Baltimore housing officials plan to ask the city to provide a subsidy of $50 million to $100 million for a developer that plans to rebuild a wide swath of East Baltimore, including an overhaul of the public housing complex just north of glitzy Harbor East.
It is the first time such a tax incentive has been considered for an affordable-housing project, housing officials said.
Proponents say the plan will improve housing conditions for tenants of the Perkins Homes, who are mostly poor and black, and help to desegregate the neighborhood. But opponents see it as a way to further gentrify the area that could force longtime residents into other parts of the city.
Peggy Margaret Webster, director of planning and development for the Housing Authority of Baltimore City, said city officials are still analyzing how much in tax-increment-financing is needed for the project. She said the subsidy, known as a TIF, will finance the building of public infrastructure to support the public housing complex, including a new school. The request is expected to go before the city's Board of Finance in April.
"The [subsidy] will pay for the school, roads, sidewalks, sewer and infrastructure," Webster said. "This is the first time the city has done a TIF with affordable housing."
The plan — called the Perkins Transformation Project — is a large-scale redevelopment of much of East Baltimore, connecting the wealthier neighborhoods of Fells Point, Harbor Point and Harbor East with Johns Hopkins Hospital's development efforts.
Key to the revitalization plans are redevelopment at the site of the mostly vacant Old Town Mall and a new mixed-income development at the site of the former Somerset Homes, which were torn down a decade ago.
The Perkins Homes complex, home to roughly 1,400 people in about 630 apartments, sits on 17 acres of prime real estate that is seen as a critical link between the rising development on the harbor, the revitalization effort surrounding Johns Hopkins Hospital and the planned transformation of the long-distressed pedestrian mall.
Housing officials say the dilapidated conditions at Perkins Homes, which have no central air-conditioning or washers and driers in units, are unacceptable. They say they plan to break up the concentrated poverty of public housing by building two separate complexes — each of them with units affordable to residents of various incomes. Plans call for 652 units aimed at very low-income people who qualify for public housing. The Housing Authority would oversee these properties, though the developer would manage them.
Another 276 homes described as "affordable" are earmarked for tenants earning 60 percent of the area median income; a family of four earning $55,000 would qualify.
And 417 homes would sell at market rate.
"This is about connecting people," Webster said. "This is a city of lots of boundaries. We're trying to break those boundaries."
But opponents say the plan could actually lead to more segregation, not less. They're concerned Perkins Homes residents could end up moved to the new development at the Somerset Homes site — located away from the waterfront and near the city jail — while wealthier, white residents take over the redeveloped Perkins area.
Matt Hill, a housing rights advocate at the Public Justice Center, said he is concerned the city's plans could cause people to be displaced.
"Are they going to actually provide a meaningful opportunity to return to the same neighborhood?" Hill said. In other redevelopment programs, former residents have faced new background checks for the new apartments that prevented them from returning to their community, he said.
Hill's also worried the project will, in the end, offer lower income people fewer choices of places to live in Baltimore.
"We're concerned any time there's a net loss of public housing units just because of how scarce affordable housing is in this city," he said.
Housing officials say they're working to make sure tenants are accommodated. They've hired a consultant to work with Perkins Homes residents before the project begins to decide whether they want to stay at the site or leave.
Those who want to leave will have an option of moving to a new complex being built at the site of the former Somerset Homes or using a federal Housing Choice voucher, also known as Section 8, to move elsewhere.
"Our goal is not to relocate anybody out of the neighborhood unless they want to go," Webster said. "We think we can do it based on the numbers. Our goal is to make sure no student gets relocated out of the school."
They say the redevelopment plan will decrease segregation, not increase it.
"Every building is mixed income. It's not segregated," Webster said.
In addition to a new school building for the students of City Springs Elementary School — most of whom live in public housing — the plan funds bike-and-pedestrian-friendly streets, new CitiWatch surveillance cameras and an anti-violence Safe Streets team at the Old Town Mall site. It also funds a range of services for Perkins residents, including enrolling children in early learning programs.
To support the project, the city and housing agency intend to apply for a $30 million federal grant. As a condition of the federal funding, the city would be required to contribute at least three times the grant amount.
A tax-increment-financing deal in the range of $90 million could help the Housing Authority meet that obligation, officials said.
City officials expect to find out at the end of this month whether the project has made the first cut in the grant process.
Roxanne German, 62, who lives in the Perkins Homes, said the conditions at her apartment are terrible. She said she can't use her stove and her heating system is broken.
"These places really need to come down," German said. "A lot of people are getting sick from being in here."
German said she would like a government rent subsidy to move to a different site — or would be willing to stay at Perkins if the redevelopment is acceptable. She said she's disappointed plans for an overhaul of the housing complex are taking so long.
"At the tenant meeting yesterday, there was no progress," she said. "All our hopes and dreams might go down."
Some opponents are expressing skepticism at the developers involved in the project.
The Housing Authority selected Beatty Development — which is building the $1 billion glittering Harbor Point project to the south of Perkins Homes and redeveloping the Old Town Mall to the north — to lead the team at Perkins.
The Harbor Point project is already benefiting from a $125 million tax-increment-financing deal.
The tax subsidy approach is often controversial because the city issues bonds to give developers up-front cash to support development work. Once completed, the new buildings' property taxes go toward paying off the city's project-related debt, instead of to the city's general fund to pay for things such as schools.
In 2016, after a political battle, the city approved its largest TIF ever — $660 million for Sagamore Development's Port Covington.
Officials from Beatty Development did not respond to a request for comment.
In addition to Beatty, the city is working on the plan with Mission First Housing Development, a nonprofit affordable housing developer; the Henson Development Co.; and Bank of America.
As a condition of the federal Choice Neighborhoods Initiatives grant, the city would be required to replace every affordable housing unit it demolishes.
If the city gets the grant, housing officials would need to complete the project within six years.
Some City Council members are wary about approving another tax-increment-financing deal, even one that housing officials argue benefits the residents of public housing.
Baltimore City Council President Bernard C. "Jack" Young, said he currently has "no appetite" for a TIF.
"I don't want to see a segregated community," Young said. "That's what it looks like is going to happen down there."
Even so, Young said he was open to hearing more from both housing officials and Perkins Homes residents about what they want to see at the site.
"I'm all for mixed-income communities, but I don't want to see gentrification," Young said. "I've always been about a win-win."
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Mayor Catherine Pugh said she is "excited" about the plans.
"Perkins Homes is not going to be just low income, but moderate income and connected to people who are upper income," Pugh said. "That's what a city needs to be: Diverse incomes, living in the same area."
Barbara Samuels, managing attorney for fair housing at the American Civil Liberties Union of Maryland, said she sees an opportunity in the project, but opposes the current plans. She wants to see more affordable housing planned for Baltimore's majority-white neighborhoods and a plan to desegregate City Springs Elementary School.
"You could be intentional about creating an integrated community and school that begins to break down the barriers between the two Baltimores, but that potential is essentially unrealized in their plan," Samuels said.
Baltimore Sun reporter Ian Duncan contributed to this article.