Joshua Siegel is Rehabbing Decrepit Reservoir Hill Housing. Thatís a Good Thing, Right?
Steps away is the crime scene, 1100 Whitelock St., an 1864-vintage apartment building Siegel is spending, by his estimate, $800,000 to renovate. He plans to rent the resulting nine apartments to students, city employees, and other professionals for between $550 (studios) and $1,800 (three BR) per month.
The largest and most ambitious historic renovation project currently underway in the Reservoir Hill neighborhood, Siegel's Whitelock Street rehab is set to be finished any day now. It is meant not only to make money for Siegel's company, Fantasia Partners, but also to encourage nearby residents--some who recently purchased large Victorian shells and are busily rehabbing them as well.
As soon as 1100 Whitelock is completed, Siegel, a burly, sandy-haired 32-year-old Manhattan resident who usually spends several days each week in Baltimore, plans to send a construction crew a few doors up Madison Avenue to rehab a building he owns at 2422 Madison into more apartments.
Although the cost of all this work is substantial, much of it will be underwritten by taxpayers: If city, state, and federal approvals go as expected, both rehabs will be eligible for tax credits for historic renovation worth several hundred thousand dollars. The state designation alone--which would add to money the Siegels will get from federal and local tax breaks--could reach about $170,000 just for 1100 Whitelock, Siegel says. While he says that not getting the tax credits won't affect the completion of the renovations, he acknowledges that "it does affect the profitability of the project." And there aren't many people willing to take on such projects without the promise of profit.
Historic tax breaks are a tasty carrot luring hungry developers to rebuild Baltimore buildings that, in some cases, have been empty--or filled with squatters and rats--for years or even decades. The stick that drives those property owners to the banquet in many cases, however, is the threat of city seizure of their properties. And Siegel knows the appeal of the former as well as the sting of the latter.
While Siegel is using tax credits to do historic rehabs and angling to get more of his properties eligible for them, he is also the scion of a family whose management of various historic Reservoir Hill properties has, for at least a decade, been less than stellar, much to the consternation of neighbors and city officials alike. For the city, then, Siegel is something of a test case for both the carrot and the stick. For Siegel--who is new to the development game--Baltimore is a bewildering test of mettle.
Siegel's Whitelock project is just one in a mini-boom of rehabs in this once-prosperous and recently troubled neighborhood. Mayor Martin O'Malley singled out Reservoir Hill for special attention from the city's housing code enforcement department and in January pledged that Project 5000, the city's effort to take over 5,000 of the city's 40,000 or so abandoned buildings and turn them over to developers, would by now hold at least 255 of 300 vacant Reservoir Hill addresses.
In fact, the city is expected to turn over some of those properties to new developers this month when the Department of Housing and Community Development chooses a winning bidder on a request for proposals (RFP) to redevelop 23 buildings on Callow and Linden Avenues (Mobtown Beat,"Take That Hill," June 30). City officials and neighborhood residents alike hope the new construction, rehabilitation, and clean-up activities will transform the neighborhood into one of Baltimore's more prestigious addresses, better able to attract young professionals, older empty nesters, and the fabled Washington commuters.
When renovations at 1100 Whitelock are complete, tenants will enjoy first-class amenities, Siegel says: central air conditioning for each apartment, tied to an environmentally friendly rooftop water chiller; historically accurate wood-framed windows with double-pane glass. There will be cherry floors throughout and towel warmers in each bathroom. And "the building is sprinklered now," Siegel notes, tossing in a safety feature required by city fire codes.
From this angle, Siegel looks like a neighborhood hero. But that's not how Erin Reilly thinks of him. Riding up on her bicycle on the back side of the building, the Madison Avenue resident stops and recalls a Sunday in April when Siegel's workers, perched on scaffolds, were stripping the huge brick wall facing Whitelock. "The work was sloppy," she says. "They were pressure-washing but they had no barriers," so lead paint chips and chemicals coated the sidewalk and ran down the street. Later, she says, the scaffold was wrapped in plastic to hold in the debris, but a wind storm toppled it onto a passing car. Everette Parks, who lives a few doors down on Madison, confirms Reilly's story, although the city has no record of any 311 complaints about the alleged events, according to city Housing Department spokesman David Tillman.
