Commentary: Land Bank Authority crucial to Baltimore rebuild

The announcement by Greater Baltimore Committee CEO Mark Anthony Thomas and representatives of BUILD Baltimore that business and faith leaders will work together to reduce the staggering number of vacant and derelict houses in the city is one all of Baltimore should welcome. But any welcome must come with caveats.

The first is that this latest initiative, cheered on by Mayor Brandon Scott to tackle an old problem, does not delay establishment of the Land Bank Authority of Baltimore City as proposed by Baltimore City Council Bill 23-0363. Anything that the coalition of business and faith leaders decides to do must complement the role of the Land Bank because it cannot replace it.

The second is that the coalition does not waste time re-inventing the wheel. The bad news is that Baltimore has been disastrously slow in putting together a realistic plan to remediate the blight caused by vacant and abandoned houses. The good news is that other cities have introduced and refined successful programs that can be replicated in Baltimore.

Those programs require money. Any prowess in raising funds from corporate and private donors that the GBC and BUILD can bring to the table would be especially helpful.

Land banks are quasi-public entities given powers to acquire, hold and distribute property in service of community goals that ordinary municipal agencies do not have. If properly administered and financed, they operate at a pace and on a scale that city bureaucracies cannot.

After a land bank acquires a derelict house, it has the house demolished, conveys it to a new owner for rehabilitation or covers the rehabilitation. After demolishment, the land bank may convey the vacant land immediately or hold it for conveyance in the future, perhaps as part of a larger parcel.

The land bank movement in the U.S. began because the real estate market, left to its own devices, was unable to cope with the large volume of vacant and abandoned houses left behind as the populations of rust-belt cities declined. Michigan enacted the first comprehensive enabling legislation for land banks in 2004. Sixteen other states, including Maryland, followed suit.

An attempt by former Mayor Sheila Dixon to establish a land bank in Baltimore stalled in 2009. A city housing official at the time blamed City Council members for the failure, stating that they feared that they “wouldn’t have the same prerogative over their districts.” Translation: Baltimore politicians wanted control over all transactions related to the disposition of land. Influence over such transactions is a valuable political commodity.

The professed need to protect Baltimoreans from predatory “outsiders” is a theme that tends to resonate with city voters. But the real threat often lies much closer to home, sometimes from City Hall itself.

Fourteen precious years were lost while the city relied on piecemeal approaches to eliminating blighted housing that were doomed to failure. The problem evolved from a crisis to what Thomas describes as an existential threat to the region’s economic vitality. Establishing and funding a city land bank is the first step toward maintaining that vitality, but it isn’t the only step.

There are important roles complementary to a land bank that can be played by businesses and philanthropic and faith-based organizations. I offer two examples from Detroit, which has been working on a blighted housing problem far greater than Baltimore’s for nearly 20 years.

The Rehabbed & Ready Program run by Detroit’s land bank rehabilitates single-family houses in selected neighborhoods where the distressed condition of the housing stock and an appraisal gap — sale prices higher than appraised values — make it difficult for potential buyers to obtain conventional financing. It began in 2015, with funding from the philanthropic arm of Rocket Mortgage, headquartered in Detroit.

The land bank oversees the rehabilitation that turns houses it owns into move-in-ready homes, partnering with the Emerging Industries Training Institute to provide skilled trades education for community members as part of the program. Sales are restricted to owner-occupants.

Rocket increased its contribution in 2021 after a study by the University of Michigan documented the effectiveness of the program, noting that both median home sale prices and the prevalence of commercial mortgages increased significantly in Rehabbed & Ready neighborhoods. Because of its cost, a program like Rehabbed & Ready is not a panacea, but can be an important tool in stabilizing neighborhood housing markets and making it easier for future buyers to obtain financing.

A program modeled on Rehabbed & Ready would be ideal for Baltimore. It would need a donor or donors to step up the way Rocket Mortgage did in Detroit.

Another useful undertaking would be a community-development finance institution (CDFI) dedicated to the redevelopment of blighted residential neighborhoods. CDFIs are federally certified private financial institutions established to serve low-income communities, usually by providing financing for projects such as small, minority-owned businesses and affordable housing.

The major source of funding for CDFIs is the federal CDFI Fund, administered by the U.S. Treasury Department. In recent years, funding by corporations and charitable foundations has increased dramatically. Billionaire philanthropist MacKenzie Scott alone has given CDFIs more than $407 million.

The Detroit Housing for the Future Fund is a CDFI established in 2020 for the specific purpose of increasing the supply of affordable housing. It began with an initial investment of $48 million, including a $15 million commitment from JPMorgan Chase and a $10 million guarantee from the Kresge Foundation, a private foundation in metropolitan Detroit.

Acquisitions by the Baltimore Land Bank would create opportunities for the rehabilitation of abandoned multifamily dwellings as well as for the construction of new ones on vacant land created by the demolition of blighted houses. A CDFI funded in part by philanthropic capital that provides “patient and flexible” financing to replace blight with affordable rental housing makes perfect sense in Baltimore, which has far too much blighted housing and far too little affordable housing.

CDFIs already exist in Baltimore, including the nonprofit Baltimore Community Lending. With additional funding, they could be adapted to serve that role. If not, a new one could be established.

There is no need for additional state legislation or for a new special purpose entity. The idea of such an entity issuing limited obligation bonds isn’t practical because no existing discrete revenue stream is adequate to support repayment of the bonds.

What’s needed is less talk and more action — and more money. Attracting that money requires a credible, long-range plan for elimination of blighted properties capable of surviving changes in city administration. That begins with the Baltimore City Council passing Bill 23-0363 to establish the Land Bank Authority of Baltimore City.

David Plymyer retired as Anne Arundel County attorney in 2014 and now writes about the law and local and state government. He lives in Catonsville.

More From The Banner

Maryland hospitals took money from poor patients. Why haven’t they paid them back?

Secret in the walls: Hidden letters reveal love, lust, scandal in 1920s Baltimore society

Grieving my brother and the Key Bridge

Sheila Dixon, a ‘filthy’ street and residents who want politicians to put up or shut up