NEARLY $100 MILLION--WASTED. That's how much community-redevelopment money Baltimore City poured into its two biggest, most blighted neighborhoods under former Mayor Kurt Schmoke during the 1990s--with, a growing number of neighborhood leaders and community-development types are concluding, nothing to show for it. As Mayor Martin O'Malley sets out to formulate neighborhood-revitalization policies of his own, they're hoping to convince him of the same.

Their bone of contention: In the last decade, the lion's share of the city's mostly federal neighborhood-revitalization kitty went to Sandtown-Winchester in West Baltimore and the 218 square blocks comprising the Historic East Baltimore Community Action Coalition (HEBCAC), while the activists' own communities saw virtually none of the bounty and declined.

Sure, the activists argue, there have been 600 houses built and rehabbed in Sandtown, but an equal number of properties in the west-side community have been abandoned. And more than a third of the 14,000 properties in the HEBCAC zone are vacant, magnets for trash and crime.

"The 1800 blocks of Castle, Bethel, Milliman, and Henneman streets, the 800 block of Bradford, 2300 block of Eager, 900 block of Duncan, the 1100 block of Bradford . . ." HEBCAC executive director Michael Seipp reels off the list of blocks where 75 percent of houses are vacant, some where just one or two families remain. "And I'm only touching the [tip of the] iceberg."

All the while, activists claim, dozens of once-stable communities were forgotten and are now beginning to fray.

"All over town neighborhoods that have a chance, neighborhoods that have both strengths and weaknesses, problems but also problem solvers--potentially the really exciting neighborhoods where we have a shot at racial and economic integration--for about 10 years those neighborhoods have been without any support from their city government," says Charlie Duff, head of Jubilee Baltimore in East Baltimore and chairperson of the Patterson Park Community Development Corp. "And we've lost a lot of them we didn't need to lose. Thousands of people left, thousands of houses were abandoned."

Butting up against HEBCAC's southern boundary, Patterson Park is not yet lost, but it is struggling. A once overwhelmingly white, working-class community undergoing demographic transition while being squeezed between go-go Canton to the south and rampant crime, decay, and real-estate scams to the north, Patterson Park has been destabilized by pressures largely outside its control. With moderate investment, neighborhood leaders contend, it could harness the Canton momentum and emerge from the transition a stable and diverse community. Without that investment, it is bound to resegregate and, like its northern neighbors, become predominantly African-American and very poor.

The absence of investment in such transitional communities, Duff says, has caused the city to lose a belt of East Baltimore neighborhoods four blocks deep along Orleans Street. Ditto with the North Broadway corridor, and with Monument Street, once a successful, integrated retail district. On the west side, east of Sandtown, lies half-vacant Marble Hill, another neighborhood Duff contends could easily have been saved.

And so the list goes, and the chorus of woe gets louder: These neighborhoods could have been spared. With a little help, neighborhoods only now beginning to erode--Belair-Edison, Waverly, Forest Park--might never have wavered.

These are neighborhoods in the middle, as they're called, and their leaders, tired of being ignored, are pulling out all stops to be heard. They forced their issues in the 1999 mayoral election, making healthier neighborhoods a cornerstone issue of the campaign. And their clamor appears to be resonating in City Hall.

"In the past, there has been an impression, and I think a reality, that the city has devoted more attention to blighted neighborhoods at the expense of healthier neighborhoods," says Laurie Schwartz, deputy mayor of economic and neighborhood development. "This administration is committed to focusing on healthier neighborhoods, and particularly neighborhoods that are on the edge and starting to fray a little bit."

Once upon a time, Patterson Park was where city dwellers spent summer nights under stars and lined sidewalks with folding chairs. In recent years, it's become much like any other city neighborhood: Crime has crept in, real-estate values have tumbled, and people with means have bolted, leaving poverty and blight in their wake.

Like any deteriorating Baltimore neighborhood, Patterson Park didn't get that way overnight. But a study by neighborhood leaders of that change and the renewal plan they hatched as a result have made Patterson Park a petri dish for a new kind of neighborhood-revitalization strategy.

Patterson Park's trajectory of change began about the same time as Patterson Park Community Development Corp. (PPCDC) executive director Ed Rutkowski's personal history there: 1955. Rutkowski was 9. Blacks were moving into the neighborhood, and his white family moved out. His parents sold their house on Biddle Street for $7,000--less than the $9,000 they'd paid.

