A Plan for Affordable Housing in Baltimore

We all know there’s a housing problem in Baltimore City — it’s becoming increasingly difficult for middle-income renters to find housing that’s both safe and affordable, and nobody should have to make that choice.  With a median income of only $40,0001, Baltimore is quickly losing a solid middle-class, and is becoming a city of rich and poor — not unlike many cities across the country.

What does make Baltimore unique, in some ways, is the surplus of housing stock we have, and not just in distressed neighborhoods.  Between vacants and foreclosure/walk-aways, we have a lot of empty homes in moderate- to lower-income neighborhoods that could be developed as moderate-income rentals, if there was a plan in place to do it.  I’ve written about it a few times, and have talked myself blue in the face about it — so why not start a larger conversation about the topic and get more feedback?

The Numbers

33.2% of Baltimore City residents earn between $25,000 and $60,000 annually, making Baltimore an increasingly unaffordable city, when residents need to rent a home or apartment. The median household income is approximately $40,000 , while the US Department of Housing and Urban Development (HUD) “Fair Market Rent” on a two-bedroom home is $12522 . Even for a couple with no children, or a single parent with one child – that rent falls outside the accepted 25% to 30% of net monthly income someone should pay each month for housing. Many rental properties in Baltimore are priced much higher, even in marginal neighborhoods with few amenities and higher-than-average crime rates.

This problem is not unique to Baltimore. After the collapse of the mortgage industry, many homeowners were forced to rent, as they lost their homes to foreclosure. As a result, rents climbed out of reach for many. Nationwide, approximately half of all rental households are spending more than 30% of their income on rent3 – a slippery slope for an already over-burdened middle class.

Let’s look at what two random Baltimore taxpayers bring home4:

  • “Joe ” makes around $43,000 a year. Twice a month he receives $1675 for a total monthly gross salary of $3350. Each month, Joe pays a total of $731.18 in state and federal income taxes, and FICA (Social Security and Medicare). This leaves Joe with a net monthly salary of $2619. Let’s assume for a moment that Joe has no 401K or insurance deductions. Joe can afford to pay no more than $873 a month in rent – far below the $1252 Fair Market Rent set by HUD for a two-bedroom, and also below the FMR of $1001 for a one bedroom. The most he would be able to afford is a fair-market rent efficiency at $847.
  • “Jenny” is a single mom with one child, and makes $39,242. Twice a month, Jenny receives a gross salary of $1435 for a total of $2870. She pays a combined monthly total of $864 in state and federal income taxes, and FICA. This leaves her with $2,006. The current FMR is far out of her reach for an efficiency, a one-bedroom, or a two-bedroom. Where is Jenny going to live for $669 a month? Currently, she’s risking her financial well-being by paying more than 30% of her income on housing — a situation that won’t last long, given the high cost of utilities and food.

The Problem

Many of our hardworking Baltimore residents are unable to meet their basic shelter needs without putting themselves at risk for financial ruin, as housing costs, particularly for renters, has increased exponentially since 2007. Not everyone can, or wants to, own a home – therefore, we need to meet the demand for reasonably-priced housing for our middle-income renters, at a price they can afford, while developing the stability and sustainability of our “Outer Harbor” neighborhoods.

While millions of tax dollars have been spent in the form of incentives for development in the Inner Harbor, downtown, and Harbor East, many of our neighborhoods have been left by the wayside, and have not received the attention or development dollars of some of our wealthier communities. As a result, these “on the cusp” areas have not developed to their full potential. In fact, some have started a decline with increased vacancy levels, as residents are pushed out by increasing rents, with no new tenants to take their place. This problem is affecting landlords, property owners, neighbors, and the city as a whole.

The Solution and the Logistics

The Outer Harbor Initiative, introduced in 2009 by Councilman William Cole, IV (District 11) would provide tax incentives and other development assistance to local companies interested in redeveloping homes in neighborhoods where the potential for sustainable revitalization is the greatest. Ideally, choosing neighborhoods that are adjacent to stable communities and working outward, would be the way to progress.

The advantages to the plan:

  1. Increasing the number of homes sold through the City’s “Vacants to Value” program
  2. Better vetting of development partners would mean better accountability and transparency for residents and government alike
  3. Retaining and attracting middle-income residents means an increased tax base
  4. Increased business revenue over the long term.

