Officials eye federal money for vacant homes

WASHINGTON — — While most of the debate on President Barack Obama's jobs bill has focused on taxes, spending on infrastructure and unemployment insurance, housing officials in Baltimore and across the country are monitoring a little-remarked proposal to revitalize vacant and abandoned properties.

Though housing officials generally praise the $15 billion program, called "Project Rebuild," they say its impact will depend in large part on whether it is geared to address recent foreclosures or the more chronic abandonment of the sort found in cities such as Baltimore and Detroit.

Early White House estimates suggest the administration is focusing more on the foreclosure problem: Maryland would receive only about $20 million for the program — the minimum for a state under the measure — compared with $543 million for Georgia, $577 million for Ohio and $2.7 billion for Florida, all of which have larger populations and higher foreclosure rates.

The housing provision is part of the broader $447 billion jobs package that Obama sent to Congress last week. The legislation would extend and deepen a payroll tax holiday for individuals, create new tax breaks for businesses, pump $100 billion into infrastructure and extend unemployment insurance.

While Obama has taken an aggressive, campaign-style sales pitch to crowds across the country, the measure faces opposition on Capitol Hill.

"The whole package, I think, is extremely important," said Baltimore Housing Commissioner Paul T. Graziano. He said it would boost existing city efforts to combat blight, such as Mayor Stephanie Rawlings-Blake's Vacants to Value program.

"But I do have to say I'm concerned about some of the apparent limitations."

One example cited by several housing experts is a provision that would restrict cities and states from using more than 10 percent of its funding for demolition unless they receive a waiver from the U.S. Department of Housing and Urban Development.

Because finding private investment for demolition can be challenging, cities and nonprofits often dig into their own budgets to pay for it.

Though demolition is sometimes controversial, it is increasingly viewed in Baltimore and elsewhere as a cost-effective approach to prepare property for future development.

"For a lot of these cities, demolition creates value," said Daniel T. Kildee, president of the Center for Community Progress in Flint, Mich., and a national authority on vacant and abandoned properties. "There just is not enough money to demolish."

City officials estimate the number of vacant structures in Baltimore at about 16,000. The city demolishes about 300 to 400 of those a year, not including structures that are removed to prepare for major projects such as the East Baltimore development near Johns Hopkins Hospital.

The number of vacant housing units in Baltimore is closer to 30,000 because some structures, such as apartment buildings, have more than one housing unit.

Only about 6,000 of the vacant structures are in strong enough areas that the homes can retain some market value, Graziano said.

Meeting the city's demolition needs, he estimated, would cost between $200 million and $250 million.

"We really do need federal help on this," Graziano said. "If we could spend more on demolition, the money would be spent more quickly and the jobs would be out there more quickly."

Frank Ford of Cleveland-based Neighborhood Progress Inc., said federal officials must take care not to impose a one-size-fits-all approach as they develop the program. Market factors that make demolition a less attractive option in one city probably don't apply in another.

"These rules are often designed for an entire country, where admittedly in many cities — Minneapolis or Boston — anything that goes vacant is going to be grabbed up," he said. "Whereas in Detroit, Cleveland and perhaps Baltimore, we view demolition as a community development tool."

The cap on demolition, like much of the Project Rebuild program, is a carryover from the Neighborhood Stabilization Program, created by Congress in 2008 as a way to confront the mounting foreclosure crisis. Additional money was injected into the program in 2009 as part of the $830 billion economic stimulus.

HUD officials said the demolition cap was added in the program's second round of funding after some cities initially demolished properties at alarming rates. The officials said the department almost always approves waivers. Kildee and others expect many cities do not request exceptions when applying for competitive grants, for fear it will hurt their chances.

Nationally, Project Rebuild would direct about $10 billion to cities, states and nonprofits through a formula and the remaining $5 billion through competitive grants.

The administration hopes the money would spur additional construction, reversing a 1.9 million job slide in that industry since 2007. The program also seeks to boost land banks that help cities buy and manage vacant buildings.

But the overall jobs plan has faced skepticism in Congress from both Republicans and some conservative Democrats up for reelection next year. A memo released Friday by House GOP leaders targeted the revitalization program specifically as one Republicans are unlikely to approve.

"There have been allegations of misuse of funds and little evidence that the program delivered the promised results," the document read.

Ford, like other housing experts, counters that withholding money from vacant properties only drives down the value of neighboring homes. And that, on a wide scale, can exacerbate the foreclosure crisis.

"It's like you have 100 apples and 10 of them are rotten," he said. "The market is very damaged by the presence of the those rotten apples in the barrel."