This was the first red flag for NOT having Port Covington project in South Baltimore ----the second was the size of this land deal. Remember that wall of ministers also working for global UnderArmour----knowing that there will be no affordable housing ----that there will be worker 'dormitories as housing.
Joshua Harris as the Obama Wall Street global corporate neo-liberal candidate turned Global Green Corporation Party candidate states he supports this Plank Enterprise as all Wall Street neo-liberals do. Everyone is shouting they are going to fight for AFFORDABLE HOUSING even as every deal and all history of these global corporate Enterprise Zones NEVER HAVE AFFORDABLE HOUSING. The development goals of UnderArmour is as I said a few weeks ago---they will expand that campus for maybe a mile bringing foreign corporations and global factories killing all those communities north and west of this GLOBAL CORPORATE CAMPUS FOOTPRINT.
So, how are these progressive posers fighting for affordable housing? THEY ARE NOT. You cannot support bringing in massive global corporate power like this and expect anything other then repression and complete corporate power.
'real estate firm owned by Under Armour CEO Kevin Plank is exempt from a law that would require it to include affordable housing in its proposed multi-billion dollar redevelopment in Port Covington'
Baltimore reaches hiring, affordable housing deals in Port Covington
Natalie ShermanContact ReporterBaltimore Sun
Port Covington to receive inclusionary housing exemption.
The real estate firm owned by Under Armour CEO Kevin Plank is exempt from a law that would require it to include affordable housing in its proposed multi-billion dollar redevelopment in Port Covington, but it has agreed to make some of the new homes below market rate.
The agreement with Plank's firm, Sagamore Development, is one of several focused on local hiring, participation of minority and woman-owned firms, and affordable housing slated to go before the Board of Estimates this week, as the city weighs Sagamore's request for a record $535 million in tax increment financing.
ADVERTISINGMayor Stephanie Rawlings-Blake and other city leaders have said commitments in those areas are critical to securing their support for the financing, which would help build infrastructure on land Plank owns on the South Baltimore waterfront.
The firm is also seeking $574 million in federal and state funds for the project, which is intended to transform the area over the next two decades with new homes, office buildings, parks and shopping.
Rawlings-Blake spokesman Howard Libit declined to provide details on the Port Covington agreements before Wednesday's meeting, but some information is already clear.
Port Covington developer asks city for $535 million in support Sagamore will be exempt from the city's inclusionary housing law, which would have required the firm to make 20 percent of the project's 7,500 proposed, mostly apartment residences, affordable if it received the TIF.
The firm is exempt because the city does not have the funding to compensate the developer for the units, as is also required by the ordinance, Libit said.
Instead, Sagamore has agreed to make 10 percent of the new homes "affordable" based on family incomes that are less than 80 percent of the area median — roughly $46,000 for an individual or $65,700 for a family of four, according to federal estimates.
Baltimore financing deal for Kevin Plank's Port Covington faces tough questions The firm has also committed to paying the city at least $150,000 annually for a minimum of five years to fund a city youth jobs program and as much as $80,000 annually to hire a local hiring coordinator.
Sagamore, which has said it is committed to making the project inclusive, could not be reached for comment immediately.
The firm owns about 160 acres in Port Covington, an area south of Federal Hill and Locust Point that is divided from those neighborhoods by Interstate-95.
The firm is planning to serve as master developer for about 260 acres in the area, working with partners on 9 million to 13 million square feet of new construction, including homes, more than 200 hotel rooms and about 1.5 million square feet of office space. Under Armour is also planning a 3.9 million square foot, 50-acre campus in the area.
Sagamore has said the new development represents $5.5 billion in investment and will support 26,500 jobs once complete.
The Board of Estimates is also slated to vote on a 25-year deal for building and maintaining a new bike path in the area.
It looks like Baltimore Development Corporation wrote a zoning law that gave Plank an EXCLUSION from affordable housing-----no doubt what was done for all Enterprise Zones and this is why we have absolutely no affordable housing in these downtown areas. City Council had to pass these zoning laws and of course they did as they pass whatever Baltimore Development writes.
The problem as usual is what Maryland Assembly and Baltimore City Hall pass as law is often illegal, unconstitutional, and not REAL law at all. You cannot zone for exclusion of affordable housing and then send in all kinds of government subsidy. Baltimore pols are very ANTI-AFFORDABLE HOUSING because they are far-right Wall Street global pols----and not Democrats.
You see the key to VOIDING these deals as a Baltimore City Hall has a duty to use zoning in a way that addresses the needs of the citizens IN THE CITY TODAY. These deals do not and as such they were never in the public interest. Baltimore Development and their pols are simply building housing for what they see will be the tenets-----the foreign rich who will own the corporations, factories, and be the executives at these global corporate campuses.
Under US Rule of Law and US Constitution these deals are illegal-----Baltimore Development Corporation no doubt says this is an International Economic Zone and if a global corporation like UnderArmour wants real estate and wants to do it his way----THAT IS HOW INTERNATIONAL ECONOMIC ZONES WORK. THE GLOBAL CORPORATION CONTROLS ALL.
'As part of its comprehensive planning process, a town commissioned a housing study to determine whether its current and projected housing stock is adequate to meet the needs of its local residents and workforce'.
Carl Stokes took pride in fighting for 17 affordable housing units in a huge downtown development project when all they had to do was enforce FEDERAL EQUAL OPPORTUNITY HOUSING LAWS TIED TO ALL FEDERAL FUNDING. All of these Enterprise Zones receive billions of dollars in Federal funding over the decade of development and as such they are bound by Federal law to meet those obligations REGARDLESS of local zoning laws to the contrary----which as I said were illegal.
