August 2007 Volume 20, Number 3 The Abell Report What we think about, and what we’d like you to think about Published as a community service by The Abell Foundation The Market Is Failing Low Baltimoreans The “poverty premium” is as much as $3,000 a year in cost-of-living-- Everything from groceries, financial transaction, cars, home mortgages. Recommendations to help restore equality, and availability of goods and services. A Report by the Job Opportunities Task Force ABELL SALUTES: fter decades of decline, Balti- sumption choices, predatory business Preservation Maryland: more has taken a number of practices, and under-informed con- Apositive steps in recent years, sumers—all but assure that they’re pay- Making history a as officials and residents have pursued ing more overall. partner in economic the shared vision of a city that features These factors combine to keep fam- development strong neighborhoods and a diverse, ilies on a seemingly endless treadmill in growing economy, where families can which costs “snowball” as one extra “Historic preservation,” at least thrive and the path to upward mobility expense begets another. The inability to among many business development is well-marked and heavily traveled. pay a utility bill one day might necessi- types, has a bad name -- building-hug- But city leaders have yet to address a tate paying a fee to quickly cash a check gers lying in front of bulldozers, block- major obstacle blocking that path: low- the next, or to pay an extra hundred dol- ing progress. Preservation Maryland is wage individuals tend to pay more than lars to secure a in advance of a tax doing a lot to change that perception. their wealthier neighbors for a wide refund that might not come for another While the agency is in the business of range of goods and services, from gro- month. A family that can’t afford to buy saving buildings, it is also in the business ceries and financial transactions to cars and maintain a car must rely on public of making those same buildings impor- and home mortgages. transit; this makes conducting transac- tant factors in fostering community Over the course of a year, The Job tions too far from home time-consum- wealth; for starters, working to save the Opportunities Task Force estimates that ing and burdensome, and might lead the historic fabric of the West Side of down- low-wage Baltimoreans can pay as family to utilize higher-priced but more town as an unprecedented $1 billion has much as $3,000 more than their wealth- convenient neighborhood options. been invested within it—making history ier neighbors for equivalent goods and Consider the cost differential for a a partner in economic development. services. This “poverty premium” can range of goods and services purchased Long known as a caretaker of his- consume over 10 percent of a low-wage by two families over the course of a toric properties, the 75-year-old Preser- family’s total income. And every dollar year. The first lives in a neighborhood vation Maryland (PM) is today engaged that goes toward the poverty premium where median household income is less in broad-based strategies of grassroots is a dollar that cannot be saved or than $30,000 per year, uses a check- advocacy, outreach and funding. In 1997 invested in education, home ownership, casher, purchases a Refund Anticipation PM spearheaded the creation of the or retirement. Loan (RAL), and buys groceries at a Maryland Heritage Structure Rehabilita- The magnitude and specifics of small store nearby. The other lives in a tion Tax , which, according to these added costs vary from one low- neighborhood where median household PM, is the city’s single most effective income family to another, depending on income is over $100,000, has a check- economic incentive for preserving and whether the family owns or rents their ing account at the with a monthly rehabilitating historic structures. Over home, owns a car or relies upon public charge, does not buy a RAL, and pur- $260 million in heritage tax credits has transit, or shops for food at a neighbor- chases the same groceries at a super- been received, leveraging over $1 billion hood corner store rather than a super- market. Both are homeowners and car in investment. market. But a number of systemic fac- owners, paying back for each. To help neighborhoods enjoy access tors—neighborhoods with limited con- Using approximations and the best and continued on page 8 continued on page 2 continued from page 1 Financial Services institutions are much less concentrated National data from the Survey of in the poorest neighborhoods of the Bal- most recent data available, the table Consumer Finances suggests that indi- timore metro area than in middle- below details how much more the low- viduals in the lowest quintile of the income communities. Their absence has wage Baltimorean might pay over the income distribution are considerably left a void that check-cashers and other course of a year. less likely to have bank accounts of any higher-priced providers of financial kind (75.5 percent) than the population services have moved in to fill. The Added Costs of Poverty as a whole (91.3 percent). In informal In addition, have failed to in Baltimore focus groups we conducted for this offer tailored products and services that Expense Annual report, most participants had bank would make it worthwhile for banks and Added Cost accounts, but complaints and misunder- their potential clients to do business standings about banking services were with each other. In the financial services Check Cashing $328 common. Thus, a sizable portion even of industry, low-wage consumers are Refund Anticipation Loan $100 those who do have nominal relation- known as the “fee-driven” market. As Mortgage Payment $817 ships with mainstream financial institu- this name implies, many banks seek to Home Insurance $136 tions may be closer in attitude and com- make this segment of the market prof- Energy $222 prehension of banking services