"Biddle Street used to be mostly white. I remember playing with white kids. So my sense is we moved pretty early," Rutkowski recalls.

Other white families followed, those who remained aged and died, and newly empty houses near the park started staying that way. Gradual disinvestment continued, but it wasn't until recently that its effect on the overall neighborhood was acutely felt. When Southeast Baltimore native Bob Kikola launched his mail-delivery career northeast of the park in 1985, people still decorated porch poles and railings, and houses on his route still sold. First-time homebuyers, often African-American, came from other parts of the city. George and Carol Stavropoulos moved from Dundalk to buy a bakery on Linwood Avenue. And in 1986, Ed Rutkowski returned to buy a house facing the park on East Baltimore Street. In 1992, after two years as president of the local neighborhood association, Rutkowski quit his job as a systems analyst with United Parcel Service to become a full-time activist dedicated to bringing his childhood neighborhood back.

But by the 1990s, lingering hopes for Patterson Park were dimming. Investors had snapped up vacant houses and converted them to low-grade rental units, and in 1995 the nearby Lafayette Courts public-housing projects were razed, flooding Patterson Park's burgeoning rental market with investor-owned housing full of subsidized tenants who were young, low-income, and black, and who, Kikola says, had folks on his route--white and black alike--worried.

"You could sense the movement," he says. "As fast as these stable, older people were moving in . . . there was another wave coming behind them that would knock the wind out of [their sails]. At the time, I was delivering in the area and I could see the danger coming. And the fear."

After discovering his 6-year-old daughter playing with a kid with a gun, Kikola moved his family to Pennsylvania and began delivering mail in Canton. After watching sales plummet, the Stavropouloses moved their baking operation to Bel Air last May. And after years of community organizing, Rutkowski was still baffled by what was happening around him.

He responded by establishing PPCDC to acquire properties and keep them out of absentee investors' hands. But there were still destabilizing factors he believed would hobble that effort if left unchecked, and he knew race was one of them.

"I lived on the 2600 block of Biddle Street (in the '50s), and my family moved out when blacks started moving in," Rutkowski says. "You get a loss of investment in those kinds of neighborhoods, and the neighborhoods resegregate. If you go up to the 2600 block of Biddle Street now, or so many of the areas around Johns Hopkins [Hospital], it's just blighted.

"We're losing the city block by block, year after year, and somehow we have to stop it. I don't know what my parents were thinking. I wish I could go back and get an adults' view of what was happening then."

Rutkowski b

elieved he knew what had to be done--someone had to perform a credible analysis of what had happened in the neighborhood and how it could be turned around. He joined forces with Marcus Pollock, a former Southeast organizer who at the time was working with the Neighborhood Reinvestment Corp., a national community-development group. Together, they set out to define the Patterson Park problem. They ended up floating a philosophy--and writing and self-publishing a book, 1998's The Urban Transition Zone: A Place Worth A Fight--that has not only guided a neighborhood revival but helped alter the city's discourse on how to use neighborhood-revitalization resources and funds.

"We want to create stability in an area that is on the verge, areas that are fragile but not necessarily in decline, and we want to prevent that decline from happening," says Pollock, a member of PPCDC's board. "Ultimately, we would want to see a change in the way community-development dollars are being spent."

Patterson Park, Pollock and Rutkowski concluded, is an "urban transition zone"--a neighborhood feeling the pressures of demographic change and surrounding market forces closing in, and facing destabilization as a result.

Following a pattern followed in East Baltimore neighborhoods for decades, the white, working-class area had become, in a matter of a few mid-'90s years, increasingly black and poor. According to a demographic profile released this spring by the Baltimore City Data Collaborative--a coalition of local nonprofits, institutions, and city agencies--one-third of residents immediately north and east of the park are African-American, and the area's average household income is about 10 percent below the city average ($28,000, compared to $30,855 citywide). The trend toward resegregation and greater poverty continues, as Patterson Park is pulled by the HEBCAC neighborhoods toward the north. But there exists a counter-force--increasingly prosperous Canton to the south--and therein, say Pollock and Rutkowski, lies a window of opportunity crucial to urban transition zones.

The activist/authors labeled that state of limbo Patterson Park's "tipping point"--the point at which it could tip toward Canton's boom with intervention or toward East Baltimore's bust without it. They weighed various indicators to determine what a neighborhood at that fulcrum looked like--its racial makeup and income levels, the age of its residents, its homeowner-to-renter ratio. And once they concluded Patterson Park's tipping point was nigh, they used the information to prescribe a revitalization strategy that was realistic and worthy of investment.