Below you can see global corporate campuses are given all the 'CARROTS' and exclusion from affordable housing. This is what creates the conditions found in NYC and San Francisco where all of the housing in city center is for the rich pushing even the middle-class out to commuting an hour or two to work each day---this is the policy Baltimore City Hall is putting in place and this current Plank UnderArmour deal shows they intend on continuing this.
Inclusionary Housing Laws
Inclusionary zoning is a tool used by cities to ensure a supply of affordable housing units. Such laws often require that new developments contain a certain percentage of affordable units and/or rental units, or they impose fees when multi-unit buildings are converted from rental properties to resident-owned condos. The percentage of affordable housing units required by inclusionary zoning laws is typically in the range of 10-30% of total units built. Inclusionary zoning laws can vary a great deal from one place to the next. Some variables include:
- Using a carrot or stick approach: while many cities require inclusionary housing, many more offer zoning bonuses, expedited permits, reduced fees, cash subsidies, or other incentives for developers who voluntarily build affordable housing.
- Exemptions for developments that fall below a minimum development size.
- Ability to build off-site affordable units, if onsite inclusion is too burdensome.
- Allowing payment of fees in lieu of unit construction.
- Price of “affordable” and maximum income level for residents of affordable units. 1
The Federal laws around equal opportunity housing are not only about discrimination in housing already built----it deals especially with housing FINANCE------meaning all Federal funding directed at housing. This would be enforced by our Baltimore HUD office but is is quasi----meaning separate and operating without citizen input or knowledge----and city hall likes it that way. The Mayor of Baltimore could first end that quasi-status with pressure on city council and that mayor could take Baltimore HUD to Federal court to require that these housing laws be enforced.
It is true an Obama Federal HUD is not enforcing Federal law---but that does not mean a Mayor of Baltimore cannot enforce existing Federal laws. So, as all the candidates for Mayor of Baltimore are shouting AFFORDABLE HOUSING, AFFORDABLE HOUSING, AFFORDABLE HOUSING WITH JOBS, JOBS, JOBS-----none of them are telling voters they will enforce Federal Housing laws because they will not.
If you are middle-class wanting to ignore these laws to keep working class or poor out------you are next as the current Master Plan will have the bulk of city center as rich only. You will see the same tactics used against the working class homeowners----targeted taxes, utility fraud, property taxes rising too high, home insurance rates climbing---and VOILA---now even the middle-class cannot afford to live in city center. That was the San Francisco/NYC plan coming to Baltimore.
Office of Fair Housing and Equal OpportunityFrom Wikipedia, the free encyclopedia
The Office of Fair Housing and Equal Opportunity (FHEO) is an agency within the United States Department of Housing and Urban Development. FHEO is responsible for administering and enforcing federal fair housing laws and establishing policies that make sure all Americans have equal access to the housing of their choice.
MissionThe mission of FHEO is to create equal housing opportunities for all persons living in America by administering laws that prohibit discrimination in housing on the basis of race, color, religion, sex, national origin, disability, and familial status.
President Johnson signing the Civil Rights Act of 1968
The Office of Fair Housing and Equal Opportunity was created by the Fair Housing Act of 1968 which sought to end discrimination in the sale, rental, and financing of housing based on race, color, religion, and national origin. The passage of the Act was contentious. The Fair Housing Act was meant to be a direct follow up to the Civil Rights Act of 1964, however from 1966 to 1967 Congress failed to garner enough political support for its passage. At that time several states had passed their own fair housing laws and Congress was not convinced that a federal law was necessary. It was only after the assassination of Rev. Dr. Martin Luther King on April 4, 1968, and the ensuing riots that Congress finally passed the bill. It was signed into law on April 11, 1968, by President Lyndon B. Johnson. Johnson, who was one of the Act’s strongest supporters, called the new law one of the "promises of a century... it proclaims that fair housing for all—all human beings who live in this country—is now a part of the American way of life."
Since 1968, the Fair Housing Act has been amended twice. In 1974 sex was added as a protected basis. In 1988 the Act was amended again to expand the number of protected bases and correct some of the enforcement inadequacies of the original Act. Congress changed the Fair Housing Act to include protection for persons with disabilities and prohibit discrimination based on familial status. The amendment strengthened the enforcement provisions by allowing the aggrieved parties to seek remedy for their cases before a HUD Administrative Law Judge or in federal court. In addition, the amendment granted the Department of Justice the power to impose more severe punishments on those who violated the Act.
This concept of INCLUSIONARY HOUSING is tied to cities like NYC allowed to ignore Federal Housing laws for these few decades and now they say we need to pass special laws to demand inclusion and on top of that ---we need to give developers MORE SUBSIDY to do this.
NYC AND SAN FRANCISCO ARE NOW CALLING THIS 'EMERGENCY AFFORDABLE HOUSING' because these city development plans over a few decades WAS VERY, VERY, VERY, BAD AND DRIVEN PURELY BY PROFIT---who gets that downtown/waterfront real estate.
'Assemblyman Keith Wright proposed a bill on Wednesday that he said was a response to the lack of 421a, but isn’t intended as a replacement. The bill, dubbed the “Emergency Affordable Housing Construction Act,” would provide upfront subsidies to developers whose entire projects were reserved for people making at or below 70 percent of the area median income (AMI), with one third of the units designated for residents earning at or below 40 percent AMI. Developers of such projects would receive $100,000 per unit'.