How the plan works, in a nutshell:

  1. For every million dollars spent in Tax Increment Financing (TIFs) in high-income communities, X-percent would have to be set aside for middle-income rental housing financing in an adjacent neighborhood.
  2. Vetted developers would purchase vacant homes in these neighborhoods, rehab them, and offer affordable rent for a period of X years (most I’ve spoken to agree that five years5 would be ideal) – at the end of the five years, the tenant has the option to either purchase the home, or pay market-rate rent. The TIF would supplement the difference between what the developer is charging for rent vs the market rate.

Obviously, some of the plan still needs to be fleshed out. Some questions for discussion and further review:

  1. Where would the TIF and other financing/money be held?
  2. Who would manage the plan and provide oversight?
  3. What would the vetting process for developers and tenants look like?

Notes and Sources:

  1. Source: BNIA Vital Signs 11: http://www.bniajfi.org/uploaded_files/VSChapters/Census%20Demographics.pdf
  2. Source: US Dept. of Housing and Urban Development (HUD) FY2014 FMR Geography Summary for Baltimore city, Maryland
  3. Source: Bipartisan Policy Center, “The State of Housing in America”, February 25, 2014
  4. Names of taxpayers have been changed, taxpayers were chosen at random and revealed actual information on their paystubs. Income information is for illustrative purposes only.
  5. I initially picked five years, assuming that most people would know whether they’re going to be staying in a home (or a neighborhood) after living there for five years. Also, to give the person time to progress salary-wise, so at the end of the five years they would be able to afford to purchase the home or pay the market-rate rent, if they chose to stay. The lease would be a one-year lease, renewing at the affordable rate for a period of five years.

MDE Issues Enforcement Actions Against City Lead Paint Violators

In December 2013, the Maryland Department of the Environment issued enforcement actions against the following Baltimore City property owners for lead paint violations:

  • Damian D. Tucker and Pia Tucker – 4 affected properties – $43,300 for alleged violations.
  • DACA Properties, LLC – 1 affected property – $32,500 for alleged violations.
  • Daniel Lopez, Jr. (Trustee) – 7 affected properties – $27,500 for alleged violations.
  • R&K Real Estate, LLC – 5 affected properties – $33,000 for alleged violations.
  • Fareed Nassor Hayat – 9 affected properties – The defendant agreed to a penalty of $10,000.
  • James Pikounis and Kalliope Pikounis – 8 affected properties – The defendants agreed to a penalty of $9,000.
  • Damion Fennoy – 2 affected properties – $22,000 for alleged violations.
  • Kenneth Delano and Ryan Delano – 4 affected properties – $22,000 for alleged violations.
  • Lara Okoro a.k.a. Lara Wilkinson – 2 affected properties – $16,500 for alleged violations.
  • George Milich and Mary Milich – 3 affected properties – $38,500 for alleged violations.
  • Cynthia Lambirth and Calvin Lambirth – 1 affected property – $5,000 for alleged violations.
  • Robert C. Shaffer and Christopher B. Kelley – 15 affected properties – The defendants agreed to a penalty of $9,000.
  • Robert J. Osborne and Richard W. Osborne – 1 affected property – The defendant agreed to a penalty of $5,000. The penalty has been paid in full.
  • Seth Sherman; Green Property, LLC; Charter Property, LLC; Pendant Property, LLC; Diligent Property, LLC; and Sherman Property Development, LLC – 28 affected properties – The defendants agreed to a penalty of $5,000.
  • Robert St. Cyr – 3 affected properties – The defendant agreed to a penalty of $5,000. The penalty has been paid in full.

Please Join Us!

We’re hosting a happy hour and fundraiser, April the 25th from 6 to 8 PM — all are welcome!

Network, see some great art, or just stop by for a quick drink and bite before heading home. This is a fundraiser to support Housing Policy Watch, a local organization that’s working hard to make Baltimore a better place to live, work, and play — one vacant at a time.

The event will be held at Gallery 788 in Hampden — Baltimore’s showcase for established and emerging artists, from Baltimore and nationwide.  Purchase your tickets today — part of your ticket price is tax deductible, and will go a long way to support our work!

