The roof is a sieve. Robbers long ago stripped the house of its copper plumbing. Developers say it will take at least $70,000 to restore the brick rowhouse, and that's what the sale price will be.
But there's a problem: The state wants to insure the mortgage for only $45,000 -- not $70,000 -- because the house's bleak surroundings lower its resale value. The developer either would have to sell the house at a loss or decide not to do the project, developers say.
Increasingly, some developers say they're passing on such projects -- a trend that could endanger redevelopment efforts in depressed areas of West and Southwest Baltimore.
This issue -- along with other barriers to revitalizing bleak neighborhoods -- will be discussed at 7 tonight at a meeting of city and state housing officials, West and Southwest Baltimore developers and representatives of neighborhood groups at 31 S. Payson St.
Cynthia Tensley, president of the Carrollton Ridge Community Association, said: "To bring middle-class people into the neighborhood, [developers] need a certain amount of [mortgage insurance] or they'll end up losing money. If they're going to lose money, they're not going to want to invest in our neighborhood."
State housing Secretary Patricia J. Payne says the state hasn't changed its mortgage insurance policy, but that housing values in many poor Baltimore neighborhoods have dropped in recent years. And the state's appraisals reflect that deflation, she said.
When a developer submits an independent appraisal on a prospective housing renovation, the state has a staff or independent appraiser appraise the property, too. Typically, that appraisal is less -- sometimes thousands of dollars less -- than the developer's appraisal, she said.
Developers may appeal state decisions, but some community organizers and developers say that's a long process that discourages development.
The state's position is already changing how some developers do business and how much business they do.
St. Ambrose Housing Aid Center, the city's oldest nonprofit housing provider, announced plans this year to lay off a quarter of its staff and shrink its services to low-income families. The nTC state's method of handling mortgage insurance on rehabilitated housing in poor neighborhoods was a key reason for the private agency's "downsizing," according to executive director Vincent P. Quayle.
Kathleen McDonald, president of Community Building Group Ltd., a Southwest Baltimore-based nonprofit developer of affordable housing, says she will consider moving her company from the city and stop doing work there if the state policy persists.
Ms. McDonald and other developers say the Maryland Housing Fund appears to have placed a $45,000 limit per house on mortgage insurance in poor areas.
Baltimore government even has had problems with the state's mortgage insurance policy regarding the long-planned revitalization of Sandtown-Winchester, state and city officials say.
Ms. Payne said those problems were resolved when the state and city jointly selected an independent appraiser to appraise houses for redevelopment there. That appraiser produced appraisals that generally were higher than the state's original appraisal, she said.
Pub Date: 5/02/96
