Owings Mills developer Alan Klatsky wants you to buy one of his $1.2 million custom-built houses in Baltimore County so badly that he’ll throw in a fully-loaded 2009 Jeep Grand Cherokee Laredo if you commit before June 1.

His Phoenix development, called Brighton Hills, consists of 10 lots, only one of which has a completed house on it. According to Klatsky’s website, the $1.7 million, 5-bedroom, 5-bath house with 10-foot ceilings and nice dark wood floors commands “one of the most unspoiled, breathtaking views of countryside.”

So why throw in the Cherokee?

“These are extraordinary economic times,” Klatsky, who is president of Prestige Development, said in a statement. Yeah, tell us about it. But vague statements like these offer no clues as to whether he means extraordinarily bad (like the reality of the housing market) or extraordinarily good housing market opportunities. So we called up a spokeswoman for the Strata Group, a brokerage partnership representing Brighton Hills, to ask what the deal was.

“He knows what’s happening, and they’re doing it in California, and having a lot of success,” she said. “The main thing is to generate interest.”

The Jeep, she added, is good for rough winter-weather roads and squeamish commuters.

“He wanted an American-made car,” the spokeswoman said. “The thought process was, because of the location of the house. It’s Baltimore County. It’s not downtown.”

Indeed. But this is 2009 — has Klatsky been living someplace where the news of the unpopularity of gas-guzzling Chrysler cars and the market for overpriced, exurban McMansions has failed to penetrate? Not to get all preachy or anything, but maybe he’d’ve sold a few more lots if he was peddling waterfront condos near a grocery store with a free Toyota Prius.

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Two seemingly unrelated news tidbits crossed my desk today. One is the unexpected report from the Commerce Department that nationally, home construction is up 22 percent. The AP reports that both housing starts and permit applications are higher than economists were predicting, largely due to an uptick in apartment construction.

The other bit of news comes from the agenda (.pdf) of Baltimore’s Board of Estimates, which is likely to approve a measure tomorrow (there are no protests filed on the item as of yet) to amend the city’s SCOPE program to make it easier for Realtors to market blighted houses in Baltimore.

The program, — which stands for Selling City Owned Properties Efficiently, and has been criticized for failing to do just that — pays agents from the Greater Baltimore Board of Realtors an 8 percent commission to successfully sell city-owned vacants to buyers interested in rehabbing them.

This new measure would change the SCOPE program in variety of ways, including allowing homebuyers to make offers on multiple SCOPE properties using one contract of sale, giving the buyer 15 extra days to back out of the contract if inspection problems arise, and two measures that hardly strike me as “efficient”– one that gives the buyer 18 months after to purchase to establish occupancy in the house and one that “[increases the] amount of time to settle from 60 days to 90 days due to numerous extension requests of purchasers as the result of financing issues.”

Reading these two items, it struck me that as we climb out of the ruins of this recession, the home-building industry and local governments might be at odds as far as their main goals are concerned. There are 2,800 houses in Baltimore, for example, that will be left empty by foreclosure, and need to be sold and occupied to keep them from falling into disrepair and damaging their surrounding neighborhoods. There are 30,000 vacant properties that the city is trying to dispose of through its new Land Bank initiative, and anyone who has ever driven through Park Heights, Sandtown or Broadway East can tell you that they’re a big part of the ruin of many an urban neighborhood.

Why, then, is it a good thing to be building new houses? And should the city be encouraged by a jump in home construction, or worried that new housing stock will undermine their efforts to fill the glut that we already have?

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In response to an article published Feb. 20 in The Daily Record, a group of Fells Point community activists have sent a letter (PDF) to Baltimore Mayor Sheila Dixon, urging her to move quickly with the city’s plan to redevelop the historic Recreation Pier.

The project has been at an impasse for over a year now as the city has tried to find a suitable temporary relocation for Moran Towing Inc., a tugboat company that is essential to the harbor’s shipping business. Read more about it here.

In the letter, which is signed by Kilpatrick Stockton LLP attorney Arthur D. Perschetz, Jason Sullivan, executive director of Fells Point Main Street Jennifer Etheridge, president of The Preservation Society, and Joanne Masopust, president, Fells Point Community Organization, the community stresses the urgency of the situation, but urges caution when the city is dealing with the situation:

“As the people who live and work in one of Baltimore’s most well-known areas, we are pleading with the city to take whatever steps are necessary to bring the parties together.… With its incredibly attractive lease, Moran has the power to literally “pull the plug” on the development of the pier. If the company doesn’t relocate now, it will have to when the pier falls down. We don’t think that it would be too much for a business that has successfully operated in the city for many years in the past to be willing to give a little at this time so that the community and the city can thrive in the future.”

