If you live in a city, you’ve heard the term “workforce housing” more than once.  It’s an oft-misunderstood term, some think it means “low-income” or Section 8 housing, this is not necessarily so.  Workforce housing is affordable to people who earn roughly 60 to 120 percent of the area’s median income.

Instead of repackaging the City’s failed “SCOPE” program as the unsustainable “Vacants to Value” program — how about fixing up the vacants that are structurally sound, to the point where they’re habitable?  Make them available for purchase by City residents (proof of residency required, i.e., tax returns) who are eligible for workforce housing?  Further improvements on the homes (granite counters, stainless appliances, etc) could be at the new owner’s expense — the City would provide the bare bones (laminate counters, basic appliances, etc.)  If the buyer defaults on the loan (made through state/federal/City partnership), the City takes back the home and sells it at market rate.

Speaking of market rate — after the residency requirement has passed (I suggest a minimum of 5 years) — the home can be resold.  However, the original owner can only set the asking price at 10% more than what he or she paid (including additional renovation costs), guaranteeing the homes would always be available to middle-class residents.  This could easily be written into the deed/program documents.  An example of how this would play out:

  • Homeowner A buys the house at $80,000 and puts another $10,000 into it for upgraded appliances, counters, etc.  Homeowner A can now sell the house for $99,000 after five years.  ($90,000 + 10%).
  • Homeowner B buys the same house for $99,000 and spends an additional $5000 for a new patio, and an additional $5000 to add a powder room to the basement.  Homeowner B can sell the home for $119,900 ($109,000 + 10%)

Some possible hurdles and responses:

The City has said it doesn’t want to be in the real estate business — Well, folks, the City is in the real estate business — that’s what Vacants to Value is.  Instead of expecting residents to totally gut and rehab vacants, do it for them — put the City’s huge unemployed population to work, combine the program with one of the City’s many job training programs, and let these folks work on the homes.

Investors will buy the homes, not residents.  This is where closer screening comes in.  Tax returns would be useful in determining residency — see also the University of Maryland’s requirements for receiving in-state tuition.  (Scroll to Paragraph II.)  For most of the University’s requirements, just substitute “Baltimore” for “Maryland”.

This will cost the City too much money.  Considering what the City already spends in tax incentives for big developers, why not spend some of that money on taxpaying residents?  In the long run, the City would recoup its costs (and potentially make a hefty profit once most of these areas are revitalized).  The homeowners would perhaps stay in Baltimore longer, after making such a commitment, and would be paying taxes on the homes — and hopefully shopping, dining, and playing locally.  Everyone wins!

I’d call the program Welcome Home, Baltimore.

I posted a shorter version of this on our Facebook page, and it’s gotten a few interesting responses.  Please feel free to comment on this post — ideas are always welcome!


29 thoughts to “An Idea for the Vacants

  • Mair

    Could probably make them livable for about the same money as a demolition assuming no big structural fixes and certainly no ‘fancies’. New owner could spiff up while living there. With today’s mortgage rates, probably less than renting and City would gain sweat-equity residents. How would the initial asking price be computed?

    • slumlordwatch

      The asking price would be computed via the same methods they’re computed for market-rate housing, but taking into consideration the value of the immediate neighborhood, not the entire Baltimore Metropolitan Statistical Area, which includes the wealthier suburbs and wealthier city neighborhoods.

      • Mair

        Dominion pointed out the required regulations if City does reno. Could property be sold cheap enough for buyer to do reno and avoid regs? Buyer could get construction mtg.for bigger stuff like roof and furnace. These monies are paid for by bank with bank oversight. Buyer could live in unit while ‘beautifying’ and use rent money saved for goodies or get bigger mtg once there was equity in property. This would also serve for purchaser to have even more sweat equity in venture.

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  • George L Peters Jr

    That is interesting, it seems a little like what we ( comehomebaltimore.com ) are doing in the neighborhood of Oliver, right down to the name. You can own one of our full renovated homes for a bout $1000 per month.

    • slumlordwatch

      George, I don’t see anything on your website about workforce housing, or income information. Could you point me to that?

