Baltimore residents could have been forgiven for raising their eyebrows when City Council President Zeke Cohen declared two weeks ago that “Baltimore is writing the greatest comeback story in American history.” Baltimoreans have heard this line before; city leaders perpetually promise that our “renaissance” is just one silver-bullet program, grant, law and/or investment away. That said, the housing reform bills Cohen introduced in his speech hold real promise, and Baltimoreans should take notice. For the first time since anyone can remember, the Baltimore City Council looks like it might pass sensible reforms with the real potential to facilitate redevelopment of the city’s vacant properties. The only problem is that council members might be tempted into thinking the package introduced on May 12 is enough — it’s not, and more fundamental changes to the city’s broken tax policy are needed. The package of five bills was introduced jointly by the City Council and Mayor Brandon Scott, and fits into broader efforts by city leaders to facilitate the redevelopment of vacant property. From axing requirements for needless stairwells in small buildings to eliminating the rules that required developers to build large parking lots instead of homes, the council’s legislative package contains a laundry list of sensible policy updates that warm my wonky heart. However, neither the council nor the mayor is paying sufficient attention to the underlying flaw at the heart of every development issue facing the city: the fundamentally counterproductive incentives created by taxing building value as opposed to land value. The notable exception is Councilman Zac Blanchard, who, along with Del. Caylin Young, recently organized a town hall, which I attended, to raise awareness of efforts to bring about a city-wide shift to a “land value tax.” The two-hour session was attended by more than 50 community participants, and much of the discussion centered on how an LVT could be used to counter the city’s pernicious problem of vacant and undeveloped properties. Our conversation reflected a growing national conversation about how well-intentioned regulations in blue states create adverse consequences that undermine sensible development. Baltimore, which has lived on the bleeding edge of American urban decline for decades, may soon be on the cutting edge of urban renewal. For years, the City Hall’s response to the vacant housing crisis has been to develop new agencies or improve existing ones to expedite the processing and sale of condemned properties to private developers. Some of these, from Councilwoman Odette Ramos’ landbank proposal last year to Mayor Scott’s BMore FAST strategy released this spring, have real promise and should be pursued. However, because Baltimore City owns a tiny portion of the city’s vacants — about 10% according to a 2022 study — policies that improve the city’s vacant clearing process are not enough. With most vacants held privately, we need tax policy that incentivizes private development so that private owners will build on their land — or sell to someone who will. Under the current tax scheme, Baltimore taxes property owners based on the value of the buildings on their property, not the land . This means developers pay almost no tax on the distressed and vacant properties they own and only pay the city’s hefty property taxes once buildings are constructed. Thus, our tax policy actively encourages vacancy. As things exist now, developers hold vacant properties for years, and lobby city hall for financial incentives and tax breaks. City leaders want to see problem properties developed — and, frankly, want legal and illegal kickbacks — so they give developers tax breaks to build on their land. At best, the current tax system makes the public-led model of redevelopment a gross game of influence peddling. At worst, it actively encourages corruption and is tantamount to legal ransom. Shifting to a Land Value Tax flips this script. Taxing the value of land penalizes those who hold it speculatively — such as the LLCs that own over a quarter of the city’s vacants — while encouraging investment by not taxing the value of the homes and business spaces they construct. There are two obstacles preventing Baltimore from making this sensible, pro-abundance shift. In the first instance, Annapolis needs to give Baltimore City full control over its own tax rates. Del. Young introduced a bill to fix this problem last session, and with the unified support of the Baltimore delegation there is a good chance it will pass when the General Assembly returns to session. The bigger challenge is the City Council itself, as councilmembers may be reluctant to change housing policy too much and too quickly, especially in ways that would lessen the relative importance of City Hall in the development process. That would be a mistake. Even if Councilman Cohen’s reforms pass, the city’s overall housing strategy is still too dependent on state investment to be reliable at a time when Annapolis is trimming budgets . With state support in doubt and federal support out of the question, it is reckless to pursue development strategies we cannot finance ourselves. A LVT, by contrast, would lessen the city’s reliance on outside financing because it induces development without government expenditure. Government-centered redevelopment strategies that subsidize predatory speculators have failed Baltimore for decades. This summer, the City Council should be bold and pass an LVT “trigger” bill that will come into effect once local tax control is returned to Baltimore. It’s about time the city flipped the script on urban decline and embraced abundance.
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