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For contractors, riches from ruin: Wrecking : The city's drive to shore up neighborhoods is worth millions for a handful of demolition businesses.

On paper, Pless B. Jones looked like a man in trouble - besieged through the early 1990s by an ugly divorce, lawsuits by creditors, threats from the IRS and a protracted bankruptcy.

But in 1995, Jones and companies connected to him managed to pump nearly $16,000 into Mayor Kurt L. Schmoke's re-election campaign and a year later funneled $37,700 into national Democratic Party coffers.

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And all during the time his company was pleading poverty to a federal bankruptcy judge, records show, his companies were collecting more than $7.2 million from the city housing administration.

Today, the 48-year-old demolition contractor is back from the brink of financial disaster, thanks to his role in a $20 million campaign to tear down rundown buildings while increasing the amount of tax dollars that go to minority businesses.

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Housing Commissioner Daniel P. Henson III has paid contractors to demolish 1,500 units of city-owned public housing with dynamite, bulldozers and wrecking cranes during his four-year tenure. But he also has engaged in a less spectacular drive on Baltimore's side streets and alleys to topple more than 1,000 privately owned, decayed dwellings - and now vows to wreck another 1,000 this year alone.

Baltimore's housing chief refused requests for an interview but said in written statement: "No city in the country has made more progress in the last few years in ridding itself of substandard properties."

But the vacant lots left behind are actually fueling the neighborhood blight that Henson's Department of Housing and Community Development has been trying to curtail, an investigation by The Sun has found.

The reason: Bills for the demolitions are passed on to property owners, many of whom are dead or too cash-strapped to pay them. So the city attaches the debts to the land itself, barring anyone from buying it until the demands are satisfied.

The unpaid bills are now acting as an impenetrable paper barrier around as many as 5,000 vacant lots in the city. And they have driven many owners to abandon their stakes - leaving postage-stamp plots to become dumps.

Henson is vowing to expand their number by 20 percent in a single year. If he succeeds, he will have taken down more houses since 1993 than his predecessors did in the eight years before he arrived.

This wrecking binge has been a wellspring of cash for a small circle of contractors, who have had a virtual lock on the work since Henson took office.

L In his letter to The Sun, Henson dismisses this as "a myth."

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But an analysis of building permits and other records shows that Jones and Randolph Phipps have received more than 60 percent of the $4 million that Henson's housing department has paid contractors for demolition work over the past three years.

Henson's housing authority has also spent spent millions more to tear down public housing projects. The commissioner would not release public housing payment records sought by The Sun.

But sources and the limited data available show that $4.4 million of the $8 million spent to demolish two public housing projects - Lexington Terrace and Fairfield Homes - went to a separate corporation formed last May by Jones and Phipps. A housing department spokesman, however, said the figure was less - about $3.1 million.

The two have been paid millions not only to tear down buildings, but also to brick up the walls of houses that are left behind to keep them from keeling over after adjoining dwellings are ripped away.

The program has been so lucrative that these firms now do little work in Baltimore that is not billed to taxpayers. And first among them is Jones' P&J; Contracting Co. Inc.

"It's true that he's done very well in his demolition contracting for the city in recent years," says Jones' attorney, Robert Fulton Dashiell. "And I'm sure it's one of the things that sustained his business through his bankruptcy reorganization. But that should not suggest that he's done anything improper."

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Local housing advocates and urban planning experts say Henson's push to knock down old, abandoned hulks is plainly a good idea. They point out that the exodus of nearly 300,000 residents has left behind as many as 40,000 decaying houses that would cost more to fix than they're worth.

But the advocates and experts also agree that his crusade to knock down an average of four dwellings a day from now until Christmas is unfocused and proceeding at a reckless pace.

"There doesn't seem to be any overall plan or policy guiding the program," said Dr. Sandra Newman, a senior researcher at the Johns Hopkins University's Institute of Policy Studies. "The city is reacting to a crisis one case at a time, which has very little impact on the crisis itself."

