Inside City Hall
Weak inclusionary housing law could get fixes this year
Paralyzed by lack of dedicated funding, the eight-year-old program has made little impact on the housing market. How might it get back on track?
Above: The developer of Jefferson Square south of Johns Hopkins Hospital kicked in funds in order to be exempted from low-income inclusionary housing. (Jefferson Apartment Group)
Legislative fixes to strengthen Baltimore’s weak inclusionary housing law are on the horizon for 2015.
Councilman Bill Henry admits that the law has only been marginally effective. He and other members of the Council as well as the Inclusionary Housing Advisory Board have been discussing “an array of possible legislative fixes.”
“Some combination of these will probably be introduced early this year,” said Henry, who chairs the Housing Committee. Henry convened a hearing last year to discuss the program’s shortcomings, but declined to discuss details of the upcoming legislation prematurely.
The city’s inclusionary housing law requires developers of 30 or more units that receive public subsidies, such as TIFs (tax increment financing) and PILOTs (payment in lieu of taxes), to set aside 20% as low-cost units.
The city then buys or rents units, at market rate, from the program’s offset fund, making them available to individuals who meet certain income requirements. Projects that require significant re-zoning that creates 30 or more units must provide 10% as inclusionary units.
However – and this is a big however – if there’s not enough money in the fund to pay for the units, developers can get a waiver.
Since the inclusionary housing law took effect in 2007, program funds have created only 25 affordable units – ten in 2008 (Miller’s Court), ten in 2010 (Union Mill), and five in 2013 (Mt. Vernon Mill).
Most of those units were available to persons making up to 80% or 100% of average monthly income for the Baltimore Metropolitan Area. In 2010, the AMI for a family of four was $82,200. So far, only efficiency and one-bedroom units have been created.
No inclusionary units were created in FY 2014.
Lack of funding is the program’s Achilles’ heel. After its initial $2 million appropriation, the fund has had no dedicated source and was nearly fully obligated by 2011.
And while Housing Commissioner Paul Graziano is empowered to provide cash offsets from sources other than the inclusionary fund, he is not required to.
In October, the mayor and Board of Estimates approved a $60,000 transfer of city bond money to the fund to create seven affordable rental units at 520 Park Avenue, a new apartment complex in Mt. Vernon.
Even though the funds came from another source, the Park Avenue units will count toward FY 2015 inclusionary housing goals.
“Currently, the program has $70,000 is the available funds,” said Cheron Porter, Housing spokeswoman.
There’s another $200,000 in deposited cash from the Jefferson Apartment Group, part of a $470,000 donation to the fund.
Jefferson’s new apartment complex on Wolfe Street south of the Johns Hopkins Hospital was exempt under the law, but the developer agreed to contribute to the fund, city records show. “But Finance hasn’t attached an additional appropriation to it yet, so we have the money, but not the authorization to spend it,” Porter stated.
As for future appropriations to the offset fund, Mayor Stephanie Rawlings-Blake hasn’t publicly broached the matter. An email to her press office seeking comment was not answered.
With no plan for additional appropriations, the program is essentially paralyzed, the advisory board acknowledged at its October meeting and formally noted in a report released recently.
“The program’s financial situation and the small number of units created since the implementation of the ordinance concerns us greatly. In today’s climate, units are expensive to develop, and the cost to provide deeply subsidized units exceeds the statute’s funding limits,” the board said.
While exempt from the law, Harbor Point developer Michael Beatty has agreed to voluntarily contribute as much as $3 million to the fund. (He was rewarded $107 million in public TIF bonds to underwrite his Fells Point project.)
Beatty’s pledge, though, is contingent on a projected build-out of over 1,000 residential units. And that won’t happen until the early 2020s – or more than five years from now.
Better Way to Spend the Funds?
In addition to strengthening the law, the advisory board has been discussing various ways to spend the money that is available.
Board member Mel Freeman, director of the Citizens Planning and Housing Association (CPHA), said one discussion concerns upscale units, which includes much of the recent housing construction.
Since the city must buy or rent the units at market rate, it might make more sense, Freeman says, for developers to create a few moderately priced units in the same buildings.
This would give the city more buying power and serve more low- and moderate-income residents.
“We want people to live in neighborhoods of opportunity. Does this mean they need to live in the most upscale units in those neighborhoods? Would two moderately priced units in the same building be better than one higher-end unit?” Freeman asked.
The board is divided on this issue, he says. “Some members feel that the inclusionary units should be just like all the others, not different.” Other members, he says, are in favor of more inclusionary units, period.
“Should this option be on the table, to discuss with individual projects? Maybe,” Freeman adds. “Other cities do it this way. Why it has to be so hard for Baltimore baffles me.”