News - Warfield at Historic Sykesville

Governor Wes Moore and Housing Secretary Jake Day Urging Immediate Action

Gov. Wes Moore and housing secretary Jake Day: Maryland is facing a crisis; now is the time to take action | COMMENTARY

The Wes Moore-Aruna Miller Administration has made “work, wages, and wealth” our North Star. We must ensure that every Marylander can get a good job, earn good pay and pass something on to their children — besides debt.

Over the last 12 months, we’ve looked under the hood of our state’s economy to learn about the barriers standing between Marylanders and opportunity. Our economic engine is getting stronger thanks to programs we championed in our first year. But we’re still leaving too much potential on the table — resulting in fewer pathways to work, wages and wealth.

After examining our state’s fiscal health, one thing has become abundantly clear: To build a stronger economy and give more Maryland families a fair shot at success, we must address the housing crisis head-on and build a stable housing market that drives long-term economic growth.

Our constituents know that the cost of living is expensive, rents are too high and home prices are up. Most Marylanders in rental properties put a third of their monthly paycheck toward rent. Mortgage interest rates more than doubled in the last two years, placing homeownership increasingly out of reach for the average Maryland family.

Many Marylanders can’t buy a house in the same neighborhood they grew up in. Working families are burning through cash to make rent, leaving them with less to spend on groceries, medicine and the occasional hard-earned night out. What’s even harder to measure is the opportunity cost of spending so much on housing instead of saving for a down payment, paying for a child’s tutoring or writing a family’s next chapter by starting a small business.

We must address the housing crisis at its source: Withering supply. Since the 2008 Great Recession, our state has not built new homes at an adequate pace to keep up with demand. The result is a staggering housing shortage of approximately 96,000 housing units — and counting.

When demand outpaces supply, prices soar. For renters and homeowners, that means insufferable costs just to keep a roof over your head — and a strain on your bank account that can last a lifetime. Marylanders are cramming into small spaces and paying too much for it. Young adults are moving home after college instead of setting out on their own.

The people of Maryland elected this administration to take bold action. We’ve spent the last year showing Marylanders what action looks like — but we aren’t slowing down. During the 2024 legislative session, our administration will introduce a historic housing package consisting of three main elements.

First, we need to cut through government red tape. Right now, any public or private entity hoping to build new housing must adhere to a patchwork of complex regulations. We must streamline the building process by eliminating local and state barriers that stand in the way of commonsense housing development.

In Maryland, we have a strong track record of protecting areas where we shouldn’t build housing, such as precious farmland and fragile wild habitats. Our administration will honor that tradition. But we need to make progress on incentivizing housing in places where we should be building it. This coming year, we will introduce legislation to do exactly that.

Second, we need to strengthen the power of state government to drive development. We plan to introduce legislation that will empower Maryland to compete for millions of dollars in federal support and strengthen existing government programs centered on turning vacant and unsafe structures into community assets.

Our team has refined these provisions in collaboration with advocates and elected officials, including Comptroller Brooke Lierman, and we look forward to partnering with the General Assembly to get it passed and signed into law.

Third, we need to stand with renters. It will take time for housing supply to meet demand, but we know Marylanders need help immediately. Together, we’ve crafted legislation to address high eviction filing rates, establish a new Office of Tenant Rights, design and disseminate a Maryland Tenants Bill of Rights, reduce barriers to becoming a renter and create new pathways to home ownership.

This is one of the most robust and dynamic housing packages that any Maryland administration has introduced in generations. Taken together, our bills will spur new housing construction, ease regulations, enhance long-term financial investment in low-income areas, centralize resources for Maryland renters and get our economy moving again.

Marylanders are counting on us to get this right. More than three-quarters of Maryland voters support the construction of more affordable housing in our state. Now, we must answer their calls. Working in partnership, we will take bold action to ensure greater access to affordable housing —  and in doing so, make work, wages and wealth more attainable to all Marylanders.

Wes Moore is the 63rd governor of Maryland. Jake Day is the state’s secretary of housing and community development.

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Developer Asserts Town’s Lawsuit “Misguided”— Files Countersuit

Town of Sykesville and Warfield Lawsuit Entanglements Continue Over Housing Development

Originally published in by Sherry Greenfield Carroll County Times

The Town of Sykesville and Warfield Historic Properties LLC continue to be embroiled in legal disputes, the first of which was filed in December 2021, and the most recent on Aug. 18.