Rather than leveling whole blocks of dilapidated houses, the housing department is toppling them one at a time and leaving behind worthless lots wedged between equally worthless houses. Because most are no bigger than a bowling alley, they are too small for any practical use and are unlikely ever to be claimed.

Baltimore's neighborhoods are now pocked with thousands of these plots, city tax records show, the accumulation of more than a decade of demolition and abandonment. Some have been transformed into informal parking lots and neighborhood vegetable gardens. But many more are blighted dumps.

"You wind up achieving nothing and maybe making matters worse," said Dr. David Listokin, a senior researcher at Rutgers University.

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Typical is the 2600 block of Frederick Ave. in West Baltimore. There, conscientious homeowners and students at nearby Frederick Elementary School contend daily with a weedy yard of nine demolition sites strewn with tires, used car parts, broken glass and wind-blown trash.

Asks Newman: "What possible strategy could we be furthering by knocking down a single house on a blighted block, then coming back a month later to knock down another one, and another one after that?"

Records show that the piecemeal practice makes it unfeasible for larger firms to compete for the work when it is put out for bids because they tend to specialize in mass demolitions that are cheaper, faster and safer.

Similarly, spot demolitions keep out-of-town firms from seeking contracts because the profit is too small to justify the expense of hauling their equipment to Baltimore.

But the housing department routinely goes through the exercise of asking for bids from these firms - including one with a worldwide reputation for using dynamite to do large-scale demolitions - even though they rarely respond. With the circle of wreckers limited in this fashion, records show, the same small group of local companies picks up the lion's share of the work, churning out a steady stream of worthless vacant lots at an average cost of $15,000 apiece.

The heaviest hitter among these firms, records show, is P&J; Contracting. Building permits show that nearly 70 percent of the company's jobs in the city in recent years have come from the housing department.

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Jones canceled a scheduled interview with The Sun to talk about the impact of the city contracts on his business, saying: "The issues you're interested in discussing aren't meaningful."

Records show that the contracts have enabled Jones to rebuild an enterprise that appeared all but finished as recently as 1991. Baltimore Gas and Electric Co. tried to have his firm banned that year from doing excavation work anywhere in the state after P&J; employees dug up nine utility lines.

The gas and electric giant later dropped its lawsuit after Jones agreed to train his workers better.

Today, the firm and its owner are enjoying happier times.

Jones is a frequent visitor to Henson's 13th-floor office at the housing department's gray concrete headquarters on Fayette Street. And he regularly appears next to Mayor Schmoke at events such as the recent demolition of the Lexington Terrace housing project - for which Jones, in partnership with Phipps, got more than $3 million.

Almost daily, his crews roll out before dawn from P&J; Contracting's fenced compound on Ridgewood Avenue in West Baltimore in a caravan of dump trucks, front-end loaders and pickups. By first light, they are hard at work pulling down old houses and carting off tons of brick and debris to city-run landfills.

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In May 1993, Jones told the bankruptcy court that his firm held $1.2 million in outstanding city contracts. And he has guarded them jealously.

Seventeen months ago, when the city was considering whether to buy its own 50-ton crane so the Public Works Department could do more demolition jobs, Jones and Phipps sent a representative to lobby against the plan.

"The demolition contracting area is a large portion of their revenues," Arnold Jolivet, president of the Maryland Minority Contractors Association, told the Board of Estimates on November 22, 1995, in opposing the crane purchase.

The city ultimately went through with the deal, spending $555,000 on the crane - but only after Henson offered assurances that the housing department's expanded demolition campaign would mean plenty of work for Jones and his fellow contractors, transcripts show.

But the bright yellow crane has been all but idle because no city employee is qualified to drive it - the two operators took early retirement last year. A spokesman says the agency is trying to contract out the operation of the crane until it can hire its own operators.

Meanwhile, to supplement the demolition work of the private contractors, Public Works officials say they continue to rent cranes with operators.

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Schmoke says the fact that larger wrecking firms "select themselves out" of the bidding because of the small profit on piecemeal demolitions is an unforeseen consequence of a practice dictated by necessity.

