In­vest­ing in us, one small loan at a time

Baltimore Sun Sunday - - MARYLAND -

A man told me he was shocked by what he saw when he made a wrong turn dur­ing a drive through South­west Bal­ti­more. “It was like a third-world coun­try,” he said, a pe­jo­ra­tive of­ten ut­tered by white vis­i­tors as they drive by va­cant row­houses or row­houses oc­cu­pied by what ap­pear to be poor black fam­i­lies.

I asked the man, who lives in the sub­urbs, where he had been for the last half-cen­tury or so. There was noth­ing new about any of this. Bal­ti­more once had 900,000 peo­ple. Af­ter decades of high­way con­struc­tion, white flight, sub­ur­ban de­vel­op­ment and the loss of man­u­fac­tur­ing — an old nar­ra­tive by now — the city has about 612,000 peo­ple. Bal­ti­more had a long his­tory of racist hous­ing poli­cies and a high con­cen­tra­tion of poverty. Some neigh­bor­hoods have al­ways thrived. Some have been re­mark­ably resur­gent and sta­ble. Some con­tinue to sprout new con­struc­tion cranes. But oth­ers, to the east and to the west, have been aban­doned or ne­glected, or only marginally im­proved.

That’s why, for all but the shocked in­ter­loper from the sub­urbs, the new re­port from the Ur­ban In­sti­tute on racial dis­par­i­ties in neigh­bor­hood in­vest­ment came as no sur­prise. The re­port found that in­vest­ment is un­evenly split by race, in­come and ge­og­ra­phy across the city. Most of Bal­ti­more’s build­ing, re­hab­bing and de­mo­li­tion goes on in whiter, bet­ter-off neigh­bor­hoods. There were also more loans for res­i­den­tial de­vel­op­ers and prop­erty own­ers in those neigh­bor­hoods, and more lend­ing for com­mer­cial de­vel­op­ment in places al­ready on the rise. What’s more, data anal­y­sis by the Bal­ti­more Busi­ness Jour­nal last year found that AfricanAmer­i­cans in the Bal­ti­more area were twice as likely as their white coun­ter­parts to be de­nied a home mort­gage by a bank. Also last year, the Johns Hop­kins 21st Cen­tury Cities Ini­tia­tive found that small­busi­ness lend­ing in the city had dropped by 32 per­cent be­tween 2007 and 2016 — a time when banks nearly dou­bled their de­posits in the city, reach­ing $26.5 bil­lion.

Bal­ti­more gets knocked for be­ing home to a lot of non­profit or­ga­ni­za­tions that don’t have to pay our too-high prop­erty taxes. But a lot of those or­ga­ni­za­tions work on the city’s most en­trenched prob­lems — poverty, drug ad­dic­tion, un­der­e­d­u­cated chil­dren, men­tal ill­ness, chronic health prob­lems, a lack of af­ford­able hous­ing.

In the realm of small busi­ness and hous­ing, you can find mis­sion-driven or­ga­ni­za­tions fight­ing the good fight in high-poverty and pre­dom­i­nantly black neigh­bor­hoods. As im­pres­sive as their ef­forts are, how­ever, they make just small dents at a time in the vast stretches of Bal­ti­more that need re­de­vel­op­ment most.

Still, they per­sist.

Habi­tat for Hu­man­ity of the Ch­e­sa­peake, for in­stance, has built or re­stored about 750 af­ford­able homes, most of them in the city, since it came on the scene in the 1980s. Bal­ti­more Com­mu­nity Lend­ing has been work­ing on this front al­most as long as Habi­tat, but with a much lower pro­file, and in a very dif­fer­ent way.

It got its start as a quasi-pub­lic agency when Kurt Schmoke was mayor but broke away from City Hall in 2004 to be­come a fed­er­ally cer­ti­fied Com­mu­nity De­vel­op­ment Fi­nan­cial In­sti­tu­tion. Since its in­cep­tion, BCL has pro­vided $220 mil­lion in fi­nanc­ing for hous­ing projects, ac­count­ing for about 4,000 units in un­der­served ar­eas of the city. Sixty per­cent of BCL’s loans go to com­pa­nies owned by peo­ple of color.

Work­ing out of an of­fice in West Bal­ti­more, the in­sti­tu­tion cob­bled to­gether do­na­tions, grants from banks and foun­da­tions and the state of Mary­land to make loans for the ren­o­va­tions of homes in Park Heights, South­west Bal­ti­more, Oliver, Green­mount West and Druid Heights. It has helped es­tab­lish an of­fice and com­mu­nity cen­ter in Be­lair-Edi­son. Given the lack of lend­ing by big banks, BCL created a small­busi­ness loan pro­gram. The BCL staff helped a cou­ple open a wine-and-cheese shop in High­land­town, and they’re help­ing a new or­ga­ni­za­tion, the Bal­ti­more African-Amer­i­can Home Builders Co­op­er­a­tive, with start-up fi­nanc­ing.

I tell you this be­cause it’s im­por­tant work. But, ob­vi­ously, just a slice of what needs to be done.

Banks cite post-re­ces­sion fed­eral reg­u­la­tory re­forms and the lack of cred­it­wor­thy bor­row­ers as road­blocks to more lend­ing. But Bill Ari­ano, the CEO of BCL, gives three rea­sons why ac­cess­ing cap­i­tal for in­vest­ment in more of Bal­ti­more is such a chal­lenge — the con­sol­i­da­tion of big banks, the lack of a clear plan to im­prove the city econ­omy and a lack of pri­vate mar­ket lead­er­ship.

“Dis­in­vest­ment is the re­sult of an un­will­ing­ness to look be­yond the false as­sump­tions that some­how one seg­ment of our pop­u­la­tion was born in­ca­pable or un­will­ing to build wealth,” he says. “The re­sult is a re­fusal to al­low ac­cess to the nec­es­sary fi­nan­cial re­sources crit­i­cal to suc­cess. It is eas­ier to iden­tify why one shouldn't ver­sus ag­gres­sively look­ing for how one can.

“Some of our banks are pro­vid­ing mod­est sup­port,” Ari­ano adds. “But they ei­ther have not been al­lowed to in­crease their in­vest­ment or are not in­ter­ested in in­creas­ing their in­volve­ment in the Bal­ti­more mar­ket.”

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