In the census tract in which the Barclay Townhouses are located, more than one in three properties are vacant and three in 10 people live in poverty. The median household income in 1999 was $20,734, about two-thirds of the citywide median. In the 1990s, the 36 percent population loss in Barclay was among the highest of any city neighborhood.
Colleen Palmer, the onsite manager for the Barclay Townhouse project, suggested many problems were beyond the control of the owners. In one instance, she said, a pipe going into a vacant house owned by the city's housing authority burst and flooded, damaging three nearby rental units; in another, she said, vandals stripped the windows and pipes out of another building during a brief period of vacancy before a new tenant could be moved in.
"It's hard to keep up a property in a neighborhood like this," she said. "You do the best you can."
According to HUD, the partnership made its last payment on the project's FHA mortgage in December 2003, leaving an unpaid balance of $3.4 million. HUD had scheduled an auction of the properties for yesterday but called it off after reaching an agreement to sell the properties to the city.
Baltimore officials said they could not say immediately whether the city loan had been repaid.
The Barclay Townhouses are not the first low-income housing project involving Friedman to fall into financial trouble. Three years ago, another Friedman partnership defaulted on more than $2 million in city loans used to convert six vacant schoolhouses into low-income apartment buildings. Those buildings were closed.
Friedman did not return phone messages left at his office last week.
A `protective' move
Shea, the Baltimore housing official, said the city's decision to buy the rowhouses was in part a "protective buy."
"I couldn't afford the risk of who might buy them," he said.
Tenants are being issued rental vouchers, which they will be able to use at least temporarily for their current units or to move somewhere else, he said.
Under the terms of the sale agreement with HUD, the rowhouses must be kept as affordable rental units for 25 years. But Shea said he is hoping HUD will agree to some flexibility once the sale in concluded to disperse rental units more widely throughout the neighborhood.
That, he and others say, would avoid one of the problems of the early 1980s that helped doom the project's ability to revive the area around it: the concentration of the poorest residents in a small area.
Another problem of the earlier approach could be avoided by combining for redevelopment the 56 units with some 35 vacant Housing Authority properties and 65 or so vacant buildings and empty lots obtained through the city's anti-blight Project 5000, Shea said. That effort could transform the southern end of Barclay and spur additional private investment.
Shea acknowledges that the presence of the parole and probation office, which the city has been unable to persuade the state to move, would be a "drag on the market." And while he says some money can be marshaled from sources such as federal low-income housing tax credits and public housing revitalization funds, he concedes that there is little city money available beyond that being used to purchase the properties.
Still, he believes a renewed effort at revitalization can succeed, even where one in the past fell short.
"It doesn't make sense to solve 10 percent of the housing problems of a neighborhood," he said. "If you work at much greater scale, you have the ability to fundamentally change the neighborhood."