Action Needed: Contact Your Maryland Senators – Oppose HB0249

Photo of Maryland State House, Annapolis
State House, Annapolis, MD

Bill Information: Sponsored by Delegates McMillan and O’Donnell, HB0249 (link opens a PDF) changes the interest rate paid to tenants on their security deposits, to coincide with the US Treasury Yield Curve Rate, which fluctuates greatly.  Currently, landlords are required to pay 3% interest on security deposits.

Why This Bill Should Fail:  This places an undue burden on landlords, and for tenants, this could result in far less interest being paid than the current 3%.  Landlords and tenants should not have to track US Treasury rates, nor should they be forced to use an online calculator maintained by the state to determine interest payment amounts at the end of a lease.  As an example, as of yesterday, February 25, the rate for two years to maturity was 0.34%.

What You Can Do:  Contact your the Maryland Senate Judicial Proceedings Committee and your Maryland Senators, and ask them to oppose this burdensome and unfair bill.

Support HB1143 / SB799 and Prevent Landlord Retaliation

Photo of Maryland State House, Annapolis
State House, Annapolis, MD

Bill Information: Sponsored by Delegates Frush, Braveboy, Bobo, Fraser-Hidalgo, Glenn, and Hucker, HB1143  and SB799 (sponsored by Senators Ramirez, Forehand, and Manno) would prevent a landlord from refusing to renew a tenant’s lease if the tenant complained about unsafe conditions in the home.

Why This Bill is Important:  Tenants have a right to live in a home that’s safe and healthy.  Currently, a landlord is allowed to refuse to renew a lease if the tenant complains about lead paint in the home — but the current law doesn’t specify prohibited actions if the tenant complains about other unsafe conditions.  This law brings more clarity and outlines the penalties for retaliatory actions on the part of the landlord.

What You Can Do:  Contact your legislators and ask them to support this important bill.

 

Support HB0658 for Better Transparency in Maryland

Photo of Maryland State House, Annapolis
State House, Annapolis, MD

Bill Information: Sponsored by Delegates Carter, Glass, Hough, Parrott, and Smigel, this bill would establish the State Information Act Compliance Board and require that the board would take action on a complaint within a specific period of time.

Why This Bill is Important:  If you’ve ever filed an information request with the State of Maryland, you know the chances of you receiving complete information in a timely fashion, at a cost that won’t send you into bankruptcy — is pretty slim, a lot of the time.  And to appeal a denial or to question excessive fees is both time consuming and out of reach for most residents.  This bill would set in motion a process where citizens could appeal a denial or file a complaint about excessive fees, without benefit of counsel, and the complaint would have to be answered in a timely fashion.

While not perfect, the bill does make headway towards addressing the fact that citizens should not have to pay unreasonably high fees or wait an unreasonable amount of time, in order to receive information that belongs to them as a taxpaying resident of Maryland.

What You Can Do:  Contact your legislators and ask them to support this important bill.

Baltimore’s Middle Class Explained

In the middle of doing research on middle-income folks in Baltimore,

Rowhomes in Baltimore City
Rowhomes in Baltimore, MD
in preparation for laying the groundwork for a middle-income housing plan…I came across a Baltimore Brew comment where someone explained it perfectly, and it brilliantly illustrates the urgent need for middle-income housing:

“Median income (2012) is about $40,000 per household in Baltimore City. In the rest of the state, it’s $72,000. That’s the point at which half the households earn more and half the households earn less. 23.4% live in poverty, the average for the state is 9.4%.

We have about 414,000 adults of working age (18-65), but only about 272,000 jobs, some of which are held by non-residents. Our current unemployment rate is about 10%, but its 7% in the statistical area to which we belong. As in the federal unemployment, those rates do not include people who have given up looking for work.

For a three person household, a family is entitled to some low income assistance (200% of poverty) when earning slightly more than $39,000. This is what $18.75 per hour looks like.

This mythical household would pay about $7,000 in taxes, rent of about $1,500 to live in a two bedroom apartment where they don’t have to shoot their way out of the front door either, about $250 for utilities of all sorts and $600-$900 for food. Know what’s left for everything else? $312 using the low end of food costs. That’s to pay for transportation, insurance, medical, school items, clothes.

