City bets millions on renewal of troubled Johnston Square neighborhood

The public housing unit Susan Batchelor shares with her teenage daughter on a blighted East Baltimore block has new kitchen cabinets, modern appliances and central air. After years on a waiting list, Batchelor is delighted with the renovated two-bedroom apartment she now calls home.

"I love it, I really do," she says. A widow who works as a teacher's assistant, she also loves her low rent: $475 a month, utilities included.

But whether it's such a bargain for taxpayers is debatable.

Batchelor's apartment is one of 10 units inside four East Preston Street rowhouses that were overhauled at a cost of nearly $1.9 million in public funds, 40 percent above the original budget. That means the tab for renovations was almost a half-million dollars per rowhouse — an "insane" price, according to contractor Jack BeVier, who restores rowhouses for profit and isn't involved in the project.

And that is just the start. On the rest of Batchelor's block, and another nearby, 30 more boarded-up rowhouses will soon be rehabbed at an average cost of $300,000 apiece, much of it from federal stimulus funds. Those houses will then be sold to lower-income buyers at steeply discounted prices of $70,000 or $75,000.

All told, more than $30 million worth of housing investment is under way or planned for Johnston Square, a battered neighborhood below Green Mount Cemetery where islands of homeownership are surrounded by vacant lots and empty or run-down houses. Major financing will be from government grants and tax subsidies.

"We really think this will jump-start some things," city housing commissioner Paul T. Graziano said in an interview. "Unfortunately, it's not the kind of thing that gets done cheaply, and it's not the kind of thing that private developers, certainly for-profit developers, are going to do at this point.

"But we sort of feel like if we're in there priming the pump, loss leader, whatever you want to call us," the area will improve, said Graziano, who also directs the city's public housing authority. He defended the rehab costs as reasonable in light of the houses' poor condition and the wage and other requirements of the federal government.

Still, beyond the high costs, some experts in urban revitalization question whether these investments make sense in a neighborhood with swaths of housing that resemble a ghost town.

Christopher B. Leinberger, a visiting fellow at the Brookings Institution who studies urban renewal, cast doubt on the city's investment premise in the neighborhood. "The days of parachuting into a poor neighborhood and doing a few projects, doing a few houses, and then hoping the entire neighborhood is going to turn around are obviously over," he said. "We've learned that doesn't work."

Brett Theodos of the Urban Institute in Washington said while reviving Johnston Square might be a laudable goal, these housing projects likely won't succeed without a broad, coordinated strategy. Though it may sound unfair, Theodos says, public dollars could be more effectively spent where the odds of a turnaround are higher. "It may well be this housing could be a drop in the bucket, and there is so much surrounding distress that it makes no difference," he said.

Graziano insists that the city has a grand plan for the neighborhood and the wider area. Sitting in a conference room high above downtown, he used color-coded maps to show how the projects fit a larger picture, with Johnston Square occupying a key crossroads. The neighborhood is bounded roughly by the cemetery, Jones Falls Expressway, Eager Street and, in spots, North Eden Street.

The work on Preston Street — the 10 apartments and 30 houses — is led by Washington-based Mi Casa, Inc., a well-regarded nonprofit developer chosen in a competitive process by the Housing Authority of Baltimore City, which owns the properties.

There are two other major housing efforts going on in the neighborhood:

•The Lillian Jones Apartments, with 74 units of affordable rentals, is planned for the southeast corner of Greenmount Avenue and Hoffman Street. Groundbreaking for the $16 million project, funded through competitively awarded low-income housing tax credits, is planned for the fall.

•The city housing authority is rehabilitating 36 other rowhouses scattered around the neighborhood. Total cost is estimated at $5.3 million, and some work has begun. The funding source is the $787 billion federal stimulus bill passed by Congress in 2009.

Also, the housing authority hopes to raze an unspecified number of houses, most of them already empty, west of Greenmount between Chase and Biddle streets. Graziano says he wants to "acquire all that, clear it, close down some streets and create some open space — green space, ideally recreational fields." This would include the area north of St. Frances Academy, a renowned Catholic high school.

