Demolition! Oh No! OH, YES!

In the seven years I have lived in Baltimore, I have seen amazing changes in and around my community, both where I live -Waverly, and where I work – Barclay/Harwood.  However, so much of the progress is overshadowed by the demoralizing sight of derelict houses, plywood covered doors and windows and sky showing through destroyed roofs -visions from a war zone.

And based on the data map published this week in the City Paper –  overlaying the homicides that have occurred this year -126 – on top of a map of the vacants in the city, those areas are war zones.

However, I want to talk about a garden.  

At the end of Falls Street which is one block long and runs from 24th to 25th Street between Barclay and Guilford, there was an abandoned end-of -row property.  During the 7 years I have worked on 25th Street, mountains of household goods were dumped in the back yard of the house and drug dealers regularly used it to store their wares and offer free samples to prospective customers.  Not a pretty or encouraging environment for the little ones in the home whose backyard looked out on it.

Two months ago, Baltimore Housing brought in a demolition team of bulldozers and dumpsters and took it down and BAM! a pretty fenced-in garden space with pebble walkways and flowers and baby trees grew up in its place.

Imagination blossoms and neighborhoods feel empowered when they are given a blank canvas not crammed with falling down bricks and trash.

Let the demolition continue!

 

Home Matters™ Launch Is Today!

Today, in Washington, DC, National NeighborWorks® Association joined (NNA) with a coast-to-coast coalition to launch a unique national movement called Home Matters. Home Matters™ aims to build public support for the essential role that Home plays as the bedrock for thriving lives, families, and a stronger nation. As it expands, Home Matters™ will go beyond housing and illuminate the connections between stable housing and other important facets of American life such as:

  • Individual Success: Home recharges adults and children alike for the day ahead.
  • Education: Children in stable homes learn and achieve more in school.
  • Health: Healthy habits take root more easily in stable affordable homes.
  • Public Safety: Stable homes make communities safer.
  • A Strong Economy: By having a Home that is affordable, people of all income levels have more to spend and support the economy.

Participating in the two-day launch, today and tomorrow, are leaders of more than 150 local and regional housing and community development organizations from across the nation – many of them NNA members – as well as national entities including NNA, Citi Community Development and Wells Fargo. Members of the U.S. Senate and U.S. House of Representatives will join us this evening, and U.S. Secretary of Housing and Urban Development Shaun Donovan will speak with the coalition tomorrow. Please visit the Home Matters™ website (www.HomeMattersAmerica.com), share your insights, tell your colleagues and friends about the movement, and connect to it through Facebook and Twitter. It’s time for the crucial roles that Home plays to be more broadly understood.

The Debt Ceiling and Housing

Source: Center for American Progress

August 2nd.  The day looms over the American public drearily, as failed negotiations leading up to the imposing government debt deadline make the possibility that the United State will default on its debt all the more likely.  We have heard from pundits and economists that the consequences would be devastating, that inflation would soar and unemployment would also increase, all while spiraling the U.S. economy into a double-dip, “U-shaped” recession.  The consequences of default on some facets of the U.S. economy seem more apparent than others, like the demand for government issued securities and the market for our bonds.  Among all of the apocalyptic speculation about what would happen if we defaulted, however, little commentary has emerged focusing on the housing market.

However, Christian Weller of the Washington-based Center for American Progress, a left-of-center think tank, had already analyzed the effects that a potential default would have on the housing market as early as last May. Now, Weller’s analysis seems all too apropos, as default increasingly looks like it could be a real possibility.  Back in May, long before most analysts even considered a default scenario, Weller wrote in a CAP brief that “if Congress fails to raise that ceiling then the U.S. housing market would most likely experience a severe double-dip contraction marked by lower housing sales and depressed home prices.”  It turns out, albeit not surprisingly, that the potential downgrade of treasury securities and the depressed market for government issued bonds could have a devastating effect on the housing market as well.

The brief goes on to outline six main contentions as to what a default would mean for housing: 1) mortgage interest rates will rise more than U.S. Treasury rates; 2) mortgage rate will remain high for some time; 3) new home sales could drop to record lows; 4) existing home sales will decrease;  5) housing prices will drop in the wake of fewer sales; and finally, 6) the economy will suffer.

Throughout the analysis, a subtly consistent point emerges: mortgage rates are directly tied to treasury interest rates, and thus, higher treasury interests would translate to higher mortgage rates.  Because U.S. government debt is perceived to be an almost risk-free investment, a default would very likely increase the interest rate on U.S. Treasury bonds.  As the table above shows, the correlation with between increased debt and higher mortgage rates are staggering.

