Seemingly everyone at the Baltimore City Council meeting Thursday night could agree on one thing: the city’s existing inclusionary housing ordinance isn’t working.
Passed in 2007, the law requires developers of market-rate housing to set aside affordable units for people with lower incomes, but it has led to the creation of only 37 affordable units. Instead, developers have paid into an offset fund or sought waivers.
Now, the Baltimore City Council is taking another crack at inclusionary housing. A bill proposed by Councilwoman Odette Ramos and co-sponsored by a majority of the council would eliminate the loopholes allowed by the previous law, while also reducing the percentage of affordable units required.
The city’s previous inclusionary housing policy required developers building 30 or more units to set aside 20% as affordable for residents earning less than the Baltimore area’s median income.
Since the bill’s introduction in February, Ramos has been working with city officials to iron out concerns ahead of public discussion. On Thursday during a committee of the whole meeting, she introduced two dozen amendments designed to allay city officials’ concerns.
Alice Kennedy, Baltimore’s Housing Commissioner, concurred with the council that the existing legislation had failed to achieve its objective of creating affordable housing.
Still, some city housing and finance officials expressed ongoing concerns and proposed some changes to the requirements of Ramos’s proposed bill based upon recommendations from a study published in 2021 that analyzed the city’s real estate market and the feasibility of inclusionary housing.
As proposed the legislation would apply to developments across the city. However the study, conducted by Enterprise Community Partners, found that only the city’s strongest housing markets could support an inclusionary housing requirement.
City officials have recommended applying the legislation to only “core” areas such as around the harbor and other select neighborhoods where development has boomed.
Under Ramos’s proposed legislation, developers receiving a city subsidy to build a project with 20 units or more would need to set aside 10% of units as affordable for low-income households — those earning 60% of area median income.
Developments receiving an additional subsidy from the city would be required to add at least 5% more affordable units for residents who are very low or extremely low income. Units would have to remain affordable for 30 years. The previous legislation was enforced over a 20-year period.
Developers would be required to submit an inclusionary housing plan to the city before receiving any permits for their project. That proposal, which also would require plans to market affordable units to residents who have historically been excluded from new developments, would have to be approved by the city’s Inclusionary Housing Board.
Steven Reilly, a principal with HR&A Advisors, a real estate consulting firm, recommended that the council target the affordable units to both moderate- and low-income residents. Moderate-income families are those making 80% of area median income. The study showed offering units to those in even lower-income brackets, as Ramos recommended, resulted in a cost burden that “really outweighed the incentive to build the project,” Reilly said.
“You want to maximize affordable production but not doing it to a point where you’re inhibiting housing production,” Reilly told the council.
Reilly proposed giving developers a 15% tax break to offset the cost of offering housing at lower rates.
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Councilman Zeke Cohen, whose district includes areas in high demand for development such as Harbor East and Butchers Hill, questioned why such a tax break was necessary. He said he worried Reilly was too quick to dismiss alternative incentives like easing parking requirements or offering a density bonus allowing more units per site.
“I am far more comfortable with those types of bonuses than I am giving an additional 15% tax credit for folks to have low income folks in their buildings when we’re already giving them a high performance subsidy,” he said, referring to a separate tax credit given for market-rate residential buildings.
Several council members questioned how the inclusionary housing proposal would be used to improve housing in other areas of the city that have struggled to attract developers amid high vacancy and neglect.
“The buzzword is inclusionary housing again,” lamented Councilman Robert Stokes, one of the bill’s co-sponsors. “Well, I don’t see how this bill includes people in those communities that suffered through the excluded housing.”
Kennedy said other tools are being deployed in neighborhoods outside the area where she would like to see the inclusionary housing bill targeted. The city needs to reduce vacancies and try to support grocery stores, green space and cultural institutions, she said.
Inclusionary housing, however, has to be targeted to areas where market rate housing is being developed, Kennedy said.
“This is really about trying to have residents who can be in areas where they are usually out of reach,” Ramos added.
This article was updated to add better explanation to Councilwoman Odette Ramos' proposed legislation.