Baltimore Council Will Try Again to Boost Inclusionary Housing

The city's Affordable Housing Trust Fund has no cash.

(Photo by Bruce Emmerling)

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If at first you don’t succeed, wait until you get a wave of new City Council members and try again.

With eight new colleagues elected in November 2016 now settled into office, Bill Henry, one of the few Baltimore City Council incumbents who remained in office, submitted legislation last Thursday to raise property sales taxes to raise money for the city’s Affordable Housing Trust Fund. The new fund was created by voters in that same election but currently has no money in it, The Baltimore Sun reports.

It’s a bill Henry has introduced before, along with another bill requiring all developers who receive taxpayer dollars to build low-income housing in Baltimore. That bill was voted down last year, before the elections.

Henry has been trying to make improvements to the city’s inclusionary housing policies. The Baltimore Sun reports that the city’s inclusionary housing ordinance has been responsible for producing just 32 units, despite thousands of apartments and condominiums being built in the city, because of a provision that requires the city to pay developers for building affordable housing units. Until last November, the city had no dedicated funding to make those payments. Henry wants to raise property sales taxes to finally start putting money into the fund.

As the Sun reports, Henry’s bill would raise the recording fee charged on every $500 worth of property sold from $5 to $6. That means on the sale of a $100,000 house, about $200 would go to the Affordable Housing Trust Fund. At the same time, the tax charged on property transfers would rise from 1.5 percent to 1.75 percent, meaning that on the sale of a $100,000 house, about $250 would go to the fund. Henry told the Sun that he estimates those changes would bring in about $10 million a year.

A spokeswoman for Baltimore Mayor Catherine Pugh told the Sun that the mayor is studying Henry’s proposal.

Similar fees or funding structures to finance affordable housing have come into recent consideration in Los Angeles, and Boulder, Colorado. As Next City noted previously, Austin was also considering a similar fee structure before the state of Texas preemptively passed a law to ban all such fees.

The impact of any such housing trust fund would also be subject to policy changes at the federal level, where lawmakers have proposed ending tax exemption for certain municipal bonds that are often used to finance affordable housing. Individual affordable housing projects often combine capital from a housing trust fund with capital raised via tax-exempt municipal bonds. Washington state’s housing trust fund, which has helped create or preserve more than 35,000 homes in 38 of Washington’s 39 counties since 1989, is itself primarily financed through tax-exempt bonds. The elimination of tax exemption for such bonds would result in 80,000 fewer affordable housing units across the U.S. over the next year, according to estimates from the National Low-Income Housing Coalition.

A lower corporate tax rate, one of the major priorities for Republicans in Congress, would also reduce investor appetite for Low-Income Housing Tax Credits, reducing the amount of funding those credits can typically raise.

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Oscar is Next City's senior economic justice correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha and Fast Company.

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Tags: affordable housingbaltimorecity councils

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