Nonprofit developer’s 87-unit, multi-block project for Druid Heights, Upton moves forward

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One of the blocks along Division Street that would be developed with new housing. Photo via Google Street View.

With sign-off from Baltimore’s Board of Estimates this morning, national nonprofit real estate developer The Community Builders, Inc. is proceeding with a plan to build dozens of new townhouses and apartments on several blocks in Druid Heights and Upton.

According to an agreement approved by the spending board, the Marshall Gardens project will bring 60 townhouses and 27 apartments to the 1700 and 1800 blocks of Division Street and the 500 blocks of Wilson, Laurens and Roberts streets. The project also includes rehabilitating five historic rowhouses.

The agenda describes it as a mix of housing for “very low-income families”–those making up to 40 percent of area median income–and workforce and market-rate housing.

The project is moving forward four years after the city agreed to sell the land to The Community Builders for $149, or $1 per property. The spending board said in 2015 that the low price was justified because the development would eliminate blight, promote economic development by generating tax income and improve the surrounding community, the Baltimore Business Journal reported at the time.

The combined value of the 149 properties at the time of the sale was at least $300,000, based on an incomplete list of appraisals provided by the city.

Minutes from that August 2015 meeting said the sale “will promote economic development through placement of the subject property on the City’s tax roll.”

But under the agreement approved today, the city has extended a tax break to The Community Builders to proceed. Baltimore’s Department of Housing and Community Development found Marshall Gardens eligible for a “payment in lieu of taxes” (or PILOT) agreement.

Per the Baltimore Development Corporation, PILOT agreements “allow a business, landowner or developer to substitute the annual real estate taxes due on a property with a negotiated payment,” and are granted for projects that “might not otherwise be undertaken because it is too cost-prohibitive.”

So, instead of whatever property taxes would have been required by the city and state, the developer agreed to pay the city $100,000 per year, with that amount rising 3 percent annually. The agreement runs for 75 years.

Jacquinn Sinclair, a spokesperson for The Community Builders, said the PILOT “reduces taxes but does not fully eliminate them,” and “helps keep the soon-to-come apartment homes affordable to Baltimore City residents.” The deal applies only to the affordable units in the project, she noted.

The agenda for today’s meeting said a DHCD staff analysis found the project met various criteria for PILOT approval: It would preserve or create new affordable housing and required a city subsidy to proceed, and The Community Builders had sought other funding and subsidies before requesting the PILOT agreement.

Sinclair said in an email that the deal is projected to close next week. “If that happens, we hope to start construction in mid-October.”

Some additional specs on Marshall Gardens:

  • An L-shaped, three-story apartment building with 27 units would be located at the corner of Wilson and Division streets. It would have nine one-bedrooms, 12 two-bedrooms, five three-bedrooms and one four-bedroom apartment. It would include a nearly 1,700-square-foot community space and a small office for property staff.
  • The same block would have one new four-bedroom and 15 new three-bedroom townhouses along Division and Laurens streets.
  • Another block of Division, Laurens and Roberts streets would have 19 new townhouses, including 15 two-bedrooms and four three-bedrooms.
  • And a third block, the 500 blocks of Robert and Laurens streets, would have the five renovated, historic rowhouses, plus 20 new townhouses.

The Community Builders developed the former McCulloh Homes Extension, a public housing project at 501 Dolphin St. rebranded last year as City View, and was chosen in 2018 as the developer for the 170-unit Monument East high-rises in East Baltimore. The nonprofit also developed, and now owns and manages, the Pedestal Gardens apartments in Madison Park, several blocks from its planned Marshall Gardens project.

Baltimore regularly uses PILOT agreements to entice developers to move forward with projects. Previously approved agreements have applied to the currently stalled State Center redevelopment, the Eager Square project in EBDI and a mixed-use building at 1234 McElderry St. being added as part of a broader rebuild in East Baltimore and others.

In the case of the Marriott Waterfront Hotel, its developer, the late John Paterakis, was infamously permitted to pay only $1 annually in taxes on a 25-year deal through fiscal year 2025.

Ethan McLeod
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