Baltimore, Maryland: Revitalizing the Oliver Neighborhood through Historic Preservation

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Baltimore, Maryland: Revitalizing the Oliver Neighborhood through Historic Preservation

Since 2006, the community organization Baltimoreans United in Leadership Development (BUILD) has partnered with the community development financial institution the Reinvestment Fund (TRF) to revitalize Oliver, an East Baltimore neighborhood where disenfranchisement and crime have created a distressed housing market. Together, TRF and BUILD used a “build from strength” investment strategy that targets public investments near major community assets to attract private investment. TRF and BUILD’s development entity, the Reinvestment Fund Development Partners (TRF DP) has since added nearly 200 residences to Oliver’s housing stock through the rehabilitation of vacant rowhouses in concentrated areas for maximum neighborhood impact. TRF DP’s most recent project, East Baltimore Historic II (EBHII), rehabilitated 36 residences on 2 blocks in Oliver as affordable rental units. EBHII won the 2017 Advisory Council on Historic Preservation/HUD Secretary’s Award for Excellence in Historic Preservation in recognition of the project’s efforts to preserve the buildings’ historic features and the neighborhood’s traditional character.

East Baltimore Historic II

Between 2014 and 2016, TRF DP rehabilitated 34 vacant rowhouses and 2 mixed-use properties, each containing a residential unit above a commercial unit. The properties are located on two blocks on the southeastern edge of Oliver near the Johns Hopkins University medical campus. TRF DP manages the residences as rental units that are affordable to households earning up to 80 percent of the area median income (AMI). One commercial unit is occupied by the nonprofit CUPs Coffeehouse, which operates a café that employs area residents as part of a workforce development program; an office tenant occupies the second commercial unit.

The EBHII buildings are in a historic district composed primarily of two- and three-story brick rowhouses dating from the mid-nineteenth and early twentieth centuries. To restore or replicate the houses’ historic features as part of a high-quality renovation, TRF DP applied for federal historic tax credits. The tax credit program requires developers to rehabilitate their properties according to the U.S. Secretary of the Interior’s standards for the rehabilitation of historic properties to preserve a building’s historic significance while modernizing and reconstructing certain elements when appropriate. The houses retain their original footprints and fenestration patterns and feature restored crown moldings, wood floors, and wood-framed windows. To modernize the properties, rowhouses were improved with a back deck and a parking space accessible from an alley, and skylights were added to each interior rowhouse. In addition, all lead paint and other health hazards on the properties were fully abated.

The historic tax credit program requires the EBHII houses to be income-producing properties for at least five years. Although TRF DP intends to eventually sell the houses, creating homeownership opportunities in the neighborhood, the developer believes that renting the houses in the near term will strengthen the housing market. Currently, the market for rental units in Oliver is stronger than the homeownership market; rather than trying to sell houses in a weak market, TRF DP believes that continuing to rehabilitate houses for the stronger rental market will increase property values to the point where higher-income homebuyers will decide the neighborhood is a suitable place to invest. When it decides to convert the rental units to owner-occupancy units, TRF DP will use its Path to Homeownership program, in which a HUD-certified housing counseling agency works with tenants to help them purchase their home.

The historic tax credits also generated equity that allowed TRF DP to renovate to a much higher finish than is typical for an affordable housing project. Sean Closkey, president of TRF DP, believes that renovated properties with historic character alongside modern touches make the overall neighborhood more attractive to homebuyers who might normally pass over a typical redevelopment that does not suggest the neighborhood is truly improving. According to Closkey, providing these high-quality buildings is a strong attraction for new homebuyers that will more quickly lead to a healthy housing market.

EBHII Financing

The development cost for EBHII was approximately $9.2 million (table 1). TRF DP used $1.28 million of its own capital to leverage funds from multiple sources. The largest source of financing was a combination of equity, grants, and a loan from TRF DP’s corporate partner, TD Bank. The commercial space occupied by CUPs Coffeehouse was financed in part by a $196,000 HUD workforce development grant.

