Madeira Street turnaround shows 'any place can be good'

Baltimore Sun
By Natalie Sherman

On Madeira Street last Thursday, tidy trash cans lined the curb in front of clean brick rowhouses with matching exterior lights. Christmas decorations already framed one doorway.

Boarded-up homes still pockmark the streets around Madeira, but residents say their narrow alleyway, tucked between Orleans and Fayette streets in East Baltimore, is nearly unrecognizable from just a few years ago, when trees sprouted through empty buildings, drug activity filled a corner lot and few lived there aside from stray cats.

"When we moved here, there were only five people living on this block," said Bryan Braham, 37, who started renting in the 200 block of N. Madeira St. in February 2013. "I'm happy. ... In less than two years, it's a big turnaround.
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Many credit the shift to Diana Torruella Gaines, a self-described stay-at-home mother from Hunt Valley who bought six homes in the block in 2011 through the city's Vacants to Value program, planning to rehab and sell them to immigrants. She has since invested well over $1 million in properties on the street, rehabbing nine homes and creating a small parking lot through her Tu Casa Development Group. She sold her first house in 2012 and expects settlement on her final one there for $192,500 this week.

"Diana's the one that made the change," said Roxann Ravenscroft, 57, whose family has lived on the block since her father moved there from West Virginia in the 1960s. "If it wasn't for her, this neighborhood wouldn't look the way it does."

Gaines is different from many developers. For starters, she's a woman. Despite a career as a commercial lender, she had no experience in urban rehab projects. She drew on some $750,000 in savings for the project as well as money invested by her husband's HighBank Advisors LLC investment firm.

That capital was key to her success, allowing her to take advantage of the "whole-block" strategy favored by the city, which tries to build momentum by concentrating investment. Gaines said she sells the redeveloped "affordable luxury" homes with profit margins of 15 percent to 20 percent.

"For me, it's not about the money," said Gaines, 52, who grew up in Puerto Rico, graduated from Duke University, worked for the former Equitable Bank and GE Capital, and took 12 years off to care for her three sons before starting Tu Casa Development. "I get a lot of satisfaction knowing that my efforts have permanently improved the Baltimore City landscape."

But if Gaines made Madeira happen, people also said the street's transformation contains ingredients found in small-scale improvements happening elsewhere: neighborhood buy-in; high-quality homes priced to sell thanks to city and other incentives; and location — in this case, proximity to Johns Hopkins Hospital, a major city employer with a new commitment to improving its host communities.

"I say East Baltimore is transformed," said Tevin Jones, 23, who grew up in the area. "They're taking over. They're making it better."

On Madeira, Gaines' team stripped Formstone from the brick exteriors and gutted the insides, digging to create 7-foot ceilings for the basements, and installing modern kitchens, hardwood floors and roof decks. They fashioned flower boxes on the sides of front steps. Even before work got underway, Gaines directed the team to hang Christmas wreaths on the boarded-up windows.

"I think Mrs. Gaines did a good job of making people feel comfortable with the project," said Kevin Butler, who works as Gaines' contractor and also does his own development in the city. "So many developers come along, and start and stop. … A lot of times, the residents don't believe in what you're doing until they see it."

Once residents saw Gaines' commitment, they said they pressured drug dealers to move elsewhere.

"By her improving the block and the area, it made the other people get on board," said Lois Ward, 59, who started renting on the street in 2006. "It's a good thing that this happened. To me, it let people know any place can be good."

Gaines said she faced a steep learning curve when it came to city bureaucracy. She missed out on a chance to secure historic tax credits for her first four homes. She was fined $500 — waived because the inspector failed to appear in court — after neglecting to register vacant property, as is required by the city each year.

But she learned, prodding the city to repave the street and replace sidewalks, and pushing for grants to improve the homes of existing residents.

"Where there's been private disinvestment and the vacants ... there's been public disinvestment that has at least paralleled it," said Julia Day, deputy commissioner of Baltimore Housing. "Diana is very assertive and very focused on what her needs are, so she was able to really identify them quickly, and we were able to help."

In some ways, success made Gaines' job more difficult. The cost of rowhouse shells on the block jumped from $2,000 to $33,000, as other investors bid up prices at receivership auctions. Gaines spent $35,000 to buy her final rehab — located between two of her other properties — which means she will just break even.

"I felt a moral obligation to the people on either side of this wall. … I didn't want to take a chance that the house wasn't done to the same standards," Gaines said.

Gaines did not sell homes to immigrants, as she initially planned, because they often can't get financing for a mortgage, she said. But most of her buyers are young people eager to experience urban life and betting that the neighborhood will get better.

"It was a good investment opportunity for me," said Patrick Sheridan, 24, a first-time homebuyer who paid about $150,000 for a two-bedroom, 1.5-bath home at the end of August. "I think the neighborhood is really coming around. I think everybody around here knows that, and especially everyone on the street. If you talk to me in five years, I think it will be just like Butchers Hill."