On the Block


April 24, 1993|By ANTERO PIETILA

Most Baltimoreans measure the progress of spring by the baseball season, Sherwood Gardens or the Flower Mart. But aggressive speculators know that spring is not really here until the annual auction of tax-delinquent properties comes around.

Even though it provides a legal way to earn up to 24 percent interest on a short-term investment, that auction is known and understood by relatively few Baltimoreans. That's not for the lack of advertising.

Well in advance of the sale, newspapers carry pages and pages of small-print listings of properties that will be sold at the auction, unless owners hurry to redeem back taxes, water bills or liens.

Year after year, a motley crew, surprisingly similar to that one might encounter at a race track, gathers to bid on about 5,000 occupied or vacant properties.

High-rollers are easily recognizable. They sit in the front row, whispering to one another. Small-timers fill the back seats. Instead of the Daily Racing Form, everyone scrutinizes lists of properties to be sold, looking for last-minute scratches.

The municipal government holds this auction because it wants to get back what it is owed in unpaid taxes, fees or liens. For that reason, bidding starts at the amount owed, which may be just a few hundred dollars or tens of thousands.

Bidding can reach considerable heights since the speculator buys a chance at getting a property at a cut-rate price, if the original owner fails to redeem the delinquencies within six months.

Most successful bidders never get to exercise that chance, though. They bid without ever having seen the properties in question and are interested solely in benefiting from the 24 percent interest rate on a relatively risk-free investment.

The last thing they want is to end up with a piece of real estate in the city. Indeed, should they get stuck with an unredeemed property, they usually forfeit their deposit and let the house wind up in the next year's tax sale.

''This often leads to more abandonment, which is very bad for the city,'' observes Stanley E. Sugarman, a local real-estate man. ''The cost of taking care of empty houses in the city in terms of fire and police protection is much more expensive than caring for occupied houses. The tax base gets eroded because of the blighting effects of vacant houses.''

For years, politicians and civic activists have been pondering how to change the tax sale so that it would be more than a revolving door for problem properties.

There have been suggestions of reducing the interest rate so that the tax sale would be more affordable to people interesting in acquiring houses for renovation.

There have been suggestions of making sales more binding, somewhat akin to Internal Revenue sales.

This year the city is trying a new method at the tax sale, which begins May 10 at the Convention Center. Auctions during the first two days will be conducted as in the past. But on May 12, about 1,500 vacant and abandoned houses -- with their back taxes and liens removed -- will be auctioned off at whatever price the market will bear.

''This is the first time we will be able to offer them at their market rate,'' Mayor Kurt L. Schmoke says of the experiment which aims at enabling renovation-minded individuals and organizations to acquire vacant houses for a song.

Each of those properties comes with a court order for repairs, which enables the successful bidder to acquire the house after 60 days and anticipates substantial renovation within one year.

''That sounds good,'' says James Crockett, a West Baltimore real- estate man. ''The only question I have is this: are these the dogs the city has owned for a long time and couldn't get rid of otherwise?''

Yes, many are dogs. But at least the city is now offering them to would-be rehabiltators rather than sitting on them.

This experiment comes exactly 20 years after Baltimore launched its pioneering urban homesteading effort by offering vacant shells for $1 each to persons pledging to rehabilitate them. Whole neighborhoods were rejuvenated: Stirling Street, Otterbein, Barre Circle. . . .

City Council President Mary Pat Clarke thinks the new tax sale experiment can be equally successful, particularly after the city completes its plans to enable purchasers to borrow low-interest money for renovators. ''I think by next year it will be very well known and popular,'' she says.

Antero Pietila writes editorials for The Baltimore Sun.

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