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Tenant Advocates Rally Against Surety Bonds Bill

Baltimore Mayor Brandon Scott has until Monday to decide whether to veto a controversial bill that would provide security deposit alternatives for renters or allow it to become law without his signature.

While supporters of the bill say it would help low-income renters who cannot afford to pay a deposit, Baltimore’s renter advocates call it predatory.

They held an outdoor town hall and barbeque Wednesday night, calling on the mayor to veto the bill.

Dozens of people gathered at Waverly Commons, where the 32nd St Farmers Market takes place on Saturday mornings.

“We should not have had to fight for this since January,” said Caitlin Goldblatt, an advocate who has been pushing against the bill for months. “And there's so many fights that we are all a part of, that we're being pulled away from to fight this particular fight.”

The bill, framed as “renters’ choice," would require landlords to provide alternatives to security deposits, such as installment payments or surety bonds, for renters.

Opponents of the bill take issue with surety bonds, which the bill calls “insurance”. Goldblatt said that’s misleading.

“This bill would render the few protections tenants do have, which many legislators who are currently working here in Baltimore City fought for, moot,” Goldblatt said.

Fueling momentum over the past two weeks was a leaked video by the real estate startup Rhino, which offers surety bonds.

Based in New York City, Rhino has been lobbying for surety bond legislation in Baltimore and other parts of the country. Jordan Stein, the company’s director of public policy, has been a registered lobbyist with the city since late March.

The video session, hosted by Rhino’s director of sales and partnerships, Eric Krauss, was originally leaked onto Vimeo. Rhino removed it from that platform, but advocates have since recirculated it on social media. They also screened it at the town hall.

“Whenever there's a loss, and this can happen both during the lease or at the end, you simply file a claim with Rhino,” Krauss says in the video. “It takes about one to two minutes. We ask for one piece of proof.”

Krauss says that examples of proof include a move out statement, or a snapshot of a rent ledger. He then says landlords can get their claims approved within two days and get paid in about four days.

Tenants and landlords who sign on with Rhino enter into a contract that requires them to settle disputes through arbitration, or in some cases, small claims court. The contract states that in both cases, renters are waiving their right to a jury.

Molly Amster from Jews United For Justice says this is dangerous for renters.

“Using Rhino, landlords can skirt the law, deny renters due process and collect their money. And renters have no opportunity to assert their right to not pay rent,” Amster said.

Matt Hill, an attorney at the Public Justice Center, told WYPR that he did not know landlords could file claims during the lease until he saw the video.

Hill said this is even greater cause for alarm, especially for tenants who withhold rent when their landlords do not make urgent repairs.

“Let's say the tenant withholds the rent for May,” Hill said. “Landlord says, ‘Well, I don't want to take a chance on the tenant going through a rent escrow process, or trying to make me make the repairs in court. So I'm just going to file a claim against the surety bond.’”

Rhino, or another surety bond company, would then pay the landlord and seek money from the tenant, who is still waiting on repairs.

“According to Rhino’s contract, it says that the tenant’s obligation to pay the surety bond company is independent of any rights or obligations under the lease,” Hill said.

Hill wrote a letter last week urging Scott to veto the bill. The mayor has not announced any definitive plans.

In an interview with WYPR, Rhino’s CEO Paraag Sarva said once a landlord makes a claim, Rhino contacts renters immediately to “get their side of the story.”

Sarva pushed back against concerns that renters will suffer damaged credit when a landlord files a claim.

“By policy, we don't actually impact negatively any renter’s credit ever,” he said.

But the contract that tenants sign with Rhino suggests otherwise. The contract states that a tenant who fails to pay Rhino for a claim may face long term consequences, including “adversely impacted” credit, difficulty renting other properties, and higher premiums when trying to get insurance.

Sarva insisted this isn’t Rhino’s intention, and that the company included that segment for “transparency.”

“These are all things we reserve the right to be able to do under the four corners of the contract, but are not at all things that we actively do today or plan to do,” Sarva said.

When asked to comment on the leaked information session by his company, Sarva said it wasn't worth dwelling on.

“You know, the comments and information that was posted, really was taken out of context,” he said. “And posted without the right permissions. And I’ll just leave it at that.”

But under further questioning, Sarva said he could not elaborate on what exactly advocates were taking out of context from the video.

“I'm not sure about what the folks you are referring to said,” he said. “But I'll just repeat what I said earlier, is that I genuinely think it's taken out of context and I would encourage folks to reach out to the company directly.”

The bill passed the City Council overwhelmingly in April, with only two opposing votes from Councilmen Zeke Cohen and Ryan Dorsey. Both were present at last night’s town hall.

Cohen accused Rhino of exploiting low-income Black renters in Baltimore, and said that it is in line with the city’s history of racist housing policy.

“Enough is enough,” Cohen said . “We don't need one more extraction of wealth out of this majority Black city that we live in and that we love. So we say no to Rhino, go back to New York, go back to Silicon Valley, go back to wherever you get your hedge fund money from. We don't want you here.”

Dorsey said the bill is cloaked in progressive language while promoting predatory behavior.

“This bill, what’s the word? It sucks,” Dorsey said. "Raise your hand if you like exploitation.” He paused. “Okay, either you all have two broken arms or you're not crazy!”

If the mayor vetoes the bill, the council could override his veto. On Wednesday night, Dorsey said he’s counting on three additional council members, if not more, including Kris Burnett, to support the mayor’s veto. Burnett, who is also a landlord, abstained from voting on the bill in April.

Tisha Guthrie from the Bolton House Residents Association urged other council members to change course.

“When you know better, you do better,” Guthrie said. “Our representatives may have had good intentions. I understand that a lot of people are busy and may not read, as we said, the fine print, but we're making it real easy for you right now. It doesn't get much clearer. So the question is, now that you know, what will you do?”

Organizers extended an invitation to other council members, including Odette Ramos, to speak, but they did not attend. However, Colin Byrd, the mayor of Greenbelt, made an appearance.

He compared the bill to a virus.

“And what we don't want to see is an epidemic of bad housing policy that follows the passage of this bill, in Baltimore, Maryland, where it spreads from city to city across the state, and from city to city across this country,” Byrd said.

Byrd ended his speech with a quip about rhinos.

“A rhino has horns. It attacks you with horns. It’ll stick you,” he said. “This bill, and this company, they’re trying to stick it to renters. They’re trying to stick it to people who are tenants and they’re trying to stick it to people who are living in poverty.”

More than 40 organizations have expressed their opposition to the bill, including CASA, Housing Our Neighbors, Organizing Black, the Baltimore Teachers Union and Baltimore Asian Resistance in Solidarity.

Sarah Y. Kim is WYPR’s health and housing reporter. Kim is WYPR's Report for America corps member, and Anthony Brandon Fellow. Kim joined WYPR as a 2020-2021 corps member for Report for America, an initiative of The GroundTruth Project that pairs young journalists with local newsrooms. Now in her second year as an RFA corps member, Kim is based in Baltimore City.