Reilly and Parks are not the only ones with complaints about Siegel's redevelopment efforts in Reservoir Hill. For 1100 Whitelock and 2422 Madison are but two properties owned by Siegel and his father, Richard Siegel, a New York-based developer. Within a few blocks of this corner, eight other Siegel properties currently sit boarded-up.
Arlen Cullors, president of the Upper Eutaw/Madison Neighborhood Association, has lived across the street from Siegel's soon-to-be-redeveloped Madison Avenue building for the past eight years, and watched as it--and the neighborhood around it--slipped further into decline.
"There was a lot of drug activity there," Cullors says. "By my second or third year, trash was being dumped into the street from the third floor. There was a fire at that location. The third-floor windows were taken out [by firefighters]. But the tenants remained."
Cullors says he did not know these neighbors, though he says he was "under the impression that they were African." An "older gentleman" lived in the back apartment, he says, and although after the fire the windows were first replaced with plastic sheeting and then plywood, a young girl lived in the building. (Cullors contends that a city code inspector visited at one point and gave the building a pass.) Eventually, all the tenants left except for the old man, who Cullors says died a few months ago. "I don't know if the plumbing was working, but at one point I did see a light bulb, so there was electricity in one part of the building," he says. "It was just in a real bad situation."
Conditions at other Siegel-owned properties in Reservoir Hill have deteriorated to the point that the city has taken action.
"We are pleased with the progress that you are making on the Whitelock Street property," reads a Dec. 5, 2003, letter from the Baltimore Housing Authority's assistant commissioner for land resources, David Levy, to the Siegels' Baltimore lawyer, John Denick. "We are not satisfied, however, with the communication that we have received regarding the properties on Callow and Lakeview Avenues. The agency has not received plans or detailed descriptions that could lead us to the conclusion that there will be any resolution to the blighting influence of these properties."
Thus, the city Department of Housing is "commencing acquisition" of seven Siegel-owned buildings on the 2400 block of Callow and two more on the 2400 block of Lakeview, the letter says. Included in the envelope, according to the letter, was a U.S. Department of Housing and Urban Development brochure titled When a Public Agency Acquires Your Property.
So far in his career, Joshua Siegel has been an investment banker specializing in debt underwriting in emerging markets, the chief executive of at least one failed dot-com, and even a professional chef. "I took a break and went to cooking school," he says, and "worked in a couple restaurants," which he declines to name. Siegel also boasts a bachelor degree in economics from Boston University and a master's from Georgetown University's McDonough School of Business. The 1100 Whitelock building is his first try at being a developer.
"I was asked by my father to join him in redeveloping some of our properties here in Baltimore [in] April 2002," he says. Richard Siegel has spent his career in New York real estate, Joshua Siegel says, developing office and retail in Manhattan and running R.H. Siegel and Co. His father, he adds, "doesn't talk to the press."
Despite his lack of experience, Joshua Siegel has become an expert advocate for historic renovation in Reservoir Hill. Last year he quarterbacked the Reservoir Hill Improvement Council's application for a federal "historic district" designation in the central section of Reservoir Hill--the only part of the neighborhood that lacks a historic designation. That application, if approved in the coming months, would open the area in the Callow and Linden corridors to the kind of rich tax breaks Siegel hopes to collect on his Whitelock project--the kind of breaks that offset the cost of a high-quality rehab.
Together, federal and state historic tax credits can eventually add up to 40 percent of construction costs. They have been the catalyst for such high-profile Baltimore projects as the Hippodrome Theatre and numerous Struever Bros. Eccles and Rouse redevelopments, such as the Can Company in Canton and the former Coca-Cola plant in Locust Point recently converted to Phillips Seafood headquarters. In fact, they have worked so well for city developers that some legislators want to get rid of them.
