Six years ago, Baltimore had 11,500 abandoned homes. By 2004, that number had grown to more than 14,000.
Thanks to Mayor Martin O?Malley?s commitment to acquiring property for redevelopment, the city has slowed the rate of vacancy by acquiring more than 6,000 homes and lots. Known as Project 5000, the mayor has demonstrated that the city can revitalize neighborhoods, increase the tax base and lower crime by cleaning up abandoned homes.
Now is the time to evaluate how to build on its success.
The city has sold many of its Project 5000 properties to developers, including about 40 to Chesapeake Habitat for Humanity. But a better long-term solution would be to start a trust fund to renovate homes.
Baltimore?s decision to begin a trust fund would mirror what more than 400 local, county, regional and state jurisdictions have already done. Failing to do so will miss an opportunity to reach many of the 46 percent of Baltimore residents who earn less than $25,000 a year, limiting the financial and social health of our city and steady progress towards a safer city that the mayor has made such a priority.
Certainly, recent years have seen dramatic improvements in many neighborhoods. Canton saw an increase in median home sale price from $103,500 to $194,000 from 2000-03. That is an 87 percent increase in three years. Prices in Mount Washington and South Baltimore neighborhoods like Federal Hill swelled almost 80 percent, and prices in Highlandtown more than doubled in the same time period.
Some neighborhoods falter
But not all neighborhoods have shared in this advancement. Median home prices in Jonestown and Oldtown decreased from $50,500 to $45,000 over the same time period.
Chesapeake Habitat for Humanity has witnessed the success that investing in run down neighborhoods can bring. In Pen Lucy, where CHFH has conducted a majority of our work in the past two years, home appraisals have increased by more than 50 percent and Old York Road has been repaved. Without this investment, we leave countless properties trapped in a pattern of ongoing deterioration. Drugs are stored in them, rats make nests in them and neighbors suffer. Not to mention that your taxes subsidize the services the city pays to make vacant houses safe and evict criminals.
Baltimore?s fund would work like other affordable housing trust funds across the country. Unlike the recent steps by city officials to focus one-time funds on affordable housing, a trust fund would be self-sustaining while achieving two objectives:
» First, it would renovate abandoned houses and provide housing for those who would not qualify for conventional loans.
» Second, it could be structured to leverage the investment of for-profit and nonprofit developers in areas currently depressed but with potential. This could be done with the right mix of incentives for corporate, for-profit developers, subsidies to nonprofit developers and assistance to low-income families.
Affordable housing trust funds can be financed in multiple ways. Two possibilities would be to increase the Recordation Tax (paid to record deeds with the local jurisdiction) or Transfer Tax (paid at the time real estate is transferred). Each would generate significant amounts of cash that would ensure development in formerly depressed neighborhoods.
Looking at the Recordation Tax, a $1 increase (from $2.75 per $500 to $3.75 per 500) would mean an estimated $3,650,000 for the fund. A small increase of 0.5 percent on the Transfer Tax earmarked for the city would mean a gain of more than $6,500,000. Taken together, these two increases would mean more than $10,000,000 a year for the Progressive Inclusion Trust Fund. Certainly, no tax would be popular but any increase in the tax would be offset by enhanced investment and additional development in depressed neighborhoods in Baltimore.
The city will recoup the modest amount of funds used for a trust fund through more stable neighborhoods and higher property tax revenue. Investments in affordable housing have been tied to job creation, health, and educational benefits. Now is the time for Baltimore to build vibrant, diverse communities that are key to financial success in the 21st century and will be a model for the country. A Progressive Inclusion Trust Fund will get us there.
Mike Mitchell is the executive director of Chesapeake Habitat for Humanity and a Democratic candidate for the Maryland House of Delegates from Baltimore?s 46th District. He can be reached at [email protected].