to the itable through reliance on fees that can Auto Loan $83 “unbanked” than to wealthier individu- be difficult for a consumer without a Car Insurance $424 als who hold bank accounts and avail steady income to avoid. Groceries $704 themselves of other services banks offer. This approach might strengthen the bank’s bottom line in the short term, but TOTAL POVERTY According to the 2006 Brookings it neither builds a sustainable clientele PREMIUM $2,815 Institution report “From Poverty, Opportunity,” one reason why so many nor serves those who face snowballing *Details on how these estimates were low-wage Baltimore residents pay more of costs in trying to recover from steep calculated can be found in the Appendix than their wealthier neighbors for finan- charges for overdrawn accounts, of the full JOTF report. cial transactions is that the cheaper bounced checks, and other financial mis- mainstream options, such as banks and steps. The experience of San Francisco, a What could this extra $2,800 a year unions, are simply absent from city which makes a conscious effort to buy? A more reliable car, a year of more than two-thirds of low-income connect its “unbanked” residents to tuition at Baltimore City Community neighborhoods in the Baltimore metro mainstream financial institutions College, an interest-generating invest- area. In general, mainstream financial through the Bank on San Francisco ment in retirement, or part of a down payment on a home. Having to spend these dollars on necessities that are available to wealthier individuals for less represents a powerful barrier to eco- nomic advancement. This Abell Report sets out the partic- ulars of the poverty premium in Balti- more, focusing on four main categories: financial services, home-related expens- es, automobile-related expenses, and gro- ceries. We show how much more low- wage Baltimore residents are paying in each of these areas, and explain the mix of factors that contribute to the higher prices for these items. Finally, we offer an action agenda to make the market work for all of Baltimore’s communities.

The Abell Report is published bi-monthly by The Abell Foundation 111 S. Calvert Street, 23rd Floor, Baltimore, Maryland 21202-6174 • (410) 547-1300 • Fax (410) 539-6579 Abell Reports on the Web: http://www.abell.org/publications

2 continued from page 2 even the most costly credit cards. Unfor- to prepare their own tax returns, partic- tunately, low-wage consumers often ularly as additional forms are required initiative, shows that when banks tailor have few alternatives. At some point, to file for the EITC. Most low-wage their products to the different needs and almost every family needs access to taxpayers, though, qualify for free tax expectations of this market, consumers short-term credit, whether to cover unex- preparation services; in 2007, the Balti- respond with greater demand. pected medical expenses, make ends more CASH (Creating Assets, Savings meet during a spell of unemployment, or and Hope) Campaign prepared more Alternative Providers pay for a car repair. While Maryland has than 7,200 returns free of charge at 15 The volume of business done by taken positive steps to protect consumers sites around the city. One priority for check cashers and pawnshops is from the most usurious practices, few local and state policymakers in unknown, but the concentration of these local businesses have stepped forward addressing the higher costs poorer Bal- stores in Baltimore’s low-income neigh- with competitively priced products to timoreans pay for financial services borhoods suggests that they serve a siz- serve the low-wage market. should be to broaden awareness of free able segment of the local market. These tax preparation services available for alternative providers charge more— Tax Preparation and Refund low-wage residents. often considerably more—for the same Anticipation Loans Refund Anticipation Loans are a services, but offer greater convenience, The Earned Income Tax Credit tempting option for consumers who easier access, and often a much more (EITC) is perhaps the most broadly cannot or do not want to wait for the comfortable environment for customers popular anti-poverty initiative of the IRS to send their refunds—a process who might not feel at home in banks. past 40 years, enjoying support from that typically takes less than two weeks Maryland, like most states, sets lim- both conservatives and liberals. In for those who file electronically, or six its on what check cashers can charge for 2003, nearly 167,000 Baltimore metro to eight weeks for paper filers. With a their services: the maximum allowable area residents filed for the EITC—typi- RAL, they get the money in advance rates are 3 percent of the face value of cally a payment of several thousand from the tax preparer, which then keeps government checks, 5 percent of payroll dollars that a family can put toward the IRS refund in addition to a charge checks, and 10 percent of personal home repair, a reliable car, or savings. for facilitating the loan. A RAL for checks. This means that an individual in Unfortunately, many EITC filers $3,000 might cost the borrower an Baltimore who takes home $30,000 per received less than they could have additional $100. Since the tax preparer year and chooses to cash payroll checks because they paid for tax preparation, is quickly re-paid when the refund at a check casher could pay as much as purchased a Refund Anticipation Loan arrives, the effective APR for a RAL $1,500 over the course of a year—5 per- (RAL), or both. In fact, those who file can range from 40 percent to as much cent of that total—to do so. for the EITC pay for tax preparation and as 500 percent. Nearly 42 percent of Maryland has taken several impor- purchase RALs at significantly higher local EITC filers purchased a RAL in tant steps to protect low-wage earners rates than do others. 2003, compared to less than 6 percent through regulation of the alternate finan- Low-wage taxpayers are less likely of non-EITC filers. cial services market. For-profit is illegal in the state, as are auto title loans. The state also effectively outlawed “payday lending” by setting a maximum rate of 33 percent on small loans, significantly lower than the triple- digit APRs payday lenders typically charge. There are ways around this, how- ever: some lenders charge excessive fees to make up for what they can’t charge in rates, and out-of-state businesses often ignore state interest rate caps and make illegal loans to Maryland consumers online. Furthermore, the state has not set any limits on pawnshop loans. Those who use these alternative financial services are faced with pay- ments that are commonly far higher than