So, the lapse of 421a----which sounds like the same TIF and tax breaks being used in Baltimore to protect corporate/high-rise apartments from paying property taxes---lead to all these talks on affordable housing. Affordable housing is being used again as a ploy for extending these 421a property tax breaks by using it as a 'carrot' for developers to build affordable housing.
JUST THINK---DO WE REALLY NEED ALL THESE TOOLS TO BRING A REGIONAL BUILDER IN WHO WANTS TO WIN A CONTRACT? OF COURSE NOT---THE FEDERAL, STATE, AND LOCAL FUNDS WILL HELP THAT LOCAL CONTRACTOR.
These NYC and San Francisco developers are likely the same as UnderArmour and Plank---they have their own real estate and development corporations meaning all the profits from this entire adventure comes back to UnderArmour---or those in NYC and San Fran. That is the only reason they come up with all this talk of carrots for affordable housing.
This is what we will hear in Baltimore in 10-20 years when all those TIF and property tax breaks end----pols will through the same old affordable housing bit----so Baltimore citizens will keep hearing this for decades if we do not fix this NOW.
Can new affordable housing programs fill the 421a void?
Developers, experts and politicians say: Nope
March 18, 2016 08:00AM
By Kathryn Brenzel
« Previous Next »Rendering of Hallets Point (inset, from left: Keith Wright, Bill de Blasio, John Banks and Gary LaBarbera
Though a handful of programs are on the table, New York City is still waiting for its affordable housing silver bullet — or, at least, something to fill the void left by 421a.
The lapse of 421a in January left developers bemoaning prohibitively high property taxes, saying that the tax abatement’s expiration would threaten the construction of new mixed-income rentals. In its absence, other initiatives — like Mayor Bill de Blasio’s mandatory inclusionary housing program — have forged on, but the general consensus among politicians, experts and developers seems to be that nothing yet proposed will bridge the gap left by 421a.
Assemblyman Keith Wright proposed a bill on Wednesday that he said was a response to the lack of 421a, but isn’t intended as a replacement. The bill, dubbed the “Emergency Affordable Housing Construction Act,” would provide upfront subsidies to developers whose entire projects were reserved for people making at or below 70 percent of the area median income (AMI), with one third of the units designated for residents earning at or below 40 percent AMI. Developers of such projects would receive $100,000 per unit.
“New York City developers do not need to be lured to Times Square or Harlem to invest and build apartment buildings that largely cater to residents of greater means rather than the average New Yorker,” Wright said in a statement. “To counteract the housing crisis, we in state government need to take bold action and do everything we can to encourage affordable development in our cities.”
After talks collapsed between labor and development groups over the future of 421a — which hinged on the two groups agreeing on whether developers must pay prevailing wages — Wright formed a panel, which included the Building and Construction Trades Council president Gary LaBarbera, to address the affordable housing crisis. What came out of those meetings was not a replacement for the tax abatement but a subsidy program powered by an estimated $200 million from the state.
The two groups at the center of the 421a debate — the building and trades council and the Real Estate Board of New York — have been tepid in their response to the proposed legislation. A representative for the building and trades council said the group is reviewing the legislation but currently can’t formally support the measure. Jamie McShane, a spokesman for REBNY, said that Wright’s proposal is “laudable” but that “it would not provide the amount of affordable housing, across different income bands and throughout the five boroughs” that 421a could have.
The impact of the program’s expiration is already being felt in the city. In February, the Durst Organization said that the future of its massive 2.5 million-square-foot mixed-use development Hallets Point — beyond the first phase — was uncertain without the abatement. The project would add seven new residential buildings to Astoria’s waterfront, two of which are slated to be affordable. New construction permits dropped significantly in January, following a rush by developers seeking to meet the cutoff date for the tax break.
Daniel Bernstein, an attorney with Venable who has represented developers applying for 421a exemption, said that the bill raises some questions and doesn’t even begin to match the incentives offered under 421a.
“I don’t think this fills the gap,” he said. “This is well-intentioned and an attempt to fill some of the gap, but it’s unclear what new construction costs would be involved in this program, and it’s very likely that the one-time subsidy will be significantly less generous than a long-term tax exemption that 421a was presumed to have provided.”
Similarly, he said that De Blasio’s mandatory inclusionary housing won’t be able to pack the same punch in 421a’s absence. The zoning change is inching closer to becoming a reality, a shift the mayor has called “the strongest, most progressive affordable housing policies in the nation.” But Bernstein said that MIH was designed to work alongside 421a. Councilman David Greenfield told the New York Times that “M.I.H. still works without it, but it doesn’t work as well.”
When asked about Wright’s proposed bill, de Blasio spokesman Austin Finan said that the city welcomes “any proposals that direct more state funding” to construct affordable housing. But, he said, a tax abatement is what is ultimately needed.
“Until we have a smart, effective tax abatement program designed to incentivize affordable housing across the entire city, we’ll see more luxury condos being built instead of the rental housing we so badly need,” he said. “That is something we urgently have to correct.”
I am using this article as a segue from bonds to housing ----my topic for this week. Remember when in 2006-2008 subprime mortgages known to be toxic were given AAA ratings by Moody's and other rating corporations----only to be found to be the center of this fraud? Well, Moody's never was held accountable for being central in that fraud and they are now center in this coming BOND MARKET FRAUD. Everyone in the City of Baltimore knows the city's financial health is not only unstable----but the debt and corporate subsidy has the city tied to struggling finances for decades. Look at Moody giving Baltimore one of the highest bond ratings! This is Moody giving AAA to toxic bonds. They did that not only to push these toxic bonds around the world as AAA as done with the subprime mortgage fraud----they did that to allow more and more debt to the city knowing the city cannot handle this debt.
