BALTIMORE — Brian Chance is a Baltimore home builder, standing in the one of the four homes that has yet to sell as part of his Canton development named Brewer's Green. He points out the finishes of the home.
It is brand new construction with four floors, garage and sweeping views from several decks which are the highlight, but his sales team was also pitching a long-standing property tax credit to ease buyers in.
[You’re in the middle of selling 12 houses in this row here and you were advertising this credit?] “Yeah,“ Chance responded.
With good reason.
The city property tax credit for newly constructed dwellings has been around since 1996.
Buyers pay half the property taxes the first year and then it slowly expires over five years; it was designed to foster development and attract residents to Baltimore.
It was re-upped by the state legislature every three to five years at the request of the city as the credit became more popular.
In just more than 20 years, Baltimore City has handed out nearly 10,000 of these credits for new homes totaling more than 40 million dollars...until, well...today.
As of June 30th, that long-standing tax credit was allowed to lapse, much to the surprise of home builders, and buyers.
”Well, obviously they weren’t happy, and we had to go back to the negotiating table and figure out how we were going to help them still move forward with the purchase and give them a seller credit to help offset the cost of not having the credit,” Chance said.
Chance said he found out two weeks ago; Mayor Jack Young said he was told about it just this week.
“I don't know where the blame lies,” Mayor Jack Young said in a press conference this week. “I am not going to blame anyone, but I understand that it didn't get passed in the legislature, the last session, so we are trying to move forward to see what we could do to extend it.
But short of a special session, the answer to that — state lawmakers say, is not much.
”We've been trying to scramble to see if there is anything that we can do but the realistic answer is, it is probably something we cannot take up until 2020,“ said Baltimore City Senator Bill Ferguson.
Ferguson says local tax credits that need state legislation are usually the responsibility of the city or county.
In this case, it would be a failure of the Pugh administration not to call the state's attention to a credit that has fostered development in parts of downtown and West Baltimore for more than two decades
Ferguson said they were made aware of the issue too late to fix it.
”Unfortunately, we didn't find out until the second to last day of session which would have been impossible,” Ferguson said, “This is something that should have been on the radar back in the fall of 2018 so that everyone could have conversations about it for a new piece of authorizing legislation in this past session...we didn't hear a word.“
And so, in the meantime, builders like Chance are having to shoulder some of that money.
In addition to his development in Canton, he is building new homes in Federal Hill while other builders are breaking ground around the city like another recent project just getting underway in Brewers Hill.
All of the homes were designed with the idea of a credit in mind and hope it won’t take a year to get it back.
”We are gonna have to do something to offset the cost to the buyers to keep, keep sales moving,“ said Chance.
The industry is hoping to keep sales moving and builders building.
Late this week the Greater Baltimore Board of Realtors announced it is currently working with the city to come up with an alternative program that would restore credit.
No deal is in place just yet, but the GBBR says it hopes to resolve this issue in 45 days.