A Baltimore Housing Authority proposal to sell more than a third of its 11,000 public housing units to private developers in order to finance $300 million in capital improvements to the properties has got some advocates and tenants worried. Some are calling the plan a "giveaway" to developers eager to convert the units into market-rate rentals, and maintenance workers at the agency have expressed fear for their jobs if the buildings are sold to private owners.
But what all those involved in the debate need to recognize is that unless the city tries a new approach, Baltimore's stock of public housing is going to drop anyway because of a lack of money to perform even basic maintenance. There are risks to the plan Housing Commissioner Paul Graziano announced last week, but there is a certainty that Baltimore's poor will suffer from sub-standard conditions in crumbling buildings if the city does nothing.
The 22 buildings the agency plans to sell all require extensive repairs to major systems such as leaking roofs, faulty heating and air conditioning equipment and nonfunctioning elevators. Yet the cost of such renovations far exceeds the agency's paltry $4 million annual maintenance budget, which has been repeatedly cut over the last few decades as Congress tightened the purse strings on domestic spending programs. If the city were to continue trying to make the repairs needed to maintain its public housing units at its current pace, it would take more than 200 years to complete the work.
If the work isn't done, moreover, many of these buildings, where thousands of low-income, elderly or disabled city residents live, will become uninhabitable within just a few years. That would further shrink the stock of affordable housing in the city and could eventually force hundreds of families from their homes and onto the streets. The city is already facing an affordable housing crisis as a result of rising rents and cuts to federal subsidies such as Section 8 housing vouchers. If nothing is done to increase the supply of low-income housing, or at a minimum preserve the units the city presently has, many residents may soon find themselves facing the prospect of not having a roof over their heads.
The Housing Authority's proposal would take advantage of private funds available through a new federal initiative called the Rental Assistance Demonstration program, which provides developers with low income housing tax credits that can be sold to investors for cash to buy and repair affordable housing units. Under the program, developers must promise to maintain the properties as low-income housing for at least 40 years and to make the units available to other low-income residents if the original tenants leave during that period. The developer's costs for buying and repairing the units are covered by the sale of the tax credits to the investors, who can then use them to write off a portion of their IRS bills over a 10-year period.
From the Housing Authority's point of view, the beauty of the program is that it allows the city to attract hundreds of millions of dollars in private funds to rehab low-income units — and to do it quickly, before the buildings deteriorate further, rather than spread the work over centuries. Granted, the Rental Assistance Demonstration program, which seeks to renovate some 60,000 public housing units across the country over the next two and a half years, is just that — an experiment to find out whether government tax incentives can attract significant private capital to invest in the nation's public housing stock. Clearly the city needs to keep a close eye on how the project unfolds take care that the developers it works with abide by their commitments. But if things go even half as well as expected, Baltimore will surely be the better for it, whereas the consequences of doing nothing are certain to lead to a situation that no one could want.
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