The AA designation for Baltimore is tied to ALL BALTIMORE TAX REVENUE including property tax for however long it takes to pay these bonds. This adds to Baltimore's taxes not coming down and with the subpriming of the bond market as I showed yesterday----Baltimore citizens have already been pushed into higher taxes to pay for those Wall Street investment firms huge profits. One can imagine HighStar global investment firm is behind these bond deals as they are the investment firm behind AIG and the subprime mortgage fraud---and HighStar is Johns Hopkins and Ivy League universities. This only happens because Baltimore City pols work for Johns Hopkins and now for Plank Enterprise Development Corporation.
HOW LONG WILL THE MIDDLE-CLASS HOLD ON TO HOUSES WITH TAXES EVER-RISING TO PAY FOR ALL THESE BOND DEALS.
Baltimore's bond rating raised to highest level in years, signaling city's improved fiscal health
Yvonne Wenger, The Baltimore Sun
Standard & Poor's raised Baltimore's bond rating to its highest level in years — a move that reflects growing confidence in the city's fiscal health and will lead to potentially millions of dollars in savings for the city budget.
The city's new AA rating puts Baltimore at the same ranking as New York City and similarly-sized Nashville, Tenn.
While the state and most county governments in Maryland have higher ratings, Baltimore's new score means it is outperforming many cities with similar demographics and wealth. A sampling of cities with similar taxable property value have only A ratings, according to an April report by the Wall Street bond rating agency.
"This is an affirmation of the economic progress the city has made in the last few years," said Mayor Rawlings-Blake. "We were able to make the tough choices necessary to return Baltimore City to balanced budgets. … Today's bond rating upgrade signifies that Baltimore City is a good place to invest."
The mayor has made a series of decisions that have cut roughly $300 million from the $750 million long-term deficit that was projected a few years ago. The changes include requiring employees to contribute more to their pensions, reducing the size of the city's workforce and vehicle fleet and asking firefighters to work longer hours.
The new credit rating is expected to allow the city to borrow money at lower interest rates for projects such as infrastructure upgrades, new schools and improved recreation centers. That in turn would save taxpayers cash on interest payments.
The rating change will be applied to existing general obligation debt and a new $63.6 million bond issue.
Standard & Poor's credit analyst Timothy Barrett said the upgrade "reflects our opinion of the city's ... strong budgetary flexibility and liquidity due to its proactive management team and demonstrated willingness to cut expenditures." Records going back to 1997 show Baltimore with lower scores than Tuesday's, an S&P spokesman said.
Andrew W. Kleine, the mayor's budget director, said Baltimore has emerged from the recession in better fiscal health with a larger fund balance, lower property taxes and significantly less in the long-term structural deficit.
Standard & Poor's — one of the nation's three leading bond-rating agencies — analyzes the credit risk of governments and businesses based on a matrix that includes the economy, budget flexibility and performance, debt and liabilities.
A rating change has been a relatively rare occurrence. The city's last change came in 2007 when the rating jumped from an A-plus to an AA-minus. The last time the city's credit was rated AA by both Moody's and Standard & Poor's was in 1963, according to Stephen M. Kraus, chief of the city's bureau of treasury management.
Frank H. Shafroth, the director for the State and Local Government Leadership Center at George Mason University, said Baltimore's new score — and its upward mobility — signal that the city is a "very safe" place to invest. AAA is the highest rating, followed by AA and A. Rates fall in categories ranging from A to D, which is default.
"Investors will look at two things: What is the rating … and more importantly, what direction is it going? Is it improving?" Shafroth said.
Baltimore's new rating isn't as high as those of some large cities, including Boston, which as a AAA rating. But Baltimore fares better than Philadelphia and Los Angeles, which are rated at A-plus and AA-minus, respectively.
The state of Maryland has the highest AAA rating, as do Anne Arundel, Baltimore, Carroll, Harford and Howard counties. Overall, about a third of jurisdictions in Maryland earn the highest score.
Brenda McKenzie, the president of Baltimore Development Corp., said development in the city also contributed to the rating upgrade, including the Horseshoe Casino, the Shops at Canton Crossing and the Rotunda redevelopment.
"It's a great time for Baltimore," she said.
HARP will turn out to be round two of subprime mortgage fraud as we see much of this lending coming from credit unions and community banks which are slated to be pushed into bankruptcy with this coming economic crash. I watched as the same commercials on local TV promoted these 'affordable housing' loans and Rawlings-Blake always loved how these housing loans were tied to the affordable housing in East Baltimore and the other Enterprise Zones failing until then to address affordable housing. Many of the city's NEW CITIZENS and homeowners are tied to these affordable housing finance programs and we will watch as these homeowners are the next to fall into fighting foreclosure or having to deal with banks closing and those loans being sold to Wall Street banks.
What was deliberate is this targeting of the American people still having good credit or staying in their homes through all of the last subprime mortgage fraud. That was the draw of lower home interest rates----it's like a credit card corporation giving 0% interest that goes up to 25%.
Many of Baltimore's new or existing homeowners are going to be tied to this mortgage and refinance program-----
YOU BETTER WATCH WHERE YOUR BANK AND WHAT THE TERMS OF THESE DEALS ARE---HOW WILL THEY WEATHER A COMING ECONOMIC CRASH?