In 2002, then-House Speaker Casper Taylor Jr. (D-Allegany County) called the state credit--which he had initiated in 1996--"out of control," as annual costs to the state reached $25 million. That was many multiples of what legislators had been led to believe the cost would be. (The tax credit is "refundable," meaning that even taxpayers who owe no state taxes can, using this credit, receive money from the state. Of course, that money comes from all the other state taxpayers.) This year, Baltimore's legislative delegation in Annapolis beat back a challenge to the state tax credit program, eventually saving it, but with the caveat that from now on any Maryland jurisdiction could receive no more than 50 percent of the total state tax credit pie. Previously, the city had gotten about 90 percent of it each year.
But even if the state money doesn't come through for Siegel or the 100 or so other projects awaiting approval across Maryland, city and federal tax credits beckon. Since 1996, Baltimore City's historic property tax credit has helped rehab 380 buildings in town, according to city Planning Department figures; at least that many projects are underway currently, ranging from kitchen refurbishments budgeted for a few thousand dollars to breaks potentially worth millions for large developers. The city Commission for Historical and Architectural Preservation (CHAP) calls the city tax incentive program the most "comprehensive in the country."
As a result, city neighborhoods are now applying for historic designation at an extraordinary rate. At its Aug. 10 meeting alone, CHAP approved applications of eight neighborhoods seeking federal historic district status (which qualifies the areas for city, state, and federal tax credits)--Hampden, Harlem Park, Upton, Sandtown, Druid Heights, Madison Park, Arcadia-Beverly Hills, and the Siegel-sponsored final slice of Reservoir Hill. The CHAP approval is but one hurdle in a process that requires mayoral approval and federal approval by the Interior Department, but the number of buildings to be covered under the federal historic designations approved in that one meeting exceeds 10,000.
"It is true that in the past four years the number of listed communities [in Baltimore] has shot up," says Bill Pencek, director of the Baltimore City Heritage Area. Pencek estimates that about 40,000 structures now carry a historic designation, qualifying their owners for historic tax breaks. By comparison, Boston has about 8,000 buildings listed, Pencek says: "We have the highest number of listed buildings of any city in the country--by far, by far."
Tax breaks are not automatic. Property owners must apply for them, submitting their rehab plans to scrutiny from local, state, and federal watchdogs that make sure they meet historic design standards. Historic buildings are more expensive to work on, and the application process takes time. And up-front planning costs for a historic designation can be substantial; the application for the Reservoir Hill neighborhood designation cost $20,000, Siegel says. But even when applying for breaks, breaks are available.
"About a year and a half ago they found their way to me," says Pencek of the Siegels. Pencek works from the mayor's office and, as part of his job, taught the Siegels about tax credits and the complex process of getting them. "I advised that they partner with the [Reservoir Hill Improvement Council] and apply for a state grant for the application process," Pencek recalls.
Siegel says the nonprofit Preservation Maryland kicked in $13,000 for the application. The nonprofit National Trust for Historic Preservation chipped in another $5,000, leaving Siegels to pay $2,000 out of pocket.
"Hopefully that application will come back in September," Siegel says. "Then it becomes a national historic district, and that allows everyone to qualify for these tax breaks. . . . This should be able to jump-start a lot of [redevelopment], especially on Callow Ave, Lakeview Ave, Linden, Brookfield."
Siegel apparently developed his enthusiasm for the historic district and its tax advantages on the fly. Early plans for 1100 Whitelock called for a straightforward rehab, without a nod to the building's historic character. But Cullors, president of the Upper Eutaw/Madison Neighborhood Association, objected in an Aug. 8, 2002, letter to Brigetta Fessenden, a city planner in charge of the Commission for Historical and Architectural Preservation. Noting that the block of Whitelock in question is already part of a historic district that requires historically correct renovations, Cullors' letter expressed concern "about potential modifications . . . that may result in the further degradation of the historic characteristics" of the building "and the community as a whole."
Fessenden wouldn't comment for this story, but Siegel and his father worked with Fessenden and Pencek to develop a historic renovation plan. The complicated planning cost money and delayed work on the building, Siegel says, though the payoff should more than make up for the initial work.