It is no small feat, he says, to package adjoining properties for the wrecking ball in a historic city where so many dwellings share common walls.

Architectural preservation groups, for example, have resisted efforts to tear down blocks of sagging alley houses dating to the 1800s. And some residents - even those who live on otherwise abandoned blocks - refuse to move to allow a clean swipe of an entire row.

"You'll get the individual contacting their community association and talking about their rights to stay, then their local elected official will generally take the position of that one single homeowner," Schmoke said. "It's not that easy."

In short, nostalgia forces the city to work around people. And smaller wrecking firms like P&J; Contracting that are geared to take on the smaller contracts naturally come to dominate the demolition program, Schmoke says.

"There are a lot of things that we do to accommodate community sentiment, things that are not driven by an overall strategic plan," Schmoke said. "I don't know of that many blocks in Baltimore where the city controls the whole block."

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Wrote Henson: "Fortunately and unfortunately, Baltimore has very few blocks which are 100 percent vacant."

But tax and court records show dozens of blocks with three, four or more adjoining hulks that are ripe for package demolition. And little has been done to inventory them for a coordinated assault on blighted housing.

Rather, the city's demolition effort is driven by neighborhood complaints and the needs of developers looking to clear land for new construction. If neighbors don't gripe and developers don't call, derelict houses usually go uncounted and unnoticed by the city's housing administration.

Consider the 1300 block of N. Bond St. in East Baltimore, a graveyard of sacked and sagging homes.

Of 26 houses there, at least 10 are abandoned and effectively controlled by the housing department- including a domino row of six slumping shells on the west side of the street.

Facing them, five addresses on the odd side have been knocked out by wreckers over the years, leaving behind a pair of rotting rowhouses in a gap-toothed block of lots that looks like a jack-o'-lantern's grin.

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Lacking a playground nearby, neighborhood children frolic on the blighted plots between the derelict houses in an area that would be big enough to accommodate at least two basketball courts.

Meanwhile, on the city's West Side, residents in another neighborhood are desperate to get out of the way of city wreckers. But, they say, the housing department has ignored their pleas to be relocated.

In the 3300 block of Virginia Ave., work crews recently hopscotched down the block, punching out 11 empty abodes on the even side of the street in a rare stab at mass demolition. But they left two units standing amid the mud and rubble.

Earnest Edwards Jr., a 57-year-old machine operator, lives in one of them. He bought his rowhouse in 1986 for $20,000 - after receiving assurances from the housing department that the city planned to renovate all the neighboring dwellings.

"Who the hell wants to live in something like this?" he asks today, gesturing down the bombed block.

Two lots away, at 3318 Virginia Ave., Edwards' neighbor is thunderstruck.

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Charles M. Gray, the 46-year-old owner of a janitorial service, bought his rowhouse just three years ago from the city for $45,000 after it had been fully renovated from the ground up. He wanted to buy the vacant house next door, too, so he could tear out the common wall and make a double-wide home for his family of three foster children.

But the Department of Housing and Community Development said no. The agency had other plans.

Last month, all that remained of the house was a heap of busted brick, splintered beams and gnarled pipes near a pit of standing water.

"I have to get up in the morning and look at this every day," Gray says dejectedly. "I hate it."

The debris has since been carted off, clearing the way for what city officials say will be new houses. But the scene of wreckage is repeated all over Baltimore as Henson spurs his agency to deliver on his promise to knock down 1,000 houses by year's end. Flustered bureaucrats say he is asking too much.

"We're drowning, and we have been for the past two years," says one housing inspector who asked not to be named. "We can barely manage 300 of these things with the people we have. Now, we're getting ready to do three times that many. It's a mess."

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But for Henson, more is at stake than just his promises of renewal.

In a speech last May to minority business owners, Henson evoked a portrait of "Old Baltimore" - describing how German, Irish and Russian tradesmen built the city's white ethnic enclaves while making "a ton of money" on government contracts.

They became, he said, "wealthy while, at the same time, doing good for the people."

Henson said that when he took office, the housing authority had never issued a prime construction or any kind of contract to an African American-owned company.

