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Baltimore Mayor Brandon Scott vetoes security deposit alternative bill

Baltimore Mayor Brandon Scott delivered a last-second veto Monday on a bill that supporters said would give renters more options when paying security deposits, but which housing advocacy groups said would create a system that preyed on tenants.

The veto, the Democratic mayor’s first since he took office in December out of more than a dozen passed bills, was announced just as City Council began its evening meeting.

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Scott said in a written statement that he “could not ignore” the concerns expressed by activists, tenant advocates and other progressive groups.

Under the bill, landlords with 10 or more units who charge a security deposit of more than 60% of a month’s rent would have to offer prospective tenants one of two alternatives: pay the deposit in three monthly installments or purchase “rental security insurance.”

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Several council members objected to the latter provision. They argued “insurance” is a misleading term for this 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 security deposit. In exchange, the bond company pays damage claims made by the landlord. Then, the company bills the tenant for the damage costs. As a result, tenants ultimately could be on the hook for more than a regular security deposit would have cost.

“The benefits of an installment plan for security deposits do not outweigh the potential costs of the security deposit insurance provision to already-vulnerable residents,” Scott said.

The coalition of groups that formed to oppose the bill hailed their victory, even as their members pivoted to lobbying council members to avoid a veto override.

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Democratic City Council President Nick Mosby, a supporter of the legislation, said the 14-member council would “do its due diligence” for the people of Baltimore, but would not say explicitly if he would seek to override the veto.

The council approved the measure in April on a vote of 12-2 with one abstention. Two-thirds of the council would need to vote in favor of overriding Scott’s veto for the bill to become law.

Mosby and other bill supporters argued it would provide renters in every neighborhood with choices, and access to quality housing in neighborhoods across the city. Security deposit alternatives already exist in some neighborhoods, he said.

“When we’re talking about working-class folks — predominantly Black — somehow a product becomes nefarious and predatory,” Mosby said in a written statement. “This is what structural racism looks like in practice: Government’s role turns paternalistic when it comes to poor Black people.”

Mosby said in an interview that he viewed the veto as “modern-day redlining.” The term refers to a practice of banks and other institutions that outlined in red areas on maps where they wouldn’t issue loans Black people needed to buy houses.

“I’m not sure I could point to something more symbolic of structural racism,” Mosby said. “The city of Baltimore is hypersegregated. How can we ever get past that?”

Mosby went on to criticize the influence that “a small minority of folks” had on the mayor’s veto, specifically the groups publicly opposed to the bill.

The Baltimore branch of the NAACP was one of dozens of groups that lobbied Scott to veto the bill. The Rev. Kobi Little, the group’s president, said he hopes to collaborate on new legislation that would lower the cost of renting without people having to “give up their rights to access the courts to dispute landlord claims.”

“The bill doesn’t do what people in this city needed it to do,” Little said. “Any bill like this should retain the right to go to court and also add the right to counsel, and this legislation didn’t do that. It ended up creating risks that outweighed the benefits.”

Scott said he hoped to work with Democratic Council Vice President Sharon Green Middleton, the bill’s primary sponsor, and other council members to propose “comprehensive changes” that would serve renters’ best interests.

During a news conference several hours before issuing his veto, Scott said he recognized that security deposits are a barrier to housing for residents, particularly families with low incomes. That must be addressed, he said.

The mayor outlined a number of changes he would like to see to the legislation, including a requirement for multiple insurance products to be offered, and he said the city needs to obtain more protections from fraudulent claims for tenants who accept security deposit insurance.

Scott declined to answer a question about whether he was confident his veto could withstand an override vote.

According to the city’s charter, the council has 20 days to attempt an override, unless it has no meeting during that window. So, any override vote on this bill would be taken at the council’s next scheduled meeting, which is June 8.

The bill garnered opposition from a range of activists and advocacy groups, including the Maryland Consumer Rights Coalition, Baltimore Teachers Union, CASA and Progressive Maryland.

Ralikh Hayes, deputy director of Organizing Black, said the groups now must pivot to sustaining the veto and producing other gains for tenants, such as rent control and rent relief.

“This was more about harm management than repairing anything,” Hayes said. “We’re excited for this victory and this show of organizational strength.”

Carol Ott, tenant advocacy director for the Fair Housing Action Center of Maryland had expressed concerns over the bill’s forced arbitration clause. It would prevent a tenant from suing or participating in a class-action lawsuit or appeal.

“There’s no recourse if something goes wrong,” Ott said. “It ends up being a bad deal for tenants.”

Calls to council members urging them to sustain the veto already have begun, said Caitlin Goldblatt, an organizer with Baltimore’s Democratic Socialists of America branch and Baltimore Renters United.

Goldblatt said Scott’s careful contemplation of the bill gave city organizations, advocates and activists more time to garner opposition against the legislation and create a sustainable movement. She said she hopes the grassroots coalition can keep building on that network to secure tangible protections for renters and low-income communities in Baltimore, such as more funding for the city’s housing department, penalties for landlords with repeated legal violations and reform of land use policies.

“The world just feels wide open,” she said. “I hope they take this as sign that we want to be involved.”

Before it moved to the mayor last month, the bill was amended to exclude public housing. But a separate amendment proposed by Democratic Councilman Ryan Dorsey to remove the security deposit insurance provision from the bill failed by a 12-2 vote.

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Only Dorsey and Democratic Councilman Zeke Cohen voted against the overall bill, but several members complained about a final committee meeting that Middleton chaired in March. At that time, Dorsey was barred from introducing his amendment (he later introduced it before the full council) and Middleton interrupted him repeatedly as he attempted to speak against the legislation.

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In an interview Monday evening, Middleton said Scott’s veto disappointed her. She said she would’ve been open to amending the bill had it become law, and will “continue to fight” for Baltimore’s renters.

“I finally saw a tool that could help poor people in our city, especially in this pandemic, which has made our problems even worse,” she said. “We have to take chances and find new ways to help people.”

Baltimore Sun reporter Christine Condon contributed to this article.

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