About The Maryland HARP Home Affordable Refinance Program
HARP Refi Program OverviewKnown as HARP 2.0, HARP 3.0, DU Refi Plus or the Obama Refinance Program #MyRefi, the Home Affordable Refinance Program is designed to assist homeowners in refinancing their mortgage when the value of their home has declined, making traditional refinancing no longer an option.
HARP stands for the Home Affordable Refinance Program, which is a government loan program that was recently updated to help more people who have underwater mortgages.
Since many homeowners were caught in a time period of rapidly declining property values, there was a need to create a refinancing opportunity for those that lost significant value in their properties but made their mortgage payments on time.
Refinancing your mortgage through the Obama Administration's HARP program will could help you save hundreds of dollars on monthly payments or obtain a more secure loan program, regardless of how much your home will appraise for.
Basic HARP Eligibility RequirementsFor help checking to see if your loan is eligible for HARP, CLICK HERE, or feel free to call us at 888-409-4881 to speak directly with a Maryland licensed HARP lender about your refinance options for your Baltimore underwater mortgage.
- Your home loan is guaranteed by Fannie Mae or Freddie Mac.
- Your loan was originated on or before May 31, 2009.
- You are current on your mortgage payments.
- You have had NO thirty day late payments for six months.
- You have had NO sixty day late payments for 12 months.
- You owe more than 80% of your home's estimated value.
- Unlimited Loan-to-Value Restrictions - to allow more people to refinance, regardless of their home's appraised value.
- Lower Banking Fees & Rates - by allowing lender participation, homeowners can shop around for the best deal vs being stuck with the bank that they are currently making their mortgage payments to.
- Owner, Investment, Second Homes OK - not just limited to owner occupied properties, investors and landlords can benefit with a HARP Mortgage Refinance as well.
- Less "Red Tape" - removing many of the barriers that have previously prevented people from refinancing, such as appraisals, complicated subordination agreements with second lenders and mortgage insurance transfers.
The stat below shows Baltimore HUD is not doing its job! We see $2,000 apartments in Fells Point for goodness sake. What is more troublesome is the OVERBUILDING OF APARTMENT SPACES in downtown. When Spain was hit with the 2008 economic crash it found hundreds of thousands of housing units built and never occupied---the same in China as developers simply went on a binge. More important than renting these units is obtaining the real estate. That is what is happening in Baltimore. It has nothing to do with housing needs----it has to do with fleecing citizens and especially the students coming to our universities just because Baltimore City Hall allows this to happen per Baltimore Development housing policy.
This is happening in US International Economic Zones across the nation and it is tied to securing real estate and then having that private owner determine rents and affordability and of course---in city centers this moves towards the rich only. I would not be surprised if some of those apartments asking $1500-2,000 I see in my community and throughout city center are being subsidized by the city when they remain empty because no one wants to pay that price---they are creating a manufactured area for only high-renters for the future.
'The firm used fair-market rent figures from the federal Department of Housing and Urban Development, which uses census surveys. HUD's most recent estimate found half of the one-bedroom rentals in Baltimore go for $985 per month or less'.
The glut in cities like Baltimore is just the move to get real estate into the hands of developers who will then create high-rent districts in city center. There is no problem with luxury or high-rent buildings---the problem is making them all that can be found.
As apartments boom in city, a new market reality emerges
Natalie ShermanContact ReporterThe Baltimore Sun
With city's apartment boom: 'I wonder if demand will meet up.'It used to be a struggle for Baltimore leaders to get developers to believe that people would want to live in the city. Now apartment builders have embraced the idea so enthusiastically that even some of its loudest champions think they might be going too far.
More than 5,360 homes in projects with 15 or more units have been completed in Baltimore in the last five years, according to the city's Planning Department. Another 3,232 are under construction, including 948 that got underway last year. And 2,825 more have been approved, including 1,233 last year.
The Downtown Partnership is tracking about 7,000 homes for sale or rent in Federal Hill, Fells Point and downtown to be completed by 2017. The number outstrips the demand predicted in a 2012 study for the group, which forecast a market for 5,800 units through 2017.
The glut of new apartments has raised questions about whether the units will find renters, especially at the rates that owners of top-of-the-line buildings are asking.
"In the last two years, obviously [building] exploded," said Pikesville developer Yonah Zahler.
His Zahlco Development started putting together its first deal about three years ago and now owns more than 100 rental units in the city.
Glut of new apartments could reshape market"I knew this would happen," he said. "I knew these two years would be strong on the construction end. I wonder if demand will meet up."
The growing supply is already reshaping the market.
Vacancy rates in Central Baltimore — an area that includes downtown, neighborhoods around the harbor and Mount Vernon — ticked up to 8.6 percent last year, from 4 percent in 2011 according to Reis, a research firm that tracks apartment buildings with 40 or more units.
That exceeds the 3.9 percent vacancy rate across the Baltimore metro area and the 4.2 percent rate nationwide.
Kirby Fowler, president of the Downtown Partnership, said it's possible that demand has grown in the two years since the nonprofit commissioned its study, as improvements in the area draw even more people and businesses. But his group, which wants to turn downtown into a 24-7 neighborhood, is sounding a soft warning note.
"We're optimistic for the future. However, we have been encouraging developers to consider other uses for buildings beyond apartments," he said. "Ultimately, it's a decision of a developer to move forward on the project, and it's our job to be transparent."
Apartment building took off nationally after the recession of 2008, as builders rushed to capitalize on the growing number of renters and the growing interest in urban living, particularly among younger households.
