Whoa. Hang on a minute. That must be the response of the Baltimore City Council to housing advocates calling for members to pass the so-called “Inclusionary Housing” bill under consideration.
The Planning Commission earlier this month unanimously high-fived the bill, aimed at making Baltimore City housing more attractive for middle and low-income residents. It would force any developers receiving city subsidies to devote 20 percent of their projects? housing units to people whose income falls within certain parameters. After a year and a half developers whose projects would not move forward without changes to zoning laws would have to designate 10 percent of their units affordable. Eventually it could apply to all developers if the city decides too much of the city?s housing stock is out of reach of the targeted demographic.
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The goal may be noble, but the problem with the bill is that the premise — a crisis in affordable housing exists in the city — is dubious, as local realestate prices show. And no guarantee exists that the bill will draw the target audience to the city or expand the stock of affordable housing. It will no doubt increase bureaucratic red tape for developers and aid recipients alike and encourage fraud by making it worthwhile to hide income to live in desirable communities among other issues, however.
Housing prices in Baltimore City are the lowest in the area, with the average home nearly $130,000 less than the average for the region. So even if the regional housing market “is increasingly like a car dealership with only Hummers and Cadillacs, and no mid-price sedan, or a grocery store that only sells filet mignon, but no macaroni and cheese,” as the city?s 2006 Inclusionary Task Force report found, the city?s housing stock could best be described as a Hyundai dealership.
Second, the financing for the legislation is shoddy. The “affordable housing trust fund” contained in the bill to compensate builders for lost revenue from lower priced units will be $1 to $3 million for 2008. That could easily be eaten by one developer. And did any of the advocates consider developers might choose to build elsewhere where no such restrictions exist, defeating the purpose of the bill?
Third, the logic behind the bill is fatally flawed. What happens when real estate prices go up on the lower-income units? Do they stay permanently low-priced? What would be the incentive to improve them, much less take care of them, if owners will not be able to make a profit when they sell them? And how does the city plan to vet and monitor those who live in the units.? Will residents have to report raises or new income streams? Rent control policies across the nation prove that those who need affordable housing the most are the least likely to live in regulated properties. Because owners will not be compensated for making improvements, they also turn into some of the most decrepit.
The better solution would be to lower city property taxes, which are twice as high as surrounding jurisdictions. That would make housing more affordable for everyone and prevent unintended consequences.