  • BestCrabCakeEver

    Enough with the retread of unfeasible, hashed ideas. A rotted out rowhouse shell basically costs $50-$100,000 per floor to put in mint, all-amenities-included condition, which is what any tenant demands these days, Before the rehab is finished, the house has already far surpassed any appraised value. The only sensible idea is to start leveling some of the rotted-rowhouse blocks, such as the disgusting blight that all the Amtrak passengers see when the train hits the City. Since nobody wants to spend the $25,000 needed to level a rowhouse, the City should make free deals where the investor/homeowner can get title to one abandoned row house if he/she demolishes and levels another one, or some logical proportion. In this way, the City kills 2 birds with 1 stone, because if only half of the City’s 16,000 abandoned row houses are demolished, the remaining, and all other realty, instantly surges in value, which is the ultimate goal !

    • slumlordwatch

      Sorry, but I disagree. And had you bothered to actually read what I wrote, instead of shooting off your mouth — you would have seen that I specifically said the City would make the home habitable, and the new owner would be responsible for any upgrades.

      It’s time the City starts doing something for its middle-class taxpayers and stops catering to the “investors” who destroy more homes than they actually fix up.

      • BestCrabCakeEver

        Math trumps rhetoric. The $100,000-$300,000 needed to render a rotted row home habitable results in a gross excess over its finished, appraised or assessed value. Nobody is pouring that kind of money down an empty hole, nor should the City, since the meager, resulting assessment prevents any appreciable property tax. Nor can that kind of money be wisely spent if the remaining houses on the block are also boarded and rotted. Rest assured that if an entire block is blighted it sits in a neighborhood in which nobody wants to live. To channel available funds into that kind of money pit is called killing the healthy chicken to make soup for the sick one. By razing these perpetually blighted blocks, a boon unto itself, the remaining housing stock instantly increases in value. That’s the law of supply and demand, or simple math.

        • Baltimore Slumlord Watch

          Seriously, if you’re not going to read the whole post, don’t bother commenting. Nobody’s talking about “rotted row homes”. And if you’re paying $100,000 to $300,000 to redo a structurally sound rowhome, no wonder you’re going broke.

  • C

    If someone going through a financial assistance program to buy a home has enough money to afford granite tops and stainless appliances they shouldn’t be getting financial assistance.

    The problem with Baltimore is that there are too many people who are happy with it the way it is. Run down neighborhoods keep rent cheap. Get yourself a section 8 check and then go lease that Mercedes. Tear the rental home up over a year or two, then go get a new one.

    The city needs to demolish thousands of houses. Decrease the supply and instantly increase demand. Get rid of the worst sections that harbor criminals. I don’t know where the figure of $25k to tear down a home came from. Its easily 1/5 of that.

    • slumlordwatch

      Another one who can’t seem to read the whole post…

      It’s not a financial assistance program for low-income buyers, it’s an incentive program to get middle-class working taxpayers to stay in the city while redeveloping viable neighborhoods at the same time.

  • C

    I read the whole post. Don’t get so aggressive when the public doesn’t agree.

    Its a good idea, but its just not fundamentally sound.

    You propose that the city / state holds the note on the home. The state / city does not have the bankroll or capacity to bear that financial burden. In the event that the had to repossess the home it would be at a loss. Realistically there is no profit for the mortgage holder.

    The city is 2/3 renters. Eliminating landlords from the solution pulls 66% of the potential buyers away from the program.

    The city does not spend tax incentives for developers. They agree to collect less. Its a significant difference. A tax incentive reduces the amount of taxes collected at an overall increase in revenues.

    Limiting the homeowners’ upside to profit does not provide an incentive for a middle class buyer to move into a lower class area.

    Look at what the city did with Otterbein. They sold the majority as $1 homes to promote owner occupied homes. It worked.

    I lived in Ridgley’s Delight for 10 years. I chose to move out of the largely middle class area because it was too dangerous. It was ok for a while but being afraid to take the garbage out at night for fear of being mugged will always outweigh a financial gain. Ridgley’s was great. Pigtown was not.

    I’m curious to see what sections of the city you’d suggest to target. Where do you think middle class buyers would be willing to live for a number of years while the area improves? What areas does the city own a high enough concentration of homes to offer in a bulk program?

    For a program like this to work the city will need to ensure the home is structurally sound and sell it at a deep discount. Give the homeowner a break on real estate taxes for as long as they stay there. Target low income individuals and give assistance to get them a construction loan. Screen contractors and only pay them out as the work is completed. Don’t ask the buyer to be a supervisor for contractors.

    The better option is just to level the blocks of vacant homes. There are too many houses for not enough people.

