A Baltimore nonprofit conspired with city officials to give itself an unfair advantage over other developers to acquire property through the city’s annual tax sale, according to an inspector general report released this week.
The nonprofit was not named in the report but was identified as the Southwest Partnership by its former executive director.
The nonprofit asked the city to withhold properties from its annual tax sale and instead have them placed in a separate bulk tax sale for developers, according to the report issued by Baltimore Inspector General Isabel Mercedes Cumming.
The nonprofit then purchased tax sale certificates for some of those properties and others on behalf of developers, the report states. For the nonprofit’s services, developers were allegedly charged a fee, according to the report. It also made recommendations to the city Department of Housing and Community Development about which developers to award tax sale certificates to, the report found.
Michael Seipp, who served as executive director of the Southwest Partnership when the investigation was undertaken in 2020, denied collecting any fees from developers, calling that portion of the report “a blatant lie.”
Seipp, who said he retired in January, admitted the group requested the removal of various properties from the annual tax sales in May, but argued that has been common practice for community development groups dating back to the 1980s when Seipp himself was the deputy commissioner of Baltimore’s Department of Housing and Community Development.
The city schedules a tax lien certificate sale each May to collect past-due property taxes or other delinquent charges. Investors purchase the liens from the city during an online auction. Those investors then can collect the debts, with interest. If they’re not paid, the buyers eventually can foreclose on the properties.
The bulk tax sale is a separate sale conducted in October where properties are reserved for community development and private investors are required to buy the tax liens for a cluster of properties.
According to the report, the Comptroller’s Department of Real Estate intervened in the arrangement between the Southwest Partnership and city housing department in March 2020, asking the partnership discontinue its tax sale program because it was not authorized by the city. In response, city housing officials drafted a memorandum of understanding between the city and the partnership giving the nonprofit priority access to tax sale certificates and allowing the partnership to select developers who could acquire tax sale properties.
Then-Mayor Bernard C. “Jack” Young’s office was notified of the inspector general’s investigation Aug. 4, 2020, prompting a stern rebuke from his chief of staff Kim Morton.
“These actions have a strong appearance of impropriety and inequity, and the administration was shocked to learn of this complaint,” Morton wrote in a letter dated Aug. 27, 2020. “No organization or entity is allowed to reach out to DHCD for a request regarding transfer of property.”
Morton said neither the mayor’s office nor the city law department was aware of the “unofficial and unauthorized” memorandum of understanding. The agreement was never executed due to the mayor’s office intervening in the situation, the report states.
The timing of the incident coincides with the unexplained firing of housing commissioner Michael Braverman.
Young abruptly dismissed Braverman Aug. 21 after three decades as a city employee. At the time, Braverman said he was told the administration wanted “to go in a different direction.” But Young himself had only months left in office. He completed his term in December.
Young’s spokesman said at the time he could not discuss the personnel matter.
Reached this week, Young said he had not yet read the inspector general report and could not comment. Braverman could not be reached.
Seipp acknowledged that the memorandum of understanding was in the works and said numerous drafts were exchanged between the Southwest Partnership and the city. Seipp said he and city officials were trying to create a pilot program that could be replicated.
“If you want to say the neighborhood leadership who developed the plan in conjunction with the city has a leg up, yeah, they have a leg up,” he said. “They developed the plan. It’s their neighborhood. My personal opinion is that if someone has a problem with that, then I think they have a skewed vision of what is productive for the city.”
Seipp credited his program with attracting developers to city neighborhoods.
“The only people who were buying tax sale certificates in Mount Clare were slum landlords,” he said. “If Ms. Cumming thinks that having slum landlords on equal footing with neighborhood developers, again, she has a skewed sense of what’s good for the city.”
Asked to respond to Seipp, Cumming said said she stands behind the report and that her office “never disclosed the subject of the report and will not do so at this time.”
Seipp said the timing of Braverman’s dismissal appeared “really coincidental.”
“If that is the case that in fact Michael Braverman was removed from the commissionership based on this report, then Ms. Cumming figuratively has blood on her hands,” he said.