3 continued from page 3 ▲ Renting Risk Baltimore’s renters have the misfor- tune of living in a city with one of the Home-Related Costs Low-wage consumers are highest eviction rates in the country. In The cost of purchasing a home has systemically disadvantaged 2000, the city’s eviction rate was a stun- spiked over the past few years. With the ning 5.81 per every 100 renters, nearly gap between home prices and at every step of this process: five times as high as New York City growing by the year, more buyers are they are less likely to have (1.26) and more than twice as high as agreeing to unconventional, often high- Philadelphia (2.74). Since landlords can interest mortgages. These higher rates relationships with main- file an eviction claim against a tenant can add up to hundreds of extra dollars each time a rent payment is late, on an each year, and tens of thousands over stream financial institutions, annual basis, there are actually more fil- the life of the loan. and what track record they ings with the rent court than there are Home Mortgage Disclosure Act renters in Baltimore. According to the data suggests an inverse relationship do have is less likely to Sherriff’s office, this unhappy trend has between mortgage purchasers’ income tell a positive story. continued, with an average of 614 evic- levels and their likelihood of obtaining a tions per month in 2006. “high-cost” . Among bor- ▼ As The Abell Foundation detailed in rowers earning less than half the median a 2003 report, the city’s high eviction income for the Baltimore area, almost the most common problems in this area, rate means great strain and cost not just 40 percent of home loans were “high including brokers pushing homeowners for renters, but for the court system and cost,” compared to less than 20 percent into refinancing low-cost mortgages the various city agencies, from the sher- of loans to households earning at least with much more expensive loans; high- iff to the Department of Public Works, 120 percent of the area median. cost loans with rates just below what is that are involved in each eviction. Multiple factors contribute to the allowed by state and federal law; and Advocates argue that the city’s eviction greater incidence of high-cost loans misrepresentation of loan terms. These process treats the court as “the collection among poorer Baltimoreans. Not sur- legal but exploitative practices have agency of first resort.” It is easier and prisingly, lower income homeowners helped drive a rash of in the cheaper to initiate eviction proceedings have higher rates of bankruptcy and city and put thousands more families at in Baltimore than in comparable cities— missed payments than do wealthier bor- risk of losing their hard-won homes. $13 to file in Baltimore City, compared rowers. Another factor here is the com- to $50 in New York and $92 in Los mon practice among lenders of relying Home Insurance Angeles at the time of the Abell report. “credit scoring.” Creditors compile Low-wage homeowners tend to pay Even when eviction is averted, the information about potential borrowers higher premiums for home insurance. proceedings can deepen the financial such as their bill-paying history, the As neighborhood incomes rise, average hole a family might find itself in. Balti- types of financial accounts they hold, rates go down. Based on a sample more offers a “right of redemption” that and their debt. reported by the Brookings Institution, a allows the renter to stay on the premises The “score” that results offers a sta- homeowner in one of Baltimore’s poor- if s/he can pay the rent and court costs tistical measure of a borrower’s credit- est neighborhoods will pay on average up until the moment of eviction, and worthiness. Unfortunately, low-wage $136 more per year to insure a compa- many families ultimately avoid eviction consumers are systemically disadvan- rable home than her counterpart in a through this contingency. But a family taged at every step of this process: they neighborhood where the median income on a limited income with no access to are less likely to have relationships with is at least three times higher. affordable short-term credit will incur mainstream financial institutions, and The explanation for these higher other high costs to come up with that what track record they do have is less home insurance premiums includes money within a short time frame. These likely to tell a positive story. Thus, they higher crime rates in those neighbor- costs often snowball to the point where frequently must pay higher rates—often hoods and the likelihood of older hous- families face an ever-steeper climb to much higher. ing stock. The data, however, is limited: build wealth and economic security. Predatory mortgage loan practices a number of companies won’t make make an already difficult environment quotes available online, and it is diffi- Utilities even tougher. An October 2006 report cult to determine which factors most Energy is a major cost for low- by the Maryland Consumer Rights directly contribute to higher premiums. income families. The Fuel Fund of Coalition (MCRC) identified some of

4 continued from page 4 loans charge average APRs ranging from 15.49 to 20.41 percent.