"The first thing is to acknowledge that you can't do [large-scale neighborhood revitalization] everywhere," Rutkowski says. "So picking the right place is the first criterion. There has got to be some strength, something you can build from."

Patterson Park's greatest strength is nearby Canton, Baltimore's hottest inner-city housing market. A former manufacturing hub, Canton housed city workers in small no-frills abodes built at bargain prices--until a few years ago, when developers realized upscale waterfront living would be an easy sell. There were housing rehabs galore, and seemingly overnight Canton housing values soared. Developer Charleene Doverspike says shells she bought for $38,000 in 1998 are now selling as high-end rehabs for $215,000--a price people will pay, she says, "because there's nothing else to buy there right now."

Patterson Park is well-situated to capitalize on Canton's housing dearth. Bordered on both sides by industry and commerce, Canton can only extend north. What's more, Patterson Park houses are larger and cheaper than Canton's, they have architectural details Canton's can't claim, and there are hundreds for sale.

"It's all about a conversation," Doverspike says. "There is no conversation that exists right now that living over there [in Patterson Park] could be a great place. Yet when I came [to Canton] five years ago, there was no conversation that houses would be selling for $250,000. If somehow the conversation starts that Patterson Park is a great place to live . . . if it follows the same course Canton did . . . the potential is overwhelming."

The other criteria for a successful urban transition zone, Rutkowski says, are a having a "competent organization" guiding redevelopment efforts and ensuring that it has enough money to be effective. "Community organizing [alone] doesn't have the capacity to do what needs to be done," he says.

Patterson Park, he contends, has the tools. Unlike Sandtown and HEBCAC--so physically and economically decimated that even $100 million hasn't made a difference--it doesn't require wholesale redevelopment. Nor does it depend strictly on outside funds. Legally set up to acquire property, PPCDC has the potential to generate its own revenue through housing sales and rentals, a potential that has attracted significant public and private investment and allowed the corporation to hire professional staff. And as a small, private nonprofit with a neighborhood-minded board, it's free of the political winds that typically steer large community-development projects in the city.

"What it comes down to is we think we're losing our cities from transitional neighborhoods. When people leave their neighborhoods their next stop is leaving the city, and as a consequence we're also losing the tax base," Rutkowski says. "The bottom line is that by picking carefully where you put your resources and what kinds of resources they are, you will maximize the health of the city overall.

"That's the premise--to create the most benefit for the city as a whole for the least cost. We can't do everything at once because we don't have the money. [And] the city doesn't really have a choice, because everything else has failed. The histories of East Baltimore and of West Baltimore show it has failed."

Pollock and Rutkowski wrote a book to make their case that the city's future lies in urban transition zones. Now the onus is on them to show that their theory can become reality, and bring Patterson Park back from the tipping point and guide its transition.

The resurgence of this fraying patch of park and Formstone is rooted in an ambitious effort to deliberately create a desirable community; to assert local control over real estate through buying and rehabbing hundreds of unremarkable houses, then selling and renting them to artists, young singles, first-time homebuyers, and recent refugees--a carefully targeted mix of modern-day urban pioneers.

PPCDC embarked on that mission in 1996 with $130,000 in private funding from the Abell Foundation, enough for Rutkowski to hire one staffer and purchase a single house that first year. Thanks to continued support from Abell, other foundations, and a half-dozen small local banks, the corporation quickly grew and is now closing out its fourth fiscal year with a paid staff of eight and a $550,000 budget. It's secured eight bank lines of credit, allowing it to carry $3 million in mortgages at any given time. It's also secured its first significant chunks of state and federal aid: Maryland is currently funding up to $2 million in low-cost, fixed-rate mortgages, and the feds will fork over $1 million in capital funds this coming year.

Robert Embry, Abell's president, says the foundation had three incentives for throwing its support behind the Patterson Park effort is three-fold. First, he says, was Rutkowski: "He's a guy in the neighborhood who cared about it and is competent." Second was the project's urgency: Southeast Baltimore "was one of the stablest areas in [the city], and it was gradually sliding downhill." Third was location: "It looked doable in the sense that it [Patterson Park] had strong boundaries on three sides, everywhere but the north"--where the benefits of a successful Patterson Park revitalization could spill over, Embry says.

