To help correct historic patterns of housing segregation in the Baltimore region, the federal government has created new financial incentives for developers to make room for low-income families in apartment buildings constructed in prosperous, integrated neighborhoods.
The Baltimore-area initiative — born out of the landmark fair housing lawsuit, Thompson v. U.S. Department of Housing and Urban Development — is expected to expand nationally if it succeeds, government officials said.
But so far, it hasn't.
The program was projected to generate at least 300 affordable units every year until 2020. Two years after it began, HUD officials said, none have been built and no developers have applied for the incentives.
"To date we have had some interest in the program, but no applications have been received," wrote Robert G. Iber, an HUD official in Baltimore, in a recent email to potential builders.
The lack of interest highlights how difficult it is to increase the number of apartments for low-wage families in integrated neighborhoods with high-performing schools, low crime and more jobs.
The federal judge in the Thompson case found that HUD had violated federal fair-housing laws by not taking a regional approach to desegregating public housing in Baltimore. As a remedy, a program has moved nearly 10,000 former city residents into surrounding counties, mainly through special rent subsidies that allow them to afford higher suburban rents.
Since the case was settled in 2012, other legal developments have pushed county officials to do more to adjust policies that for decades contributed to clustering low-income residents in the poorest neighborhoods. This year, a Supreme Court ruling and HUD's renewed push to enforce the Fair Housing Act of 1968 have alerted local governments nationwide that they could lose millions in federal housing support unless they take action to address clustering.
Baltimore is one of the few regions in the nation where county and city officials are collaborating on policies that would make it more economically feasible for developers to build affordable units in so-called "communities of opportunity."
Led by the Baltimore Metropolitan Council, localities financed a regional analysis of the impediments to creating more units where low-income families could move in the region. The report found the region's policies discourage "expansion of affordable multifamily rental developments into neighborhoods that are traditionally white and low-poverty."
The council's regional Opportunity Collaborative initiative, which is funded by HUD, published a separate regional housing analysis last year that found little relief on the horizon.
Nearly all of the multifamily projects being developed in high-opportunity areas throughout the regionare planned to be market-rate housing, "and likely to be unaffordable to the region's lowest income households without an inclusionary zoning requirement or subsidy," according to the Opportunity Collaborative's assessment. Inclusionary zoning generally requires developers to set aside some affordable units within a project.
"There are no rental homes in the housing market that are affordable to a family earning 30 percent of median family income" of $85,600, the report states. "This income level includes the typical food prep worker with two children earning $23,000 a year or a typical retail salesperson with three children earning $25,000 a year."
Opportunity Collaborative has helped orchestrate regional cooperation to provide more incentives. For example, the housing agencies in Baltimore City and Anne Arundel, Baltimore, Harford and Howard counties have agreed to create a pot of their own federally funded rent subsidies and award the funds to developments that set aside units for low-income families.
Housing advocates have said that more affordable apartments and homes would be available in the city's suburbs if Anne Arundel, Baltimore and Harford counties followed Howard County's lead and enacted legislation requiring developers to set aside some low-income units and prohibited landlords from turning away tenants with subsidies.
Such legislative proposals are being considered by Baltimore County officials as part of negotiations with fair-housing advocates over a 2011 federal discrimination complaint filed against the county. The complaint accuses the county of perpetuating segregated clusters of renters with government subsidies by not implementing policies to expand affordable options in more prosperous neighborhoods.
The state housing department faces a similar complaint regarding the placement of housing supported by low-income housing tax credits. Advocates say such policies have placed senior affordable housing projects in good neighborhoods while locating family apartment complexes in areas of existing poverty and subsidized housing.
The new federal initiative adds another layer of financial savings for developers seeking those tax credits for multifamily developments. The HUD incentives offer lower mortgage insurance premiums and other incentives to developers that set aside 10 percent of two- and three-bedroom apartments for tenants with rent subsidies.
"HUD believes that the proposed incentives will contribute to reducing racial segregation and increasing opportunities for low-income families to live in areas identified as 'communities of opportunity'" in the Baltimore area, according to HUD documents.
HUD officials did not explain why the new incentive program has failed to attract any applicants.
Several housing officials and developers from across the region said they were either unaware of the new incentives or unfamiliar with their impact.
"I don't know about it," said developer Jeffrey C. Kirby, of KB Company Inc. "I'm surprised I don't."
Last month Kirby began construction on apartments in Elkridge, a project that received tax credits from the state and funding from Howard County. The 84-unit, mixed-income community will offer 42 market-rate apartments and 42 affordable units. The four-story apartment and townhouse development will feature views of the Patapsco River, large lobby windows, a walkway, gazebo and community open areas.
Kirby is close to finalizing a similar deal on a 92-unit apartment building in the Parkville area and is talking to Baltimore County housing officials about getting incentives from a new $9 million fund established by County Executive Kevin Kamenetz. The county plans to spend $30 million over the next decade from the fund to provide incentives to developers.
Without such incentives — which Howard County has offered for years — counties might not attract developers willing to build affordable apartments in more prosperous neighborhoods where land is more expensive. Such deals are more complicated and can take longer when they include tax credits, government incentives and other financing.
"These projects are really hard to do," Kirby said. "There's just not as many developers who do this. It's just economics."
Thomas Carbo, Howard County's housing director, agreed. Riverwatch is the first multifamily, mixed-income development by a private developer in the county in eight years, Carbo said.
"It's been difficult attracting private developers to do affordable housing in Howard County," he said. Helping developers afford the high land costs through incentives is essential, he said.
County assistance can also assure that projects blend into the community to overcome stigmas about subsidized tenants.
"What we don't want is for people to drive by and say, 'There's that low-income housing,'" Carbo said.