Is this mythical family the poorest of the poor? Of course not, but they are the middle of our income distribution. 50% of our employed citizens earn less than that.” (Comment by “bmorepanic”).

It’s truly frightening to think there is no housing for these folks — nothing they can afford, certainly, unless they’re willing and able to stomach having to “shoot their way out of the front door” — and the folks who earn as much as $45,000 aren’t much better off, either.

I’m really hoping the plan I’m trying to put together actually comes to fruition — without more of this income group, I loathe to see what our city will become in the not-so-distant future.

Why HB0268 Was Needed

Today’s fatal fire at 447 N Lakewood Avenue is a tragic example of why the LLC transparency bill, introduced in the Maryland Legislature by Delegate Stephen Lafferty was so necessary.  Yet it was shot down by delegates who perhaps put more importance on hiding the owners of LLCs than on their taxpaying constituents. (Link opens a PDF)

447 N Lakewood Avenue is owned by Marywood Real Estate Investors, LLC with an address of 550 M Ritchie Highway, #261, Severna Park, MD 21224.  Sounds legit, right?  Sounds worth protecting, at the expense of taxpayers, right?

Wrong.

The address is a UPS Store — a mail drop.  There is no office, no nothing.  Just a post office box.  No phone, no email, no receptionist, nobody for residents or government officials to contact in case of emergency.

No problem, we can contact the Resident Agent — even though he’s just there to be served with legal papers, surely we can contact him with any concerns, right?

Wrong.  The resident agent’s address…is another UPS Store.

Maryland law dictates that a company must have a physical address in the state of Maryland, not a PO Box, not a mail drop — an actual physical location.  Maryland law also dictates that the Resident Agent also must have a physical location where he or she can be served with legal papers — again, not a PO Box, and certainly not a mail drop at the local UPS Store.

Photo Credit:  Shannon Fernandez
Photo Credit: Shannon Fernandez

Three people were taken to the hospital as a result of this fire, and one has died — a fire that happened in a house that this lawbreaking LLC owns.  Maybe some good can come of this tragedy — maybe this can wake up a few delegates who need to remember that the taxpaying citizens of this state deserve protection from the predatory companies and negligent property owners that hide behind their shell LLCs and corporations — we deserve better than this, the residents of 447 N Lakewood Avenue deserved better.

Transparency and accountability in government and in business mean a stronger, better Maryland.

 

Your Voice Is Needed: Ask Your Legislators to Support HB0833

Bill Information:  Sponsored by Delegate Maggie McIntosh,

Photo of Maryland State House, Annapolis
State House, Annapolis, MD

HB0833 would require organizations that own tax-exempt property to submit an application to the State Department of Assessments and Taxation (SDAT), detailing what purpose the property is being used for, and whether that use is in line with allowable tax-exempt purposes.

Why This Is Important:  Baltimore City property taxes are the highest in the state. If organizations are not using their properties for allowable tax-exempt purposes (a glaring example would be the many nonprofit- and church-owned blighted vacants across our city) — they should be subject to paying property taxes on those structures.  With an increased tax base, there’s an opportunity for property taxes to be lowered for legit businesses and homeowners, or the money to be spent on increasing city services to residents.

What You Can Do:  Contact your legislators and ask them to support this important bill.

Residents: Your Input Is Needed!

1211_n_patterson_park_ave_rearHow would you like to live next to this eyesore?  No?  I would bet that most people wouldn’t want to, either.

Residents, when Baltimore Housing files for receivership of a home (meaning, a receiver appointed by the City will own the home after it’s taken away from its negligent owner) — if you’re impacted by the blight, you have a right to make your voice heard in court!  Your words can go a long way towards making our judges truly understand how passionate you are about your neighborhood, and how damaging these homes are — not just the physical damage they can cause to neighboring homes, but the psychological damage that happens when you’re stuck with an eyesore next door.  Your words can bring the human element back to the courtroom.

I strongly urge you to think about this the next time you file a 311 complaint about a problem property.  Follow what happens after your complaint is submitted — see if the property ends up in court, and make sure your voice is heard.  Our housing attorneys work really hard getting these negligent property owners to court — your words are another piece of the puzzle, one that’s sorely needed, particularly in some of the more egregious cases.

It’s your right to be there, and it’s your right to live in a safe and healthy community.