|Bill Henry during TIF hearing (Daily Record)|
Leveling the playing field has been the elusive goal when it comes to buying, developing or owning real estate in the city more similar to the surrounding counties where property taxes are about half, permits easier to get and insurances much cheaper.
But there is also this:
- There is an affordable housing crisis in this city and all across America
- A Baltimore inclusionary zoning code that was supposed to force developers of larger residential developments to set aside of affordable units has been undercut for a variety of reasons (initially because it just got into effect when the financial crisis hit) and has not yielded a measurable relief to the affordable housing shortage
- A ballot measure to amend the city charter and allow an Affordable Hosuing Trust Fund passed last November. But such a fund remains ineffective if there is no money in it
- Surrounding counties have done little to build affordable housing in opportunity areas or anywhere else, leaving the city to deal with disproportional demand for affordable housing and long wait lists for units and vouchers
- Real estate in the city is generally cheaper than in the counties offsetting in part the higher taxes and fees
|Baltimore housing activists|
Question J: Affordable Housing Trust FundThe petition is for the purpose of amending the Baltimore City Charter to establish a continuing, non-lapsing Affordable Housing Trust Fund to be used exclusively to provide broadly defined projects and programs related to establishing and preserving affordable housing in Baltimore City. Revenue for the Fund is as provided in the Ordinance of Estimates, grants and donations, mandatory and voluntary payments made pursuant to ordinances establishing development policy, a portion of tax increment financing revenue and any other source established by ordinance. These allocation methods are not subject to discretion in the budget process, other fiscal priorities or constraints imposed by revenue limitations. The Petition authorizes oversight, governance, and administration of the Fund by the Department of Housing and Community Development and a 12 member commission.Last year, at a mayoral campaign event with all candidates, long-term housing activist Jeff Singer described Baltimore's housing conditions in bleak terms and called affordable housing one of the city's most pressing problems. He cited statistics that almost 40 percent of households in the city cannot afford their housing based on the proportion of monthly cost, contributing to 150,000 eviction notices filed each year. Around 2,800 people are estimated to sleep on the street on a given night, according to Singer. In the national context, Glassdoor rated Baltimore as one of the top 25 US cities when it comes to jobs and housing costs.(Baltimore was #19 in that survey, Pittsburgh #1).
Recently Pugh supported the call from the Baltimore Housing Roundtable demanding $20 million towards affordable housing and $20 million towards deconstructing vacant houses. “Mayor Pugh shares the vision of the 20/20 plan,” Anthony W. McCarthy said in November. From previous statements one has to assume that the Mayor expects donations and funds from the private sector.
Councilman Cohen made the connection between affordable housing and crime:
“If we are going to get serious about public safety, if we’re going to get serious about educating our kids,” he said. “Then we have to get serious about stable, affordable, safe housing in Baltimore. The city is looking down the barrel of a housing affordability crisis,” Councilman Zeke Cohen.Since to date no sustainable funding source had been proposed the idea of the fund had no legs until last week when Councilman Henry submitted legislation to raise the recording fee by 20 percent and transfer taxes by 17 percent as a “sustainable revenue source” for the Affordable Housing Trust Fund. The raise would increase the recording fee charged on every $500 worth of property sold from $5 to $6; amounting to about $200 on a $100,000 house sale The transfer tax charged on property transfers would rise from 1.5 percent to 1.75 percent or an additional $250 on that $100,000 house. It is estimated that these taxes would generate about $10 million per year. Council President Young and Councilman Bullock want to create a task force to study funding for affordable housing. The task force would look at Henry's bill and other ways of directing money into the trust fund.
|DC Housing Fund achievements|
The proposal received swift condemnation by some and support by others. On David Troy's Baltimore City Voters Facebook page opinions bounced back and forth.
Wendy W, an "underwater" homeowner posted: "This is straight BS... homeowners continue to pay for the poor in this City! Yet, businesses and developers get the biggest brakes! Why aren’t they paying for the poor and distressed!"
Richard C. was also opposed: "Completely against this. I'll support something like this when our friends in the suburbs do the same. Why make this struggling city less attractive to newcomers?".
To which Bill Henry responded: "yeah, the competitive disadvantage argument is always a handicap to trying to be more progressive than the jurisdictions that surround us. Honestly though, I doubt that less than half-a-percent of the sales price - split between the buyer and seller - is going to send a buyer out to the suburbs who was otherwise going to buy here...not trying because they aren't trying seems counter-intuitive, when the goal is to get something done..."
Phyllis F was for the bill: "For the record, I’m a liberal and I have no problem with this because it’s a way for the city to fulfill a legislated commitment to affordable housing it hasn’t been able to because of funding."
|DC housing fund, how funds were assigned|
Lynda B is also sanguine about it: "This actually doesn’t sound too bad. The headline of the article makes it sound like it will affect taxes in general, but it’s only during the sale of a property - the recording fee and transfer tax will go up. If it could also include a minute amount on second homes and rentals (not during a sale, but a general fee for providing rental property in Baltimore, like $5 per year per unit you have available - this would not be such a burden on an owner who has a few properties, while the larger companies would shoulder more of the burden (and should be providing more of the lower income housing anyway) you’d have this thing funded in a heartbeat."
Affordable housing trust funds are commonly used across the country and also elsewhere in Maryland. Nearby, Howard County, Montgomery County and the District of Columbia use the tool.
DC's Trust Fund has been in effect for over a decade and is also mostly fueled by transfer taxes. Like in Baltimore, affordable housing fees to be paid by developers in lieu of constructing such units under zoning were never enforced. In its 2014 report the DC trust claims to have provided $320 million for financing and to have leveraged an additional $794 million. Of course, DC has seen an extraordinary housing boom. Just like similar "trust" funds for other purposes such as the Maryland Transportation Trust fund or Maryland's Program Open Space, the DC housing fund had been raided to prop up the general fund.
The Philadelphia Housing Trust fund was created in 2005 and is funded by mortgage fees. Its achievements are more modest than those of the District. The 10 year report lists that the HTF has raised nearly $109 million and assisted more than 27,000 households. It has done this through the production of 1,482 new or rehabilitated homes, major repairs to 2,281 homes, improved accessibility for 1,381 households, repair of 12,986 heaters, homelessness prevention for 2,713 households, and utility assistance for 6,399 Philadelphia families.
Since nationally the most important funding source for affordable housing has been the affordable housing tax credit, which is in jeopardy because of the federal tax bill currently being in reconciliation in Washington, local funding sources will likely become an even more important lifeline for affordable housing and the many households who depend on it.
Klaus Philipsen, FAIA
Baltimore SUN story
Ten Year Report of the Philadelphia Housing Trust Fund