Build it back

When Shea Frederick started house hunting in 2013, he went the typical route: Heading online to look at different properties. But Frederick, a computer programmer and noted internet do-gooder among Baltimore’s civic hacking community, wasn’t looking for brand new houses. Instead, he was using an interactive online map he had built, BaltimoreVacants.org, to look for neighborhoods with vacant houses available to rehab. He found a prospect in one of Baltimore’s eastside neighborhoods. When he first crossed the threshold, he saw soiled needles and thousands of empty vials.

"It was quite the sight, and smelled really bad," Frederick remembers. "People had just been getting high and shitting in the corner for, like, 15 years in this place."

No turning back, however. It was July 2013, and Frederick had just spent $9,000 to purchase his first vacant house from the City of Baltimore. A little more than one year and $100,000 later, Frederick would move into this newly rehabbed house in Greenmount West, one of several Baltimore neighborhoods that has undergone a noticeable transformation over the last half-decade thanks, in part, to a six-year-old city program called Vacants to Value.

For decades, Baltimore has been plagued by vacant properties. More than 16,000, about a quarter of them city-owned, line its blocks today. Nonresidents might know them best through the eyes of Chris Partlow, a character from the HBO series The Wire who dumped dead bodies into vacant buildings and nailed the entrances shut with plywood. But Baltimore residents see them every day, especially in sections of the city once home to working class families or redlined over decades of segregationist city planning. Head west or east on North Avenue, away from the popular Station North Arts and Entertainment District, and you’ll see stretches of vacant rowhouses. Drive into Sandtown-Winchester, where 25-year-old Freddie Gray was detained by Baltimore police in April 2015 before dying a week later in custody, and you’ll find hundreds of them—more than 800, according to official city numbers.

It’s against this backdrop that Mayor Stephanie Rawlings-Blake introduced Vacants to Value in November 2010. An attempt to get vacant buildings rehabbed and occupied, Vacants to Value is the city’s "most ambitious blight-elimination effort in 40 years," according to the Abell Foundation, a prominent Baltimore-based nonprofit. It’s a signature policy piece for Rawlings-Blake, who declined to comment for this story and who leaves office December 6. A message about V2V’s future, sent to the campaign of Catherine Pugh, the Democratic state senator who was voted the fiftieth mayor of Baltimore on Election Day, went unreturned.

"During the campaign, Sen. Pugh repeatedly commended the program and has said she wants to continue it," says Julie Day, deputy commissioner for Baltimore Housing and part of the leadership team behind Vacants to Value. "Now, under what form or under what name … I don’t know. We’re definitely kicking ideas around."

Vacants to Value is a multi-pronged attempt to fight blight by streamlining the sale of city-owned vacant properties to buyers committed to rehabbing them. The program fines owners who don’t take care of unlivable properties, promoting strict, swift code enforcement. V2V allows district court judges to use receivership to take absentee owners’ derelict properties from them to be auctioned off for renovation, and it offers incentives to individual homebuyers and developers to purchase properties and spur neighborhood turnarounds.

But these efforts are easier said than done.

City data pegs the number of vacants at 16,730 structures, with "vacant" defined as any building likely to violate the city’s Building and Fire Code—something with broken windows, no roof, or, in the case of Frederick’s vacant, boarded-up windows and doors and empty heroin vials strewn about. Put simply: They’re unsafe and unfit for human habitation. Other tallies place the number much higher. The University of Baltimore’s Jacob France Institute estimates there’s at least twice that many vacant properties.

Vacants to Value has been a mixed bag. On one hand, V2V has achieved some successes in its six years. More than 3,000 vacant properties have been rehabilitated, according to Baltimore Housing, the umbrella group that oversees V2V, composed of the federally funded Housing Authority of Baltimore City and the locally funded Department of Housing and Community Development. A total of 1,467 city-owned properties, which includes 938 vacant buildings, have been sold through the program.

On the other hand, it’s questionable just how beneficial the program has been. At launch, Vacants to Value promised to "promote rehabilitation of more vacant, boarded buildings than any previous blight elimination program to date," and said more than 1,000 buildings would be rehabbed in just the first year. Two and a half years later, however, that number stood at 728. And over its first four years, more than 500 buildings became newly vacant, according to a report published last November by the Abell Foundation.

