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East Baltimore Represents A Chance To Finally Do Affordable Housing Right

Want to get a jump-start on upcoming deals? Meet the major Baltimore players at one of our upcoming events!

Even though the U.S. Department of Housing and Urban Development has been cutting its budget for years, a key program has helped jump-start a potentially historic affordable housing project.

East Baltimore Represents A Chance To Finally Do Affordable Housing Right
Pennrose Regional Vice President Ivy Dench-Carter

The master-planned redevelopment of an area in East Baltimore including the Old Town Mall, Perkins Homes and the former site of the Somerset Homes was awarded a $30M grant from HUD’s Choice Neighborhoods Initiative in May. The grant has conditions attached to it that will force the project to be different from anything done in the area, such as a five-year deadline for completion.

The project is being led by St. Louis-based McCormack Baron Salazar, joined by local partners Beatty Development Group and Henson Development Co. with additional assistance from Cross Street Partners. Henson Vice President Dana Henson and Cross Street principal Bill Struever will be among the panelists at Bisnow’s Baltimore Affordable Housing Investment & Development event at the Four Seasons Hotel Baltimore on Oct. 11.

The five-year deadline provides a hefty sense of urgency for a development projected to cost over $1B and create over 1,300 units of housing. Although the first phases of the project will be heavily focused on affordable housing to retain the 1-to-1 replacement ratio, future elements will have significant portions of market-rate housing to create the mixed-income community Struever said is crucial to turning a neighborhood from blighted to healthy.

Another requirement of the CNI grant is just as important: a comprehensive plan to not just build housing, but also infrastructure and commercial and community space. The idea is to use those federal dollars to ensure an affordable housing project delivers the transformative growth to a neighborhood that previous Maryland programs have failed to do.

HUD’s HOPE VI program was intended to replace large public housing projects in disrepair with lower-density duplexes and rowhouses, but the decrease in density forced residents of those previous developments to relocate with the help of vouchers. But, according to Struever, those vouchers and the replacement developments created isolated residents and communities.

East Baltimore Represents A Chance To Finally Do Affordable Housing Right
Henson Development Co. Vice President Dana Henson

“Most towns have no programming support [for families in affordable housing],” Struever said. “HOPE VI was really about the physical redevelopment of the place, with little money for the people and families. With the CNI, we’re trying to flip that and make it about the families, with programs and services to connect and ensure those families are successful.”

Compounding the problems with HOPE VI has been Maryland’s Communities of Opportunity program, meant to highlight towns and neighborhoods that show potential for growth. But because the program contains restrictions on minority percentages and school performance, too many of those communities were actually suburban towns that treated affordable housing like unwelcome incursions, halting development or stranding it away from town centers, Pennrose Regional Vice President Ivy Dench-Carter said.

“We all hope to create mixed-income communities and give everyone a fair shot, but the problem is that these communities really don’t want affordable housing there, so it can be very challenging to develop in these areas, especially if you need zoning or financing from the county to make the funding work,” Carter said. “In the city of Baltimore, you may have three or four neighborhoods that [the state of Maryland] would consider communities of opportunity — Roland Park, Federal Hill and Canton.

"Those are higher-income communities, and trying to find land is quite difficult. And going through the community planning process, they probably don’t want affordable housing.”

The CNI does not allow for the relocate-and-voucher strategy, so the construction of new buildings where the Somerset Homes once stood must be completed for residents of Perkins Homes to move into ahead of that project’s demolition. For all the ambition allowed by the CNI grant, however, $30M is not nearly enough to fund even one building in the master plan.

It is the latest chapter in affordable housing’s decline in federal funding, but the state of Maryland has attempted to fill some of that gap by granting the development both the 9% and 4% forms of the Low Income Housing Tax Credit — a practice called “twinning” that Maryland has never allowed before, Henson said. Now it is the city’s turn to step up and prove it is serious about Mayor Catherine Pugh’s promise to throw financial support behind development.

East Baltimore Represents A Chance To Finally Do Affordable Housing Right
Pennrose's most recent affordable development in Baltimore, called Uplands, features mini-mansions divided into apartments with separate entrances.

“To date, the city and state have definitely been important, but what we need going forward is the Tax Increment Financing [package],” Henson said. “This would a true neighborhood TIF, where previously they had gone not necessarily to blighted areas, but areas [the city] wanted to improve. This is an area with truly distressed housing stock to change people’s lives.”

Henson noted the use of TIF on projects in neighborhoods surrounding the Perkins Homes, Somerset Homes and Old Town Mall area, such as Fells Point, Inner Harbor and the EBDI life sciences complex. When she takes part in the development group’s presentation to the city’s Board of Estimates at the end of the month, she will request the use of those developments’ tax revenue toward the East Baltimore plan.

Those neighborhoods have significance to the aforementioned development beyond potential revenue or as examples of misdirected funds. Their proximity is a big reason for optimism that the collective vision of a mixed-income community is actually attainable. Henson called the project “the hole in the doughnut.”

Proximity to already-healthy areas reduces the isolation previous affordable developments have experienced, helped along by infrastructure changes like more continuous roads and parks. Henson noted that residents of Perkins Homes often treat Somerset Homes more like a separate city than a development 200 feet away. In the next few years, as retail and office components become part of the development, those neighborhoods will also help ensure their success.

What Struever and Henson emphasized repeatedly about the East Baltimore plan is the unprecedented level of focus on all the elements beyond the mere units. The training and engagement initiatives that come with the CNI, the unique placement between successful areas: all of it is in the service of a transformation on the scale never before seen in the area.

"If you don’t rebuild the people, you’re just going to have the same neighborhood,” Henson said. “If the community is brand-new, the people are brand-new.”

Come discuss East Baltimore and the affordable housing landscape for the entire metro area at Bisnow's Baltimore Affordable Housing Development & Investment event at the Four Seasons Baltimore Oct. 11.