Average Per-Square-Foot Energy Expenditure, by Poverty Status, USA Auto Insurance Low-wage drivers face another set Energy Expenditure per Square Foot of challenges and expenses relating to car insurance. The insurance industry practice of “territorial rating”—setting Poverty Status Less than 100% Poverty $0.93 premiums based on the statistical likeli- 100-150% Poverty $0.89 hood of accidents and claims by resi- Over 150% Poverty $0.73 dents of a given area—means that Bal- timore drivers pay considerably more Source: Energy Information Administration, Office of Energy Markets and End Use, Forms EIA- 457 A-G of the 2001 Residential Energy Consumption Survey for car insurance than do other Mary- land residents. The poorest Baltimore- Maryland, a non-profit that provides Auto Prices and Auto Loans ans tend to face the highest rates of assistance for poor households in Balti- Research strongly suggests that low- all—largely regardless of their personal more and surrounding communities, wage car buyers tend to pay more for the driving histories—because some insur- estimates that low-income families pay same car than do wealthier buyers. In a ers also use credit scores as a factor in a quarter of their yearly income for 2001 study, economists Fiona Scott Mor- setting rates. energy; for middle class families, the ton, Florian Zettelmeyer and Jorge Silva- A 2003 Maryland Insurance rate is 4 percent. On a per square foot Risso concluded that a number of factors Administration comparison of premi- basis, lower-income families pay con- correlated with income—including ums offered by the state’s ten largest siderably more for energy than do their home ownership, education, and race— insurance companies found that Balti- wealthier neighbors. serve as proxies to create a premium of more City residents paid up to 60 per- The housing stock in lower-income approximately $500 more for the same cent more than those in Baltimore neighborhoods is generally older and car when sold to a lower-wage buyer County, and nearly twice as much as less likely to be winterized and energy- than a wealthier buyer. drivers in Carroll County. Looking at a efficient. According to the U.S. Depart- Low-wage individuals are also like- sample from the entire metro area, ment of Energy, only 20 percent of ly to pay more for a loan to buy their car. Brookings identified the same trend. homes built before 1980 are well insu- National data in the Brookings Institu- While the average quote for someone lated. Census data shows that houses in tion’s 2006 report found a strong inverse living in a high-income neighborhood is Baltimore’s poorest neighborhoods are linear relationship between household $520, the average quote for a demo- almost ten times more likely to have income and interest rates for auto loans. graphically similar resident of a low- been built before 1950 than those in Low-income car buyers pay an average income neighborhood is $944. higher income neighborhoods, and APR of 9.2 percent; high-income buyers In the face of these prices, many city nearly eight times less likely to have pay an average APR of 5.5 percent. drivers illegally go without insurance been built after 1980. While both the Not only do lower income auto loan and take their chances of getting caught. city and state participate in the federal purchasers pay on average a higher inter- In a 2005 report, The Abell Foundation Weatherization Assistance Program, est rate, they are far more likely to pay found that “nearly one in four drivers in resources are meager: for Fiscal Year the very highest rates. Brookings found Baltimore is uninsured.” The high fre- 2006, Baltimore City’s total allocation that in 2004, almost 40 percent of house- quency of uninsured drivers increases was less than $1 million, enough to holds with an annual income below rates for those who do have insurance. weatherize just 169 units. $30,000 had loans with an APR in the The state does offer “insurance of last top quarter of all rates. This held true for resort” through the Maryland Auto Transportation-Related 30 percent of households with income Insurance Fund (MAIF), an independent Expenses between $30,000 and $60,000, down to state agency that provides coverage to Given the limitations of public tran- just 6 percent of households with annual eligible Maryland residents who have sit in the Baltimore region, local work- income over $120,000. In many cases, been turned down by two private insur- ers are even more dependent than most consumers with the highest rates are bor- ers—whether because of a poor credit Americans on reliable cars. But data rowing through sub-prime finance com- score, bad driving history, age, or lack of indicates that lower-wage individuals panies. A 2002 analysis conducted by the experience—or canceled by one. Under tend to pay more for all manner of auto- Progressive Policy Institute found that current law, MAIF requires applicants to related costs. companies specializing in sub-prime pay the full amount of the premium