But what’s worse, according to Weller, “the assumption is that even if the debt ceiling is not raised in August, members of Congress will eventually come to a budget agreement to pay for the government’s operations and pay the outstanding debt.”  However, even a temporary default will have an impact a major, perhaps permanent impact on interest rates, as investors, for the first time, will associate risk with U.S. debt.

While all of this may come across as overly abstract and theoretical, the effect that a default will have on the housing market, and more specifically, on St. Ambrose and the Baltimore community, will be huge.  To name just one example, much of revenue that helps fund our operation here in Baltimore comes from home sales [hyperlink], as our inventory of competitively-priced, high quality homes in the Baltimore area has long been an asset building and neighborhood stabilizing resource for low and middle income homeowners of Baltimore City.  With higher mortgage rates, however, fewer and fewer families would realistically be able to secure a home loan that may fund even our modest properties.  This fact coupled with the recent news that a median income Baltimore resident may be unable to afford a Baltimore home makes the prospect of a default significant.

Beyond this, our foreclosure prevention department, which is swamped with cases, would certainly have to shoulder an increase in clients.  More foreclosure and less affordable housing means more vacant properties, depressed mean home values in neighborhoods, and depleting household equity for Baltimore families.  In total, the effect on our community would be devastating, and we hope that our two major political parties will find a way to stave off this disaster.  Time will tell.

Take Back the Land: A Human Rights Approach to Housing

Image Source: Take Back the Land

This week, we take a divergence from the dense, policy-based reporting of the last several posts to focus on a small, little known social movement, the Take Back the Land Movement.  Take Back the Land, an intentionally designed social movement that emerged via the work of diligent community organizers, possesses one central theme: to elevate the issue of Housing as a Human Right.

On it’s face, it’s easy to conflate the Miami-based organization with the countless other housing non-profits throughout the country, whose work is often challenged by bureaucracy and whose funding is likewise handcuffed by strictly regulated government grants.  But Take Back the Land is different.  It’s a grass roots movement that advocates on behalf of the homeless, with the goal of housing longtime homeless individuals and families as well as folks who’ve been displaced during the foreclosure crisis.  And unlike the stereotypical “social movement,” which often encounter criticism for being “too much talk, not enough action,” Take Back the Land has succeeded in finding houses for displaced individuals through a creative yet simplistic technique: moving people into foreclosed properties.

It’s easy to wonder how this is accomplishable and why the movement is yet to come across serious issues with law enforcement. In an ABC News segment, Max Rameau, a spokesperson for the movement, offers a good reason: “this [foreclosed house] is a complete waste.  This is not benefitting anyone.  It’s not benefitting the bank, it’s not benefitting the community, it’s not benefiting the families.  There’s no reason this house is empty.” (Rameau also wrote a book about developing a homeless village in an effort to provide affordable housing for low-income people, “Take Back the Land: Land, Gentrification and the Umoja Village Shantytown”).   Furthermore, rather than face trouble with the law, the movement, at least in Miami, is gaining the police’s support.  ABC spoke with the city’s Chief of Police, who expressed a refusal to enforce eviction notices, stating, “what Social Good would be served by arresting this mother, taking her away from her children?”

The movement has gained traction in several parts of the country, and while it’s not officially a non-profit, it’s website indicates that it has networked with “Local Action Groups” in cities coast to coast, ranging from Atlanta to Madison to Portland to Rochester.  While not a policy-promoting organization, Take Back the Land’s approach mirrors a policy alternative discussed both in our blog as well as at Mayor Rawlings-Blake’s recent Vacant’s to Values summit, Code Enforcement.

The theory behind Code Enforcement involves heavily cracking down on delinquent property owners to ensure that they meet the city’s code; if they do not, the government, in one step, can turn the property back to the market, where it will be sold in a competitive auction.  The idea behind the notion is that it would give property owners a strong incentive to maintain their homes while redirecting properties to a better owner if they do not.  Similarly, by putting families back into vacant homes, Take Back the Land helps ensure that the homes are once again properly maintained and meeting code, keeping neighborhood property values up and benefitting the broader community.  Their residents pay utilities, giving added business to companies that provide these services.

There are thousands of foreclosed properties in Baltimore and millions in the nation, the effect of which, in addition to harming families, encumber neighborhoods and by extension, capital markets and economies.  Rather than high-minded policies, Take Back the Land provides a plainspoken way to mitigate this crisis, and rather than sitting back and spouting out ideas, they are acting. By doing so, they begin to make progress towards their stated objectives of encouraging the perception of housing as a human right, local control over housing, community-based leadership, and direct action campaigns.  To be sure, plenty of their operations are illegal. However, policymakers and activists alike can benefit from the organization’s can-do spirit and human rights oriented strategy.

