Dan Rodricks

Investing in more of Baltimore, one small loan at a time

Renovating hundreds of rowhouses, creating more affordable housing, increasing population remain major challenges.

A man told me he was shocked by what he saw when he made a wrong turn during a drive through Southwest Baltimore. “It was like a third-world country,” he said, a pejorative often uttered by white visitors as they drive by vacant rowhouses or rowhouses occupied by what appear to be poor black families.

I asked the man, who lives in the suburbs, where he had been for the last half-century or so. There was nothing new about any of this. Baltimore once had 900,000 people. After decades of highway construction, white flight, suburban development and the loss of manufacturing — an old narrative by now — the city has about 612,000 people. Baltimore has a long history of racist housing policies and a high concentration of poverty. Some neighborhoods have always thrived. Some have been remarkably resurgent and stable. Some continue to sprout new construction cranes. But others, to the east and to the west, have been abandoned or neglected, or only marginally improved.


That’s why, for all but the shocked interloper from the suburbs, the new report from the Urban Institute on racial disparities in neighborhood investment came as no surprise. The report found that investment is unevenly split by race, income and geography across the city. Most of Baltimore’s building, rehabbing and demolition goes on in whiter, better-off neighborhoods. There were also more loans for residential developers and property owners in those neighborhoods, and more lending for commercial development in places already on the rise. What’s more, data analysis by the Baltimore Business Journal last year found that African-Americans in the Baltimore area were twice as likely as their white counterparts to be denied a home mortgage by a bank. Also last year, the Johns Hopkins 21st Century Cities Initiative found that small-business lending in the city had dropped by 32 percent between 2007 and 2016 — a time when banks nearly doubled their deposits in the city, reaching $26.5 billion.

Baltimore gets knocked for being home to a lot of nonprofit organizations that don’t have to pay our too-high property taxes. But a lot of those organizations work on the city’s most entrenched problems — poverty, drug addiction, undereducated children, mental illness, chronic health problems, a lack of affordable housing.


In the realm of small business and housing, you can find mission-driven organizations fighting the good fight in high-poverty and predominantly black neighborhoods. As impressive as their efforts are, however, they make just small dents at a time in the vast stretches of Baltimore that need redevelopment most.

Still, they persist.

Habitat for Humanity of the Chesapeake, for instance, has built or restored about 750 affordable homes, most of them in the city, since it came on the scene in the 1980s. Baltimore Community Lending has been working on this front almost as long as Habitat, but with a much lower profile, and in a very different way.

It got its start as a quasi-public agency when Kurt Schmoke was mayor but broke away from City Hall in 2004 to become a federally certified Community Development Financial Institution. Since its inception, BCL has provided $220 million in financing for housing projects, accounting for about 4,000 units in underserved areas of the city. Sixty percent of BCL’s loans go to companies owned by people of color.

Working out of an office in West Baltimore, the institution cobbled together donations, grants from banks and foundations and the state of Maryland to make loans for the renovations of homes in Park Heights, Southwest Baltimore, Oliver, Greenmount West and Druid Heights. It has helped establish an office and community center in Belair-Edison. Given the lack of lending by big banks, BCL created a small-business loan program. The BCL staff helped a couple open a wine-and-cheese shop in Highlandtown, and they’re helping a new organization, the Baltimore African-American Home Builders Cooperative, with start-up financing.

I tell you this because it’s important work. But, obviously, just a slice of what needs to be done.

Banks cite post-recession federal regulatory reforms and the lack of creditworthy borrowers as roadblocks to more lending. But Bill Ariano, the CEO of BCL, gives three reasons why accessing capital for investment in more of Baltimore is such a challenge — the consolidation of big banks, the lack of a clear plan to improve the city economy and a lack of private market leadership.

“Disinvestment is the result of an unwillingness to look beyond the false assumptions that somehow one segment of our population was born incapable or unwilling to build wealth,” he says. “The result is a refusal to allow access to the necessary financial resources critical to success. It is easier to identify why one shouldn't versus aggressively looking for how one can.


“Some of our banks are providing modest support,” Ariano adds. “But they either have not been allowed to increase their investment or are not interested in increasing their involvement in the Baltimore market.”