    • Baltimore Slumlord Watch

      Definitely agree with your assessment of Pigtown. As for Ridgley’s, I was robbed at gunpoint there a few years ago — I can also agree with why you would move. 🙁

      My first thought was the area behind the BCPSS headquarters, around towards Charles Village — I walked around through there one day, and it was incredibly creepy…for the most part, I didn’t encounter another person the whole time I was there. Not even a car came down some of the streets I was on.

      I agree with this part:

      For a program like this to work the city will need to ensure the home is structurally sound and sell it at a deep discount. Give the homeowner a break on real estate taxes for as long as they stay there. Target low income individuals and give assistance to get them a construction loan. Screen contractors and only pay them out as the work is completed. Don’t ask the buyer to be a supervisor for contractors.

      However, I’d like to change some of the city’s focus from low-income to middle-income working people. Baltimore City is losing taxpayers, at an alarming rate — we’ve seen the failure of the high-end real estate market…so many of the overpriced condos are now rentals — again, not conducive to retaining a solid tax base. There are programs for low-income folks — some might say too many. However, there’s nothing here to retain and encourage the one income group that sustains cities — the middle-income people.

    • Ed

      I agree also think of the political disaster if the city has to foreclose on scores of homes when folks can’t pay for whatever reason.

  • acandidworld (@acandidworld)

    I think any ideas for affordable housing are admirable, speaking as someone who was involved in establishing Montgomery County’s Workforce Housing program.

    The problem in Baltimore City, however, is that there are tens of thousands of vacant properties. No plan I have heard deals honestly with that problem.

    To eliminate vacant housing stock, the City has to increase its adult population and/or demolish unneeded housing. Any effort to fix up properties without either of those merely pushes abandonment around. Since the population has been largely constant or falling over time, with the exception of the downtown areas, it seems to me that demolition is the only answer.

    We need to shift the focus from redevelopment to demolition.

    Demolition provides an opportunity to increase City home values and quality of life by replacing abandonment with green space. Once you do that, private developers gain a greater incentive to invest in the City’s neighborhoods.


    • Baltimore Slumlord Watch

      Agree 100% about the demolition. I’ve long thought Baltimore should embrace the idea of shrinking the city in order to save on infrastructure costs. However, you’ve also brought up another important point – the City needs to address the problem honestly…something that hasn’t happened thus far. And I wonder if it will ever happen – to be honest sometimes requires admitting past mistakes, costly mistakes.

      The City also needs to make some tough decisions about where to channel its tax dollars – so far, taxpayers haven’t gotten much attention…hence the great need for workforce housing.

  • BestCrabCakeEver

    People believing that they have the best of intentions frequently succumb to the notion that they can solve the world’s problems in their own little minds. An example of this is Paul Wolfowitz insisting that our country would be met with rose petals after conquering Iraq. Getting back to the point, it is futile to suppose that any housing gimmick, or similar incentive, is luring any wave of middle class families anywhere. The known, established and universally accepted fact is that the middle class goes to one and only one place, namely, a place possessed of a safe, successful, public school system. One where the kids can walk to school and not get mugged on the way there, or inside. Offering low priced or even zero-priced homes where parents cannot securely send their kids off to school results in but a transient neighborhood. Newly arrived parents of young kids learn very quickly about the schools from the babysitters who already attend them. Why ignore the demographic history of this country in the 60’s and 70’s when the middle class fled the cities that lost safe schools.
    Everyone knows that vacants are a gross impediment to safety. In the movie, Gran Torino, the gang occupied a vacant. Squatters seek vacants. Pioneers seek open land. In 2006, I was at a meeting in the office of the City’s Deputy Housing Commissioner. He flatly announced the City’s position on the vacants. They zealously guarded the vacants as an asset to sell to the highest bidder. Assets, my a–. They are a magnet for everything bad and repulsive to everything good. Rid the vacants a.s.a.p.

    • Baltimore Slumlord Watch

      So get rid of all the vacants. Just make sure you also get rid of the bad property owners, you know…the ones who start construction without permits and cause damage to the next door neighbor’s home. How about that?

      • BestCrabCakeEver

        You should know who you’re talking about before loosing the cannon at the wrong target.

        • Baltimore Slumlord Watch

          A leopard can change its LLC, it can’t change its spots.

  • Ed

    The problem as I see it with the idea is anything the city touches will require additional costs dues to regulations. It would make the program a taxpayer pit.

