Baltimore council president backs $20 million in property-sale tax hike to fund affordable housing

Baltimore City Council President Bernard C. “Jack” Young is lending his support to a proposal being introduced today that would increase taxes on certain property sales in the city to raise an estimated $20 million to fund affordable housing projects.

Voters approved the creation of an affordable housing trust fund in 2016 but city officials have not designated a revenue source for the fund. Young said generating money for the fund through a dedicated tax increase would be a “breakthrough.”

“It’s something that really needs to happen,” he said. “This is one of the important issues that is facing Baltimore city when you look at rising rates of rents.”

A bill being introduced in the City Council on Monday would increase the city’s 1.5 percent transfer tax to 2.1 percent and the recordation tax from 1 percent to 1.4 percent. The increases would apply only to properties sold to owners who intend to rent the buildings, not to buyers who intend to live in them.

Young has worked closely with Councilman John Bullock on the bill. After a working lunch for the council on Monday, 11 of the council’s 15 members had signed on as sponsors.

The proposal also has the backing of activist coalition Housing For All: Baltimore. The group estimates that the money raised through the tax could employ 1,000 people and create 400 affordable homes a year if it was spent on rehabilitating vacant property.

Matt Hill, an attorney at the Public Justice Center and a member of the group, said the tax represents a small proportion of each property sale but would have a big effect in Baltimore’s blighted neighborhoods by creating jobs, eliminating vacants and building permanent affordable homes.

“It would be revolutionary,” Hill said.

The idea is similar to another proposal under consideration in the City Council to slightly increase two taxes on all property sales. The new bill is forecast to raise double the amount of money should it pass, relying on steeper increases on a smaller set of sales.

Councilman Bill Henry, the lead sponsor of that bill, said he wanted to spread the effects of the tax increase more broadly, but said his priority is finding a way to fund affordable housing. Henry is a co-sponsor of the new bill.

“Clearly I thought on some level the way I was doing it was better but I’m a pragmatist,” Henry said. “This is a democracy. If more people want to do it this way than that way, we’ll do it this way.”

Hill said some housing activists are concerned that applying the tax increase to all property sales could make it harder for families to purchase homes in Baltimore.

But by exempting would-be homeowners from the tax, the new proposal could stoke opposition from developers and landlords.

Jack BeVier, a member of the Small Developers Collective, said he supports finding a way to put money in the housing trust fund but focusing only on business-related property sales is the wrong way to do it.

“It feels a little confrontational to the landlords,” said BeVier, a partner at The Dominion Group. “It exacerbates the perception that Baltimore is not that friendly towards business.”

Supporters of the bill say academic research has found that increasing property sales taxes doesn’t lead to higher rents, but BaVier said a new fee would push up the cost of doing projects in Baltimore.

Young said he would listen to developers’ concerns but that he was committed to proceeding with the legislation.

“We’re going talk to everybody but this is something we’re going to be wedded to and we’re going to get done,” he said.

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