A Revitalization Strategy for Oliver

BUILD, which has been active in community development work across Baltimore since 1977, was spurred into action in Oliver in 2002, when an event shocked the neighborhood. In that year, crime activity in Oliver peaked with the firebombing of a home that resulted in the deaths of seven people. In response, BUILD decided that only an intentional revitalization strategy with strong community support could improve livability in Oliver. The nonprofit devoted several years to engaging the community and building capacity and, in 2006, reached out to TRF to develop a strategy to implement the community’s vision. Based on a building inventory compiled by TRF-trained residents, TRF recommended a build-from-strength investment strategy that would take advantage of the neighborhood’s historic character. Following this strategy, TRF DP would begin by renovating houses in less distressed areas close to community assets such as the Johns Hopkins University medical campus rather than renovating properties in the most distressed areas that had few assets.

TRF DP’s approach stands out from other major revitalization programs for East Baltimore. Beginning in 1994, the Historic East Baltimore Community Action Coalition (HEBCAC) engaged in scattered-site, “spot rehabilitation” efforts, selectively rehabilitating the most distressed homes across East Baltimore. However, their efforts proved to be too diffuse to have a significant impact. In reaction to this effort’s limited success, in 2002 the East Baltimore Development Initiative (EBDI) began a $1 billion urban renewal project for an 88-acre site north of the Johns Hopkins University medical campus, resulting in the mass acquisition and demolition of hundreds of properties to make way for a new mixed-use development. The 2008 recession slowed construction, and many of EBDI’s properties remained vacant during the protracted economic recovery. The project was also marred by controversy surrounding the use of eminent domain, which displaced many neighborhood residents. The project also relied on large local public subsidies, which were more difficult to obtain as time passed.

In contrast to EBDI’s approach, BUILD and TRF used limited public expenditures to rehabilitate blighted houses standing among houses in good condition, inserting new neighbors without relocating original occupants, weaving the neighborhood back together one block at a time. By strategically rehabilitating houses to fill in targeted blocks, BUILD and TRF believed they could achieve a more significant impact than HEBCAC’s scattered-site approach and a more conscientious revitalization than EBDI’s redevelopment.

Beginning in 2006, BUILD and TRF sought investors to fund their efforts in Oliver, raising $10 million from a diverse group of banks, churches, and nonprofits. Three years later, TRF DP began a series of rowhouse rehabilitation projects, a mix of owner- and renter-occupied units affordable to households earning between 60 to 120 percent of AMI. For those construction efforts, TRF DP further strengthened the community by creating jobs for local businesses. Contracts were offered for the rehabilitation of six rowhouses at a time so that small local contractors could submit successful bids. As a result, local firms have won 70 percent of TRF DP’s construction contracts.

Preservation Leading to Neighborhood Transformation

Between 2009 and 2016, TRF DP rehabilitated 188 residential units in Oliver as part of several projects, including EBHII, and is currently planning to rehabilitate 47 more units. Through their work in the neighborhood, TRF and BUILD created a model for revitalization that is an alternative to both scattered-site rehabilitation and urban renewal. With EBHII, TRF DP also demonstrates how historic tax credits can be used to produce high-quality, affordable housing that enhances the existing neighborhood fabric and improves the housing market. TRF DP’s impact on the neighborhood is tangible; the number of vacant properties in Oliver has decreased from 481 in 2009 to 30 in 2016, and the median home price has increased from $18,450 in 2008 to $135,000 in 2016. In addition, the number of housing starts has increased from 1.5 per month in 2008 to nearly 5 per month in 2016. As further evidence of TRF DP’s impact, most of the recent building permits were issued to private investors. Social conditions have also improved; according to Closkey, violence in Oliver is no longer as prevalent as it once was, and the typical complaint of residents today is the neighborhood’s lack of parking.