New Loan Program Aims At City Housing

Healthy Neighborhoods Inc. works to encourage investment, renovations in 10 neighborhoods

November 02, 2005|By JUNE ARNEY | JUNE ARNEY,SUN REPORTER

Healthy Neighborhoods Inc., a nonprofit group working to stimulate investment in Baltimore, is expected to announce today the creation of a $38 million loan pool to encourage purchases and renovations of owner-occupied housing in 10 Baltimore neighborhoods.

Made possible by contributions from 10 area banks, the loans offer one answer to concerns over the fact that about two-thirds of city homes changing hands are sold to investors rather than to people who intend to live in them.

Areas to be targeted are: Belair-Edison, Garwyn Oaks/Hanlon, lower Charles Village, Greater Mondawmin, Ednor Gardens-Lakeside, Patterson Park, Reservoir Hill, Highlandtown/Bayview, the Neighborhoods of Greater Lauraville and Midtown.

"The neighborhoods felt strongly that making visible changes outside sends a signal to other people that they can do the same," said Mark Sissman, president of Healthy Neighborhoods, who was a major player in redeveloping the Hippodrome.

"I was given the charge by the board to bring this to scale so that it made a difference in the city."

A pilot program goes back more than four years, but this is a new drive to turn targeted neighborhoods into hot real estate on a larger scale, Sissman said.

The program offers loans of up to 120 percent of the after-rehab value of a home, he said.

An architectural firm will help investors determine which improvements will maximize the value.

Sissman said he expects money from the loan pool to be available for about five years, at 1 percent below market rates.

The Abell and Goldseker foundations and the Maryland Housing Fund have agreed to guarantee up to 10 percent of losses on the value of any single mortgage, for up to 10 years, Sissman said.

"Our goal is not to capture every loan, but to create a market," he said. "We're creating a new loan product. It would be great if the demand was very high. That would cause us to go seek more money."

The program will not have restrictions on income or house price. It measures success through home values, tax base, time on the market and other investments and activity in the neighborhoods.

"We're very committed to mixed-income neighborhoods," he said. "In some neighborhoods, we have to introduce higher-income residents to create that kind of mix."

Participating banks are Provident Bank, Mercantile-Safe Deposit and Trust, M&T Bank, Bradford Bank, Susquehanna Bank, Chevy Chase Bank, Madison Square Federal Savings Bank, Hamilton Federal Bank, Fraternity Federal Savings and Loan Association and Madison Bohemian Savings Bank.

"These are good, solid neighborhoods," said Kevin G. Byrnes, chairman of Healthy Neighborhoods and president and chief operating officer of Provident Bank.

"We want to stimulate growth in and around them."

"The money isn't coming from the federal government or the state government or the city," said Tracy Gosson, executive director of Live Baltimore Home Center, an organization that promotes city living. "It's that perfect piece when you're able to leverage the private sector investment."

Akil R. King III, a lieutenant commander and executive officer of the Navy Operational Support Center in Baltimore who lived in Northwest Baltimore as a child, will be among the first recipients of the expanded program.

The 35-year-old King did extensive research for six months before making the leap from apartment living in Silver Spring to homeownership in Baltimore's Belair-Edison neighborhood.

He now hopes to borrow as much as $30,000 to make improvements to the 1929 rowhouse that he bought in July for $66,000.

His home, at 2849 Chesterfield Ave., has stained-glass windows, hardwood floors and a front porch, across the street from 300-acre Herring Run Park, which has bike trails and a stream running through it. He rents the basement and first floor to a tenant who has a one-year lease.

King, who plans to marry in February, eventually wants to convert the 1,500-square-foot property back to a single-family home and to upgrade the main kitchen and the bathrooms. He also wants to refinish its hardwood floors and install central heat and air conditioning.

Outside, he plans to landscape and add a new door and windows.

"It's a loan program that could snowball," he said. "With the improvements going on, it's going to attract more investors and more homeowners into the city. I think the potential is huge."

An analysis earlier this year by The Sun of real estate transfer data determined that two-thirds of homes selling in the city were going to "non-owner-occupiers" - typically investors. That's up from one-third in 2001.

Barbara Aylesworth, executive director of Belair-Edison Neighborhood Inc., said the median sales price for homes in the targeted portion of her neighborhood has risen 67 percent since 2000, from $59,900 to $99,900 this past July.

"As nice as the loans are, it's really the community building that creates the basis for the neighborhood's growth, increase in value and its becoming a destination," she said.

Aylesworth pointed to an e-mail she received yesterday from a woman from Alexandria, Va., who said she "kept hearing about Belair-Edison" and wanted to learn more.

Aylesworth sees that as evidence that her group has created a sense of place in that neighborhood and made it a place where people want to live.

"What's really great about this loan pool is the recognition by all the parties involved that some of Baltimore's bedrock communities can be revived and gain a lot of value quickly, with a modest amount of investment," she said. "Baltimore is coming alive - not just in the downtown neighborhoods, but in diverse, interesting neighborhoods all over the city."

june.arney@baltsun.com

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