The ball, it seems, is in the city’s court.

ROBBIE WHELAN, Business Writer

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This week’s Forbes magazine has a great article by former Baltimore Sun reporter Gady Epstein about a developer in Chungqing, China, who thought he was going to benefit from the government’s seizure of prime land near a highway and commerce center. He ended up losing out, as a government official showed favoritism to another developer, seized his land, and eventually denied him about 75 percent of the compensation that he, and the courts, thought he deserved.Why does this sound familiar to me?

Oh yeah — because Chen Yun, the real estate developer in question, could be any number of Baltimore landowners who have lost their property to the city or seen it conveyed to another private interest, and been, in their opinion, unjustly compensated. In fact, we wrote a three-part series about that very subject last month.

We already know that China, and Chongqing in particular, has a miserable record on property rights — but what a strange coincidence that reporters who have worked in Baltimore are still poking at the same types of stories, even in China. At least we have one thing in common!

ROBBIE WHELAN, Business Writer

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Coinciding with the city’s proposed land-banking program to deal with Baltimore’s 30,000 vacant properties, another citizen activist blog has sprung up: Baltimore Slumlord Watch.

It’s a website in the vein of Baltimore John Watch, the site that began last year to fight prostitution in Pigtown (Pigtown seems to be a hotbed of internet-based social activism!) by posting photos, videos and license plate info of the johns who visit prostitutes in that neighborhood.

Baltimore Slumlord Watch posts addresses, pictures, and contact info for the state-listed owners of vacant properties and urges the city to deal with the problems.

I understand and respect the need for this sort of thing — I’m all for people protecting their families, preserving their property values and generally keeping their neighborhoods clean. And what these derelict property owners and johns appear to be doing is negligent and illegal. I just wonder sometimes if publicly shaming people on a case-by-case basis is the best way to effect real change. It seems to me that the only way to target this sort of behavior in a meaningful way is on the demand side — after all, being a slumlord has got to be the world’s second-oldest profession — because there will always be desperate or careless people willing to exploit or be exploited for money. In the case of the johns, it means prosecuting those who seek out sex for money, and rehabilitating or re-socializing the prostitutes they visit. In the case of the vacant houses, it’s a little trickier: you have to create demand for vacant properties and emphasize the incentives for rehabbing them.

From that angle, the Land Bank seems very sensible: If indeed the problem with vacants is that they’re hard to buy, rehab and sell again because of city bureaucracy, a program like a land bank that removes those sorts of barriers to development should be the way to go. Unfortunately, we’ve never had one in Baltimore, so we don’t know how well such a thing might work.

Here’s an idea. To the “Baltimore City resident who was tired of watching out of town developers and investors (and the city government) buy properties and let them sit vacant for months…years…even decades” who runs Baltimore Slumlord Watch: Please post, alongside every vacant house you photograph, a shot of an interested buyer.

Robbie Whelan, Business Writer

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In response to Wednesday’s article about the city’s new land-banking program that seeks to tackle the 30,000 vacant properties in Baltimore, a reader writes:

“Why can’t the city simply improve the processes and procedures of the SCOPE program? If SCOPE isn’t doing what it is supposed to do, end it and replace it. It makes no sense to me to have both programs exists.”

Our first response was, well, that’s what this is: the Land Bank will replace SCOPE. But we decided to run that question by some Baltimore Housing officials anyway, just in case they had more authoritative thoughts on the matter. Cheron Porter, a department spokeswoman, wrote this in response:

“SCOPE is a marketing and sales tool. It is just one method of disposition. It was not designed or contemplated to address the full range of 10,000 vacant properties in the inventory.

The Land Bank will consolidate properties in a single entity making them more accessible to realtors who participate in SCOPE, as well as to the general public. It will also streamline the disposition review process to shorten the time from sale to settlement.”

Jody Landers, head of the Greater Baltimore Board of Realtors, told us Tuesday that only about 250 houses had been sold in five years of SCOPE. At that rate, it would take 340 years to get the city free of vacants. So while some local Realtors, like Landers, can both benefit from and take credit for SCOPE, it seems clear that something needs to be done about Baltimore’s vacants on a much larger scale.

