With only a third of the vacant houses sold at an auction last spring renovated and occupied, Baltimore officials are trying to figure out what went wrong with the ambitious effort to rejuvenate older neighborhoods.
For the second time in a row, a highly promoted attempt by the city to attract new homeowners for its growing inventory of boarded-up homes appears to have faltered. A spring sale in 1993 generated mostly investor interest and was frustrated by a complex foreclosure process.
City officials tried to simplify last April's auction, but a year later, RTC only 20 families have moved into the 60 homes purchased at the Baltimore Home Festival Auction. And some of the successful bidders have become so frustrated with the red tape and delays that they are giving up on the program.
"It's been a disaster," said Charles Smith, director of the Greenmount West Community Association, who has found another home and asked for his $900 deposit back.
Last week, concerned by the continuing complaints, the City Council called for a hearing to investigate the results of the auction.
Mayor Kurt L. Schmoke described it as "an overall success." He received one letter of thanks from a couple inviting him to tour their refurbished house on Forest View Avenue.
But Mr. Schmoke acknowledged that the program has been dogged by renovation problems and by complications involving credit checks, income verifications and property appraisals.
He said Friday that he wanted to assess the work of the various contractors and that he had ordered city housing chief Daniel P. Henson III to prepare a list of them. Mr. Henson said he provided the list that night.
The housing commissioner said credit problems and the extensive renovations that the city promised to make have forced families to postpone moving into the houses they bought. An additional dozen homes are being completed, he said, but some successful bidders have failed to qualify for mortgages.
"This was intended to be a turn-key opportunity for people to buy a house. It is part of an overall plan to get rid of these vacant houses" Mr. Henson said.
He is planning another auction this year but said the city no longer will offer homes that are little more than vacant shells and require a complete overhaul.
In the 200 block of E. Lafayette Ave., the brick rowhouses have rotting floors, trash-strewn basements and few fixtures left after being stripped by vandals.
Repairs went unfinished at nine houses there after Lanocha Construction Inc., the contractor selected to do the work, became the target of a federal corruption investigation.
Lanocha gutted two of the rowhouses in August but stopped the work a month later. In November, at the company's request, the city housing department canceled its contract with Lanocha.
Since then, Timothy and William Lanocha, the brothers who own the Jarrettsville construction company, have been convicted of making illegal payments in relation to another program, to the housing agency's troubled $25.6 million no-bid repair program. Lanocha officials did not return calls late last week.
A federal audit and a three-part series in The Sun last month detailed serious deficiencies in the emergency program to fix up more than 1,000 homes for the poor, including shoddy work, inflated costs and bogus bills.
Mr. Henson acknowledged that the cancellation of the Lanocha contract "did set us back a bit" in renovating the auctioned houses but said the city is hiring another contractor to complete the work.
Third District Councilman Martin O'Malley decided to look into the auction after receiving a letter from Ward Morrow, a lawyer who has been left dangling since he made a $25,000 bid on a two-story rowhouse in the 3900 block of E. Pratt St. in Highlandtown.
Mr. Morrow got into a dispute with an auction official who told him to ante up an additional $5,000 because the state owned the house and had set the minimum bid at $30,000.
State housing officials agreed in June to let him have the house for $25,000, but the city did not begin the repairs and then demanded that he pay for them.
"This was a first-time purchase, and I was real excited about it," Mr. Morrow said. "Now it's been a year, and I don't know how much the house has deteriorated. It's outrageous."
Billed as a chance to revitalize neighborhoods and get vacant, dilapidated homes back on the tax rolls, the auction offered about 160 houses ranging from a Charles Street condominium to modest rowhouses in Reservoir Hill, Hollins Park, Poppleton and Federal Hill. About 100 of them went unsold.
The city promised to pay for renovations with "gap financing" from community development block grants if owners pledged to live in the home for at least 10 years. Community Development Financing Corp., a quasi-public development organization, lined up contractors and handled most of the construction loans.
At the time of last year's auction, city officials hoped it would have a greater chance of success than one held the previous year. In a 1993 tax sale, 350 of 1,500 vacant homes were sold, mostly to investors.
Mr. Smith, 32, said he was eager to fix up at 203 Lafayette Ave., the house he purchased for $43,000, and that he planned to live there for years.
Robert Helmacy, a 39-year-old ironworker who sold his home in Pasadena for $106,000 to qualify for the auction and bid $40,000 for a house at 207 Lafayette Ave., said, "I wanted to move into the city."
For Gilbert S. Jenkins Jr., the auction offered a chance to turn around his mostly deserted block. He was looking forward to neighbors such as Mr. Helmacy. But his enthusiasm has turned to dismay since contractors damaged the wall next to his dining room.
Workers put up tar to stop the leak and left the unfinished home covered with a sheet of plastic. But Mr. Jenkins' wallpaper has shredded, and his basement still gets soaked when it rains.
"All of the buyers have been put in a very difficult situation," Mr. Smith said. "My life has been on hold since last April."