Thursday, May 6, 2010

How the System Rules Out Economic Recovery Solutions

My experiences as an entrepreneur, builder and developer prepare me well to provide insight into some of the problems that continue to plague our economy. As a person who loves and respects analyses and economics, and more importantly the word of God, I have discovered that many of the policies, programs and practices of our government work against freedom to pursue economic parity and financial independence for persons such as myself who remain continually locked out and counted out of the system.

Before discussing the litany of issues, impediments and roadblocks that I have experienced, I want to acknowledge the fact that my experiences could be considered anecdotal and not typical of general conditions were it not for the scarcity and rarity of African Americans involved productively in real estate development, and building and infrastructure construction.

I believe that it is time for us as a society to come up with answers to this problem of exclusion.
It is shameful that impediments come disguised as objective laws, rules and procedures. Ultimately, the rules are used to limit, negate and undermine the valid economic and profit-making activities of local community-based entrepreneurs. I have found that housing department, and the agencies for taxation and zoning which purport to support the idea of community development do in fact operate to defeat, hinder and even punish anyone who is audacious enough to use their own money to invest in communities without connections to power and/or corruption networks.

Being a community-based developer, my effort to take the initiative to buy houses in blighted areas for the purpose of redevelopment for profit have only engendered higher taxes, numerous citations, and great disdain from the powers that be.
My experiences include being denied pre-approved utility contractor status by Baltimore County in violation of its own rules and provisions, having a subdivision declared “expired” prior to its expiration date, being disqualified from doing minor subdivisions because of a general problem with sewer mains unrelated to the specific site of my subdivision, being locked out of community redevelopment programs because my company is for-profit (despite the fact that we deliver and do housing quicker at cheaper prices than nonprofits operating in the same area), being singled out for contemptuous and constant scrutiny by arrogant and ill-informed leadership in inspection departments particularly in Baltimore County, and, being denied a builders’ license for reasons that have nothing to do with the quality of my company’s work or our relationships with the consumers we serve.

I have been denied a permit for the second of two adjoining houses because the permit for the first house was illegally suspended without due process.

I have been cited for not cutting grass at building rehabilitation sites which, prior to our improvement operations, were dwellings for rats, roaches, other vermin, drug paraphernalia, and garbage. Even though these hideous conditions existed prior to our operations, citations were only deemed necessary to be given our company after we improved the area. These experiences occurred in such areas needing redevelopment as Homestead Street in East Baltimore, West Lafayette Ave, Bel Air Road (Baltimore city), Winters Lane, Windsor Mill Road, Liberty Road, St. Luke’s Lane (Baltimore County), just to name a few.

I have been cited, and have since learned also, that it is punishable to own a building that is unoccupied even while you are seeking funds to improve it. It has also come to my attention that such buildings may be confiscated by the city because you are unable to make profitable improvements. So, the city in its wisdom, gives citations for vacant properties, which it then sells for taxes, which it then adds to the thirty-thousand unoccupied, mostly boarded properties that it already expropriated and now owns.

In one day, I received a citation for not cutting the grass at two properties, and a citation for cutting the grass at a third. According to the inspector who cited the latter, his justification was that I did not have a “sediment control permit”. So here again, I learned that a person can be given a citation for both cutting grass and not cutting grass. Should he be unable to pay, the property could be sold at a tax sale.

My properties have consistently been given a higher tax assessment rate than similar properties in the same areas. Sometimes, even while our houses are still being built, without use and occupancy permits, they were assessed as though they were finished and occupied!

I have been required by agencies to follow the most cumbersome, expensive and time-consuming procedures in the course of performing regular construction and development activities. For instance, Baltimore County required that we put in a sewer main with 3 manholes rather than the normal procedure which would have been a simple connection from the existing sewer to serve one house. The sewer main is ten times more expensive and completely unnecessary for that one house which could have been served by a house connection. Sewer mains require bonding, engineering and other costs which also multiply the complexity of the process without benefits to either the County or the home owner.

In another instance, the County required that we put curb, gutter, and sidewalk for a single family house on an existing lot of record. Being an existing lot of record, the design for that lot as far as curb, gutter and sidewalk are concerned, had been completed many years ago. In this particular case, the original design did not include the construction of curb, gutter and sidewalk for the lots on that side of the street. In other words, the County required bonding, engineering, and construction expenses to create curb, gutter and sidewalk which connected to nothing in either direction. And for this, they held up the construction of this house, placed our company in severe financial straits, and caused the incompletion of a project which could have added employment and tax dollars.

These types of self-defeating rulings make worse and hinder the type of economic activity that multiplies taxes and income at the local level. The arrogance of public officials who overlook these positive impacts as they make things difficult for economic activity can no longer be tolerated.

Many Americans are beginning to see that our problems are caused by government agencies who deal with us using methods saddled with complex procedures, punitive interpretation of rules and regulations, and guidelines and laws, hence disqualifying us by systemic design while claiming objective fairness. Thus we have been excluded from participating in community development and reinvesting by various screens such as “creditworthiness” where there is no relationship between credit and productivity, “criminal history” where there is no relationship between a crime and competence, “bonding” where there is no relationship between qualifying for a bond and the capability to do the work, “insurance” where risk is allegedly minimized by credit worthiness, bonding, criminal history, productive capacity, experience etc., in other words all the screens that have eliminated the community builder, and so on.

It is ridiculous to see that the very source by which the nation’s tax base could be increased and thousands of person could be put back to work is being undermined by the very systems set up to provide it.

It is critical that local-based entrepreneurs be empowered by the system to create jobs, increase the tax base and provide a local example to youth and citizens of the power of the great multiplier that is in private enterprise. Unfortunately, instead of providing a positive, enabling environment in which small local builders and business are proactively encouraged and nurtured, the system construes rules, laws, regulations, and interpretations of regulations in manners to stifle productivity. In this context, more and more businesses are ruled out of participating in the economy, therefore jobs decrease, income decreases, the tax base decreases, home ownership decreases, deficits grow, dependency on government intervention in social services increases, hopelessness increases and the cost of government balloons.

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