More broadly, he says, the city hopes to revive the haggard Greenmount corridor that bisects Johnston Square and edges the Greenmount West neighborhood, where new subsidized artist housing has opened. He also wants to better link Johnston Square to areas further east, including the revitalization initiative around the Johns Hopkins medical campus.

Elsewhere in Baltimore, federal money is flowing into areas deemed better off than Johnston Square. Healthy Neighborhoods Inc. leads a consortium that won $26 million in stimulus funds to buy, rehab and resell homes. It works in Patterson Park, Belair Edison and other areas that its president Mark Sissman calls "in the middle" — hurt by foreclosures and vacancies, but not too distressed.

Compared to those areas, Sissman said, Johnston Square is "a much tougher place."

Asked if he can point to any comparable undertakings in Baltimore, Graziano said the city has successfully conveyed numerous Reservoir Hill houses to developers who then revamped them. And assistant commissioner Peter Engel said the HOPE VI projects, which transformed public housing projects into new neighborhoods, showed that "if you do something at scale and focus the resources, you really can turn something around."

"And I guess," Graziano added, "the question is, what's the alternative? Do we just sit here and let these neighborhoods further decline, decline, decline? We've got to do it in a strategic way that says we get that critical mass."

'Give them a chance'

Walter Jones has lived in Johnston Square since 1956. Now in his 70s, he owns the same rowhouse on Valley Street that his family moved into when he was 21. Back then, there were only two other black families in what had been an all-white area.

Jones chairs the nonprofit Johnston Square Community Development Corp., which has worked with Mi Casa, keeping area residents apprised of the progress and construction job opportunities.

Jones thinks his neighborhood, adjacent to the sprawling city jail complex, has too long been denied a piece of the redevelopment "pie," as funds have gone to places like Sandtown-Winchester, Homestead-Montebello, Fells Point and Hollins Market.

Mary Ross, the organization's director, has lived in the neighborhood since around 1970. By then the galloping white flight had flipped the racial composition to mostly African-American. It was still a solid working-class community, she says, still years from the decline so evident today. According to the 2010 Census, 25 percent of houses in Johnston Square are vacant, compared to 16 percent citywide.

The millions of dollars in housing investment won't be wasted, she says. "Watching the decay the last 20 years, I would agree it's costly," she said. "But it's badly needed. I think in the end the results will be good for the overall city."

Despite the woes, a sense of community endures, she says, and crime has dipped. Baltimore police figures show that robberies, aggravated assaults and drug arrests were down last year compared to 2005, although burglaries rose.

Elin Zurbrigg, Mi Casa's deputy director, said her group sees potential where private developers may not. She hopes to begin work on the first for-sale houses later this summer.

"It's an area where people live and work and go to school," she said. "There are people who are homeowners in the community, or who are renters who do care about the community and care about the future of the community and want to see it thrive."

Zurbrigg pointed to Johnston Square Manor, a 1980s townhouse development directly across Preston from the vacant houses Mi Casa plans to restore. Of its 50-plus houses, four out of five are owner-occupied, with assessed values around $90,000, property records show. The 30 for-sale houses on Preston will build on that "cornerstone" of ownership, she says.

As Graziano put it, "Frankly we're protecting the investments of these folks who have stuck it out."

Phyllis Smith, a retiree, has stuck it out for 25 years. Every time she steps onto Preston, she's greeted by a grim tableau of boarded-up houses owned by the housing authority. "Of course it depresses your own property," she said.

Hugh Good, a 63-year-old retired railroad worker, doesn't own his house in the 700 block of Biddle, a block south of Preston, but he acts like he does. Last week, he and a friend donned thick gardening gloves and cleaned up trash-strewn, city-owned lots at Biddle and Homewood Avenue.

An area resident for 15 years, Good describes his neighbors as "beautiful" people badly in need of better housing. One Formstone-clad house on Biddle has sat empty for years, he says, its roof long gone. And nearby a woman and her children had to move out of another house after rats moved in.

"What's wrong with making housing for people to live in so they don't have to worry about rats, roaches and all that mess?" he said. "Give them a chance. This is the United States. Make something decent for everybody."