Taking a Turn to the Big Easy: A Conversation with Housing Expert David Marcello

Professor and Policymaker David Marcello (Image Source: Tulane Law School)
Today’s post will mark the the first interview of Talk to St Ambrose’s “Talking with the Experts” series. Professor David Marcello, a prominent policymaker and civic leader in New Orleans, has kindly responded to my questions about housing policy issues.  In addition to his academic duties at Tulane, Professor Marcello’s experience in New Orleans includes serving as the statewide coordinator of the Conservation Coalition–the first statewide environmental lobby in Louisiana.  He also headed the state’s first public interest law firm, The Louisiana Center for the Public Interest.  He has advised and served under several New Orleans mayors, including as Executive Counsel to Mayor Ernest N. “Dutch” Morial, the city’s first African-American mayor.  Under Mayor Marc Morial, Professor Marcello successfully chaired the city’s Charter Revision Advisory Committee, which resulted in the first complete revision of the city’s home rule charter.  Recently, Professor Marcello co-chaired Mayor Mitch Landrieu’s Blight Transition Task Force.
This post contains the first half of our interview.  The second half will appear tomorrow.

Harsha Sekar: The issue of housing in New Orleans has been deeply affected by Hurricane Katrina, whose impact has posed enormous challenges in providing affordable housing for low and middle-income people and delivering adequate housing for displaced residents, most of whom fall into the former category. What strategies have you advocated with the  goal of providing affordable housing for low-income citizens?  How can other mid-sized cities, like Baltimore, learn from the dilemma that New Orleans continues to face after Katrina?

David Marcello: Five years after Katrina, New Orleans finds itself facing significantly different housing needs from those that prevailed in the immediate aftermath of the storm, but our housing finance incentives are still structured in such a way as to favor the same types of housing development that they were promoting five years ago.

After Katrina, large numbers of people sought to return to a city where vast numbers of housing units were no longer in service due to flooding. Considering the severe housing shortage that existed at the time, there was some logic in structuring housing finance incentives to foster large new multiunit apartment complexes that could quickly accommodate the needs of tens of thousands of displaced residents who urgently wanted to return to the city.

Now, in the wake of 2010 census results, we recognize that New Orleans is going to be a much smaller city—currently, about two-thirds the size that it was before Katrina. Moreover, our formerly displaced residents are no longer planning by the thousands for their imminent return to the city; many have taken up residence in other cities and have no plans to return to New Orleans. The post-Katrina “flood” of residents back into the city has slowed to a “trickle,” and that change should change our focus from large-scale development to small-scale rehabilitation of housing.

New Orleans was already an overbuilt city pre-Katrina, having reached its peak population of roughly 650,000 residents during the 1960s. By the year 2000, only approximately 485,000 residents remained to occupy a housing stock that had been built four decades earlier to accommodate more than 150,000 people who were no longer living in the city. Now we’ve lost almost another 150,000, so the disparity been “houses built” and “people to live in them” is even greater. Katrina destroyed many thousands of housing units in New Orleans and severely damaged many thousands more, but even with that loss, much remains in the built housing environment that can be rehabilitated to accommodate New Orleans’ 21st Century housing needs. That’s where our housing finance incentives should be directed currently—toward rehabilitation of existing housing, not new construction of residential mega-plexes.

Much of New Orleans’ most historic housing was either untouched or only mildly impacted by Katrina’s flooding. There was a reason why early settlers built New Orleans on the “sliver by the river” that gives the Crescent City its nickname—because that was the high ground, less susceptible to flooding when the Mississippi River periodically overflowed its banks in the days before the Corps of Engineers built levees to protect the city from flooding. This earliest, historic housing gives the city much of its charm, attracting the visitors who fuel our tourist economy. We’ve much to gain as a city, a community, and a culture in restructuring housing finance incentives to favor rehabilitation of that historic housing stock. We’ve much to lose if incentives remain tilted in favor of multi-unit apartment complexes, because for every 100 new rental units that come on the market there’s a corresponding reduction in demand for occupancy of the older historic housing. New construction undercuts the market for rehabilitation of the city’s historic housing, and in turn threatens to undermine the unique culture that gives New Orleans its worldwide appeal.

We need to restructure residential financing incentives to favor the rehabilitation of existing housing stock.

