Low-cost homes bill debated

Proposal for mixed-income houses in city faces money woes, critics

April 22, 2007|By Jill Rosen | Jill Rosen,Sun reporter

The Baltimore area's housing market increasingly resembles a grocery store that sells filet mignon but no macaroni and cheese, a task force warned last year.

Now, a bill headed to the Baltimore City Council aims to ensure that people on a macaroni budget won't be priced out of the city or relegated to its less desirable neighborhoods. The measure would require low-cost homes to be mixed into certain market-rate projects.

But after this inclusionary housing bill has been diffused by compromise attempts and restricted by a lack of money, it remains unclear how much that proposal will end up doing -- including how many homes it will create and where they will be.

The coalition of religious groups, urban advocacy organizations and unions that have pushed for the legislation in Baltimore and across the region believe its effect will be significant.

"It will make a contribution, a significant contribution, to maintaining an opportunity for working people of modest incomes to continue living in Baltimore city," said David Rusk, a Washington-based urban policy consultant who helped draft Baltimore's bill.

But others, particularly skeptical developers and builders, are much less confident.

"For all of this effort and a very complicated bureaucratic process, it doesn't yield a whole lot and won't yield a whole lot," said Joseph T. "Jody" Landers III, executive vice president of the Greater Baltimore Board of Realtors. "Above and beyond that, it's a very costly way of developing affordable housing."

When the Planning Commission unanimously endorsed the bill last week, the coalition celebrated. In 2005, the last time the commission considered anything like this, it died in a flurry of criticism and questions.

But that bill's death inspired the creation of Baltimore's inclusionary housing task force, which -- in a report released last summer -- urged city leaders to carefully reconsider the concept. The city must find a way to protect the vulnerable poor, the report said, while not stunting the rebounding real estate market.

That proved to be no easy task.

The first version of the bill, unveiled late last year, was sharply criticized not only by the real estate community but by city agencies that agreed it went too far.

The current legislation reflects a somewhat uneasy compromise among the coalition, developers and the city. It's no one's ideal, but for most, an acceptable place to start if creating mixed-income neighborhoods is to be a priority.

"This is an easy concept to get behind but a hard one to accomplish," said City Council President Stephanie C. Rawlings-Blake.

The bill would immediately apply only to developers receiving tax breaks or discounted land from the city. Those subsidized builders would have to reserve 20 percent of their projects' units for low- to moderate-income residents.

The bill would also require a portion of the affordable units be set aside for the poorest people.

After a year and a half, the bill would apply to developers who benefit from rezonings. They would have to make 10 percent of their housing affordable.

The measure would expand to include projects not receiving subsidies or zoning changes only if most of the houses in the city's market become unaffordable under an equation to be determined as part of the bill.

A key aspect of the bill is that the city would compensate affected developers for any expenses. The city would offset costs by giving builders subsidies, density bonuses and cash payments from a new inclusionary housing trust fund.

With only $2 million from Baltimore's budget to fill the fund in its first year, the money likely won't go far. If the fund runs dry, developers would be exempt from the regulations.

Developers, particularly those building luxury housing, could also be let off the hook if the city can't afford to pay them back with tax breaks or discounted land.

In Maryland, the only other jurisdictions with similar affordable-housing requirements are Montgomery and Frederick counties.

Montgomery County, a fast-growing area just outside Washington, became the nation's first jurisdiction to approve an inclusionary housing measure when its law passed in 1974. The county primarily compensates developers with density bonuses rather than cash.

Though builders initially complained, studies have shown that the law, which has created thousands of affordable homes, has not affected overall home sales or prices.

In Prince George's County, a similar ordinance was passed at the request of a coalition of church groups. The county repealed the measure a few years later in a push to increase taxes by bringing in higher-priced housing.

Rusk said Washington fought an inclusionary housing movement a decade ago. The housing market became so hot there that in 2005, prices rose 40 percent in some of the district's poorest neighborhoods.

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