    The best remedy as I see it for the city is to reduce property taxes to be competitive with surrounding jurisdictions and minimize or even abolish its affordable housing programs. Let the market sort out where folks from different classes live.

    • Baltimore Slumlord Watch

      I would be okay with less Section 8/voucher housing — or at least better regulation of our current programs. I’ve actually seen ads for rentals that say “SECTION 8 ONLY” — what…they don’t want tenants who work? That gets old fast, especially as someone who’s currently looking for decent rental housing, yet I’m not willing to pay HUD FMR to live in a marginal neighborhood. Unfortunately, in Baltimore, any government-funded program is surely rife with fraud/waste. Sad, but it’s been proven over and over.

  • living in the big house

    One big issue is this idea that there needs to be more low income housing in Baltimore. It already has too much low income housing. The rest of the state needs low income housing so those in the city can move out to the good life.

    The average household income for Baltimore is almost half of that of the state. When you go into bad neighborhoods this goes down to about 1/4 of the average for the state. So if market rate housing is occupied by families making less than $20,000 a year in these neighborhoods we sure don’t need to spend governement money trying to get those making 60% of that to move into the neighborhood.

    What the city needs to do is spend money to get middle and upper class people to move into the city. Families making $70k a year don’t commit crimes at nearly the same rates as the poor. They also buy houses with property taxes high enough to support schools and other forms of government. Every other functioning city in America as done this to some degree – New York, Chicago, DC, etc. Close down low income housing, remove the homeless, direct them to the rest of the state.

  • BestCrabCakeEver

    Threading low income housing throughout the rest of the State overlooks the fact that only the City has the extensive support and administrative networks needed for low income, Section 8, non-elderly disabled, and other program, or subsidized tenants. There is no point in any comparison with Chicago, New York, or other cities with immense tax bases enabling the financing of saturation policing, schools, and other municipal projects and facilities. When this country acts on a national level to treat crime and disorder in its cities as seriously as crime and disorder in Iraq and Afghanistan, there might be some progress. Imagine if the soldiers sent to police the middle east were deployed in our cities. Same problem. Opposite attitude.

    • Baltimore Slumlord Watch

      It would be interesting to see what would happen if the court system in Baltimore would treat crime seriously, and actually applied penalties for violent crimes, instead of unleashing violent offenders back to the community time and time again.

  • Pete from Highlandtown

    I would disagree with the commenter who claimed that structually sound houses in Baltimore cost over $200,000 to fix up. I do interior demolition work for many investors and contracors in Baltimore. To give you an example, most buy houses in Fells Point or Highlandtown for $80,000 or so.And then fix them up and sell them for around $200,000. So if they had spent over $120,000 fixing them up, they wouldnt have made a profit.And these guys do fairly highend rehabs.Most have given up on doing the extreme high end rehabs that were being done in the 90s[not as many rooftop decks being built.Or basements being dug out to 8 foot levels].but they still are high end

    The problem i see for your idea is that mostof the vacants in Baltimore are in West Baltimore,Pigtown or Brooklyn, or north of Baltimore Street in East Baltimore. And not many people are going to pay $80,000 for a “shell” in those areas.When they can buy a “shell” in Highlandtown,Riverside or Fells Point for the same price. That is the problem that i have with the Vacant to Values program.They are trying to sell houses that are worth around $10,000-$30,000 for prices over $80,000. I saw one house that they were trying to sell for $80,000[i think it was on the 1200 block of North Broadway].and in the “streetview” photo that they had on the website, there was an actual photo of the property.With a police car in front of the property.And two cops standing over a handcuffed man. It was beyond parody

    The city needs to sell the houses, as you say.but it needs to sell them at a much more realistic price.And in certain areas which are hugely abandoned, they need to get proffesional invesotors [and the are some honest and good invesotors in Baltimore.not all are crooks]] in there.A single homeowner wont move onto a block that is completly abandoned.the whole block has to be rehabbed at the same time. A completly abandoned block in a rough part of Baltimore is incapable of being rehabbed house by house . Ive volunteered with Habitat for Humanity in Baltimore.And when they fix up houses, they do several on a block.For the reasons that icited

    • Baltimore Slumlord Watch

      I agree, Pete. There’s no need to spend $200,000 to rehab a home in most Baltimore neighborhoods. In fact, one of the reasons why a lot of these homes won’t sell — they’re over-improved. And the property owners never took the time to rehab the property correctly, or to a point that was appropriate for the neighborhood.

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