ROBBIE WHELAN, Business Writer

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Patrick Turner, the Baltimore developer who, it has been noted, resembles Virgin CEO Richard Branson both physically and for the audacity of his business ideas, has a little saying he likes to repeat:

“You make money when you buy, not when you sell.”

He’s told us that at least the last three times we’ve spoken with him, including on Monday, when we got him on the phone to reflect on 2008 and the economic climate for commercial real estate development, and predict the future of 2009 in real estate. But mostly, we ended up chatting about Silo Point, the century-old grain elevator in Locust Point that Turner converted into luxury condos, at a cost of $170 million. The condos went on sale this fall.

The condo tower is one of two marquee Turner Development projects backed by Washington-based private equity firm The Carlyle Group. The other is a proposed, multi-billion-dollar revamping of a 50-acre site known as Westport, on the Middle Branch of the Patapsco, where demolition of a former BG&E power station is almost done, someday to make way for homes, shops and what the developer envisions as “a second downtown” for Baltimore.

Read the rest of this entry »

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At a CREW (Commercial Real Estate Women) panel discussion yesterday, local developers, tenants and economic development officials talked about how Baltimore’s businesses and development projects are poised to make it though these unstable economic times.

The panelists, Courtney Capute of Venable, Downtown Partnership President Kirby Fowler and Cole Schnorf, senior vice president & director of development at Manekin LLC, said they thought downtown Baltimore’s perks – like its waterfront, accessible highways and public transportation and historic neighborhoods – serve as constant selling points that make the city unique.

“We have a lot of things going for use that you can’t just replicate if you’re just starting out,” said Schnorf.

Fowler said afterwards he thought downtowns as a whole are going to be more attractive during these times as people recognize that being farther away from job centers means spending more on vehicle maintenance and gasoline. But on the other hand, while downtowns are still attractive to people, new business developments could slow down.

“We’re just looking at everything a little bit more skeptically now when projects come before us,” Fowler said. “Five years ago if someone came to us and they had some financial partners we’d never heard of we’d say ‘well maybe they’ll be able to make it work.’ But now the projects we think will have the most success are the ones that have some of the more traditional lending sources and have done a really strong economic analysis of their project.”

Do you think in the push to get more businesses back to the downtown area, some development projects got the short stick and Baltimore should have taken a more cautious approach before? Or are we no different than most cities in the middle of an urban renewal?

LIZ FARMER, Business Writer

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If you like converted shipping containers as a housing option for Mexican border towns (see today’s Uncover Story), how about putting them in Monkton?

A nursery owner famous for his irises had a double-container house built for one of his workers after the state said the man could no longer live in an RV on the property, according to this story from the North County News.

L. Bruce Hornstein and partner Lee Dorman were so taken with the result — painted to match their own house, and built to Harford County code — that they formed a production company, Steel’s the Answer. They envision not just houses but “villages for migrant workers or for the homeless.”

The director of Harford County’s Office of Economic Development offered another intriguing possibility: using the houses to accommodate the influx of federal workers brought to Maryland under BRAC. (No, he didn’t specify Aberdeen Proving Ground; I’m just guessing that’s what the director of Harford County’s Office of Economic Development means when he says “BRAC.”)

Call me skeptical, but I don’t see this as a big draw for all those folks who’d rather stay in New Jersey.

BARBARA GRZINCIC, Managing Editor/Law

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Anirban Basu, the local economics luminary who runs the Sage Policy Group, knows how to give a good talk. His presentations, more than any professorial type I’ve ever seen, make the audience laugh, and never really degenerate into the dense jargon and technical talk that plagues a lot of business writing and management seminars.

So on Tuesday at the Maryland Association of Realtor’s annual convention in Ocean City, we took some notes at Basu’s talk on Maryland’s economic forecast, so you and your business don’t have to pay him for the same.

Here’s what we learned:

• The second half of 2008 will be worse than the first, because the federal income tax rebate checks are done stimulating the economy, and because the first round of foreclosures staved off by emergency state legislation to revive the housing market will hit the fan this Fall.

• In Maryland, we’re gaining jobs in the education and health sectors, leisure industries, natural resources/mining, and government services. We’re losing jobs in information technology, manufacturing, construction and finance. Read the rest of this entry »

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