With financing more readily available for apartments than office or retail or condo projects, the momentum accelerated.
In Baltimore, several years of stronger-than-average rent increases and a tax abatement program for market-rate rentals provided further encouragement.
Some developers don't believe the numbers reflect weakened demand for housing, but rather a lack of appetite for the fancy — and expensive — new products on offer.
Dominic Wiker is development director for the Time Group, which opened the 171-unit 520 Park Avenue apartments last year. The average one-bedroom costs about $1,300 per month and the property is about 95 percent leased. The firm is considering building a new apartment building next door.
"As more units come online, there's going to be price sensitivity," he said. "I think the demand is there. It's just going to be a question of what are people willing to pay, and then who are those people."
Vacancies in the city's Class A buildings — typically, new or recently renovated buildings with up-to-date amenities and the highest rents — were about 6.5 percent at the end of last year, according to the real estate research firm Delta Associates. The rate was 9.1 percent in Fells Point and other waterfront neighborhoods, where landlords are asking rents of more than $2,000 a unit.
Daniel Kline is president of New York-based Delancey Street Capital, which has about 300 Class B apartments in Baltimore, with an average rent of about $1,100.
"If you're a student and you can live in one of my buildings … yeah, the cabinets are not brand-new, the countertop's Formica, not granite, but your rent is $500 less. It's like a no-brainer," he said.
Kline, who closed on the 28-unit Ridgely's Delight Apartments for $2.96 million in February, said he believes properties that are less expensive are a safer investment — especially in Baltimore, where buying a home remains relatively affordable and many rowhouses are available for rent as well.
"I think the other investors don't see the value. They want to be like the sexy retailer that just does the brand-new and cool and hip, and have all these services and amenities," he said. "Some part of the market will pay for it, but the majority of the market won't, and it's reflected in the statistics."
When rental rates are compared to median income, Baltimore is one of the least affordable rental markets, according to the real estate research firm RealtyTrac. The firm ranked the city behind only the Bronx, N.Y.
The firm used fair-market rent figures from the federal Department of Housing and Urban Development, which uses census surveys. HUD's most recent estimate found half of the one-bedroom rentals in Baltimore go for $985 per month or less.
Rent in apartment buildings hit an average of $1,294 in Central Baltimore last year, according to Reis.
Marcel de Pontbriand, a 25-year-old graduate student and barista, shares a two-bedroom house in Seton Hill with a roommate. They pay $1,050, utilities not included.
"Housing is cheap, but it seems like the apartment buildings aren't in a price range for someone like me — and there are certainly a lot of us," de Pontbriand said.
He said he has looked at some of the newer buildings in neighborhoods such as Remington, but the rents never seemed worth it.
"I'm really drawn to how cheap some of the whole houses are," he said. "$1,100 for a one bedroom — even that's a lot, working and being in school."
Nationally, demand for apartments remains strong, but low wage growth has kept rent increases contained. Brad Doremus, a senior analyst for Reis, said that raises questions about the viability of new projects started and financed under more optimistic growth assumptions.
"Apartments have been sort of the belle of the ball in terms of commercial real estate, but rents may not necessarily … be going as high as some would have expected," he said.
Results in Baltimore are mixed. Reis' analysis of the Central Baltimore market found that the rents that Class A apartment owners were asking increased about 3.7 percent for the year, compared to 5.9 percent for other properties.
Delta Associates reported that Class A rental rates in Baltimore City fell 2.2 percent last year, and 4.2 percent in neighborhoods beyond the waterfront.
William Rich, senior vice president at Delta Associates, said he expects the new supply of Class A properties to pull rents down and push vacancy rates up in the short term. But he predicted the market would correct itself.
"The metro areas as a whole is in fairly good shape and over the long term," he said. "I think that Baltimore City will be able to rebound from this supply issue that's currently in the market."
Weakness at the top of the market doesn't mean rents are going down everywhere.
Overall rents in Central Baltimore increased by 6.3 percent last year. The increase was double that of the metro area, and almost 3 percentage points more than the national average.
Zahler, who expects to open a 32-unit building in Ridgley's Delight and break ground on a 60-unit building on Calvert Street this spring, is betting that demand will remain strong for apartments with midrange prices, while slowing for the worst-quality or highest-priced units.
Zahler's apartments typically go for $1,200 to $1,600, he said.
"Rents will climb. The question is, which rents will climb," he said. "There's enough product out there that the consumer can price out and look around."
JK Equities, the owner of the 189-unit Equitable Building at 10 N. Calvert St., expects to start leasing in March. Rates in the newly renovated former office building start at around $1,500 for a studio with Internet, cable, in-unit washer/dryers, and other amenities.
Jerry Karlik, owner of the firm, said he's not worried about overbuilding, given the growing popularity of city living. His property, a conversion with several retail tenants in place, is a less expensive investment than new construction.
"That's been sort of the trend around the country and the trend continues, and there's no reason for Baltimore to be any different from any other place," he said. "You're seeing a bunch of activity, but the activity is minuscule compared to other markets."
As more shopping, restaurants and other services start to follow residents downtown, he said, the scene is likely to create demand that does not exist today.
"It's sort of a cat-and-mouse game with this type of urbanization," Karlik said. "We're very happy to be building in Baltimore. We think there's a lot more opportunity in this market."
Fowler of the Downtown Partnership said the difference between a building with a 90 percent occupancy rate and a 100 percent occupancy rate is important to a landlord. But from the perspective of his group, any increase in residents will benefit the neighborhood.