"So we want to do other historic projects, and it's going to slow things down," Siegel says, but adds, "We like doing things historically because it provides tremendous value."
That "tremendous value" is now key to the Siegels' effort to hold on to the dilapidated, boarded-up buildings they own on Callow and Lakeview avenues.
The city has offered the Siegels more than $430,000 just for the properties on Callow, but the lawyer for the Siegels' Fantasia Partners sent the Baltimore Housing Authority's David Levy a letter July 7 saying that it wasn't enough, arguing that Fantasia had maintained the properties "and conducted regular clean up and maintenance so as to minimize any problems at the properties and to the community." Plans call for the Lakeview buildings to be rehabilitated in the second phase of Siegel's planned renovations, and Callow Avenue will be done later, in phase three, according to the letter. "From what we are told, the city plans to take the properties, demolish the buildings, and then transfer the land to another developer for development purposes," the letter says. "We challenge the right to take these properties under these circumstances."
Siegel says the city is being unreasonable. "They wanted us to move on our Callow and Lakeview properties at the same time" as the Whitelock and Madison buildings, he says. "It would be fiscally irresponsible. The market demands that you do certain things--the area just isn't ready for all those buildings to be done at one time."
The city disagrees with Siegel's market assessment: Its RFP for the Callow/Linden project includes buildings on Callow just one block south of Siegel's holdings.
The bottom line, Siegel says, is that "we are trying to work it out with the city. We're not trying to have a big fight. The city wants what it wants. And we're private landowners. You can't take property without due process."
Part of that process has been the city's attempt--unsuccessful until recently--to contact a human being who would take responsibility for the properties.
Legally, the owners of the Callow Avenue buildings are Value Realty LLC for 2439-2445 Callow and the Lakeview properties; and City Development Co. Inc. for 2419-2427 Callow. Selma Harris signed as secretary of City Development when it took over those properties in 1969, and she is the principal of Value Realty, according to a title report obtained by the city. Harris is 91 years old, Joshua Siegel says, and playing bridge to pass the time. "She's my grandmother," he says.
Value Realty has owned its Callow and Lakeview properties since 1994, having bought them from Nathan and David Harris. Nathan Harris is Selma Harris' late husband. The Harris family first acquired the buildings in 1978.
Joshua Siegel acknowledges that the buildings have been in his family "for 50 or 60 years," but his explanation of the buildings' recent history omits mention of who was ultimately responsible for keeping the buildings up to code before he came along.
"The problem was, the properties were being managed by a guy in Baltimore--the name escapes me," Siegel says. "The other problem is we had squatters living in our buildings, especially in Reservoir Hill.
He says that in 2000, a couple of years before he got involved, his family had planned to sell the properties to a man named Paul Palitti. The deal got as far as a signed contract and Palitti taking ownership when, "basically, he defaulted," Siegel says. "We're in litigation now." Siegel says that Palitti "inherited some problems from the previous management companies, but he also made things worse." (City Paper's attempts to contact Palitti were unsuccessful.)
The Siegels took the property back and offered them for sale to a man named Larry Cunningham. "He had them four or five months and didn't make them any better," Siegel recalls. "So in 2002 I got involved directly."
A glance though the city housing code enforcement file for 1100 Whitelock St. supports Siegel's story and shows how difficult the Harris/Siegel ownership/management structure was for city officials to crack. After a city inspector noticed a defective retaining wall in early 2001, he tried to track down a responsible party to make repairs. "Attempt to make contact with owner via Yahoo! People Search and BITS. Unable to get telephone contact with owner," reads one handwritten entry from May 2001. Later that summer, inspectors phoned a Paul Palitti and a washing machine in the backyard was disposed of, the file reveals. But no one appeared for a November 2001 hearing about the wall.
