Critics call Baltimore's proposed Land Bank a 'new version of shadow

Daily Record, The (Baltimore), Jun 19, 2009 by Robbie Whelan

Controversy is heating up over Baltimore's proposed Land Bank Authority, an initiative being touted by Baltimore Housing as the solution to the city's blight problem.

At a public hearing Wednesday night, Baltimore Comptroller Joan Pratt voiced concerns over the cost of creating a land bank, which she described as a "new version of shadow government ... trustees who conduct business outside the purview of the City Council and Board of Estimates."

There are 30,000 vacant properties in Baltimore, split about evenly between houses and undeveloped lots, and the city owns about 10,000 of them. Under current law, any business transaction worth $5,000 or more must be approved by the city spending panel, the Board of Estimates.

If established, the Land Bank Authority would have the power to acquire, manage and sell city properties without the Board of Estimates' or the City Council's approval, a provision that would require altering in the city code.

"Those who drafted the city charter did not contemplate a situation with 10,000 properties that the city owned, and the prospect that it might acquire thousands more," said Paul T. Graziano, the city's housing commissioner, in testimony before the City Council's Taxation, Finance and Economic Development Committee. "I would argue that this is the perfect time. It's us going out there and investing, acquiring properties at bargain-basement prices."

In addition, the housing department has proposed transferring 62 Baltimore Housing staffers and other resources from that agency to the land bank, which, according to a draft budget obtained by The Daily Record, would cost nearly $6.2 million, including startup costs.

Graziano defended the budget at Wednesday's meeting, pointing out that $5.7 million of the authority's total proposed cost is already built into the city's fiscal year budget, which was approved by City Council Monday. In addition, Baltimore Housing's ability to conduct massive redevelopment efforts, including the assemblage of land using eminent domain, would not transfer to the land bank under the current plan.

"It's only so fast you can drive a Model T," he said. "Only so far you can go without the current, modern tools available."

But critics have decried the land bank proposal's lack of details and the potential for conflict of interest.

Under a section labeled "Sources" of funds, the program's draft budget lists $500,000 in "developer contribution" and nearly $1.2 million from "ebdi," referring to East Baltimore Development Inc., the nonprofit directing the acquisition of more than 1,600 houses near the Johns Hopkins Hospital as part of a $1.8 billion biotech- related redevelopment project.

EBDI has about nine employees working in the housing department, assisting with the legalities of acquiring and demolishing houses, but Graziano said those employees would be transferred to the land bank if it were established.

In an interview Thursday, Graziano said that the "developer contribution" referred to payments that would be made by developers to the land bank to cover the salaries of staffers who are handling the disposition of properties associated with their projects. He said because these developers will have been already selected through a competitive process, and because their contribution to the land bank would be built into the proceeds from their purchase of property, there is no conflict of interest surrounding these funds.

Land banks have been established for the purpose of dealing with unproductive properties for decades, with notable cases in St. Louis, Cleveland, Atlanta and Genesee County, Mich.

Frank Alexander, a law professor at Emory University in Atlanta, testified Wednesday in support of establishing the authority, arguing that land-banking is a tried and true way of "converting liabilities into assets."

"The issues that y'all are wrestling with are being wrestled with in most major metropolitan areas today," he said.

Councilman Jim Kraft, who represents Southeast Baltimore, said he was worried that the city would "cherry-pick" the most desirable vacant properties and use existing housing department resources to dispose of them, and fill the land bank with unmarketable, virtually- worthless properties.

"Commissioner Graziano has continually told me that they will not cherry-pick. What he says is, 'We don't cherry pick, but we reserve the right to use discretion when we transfer property,'" he said. "It's a duck by another name. I like the concept, I just don't like the way the bill is written."

Others were more vocal in their opposition to the plan.

"It's an absolute abdication of the duty of City Council and the Board of Estimates to act as fiduciaries for the properties that would be transferred to the land bank," Pratt, the comptroller said. "How can we be sure that the land bank is run according to the city's priorities? This broad-reaching, unbridled authority is unprecedented."

The comptroller suggested that instead of "outsourcing" land disposition work to a newly created authority, the housing department ought to improve and streamline its own real estate functions.