5 continued from page 5 ▲ severely low-income West Baltimore, the other a supermarket in relatively upfront; installment payments are not Per capita, there are about affluent Pikesville—Franco found that a accepted. MAIF reports that 96 percent box of cereal cost fully $1.30 more in of its current policies are paid for with three times as many super- the poorer neighborhood, and a half- financing from lenders who charge up to markets in the wealthier gallon of milk cost $0.81 more. This is 30 percent per year. neighborhoods of the fairly typical of a small Baltimore City store—as is the far more limited variety Groceries and Food Costs county. The distinction available. Franco’s research finds that The cost and quality of what’s eaten is doubly important because typical convenience or grocery stores in in low-income neighborhoods should be research consistently has the city generally will sell a few staples major issues for any policymaker who is and a variety of junk food, but few serious about addressing the causes and shown that larger stores healthy options—no fresh fruit or veg- consequences of poverty. Because full- generally charge lower etables, and no whole-wheat, low-fat, service, high-quality supermarkets are prices and offer a wider low-sugar, or low-sodium options. fewer and father between in poor neigh- When healthy items are available they borhoods, residents are far less likely to variety of products, are often of lower quality. have easy access to fresh, nutritious including healthy options. One reason supermarkets are less food. And because other options aren’t common in lower income communities present, they often pay more for the ▼ is the perception that these neighbor- unhealthy foods that are available. hoods cannot support large-volume Shoppers must either settle for more In other words, size matters here. food sellers. But Social Compact, a expensive and less nutritious food near- The Brookings Institution’s 2006 report national coalition of business leaders by, or spend time and effort getting to a “From Poverty, Opportunity” found that who advocate for business investment supermarket farther away. nationwide, the average grocery store in in lower income communities, argues Baltimore is no exception to this a low-income neighborhood is less than that traditional methods of measuring national trend. Low-income neighbor- half the size of the average grocery store demand fail to capture the true level of hoods have small grocery and conven- in a wealthier neighborhood. Looking at purchasing power in those communi- ience stores, while supermarkets are 132 food products sold at over 3,000 ties. The group is now advising Balti- fewer and farther between. In his grocery stores across the country, more Development Corporation offi- research at the Johns Hopkins Brookings found that two-thirds cost cials to help the city refine its pitch to Bloomberg School of Public Health, more in smaller stores, including a retailers who might underestimate the doctoral candidate Manuel Franco, MD dozen eggs at an average of 14 cents purchasing power of inner-city commu- compares food-selling establishments in more and a six-ounce can of tuna at 78 nities. Baltimore City and County. Surveying cents more. 226 food stores in 106 local neighbor- While these price differences for Health Costs and Consequences hoods, he found that in low-income specific items might sound small, they In recent years, public health advo- areas, 89 percent were either grocery, can add up fast. A conservative USDA cates have documented the higher inci- convenience, or behind-the-glass stores estimate finds that small stores of the dence of obesity and related health with a limited range of products (no type far more common in low-income problems in communities that lack easy fresh fruits or vegetables, no skim neighborhoods charge on average 10 access to nutritious foods. The Food milk), and just 11 percent were super- percent more than supermarkets. At that Trust, a nonprofit that advocates for uni- markets. In higher-income neighbor- rate, if a family pays $500 a month for versal access to affordable and nutri- hoods, by contrast, 42 percent of the groceries at a supermarket, the same tious food, explored this relationship establishments were supermarkets. goods purchased at a convenience store among poor neighborhoods in Philadel- Per capita, there are about three would cost $50 more. Over the course phia. They found that approximately times as many supermarkets in the of a year, the family would spend $600 one in four adults in Philadelphia who wealthier neighborhoods of the county. more for the exact same items. reported fair or poor health had trouble The distinction is doubly important Based on our research and the data obtaining fresh fruits and vegetables in because research consistently has shown collected by Dr. Franco, the higher their neighborhoods; this was true of that larger stores generally charge lower prices seen nationwide hold true for only 9 percent of adults who described prices and offer a wider variety of prod- Baltimore. For example, in two Balti- their health as excellent or good. In ucts, including healthy options. more area stores—one a grocery store in Chicago, researcher Mari Gallagher

