Tackling vacants, block by block

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Two years ago, an email arrived in my inbox. It contained some thoughtful ideas put together by Joseph “Joe” Meyerhoff II about Baltimore City’s perpetual vacant housing inventory and how to do something about it.

The brochure that Meyerhoff, an affordable housing finance specialist, had put together contained some intriguing ideas. These included something called a “non-contiguous TIF,” which I might have regarded as visionary, but perhaps not ready for prime time.

At a meeting last week hosted by the Baltimore chapter of Lambda Alpha International, the land economics honorary society, featuring a presentation on the workings of the non-contiguous TIF, it seemed as though prime time may have arrived. The presenters were Baltimore City Housing Commissioner Alice Kennedy, Finance Director Michael Mocksten, and the city’s private adviser on all of its TIFs, Keenan Rice, president, MuniCap, Inc.

Readers may be familiar with TIFs in general, referring to a form of public finance known as Tax Increment Financing. For example, TIFs have been used in connection with some high-profile projects in the city, including the mixed-use development that has been moving forward on the downtown waterfront at Harbor Point as well as the transformation of the Baltimore Peninsula.

Tax Increment Financing has been used by state and local governments across the country. TIFs serve as a public revenue tool that uses taxes on expected future gains in real estate assessments to pay for new community improvements, such as roadways, utilities, public parks, other green space and various community amenities.

TIFs are usually authorized by state law and, until now, always begin with the designation of a geographic area as a TIF district.

The innovation that Meyerhoff wrote about two years ago is this non-contiguous TIF, in which no geographic area is delineated on a map. Instead, parcels containing vacant properties are designated as being included in the TIF, which essentially is defined by the database incorporating the selected parcels. According to Kennedy, Baltimore would be first in the nation in taking this approach.

Baltimore has been wrestling with its thousands of vacant properties for decades. The vacant units not only blight neighborhoods, they are costly. In a study supported by the Abell Foundation, authors Mary Miller and Mac McComas with the Johns Hopkins 21st Century Cities Initiative estimated that the city’s vacant housing results in some $100 million in lost tax revenue yearly; another $100 million annually is expended on managing the inventory.

For a long period of time, the number of vacants hovered around 16,000 properties. City leaders have tried various approaches.

There was Project SCOPE, that enlisted private real estate brokers to transfer vacants to new private owners. There was Project CORE, Gov. Larry Hogan’s program to demolish or stabilize vacant properties. In 2010, the city launched its Vacants to Value initiative, using code enforcement and other tools to rehabilitate vacant units.

These various programs have made some dent, but new properties become vacant all the time, and the overall total was being reduced at a glacial pace. The Department of Housing and Community Dashboard, which I checked on Feb. 23, cited 12,878 vacant properties. To indicate how focused the city is to drive down that number, according to Kennedy, the dashboard is updated daily.

And now the pace of reducing the total can accelerate. In October, Gov. Wes Moore signed an executive order called “Reinvest Baltimore” that is intended to create a blueprint to address blight block by block. The state’s $50 million funding commitment, combined with funds from the issuance of non-contiguous TIF bonds and contributions from the philanthropic sector, will get the initiative going.

The initial goal is to reduce the number of vacant properties by 5,000 in the next five years.

Another notable element of the strategy is approaching the vacant properties with a “complete block” mentality. That recognizes rehabilitating one property will not be effective if surrounding homes remain vacant and neglected.

The city, working with neighborhood representatives, local businesses, anchor institutions and other stakeholders, can help determine how every parcel on the block can contribute to the enhancement of the neighborhood, such as leaving one parcel without a structure to become a pocket park.

Bolstered by the new funding commitments, Mayor Brandon Scott has formed a coalition, including leaders from Baltimoreans United in Leadership Development, the Greater Baltimore Committee as well as consultants from Ballard Spahr and PFM to finally address the vacant property properties problem at scale.

Beyond removing bright, this new effort can reduce the costs cited in the Miller and McComas study, strengthen local communities and contribute to rebuilding the base of tax-producing properties.

Joe Nathanson is the retired principal of Urban Information Associates, a Baltimore-based economic and community development consulting firm. Since 2001, he has written a monthly column for The Daily Record and can be contacted at [email protected]