Mayor Brandon Scott had the crowd right where he wanted them.
He told a rapt audience in December what so many had waited so long to hear: Baltimore finally had a big plan to address the city’s vacant housing epidemic.
To pull it off, the mayor and the city must convince the revenue-strapped state to do something unprecedented: contribute nearly $1 billion over 15 years and give Baltimore control of a portion of the sales tax collected in the city.
But despite the magnitude of the task — nearly every city issue is linked to vacant properties — the mayor stood before the packed West Baltimore church without his most crucial ally: Maryland Gov. Wes Moore.
So far the reception from state leaders has been lukewarm as Scott’s administration has tried to build up support, according to emails and other communications obtained in a public records request. And the city hasn’t come close to securing a full $3 billion they say is needed to address the crisis. Meanwhile, budget officials have pushed back internally, raising concern about the risks of the plan to Baltimore’s finances.
Still, City Hall is forging ahead.
Mayors before, Scott told the crowd in full campaign mode, have committed only a few million dollars a year to fixing the vacant housing crisis.
“At that rate, it would take more than 300 years to end this crisis. Does Baltimore have 300 years to wait?”
“No!” the chorus answered.
Now, the City Council is expected to introduce legislation as soon as this summer which, if passed, would allow the city to roll out the first-ever tax increment financing package geared for individual neighborhoods. These bonds are sold at the start of a project — typically big, new projects — to pay for public infrastructure costs and are ideally repaid later with future property taxes.
If the tax revenues fall short of repaying the upfront investment, the city would be on the hook, or else risk its capacity to borrow money in the future.
Using the financing method to rebuild Baltimore’s neighborhoods is arguably the most ambitious part of the plan. Though the stakes are high, it has won the support of city leaders including the housing and finance directors and the heads of Baltimore’s faith and business communities, who are credited as co-architects of the proposal. The city aims to roll out an initial round of bonds — $20 million, at least — before releasing additional waves.
Besides the financing, the plan also asks the state to pledge $900 million in support and enable the city to collect a portion of the state sales tax, either with an add-on amount or by slicing off a cut of the rate.
The financial risks of the approach have driven rifts in City Hall, according to internal emails obtained by The Baltimore Banner in a records request, and it’s unclear how much wider the state can open its purse. Just days into the fiscal year, Moore’s administration said that it would cut nearly $150 million in planned spending due to higher-than-expected Medicaid and child care costs. And Moore has already planted flags in other expensive ventures, including a new east-west light rail line in Baltimore.
City officials have banked on state support for their plan, according to the records obtained by The Banner. So much so that Baltimore’s highest ranking finance official, Michael Mocksten, batted away mounting questions from his staff about the proposal’s viability.
“I believe it represents the right balance between risk and opportunity for the City,” Mocksten said in an email last September to members of the mayor’s innermost orbit. “With the assumption that the city investment moves in conjunction with a larger state investment.”
The director’s assurances, though, didn’t allay the concern of some top budget officials.
Less than two weeks before the December rally, Deputy Budget Director Laura Larsen emailed the mayor’s team. Officials had clearly made their decision to move ahead with the announcement, Larsen said. But she warned colleagues that they should understand the risk to city finances.
By announcing the full commitment, the administration was locking the city into a program “that is not financially viable,” Larsen said. If the city’s experimental bonds don’t pay for themselves, City Hall would have no choice but to foot the bill, likely at the cost of other priority investments, such as the city’s deferred maintenance backlog, employee wages and the continuation of initiatives Scott has launched with one-time pandemic aid.
Doubts remain about how much the state is willing to help. Mocksten acknowledged in an interview that while state lawmakers have agreed to contribute $50 million a year toward demolition work in the city in perpetuity — which would make $750 million available over the next 15 years — the sales tax idea has been a tougher sell.
The city is working one step at a time to build financing, Mocksten said, moving forward with the first wave of state funds and the city’s bonding strategy. He said he’s considering contingencies if Baltimore can’t persuade Annapolis lawmakers to turn over a cut of the sales tax. He pointed to the federal Infrastructure Investment and Jobs Act as a possible backup plan.
“It is not waiting and waiting until we can cobble together $3 billion,” he added.
Leaders have tried and failed to wrap their arms around Baltimore’s blighted and abandoned housing for decades, which stands at around 13,000 properties and 20,000 lots. The city owns a fraction of the homes and lots with the rest under the stewardship of private individuals, limited liability companies and businesses, according to city data.
As an antidote to the problem, the city constructed a framework for investment in so-called “middle” neighborhoods with existing anchors, such as hospitals or universities, that require a lesser initial commitment. The result has been a patchwork system for remediating blight and abandonment in Baltimore that fails to comprehensively address the problem, creating ripple effects across all aspects of city life.
In Moore, a Democrat, city leaders and residents have embraced a fierce champion of the city who claims it as his own. So why didn’t he and his surrogates attend the mayor’s consequential kickoff event in December?
Mocksten said the state has been wholly supportive of the city’s work. High-ranking lawmakers and Moore administration officials couldn’t attend the announcement, he added, since they were preparing for their own budget and couldn’t commit to funding anything at that time.
Just a few weeks earlier, Moore and several state officials flanked Baltimore developer P. David Bramble as he unveiled the new vision for Harborplace at the Inner Harbor, the city’s high-profile development. Moore gave remarks then, cheering on Bramble and the project’s potential for Baltimore.
At least some state government leaders have offered a tepid response to the vacant housing plan.
“I appreciate the thoughtfulness of the approach,” state Comptroller Brooke Lierman wrote in an email to members of the mayor’s staff and Mocksten after being briefed on the matter in October. “You have an uphill battle ahead of you, but appreciate you taking on the challenge.”
Lierman did not offer further assistance, the email shows. She declined to comment. Representatives from the offices of state Senate President Bill Ferguson or Maryland House Speaker Adrienne A. Jones, the state’s highest-ranking lawmakers, also did not respond to requests for comment.
The Maryland Department of Housing and Community Development, meanwhile, did not address the feasibility of Baltimore’s plan in a statement, pointing instead to its existing Project C.O.R.E program, which funds demolition work in Baltimore and shares “the same core goal” with Scott’s proposal.
Michael Sanderson, executive director for the Maryland Association of Counties, said in his 30 years advocating for county governments in the state, he has never seen a “meaningful discussion” about sharing sales tax revenue. Baltimore’s ask puts the state in uncharted waters, he said.
But Sanderson argued that the urgency of Baltimore’s housing crisis offers a compelling case for a bold policy change. If Scott can make that case to the Moore administration, maybe this becomes the “black swan” event that changes the politics of the sales tax in Annapolis.
In a statement, Scott spokesman Bryan Doherty said the vacant housing plan was developed in conjunction with “leading public finance experts” and includes some “time tested” financing mechanisms, as well as some new ideas that should be described as ambitious.
Some aspects of the plan are lofty, Doherty added — but that’s what public policy should be.
Still, doubts persist about how much the state is willing to help.
Recently, an initial step of Scott’s vision went before the city’s Board of Finance. While members considered whether to greenlight the experimental bond proposal, they questioned Mocksten about the viability of raising a full $3 billion. Less than half of that is accounted for so far — assuming the bonds pay out — with the rest dependent on the state rewriting its sales tax policy.
After close to two hours of discussion, Mocksten and board members seemed to agree that key parts of the plan remain “aspirational.”
The board approved the bonding plan unanimously anyway.
Comments
Welcome to The Banner's subscriber-only commenting community. Please review our community guidelines.