6 continued from page 6 • Enact a “Security in the Home” • Raise the level of financial litera- measure to slow down the evic- cy in Baltimore. found that residents in “food deserts”— tion process for renters and give can be incorporated into the sec- communities where fast food and con- more tools to homeowners at risk ondary school curriculum in Balti- venience stores are plentiful, but of . To reduce the evic- more’s public schools, and should healthy food options are nearly nonex- tion rate, the Baltimore City Coun- be a component of all workforce istent—were much more likely to die cil should require landlords to pres- development and social service early and suffer from diabetes, obesity, ent delinquent renters a formal “pay programming. Financial institu- and high blood pressure. or quit” notice advising them of the tions, mainstream and not, should Here again, families suffer a cumu- amount due and final date for pay- also join the effort to link people to lative effect: without easy access to less ment, before eviction proceedings local financial literacy resources. expensive and more nutritious food, begin. Measures to address the high consumers pay more and eat worse. incidence of foreclosure should • Help connect residents of low- Poor diets often lead to serious health include counseling, refinancing income neighborhoods to lower consequences, creating a new category options, an emergency zero-interest cost, healthier food. Through the of medical expenses and damaging loan pool, and redress for those fac- Baltimore Supermarket Initiative, prospects of advancing to a better job. Public officials and advocates need to ing foreclosure as a result of the city already has taken an impor- work with community-based and faith- exploitative mortgage terms. tant step toward increasing access based organizations to broaden public to lower cost, healthier food. The knowledge of the health consequences • Make auto insurance universal in next step should be to work with of poor diets, and to find better alterna- Maryland. Legislators should con- smaller stores interested in selling tives for those stuck in Baltimore’s sider working with private insurers produce and fresh products, “food deserts.” to offer an affordable product—as through technical assistance and California has done through its Low- small subsidies. Actions to Reduce the Poverty Cost Automobile Insurance Pro- Premium in Baltimore gram—and giving Maryland Auto For Baltimore to retain its historical Making the market work better for Insurance Fund purchasers a wider identity as a place where working-class low-wage consumers will not be easy, range of payment options by chang- and middle-class families can prosper, but improvement is possible. Policy- ing the current requirement that they city leaders must contend with the makers can take some of the following pay their premiums upfront. poverty premium and take action to steps almost immediately, through legis- restore equity in prices and availability lation or executive order; others will • Work with financial institutions of goods and services. We believe that require more systemic changes that ulti- to reach out to low-wage cus- by taking these steps, Baltimore will be mately help consumers make better tomers, and develop banking well on its way to doing just that. informed, more cost-effective decisions. products that meet the needs of those consumers. Low-wage Balti- About the Report • Enforce the state lending laws to moreans are far less likely to have This full report of “The Market limit interest rates on Refund savings or checking accounts or use Is Failing Low Wage Baltimoreans” Anticipation Loans, and strength- other banking products than their will be released by the Job Opportu- en the predatory mortgage loan wealthier neighbors. Fortunately, nities Task Force in Fall 2007. It law. Local consumers often avail models exist for closing this gap, will be available at www.jotf.org. themselves of high cost but unnec- most prominently Bank on San The mission of JOTF is to develop essary services such as Refund Francisco. Political and business and advocate policies and programs Anticipation Loans (RALs), and to increase the skills, job opportuni- leaders should make a similar com- unwittingly enter into exploitative ties, and incomes of low-skill, low mitment to reach out to Baltimore’s mortgages that place them at high income workers and job seekers. “unbanked,” matched by banks risk of foreclosure. Enforcing the Andrea Payne was the primary offering no- or minimal-balance state’s existing laws and strengthen- researcher for the report, which was accounts, reasonably priced short- ing the law to written by David Jason Fischer. prohibit some of the more egregious term loans, and other products that practices would provide consumers address the most common needs of with much-needed protection. the low-wage market. continued on page 8

