November 20, 1993|By ANTERO PIETILA

When the General Assembly convenes January 12, one of itstoughest challenges is to do something about Maryland's lead-paint crisis.

A failure to act could cause further havoc, especially in Baltimore's depressed residential real-estate market where aging income properties are often almost impossible to trade because their lead paint poses potential health hazards.

An example: At a recent auction, a two-story porch house in the 2900 block Winchester Avenue failed to elicit bids even though it was likely to bring $385 in monthly rental income (after modest repairs) and the asking price was just $11,500.

''The resistance was the neighborhood and lead paint,'' reported Daniel Billig, the auctioner.

A similar nearby house in livable condition fetched a paltry $4,200.

These are extreme examples. But they describe what has

happened to the low end of Baltimore's investment-property market when a difficult economic climate has combined with fears about lead paint.

To many, lead paint is solely a health issue. But as costly litigation has become commonplace in such cities as Baltimore and Boston -- which are at the forefront nationwide in testing children for high lead levels in blood -- the situation has produced unforeseen economic and social consequences.

After courts began awarding considerable damages to victims, insurance companies started canceling landlords' liability policies. That made many lead-tainted investment properties unsalable, causing further deterioration and wholesale abandonment in the city's marginal neighborhoods. The racial red-lining of the past may be gone, but cities like Baltimore are being lead-lined. The effect often is the same.

Some investors try to limit their liability exposure by dividing their houses into innumerable separate corporations. Others insist that would-be renters have their children tested for pre-existing lead levels -- or they refuse to rent to families with children altogether.

''You can't sell the homes, you can't finance them, you can't insure them. What the hell good are they?'' moans Stanley Sugarman, a veteran landlord.

With property values falling, the economic and health implications are so ominous that Housing Commissioner Daniel P. Henson III recently told a public meeting the lead paint crisis was ''the biggest housing problem in the city of Baltimore.''

''We've got to come up with a rational policy that recognizes the problems of all sides,'' he observed.

On Tuesday, the Governor's Lead Paint Poisoning Task Force is expected to issue its long-awaited report on dealing with the problem.

Maryland has 159,000 dwellings built before 1950, when lead-based paint was widely used. Most of them are in Baltimore or in older areas of Baltimore County. In 1991, nearly 2,000 city children were considered lead-poisoned.

The 15-member panel recommends that landlords should be guaranteed liability insurance if they agree to a certain ''standard of care'' and have their properties inspected annually. They would be responsible for the medical expenses of a lead-poison victim on their property but would be given immunity for punitive damages and income losses.

Such an arrangement does not please many landlords. But among the many rival interest groups they are the minority. The proposal, says Nick Farr of the Columbia-based National Center for Lead-Safe Housing, does not make rental units ''100 percent safe but a hell of a lot safer'' than they are now.

Del. Samuel I. ''Sandy'' Rosenberg, a legislative advocate, describes the recommendation ''not as an ideal solution but much better than where we are now or where we will be unless there is any statutory change.''

Nationwide, lead has rapidly replaced asbestos as the toxic tort king.

Peeling paint or lead dust in old houses is the major source of elevated blood levels. But it is only one source. Urban soil -- and even tap water -- is often loaded with lead from decades of leaded-gas emissions. As children play outside, they become exposed to it -- and drag the soil into houses.

''It's really a terribly difficult issue,'' observes Donald Gifford, the commission's chairman. ''On one hand there is a major public-health crisis. On the other hand the solution to the public-health/lead-paint problem has to be one that doesn't make investing in low-income housing totally unprofitable.''

G; Antero Pietila writes editorials for The Baltimore Sun.

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