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Opinion How Maryland can help make affordable rental housing more accessible in Baltimore

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David Plymyer is a lawyer and former social worker. He retired in 2014 as the Anne Arundel County attorney.

Maryland leaders must think bigger to solve the problem of housing security in Baltimore. Removing the obstacle to accessing decent, affordable rental housing created by security deposit requirements is an example.

Racial discrimination written into government policy began the chain of events that led to a shortage of affordable rental housing in Baltimore. It will take government policy and a substantial public investment to end it. State-subsidized lease insurance for landlords, as an alternative to security deposits and private rental security insurance purchased by tenants, is a way to redress some of the harm done by the city’s striking history of systemic racism.

Mortgage insurance backed by the government once rescued White Baltimoreans from a housing crisis. Lease insurance subsidized by the government can help do the same for Black Baltimoreans today.

The Baltimore City Council recently passed an ordinance that requires landlords who own or control 10 or more rental units in the city and do not allow tenants to pay security deposits in installments to accept private rental security insurance. The measure will make only a small dent in the problem in Baltimore.

Most rental security “insurance” policies are not insurance; they are surety bonds with terms and conditions that favor protection of the insurance companies and limit their usefulness to low-income tenants. It is paradoxical that some public officials see creating profit-making opportunities for insurance companies as a solution to Baltimore’s housing crisis, given the city’s history.

The concentration of poor Black residents in specific neighborhoods in Baltimore is a direct consequence of systemic racism, described in the landmark 2010 book by Antero Pietila, “Not in My Neighborhood: How Bigotry Shaped a Great American City.” Government policy played a major role.

The Federal Housing Administration was established in 1934 in response to a national housing crisis. Bank failures during the Great Depression made it difficult to obtain home loans. The FHA insured the payment of mortgages by borrowers, thus protecting the banks against defaults. The FHA dramatically increased the availability of home loans — for White people.

The FHA refused to insure mortgages in Black neighborhoods, a practice called “redlining.” Meanwhile, the FHA subsidized the mass production of houses in the suburbs on the condition that none of the houses would be sold to Black people. The theory was that houses would decline in value if Black people moved into a neighborhood, increasing the risk of loan defaults.

Redlining created housing patterns in Baltimore that persist to this day. Black homeownership declined. White investors bought up housing stock in Black neighborhoods to serve as rental properties, driving up prices. By charging exorbitant rents and investing little in their properties, they exploited racial discrimination that limited housing options for Black residents.

Over time, White people fled to the suburbs, and investment went with them. Black people remained behind, the poorest living in the city’s “Black Butterfly.” From 1950 to 2000, though the overall population decreased by about 30 percent, the percentage of Black residents increased from less than 25 percent to more than 64 percent. Baltimore, with a poverty rate now at about 22 percent, became a poor city in a very wealthy state.

The state government has the resources to lower the barrier to affordable housing caused by security deposits; the cash-strapped city government does not. The Maryland General Assembly should establish a quasi-public nonprofit corporation, subsidized by state taxpayers, that insures landlords against loss from unpaid rent and damage done by low-income tenants in the city up to the amount of the security deposits required for the rental units.

The shortage of affordable rental housing in Baltimore perpetuates the concentration of poverty in predominantly Black neighborhoods, the city’s most intractable problem. If ever there were a case to be made for reparations for the consequences of segregation, helping poor Black residents of Baltimore gain access to affordable rental housing is it.

Subsidizing lease insurance for landlords would be payment by Marylanders against a moral debt — a debt incurred by nearly a century of discriminatory policies and predatory lending and real estate practices that profited banks and White speculators but consigned many Black residents to inferior housing in neighborhoods with substandard schools and inadequate access to employment.

Repayment of that debt is the only way to save many city neighborhoods. Subsidized lease insurance is a reinvestment in Baltimore that will more than pay for itself in the future.

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