State aid for home purchase is revived

Some say changes distort intent of anti-sprawl effort

September 18, 2006|By Timothy B. Wheeler | Timothy B. Wheeler,Sun reporter

A pioneering homebuying assistance program that was once part of Maryland's anti-sprawl Smart Growth initiative has been revived by the Ehrlich administration, but with changes that critics say weaken the original intent and may contribute to suburban sprawl.

Live Near Your Work Plus is the name of the new program. It offers qualified buyers grants worth up to 3 percent of their mortgage to help cover closing costs - a significant benefit in a state where fees and taxes required to purchase a home are among the highest in the country.

But unlike the original Live Near Your Work program launched in 1997 under Gov. Parris N. Glendening, the new initiative does not limit assistance to home purchases in neighborhoods in need of revitalization. Anyone can get a closing-cost grant for an existing home if it is within 25 miles of the buyer's workplace - which some see as an awfully long commute that belies the program's name.

"This is `live near your work'? ... This is a benefit for congestion, which we don't really need any more incentives for," said Dru Schmidt-Perkins, executive director of 1000 Friends of Maryland, a conservation group advocating compact development.

Ehrlich administration officials say the new program, unveiled with little fanfare this summer, is simpler and more generous than the old one. The original Live Near Your Work program gave $3,000 to buyers of homes in targeted neighborhoods, though it did not specify how close a home had to be to the buyer's workplace. The state, the buyer's employer and the local government split the cost of the grant.

"Three thousand dollars is nice, but 3 percent of your mortgage amount is better," said Stephen Silver, chief financial officer of the state Department of Housing and Community Development. He also noted that "you don't have to worry, `Oh does my employer participate? Does my county participate?' You just get this."

Paul Pilger and his girlfriend were among the first to take advantage of the new program after its debut at the end of June. The Silver Spring couple received a grant of more than $9,000 to help pay settlement costs for the $311,933 mortgage they took out to buy a 20-year-old townhouse in Elkridge. When combined with another zero-interest loan offered by the state, the couple were able to cover half their closing costs, Pilger said.

"The new place is a little bit bigger" than the townhouse they had been renting, he said. And the neighborhood is more open, with "a lot of green space" and near shopping and restaurants.

But Pilger, 39, a fundraiser for a nonprofit group in Washington, says moving to Elkridge will lengthen his commute, from 20 miles to more than 25 miles, though he still plans to take public transportation. His girlfriend's drive to work in College Park also will be longer but within the 25-mile limit to be eligible for the grant.

Former Glendening administration officials say the Ehrlich initiative is a distortion of the Live Near Your Work program they launched, in which the state teamed up with local governments and employers to encourage homebuying in mostly urban neighborhoods targeted for revitalization.

"What is the point of it when it's not so proximate?" asked Harriet Tregoning, former special secretary of Smart Growth under Glendening.

"You could draw a 25-mile circle around most major employers and end up where you don't want development to happen," said Tregoning, who continues to work with Glendening in directing the Smart Growth Leadership Institute in Washington.

The new program also "gets away from the place-revitalizing focus" of the original initiative, she said, which she said was part of what made it so novel at the time.

Though slow to catch on in Maryland, the original Live Near Your Work program enlisted more than 100 employers over five years to provide 990 homebuyers with $3,000 grants. A handful of other states developed similar programs, and even adopted the name, which Tregoning said was coined by the Glendening administration.

"It was a brand-new idea," said David Tillman, spokesman for Baltimore's Department of Housing and Community Development. Though some private employers in other areas of the country offered homebuying assistance to their workers, Tillman said, "Employer-assisted housing just hadn't been done to a critical mass in the city or the state before that."

Baltimore was the biggest beneficiary of the original program, with four out of five grants handed out there, though seven other municipalities also participated, from Hagerstown to Salisbury. Universities, hospitals and a variety of private employers joined the effort, including The Baltimore Sun.

"It was a nice little thing to do as part of recruitment," said Mary L. Leach, senior adviser to the president of the University of Maryland, Baltimore. "But also we didn't want to paper downtown with parking garages. The more employees who could walk to work or take public transportation, the better for everybody."

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