During this time, 1100 Whitelock was owned on paper by Metro Realty LLC. City inspectors called that company's resident agent, Jonathan Azrael, in hopes of getting someone to come to a second hearing scheduled for Jan. 8, 2002. Another no show. A note in the file dated Jan. 8 states, "Jonathan Azrael now has responsibility for the property," but underneath that is an update, dated Jan. 14, 2002, which says Azrael told the inspector that Larry Cunningham was then the property's "responsible officer." Two phone numbers and an address were included in the note, but it does not appear the inspectors managed to contact Cunningham. No one appeared at the next hearing in March 2002. City Paper called the numbers and could not reach Cunningham, either.
Inspections continued and the wall was not repaired. On Jan. 30, 2004, an entry reads, "No work done on retaining wall. Contacted Jonathan Azrael." This time, apparently, Azrael told the inspector that "Cunningham is no longer responsible" but a new guy, "Mr. Dickerson," was.
Azrael is listed as the current resident agent for the Siegels' Fantasia Partners, LLC. "Mr. Dickerson" is most likely Gerald Dixon, a White Marsh contractor hired by Joshua Siegel, who applied for work permits to clean up the Callow Avenue properties in late June 2003 and continues to do work for Fantasia Partners.
When he did get involved with his family's Reservoir Hill properties, Siegel says, his first job was to straighten out back taxes and other paperwork. He also tackled the festering code problems by evicting all remaining tenants--or squatters--and demolishing unsound structures, boarding up windows, and removing tons of debris.
"We invested almost immediately probably over $100,000 paying back taxes, cleaning up, keeping the grass mowed, making sure there was no garbage around," Siegel says. By late 2003, he says, the buildings on Callow and Lakeview were boarded against squatters and weatherproof enough to stand a few years waiting for the planned redevelopment while he moved ahead on the Whitelock project.
Even Arlen Cullors, president of the Upper Eutaw/Madison Neighborhood Association, has been impressed by what Siegel has accomplished so far with the Madison Avenue building: "I will say this much--he has done what he said he was going to do with the property. I don't know how valid it is that he inherited the property and he had nothing to do with the prior conditions, but he has done what he said he would."
When it comes to the condition of his remaining properties on Callow and Lakeview, Siegel thinks the city should just simmer down and wait for him to realize his vision--a vision that is sure to be much more grand because of the historic tax breaks, even if it takes even longer to realize. But while many neighbors are thrilled to see projects like 1100 Whitelock near completion and hope for more, others grumble that property owners like Siegel have done the neighborhood a disservice by taking their sweet time.
Chris Forsberg, who has lived on Eutaw Place for about four years, says that until recently all of Siegel's buildings were problems for the neighborhood, some worse than others. In his view, the Siegels have kept the buildings vacant in order to cash in on rising values. "That's land banking," he says. "That hurts our neighborhood."
While the Baltimore Housing Authority's David Levy acknowledges that "we like it when [landlords] move in the direction that the community wants to move in," he adds that "if a property is an overall blighting influence on the neighborhood, we will intervene." Thus plans to seize the Callow and Lakeview buildings continue. But so do negotiations between the Siegels and the city, and the city will not have the Siegels' property any time soon.
"The city is not in the business of willy-nilly taking property," Levy says. But he hints that giving the appearance that it is in that business concentrates the minds of recalcitrant property owners: "When folks drive around and see all that scaffolding, a decent amount of that is [on the buildings of] folks we suspended acquisition on."
If Joshua Siegel's rehabbed properties form the core of a newly revitalized Reservoir Hill, then perhaps the taxpayer outlay and the years of neglect will be paid in full. Levy sums up the city's philosophy on the situation thusly: "Let's not judge you by your past. Let's judge you on what you do."
Big Box Backlash (7/21/2010)
Citizen groups oppose Remington development on several fronts
Documents and Eyewitnesses (6/4/2010)
Judge orders Baltimore zoning board to produce records
Old Habits (7/28/2010)
Medicalization is the hot new thing in drug treatment. Just like in 1970.
Room for Improvement (7/14/2010)
Celebrated crime control measure actually a flop, former chief reveals
Shelling Out (7/7/2010)
Mortgage broker goes bankrupt, seeks mortgage modification as taxpayers face mounting bailout bills
812 Park Ave.
Baltimore, MD 21201