"When we try to come up with a single program to eliminate all that blight, it’s impossible," Day told me in 2014 when I first talked to her about the V2V program. "It’s always going to be a work in progress."

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That so many Baltimore homes stand empty is a reflection of how the city’s economy has changed over the decades. In 1950, the city was home to nearly 950,000 people, as well as to plants operated by General Motors and Bethlehem Steel. By 1990, more than 200,000 people had left Baltimore due to white flight and a dwindling number of blue collar jobs. Today, according to the latest Census estimates, Baltimore is home to about 621,000 residents.

Vacants to Value is not the city’s first attempt to bring vacant homes back to the housing market. The Dollar House program—enacted in 1973, when Baltimore had about 5,500 vacants—tried to attract contractors willing to fix up crummy, city-owned properties, and used a combination of city and federal funding to help finance low-interest loans for renovations. By the 2000s, the number of vacants had tripled, and a new project came into being: SCOPE, or Selling City-Owned Property Efficiently. Vacants to Value’s immediate predecessor, SCOPE was a flop: In November 2010, just as V2V was announced, Baltimore City Paper reported that SCOPE had facilitated just 130 complete rehabilitations in eight years.

Vacants to Value uses a wider variety of tactics to get both city-owned and privately owned vacants rehabbed. What V2V won’t do is facilitate a rehab of just one vacant on a street if there are five others, or spend resources in neighborhoods with high vacancy rates and slim chances of attracting homebuyers. Instead, it targets specific neighborhoods classified as "middle markets," with lower rates of vacant housing, and uses a "block by block" approach. The city will see what properties are city-owned, if any, and then go after properties that are privately held.

"V2V, and I don’t mean this as a criticism, is a cherry picker," says Bill Henry, city councilman and chair of the council’s Housing and Community Development Committee. "It’s deliberately identifying those vacant houses of having the best chance of getting back onto the tax roll."

It starts by issuing $900 fines to private owners of vacants in the hopes it will push them to make necessary repairs or sell the house. In cases where the owner can’t be found, or repeated fines and notices go unanswered, V2V turns to receivership. Vacants are legally considered public nuisances, which means the city can petition district court judges to seize a vacant house and hand it over to a receiver, which in turn sells the property. More often than not, the receiver is One House At A Time, a two-person nonprofit that’s auctioned off close to 1,300 vacant properties since 2006. The most One House can keep from each sale is $5,000, but only after the lawyers and the auctioneer are paid; on average, One House gets around $3,200 from a sale. Executive Director Lisa Evans says the number of houses the nonprofit auctions each year has increased since V2V started. Last year, 186 vacants were sold to prequalified buyers—ones who can show they have at least $90,000 in cash, whether savings or loans—to rehab.

"We don’t differentiate on people who want to sell or rent. What we care about is they have a track record of buying vacants, fixing them, and getting them back on the market in a reasonable amount of time," Evans says.

In other cases, Vacants to Value focuses resources on Community Development Clusters, typically smaller areas of vacancy near major redevelopment areas, like the one overseen by the (controversial) East Baltimore Development Inc. in the city’s Middle East neighborhood. EBDI has used V2V to purchase dozens of vacant buildings and lots in its continuing quest to transform 88 acres of land near the Johns Hopkins Hospital.

"Vacants to Value was never meant to fix everything. … Every block has its own potential," Day says. "In CDCs, we’ve brought vacants down in those footprints by about 35 percent, but the total number of vacants through the city has gone up by 8 percent."

There’s a reason the Oliver neighborhood on Baltimore’s east side is continually cited as a success story. There, TRF Development Partners has poured money into rehabbing about 175 single-family homes.

"V2V said to developers, tell us where you have interest in developing, and then we’ll consolidate vacants in that area, and use auctions and receivership to package groups of properties and get you to the point where you’re able to complete an entire block face," says TRF President Sean Closkey.

Packaging properties is one of V2V’s strengths, says Avendui Lacovara, a real estate agent and a V2V fan who has sold more than 40 properties rehabbed by developers through the program. Lacovara says that under SCOPE, properties were rehabbed piecemeal: One house on a block would be renovated, but then three other vacant buildings remained. For a realtor, that’s already a sales challenge. Coupled with a down housing market after the recession hit, the task became impossible. Now, she says, the way Vacants to Value deals with vacant properties and bundles them together for developers to buy is "a much more reliable market influence."

