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Baltimore Council President Nick Mosby to propose reviving dollar house program in historically redlined areas

Baltimore’s lauded dollar house program would be revived and home repair grants of up to $25,000 awarded in areas of the city hardest hit by historical redlining under a legislative package City Council President Nick Mosby will introduce Monday.

The collection of several housing bills, which would also offer assistance for older adults struggling with reverse mortgages, would require $200 million to fund. Mosby is calling on Democratic Mayor Brandon Scott to take that amount from the city’s American Rescue Plan allocation — an amount that’s nearly a third of the $641 million Baltimore has received from the federal recovery plan.

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That’s a fair sum, the Democratic council president said, considering the type of transformative change the program would bring to city residents.

“We can’t spend this money. We must invest this money,” Mosby said. “This is a once-in-a-lifetime opportunity to responsibly invest and grow in our communities in a way we can’t do otherwise.”

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Calvin Harris, Scott’s spokesman, said the mayor “is intentional about making a transformative impact in Baltimore, particularly through the equitable distribution of American Rescue Plan Act funds.”

Scott’s plan for the ARP money includes a “substantial investment” in historically redlined neighborhoods, Harris said. An announcement about that funding will be forthcoming, he said.

“The Mayor’s Office has unfortunately not received details about the Council President’s proposed legislation, but will carefully consider any ideas advanced by the City Council,” Harris said.

Under Mosby’s plan, which would need not only Scott’s consideration but also the approval of the council, vacant homes owned by the city would be made available for two-year leases at a cost of $1. Buyers would rent the properties and use those two years to make improvements. After that, ownership of the property would be transferred to the buyer, subject to home inspections of the repairs.

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A registry would be compiled listing properties that are eligible. To be included, a home would have to be able to be repaired and likely to sell.

The program would be available only in designated neighborhoods, ones that city officials deem to be overlooked by investors or historically subject to redlining, the racially motivated denial of loans and other services to communities considered less desirable. Eligible neighborhoods would have to have “assets” that can be a hub for revitalization, such as public markets, transit corridors or emerging development activity, according to the bill. City housing officials would choose the neighborhoods; they are not specified in the bill.

To be eligible, buyers would need to be “legacy residents” of Baltimore, meaning they have either lived in the city for 15 consecutive years or were a resident for that same length of time before leaving due to a foreclosure. Participants would also need to be first-time homebuyers and demonstrate the financial ability to take on the repairs. Mosby estimated that there are at least 18,000 city renters who are legacy residents.

City employees would be eligible after five years on the job, regardless of how long they’ve lived in Baltimore.

A separate piece of legislation would offer home repair grants that could also be used by participants in the dollar house program. Up to $25,000 would be available for general repairs, while $10,000 grants would be issued for emergency repairs and work to make homes more accessible.

The grant program would be available to legacy residents, as well as those with household incomes at or below 80% of the median income (in Baltimore about $104,000), those eligible for subsidized housing, homeowners with reverse mortgages, and people who have lived for 10 years in a “designated impact investment neighborhood” — one that has been historically overlooked by investors.

Mosby said the city has about 16,000 vacant homes, roughly 3,000 of which the city owns. Those properties are “nonperforming assets,” he said.

Mosby did not have an estimate for how much demand the program might generate.

“Why not put them out on the open market in a program like this?” he said. “We could go in, we could displace all the residents, we could gentrify — like what has happened in other major cities — or we could do it responsibly.”

Mosby’s bill would be the latest attempt to re-create Baltimore’s successful dollar house program of the 1970s, which offered homes for a dollar to owners who promised to fix them up and live in them for a specified period. To ensure that the properties would be redeveloped, Baltimore offered low-interest loans to residents and required buyers to prove they had sufficient income to repay the debt.

The program was a deal for buyers, who were able to buy larger homes than they would have otherwise been able to afford. It was also a boon for the city that had scores of uninhabitable properties to unload due to a never-finished road project. Neighborhoods like Ridgely’s Delight and Otterbein, to the west and south of downtown, blossomed as a result.

Still, attempts to revitalize the program have not materialized. A 2017 push by Democratic Councilwoman Mary Pat Clarke to persuade then-Mayor Catherine Pugh to bring it back fizzled after housing officials said program would be too difficult to re-create without federal funding. Officials also argued the program was more a success in marketing than in results.

“We’ve come up with only 183 houses that were sold through the program,” a housing official said during a 2017 council hearing. “We sell on average 150 vacant properties a year.”

Bob Embry, president of the Abell Foundation, served as housing commissioner for the city during the administration of Democratic Mayor William Donald Schaefer and was the program’s architect. Its success hinged upon several factors, Embry said recently, ones that differ from Mosby’s plan. One was an office the city created to match prospective buyers with contractors, architects and others who could work on their homes. Mosby’s plan does not include such an office.

Another was the funding, much of which came from a city bond issue and was then lent to homeowners at a higher interest rate than the city was paying. The program cost the city very little except for the office to help homebuyers, Embry said.

However, if the dollar house program were to be exactly replicated today, it would likely be considered gentrification, Embry said. The people who took advantage of the original program were disproportionately white and disproportionately people with higher incomes, Embry said. The legacy residents Mosby hopes to assist represent a different demographic.

“You could concentrate on vacant properties and provide city financing and replicate the dollar house program, but it wouldn’t be what Mosby’s up to,” he said.

Embry said $25,000 grants are not large enough to renovate homes.

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“You have to look at the income of that group of people and what amount of subsidy would be needed to fix a house up, and whether they could maintain that,” he said.

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Mosby’s legislation, which will be introduced at the council’s meeting Monday night, will be assigned to the committee of the whole for discussion. Asked how he will persuade Scott to spend the money, Mosby said he will “work with the administration.”

“Council has been upfront to say, ‘We want a say on the way ARPA dollars are allocated,’” he said. “Not just spending the money, but really advocating.”

Harris, Scott’s spokesman, said some of the proposed programs outlined in Mosby’s legislation, including the home repair grants, are duplicative of existing city programs.

Baltimore was awarded $641 million as part of the American Rescue Plan. Scott has already announced that he wants to spend $80 million of the money on COVID-related measures such as vaccination campaigns and contact tracing, and $50 million to implement his violence reduction plan, which would triple the city’s violence interruption initiatives and provide jobs and reentry services to formerly incarcerated people. The city has set aside an additional $141 million as a reserve in case of additional COVID-related budget costs.

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