7 continued from page 7 ABELL SALUTES Continued from page 1 to this program, PM and Maryland His- toric significance that were required to Promising Practices torical Trust with a seed grant of be preserved and encouraged protection for Reducing the $25,000 from The Abell Foundation, of other buildings affected by the plan. Poverty Premium created the Historic Communities Directly across the street from the Investment Fund (HCIF). HCIF provid- Hippodrome Theater, the neighbor- In researching this report, we ed funding to help communities nomi- hood’s crown jewel, is the mixed-use identified promising practices in nate districts to the National Register of Centerpoint project developed by Bank Baltimore and around the country Historic Places. Once these districts are of America. The redevelopment project to reduce prices and provide alter- successfully registered, the houses and boasts 370 apartments and 60,000 natives for low-wage consumers. structures within the districts are eligi- square feet of retail space including a Among the best models are: ble for the state tax credits, local prop- locally owned restaurant, Maggie erty tax relief and in some cases federal Moore’s, and a Starbucks. The majority • Bank on San Francisco historic tax credits—drawing revitaliza- of the 17 buildings that comprise Cen- tion funding. terpoint are historic buildings that were • Alternatives Federal The results are dramatic. Real estate originally slated for demolition under Credit Union values for the Reservoir Hill neighbor- the West Side Master Plan. As a result • Advance hood, for example, have nearly doubled of preservation-based strategies, his- Loan Program since 2002. Over its five-year span from toric buildings have new life, the com- 2000 to 2005, HCIF funded nominations munity is growing, and Baltimore • Foreclosure Assistance: of seventeen historic districts in Balti- serves as a national model. “Every Minute Counts” more City. Baltimore City now has over These Baltimore success stories are Hotline & Baltimore HELP 46,000 houses and commercial buildings the result of partnerships. One of • Neighborhood Housing that are eligible to access the benefits of Preservation Maryland’s key strengths Services Refinance Loan the Heritage Tax Credit program, in is its ability to build coalitions which neighborhoods including Reservoir Hill, bring a variety of perspectives, needs, • Vehicles for Change Patterson Park, and Hampden. and leverage to any given issue. These • California Low-Cost Auto- Despite the documented success of partnerships were called on this year to mobile Insurance Program historic preservation as a revitalization help save the state Heritage Tax Credit, and economic development tool, historic which was due to expire in 2008 and to • Baltimore Supermarket treasures continue to be threatened. Bal- eliminate a legislative cap on commer- Initiative timore, so rich in historic buildings, cial tax credit awards to any single juris- • The Food Trust’s Healthy nearly faced an unprecedented loss: the diction. In 2006, this limitation had pre- Corner Store Initiative 1998 West Side Master Plan slated the vented 30 Baltimore City commercial demolition of 150 historic buildings. projects from receiving the remaining Details on the goals and The plan threatened not only cherished $10 million after tax credits were equi- impact of these programs can be structures but also local businesses and tably distributed around the state. These found in the full JOTF report. the community itself. PM partnered lost opportunities for Baltimore also with Baltimore Heritage, campaigning ultimately meant lost revenue for the successfully to use preservation-based state. As a result of advocacy from PM revitalization instead of demolition. and many partners, the Heritage Tax Using a combination consisting of Credit has been extended for two years “The Market Is Failing an alternate proposal highlighting the to 2010 and the cap was eased to allow Low Wage Baltimoreans” benefits of federal and state tax credits, Baltimore commercial projects to is available on grass roots advocacy, lobbying, a docu- receive up to 75 percent of the tax cred- The Abell Foundation’s website at mentary short, and a National Register its available statewide. www.abell.org or: write to for Historic Places nomination, Preser- The Abell Foundation salutes The Abell Foundation, vation Maryland successfully chal- Preservation Maryland and its executive 111 S. Calvert Street, 23rd Floor, lenged the demolition plan. A Memo- director, Tyler Gearhart, for their role in Baltimore, MD 21202 randum of Understanding between the making history a vital part of economic city and PM identified buildings of his- development.

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