A new fixed pricing program is helping the city of Baltimore, Md., sell vacant city properties in a time-efficient manner.

When the city decided to investigate what might be slowing down their previous process, it was discovered that the city was spending a lot of time in negotiation with developers. Developers would complain they were unaware of the price upfront or the length of time the process would take.

The city’s goal was to get the homes renovated and back into productive use, not to make as much money as possible, so spending a large amount of time negotiating the price was counterproductive. Baltimore officials sought advice from other municipalities and did research on programs that either had up-front pricing or a fixed price system and then created their fixed pricing program from the research. The city’s new system also helped improve and streamline the purchase process to ensure it was faster and more equitable.

City staffers, together with key agencies and stakeholders, spent a couple of years coming up with ideas and developing the best process. After discussion regarding what people were looking for and what the previous problematic issues were, the city started to write the fixed pricing program policy. According to Kate Edwards, deputy commissioner of the development division, the new policy was circled back to the same group for feedback. It was then posted online for approximately a year to receive public commentary.

After responding to comments and incorporating some of the suggestions into the policy, an updated policy was posted online for another 30 days. The finalized policy was then taken to the board of estimates for approval, and the fixed pricing program was implemented and launched in March.

Meanwhile, city staff members were undergoing a great deal of training. Internal standards and procedures for the new policy had to be written and employees trained on them prior to implementation. A new computer system with workflow software was another improvement included as part of the new policy, and they had to undergo training on that as well.

For example, previous applications were all filled out on paper. All applications now had to be transferred to a digital format and posted online.

“When we initially launched, we had a 90-day period just for city residents who wanted to purchase a vacant home as their primary residence,” Edwards said. “We got like 1,200 applications, maybe 800 in the first day. We didn’t realize it would get so much press and attention.”

While it was significantly more interest than the city was anticipating, staff also quickly realized many of the applications did not fit the criteria for the first 90 days. Another hurdle to overcome was that some applications did not include the necessary financial information.

Once the 90-day period was complete, Baltimore had received a total of 1,675 applications. Of those, 1,200 actually wanted to purchase a property as a homeowner, but only 363 of the applicants were city residents.

Of the city residents, there were only 77 applications properly completed and able to move forward for review. Some of these did not wish to use the home as their primary residence, and 49 did not have the necessary finances to rehab the vacant home. Five applicants ultimately qualified and three are moving forward with the process. The city began accepting all applications on July 1.

In order to qualify, the property must be a vacant building owned by the city and listed as available on the website. It has to be located in a specific area of the housing market; an area considered to be a stressed housing area. The property or lot must be used as residential, mixed-use with residential or green space. It cannot be identified as a part of an upcoming development project. The individual must have the financing available to rehab the vacant home, which in this case is a minimum of $90,000, which can be financed. He or she cannot have any other vacant properties that have had permits pulled or buildings that have been vacant for more than two years.

The pricing system is based on both the purchaser and the property. For homeowners wishing to use the home as their primary residence, the purchase price is $1. The homeowner must then maintain the home as their primary residence for a minimum of five years.

For a nonprofit organization, the cost is $1,000. A for-profit business is then charged $3,000. There are also different prices for vacant lots, but if the property is assessed for over $100,000 then it does not qualify as part of the program.

When an individual or business qualifies for the fixed pricing program, they enter a standard land disposition agreement with the city that the rehab of the property will be completed within 12 months. Specific milestones within that 12 months must also be reached, such as when permits should be pulled and the like.

An individual can only purchase up to 12 properties through the program. However, individuals or businesses looking to purchase larger properties or bundles of properties for commercial developments or subdivisions can go through the request-for-proposals process.

For other cities considering implementing a similar fixed-price policy, Edwards suggested, “I think the community outreach portion and getting the word out is really important. Do the work ahead of time and continue throughout the process with the outreach, and work with your elected officials and community representatives.”

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