Baltimore loses $100 million in tax revenue from vacant properties every year and spends another $100 million annually maintaining them, according to a report published Thursday by Johns Hopkins researchers.
The economic and social costs “far exceed the investment needed to bring them back to productive use,” the report argues. In an interview, study authors Mac McComas and Mary Miller, both of Hopkins’ 21st Century Cities Initiative, said that while $200 million may be a conservative estimate, it is the most accurate and holistic assessment of the crisis produced in several years.
“The city bears this cost and so we all have to pay for it, through taxes and through the knock-on ‘contagion” effects,’” McComas said.
But these costs — especially those that are harder to measure — are not shared equally, he said. “While we all bear some cost of it, there is some inequity here in terms of: if this doesn’t get solved, who has to live with that?” McComas said.
Community developers, lawmakers and activists said the report makes clear that the city’s lack of consistent investment has exacerbated the crisis and pushed the burden onto residents.
“What this report does is demonstrate that by not making a choice to face this, you’ve actually made a choice,” said Sean Closkey, president of ReBUILD Metro, a nonprofit organization that works to restore blighted neighborhoods in Baltimore. He and other developers have called on the city to invest as much as $100 million a year to convert 1,000 houses back into productive use each year, saying it would shrink the city’s inventory of blighted properties in a realistic time frame and drive more private investment.
“You have the money to spend $100 million a year. You have the freedom not to collect $100 million a year” in tax revenue, said Closkey. “And you are choosing to behave differently than every other city on the East Coast when they’ve faced vacancy — they’ve done something meaningful at scale.”
The report identifies $100 million a year in lost revenue from the city’s recorded inventory of 15,000 vacant properties, broken down into an estimated $50 million in property tax revenue, plus at least $24 million in income tax and $12 million in water and sewer revenue. Another $22 million is lost per year through the “contagion effect” that drags down the value of nearby properties, the report estimates.
The report also breaks down the estimated $100 million worth of direct costs associated with vacant properties. The city spends $21 million for maintenance work such as cleaning and boarding, property acquisition, rat control, and outreach to people living in abandoned properties. It also spends nearly $30 million in service costs associated with increased 911 calls in high-vacancy areas and another $50 million on stabilization and demolition of vacant properties.
While the city owns just under 10% of the vacant properties, with the rest owned by private individuals and companies, it is responsible for nearly all of the expenses associated with them, the report notes.
The report acknowledges that the city’s recorded number of vacant houses is likely an undercount.
But the authors say that undercount likely doesn’t drastically change the challenges and necessary solutions. “I don’t think it changes the city spending on the problem and I don’t think it changes the economics of what you have to do to solve the problem,” said Miller, who ran unsuccessfully for mayor in 2020 and supported a recent plan by the group Renew Baltimore to drastically cut city homeowners’ property tax rates.
Closkey — whose organization ReBUILD Metro has combatted vacancy by zeroing in on three East Baltimore neighborhoods — and other community developers and advocates say the money the city currently spends on maintaining vacant properties could be better spent investing in acquiring and rehabilitating vacant properties.
By the city’s own estimates, tackling vacancy will require a sustained, multimillion-dollar effort. A memo written by City Administrator Christopher J. Shorter earlier this year estimates the first phase of rehabilitation would cost $103 million for more than 5,100 homes. At least $80 million more would be needed for each of four additional phases. In the first phase, plans call for $40 million just for developer incentives. Additional investment from private groups would be necessary, too.
“It cannot be emphasized enough that substantially decreasing the City’s vacant property inventory will require a significant (at least hundreds of millions) capital investment,” the memo reads.
The mayor’s office committed in March to direct $100 million in federal COVID relief funds toward housing issues, much of which will go toward eliminating and preventing vacancies.
In a Thursday statement, the mayor’s office said that it is “committed to substantially decreasing the City’s vacant property inventory.” Mayor Brandon Scott, who recently launched a working group for tackling vacancy, “understands that this is work that will require significant capital investment and is diligently working to explore additional funding opportunities,” the statement added.
The city aims to replicate ReBUILD Metro’s approach by focusing block-by-block and neighborhood-by-neighborhood, targeting what it calls impact investment areas. Those areas are: Broadway East; Coldstream Homestead Montebello; Druid Heights/Upton/Penn North; East Baltimore Midway; Johnston Square; Southwest Baltimore; and Park Heights.
The neighborhoods were chosen “to maximize the impact of limited municipal resources,” wrote James Bentley, a spokesperson for Scott, in an email earlier this year. He said the neighborhoods “engaged the concept of building from strength,” with each impact investment area “near an area of strength, institutional anchors and ongoing committed investments.”
Still, residents of high-vacancy areas say the city’s efforts are falling short.
“To me that cost doesn’t add up,” said Edna Manns, director of Fayette Street Outreach, a neighborhood organization in West Baltimore, referring to estimates that the city is spending so much on maintenance. She added that many vacant properties in her neighborhood are not adequately boarded up or maintained. She lives less than a mile from a vacant house that caught fire and collapsed in January, killing three firefighters.
The report also notes that the costs it identifies are likely too modest because they don’t account for other incalculable public safety and health costs, such as lead poisoning, violent crime rates, and poor mental health outcomes.
“It all goes back to vacant housing,” said City Councilwoman Odette Ramos, former executive director of the Community Development Network of Maryland. “So much is connected to that.” More city investment in vacant housing also would combat other pressing social ills, such as violent crime, she added.
Manns, a lifelong West Baltimore resident, said vacant housing in and around her neighborhood has proved costly to her and her neighbors, as well.
“The costs for us having vacancies in my community — it brings the [home values] of the people that live here, that own property, it’s bringing our property value down,” she said.
Her two-story rowhouse, which has been in her family since her parents bought it in 1962, was assessed at just $25,000 last year.
“The people that are still here, the homeowners that still live here, are still reinvesting in their properties, trying to keep their properties up, trying to do what they can ... ” said Manns. “And it’s costing them.”
Read the report: