Chelly Curtis played by the rules of the American Dream: she squirreled away six months worth of living expenses in an emergency account, saved every spare penny to buy a house, and dreamed of growing her Black family’s wealth through home equity.

But this winter, the notice came anyway: her home was due to be listed on this year’s Baltimore City’s tax sale list. The pandemic decimated her daycare business’ bottom line. She’d accrued nearly $7,000 in unpaid bills and taxes.

“I never expected to be in this position. I never expected to go through this in my life,” Curtis said. “You can be on top of the world one day and lose everything in a day.”

The tax sale is an annual event in which Baltimore recovers unpaid property debts by auctioning them off to third parties. Owner-occupied properties end up on the list for liens of $750 or more, while non-owner occupied properties need accrue $250. The sale provides the city with an immediate influx of cash: last year, it netted Baltimore $15.2 million, a figure that is less than a half a percent of the city’s $3.2 billion 2020 budget.

The investors who buy those liens may charge debtors like Curtis up to 12% interest, a process that housing advocates say enables wealthy, out-of-state investors to make money off of Baltimore’s most vulnerable residents. If residents can’t pay, investors can foreclose on their homes.

Mayor Brandon Scott said in March that he has directed the Department of Finance “to use every tool and resource available to us to make sure that no one loses their home to tax sale in the midst of this pandemic.” But data from early April shows that 3,190 owner-occupied properties remain on the tax sale list, which is slated for May 17. Friday is the last day homeowners can provide payment to remove themselves from the list.

Scott did not respond to repeated requests for comment for this story.

Housing advocates say that auctioning property liens off over unpaid taxes, bills and fines widens racial and economic inequities — and that leaving those on the tax sale in limbo is cruel. The crisis of the pandemic calls for cancelling or seriously reforming the practice of tax sale, they say.

“My Home Is My Key To The American Dream”

A native Baltimorean raised partially in foster care, Curtis heard time and time again that home ownership was a path to middle class stability. Along with her husband, she scrimped and saved for a down payment, and in 2015 the couple purchased a 1,500 sq. foot home in West Forest Park.

A few years later, Curtis’ husband suddenly died. Now, she was without his second stream of income that allowed her to pay down her mortgage. Curtis, a 39-year-old with a quiet, radiant smile, had already identified a need in her neighborhood for safe, reliable childcare. She decided to transform her white, 3-bedroom house into a daycare.

“It's like he left me with a gift,” Curtis said. “So even though he's gone, I'm able to make money in my home that has protected me during a pandemic. My home is my key to the American Dream.”

Her home’s ground level floor resembles a classroom: posters that list the names of colors and shapes adorn the walls, while cubbies holding blankets, books and princess costumes stand guard by the entrance. The kitchen fridge is packed with fruit cups and milk cartons; the former living room now holds toddler-sized tables and chairs. Curtis has only two spaces for herself: a bedroom and a backyard patio. She calls the latter her sanctuary, where she can decompress from a day of wrangling kids.

In order to make childcare accessible to low-income families in her neighborhood, Curtis decided to charge parents below-market rates: $175 per week for kids above the age of two and $190 for ages below. As her business slowly took off, Curtis successfully convinced drug dealers who operated on her corner to move elsewhere.

“I said to the guys, ‘Don't do that here, there are children here. Would you want your children subject to that?’” she recalled. “And those same guys came back months later and said, ‘What did you do to this corner? You cleaned it up, your grass looks like golf course grass.’ ”

At her business’s peak, Curtis employed three childcare workers to care for 15 children, who arrived at the home in staggered waves each weekday. Life moved along at a pleasant clip: she paid her bills, put money toward her emergency savings account and often lent neighbors money. She helped make tuition payments for her two stepchildren, who primarily live with their paternal grandparents.

Then, the pandemic hit. A large majority of the parents she served lost their service industry jobs. Within a matter of weeks, the daycare’s clientele dropped to three kids. Operating at a loss, she laid off her employees and considered shutting down the daycare altogether. But the few still in her care were children of essential workers.

“I was like, wait a minute, I can't stop their child care now. They need me more,” she said. “I let it stay open for the pennies that they paid.”

In the year that followed, some former clients returned to the daycare, happily touting new service industry jobs. But fluctuating restrictions at bars and restaurants, set by former Mayor Jack Young and then Mayor Scott, made those jobs anything but stable. Clients would jubilantly return their children to the daycare after landing new gigs, only to pull them back out days later.

All the while, Curtis’ bills piled up: $3,100 in annual property taxes — a figure that she finds ludicrous, since it’s twice as high as her next door neighbor’s — and high utility bills after a particularly harsh winter overwhelmed both her emergency savings account and a series of stimulus checks.

“I had six months of bills saved up,” Curtis said. “I felt safe and I felt secure in my finances. 14 months into a pandemic, what did that six months do?”

Who does the Baltimore City tax sale affect?

Properties wind up on the tax sale list for a variety of reasons, including environmental citations, unpaid utility bills and unpaid property taxes. Historically, Black neighborhoods have higher property taxes than white neighborhoods.

Black Baltimoreans are often overtaxed because their homes are unfairly appraised, which may drain a family’s wealth while making them more vulnerable to tax delinquency, said Jaime Lee, a University of Baltimore law professor and the director of Community Development Clinic.

Baltimore City does not track the demographics of those on the sale list, but data collected by the Pro Bono Resource Center and Maryland Volunteer Lawyers Service, organizations that provide legal counsel for those facing tax sale, paint a bleak picture of inequity.

Of those who attended the nonprofits’ 2020 tax sale clinics, 72% were seniors, 48% were disabled and 85% were Black. Nearly three-fourths reported annual household incomes of less than $30,000. Attendees owned their homes for an average of 24 years; nearly 75% of them did not have a mortgage.

Attendees also struggled with cloudy titles: 13% did not have the title to the home in which they live. In nearly all their cases, the legal owner of their home had died and liens still attached to the home prevented heirs from recording a new deed. Properties are disproportionately located in the Black Butterfly: segregated Black communities that fan across East and West Baltimore.

The tax sale systemically devastates communities and strips wealth from Black families — the same families whose elders were forced to grapple with redlining, blockbusting and discriminatory lending, said Nneka N’namdi, the founder of Fight Blight Bmore.

“You can't have equity while you have a practice in your city that is going to steal people's equity,” she said. “In these hot real estate markets, investors see an elderly Black homeowner on a fixed income and their home looks like an easy picking.”

To Curtis, homeownership “as an African-American means more. … It gives you some power.”

She pointed to studies that show that white families have nearly ten times the amount of wealth than Black families. “Being able to leave something to [my stepkids] so that they can have it easier and not have to fight for everything” is a driving force in her life, she said.

Curtis’ debt will be paid down to just under $750 by the Stop Oppressive Seizures Fund, a program created by N’namdi of Fight Blight Bmore and John Kern of the Maryland Volunteer Lawyers Service, that distributes money to homeowners at risk of losing their properties through tax sale.

For Curtis — a person who opened her daycare with the intent of filling a desperate neighborhood need — the SOS fund’s “lifesaving” assistance is almost beyond belief.

“I am amazed by that, because I never I never thought anyone could come to my rescue. I was the rescuer,” she said. “It helps me to know that there are resources and that there is someone out there, though it’s not my city.”

Curtis first learned she was slated for tax sale after a call from Kern, the Advance Planning Project Coordinator at MVLS. That’s common, he said: the city is supposed to notify people by phone and by mail that their properties are on the list, but most people who receive outreach from housing advocates are unaware of their status.

“You lost your whole house for potentially $750”

The city’s finance department directs people to MVLS on its website — but the demand for pro bono tax sale services vastly exceeds the nonprofit’s resources, Kern said.

For those advocates were unable to assist, navigating the tax sale system is an enormous challenge, said Lee, the University of Baltimore law. It’s “nearly impossible” for the average homeowner to deduce it without the aid of a lawyer, she said.

Maryland property owners must pay their property taxes by July 1 each year. They’re considered delinquent if they don’t pay by Oct. 1, or if they’re on an annual payment plan, they’re considered delinquent if they don’t pay the first installment by Oct. 1 and the second installment by Jan. 1.

At least 30 days before properties are advertised for the sale, usually in February, the city mails a final bill and notice to each delinquent property owner that lists their debts and the deadline to pay up to avoid ending up on the list. A second reminder is sent out in April.

On the day of the sale, pre-registered investors bid on various properties. They pay the lien amounts owed and in turn receive the right to recover payment with interest and legal fees.

And once a tax lien has been sold, things only get more complicated, said Emily Poor, a clinical teaching fellow in the Civil Advocacy Clinic at the University of Baltimore School of Law. She previously worked as an attorney for the Pro Bono Resource Center. “It's like rolling down a hill, just getting faster and faster and faster because every step of the way, the additional fees get added.”

A $1,000 delinquency can morph into $3,330 in just a year, thanks to $330 in interest and $2,000 in accumulated legal fees — the standard cost of tax attorney services, she said,

If a homeowner fails to make payments to their new debtors, those debtors can force a foreclosure lawsuit. And unlike a mortgage foreclosure, in which banks sell a home and must give former deed holders surplus from the sale, debtors are not obligated to pass along equity.

“They get full title, so they can still foreclose and then they become the only owner of the house and you lose any equity you have,” Poor said. “There is nothing preserved. You lost your whole house for potentially $750.”

That’s especially sinister when you consider that the large majority of owner-occupied properties have already been paid off, she said.

There are fleeting exceptions, Poor added, when former deed holders are entitled to surpluses, “but that's not going to be anywhere near what they should be. It’s still a huge loss of equity.”

Then there’s the issue of properties that errantly ended up on the tax sale list. One notable mistake led to Camden Yards and M&T Bank Stadiums being placed on the tax sale list in 2017. City officials attributed the error to a breakdown in communication between utility agencies and the Maryland Stadium Authority. Homeowners who are mistakenly put on the list are nevertheless often forced to shell out for lawyers, Lee said.

Confronted with the mounting costs of navigating the tax sale, some families become overwhelmed and simply move out of their homes, even if there isn’t a foreclosure, N’namdi said.

“It makes people sick emotionally, physically, financially,” she said.

That same anxiety weighed heavily on Curtis. After learning her home was slated for the list, she lost 60 pounds over three months. “I thought I was dying,” she said. Her doctor ran several tests and chalked it up to stress.

“This has drastically affected me in so many ways. This isn't just finances, it affects everything,” Curtis said.

N’namdi recalled a family of clients she assisted last year: a married couple in their 80s who lived with their 40-something daughter and her teenage granddaughter. The couple eventually lost their home, where they had lived for 30 years, through the tax sale.

The loss was multifaceted: the family lost a sense of stability and wellness, and their neighborhood lost a crucial pair of elders. Trauma rippled through the entire community.

“It is a shock to the root of a person, to the family and the community to have people displaced yet again as a result of public policy,” N’namdi said.

“A vicious cycle of vacants”

In 2020, the city offered $81,952,980 in liens to investors. Baltimore sold 18.6% of those debts. The liens that went unsold are what N’namdi calls the poorest quality debt — the debt attached to vacant homes or lots that’s far less likely to be paid back than that of owner-occupied properties.

A husk of a building at 302 N. Carrollton — trees poke out of some of its boarded up windows — is on this year’s sale. The 3,000 square ft. building is assessed at $6,000, with yearly property taxes of $120. It has $725 in liens.

The building is what housing advocates call a zombie property: it’s owned by a defunct LLC, registered to a man who passed away years ago. No one is coming back for it, Kern said.

“This is a terrible investment, because it's going to cost you $250,000 to rehab this building,” he said. “And that just leads to a vicious cycle of vacants.”

As properties like 302 N. Carrollton cycle through the tax sale, fees from unpaid tax bills, environmental citations and other liens grow, until the liens exceed the property value. At this point, unless the property is in a neighborhood on the brink of revitalization, it’s not likely that it will be purchased, either through tax sale or on the market — meaning vacancy persists, said Poor, of UB's Civil Advocacy Clinic.

“It's not the vacant properties that are actually being bought at the tax sale because the investors are not trying to redevelop areas,” she said. “There’s not actually any redevelopment happening. It's just privatizing the collections of these tax debts and passing them on to really predatory actors.”

Meanwhile, vacancy leads to declining property values, spikes in violent crime and growing costs for the city, as well as environments that emotionally distress families, N’namdi said.

“When a child has to walk past 20 vacant properties to school, they've already failed the first grade — not because there's anything wrong with the child, but the conditions they’re in does damage the child's self-esteem,” she said.

Who benefits from the tax sale?

On its face, tax sale is supposed to serve as a tax enforcement mechanism: if you don’t pay your taxes, you risk losing your property.

But tax sales have generated injustices since their very creation, said Andrew W. Kahrl, a professor of history and African American studies at the University of Virginia who specializes in the history of land use and taxation. He likens the practice to redlining.

“Tax lien investors are kind of a latter day player in this long history of housing exploitation,” Kahrl said. “They’re a class of investors who are utilizing structural disadvantages and a history of racism in housing markets as a source of profit.”

While the tax sale generates a modest, immediate cash flow for Baltimore, the investors who purchase the liens see significant profits. They may charge up to 12% interest on the liens in a “redemption,” a two-step process in which a homeowner must first pay the new owner of their tax lien and then pay the city.

“Where else can you find an investment opportunity for 12% return? I mean, that’s amazing,” Kern of MVLS said. “It's not so much the home value as the desperation of the owners to stay there. That desperation incentivizes these Wall Street investors to go after elderly homeowners, not vacants.”

Fiscal crises can lead cities on a desperate search for revenue, where they engage in dubious revenue generating schemes, Kahrl said. “But that’s short-term thinking. There are major consequences, beyond those of frightened homeowners.”

“The city is unleashing these investors onto their own citizens who are operating with profit motive in mind, wreaking havoc in neighborhoods and exacerbating the problems within housing markets that other divisions of city government are trying to solve,” he said.

The tax delinquency industry is a lucrative one: it sees more than $10 billion a year in profits. And during periods of economic hardship, Kahrl said, tax sale investors see profits explode — unlike Curtis’ daycare. She calls the tax sale “reverse Robin Hood.”

“Instead of asking why someone failed to pay their taxes on time, we should ask why the city of Baltimore is siccing a class of predatory investors on their own citizens,” Kahrl said.

Calls to reform amid crisis

The moment is ripe for tax sale reform, Lee said, pointing to the protests for racial justice that first erupted after George Floyd was murdered by a Minneapolis police officer last year. “We’re reawakening to the fact that so many of these procedures and systems have racist origins and were used in very explicitly discriminatory ways,” she said.

The MVLS, the Pro Bono Resource Center and several other housing organizations have advocated for a tax sale system that has different processes for different types of properties -- one where a property that has been vacant for 20 years is not treated the same as an occupied property that has been in a family for generations.

They propose that the city sell deeds, not liens, to vacants, so that they can return to productive use, as well as create a bolstered support system for those in owner-occupied properties facing tax sale, including face-to-face outreach, estate planning clinics to clear up murky titles and the automatic rollover of certain property tax credits.

“There's no reason that my 90-year-olds should apply for the Homestead Tax Credit year after year,” said Councilwoman Odette Ramos.

For N’namdi, reform isn’t enough. The practice of tax sale should be totally abolished, she said.

“Some things have to be outright replaced because their intent is predatory and exploitative, and you just cannot fix that,” she said. “These are forms of economic violence that are applied to Black communities that are simply tools to advantage the aims of white supremacy.”

As long as the sales are held, “you're going to pay more in homelessness services. You're going to pay more in upkeep of vacant properties. And at the end of the day, skip the human toll of having elders kicked out of their houses, of having people lose their homes that they worked hard to get, trying to follow this so-called American dream,” N’namdi said.

