Board authorizes up to $30M in bonds for citywide affordable-housing TIF, approves program structure

The Baltimore City Board of Finance voted Oct. 27 to authorize issuance of special obligation bonds of up to $30,000,000 (Series 2025) to fund the citywide affordable housing tax increment financing (TIF) program.

Alice Kennedy, housing commissioner at the Baltimore City Department of Housing and Community Development, told the board the city council approved the creation of a citywide affordable housing development district (Ordinance 24‑443) and a separate ordinance that authorized up to $65,000,000 for vacant-housing rehabilitation and certain public infrastructure improvements. The Series 2025 bond authorization is the first tranche of the TIF financing plan.

The resolution approved by the board authorizes sale and delivery of up to $30,000,000 in fixed-rate special-obligation bonds (rate not to exceed 7.5 percent), approval of the indenture of trust, the funding agreement, the grant program agreement, and related documents. The package authorizes a negotiated sale and appoints Stifel Nicolaus as underwriter, McGuireWoods as bond counsel, and Municap as development-district administrator and grant administrator functions.

Kennedy said the program is designed to reimburse hard construction costs for rehabilitation and eligible new construction of vacant properties and can support homeownership and rental projects up to 115% of area median income (AMI) with emphasis on 60% and 80% AMI levels. She said the program is reimbursement-only: grant proceeds reimburse documented hard construction expenses after third-party inspection and cost verification, not advance payments.

Program rollout details presented to the board included a notice of funding opportunity that generated 190 applications, 104 of which passed a threshold review; applicants covered 361 properties and requested more than $43,000,000. Kennedy said the city expects the Series 2025 proceeds to cover roughly $15,000,000–$16,000,000 of those documented needs and that the initial awards will target more than 100 vacant buildings for rehabilitation.

Program controls discussed in the meeting include a third-party inspection regime (an RFQ produced eight respondents; the city plans to approve seven inspectors), Municap acting as cost-verification agent and grant administrator, and restrictive covenants tied to assisted properties (the city indicated a five-year affordability term was under consideration).

Director Rogers and Municap presented the plan of finance. The forecast presented at the meeting showed total bond proceeds of $29,190,000, with $24,650,000 deposited to an improvement fund. The improvement-fund uses shown in the presentation included: $15,900,000 for an affordable housing program grant, $7,900,000 for an affordable housing development grant, roughly $711,000 for predevelopment/infrastructure engineering and design, a debt-service reserve of about $2,100,000, administrative costs of about $350,000, and estimated issuance costs.

Bond counsel emphasized legal and tax compliance features: the grant agreements are structured for reimbursement to reduce IRS risk, restrictive covenants will run with assisted properties, and bond payments are payable from segregated tax-increment revenues dedicated to the TIF special fund. Counsel noted charter and Maryland practice requires tax-increment payments to remain subject to annual appropriation by the council; the legal team said investors and rating agencies are familiar with Maryland’s appropriation framework.

Board members pressed on risk: speakers identified the greatest operational risk as developer or homeowner failure to complete projects after a grant award; staff emphasized the reimbursement structure, third-party inspectors, and cost-verification as mitigation. Municap presented multiple "but-for" examples showing appraisal and affordability gaps (homeownership examples with subsidy needs of roughly $100,000–$215,000 per unit and a rental example needing roughly $95,000–$116,000 per unit) and summarized that approved projects include 44%–68% non-city investment in total project costs.

After discussion, the board moved, seconded and approved the resolution authorizing the issuance and delivery of special obligation bonds not to exceed $30,000,000 for the citywide affordable housing program (Series 2025). The motion passed on an affirmative vote recorded as "All in favor."