But realizing that houses alone won't bring people to Patterson Park, PPCDC has also created incentives. Again with funding from Abell, it offers homebuyers nine years of free tuition at St. Elizabeth's, a nearby Catholic school, and home-value guarantees (if the value of the home drops, Abell will pay the difference when the buyer sells).

Five children are currently enrolled in the tuition program and nine families have accepted the guarantee. India Bruce, a 24-year-old single mother of two, says she would not have put a contract on her house at Fayette and Conkling streets without the incentives.

"I preferred East Baltimore and I did look into houses on Eager Street--they're building new homes down there--but they didn't have incentive plans as far as the value of the home or anything like sending kids to school for free," says Bruce, a secretary at the University of Maryland.

Another carrot PPCDC is peddling to homebuyers is custom rehab options such as merging two houses into one, something it couldn't do if housing in the area wasn't affordable and available. Mark Thayer, a 32-year-old engineer and lifelong suburbanite, says seeing the potential in his house on North Linwood Street took some "creative imaging"--looking past all the 1970s paneling and envisioning exposed brick underneath. But the fact that he was in the driver's seat regarding design made it doable. So did the price: He paid $68,000 for a two-story house a block from the park. Something comparable in suburbia, he says, would cost at least $200,000.

Ditto with artist Joan Kelly. "The space I have is outstanding. I could design it all myself, and it was under $100,000," the Towson transplant says. "It's the only place in the city that I could find to accommodate my needs. I needed to design the house myself and I needed a 25-foot wall at least for a mural."

The financing and incentives have allowed PPCDC to purchase 142 houses to date, sell 49, and rent 67--enough transactions, Rutkowski reckons, to start showing the project's potential in a quantifiable way. (According to Abell economic-development specialist Beth Harber, PPCDC is the second-most productive nonprofit in the city, in terms of home sales, after the Enterprise Foundation in Sandtown.) At the same time, Rutkowski acknowledges several factors that could stall, even thwart, the project.

"The destabilizing forces of demographic change create the weak real-estate market and eventual takeover by absentee investors. We've stabilized the real-estate market and reduced the number of acquisitions by absentee investors, and as a consequence we're beginning to stabilize the neighborhood," he says. "But the destabilizing factors of demographic change are still there, and right now there's a lot of that east of the park."

To counter those forces, Pollock says, PPCDC needs to attract more financially stable people with means to contribute to--but not, he is careful to say, "take over"--the neighborhood. It also needs to maintain a racial balance and ensure that rental units go to responsible tenants, Rutkowski adds.

There are other obstacles, over which PPCDC has less control. Patterson Park and surrounding East Baltimore were hit harder than most neighborhoods by the late-'90s "flipping" scams in which investors snapped up rundown properties for a song, then turned around and sold them to naive homebuyers at huge profits. Such chicanery blindsided the corporation in its effort to dominate neighborhood real estate, exacerbating the demographic shift, Pollock says: While PPCDC targets groups of properties on a block-by-block basis so as to concentrate resources on creating stable, diverse blocks, flippers target low-income, largely African-American homebuyers on an individual basis. And flipping has spread farther and faster than Rutkowski and his crew.

The neighborhood's own growing pains pose another challenge. As PPCDC's stable nears the 150-house mark, the organization is being forced to think beyond bricks and mortar. In recent years Patterson Park has seen a dry cleaner, confectionery, pizza shop, and drugstore all close. A successful neighborhood needs more than just homeowners, PPCDC chairperson Duff says--it needs stores, it needs institutions. Striking that balance remains one of the corporation's biggest challenges. This past winter it took a first step toward meeting that challenge, putting a $10,000, nonrefundable deposit on the shuttered drugstore, which it hopes to convert into a coffee house and community radio station.

Above all, though, PPCDC needs the city to pony up resources.

"I think the neighborhood is still quite fragile," Pollock says. "We're probably a third of the way there. There is still a lot of work to be done, and at least some of it is outside the scope of influence the PPCDC would have. Crime and drugs are still very much a predictor of the change and present one of the most potent obstacles to us."

Over the last few years, the Schmoke administration gave PPCDC $540,000. It's asking O'Malley for a lot more--$1 million in the coming fiscal year, for starters, and special consideration when it comes to city services. Additional police, housing inspectors, and public-works troops can make a greater difference in Patterson Park than in poorer neighborhoods, Rutkowski and others argue. And if the effort is to succeed, they add, Patterson Park's zoned schools--such as Highlandtown Middle, with its oversized, rundown building and unusually large student body of 1,500--need intervention.

