Liens slow city renewal
Some vacant buildings in Baltimore come with debts topping $1 million
For 30 years, the city has tried to collect the growing debt of John Stevens.
Stevens is listed as the owner of 2032 Penrose Ave., a boarded-up old corner store with a bay window on the second floor and a pile of junk in the backyard. Officials say the money he owes for taxes, water bills, fines, fees and interest on the property has grown to $1.76 million. Stevens has been dead since 1989. The crumbling, century-old building he owned in West Baltimore is one of at least 15 properties on the city’s tax sale list that have accrued more than $1 million in debt over the past decade.
These million-dollar vacants are the most extreme examples of a far more widespread problem: Thousands of properties in Baltimore are encumbered with liens for more than they’re worth. In many cases, far more.
And that makes them zombies, empty, abandoned and unattractive to developers, contributing to the blight that plagues the city.
State Sen. Bill Ferguson says the phenomenon shows that the challenge of healing the city landscape is more complex than simply trying to draw investors to its troubled areas.
“There are lots of links in the chain that create vacancy and neighborhood decay that are unrelated to just the marketplace overall — that, in fact, contribute to market failure,” the Baltimore Democrat said.
Ferguson serves on a state work group studying tax sales across Maryland.
One way the city tries to recover unpaid taxes, water bills and other debts is to place liens on properties and sell them. Investors purchase the liens for the amount that’s owed, satisfying the city’s debt, and then seek reimbursement directly from the property owners, with interest. When owners don’t pay, lienholders may take possession of properties through foreclosure.
But the process works only when the price is right. There’s no profit in buying a lien for more than a property is worth.
The debts trap the properties in a state of perpetual vacancy. Owners have died or abandoned the property, and the unpaid bills must be settled before the properties can be sold. So they cycle on and off the city’s annual tax sale list, unwanted and unpurchased.
At the most recent tax sale, in May, the city offered liens on 1,400 such properties, with debts totaling $137 million. The city sold 16, bringing in $50,000.
A group commissioned by the RawlingsBlake administration last year to study the tax sale system concluded that it helps keep as many as 4,000 houses vacant. The nonprofit that conducted the study recommended overhauling the system.
The city sold 7,696 total liens in this year’s auction. City Finance Director Henry Raymond says the annual sale brings in millions of dollars in revenue and helps cut down on blight.
“What we want to do is take those abandoned or vacant properties, put them back into productive use,” he said.
He says the city keeps liens on abandoned properties on the books in hopes that someone, someday might pay them off.
“Liens have no statute of limitations,” he said. “We maintain it because at some point, there may be an opportunity to recover the value of the liens or we may be able to negotiate the liens based on a potential investor.”