INTRODUCTION

Since taking office in December 2020, Mayor Scott's administration has reduced the City’s vacant property inventory fby over 16% (track continued progress HERE)  Resources such as American Program Rescue Act (ARPA) funds contributed to this reduction but are not enough to solve the decades of redlining and disinvestment that created the City’s vacancy problem.

On September 30, 2024, the City’s first- tax increment financing (TIF) legislation was introduced targeting vacant housing and is possibly the country’s first Affordable Housing TIF.  The Affordable housing TIF is part of a comprehensive vacancy reduction and community redevelopment initiative that focuses on long disinvested communities.

The TIF legislation establishes support for $150 million in bonds that will be approved by the City Council in phases and authorizes the sale of up to $65 million in bonds in the legislation.  Bonds will be sold as series, with the amount and projects determined for each series based on neighborhood market conditions, readiness to proceed, other funding sources, and affordability.  

TIF Funds will only be spent on affordable housing – either public infrastructure to support new housing construction or construction costs to redevelop vacant buildings and reduce the appraisal gap.  An important feature of the Affordable Housing TIF is its prioritization of: legacy residents, providing homeownership opportunities to households earning 60% of the area median income and emerging and small developers. 

The Affordable Housing TIF is unique because it is citywide and funds would be available to everyone: homeowners, residents that want to be homeowners, small and emerging developers, nonprofit and affordable housing developers, and established development organizations.  TIF Funds will be provided as grants to help reduce the appraisal gap, which has stalled development from taking place at scale where it is most needed.

There are 7,925 properties included in the Affordable Housing TIF.  3,991 of these will be eligible to receive a portion of the TIF Bonds.  The remaining 3,934 properties are formerly vacant properties that are now rehabbed and occupied – these will be used to repay the increment generated from the sale of the first sale of bonds. The City hopes to sell the first bond series in Calendar Year 2025. 

As the 3,991 properties are rehabbed and occupied, the increase in property values will be used to support the sale of future bond series. Bonds will be issued in series up to $150 million.  Once the legislation authorizing the sale of bonds is approved, the City will work with underwriters and its financial consultants to determine the amount of bonds that can be sold in each series. 

TIF Bonds are debt and are typically repaid from increases in property taxes from projects that the bonds support.  Affordable Housing TIF bonds will be repaid from the property increases that occur when vacant buildings and land are redeveloped with new housing. 

THE AFFORDABLE HOUSING TIF

How is the Affordable Housing TIF different from the City’s Other TIF’s?

The table below summarizes the differences between the City’s traditional TIF’s and the Affordable Housing TIF:

What kinds of housing can be funded by the Affordable Housing TIF?

TIF Funds can be used to support rental and homeownership, but usually emphasize homeownership because it is one of the most significant ways to build generational wealth and because it is one of the most effective ways to help increase the City’s tax base.  

How does the TIF define affordable housing and low income households?

Under the City Charter, TIF funds can be used to support households earning up to 115% of the area median income, or approximately $132,000 for a household of four as determined by HUD.  Mayor Scott recognizes that many City families earn considerably less than $132,000 and is committed to using TIF funds to make homeownership affordable to incomes where it is most needed, including at 60% of area median income. 

Affordability for properties funded by the TIF will be based on several factors including:

• End use (will the property be used for homeownership or rental)
• Will the property help build the neighborhood housing market or preserve affordability
• How will the proposed affordability impact a whole block outcome
• What does the neighborhood housing market look like
• What is the amount of TIF funds to achieve the requested affordability
• What is the size and condition of the property
• Is the request part of a larger project or only the TIF properties n

What can TIF Funds be used for?

The Affordable Housing TIF funds will be used for two activities:

• Public infrastructure so that new housing can be constructed
• Hard construction costs to redevelop a vacant building into an occupied home

Public infrastructure is defined as streets, curbs, gutters, sidewalks, lighting, landscaping, roads, and water and other utilities.  Hard construction costs can include but are not limited to roofs, doors, windows, flooring, porch repair, and drywall.

WHAT PROPERTIES ARE TIF PROPERTIES

Only properties that are included in City Council Bill 24-0595, City-Wide Affordable Housing Development District are eligible to receive TIF bond funds.  There are a total of 7,925 properties included in the TIF legislation that fall into one of two categories: vacant properties eligible for redevelopment and properties used to generate increment for the first bond series.

Vacant Properties for Redevelopment

There are 3,991 vacant properties identified in the TIF legislation that could qualify for TIF Funds.  These properties were identified through DHCD’s ongoing whole block planning efforts and could complete a block, leverage other funding sources, were identified as a community priority, or are part of a DHCD-sponsored development project.  All of these properties met one or more of the following criteria:

• Eligible for Judicial In Rem Foreclosure.  Judicial In Rem Foreclosure allows the Baltimore City Department of Housing & Community Development (DHCD) to foreclose on the liens on a vacant lot or building where the value of the liens exceeds the assessed value of the property, and thereby take title to the property.  To learn more about In Rem Foreclosure, click here. In Rem Eligibility | Baltimore City Department of Housing & Community Development
• Acquired using American Rescue Program Act (ARPA) Funds or other City funding sources.  
• City-owned vacant building
• Vacant property (building or lot) that is needed for a development project.

Click HERE for the list of properties included in the TIF legislation.