HS: New Orleans has also been characterized as a “laboratory” for government policies that encourage NGO’s and non-profit organizations.  Indeed, the city possesses a disproportionate amount of housing non-profits that are similar in function and organization to St. Ambrose.  Have non-profits played an effective role providing equal opportunity housing for New Orleanians who need it?  What do you feel is the appropriate function for non-profits and NGOs in this endeavor.

DM: I think in New Orleans we can only talk about “government policies that encourage NGO’s and non-profit organizations” if we first introduce the conversation with the proposition that, “Power abhors a vacuum.” Nonprofits surged in New Orleans after Katrina—not because government action encouraged nonprofits and NGO’s, but because government inaction demanded it. Nonprofits had to do more because local government was doing so little and was so ineffective.

Our residents recognized that they had to look to themselves for recovery and renewal, not to City Hall. Neighborhood groups all across the city responded to that need with an unprecedented outpouring of civic activism. New Orleans also benefited hugely from the volunteer activism that poured into our community from around the country—student volunteers, faith-based organizations, philanthropic organizations, first responders—from all across America they came to our assistance, and this city still feels a deep and abiding sense of gratitude for their help.

Happily, we’ve enjoyed more vigorous and capable leadership in City Hall since the mayoral transition that took place in May 2010. But even so, there is a continuing need for nonprofits to play a role across a broad front of needs. For example, the Fair Housing Action Center has relentlessly opposed housing discrimination in the metropolitan area. The Center repeatedly hauled officials from adjacent St. Bernard Parish into federal court, pursuing a series of contempt orders in a successful multi-year battle to secure “open” housing policies. That need to fight housing discrimination continues, and it’s a task well-suited to fearlessly independent nonprofits like the Fair Housing Action Center.

HS: As a follow up to the previous question, many have argued that NGO’s have, in too many instances, served as a proxy for the government, in that they have provided a service that should be the responsibility of the government, such as encouraging equal opportunity housing and supporting diverse neighborhoods.  Indeed, many housing NGO’s are supported almost entirely with government funds. Critics suggest that the rapid growth of NGO’s in the last decade has led to the further “privatization” of government services and inefficiency.  Being a policy-maker in a city with a strong NGO presence, what do you feel about this argument?

DM: I can see where that might be a problem in some cities, but I don’t think we’ve seen that effect here. Far from serving as a “proxy” for government, our neighborhood associations have traditionally played more of an oppositional role relative to government. They contribute to a pluralistic dialogue that takes place among neighborhood residents, developers, and city government. We need to empower neighborhood associations so that they can play more of a role in that ongoing dialogue and give voice to the legitimate interests of neighborhood residents. Our recently adopted master plan calls for a structured system of public participation, and we will see such a system created within the next year. Public participation is the best antidote to an incompetent or unresponsive government. Nonprofits will always have a role to play in that context.

Tune in tomorrow the Part II of Talk to St. Ambrose’s Interview with Professor David Marcello.

Baltimore’s Vacants to Value Summit

Mayor Rawlings-Blake announcing her “Vacants to Value” plan to curb blight (Image Source: baltimorecity.gov)

by Millie Hrdina

I was among 600 plus, who attended Mayor Stephanie Rawlings-Blake’s Summit on Vacants to VALUE (V2V): Addressing the Challenge – Breaking New Ground. Because of the overflow crowd, it was relocated to the Baltimore Convention Center.

Breakfast with the Mayor was followed by a full day of break-out sessions, lunch with a keynote speaker, and a networking reception with the Mayor. Nuts and Bolts of V2V introduced the leadership team of Baltimore Housing, outlined the strategies, partners and goals of the mayor’s new initiative to address the impact of blight in our communities. The current vacant housing situation, it was explained, was 50 years in the making. There are about 30K vacancies. Of which 14K are lots and 16K houses. The city owns about ¼ and the other ¾ are privately owned. The challenge is that for 2/3 of them there is no market.  To meet this challenge, a six point strategy plan was introduced.

My day went like this: Promoting Stronger Neighborhoods Through Code Enforcement described one of the strategies being employed by the City. CHIP (Computerized Housing Inspection Process) is being reorganized from 74 to 64 districts and a new approach with more active observation of vacancies is being implemented along with other tactical code informant items.

The Working Power Lunch included Allan Mallach’s informative Keynote: V2V in a National Context. He emphasized that any strategy must be sensitive to market reality and encouraged finding the sweet spot of the market, focus on risk vs potential, maximize neighborhood market impact of every public dollar and identify creative non-development uses for heavily disinvested areas.

