Landlords and lawyers differed sharply Wednesday over legislation that would create a state-run fund to compensate victims of lead-paint poisoning.
A string of rental property owners and real estate investors from Baltimore and some other parts of Maryland backed the proposal at a hearing in Annapolis, saying that without state help they'd be driven out of business by mounting litigation. A lawyer for landlords told members of the House Environmental Matters Committee that landlords face financial ruin because they cannot get insurance to cover six-figure damage claims.
"I'm scared silly," said Arthur Miller, who said he owns 12 rental units. He said he dreads seeing strange cars coming down his driveway, fearing they may be process servers bringing lawsuits.
A bill, HB472, would create a compensation fund financed by fees levied on all rental properties built before 1978. It would pay up to $200,000 for each proven claim of lead poisoning.
D. Robert Enten, lobbyist for the Property Owners Association of Greater Baltimore, said legislation was needed in the wake of a Maryland Court of Appeals ruling he said was "devastating" to rental property owners. The state high court in October declared unconstitutional a law limiting payments to lead-poisoning victims to $17,000 if landlords complied with state law requiring them to reduce lead-paint risks in their units.
"Basically, it made their properties worthless," Enten said. "No one will buy these properties, no one will continue to own these properties."
Enten said the fund would effectively stand in for the liability insurance landlords cannot now get, and would ensure that victims get more compensation while helping cushion the financial toll on property owners.
But lawyers for lead-poisoning victims contended that the legislation sponsored by Del. Maggie McIntosh, D-Baltimore city, was "fundamentally flawed" and unworkable. Owners of apartment complexes, primarily in the suburbs, also complained that it was unfair to make them pay into the fund, as they'd already invested in reducing or even removing lead-paint risks from their units and have insurance coverage.
"This is not the answer," said Adam Skolnik, owner of 136 units and a member of the Maryland Multi-Housing Association. And David Hillman, chairman and CEO of Southern Management Corp., which has 25,000 units across the state, said that although some of his firm's units still contain lead-based paint, they're maintained to ensure there's no risk of exposure.
McIntosh defended her bill, one of eight before the General Assembly dealing with lead poisoning, but one likely to get serious consideration because she heads the House committee.
McIntosh argued the fund would get more landlords to comply with state law requiring them to fix up their properties to minimize lead-paint risks. About 6 percent of units inspected last year had significant violations, according to the Maryland Department of the Environment.
The bill would charge fees ranging from $50 per unit for housing with no lead paint inside to $100 for "lead-safe" units to $500 for noncompliant ones. But McIntosh, who heads the House committee, said owners of noncompliant units would not be eligible for help from the fund.
She also vowed to amend her bill to ensure that no public funds are used to set up or run the fund. A fiscal note on the bill by legislative analysts projects that $247,000 would be needed in the first year at least for staffing, before any substantial fee revenues are collected.