"It seems like there’s a much more systematic way of dealing with problem properties," says Lacovara. "It allows the buyer to know that not just their house is going to be fixed up, and it gives the people who are living there already some comfort that they can start investing in their own home."

When Shea Frederick went vacant-hunting back in January 2013, he started in Greenmount West largely because of what was already happening there. An empty factory was being converted into the Baltimore Design School, which opened in August 2013. TRF Development Partners had rehabbed 25 vacant rowhouses, and City Arts, another project TRF had a hand in, had recently come online: 69 apartments, all classified as affordable housing and leased exclusively to artists. (Greenmount West is part of Baltimore’s Station North arts district.) There were still other vacants in the neighborhood, but it seemed to be on the cusp of transformation and straddled that uneasy line between full-blown dereliction and bearded-hipster gentrification.

"When we launched [V2V], there were 179 vacants in Greenmount West. There are fewer than 60 right now and most of those are under contract or under construction," says Day.

Frederick at that time was still a senior programmer at Advertising.com, a Baltimore-based subsidiary of AOL. He grew up in California not far from Apple HQ—as a kid, he’d take his skateboard to the top of the company’s parking garage and race the security guards trying to chase him down—but construction was in his blood. His dad grew up pounding nails with his dad, Frederick’s grandfather, who was business manager of the local carpenters union in and around Oakland.

"Despite the fact that I’m a programmer, I actually like working with my hands," says the 39-year-old Frederick.

Entering vacant houses legally requires signing a waiver and paying the city $25 for the privilege. Frederick went through this process to check out the insides of a half-dozen vacants in the neighborhood. To get past their plywood-covered entrances, he made each trip with a screwdriver and crowbar. He eventually settled on a corner rowhouse on Lanvale Street that was also hiding a sawed-off shotgun, in addition to the human poop and remnants of a heroin habit he found. But it was a shell with good bones and most of a roof.

Purchasing the house through V2V was a matter of a 14-page application—a document that outlines the intended use of the property and architectural plans for the house—and the placement of a bid. Frederick offered $9,000. That price, coupled with what the city told him was the best-looking application, helped him win out against two other buyers. But what the city really wants to see, in addition to a development plan and the total cost of the rehab, is proof that a buyer has the cash on hand to do the renovation.

"You have to prove that you have 100 percent of the funds the day you apply," says Frederick, who took out three lines of credit, even though he ended up using only one of them. "I needed to show that I had the possibility to get all the money at once to do the house, and that’s where it’s not realistic for most people, I think."

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Even for Frederick, who had no debt and a cushy programming job, proving to housing officials that he had not only the money for the house, but also the money for the rehab was the most difficult part.

For individual buyers or smaller developers, this is where some of the holes in Vacants to Value’s methodology begin to appear. A developer has to be sure they can sell a renovated house for a bit of profit, something that’s pretty obvious even to people who don’t watch every house-flipping show on HGTV. In Baltimore neighborhoods where vacants make up one-quarter to one-half of the housing stock, there’s no guarantee of earning that money back.

"The problem with most vacant houses in Baltimore, even if you pay nothing for the house itself, is that the cost of renovating them and bringing them back up to code exceeds their value in the place that they are," says Henry.

Chuck Davies and his business partner have been renovating vacant houses in Baltimore for six years. Davies usually estimates at least $180,000 in construction costs for a 2,000-square-foot house. In a neighborhood like Greenmount West, where they’ve purchased 16 vacant properties—half of them through Vacants to Value—they’re able to make back the money and turn a small profit. But Davies is finding it more difficult to sell renovated houses in other neighborhoods like Barclay and Johnson Square, two of V2V’s target areas.

"There’s a lot of places where even though they are nice neighborhoods, we’re having a hard time finding qualified buyers," says Davies, a former New Jersey city planner. "I just can’t cover my costs in some of these weaker markets."

In its report published in November 2015, the Abell Foundation said money trouble, for both homebuyers and developers, was one hangup of the Vacants to Value program. "There are problems that need to be fixed," Joan Jacobson, the report’s author, told the Baltimore Sun at the time. "And one big problem is a lack of financing."

