Just two weeks ago, housing activists joined Mayor Catherine E. Pugh at City Hall to celebrate a hard-won agreement that she called “historic” — an eventual $20 million annual commitment to affordable housing, funded in part by new excise taxes on real estate transactions of more than $1 million.

But those activists said this week that last-minute proposals to exempt some of those big-ticket transactions from the new taxes threatened to diminish that commitment — although it was unclear by how much. A City Council committee passed the exemptions Sept. 27, a day after Pugh’s event, and the full council will vote on them today.

Some activists say they were blindsided by the exemptions, presented in amendments to a bill authorizing the new excise taxes, and angry that they were passed before the city provided an analysis of their effect.

“It was a surprise, and a punch in the gut,” said Peter Sabonis, an economist and lawyer who is part of the Baltimore Housing Roundtable, one of the groups that have been trying to get the affordable housing trust off the ground.

On Friday, the city completed its estimate of the impact and told activists it should be no more than $1.15 million.

Sabonis said he has no reason to doubt the estimate, and was heartened that it was much less than he expected after he made his own back-of-the-envelope calculations.

“We’re pleased they now have figures,” Sabonis said, “two weeks after the exemptions were adopted.”

The full council will consider two exemptions: one, for residential properties valued at over $1 million, for the next two years, and another that would exempt construction loans for projects that are currently in the pipeline and have a building permit by the effective date of the new taxes, which is Jan. 1.

The proposed exemptions are the latest hurdle in a years-long effort to address the need for affordable housing in Baltimore.

Voters approved a ballot measure in 2016 to create an affordable housing trust, but it remained unfunded.

Activists called for $20 million in annual funds — as well as a similar amount for demolishing vacant houses — and Pugh voiced her support for that vision in 2017. When funding failed to materialize, activists launched a petition drive to get another measure onto the ballot in November of this year to require the city to devote a nickel of every $100 in assessed city property value to the trust.

They said they had more than the 10,000 signatures needed to get the question onto the ballot.

With voters generally approving such ballot questions, city officials negotiated an alternate funding stream in exchange for the end of the referendum effort.

In August, the city announced the new excise taxes: an extra 0.6 percent tax on the transfer of real estate valued at more than $1 million, and an extra 0.15 percent tax on recordation fees for transactions of more than $1 million.

The city estimated those taxes would generate about $13 million a year for the trust, and Pugh committed to providing additional funds to bring the total to $20 million by fiscal 2023. City officials and activists signed off on the deal, which was celebrated at the Sept. 26 City Hall news conference with much applause and mutual thanks.

The following day, the council’s taxation and finance committee voted to forward the measure with the amendments that would create exemptions to the taxes and end the funding measure after seven years.

City Councilwoman Sharon Middleton, the tax and finance chairwoman, said there was some confusion over the effect of the exemptions, but those could be ironed out later.

“That piece will have more discussion at the [Monday] meeting,” she said. “We didn’t want that to hold up the total bill.”

Josh Greenfeld, vice president of government affairs for the Maryland Building Industry Association, said the group sought the exemption that would grandfather in development projects that already had received building permits.

jean.marbella@baltsun.com

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