Warfield, developer of Warfield at Historic Sykesville, a mixed-use housing and commercial development on Route 32, filed a counterclaim in the Circuit Court of Carroll County on Aug. 18, in response to the town’s June lawsuit, alleging that Warfield has made little or no progress in preserving and reusing nine historic buildings at the site for affordable housing, which it agreed to do when the property was purchased in 2018.

The town is asking the court to enter a judgment in its favor and against Warfield Historic Properties LLC and Warfield Historic Quad LLC for breach of contract, according to court documents. The town is also asking to be awarded $3 million in damages.

Warfield’s counterclaim states that the town violated its duty of good faith and fair dealing to cooperate with the developers, according to court papers.

“We have not abandoned a workforce housing project for the historic buildings at Warfield, but the town’s lawsuit and its subversion of our efforts in the past have put this part of the project — admittedly the most important part — on hold,” Steven McCleaf, president of Langley Realty Partners, LLC, which oversees the day-to-day operations of Warfield at Historic Sykesville, said in an email on Friday.

McCleaf said the company spent $8.2 million to purchase the property, helping to resolve more than $5 million in town debt related to Sykesville’s “failed effort” at Warfield, and has invested “millions” since closing on the property in 2018.

“Town leadership has actively disrupted millions in additional investment by disparaging the developer both publicly and in private with capital partners, contractors, and consultants,” he said. “In addition, town leadership has consistently refused to meet with the developer to discuss commercially reasonable proposals for the future of Warfield and has rejected mediation.”

McCleaf said the town’s denial of due process, and the lawsuits, indicated Mayor Stacy Link’s sole intent is to seize control of the property, and put at risk more than $30 million in state and federal incentives needed to make Warfield viable.

“The town owned the property for 16 years and failed in its efforts to rescue Warfield’s historic buildings or to create an economically viable project — going millions into debt in the process,” he said. “The town’s lawsuit is misguided. It is a recipe for disaster.”

Link issued her own statement Friday in response to Warfield’s countersuit.

“A party may assert as a counterclaim any claim that party has against any opposing party, whether or not arising out of the transaction or occurrence that is the subject matter of the opposing party’s claim,” Link said. “That’s exactly what they’ve done here. Besides its contents having nothing to do with the town’s original filing, which is merely an exercise in accountability to the preservation agreement, the counter claim lacks merit.”

Link is out of the country and issued her statement through email.

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Dan Rodricks: Calling Maryland’s Governor to Peace Talks in Sykesville Over Housing Dispute

Staff Commentary

Originally published in the Baltimore Sun by Dan Rodricks • Aug 25, 2023 at 12:50 pm 

If he can find time, Gov. Wes Moore might want to take a ride to Sykesville to deploy his big smile, positive nature and power of persuasion to resolve a bitter dispute between the Carroll County town and a developer. I mean, why not? There’s a legitimate place for the Maryland governor or his housing secretary in the Sykesville mess.

The state still has an interest in what happens on the grounds of the old Springfield Hospital Center, a Maryland institution that once housed and treated people with mental disorders.

Under a previous governor, Parris Glendening, the state conveyed a large parcel of Springfield, known as the Warfield complex, to the town. That happened in 2002, with a disposition agreement that emphasized the Smart Growth ideals Glendening championed during his two terms in Annapolis.

The agreement noted Sykesville’s desire to redevelop Warfield as “principally an employment center/office park,” but it allowed for other uses as well, including residential development that would accommodate people of different income levels.

I mention that because housing is central to the dispute between Sykesville and Warfield Historic Properties LLC, the group that paid the town $8.2 million for the parcel in 2018.
The development, Warfield at Historic Sykesville, prioritized the restoration of 19th-century buildings on the property and the development of office and retail space and townhomes.

But then came the COVID-19 pandemic.

The market for new office buildings and retail space dried up while the need for affordable housing, or workforce housing, grew.

In December 2021, the Warfield group requested permission to build less commercial space and more affordable workforce housing. That’s where things got messy.

A hearing in May 2022 on the developer’s request produced the tired, coded claims that workforce housing would change the “character of the community” and lead to more crime. A former Sykesville mayor warned that outsiders with federal housing vouchers — he actually referred to them as “those people” — would be “coming to our schools and our towns.”