"Now, subcontracts had increased from 4.65 percent of the total in 1982 to 21.88 percent in 1992," the year before he took office, he said. "But in 1993 we more than doubled to 50 percent; in 1994, it was 72 percent, and last year, we dropped back to 60 percent. Now I think that that is a respectable and reasonable achievement."

Then he warned that Congress and the U.S. Supreme Court were chiseling away at rules that help minority businesses catch up with their white counterparts after years of unfair government contracting schemes that excluded them.

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"We have got to develop ways to take advantage of this time," Henson said.

One way was to broaden demolitions, records show.

Under city bidding rules, all contractors - minorities included - are required to give 20 percent of any city job over $25,000 to a minority subcontractor and 3 percent to a woman-owned business.

Together with the housing department's practice of tearing down houses piecemeal, these rules helped P&J; Contracting become the pivotal firm in the housing department's demolition campaign. The reason: They gave Pless Jones the means to steer city contracting dollars to his friends and associates.

Among the few companies to bid against him for city wrecking contracts, for example, is a minority-owned company called Phipps Construction Contractors Inc.

The firm is owned by the man who started out with Jones in the demolition business, Randolph Phipps, 63, whom Jones uses frequently as his minority subcontractor on larger city jobs. So even when [See Housing, next page] Phipps bids against Jones, he often stands to win even if he loses.

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Since mid-1994, Phipps has taken in nearly $800,000 in city contracts for demolishing abandoned houses and hauling away debris - which represented more than 80 percent of his company's work in Baltimore, according to finance records and building permits.

He and Jones shared millions for the demolition of the Lexington Terrace and Fairfield Homes public housing complexes. Now, Phipps is expanding his business with a city gravel contract worth $1.5 million.

Like Jones, Phipps was in deep financial trouble before Henson stepped up the schedule of demolitions.

Court files portray a man awash in debts, ranging from tens of thousands of dollars in back taxes to an unpaid $875 legal fee. Thousands of dollars in overdue bills remain on the courthouse ++ books to this day.

In 1993, just months after Henson took office, Phipps incorporated a new company and was soon recovering his fortune. Today, he ranks second only to his old friend Jones as a top wrecker for the housing administration. on at least 10 recent demolition jobs, no other contractor expressed interest.

And, like Jones, he became a major political contributor. In 1995 alone, he, his wife and company gave almost $11,000 to help re-elect Schmoke. A year later, they pumped $14,000 into local and national Democratic campaign funds.

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Another favorite subcontractor of Jones is a company called Mystic Construction. The woman who owns it, Shedina A. Bouldin, 38, is identified in Jones' divorce file as his girlfriend and her company headquarters is in his office building in West Baltimore.

Bouldin has taken in at least $56,632 in city contracts in the past two years, records show.

This network of relationships appears time and again.

In one of the more lucrative deals, Jones was awarded a $208,945 package contract in May 1995 to topple more than a dozen rowhouses scattered around the East Side. To meet the city's subcontractor requirements, Jones brought in Phipps for $17,700 worth of work and Bouldin for $6,300.

Today, the smiling face of the bespectacled Jones is featured prominently in housing department newsletters as an example of Henson's success in turning the agency into "an engine of economic opportunity" for minority contractors.

Phipps and Bouldin did not respond to requests for interviews sent to them by special delivery messenger and registered mail.

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Schmoke says any appearance of potential conflicts of interest among these contractors is strictly coincidental. The decision to expand the demolition campaign was based on an outcry from civic groups, he says, and the fact that it would be too expensive to save all the city's abandoned houses - not on a scheme to enrich minority firms.

"I might be subject to criticism," the mayor said. "But the criticism would be more legitimate if I had exercised some discretion in sole-sourcing to these guys, but that's just not the case.

"I think you can look at it in hindsight and say this may have been a result of some policy choices," Schmoke said. "But it seems to me a situation where these small contracts are viewed as being uneconomic by some firms, but kind of bread-and-butter good business for these smaller contractors. That I see is what's really going on, rather than closing out others."

