Council votes for real estate tax rises

Levies on transactions would pay for affordable housing trust fund

The Baltimore City Council voted unanimously Monday to raise taxes on real estate transactions to fund a $20 million Affordable Housing Trust Fund, earning cheers from advocates but concern from the city’s budget chief.

Council members backed a deal struck by Mayor Catherine E. Pugh and housing advocates to levy two excise taxes on certain transactions and other allocations to fund the trust to create, rehabilitate and preserve more than 4,100 affordable housing units in the next decade.

Activists, who cheered the council’s vote at City Hall, say the fund will help low-income residents who can’t find decent homes or apartments.

“This is really exciting,” said Odette Ramos, director of the Community Development Network of Maryland, who pushed for the fund’s creation. “The people this will serve, these are families who are really, really struggling.”

The legislation needs one more approval vote from the council before it advances to Pugh’s desk for her signature.

The city’s finance department raised concerns about the volatile nature of transfer tax revenues and the city’s already high tax burden. Baltimore charges twice as much in property taxes as surrounding jurisdictions.

“The burden placed on residents and businesses in the city is significant in comparison to both other local jurisdictions and major cities nationwide,” Robert Cenname, the city’s budget director, wrote in a statement he submitted. “Any additional tax increase has the potential to reduce investment in Baltimore, which in turn could erode general fund revenues.”

The bill was the subject of consternation among activists in the days leading up to the council vote over exemptions and a sunset clause.

The exemptions would deprive the fund of about $1.15 million, according to city estimates. They included one for residential properties valued at over $1 million, for up to two years, and another that would exempt construction loans for projects that are currently in the pipeline and have a building permit by the effective date of the new taxes, which is Jan. 1.

Josh Greenfeld, vice president of government affairs for the Maryland Building Industry Association, has said the group sought the exemption that would grandfather in development projects that already had received building permits. Greenfeld said it’s important to protect developers who have projects in the pipeline and have secured financing on the basis of the current tax rate. Adding a new excise tax increases costs and jeopardizes that financing, he said.

Matt Hill, a lawyer with the Public Justice Center, said that even with the exemptions, the bill is a positive development for Baltimore’s poorest residents. “This is still huge. This is $20 million a year to invest in Baltimore neighborhoods,” Hill said.

The council amended the bill on the floor Monday to strike the sunset clause, which would have allowed the tax increases to expire after seven years.