And in the meantime, he said, queries about residential development keep coming.
This is the problem with corporate tax subsidy from both sides of an issue----a city NEEDS TAX BASE--it cannot keep giving these deals especially when these condo tenets are the more affluent. Yet this will be the debate 10 years in Baltimore as deals that should expire will find some excuse to continue. All of this violates TAX UNIFORMITY laws meant to keep one group of citizens from being targeted for higher taxes than another as is happening right now. Long-time homeowners in Baltimore are shouting as they are being fleeced in property taxes while new housing receives sweet deals.
This article shows as well how our BUILDING TRADES UNIONS work to create these tax harbors by siding with developers---and in this case the trades are against developers having that 421a extension only to secure wages. Taxes are going up on main street because our labor and justice organizations are wheeling and dealing with bad development policy. We can have plenty of work for trades that does not kill main street taxpayers.
'After talks collapsed between labor and development groups over the future of 421a — which hinged on the two groups agreeing on whether developers must pay prevailing wages — Wright formed a panel, which included the Building and Construction Trades Council president Gary LaBarbera, to address the affordable housing crisis'.
421a Tax Exemption: Don’t Say You Didn’t KnowBy JULIE SATOWNOV. 11, 2011 New York Times
A mint-condition two-bedroom, described by the broker as having “a New York meets Los Angeles meets South Beach flavor,” it is also in a race against time. It has been on the market since March, and Mr. Abrams, who has relocated to Los Angeles to be closer to his son and for work, has already slashed the price three times, to $1.575 million. He is hoping to sell the apartment in part because his monthly real estate taxes are poised to surge by more than 400 percent over the next several years.
That jump is mainly due to the city’s 421a tax exemption program, which encouraged development of underused or unused land by drastically reducing property taxes for a set amount of time. Buyers got what seemed to be an unbelievable deal on taxes — but with the caveat that it was only temporary and that someday, their rates would rise to what everyone else was paying.
When Mr. Abrams bought the brand-new apartment in 2007, his taxes were just $35 a month; he now pays $374 a month. When the exemption runs its course, in 2018, the monthly tax bill will be an estimated $1,629.
Photo350 West 42nd Street, Apt. 48D
Bought in 2007 for $1,575,000
On the market now for $1,575,000
Original monthly taxes: $35
Current monthly taxes: $374
Estimated monthly taxes in 2018: $1,629 Credit Chang W. Lee/The New York Times
“It is utterly ridiculous,” said Mr. Abrams, a co-president of Alternative Marketing Solutions, which helps publicize films. “I have a home in Los Angeles and Palm Springs, and California is famous for high taxes, yet we don’t pay anything close to what I will be paying.”
During the real estate boom, from 2004 until the bubble burst in 2008, thousands of condominiums were built in Manhattan under the program. There are now more than 43,000 421a condominiums, the most since the program was started in 1971.
The 10-year exemptions, which decrease by 20 percent every two years, are now beginning to run their course. As a result, thousands of apartment owners across the city are seeing their tax bills surge. And while many condo owners are expecting this, because the information is contained in building offering plans, the increases are coming at a time when real estate prices are flat and the economy continues to flounder. A tax bill that is guaranteed to rise significantly is not a strong selling point.
“It will be a rude awakening to many New Yorkers who haven’t been paying close attention,” said Robert M. Pollack, a partner at the law firm Marcus & Pollack, who represents the 60-story Orion, at 350 West 42nd Street. “And for many of them, it couldn’t come at a worse time.”
Photo110 Third Avenue, Apt. 5D
Bought in 2007 for $1,320,000
On the market now for $1,499,000
Original monthly taxes: $102
Current monthly taxes: $339
Estimated monthly taxes in 2019: $1,065
Credit Suzanne DeChillo/The New York Times
On top of the expiring exemption, a second blow to Mr. Abrams and owners of high-end condos is rising tax assessments. Over the last three years, the city has raised the value of the Orion by 10.4 percent, 9.5 percent and 9 percent, respectively.
Similarly, at 340 East 23rd Street, a 2008 condominium with interiors designed by Philippe Starck, the city has raised the building’s value over the past three years, first by 17 percent, then 10 percent, and most recently 21.5 percent.
“It’s been a frustrating process,” said Josh Fox, the president of the board at 340 East 23rd, which Mr. Pollack also represents. “The city has bumped up the valuation of our building to an extreme level. We have a beautiful new building, don’t get me wrong, but they are assessing our apartments as if we are in one of the most luxurious buildings on Fifth Avenue or the heart of TriBeCa,” rather than off First Avenue.
The high valuations are “having an enormous impact on sales prices,” said Brian Morgan, a senior vice president of CitiHabitats who also lives at 340 East 23rd, “because buyers realize there are only a few years left on these exemptions and so they say to the seller, ‘You had much lower monthly charges than we will have, so it only makes sense that we pay less than you did.’ ”
Photo340 East 23rd Street, Apt. 8M
Bought in 2008 for $1,865,000
Original monthly taxes: $229
Current monthly taxes: $641
Estimated monthly taxes in 2019:$2,393 Credit Chang W. Lee/The New York Times
Mr. Morgan, whose taxes will rise 373 percent by the time the tax exemption expires in 2019, is representing a client who recently considered buying a two-bedroom condo at 110 Third Avenue. The asking price is $1.499 million, but the taxes will surge more than 300 percent in 2019, “so I told them it isn’t worth it for that price,” he said.