The mayor's argument finds some support in a firm called Better Home Improvement Co.

Its owner is a 54-year-old white bricklayer, Gerry Gorleski, who built his Parkton-based business over two decades by shoring up the walls around city demolition sites. Gradually, he became a full-service wrecker himself.

Since early 1994, he has taken in more than $400,000 in city demolition contracts. Permit records show that 80 percent of his work in Baltimore is for the city.

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Gorleski has never controlled a major share of the city's demolition work, but neither has he experienced any drop-off in his business since Henson became housing commissioner in 1993. Nor has he ever been a campaign contributor to Schmoke.

The former U.S. Marine and father of eight has been in the wrecking trade most of his adult life. He says the reason so few wreckers seek the city contracts is that it's a "dirty, stinking job."

"You go home at night and blow your nose and it comes out black," he says. "You take a shower and you have to take another shower after that. All kinds of things go wrong. Walls fall down on people. Guys lose fingers and arms. Guys get killed doing this stuff."

He says that the wreckers - white and black, large and small - form a close-knit and cooperative community.

"Jones or Phipps would lend me money if I needed it without even thinking about it," he said. "I would do the same thing for them. The fact is, there aren't that many people who understand what we go through out here. So, naturally, they become your friends."

But he insists their cooperation ends when it comes to competing for the city's business.

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They are all old enough to remember the 1970s, he says, when a senior housing official and five demolition contractors were convicted in a bid-rigging scandal that had given them control over another great wrecking binge in the city's history.

Between 1970 and 1977, the housing department tore down more than 7,000 buildings to clear the way for highway construction, the development of the Inner Harbor and other urban renewal projects.

Evidence later showed that wreckers met regularly at local restaurants to divvy up the trade by agreeing on which of them would submit the lowest bid on the next job. For this collusion, some went to prison. Others bore stiff fines. And the face of the local demolition trade, which was then completely white, was changed forever.

Said Gorleski: "I think everybody in this business learned a lesson then. In fact, that's how we all got started. When the big guys fell, we moved in."

The ghosts of those times continue to haunt Baltimore today. Hard lessons can be found in the weed-choked lots and trash-strewn alleys that were left behind by earlier wrecking campaigns.

Return for a moment to the 1300 block of N. Bond St. Behind each blighted lot, hundreds of pages of public records tell a tale of folly that some say is being repeated today.

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Nigel C. Perkins, 38, a medical technologist from Bowie, owns 1327 N. Bond St. - a rundown plot heaped with old tires and garbage. It was once the site of a two-story red-brick rowhouse. Today, children play amid the debris.

Perkins bought the house for $250 at a city auction in 1982 after it was abandoned by a previous owner. He was a young college student at the time, heeding the advice of his grandfather to invest in real estate for his future.

"It was in awful shape," he recalls today. "But I thought we could fix it up over a couple of years and maybe rent it out. I thought

the city would be grateful just to have it back in private hands. But that's not what happened."

Almost immediately, city inspectors began dogging him to fix it or face prosecution.

Struggling to pay his tuition, Perkins couldn't renovate the house fast enough. So he told them, "you can have your house back" and walked away. Within months, the housing department tore it down and billed Perkins for $12,000.

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When he didn't pay, the city attached the debt to the deed of his property, barring anyone from buying it or using it until the bill is paid.

Today, interest, penalties and unpaid taxes have ballooned that debt to $106,283.79. The vacant lot is a dump. And the neighborhood around it is in ruin.

"Who in their right mind would be willing to pay off those bills to get one of those lots?" Perkins asks incredulously. "You're talking about paying 10 or 12 times more than they're worth - and all you're getting is a little patch of dirt.

"Is the neighborhood better off? I don't think so. The only people who are better off are the contractors."

Tomorrow

The plague of abandoned houses in Baltimore has reached a crisis stage that will take years and millions of dollars to heal. But an overwhelmed city housing department continues to use outmoded tactics that are only making matters worse. National experts offer a prescription that could speed the city's recovery.

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Pub Date: 4/07/97


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