Andrew Kahrl of UVA notes that there’s no difference in tax delinquency rates in states that sell property liens to private third parties versus those that don’t.

“If tax sale is a way to kind of enforce compliance, the facts just simply don't back that up,” he said.

The future of Baltimore City’s 2021 tax sale

Though Mayor Scott has said he will try to remove owner-occupied properties from the tax sale list, his administration has not shared how or when they would do so.

Scott staffers have said that the administration is researching whether the mayor can legally delay, cancel or remove certain groups from the sale. City Solicitor Jim Shea referred questions about the Law Department's legal opinion on the matter to the mayor, who did not respond to requests for comment.

Housing advocates are quick to point to Mayor Jack Young’s decision to delay the 2020 sale by a few months and to recent state laws that allow government executives to remove owner-occupied properties from tax sale.

“I don't really see any dispute in the law as to the mayor's authority to delay the sale and probably to cancel entirely,” Emily Poor of UB, noting that there are no laws that define the date of the sale or mandate that it must occur every year. “I think it's more of a political and budgetary argument, frankly.”

As May 17 and the anxiety of those on the tax sale list loom, N’namdi and Kern of the SOS fund say that action must be taken immediately. Both spoke directly to the mayor at a recent Taxpayers’ Night event, urging him to cancel the sale altogether. N’namdi lamented the lack of response from city officials.

“No one seems to have an answer, except that I should bring my question here,” she said.

Finance Director Henry Raymond, whose city agency oversees the sale, did not respond to requests for comment for this story. In a recent fiscal year 2021 budget briefing, he told WYPR that “every dollar is important to the city from every source that we're able to recover it, including tax sale.”

Several prominent City Hall officials who say they are not privy to the Scott administration’s plans for the sale have called on the mayor to take action.

Council President Nick J. Mosby, who as a state lawmaker sponsored a law that ended the practice of placing owner-occupied property on tax sale over unpaid water bills, said the sale should be delayed.

“I say, let’s remove this level of anxiety from our residents,” he said. “As a government, we need to step in.”

And should someone lose their home through tax sale and require homelessness services, they “ultimately become the burden of the city of Baltimore for a $2,000, $3,000 bill,” he said. “That’s something that in the grand scheme of things just is not worth potentially derailing someone's life, particularly in the midst of a global pandemic.”

Mosby said that concerns about balancing the budget have “absolutely nothing to do” with the sale, citing the American Rescue Plan, federal legislation passed last month that will provide Baltimore with $670 million in pandemic relief money.

Comptroller Bill Henry echoed Mosby’s argument. He said the Scott administration is “convinced” that the city can’t use ARP funds to replace revenue from deliberately reduced taxes — “that if we cancel the tax sale, then we were effectively saying that we don't want this tax money and so we can't use our funds to replace it.”

That doesn’t mean the city can’t develop a creative workaround, he said, suggesting that the city use ARP funds to create funded grants that residents can use to pay off their liens.

“They may be very close to an equally good plan, coming at this from a different direction,” Henry said. “They may feel more comfortable making certain that their idea passes legal and financial assessments before they want to put it out there because they don't want to get hopes up.”

Councilwoman Ramos attempted to cancel the tax sale earlier this year via legislation, but her bill died after the city’s law department said the City Council did not have the legal authority to do so. The North Baltimore Democrat said she’s spent countless hours assisting constituents with navigating the complex tax sale process this year.

“I'm hopeful that the mayor's going to continue to fight the good fight and do the right thing,” she said. “ But we're not waiting. We're just continuing to help people up to the last minute.”

Meanwhile, Curtis is grateful that her home — a safe space for neighborhood kids — isn’t up for tax sale. But she’s haunted at what could’ve been.

“For a Black woman to own property and to be able to be a beacon of light to a community and to bring up a community that everyone used to think was going down so fast… [losing my home] doesn't help the community,” she said. “It helps that you keep people here that can grow here and can raise the value of the community by being valuable within themselves.”