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Mosby’s dollar house program panned by city agency leaders

2016-10-12_09_55_06_abandoned_row_homes_along_monroe_street_between_u.s._route_1__wilkens_avenue__and_eagle_street_in_baltimore_city__maryland.jpg
Wikimedia Commons/FAMARTIN
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A group of vacant rowhomes on Monroe Street. At a hearing Tuesday, agency leaders slammed City Council President Nick Mosby's dollar house proposal.

City Council President Nick Mosby’s dollar house program got a slew of unfavorable reviews from Baltimore agency leaders at a hearing Tuesday.

Mosby has touted his legislation, a package of three bills introduced last year, as a pathway to homeownership for legacy city residents, arguing it would revitalize impoverished neighborhoods as Baltimore’s original dollar home program did in the 1970s. The bills call for using $200 million in American Rescue Plan Act funding, which is solely controlled by Mayor Brandon Scott.

Scott’s cabinet leaders slammed the bills, calling them confusing and unconstitutional.

In a lengthy and critical report, Housing Commissioner Alice Kennedy said that selling a city-owned property for a dollar was the most straightforward component of the bill.

“It is the access to capital and lending, affordability, and comprehensive community revitalization that also need to be in place in order to achieve the homeownership outcomes that we know we need,” she said.

Mosby’s dollar home program would be open to legacy residents, defined in his legislation as first-time homebuyers who have lived in Baltimore for 10 continuous years or who are city employees of at least five years. The program would offer city-owned homes in designated neighborhoods, defined as those overlooked by investors or those historically subject to redlining and those with assets that can provide an impetus for revitalization, such as public markets and transit corridors.

Kennedy said it would not be difficult to verify whether someone had ever owned a home, but that proof of residency “would be very difficult to establish at a level that may be able to withstand an audit.”

The bill would allow participants to lease a city-owned property for two years at a cost of one dollar. The participant would then need to pay for the property’s rehabilitation and declare it as their primary residence within six months of signing the lease. If the home is brought up to code, the city would then transfer its title to the participant.

Mosby’s legislative package includes a bill to provide grants up to $25,000 for residents in designated neighborhoods to make repairs to their homes, as well as a bill to provide $5,000 for seniors at risk of losing their homes due to reverse mortgages.

That’s not enough to fund renovations that would cost anywhere from $100,000 to $300,000, depending on the size and condition of eligible properties, Kennedy said.

She said the legislation’s language would prevent participants from taking out standard acquisition and rehab loans, which generally require a participant to own the home they are renovating. The legislation, which would require residents to rehabilitate properties they are leasing, does not provide a pathway to the needed capital that the renovations of decrepit city properties would require, she said.

Kennedy added that only 315 city-owned properties would be eligible under the program’s stipulations; they are in 47 of Baltimore’s more than 270 neighborhoods. Nearly two-thirds of the eligible properties are directly next to a vacant property; nearly half are on blocks with more than 50% vacancy. The city’s original dollar home program offered up entire blocks of homes.

The cost of rehabilitating an eligible city-owned home would be greater than the average area home sales price, she said, adding that even if a program participant could obtain financing and insurance with the cost of rehab greater than area sales prices, they would be immediately underwater.

She added that the bill would seriously strain DHCD’s finances and staff, estimating that the bill would require spending about $800,000 to hire nine additional staffers to run the program.

Kennedy also said the bills are duplicaticative of other city programs, such as Vacants to Values and a home repair grants program.

Mosby replied that his program was not meant to replace existing programs, but supplement them by creating new opportunities to generate wealth and redress racist housing policies of the past, such as redlining, which disproportionately hurt Black families.

“More needs to be done,” Mosby said. “It’s not that it’s duplicative. It’s that it’s a supplement. It’s not that it’s restrictive. It’s that we want to hone in on the areas that have disinvested in for far too long.”

Council Vice President Sharon Green Middleton said Mosby’s proposals are far more wide-reaching than Baltimore's current programs.

“These bills came about through the findings of what we can all see, particularly through the pandemic,” she said. “And some of the programs that are already in place have problems.”

Councilman Ryan Dorsey was more critical.

Kennedy’s “assessment of the bill reflects a lot of the questions that I have had in reading it, and it does really reveal a lot of conversation that seems to need to take place over this bill,” he said.

After the council members’ comments, as the virtual event eclipsed the 90-minute mark, Mosby left the hearing. Middleton announced his departure and chaired the rest of the hearing.

Afterwards, other city agency heads shared their concerns. Finance officials said the package would cost at least $16.1 million to implement. Budget Director Bob Cenname estimated the home repairs grant funding would cost $13.8 million.

He pushed back against using ARPA money for the $200 million legislative package, saying it may not qualify.

“I don’t think we’re ready to commit to that… the general fund is not in the position to absorb a program of this magnitude given again the significant challenges we're facing recovering from the pandemic and dealing with additional mandated education spending,” Cenname said.

Shamiah Kerney, the leader of the office which oversees the city’s $641 million in ARPA funding, said the money may generally be used on housing measures but that her staff needs more information about the programs’ anticipated costs.

“The Mayor's Office of Recovery Programs hasn't taken a position on the legislation, but does defer to [DCHD], the agency that's tasked with administering the program,” she said.

She noted that the Treasury requires ARPA money spent on ineligible projects must be returned.

Chief Solicitor Victor Tervala said the bills would violate the constitution’s equal protection clause through the durational residency requirements, arguing they would distribute government benefits unequally.

“Ultimately, what we're doing in the bill is discriminating against short term residents versus long term residents,” he said.

He added that the bills violate the city charter, which does not allow the council to set the price of city property, but noted this could likely be worked around.

Cynthia Gross, head of the C.A.R.E. Community Association, testified during the hearing’s public comment period, telling the council about her purchase of a home through the Vacants to Value program. She struggled to procure financing for her home’s rehabilitation and said that horrible experience would likely be duplicated in the proposed program.

“When I see something that creates timelines as restrictive as this bill, it worries me because nothing in construction goes well or timely,” she said.

The legislation has good intent, but it needs amendments to become more accessible to the people it’s aiming to serve, she said.

“What I'm hearing is a lot of defending of what's written and not necessarily a need or desire to make the program better for people who actually need it,” Gross said.

Mosby’s legislative package has several more rounds to pass before it can become law. Mayor Brandon Scott has said that he will carefully consider any measure passed by the council, though his senior staffers began to whip votes of the council’s progressive wing last year.

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