Still, Good was amazed to hear the average rehab cost on Preston will be $300,000.

"That don't make no sense," he said. "You can go out to the county and buy you a house. Why don't they do that? That's the government, ain't it? Not their money."

High rehab costs

Jack BeVier, the private contractor who isn't involved in these projects, says he could rehab the houses for $200,000 or less. He doesn't blame Mi Casa or the city but rather the requirements imposed when federal dollars are used, which push up costs by, for example, requiring higher wages for construction workers.

"There are so many strings attached to it, it drives the cost up to a ridiculous level," said BeVier, a partner in the Dominion Group.

Engel, the assistant housing commissioner, said the housing authority must follow those rules. He also said ownership units cost more to develop than rentals but said Johnston Square needs more ownership. "In this case," he said, "there was federal money to really help make that work."

In fact, plans to restore the 30 houses lay dormant until the stimulus money became available to Mi Casa.

The $9 million budget for the 30 houses breaks down this way: $5 million in federal stimulus money; $2 million from the city's share of federal Community Development Block Grant funds and $2 million from private sources, including The Reinvestment Fund.

Zurbrigg of Mi Casa noted that these houses are big, with three finished floors and around 2,000 square feet. Some are so dilapidated that only the brick facade can be saved.

She defended the cost per square foot as "quite reasonable" — $128 a square foot in hard construction costs and $160 in total development costs, which includes architectural drawings. On Friday she said Mi Casa's Baltimore contractor has revised the hard cost figure downward to $106 a square foot. BeVier insists, though, that he could do the work for $75 a square foot in hard costs.

Jim French, whose development company will build the 74 apartments of new construction on Greenmount, does not share BeVier's view. If anything, he says the rehab costs sound low.

"That's all they're spending is $300,000 a house?" he said. "Do you know what it costs to renovate a building that's substantially deteriorated and needs rehab? Those numbers don't surprise me."

Already, the rehabilitation of the 10 apartments on Preston has shown how costs can spiral upward.

The budget was $1.3 million when the housing authority chose Mi Casa in 2007. By the time they signed a contract months later, the projected cost had risen to around $1.5 million. It has since jumped to $1.86 million, all covered by federal funds except for $176,000 that the authority had to borrow.

Both sides say the costs increased as Mi Casa and its contractor realized the full extent of the deterioration. Other changes were mandated by Baltimore Gas and Electric, Zurbrigg says, and the housing authority ordered new interior wood framing and joists due to mold and pigeon waste.

But tensions have risen along with the expenses.

In December, Michelle Porter, the housing authority's planning and development director, sent Zurbrigg a barbed letter. If Mi Casa had provided "a realistic budget" of total costs, she wrote, "the agency may have made different business decisions regarding the feasibility of the project given the original proposal."

The sales pitch

On Tuesday evening, the community development group hosted a meeting for anyone interested in possibly buying one of the first 12 Preston Street rehabs. Realtor Erica Solomon of Long and Foster told the 15 people who sat on folding metal chairs that these will be essentially new homes.

The houses will have "three-plus" bedrooms and "two-plus" bathrooms, she said. They'll be energy-efficient and feature "gourmet kitchens," balconies, hardwood floors and central air. Open floor plans will be ideal for entertaining.

"At $70,000, it's unbelievable," she said. " Honestly, I wish I could buy one."

Some will be sold to buyers with household income up to about $66,000 for a family of four, while others will be reserved for those with household income of $41,000 for a family of four.

When Solomon opened the floor to questions, Al Williams spoke first: "I'm very interested in how can we go about applying."

Williams is a truck driver for Amtrak. He and his wife, Maketha, an administrative assistant, had been living in New Jersey but were flooded out. Now they're staying in Baltimore with family and see these houses as a way to sink roots.

Zurbrigg was there, too. "They're going to be beautiful homes," she said, "and very, very affordable."

Listening was Clifford Gaddy, 67, a retired postal worker. He's eyeing one future rehab property: 826 E. Preston. Turns out he lived there as a boy decades ago.

"I would love to get that house," he said. "That's where I was raised up at. This is coming back home."