Housing stimulus plans flourish

Programs assist employees of city with purchase, taxes

One out of money early

January 21, 2001|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

A surge in home sales in Baltimore has helped exhaust funds for one city incentive program, kept another running in high gear and prompted City Council to get a third back on track.

The Baltimore City Employee Homeownership Program, which provides $5,000 to city employees who buy a home anywhere in Baltimore, ran out of money last month, going through its budget of $700,000 after only six months of the fiscal year, which began July 1. For all of 2000, the program made available $1.325 million, helping 265 police officers, firefighters, teachers and other municipal employees finance a city home.

"We were very fortunate. We had a boom year," said Tom Jaudan, chief of the city's Homeownership Institute. "This is the first time that we have ever run out of money in the city employee program."

Meanwhile, Jaudan also said that the city's Settlement Expense Loan Program (SELP) was running beyond expectations.

"November and December did not slow down in the market. I was quite surprised," Jaudan said, adding that 147 loans were made in the last month of 2000, compared with 110 loans made in December 1999. "That is quite a number of SELP loans."

Jaudan said 140 loans were made in November, up from 85 in October. He said the normal number of SELP loans made each month is about 100.

The SELP incentive allows homebuyers to borrow up to $5,000 over 10 years to help cover closing costs, reducing the amount of out-of-pocket expenses for the borrower.

In another matter, Jaudan said the City Council has approved reintroduction of the Newly Constructed Dwelling Tax Credit, which had expired in June. The council made the program retroactive to July 1, allowing homebuyers who were caught by the unexpected lapse in the program to take advantage of the incentive.

City housing officials were unaware late last summer that the program, first approved in 1995, had a sunset provision and would end June 30. The program sought to make the city's property tax rate - at $5.82 per $100 of assessed value, by far the highest in the state - competitive with those in the surrounding counties.

The credit halved a buyer's first-year property tax bill, then phased in the remaining 50 percent at an additional 10 percent a year so that, by year six, the buyer would be paying the full tax.

Under the program, which will end June 30, 2002, the buyer of a newly constructed home in the city would have to apply for the credit within 90 days of settlement. But that requirement wouldn't apply to those buyers who got "caught in the middle," according to Jaudan.

As for the Baltimore City Employee Homeownership Program, Jaudan said the program "moved very slow in previous years." But, he said, it accelerated when Martin O'Malley took over as mayor.

"There seems to be a very positive outlook on the new mayor and what is happening in the city, so employees began making investments and buying and accessing our grant money," he said.

Likewise, Tracy Gosson, executive director of the Live Baltimore Marketing Center, which promotes buying in the city, said just the fact that city employees are "fighting over that money is a great sign" for Baltimore.

"For what [city employees] hear every day are the problems of the city - and these are the people that are dealing with it every day - even they are inspired by the positive potential of the city, that even they want to live in the city," Gosson said.

The $5,000 incentive is actually a no-interest, 10-year loan that is reduced by 10 percent each year that the buyer stays in the residence. The resident is not required to pay on the loan. It becomes due only if the buyer sells or transfers the title, leases to another party or does a cash-out refinance.

Jaudan said the program will begin again at the start of the city's next fiscal year in July.

However, because of the popularity of the program, it is likely that the $5,000 maximum will be decreased, allowing more city employees to take advantage of the incentive.

He added that the program was used especially by the school administration in its recruitment of new teachers.

"They began marketing the fact that we had funding for them if they signed a contract to teach in the city," Jaudan said. "So that was a big motivator."

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