The 421a program applies to areas of Manhattan where developers build condominiums on underutilized or unused land. In most of them, the exemption lasts for 10 years, giving owners a 100 percent exemption from any increases in their real estate taxes for two years, then phasing out the exemption by 20 percent every two years over the remaining eight. In Upper Manhattan and the other boroughs, the exemption can last for 15 or 25 years.
In 2008, 421a was overhauled to include, among other things, a requirement that developers set aside 20 percent of their units for affordable housing. As a result, fewer buildings are now entering the program.
There are a number of reasons that new condos have higher property taxes than older ones or comparable co-ops, tax experts said.
In New York City, the real estate tax rate for condominiums is 13.353 percent. This number is applied to the assessed value of the property, and the city assesses the properties anew every year. To assess the value of condominiums and co-ops, the city looks at how much income the building would produce if it were a rental.
“By law, we are required to value condominiums as if they were income-producing properties,” said Michael Hyman, a deputy commissioner for tax policy and planning at the city Department of Finance, “so we impute rental incomes even though the buildings are generally owner-occupied.” The law went into effect in 1983, he said. At that time, the city was experiencing many co-op conversions, and the hope was that the legislation would diminish the disparity in value between rentals and co-ops.
Continue reading the main storyEven though now it is condominiums that are making up an increasing proportion of the apartments in the city, the law does not reflect this shift, he said.
Taxes for new condos are usually higher than the taxes levied on older condo buildings, because the rental buildings used as comparison points are also of a newer vintage, and rarely have any rent-regulated tenants. Older condos, on the other hand, are compared with rentals that often have such tenants in place, lowering their overall assessed values. Since many co-op buildings are of an older vintage, they also often have lower tax assessments than new condos, even if the sales prices at the co-ops are far higher.
And the rental market has been very strong in recent quarters, helping to raise the overall assessment values of condominiums, even though sales prices may have fallen. “People think that if the market goes down, then their condominium assessments should also go down,” said William E. Banfield, a partner at the law firm Podell, Schwartz, Schecter & Banfield. “So it is very hard to communicate that the assessments are based on rental incomes, and the sales price has nothing at all to do with it.”
Another factor for new-construction condominiums is the assessed value of land. As soon as a developer obtains a permit to start construction on a project, “the city immediately starts increasing the land assessments,” said Peter E. Blond, a partner at Brandt, Steinberg & Lewis, who represents buildings in assessment disputes. “While the building may be exempt under the 421a program, the land is not exempt, so the city can raise the land assessment to guarantee themselves a bare minimum of tax revenue.”
Supporters of the 421a program point out that the offering plans that come with new condominiums outline what the taxes on a unit will be, with and without the 421a exemption.
But Paul J. Korngold, a partner at the law firm of Tuchman, Korngold, Weiss, Lippman & Gelles, who also represents buildings in assessment disputes, says “those numbers are pure baloney.” He says taxes in an offering plan are often based in part on the assessed value of the property before construction is completed, so the tax rate is being applied to a lower assessment that will not stand once the development is built and residents have moved in.
In addition, Mr. Korngold said, “none of us can know what the assessment will be 10 years from now, but if history is a guide, whatever the assessment is today, you can bet the value will go up.”
Mr. Fox, the president of the condominium board at 340 East 23rd Street, said that was the case in his building. “A lot of people were given an offering plan,” he said, “and so they felt they had a good understanding of what they would be paying in taxes. But by the time they closed on their apartment, that tax figure was already higher.”
He added, “it’s fundamentally unfair to have your taxes quoted at a certain level if that level does not reflect what you are actually purchasing, but rather reflects the construction status of a building at a much earlier point in time.”
According to the state attorney general, even if offering plans sometimes cite preconstruction assessment figures, developers are required to include footnotes that disclose the postconstruction costs.
Assessments can be challenged, of course, and many buildings regularly petition the New York City Tax Commission to lower their values. The commission received more than 47,000 petitions last year, the most in its history. Of those, 15 percent of the petitioners were offered lower assessments, and 12 percent agreed to them.
Nicholas Kamillatos, a partner at the law firm Rosenberg & Estis, who specializes in representing buildings in assessment cases, says it is crucial that owners pay attention to the assessed value of their property while the 421a exemption is in place. “If they wait,” Mr. Kamillatos said, “and the city was overcharging them consecutively for three or four years, they will be fighting a higher overall price, and it will be much harder to argue their case.”
Still, some market experts say that even after the exemption expires, real estate taxes at many apartments will remain low. At 497 Greenwich Street, for example, Robert Browne, a senior vice president of the Corcoran Group, is representing the sellers of a 3,052-square-foot three-bedroom that is on the market for $5.25 million. Taxes are currently $2,778 a month, which, at less than $1 per square foot, “is extremely low, as you would expect with the exemption,” Mr. Browne said. But after the benefit wears off in 2015, the taxes will be $3,675, which, while a 32 percent increase, is still only $1.20 a square foot. “And don’t forget, real estate taxes are tax-deductible from your income,” he added. “As long as your taxes aren’t unreasonably high at the end of it, the wearing off of an exemption shouldn’t have a dire effect.”
In any case, brokers say, the onus is on buyers to know exactly what they will pay and to be realistic about how much of a tax increase they can afford.
“When an apartment has a 421a exemption,” said Paul Purcell, a founding partner at Rutenberg Realty, “it is akin to winning the temporary lottery. But I always tell clients, ‘Can you weather the storm at the end of 10 years? Is this going to be an acceptable carrying cost when you see the real taxes you will be paying?’ That is the real question they need to answer.”