The panel of speakers at Suggestion Box: Dollar Houses and Other Ideas made clear that tax cuts and dollar houses were not in the plan. One panelist stressed location, location, location – meaning that rehab would not work in depressed areas and Mr. Mallach outlined what to look for from the city: 1. reasonable taxes, 2. Quality services, 3. Quality infrastructure and environment, and 4. addressing and moving forward on issues and problems. In the second afternoon session – It Doesn’t Have to be Housing: Open Spaces and Adaptive Reuse, Beth Strommen, Office of Sustainability, talked about the recent census numbers. Planning should be focused on what Baltimore is! It is a city with a population of 621,000 and should not worry about returning to the all time high of ~850,000. She explained the concept of “food deserts” and outlined Baltimore’s sustainable program hope to change food policies. Other panelist addressed open green spaces, adopt-a-lot agreements and Main Street needing steroids.

I’ll admit my heart was at the second session. Not only do I feel it is potentially the easiest means to handling a large segment of Baltimore’s blight but quite possibly the cheaper of all the opportunities which exist to us as a community. There is a great deal of grant monies available to assist the partners in the cost. To me it clearly belongs high on the list of options in a 10 year plan for Baltimore. It develops a broader scope of utility and creates more community pride than most of the others.

It appeared to me, as well as other attendee that I have since spoken with, that the large majority of the audience was developers. I hope that as the city goes forward with developing a 10 year plan it continues this conversation and broadens the scope of community partners inviting all walks of citizens to step up and double their efforts to revitalize Baltimore shifting vacants to value.  Click here for Mayor Stephanie Rawling-Blake’s V@V web site.

BNIA Study’s of Effect of Foreclosures on Baltimore Schoolchildren


Image Source: Baltimore Neighborhood Indicators Alliance

In the past week, the University of Baltimore’s Baltimore Neighborhoods Indicator Alliance (BNIA) released an analysis, possibly the first since the onset of the foreclosure crisis, that examines the effects of the foreclosures on children in Baltimore.  I first came across the study by way of Jamie Smith Hopkins’ excellent “Real Estate Wonk” blog, where Ms. Hopkins provides an enlightening commentary on the study and its implications.

University of Baltimore Professor Matthew Kachura conducted the study; he received ample funding from various arms of the Open Society Institute.  The study is premised on the notion that while the foreclosure crisis has prompted much examination of related matters, like the impact on property values and the housing market, little if any research exists on the foreclosure crisis’s impact on schoolchildren.  From there, Kachura’s study proceeds to dissect itself into two phases: phase one identifies the students affected by foreclosure and delineates a broad set of demographic characteristics, while the second phase, which is yet to be published, will look at the school performance of the affected students.  The published phase exhaustively utilizes hard data, including publically available foreclosure statistics and other metrics provided by the Baltimore Public Schools; the second phase will look at test scores.

While one cannot make assumptions about the negative impact that foreclosures will have on students’ performances just yet, Ms. Hopkins, on her blog, points out that a University of Baltimore press release has stated that affected students “may have to switch schools, move in with relatives, or leave the city altogether,” shedding light on the outcomes of the second phase of the study.

Kachura’s study proffers further evidence for the interrelationship between housing policies and systemic racism and poverty.  In a previous post, my colleague Will Flagle covered the recent Brandeis University study on the enormous impact that possessing equity in a home has had on intergenerational wealth over the past several decades, which, it turns out, has greatly contributed to inequality between African-Americans and White Americans nowadays.  Here, Kachura documents the disproportionate impact that foreclosures in Baltimore have had on minorities, conveyed in the graphs below:

Perhaps most insightful, Kachura’s data, coupled with that of the Brandeis study and others, gives us a clearer indication of the less salient, less tangible meaning of these foreclosures.  Minorities disproportionately are victims of foreclosure in part because, for systemic reasons, they have access to less capital and family wealth, in part because they are frequently targeted with predatory, non-prime loans, and in part because by and large they do not benefit from the sort of white privilege that would enable one to walk away from a million dollar mortgage and face hardly any repercussions.  As Barbara Eirenreich and others have pointed out, while the foreclosure crisis translates to a recession for some, in the African-American community it has meant a depression.  Kachura’s research suggests that because of foreclosures, minority children will face educational setbacks, and in turn lower college matriculation rates, access to decent jobs, affordable housing, and respect.  In short, the foreclosure crisis, as silly as it may sound, is reinforcing systemic racism, weakening the resources of minorities, and curtailing the rise of diverse neighborhoods and communities.