For Timothy Maloney, the attorney representing the developer, that sentiment reflects the reason the town wants to now reclaim the historic Warfield properties from his client.
“‘Those people’ are precisely who the town leadership seeks to exclude from living at Warfield,” he says. “It’s why they are willing to walk away from $30 million in federal and state tax credits for housing and revitalization. And it’s why they are trying to take the property back — to keep ‘those people’ out of Sykesville. Sad to say, it’s the driving force behind all of this.” Mayor Stacy Link disagrees. “The Town would welcome affordable housing if it were proposed in a thoughtful, well-planned development,” she wrote in an email. “The plan the developers showed creates pockets of different housing types with the affordable component pushed to the back of the property instead of being incorporated throughout an accessible and inclusive mixed-use development. Our main issue was with the design of the project and its purely residential concept.”
Link said the town plans to address affordable housing in other ways, through “inclusionary zoning practices and relaxed regulations on accessory dwelling units,” the latter the subject of my Aug. 25 column.

But Steven McCleaf, a principal in the Warfield group, is not convinced. “Affordable housing of any kind was certainly not a pillar of the platform of either Mayor Link or her predecessor,” he says. “Despite a well- demonstrated shortage of affordable housing, the town has failed for decades to address the issue.”

On June 9, 2022, Ken Holt, in his final year as Secretary of Housing and Community Development, convened a meeting at Sykesville Town Hall to try and get local officials and the developers to work toward a resolution. It failed.

“The town never would even discuss a different range of housing mixes,” McCleaf says. “They essentially shut down communication with us.” Two weeks later, the Sykesville Town Council rejected the developer’s request for more affordable housing. Then, in May of this year, the town took steps to reclaim property from the Warfield group, charging that
the developer had failed to pay for the agreed-upon stabilization and preservation of nine historic buildings.

“This inaction,” said Sykesville Town Manager Joe Cosentini, “leaves the Town with two options: continue watching the buildings be demolished by neglect until they can no longer be saved or exercise the remedies available to the Town from the original sales contract, including reversion of the historic buildings to theTown’s ownership. The Town has chosen the latter.” Maloney filed a counterclaim, charging that Sykesville officials acted in bad faith with his client, and seeking damages. His filing says the town’s motivation for taking the property back is “opposition to affordable housing and animus toward residents of affordable housing.”

More than 140 houses, priced between $300,000 and more than $500,000, are mostly completed and already sold, and McCleaf vows to continue working on some elements of the project.
But litigation over the historic buildings has scuttled the partnership’s plan for workforce housing. Maloney says no other developer or lender would touch a project focused on office, commercial and retail space. “And residential development,” he says, “requires the kind of substantial support that the state was willing to provide.”

The relationship between the town and the Warfield group might have become too bitter to be saved. But, given the state’s historic interest in the place and the need for affordable housing, the governor might want to offer personal mediation. I mean, why not?

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Coale: Local Government the “Primary Suspect” in Housing Affordability Crisis

Maryland’s ‘local control’ over housing worsens shortage crisis

Maryland’s housing crisis is getting worse. Freddie Mac and the National Association of Realtors have reported there is a housing shortage of around 120,000 units in Maryland. This number isn’t projecting future growth or new people moving to Maryland, but rather the under supply of housing for those who already call Maryland home. This deficit causes more people to live in smaller spaces and to pay more than they can afford for a place to lay their head. It heightens the risk of eviction and homelessness. Low housing supply results in rents that far outpace regional income growth. And it ultimately makes Maryland a less desirable place to move or build a business as workers require higher compensation to pay for high housing costs.

Maryland’s affordable housing crisis is even worse. The National Low Income Housing Coalition issues an annual report on “The Gap” between demand and supply for affordable units. Maryland has 30 affordable and available rental units for every 100 extremely low income rental households. This ranks Maryland as having the 10th worst affordable housing gap in the country.

While many state lawmakers have acknowledged the high cost of housing as a crisis, few are willing to identify local government as the primary suspect. A century ago, the Standard State Zoning Enabling Act was issued by the U.S. Department of Commerce to provide model legislation for states to grant municipalities the power to dictate local land use. Since that time, housing has been presumed to be a “local matter” not subject to state control.

This made sense as counties facilitated, and even welcomed, growth. But over time, these same counties have become less interested in growth and more focused on resource hoarding. Counties not only want to create well-funded school systems with a high quality of life, but also want to ensure as few people as possible have access to these public goods.

