Baltimore City Council approved a bill Monday that will create a security deposit grant program for low-income city residents — a compromise reached among various city officials after a bill mandating alternative security deposit options was rejected earlier this year.
The grant program will provide up to $2,000 toward a renter’s security deposit based on their income. The grants, which will be administered by the Mayor’s Office of Children and Family Success, will be available only to low-income residents on a one-time basis. Annual funding will come from the Affordable Housing Trust Fund and other sources within the city budget.
Council fast tracked the legislation Monday, taking the second and final vote on the measure on the same night. The measure passed 14-0 with one abstention from Councilman Kristerfer Burnett.
Council Vice President Sharon Green Middleton, the bill’s primary sponsor, applauded the various branches of city government who worked together on the bill. Like council’s previous attempt to offer other options to cash-up-front security deposits, the grant program is “forward-thinking” legislation, she said.
“It addresses the need, it solves a problem, it helps residents and it helps our city,” she said.
The grant legislation was introduced in June after council’s failed attempt to regulate security deposit alternatives. The alternatives bill, also introduced by Middleton, would have required landlords with 10 or more units who charge a deposit of more than 60% of a month’s rent to offer tenants payment alternatives: either pay the deposit in three monthly installments or buy what is called “rental security insurance.”
The bill passed on a 12-2 vote with one abstention, but some council members said they objected to the insurance provision.
They argued “insurance” is a misleading term for that type of security deposit alternative, which is typically offered via a surety bond. In such an arrangement, a tenant often pays a nonrefundable premium that is lower than a typical lump-sum deposit. In exchange, the bond company pays damage claims made by the landlord. Then, the company bills the tenant for the costs.
Supporters of the bill argued the plan would have given renters more options. Housing advocacy groups, however, campaigned for a veto, saying it would create a system that preyed on tenants.
Mayor Brandon Scott ultimately vetoed the bill. Several council members also were swayed by housing advocates, and a coalition needed to override Scott’s veto fell apart. An override vote was never called, and Middleton introduced the grant program legislation instead.
Council President Nick Mosby said Monday the security deposit grant program is urgently needed for the city’s numerous residents on the brink of homelessness due to the COVID-19 pandemic.