"There is absolutely nothing about the neighborhoods of Patterson Park to guarantee a fate different than that of the two or three square miles that constitute HEBCAC," Duff says. "First of all, it needs money. But it also needs some city policy changes. It needs a policing strategy that nobody is talking about--a policy of putting significant police resources into defending neighborhoods that are still neighborhoods of choice, and keeping crime at a level where people still choose to live there."

To argue that a neighborhood such as Patterson Park needs this help more than, say, a Sandtown is to invite controversy. (See "Turf Wars," page 26.) But Duff says such assistance needn't occur at the expense of poor neighborhoods. "City policy, with relatively small amounts of money, can create large areas that are stable and safe for taxpayers in neighborhoods that would have otherwise become dangerous, non-taxpaying, and eventually vacant," he says. "The city can use these neighborhoods to attract good people. And when you've got a bunch of good people around, good things start to happen."

That thinking resonates even among some struggling in the city's trenches, such as HEBCAC's Michael Seipp.

"The challenge for the new administration is to take where the [Schmoke] administration left off and elevate that to a higher plain that deals with the whole city, and that means you have to have a vision of where you want to be 25 years from now," Seipp says. "A neighborhood that is entering a transition period, like a Highlandtown, Berea, or Belair-Edison--those are neighborhoods where we ought to be pumping in housing-inspection intervention at 20 times the rate we're doing."

If PPCDC was bracing for a tough battle with City Hall, it need brace no further. At this point, all government systems say "Go." Deputy Mayor Laurie Schwartz says the city is still formulating its neighborhoods approach, but at least two overarching policies will shape it. First, the city will require greater accountability among neighborhoods receiving federal community-development funds. Second, the city will not focus only on neighborhoods that because of federal income restrictions tend to receive those funds--the Sandtowns and HEBCACs--but also neighborhoods facing a "variety of conditions or issues."

Among the latter, Patterson Park is already on the city's radar. Both Schwartz and Housing Commissioner Patricia Payne have met with PPCDC and liked what they've seen.

"What Patterson Park is doing is very strategic, it's very tangible, it's looking at interventions on a block-by-block level, and it uses a lot of private money," Payne says.

"It's very healthy for [community-development corporations] to play this role," Schwartz adds. "They're in the neighborhood feeling its pulse and understanding the market much better than government officials could."

Kudos aside, the administration hasn't yet committed to making good on PPCDC's requests. But it has expressed support for the recently formed Healthy Neighborhoods Alliance, a coalition launched by the Citizens Planning and Housing Association that includes Patterson Park and echoes Pollock and Rutkowski's assertion that neighborhoods like it theirs warrant more government attention. With some coalition prodding, O'Malley successfully lobbied Gov. Parris Glendening for $1 million to support a one-year pilot program to revitalize healthy neighborhoods, starting this summer. Under the pilot, Payne says, four to six neighborhoods with revitalization strategies and track records will be selected to participate, and Rutkowski is banking on Patterson Park being one of them.

Payne hopes the pilot program will demonstrate the city's need to break with past policies, a strong recommendation of O'Malley's transition committee on housing. Abell's Embry, a former city housing commissioner who chaired the committee, says investments in Baltimore's healthier neighborhoods, he says, are "very cost-effective expenditures of money."

"Certainly, our recommendation was that there be a shift in emphasis and more attention paid to neighborhoods that are beginning to show signs of deterioration than in the past," Embry says.

Fewer vacancies, better schools, and lower crime and infant mortality rates also factor into a neighborhood's success, he says. Those issues, once thrown into the mix, point up the consequences of the city not changing its course--and, some say, its moral obligation to do so. Duff points again to the city's failure to turn Sandtown around.

"We used this investment to sucker perhaps 300 working-class families into a bad real-estate investment. We have told them, 'You want to be homeowners at a price you can afford and we will make that possible upon condition that you be homeowners in a dreadful place," Duff says. "So we got them to move into a neighborhood with new houses, dangerous streets, bad schools, and no jobs. And it's difficult to see how that's doing a big favor for them."

Having lived through that failure, Lucille Gorham--a community leader in Middle East, a HEBCAC neighborhood--is ready to give the urban-transition-zone theory a try.

"If it fails or if it doesn't fail, it's a model that we can look at," she says. Is it the right way? Gorman isn't sure; no one can be. But, she adds, "it's a different way." And for many of Baltimore's neighborhoods, at the moment that's enough.

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