It was only a month ago that most Baltimoreans learned that the Housing Authority of Baltimore City (HABC) is contracting to sell off about half of its 10,300 federally subsidized low- income apartments to private companies.
The Baltimore Brew broke the news in a series of stories that irritated Housing Commissioner Paul Graziano and prompted several radio appearances and a March 12 City Council hearing.
"They came in here and left notices on each floor" just before Christmas, says Floyd Vines, a resident of the J Van Story Branch senior apartments on 20th Street. "I said, 'What-they going to privatize?' Not that I was automatically skeptical. But I was like, 'This is the guy they send in to take you out.' I was joking with him-'Are you with the CIA or something?'"
The program itself has been known to housing policy insiders since at least 2012. And those who didn't know probably could have guessed what was coming. The Van Story Branch apartments are slated for a "phase two" sale; HABC estimates they need more than $19 million in rehab.
Underlying the arguments and worries about what might become of vulnerable elderly and disabled tenants under the new regime is a policy shift that has systematically diverted federal tax money away from direct housing subsidies and into the pockets of banks and wealthy corporations for nearly three decades.
Since 1986, public housing has been built mostly using the Low Income Housing Tax Credit, which allows a dollar-for-dollar reduction in federal taxes for those who buy it.
While nearly 100,000 new units of low-income housing have been built or renovated annually under this program, the buildings erected in the 1950s and '60s using direct federal subsidies have been torn down-mainly because of lack of maintenance. "HUD estimates a national backlog of deferred maintenance and capital need of approximately $27 billion," the Housing Authority says in a handout it's titled Frequently Asked Questions.
Coincidentally, $27 billion is what the Low Income Housing Tax Credit cost the federal treasury from 2010 through 2014.
The total tax expenditure-that is, taxes foregone by the federal government-from the Low Income Housing Tax Credit since its 1986 inception is in excess of $100 billion.
"I went back and did a little research on the Low Income Housing Tax Credit," City Councilman Bill Henry says. "And, unsurprisingly, it's a product of the Reagan administration. People say it's the most successful affordable housing program ever, and of course it is, because its operation requires that the private sector make money."
Graziano would not have chosen it, but it's the best option he has. "RAD is the best choice because, simply, there are no other choices available to HABC or HUD that have the potential to be this transformative for public housing and its residents," he writes in the FAQ, adding that Baltimore's share of the $27 billion housing maintenance and repair backlog is $800 million. "Given the current climate in Congress, there is no realistic expectation that there will be federal funding available in that magnitude for public housing."
Graziano says that through the magic of the Low Income Housing Tax Credit, RAD will allow HUD to invest over $6 billion nationwide in public housing "without further appropriations from Congress."
"Doing nothing is also not an option," Graziano says. About 1 percent of all HUD-funded public housing is lost each year to lack of maintenance. "HABC is not immune to this trend."
Phase one of the plan would sell 11 publicly owned complexes to private companies that have already won the right to purchase them in a Request for Proposal bid that happened last summer, according to HABC's handout. Eleven more sales will happen in phase two, beginning in 2015.
HABC chose 10 developers to operate the 11 HABC-owned projects. Enterprise Homes will get The Allendale at 3600 W. Franklin, PIRHL Development the Bernard E. Mason Senior Apartments at 2121 Windsor Garden Lane and The Woda Group will take over The Somerset Court on the 600 block of Aisquith St.
Michaels Development gets Pleasant View Gardens on the 200 block of Aisquith; The Community Builders gets the McCulloh Homes Extension at 501 Dolphin St.; Telesis gets The Brentwood at 410 E. 25th Street; Landex gets the Bel-Park Tower (3800 W. Belvedere Ave.) and the Lakeview Towers on Druid Park Lake Drive; Community Preservation & Development Corp. gets Hollins House at 1010 W. Baltimore St.; The French Companies/Community Housing Partners is taking over Primrose Place at 820 S. Caton Ave.; and Pennrose is taking over the Wyman House at 123 W. 29th St.
"The consideration for applying primarily for the mixed-population high-rises is that with only one exception they are all single-building developments and therefore significantly easier to finance through the [Low Income Housing Tax Credit], which HABC had determined was a necessary element of any RAD transaction," HABC says.
Housing advocates have been scrambling to check up on the companies, says Jessica Lewis of the Right to Housing Alliance, an organization led by low-income residents.