There’s no one-size-fits-all solution for when a city contains more than 13,000 vacant homes and some 20,000 empty lots.
Instead, Baltimore’s vast vacant housing landscape has ushered in waves of new ideas — and people, all hoping to slice off a piece of the pie.
WaterBottle, a worker-owned cooperative, is one such example. It includes a property management division and construction service under its umbrella and spreads control of the operation among its employees, with no formal hierarchy and a one-person, one-vote system of governance. It owns 22 properties in West Baltimore, where it’s restoring dilapidated buildings and renting them out with first dibs offered to the workers.
Most of the co-op members — carpenters, builders, project managers and general contractors among them — come from nontraditional backgrounds. Some fell into the work after previously being incarcerated and encountering difficulty landing employment. Many are recovering from substance use disorder and saw their personal stories reflected in the act of rehabilitation work. And others have immigrated to the U.S. and need not only jobs but safe and affordable housing. The business has about 30 employees.
“This is a low barrier to entry business,” said David Lidz, CEO of the construction arm and real estate asset manager for the property management service. “Guys come out of jail and rehab, and once they get stabilized, we can offer them a job.
“For those with a shady past,” he added, “it’s a good industry.”
The journey to this point has been long and twisty.
Lidz, in recovery for alcohol use, got sober in 2002 and found few opportunities he could apply for due to his court record. He found some odd jobs that would pay the bills — changing doorknobs, cutting grass, or what he likes to call “maintaining the foreclosure stock.”
Around the time of the 2008 recession, he and others began toying with the idea of an enterprise that combined sober houses with construction jobs. He later founded a construction company, Appalachian Field Services, LLC, which renovated and rehabbed vacant homes for corporate and government lenders, including Fannie Mae, Freddie Mac and the Federal Housing Administration, and trained people who used to be incarcerated or who were in recovery from substance use disorder.
But a gulf existed between the company and its clients, whom Lidz perceived as getting bailed out from a crisis of their own making while profiting off the company’s labor in distressed neighborhoods.
“We decided there was something not cool going on,” he said.
By the late 2010s, Lidz decided it was time to try and flip the script. With a worker-owned cooperative model, he said, workers would have full control over the direction, finances and mission of the company, and they would no longer be beholden to one manager or a group of faraway shareholders. The group could decide how much to pay in wages, for example, or what to do with surplus cash at the end of the year.
The business structure is complex, but that’s partially due to Maryland lacking a worker cooperative statute. In testimony delivered earlier this year to state lawmakers, Lidz said the group has spent thousands of dollars in legal fees in an effort to streamline the business, particularly how it handles tax filings, and they have struggled to find insurers who understand the model.
But Lidz can slowly feel the tides starting to change. State legislators considered a bill in Annapolis this year that would have created a legal and regulatory system for limited worker cooperative associations. Though it did not pass, Lidz said its introduction alone signals the growing momentum behind social enterprises, or for-profit businesses with social justice missions and democratic governance systems.
Much of their funding has come via the Baltimore Roundtable for Economic Democracy, or BRED, the city-based member of a national community development financial institution called Seed Commons which works with several worker cooperatives in Maryland to provide money and technical assistance. Their members include Baltimore staples like Red Emma’s, Taharka Brothers and, before it shuttered last year, Joe Squared. BRED has directed about $5 million to the WaterBottle co-op since at least 2019.
Financing is generally the chief barrier in the way of co-ops’ success, said Christa Daring, BRED’s executive director. Loans often require guarantors, which cooperatives don’t always have; they tend to be structured in a way that mitigates one person from shouldering full responsibility. And as a lender, BRED usually refrains from checking credit scores or requiring loan repayment until a co-op is profitable.
“We don’t want a business to decide between payroll and debt,” Daring said.
Despite a lot of “bleeding and suffering,” as Lidz says, the company has never missed payroll. And that’s despite the coronavirus pandemic’s effect on mortgage interest rates, construction materials and labor shortfalls.
Now, after refinancing and reallocating their $5 million, the company has created about 30 jobs that pay from $18 to $48 an hour, and they’ve been able to return nearly two dozen vacant and blighted properties back into productive use.
They’ve also gotten to know some of their neighbors in West Baltimore, said Phillip Clyde, a carpenter and co-op member. Sometimes, they will mow an extra lawn or help someone out with repairs for free, Clyde said, and it helps restore hope.
His apprentice, Erik Gates, said he came to the co-op after years in and out of the prison system due to the influence of drugs and alcohol. Now sober, Gates said the work has restored his purpose.
“I have learned and grown so much,” Gates said. “It gives us something to look forward to.”
Lidz said many of the properties are acquired at tax sale auction, which allows the group to purchase a number of houses at below-market values. The more distressed the home, the cheaper it tends to be — but they must weigh that against the salvaging costs, which can be steep.
He hopes more grant funding will be made available to help the group close the appraisal gaps, or the difference between rehabilitation costs and a home’s market value. The more money they bring in, the more affordable pricing they can offer.
After being revitalized, a typical three-story, two-bedroom property is renting now for an average of nearly $1,500 a month in West Baltimore, and most of the organization’s tenants are women of color with children. The best they can do to mitigate the high rent costs is disregard an applicant’s credit score, Lidz said. Eventually, they want to invite the tenants into the co-op and give them voting power.
He’s proud that, even at the group’s lowest points, the mission has not changed.
“This model could be replicated,” Lidz said. “We’re revitalizing, without pushing people out, without gentrifying.”
This story has been updated to reflect more accurate totals for the number of properties owned by the co-op, its hourly wages, monthly rent charged and number of employees.
