Baltimore City Council considers tax hikes to pay for affordable housing

Councilman Bill Henry wants to increase taxes on property sale recording fees and inheritances to raise $10 million annually for affordable housing in Baltimore.
Councilman Bill Henry wants to increase taxes on property sale recording fees and inheritances to raise $10 million annually for affordable housing in Baltimore. (Karl Merton Ferron / Baltimore Sun)

In a city where many struggle to make monthly rent payments, the Baltimore City Council is considering raising taxes on property sales and transfers to provide $10 million annually for affordable housing.

City Councilman Bill Henry submitted legislation Thursday to raise the recording fee by 20 percent and transfer taxes by 17 percent, respectively, to provide a “sustainable revenue source” for the Affordable Housing Trust Fund — a new fund created by the voters that currently has no money in it.


Henry said the tax increase would result in about $10 million more each year.

If passed, the bill would raise the recording fee charged on every $500 worth of property sold from $5 to $6. That means on the sale of a $100,000 house, about $200 would go to the Affordable Housing Trust Fund.


The transfer tax charged on property transfers would rise from 1.5 percent to 1.75 percent. That means on the sale of a $100,000 house, about $250 would go to the Affordable Housing Trust Fund.

“Baltimore City is a difficult place to live right now for a lot of people. They just don’t have the money and the resources to pay all of their bills,” Henry said. “Society has a responsibility to address that.”

City Council President Bernard C. “Jack” Young said council members plan to study Henry’s legislation, along with other ideas to raise money, on a task force he’s creating dedicated to funding more affordable housing in Baltimore.

He and fellow City Councilman John Bullock submitted legislation Thursday to create the task force, which will make recommendations about new revenue streams for affordable housing.

Baltimore tenants, who have one of the highest rates of eviction in the country, are pressuring Mayor Catherine Pugh to make good on a campaign promise for more affordable housing in the city.

Young said he was disappointed that his past attempts to create more housing for the poor have been unsuccessful. He lamented the weakness of the city’s current inclusionary housing law, which has been in effect for a decade with meager results.

“What I’m hoping doesn’t happen is what happened last time,” Young said. “I had a very strong inclusionary housing bill that was weakened by the mayor and the housing commissioner.”

Even the proponents of Baltimore's current inclusionary housing law agree that it is flawed.

The ordinance was supposed to require developers of city-subsidized projects to make 20 percent of their housing units affordable to lower-income families.

But the law has produced just 32 affordable units, despite thousands of apartments and condominiums being built in the city, because of a provision that requires the city to pay developers for building the units — money city officials say they don’t have. Instead, city officials typically grant waivers and the developments are built without housing for the poor.

“We do have an inclusionary housing law. It’s not working very well,” Bullock said. “We’re not producing many units. … We want to make sure we have a law that works for everyone.”

The nonprofit Baltimore Healthy Start has declared an affordable housing “crisis” in the city.

“More than half of Baltimore’s renters live in housing they cannot afford; 57 percent pay more than 30 percent of their income for housing and, staggeringly, 33 percent pay more than half,” the group wrote in a report last year. “And it’s getting worse. Rising rents and stagnant incomes have forced more and more families to spend more of their budget on housing, increasing financial insecurity and the risk of eviction or foreclosure.”

To try to remedy the problem, voters last year amended the city charter to set up a new trust fund for low and extremely low-income households — after an affordable housing advocacy group submitted more than 18,100 signatures in support of it.

Plans for the Affordable Housing Trust Fund say it will one day support inexpensive housing by providing loans or grants.

But the trust fund does not have a funding source, and it’s up to the City Council or the mayor to designate money for it.

A spokeswoman for Mayor Catherine Pugh said Thursday that she was studying Henry’s proposal.

On a related topic, Henry also submitted a resolution Thursday asking the city to create a community development-focused tax-increment-financing program.

Tax-increment-financing deals have been used to subsidize development around Baltimore’s waterfront, but Henry wants to create a program that would identify community development initiatives that are not along the waterfront or in the downtown.

Recommended on Baltimore Sun