation under Vacants to Value: Oliver, a blighted neighborhood where two developers have rehabbed dozens of vacants; Greenmount West, where rehabbed homes are now being listed for sale at more than $300,000; and Reservoir Hill, where blighted Callow Avenue is set for a makeover.

The city relies on partnerships with developers, who rehabilitate the properties. During the slow recovery from the recession of 2008, officials say, it has been difficult to find developers who are interested in taking on the work.

"I think what we've been accomplishing in light of the economic environment is noteworthy," said Julie Day, Baltimore's deputy housing commissioner for land resources. "There are credit issues, there are capital issues that are bigger than what we're able to fix directly — and that's why it's really important that we're able to cobble together the different tools that the city can bring to bear to create a good environment for investment."

Vacants to Value is aimed at one of the city's most visible problems. The city counts more than 16,000 vacant homes; the U.S. Census Bureau believes the figure is closer to 23,000.

The Abell Foundation says the number of vacant houses on the city's list grew by more than 500 in the first four years of the program, to 16,636 by the end of last year.

Rawlings-Blake said the program's progress is "very clear." She said she is "always pushing" the housing department toward the program's goals.

"We all know that we have immense challenges," she said. "We also know that it's going to take a concerted effort on a consistent basis to make a difference, and that's what this program is.

"We can be glass-half-empty if you'd like, but we can also take a second to acknowledge that this is the most comprehensive blight elimination initiative that the city has had in over 50 years."

When Rawlings-Blake unveiled Vacants to Value in November 2010, she promised a new approach to an old problem. In emerging areas that were being dragged down by scattered vacant houses, the city would step up code enforcement and seek developers to rehab properties.

In heavily blighted neighborhoods where there wasn't much hope for spurring the private market into action, the city would raze or find developers to rehab an entire block at a time.

That was a departure from the quasi-governmental nonprofit land bank proposed by Rawlings-Blake's predecessor, Sheila Dixon, and the Project 5000 initiative, which encouraged the housing department to acquire more vacant properties, created by Martin O'Malley.

Under Rawlings-Blake, the housing department laid out a multipronged approach to cut through red tape and speed the sale of city-owned properties. Officials set an initial goal of rehabbing 1,500 vacant houses, and finishing 500 in the first year. The city also set a goal of demolishing 500 properties in the first year.

Two years later, city officials set a goal of tearing down 1,500 vacant properties and renovating another 1,500 from the beginning of 2013 to the end of 2015.

Jacobson called the program's early goals "overly ambitious," considering the continuing effects of the recession.

Records obtained by The Sun show that the city sold about 800 houses from the fall of 2010 to August 2015, and only about 300 of those had occupancy permits, indicating a completed rehab.

The rest were demolished for new development by East Baltimore Development Inc., have permits indicating some rehab work, or have no permits at all.

From December 2010 to August, the city demolished about 1,280 vacant houses, records show.

Jacobson said the program's greatest success was not in selling city-owned properties, but in receivership. Through receivership, housing attorneys can ask a judge to take a vacant from its owner and give it to a nonprofit that auctions it to be rehabbed.

By the end of 2014, Jacobson found, 448 properties had either been rehabbed after going through receivership, or the threat of receivership was enough for the owner to clean up the property.

A key problem, Jacobson found, is a lack of money for financing. Banks won't lend to homebuyers to rehab a vacant shell, so only a few individual buyers who intend to occupy the properties have successfully bought homes through the program.

Jacobson said officials gave her a database of 1,585 properties that they said had been completely rehabbed through the program's first four years. She said she found hundreds of them lacked building permits for renovation, or had permits that predated the program. She said nearly 300 more properties were purchased by investors on the private market and were not involved with the program.

A spokesman for Rawlings-Blake took issue Wednesday with the way the Abell Foundation interpreted some of the statistics it reviewed.

"We appreciate the Abell Foundation's recognition that the Mayor's Vacants to Value initiative is the 'most ambitious blight elimination effort in 40 years,' as well as the acknowledgment of the major challenges that the City has successfully taken on with respect to securing ownership of long-abandoned privately owned properties for redevelopment," spokesman Howard Libit said in a statement.

He said the city has filed receivership cases on more than 2,100 vacant buildings, and helped initiate the sale of 1,277 properties, the rehabilitation of more than 2,500 vacant properties, the demolition of almost 1,700 dilapidated structures, the award of more than 500 Vacant to Value homebuyer assistance grants and the adoption and greening of nearly 900 vacant lots by community groups.

The city's annual budget for demolitions is about $10 million, plus whatever state and federal grants officials can cobble together. The costs can include moving the last few people living in a nearly vacant block to a comparable home elsewhere.