There have been some attempts to circumvent the financing challenges. A city-sponsored "booster" specifically for Vacants to Value homebuyers has been around since the program began. Originally, these grants were for $5,000 and only available to select groups of buyers, like teachers. After some retooling, the grants were expanded to all V2V homebuyers, and the amount per grant was increased. Since 2012, the city has given out 518 grants of $10,000 apiece.

"It’s hard to fully renovate a house in Baltimore city and get a price point under $175,000," says Lacovara. "To be able to ensure you’re in a 20 percent down situation, [the grant is] kind of critical."

The booster program hiccupped this summer when the $300,000 allocated for grants for the fiscal year spanning from July 2016 through June 2017 ran out after two months. In late September, the city allocated another $700,000 for the booster program, which means potentially 70 more buyers will be able to purchase previously vacant houses this year. Day says she was not part of the decision-making that resulted in the grant money being temporarily cut.

"We would never ask for less money in a program that we believe is critical," she says. "In the long run, I actually think it was a good thing we ran out of money because there was such an outcry [from buyers and developers]. It’s going to be pretty hard to cut going forward."

Ultimately, it’s hard to determine the overall effect of Vacants to Value because Baltimore Housing doesn’t publish clear, easy-to-find data, meaning the city tends to oversell the program’s transformative capabilities. Case in point: A database of 1,585 properties purportedly rehabbed in the program’s first four years and analyzed by the Abell Foundation included 416 properties with permits for renovation that predated V2V’s launch.

"I’m not sure how big a dent we’re making," Evans says. "There’s certainly way too many neighborhoods where there’s no real estate market."

Lately there’s been more talk about whether Baltimore should demolish vacant houses rather than redevelop them. A Baltimore City Paper budget investigation in September suggested that the city seems to be shifting more financial resources toward demolition and away from homeowner incentives. The incoming mayor, Catherine Pugh, told the Sun that she would like to break up Baltimore Housing into two separate agencies, one of which would be focused on demolishing vacants.

"Demolition has always been a component to V2V. There are certain blocks that are so distressed that they need to be demolished," says Day. According to her, Mayor Rawlings-Blake has quadrupled the amount of funding for demolition from about $2.5 million to about $10 million during her tenure.

There’s also a new Maryland state program specifically for demolition. Announced by Governor Larry Hogan earlier this year, it’s supposed to provide $75 million over four years to tear down thousands of Baltimore vacants. What takes the place of vacants that are torn down will vary. The state program calls for green spaces, like the park in Sandtown-Winchester the governor visited in June, and new development. In some cases, vacants will be torn down to make nearby properties being rehabbed through V2V a better proposition for buyers (because no one wants to see a vacant house in the alleyway behind their renovated home). But the demolition initiative is already falling behind on its goals for this year.

"Vacants to Value is just one piece. I think it works for what it is, but I wish there was a much larger-scale way to address all this," says Evans. "I don’t see the funding for that, or, at this point, we still don’t have a population game, so the picture of this is much greater than a vacant house."

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For Frederick, Vacants to Value worked out well. The vacant shell he purchased from the city is now a three-bedroom, two-bathroom home with modern fixtures and steps made of reclaimed wood. He lives there with Allie, his dog, across the street from a new public park, where a cubby holds books for adults and children to take.

He’s since purchased another vacant in Greenmount West, which he recently sold after renovations. He also has a deal worked out with TRF Development Partners, who’ve agreed to fund 85 percent of the costs to build rowhouses from the ground up on four vacant lots he just purchased. After a summer of waiting, he finally closed on a third vacant rowhouse, bought at auction from One House At A Time. And he’s traded in his keyboard and JavaScript for a hammer and nails: Like his grandfather, Frederick now works in the construction business full-time; he recently started up his own contracting business.

"I just felt like it was time for a change," he says. "I’ve been doing programming for like 15 years now. And in reality nothing’s changed in the 15 years—it’s always the same thing just repeated."

In late September, at his newest vacant rowhouse, Frederick walks through clouds of dust and over piles of broken wood wearing work boots, a pair of Carhartt khaki pants, and a t-shirt that reads "I see dead pixels." He and three guys he hired from the neighborhood have just finished gutting the insides of this new vacant. It needs a new roof, a project Frederick hopes to tackle before the winter. Upstairs in the bathroom: a tub filled with empty bottles of bleach, which Frederick points out with a laugh. When it comes to renovating vacants, sometimes things don’t change either.

Editor: Sara Polsky