About $3 million of the annual budget gets eaten up by one-off demolitions for when a house collapses, or if a vacant house is compromising the structure of an occupied house next-door.

With limited dollars, officials try to be strategic, said Michael Braverman, a deputy housing commissioner who oversees demolitions.

"If you want the 1500 block of Broadway to be redeveloped, you most likely have to demolish the 1500 block of Regester [Street], which is right behind 1500 Broadway," Braverman said. "So there are these alley streets behind the principal ones that are likely to see the investment, and the demolition occurring there leverages the investment."

That demolition on Regester Street happened in October. Developer Karim Harried plans to renovate 17 houses in the 1500 block of Broadway. He thinks they could sell for close to $300,000.

Harried said the $10,000 buyer grant has been a boon, because it attracts buyers who might earn relatively high wages but lack savings for a down payment. He has renovated about 50 homes in the Broadway corridor.

"I feel like there's no reason why East Baltimore can't be Canton or Federal Hill," Harried said. Buyers "want to be part of this rejuvenation."

In some cases, developers have razed the vacant houses they bought and built large affordable housing buildings in the space. Those projects include the $16.1 million, 74-unit Lillian Jones Apartments in Johnston Square, and a $14 million, 64-unit affordable housing complex in the 3000 block of W. North Ave. called North Avenue Gateway. Both opened in 2013.

Vacant houses have plagued Baltimore at least since Thomas D'Alesandro Jr. was mayor in the 1950s, and different administrations have tried to fight back with land trusts or selling houses for $1.

Vacants are magnets for fire and crime. Officials say the city's housing stock — attached rowhouses — is trickier and more expensive to demolish than the single-family dwellings in cities such as Detroit.

While there are success stories, some neighborhoods feel left out.

"We've not seen any success here at all," said Marvin L. "Doc" Cheatham, who leads the Matthew A. Henson Neighborhood Association in West Baltimore. While the city has painted colorful markers on some vacant houses for sale through its program, Cheatham said he doesn't see them in his area.

The scale of the problem in West Baltimore is significant, he said. From his backyard in the 1600 block of Appleton St., he can see mattresses, garbage and "wood piled up so high it's almost seven feet." With rats scurrying around the uncut grass, people walk in the street rather than the sidewalk.

"It's clear we need a major program to deal with these boarded-up houses, but we need to revisit what Vacants to Value was intended to do," Cheatham said. "Because if it was supposed to address vacant houses throughout the city, it has failed."

In Oliver, a neighborhood near Johns Hopkins Hospital plagued by vacancy and crime, the Philadelphia-based TRF Development Partners bought more than 60 vacant houses. The group demolished a few, but renovated and obtained occupancy permits for the majority.

When the group started rehabbing in the late 2000s, President Sean Closkey says, about 8,000 of the 17,000 houses and lots in the neighborhood were vacant.

With blight on that scale, he said, "You can't fix it all at once. It's just not going to happen."

So the group worked on a block at a time.

"Your work encourages others to come in," he said. "We want to be the catalyst and let the market take over."

TRF has helped transform blighted blocks mostly in Oliver, but also in Broadway East and Greenmount West. The group rehabbed about 30 houses before the start of Vacants to Value, Closkey said. He said the program has made it much easier to obtain the entire blocks of houses that are critical to the group's strategy.

"We are interested in working on other neighborhoods in Baltimore because we have a high level of confidence in the city administration's ability to work with developers to get housing markets to work again," Closkey said. City housing staff "is just dynamite. They have a game plan."

The Oliver neighborhood still struggles with blight, crime and poverty, but residents said things are starting to move in a different direction.

"There's just an overall spirit of rebuilding and rebirth that tends to permeate those couple blocks because of all the new construction and new faces and new families," said Dave Landymore, who runs a nonprofit that's seeking to turn Oliver around. "There's homeowners there and the general understanding is that they're homeowners, they're going to stay."

Elsewhere, developers started rehabbing vacant houses or obtained work permits but didn't follow through.

In 2011, two business partners bought a dozen vacant houses in the 600 block of Pitcher St., off Pennsylvania Avenue in Upton.

Before the demolition this week, city officials had posted a notice on the boarded-up doors warning that the structures would be razed if the owners did not begin rehabbing them within 30 days. The partners did not respond to requests for comment.

"They finished these two and then they boarded them up, and people started coming in and stealing the doors and the windows," neighbor George McClain said before the demolition.

McClain said he has heard a lot of promises for redevelopment in the area over the years and had been skeptical the Pitcher Street renovations would come to fruition. At age 82, the retired mason wants to move out of the neighborhood he grew up in, but doesn't think he will.

"I was here when this block was in bloom," he said. "I didn't think I would ever see Baltimore like it is now."

cwells@baltsun.com