In Baltimore County, a new affordable housing proposal in Towson was finally cleared for construction after being held up, and denied administrative approval, because of a resolution adopted by the County Council with the express intent of killing the project. The 56 new affordable units are desperately needed to satisfy the county’s obligation to create 1,200 new units over the next 11 years — an obligation it is not likely to meet.

In Howard County, a member of the Zoning Board, who also serves as a member of the County Council, presided over and voted against a zoning petition for new apartments in the Columbia village of Hickory Ridge after testifying against the petition when it was before the Howard County Planning Board. This kind of explicit bias would be decried in any courtroom, but is status quo for local land use decisions.

Adequate Public Facilities Ordinances, which are intended to signal the need for additional infrastructure to accompany housing growth, have been utilized by counties to create housing moratoriums, stalling the construction of housing in areas with already inflated housing prices. Earlier this year, a circuit court judge ruled that a police shortage in Annapolis would require a hold on all new housing in the city.

Jurisdictions like Montgomery County are projected to need over 60,000 new housing units over the next 20 years. Despite relatively liberal land use and zoning policies compared to its neighbors, Montgomery County is producing less than 2,600 new housing units per year, leaving a projected gap of 8,000 units. When large jurisdictions like Montgomery County don’t build enough housing, the consequences cascade across surrounding counties that need to make up the gap.

The necessities of the housing crisis have caused states like California and Massachusetts to revisit the sanctity of local control for the purposes of shaping statewide housing policy. Maryland may be ready to do the same. House Bill 852/Senate Bill 903 would require counties to provide expedited permit review for religious institutions building affordable housing. Lawmakers also are considering creating a task force to study a law that would require counties to allow the construction of accessory dwelling units. The Montgomery County Delegation sponsored legislation that would prohibit the Montgomery County district council from adopting or enforcing a local law that would require off-street parking for a residential development that is located within a quarter mile of a present or planned Metro or Purple Line station.

The failure to build new housing is a generational wealth transfer by inertia. As housing supply becomes more constrained, Baby Boomers, Gen X members, and older millennials become more wealthy on paper, while later generations find homeownership further out of reach. Every day of inaction makes the problem more intractable. The politics of local government make movement on the housing crisis impossible. It’s time for state lawmakers to step in.

 

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OUTLOOK BLEAK FOR FIRST-TIME HOMEBUYERS

First-Time Homebuyers are ‘Royally Screwed’

Lawrence Talej was ready to buy his first house.

It was late 2019, and Talej, then a 26-year-old software developer, had saved up for a down payment while living with his parents in a suburb near Richmond, Virginia. After looking at a few houses in the area, he won out on a nearby home for $315,000 — right at the asking price. But before he could officially become a first-time homeowner, an inspection revealed the house needed as much as $40,000 worth of repairs. He decided to back out of the contract. Better deals would come around, he thought.

Now Talej wishes he’d bought the home after all. The surge in home prices during the COVID-19 pandemic meant that by the time he jumped back into the market during the summer of 2021, it was too late. The median price for a home in his ZIP code had risen by more than $100,000.

For first-time homebuyers like Talej, the outlook has never been bleaker. The double whammy of skyrocketing home prices and surging interest rates has pushed homeownership further out of reach, while a decade of under building has left the latest generation of hopeful owners with fewer options and stiffer competition for listings.

This unfortunate combination means first-time buyers are waiting longer to purchase homes and winning out with less frequency than ever before. Between June 2021 and June 2022, the typical first-time homebuyer was 36 years old, the highest median age since the National Association of Realtors started surveying buyers in 1981. And during that year, first-time buyers accounted for just 26% of all home purchases, the lowest percentage ever, according to the NAR.

It’s clear that the pandemic has exacerbated inequalities in the housing market, forging a greater divide between those who already own their home and those who are still searching for that opportunity. And while there may be some short-term relief on the horizon, housing advocates worry that without some sort of large-scale intervention, the long-term obstacles for first-time buyers will continue to mount.

Meanwhile, would-be buyers are stuck with the feeling that they’ve been locked out of the market entirely. Talej, who’s now 29, summed up his cohort’s position with a grim acknowledgement: “We’re royally screwed.”

The new first-time homebuyer

The profile of the typical first-time homebuyer has dramatically shifted over the past few decades — and even more so in the years since the housing-market meltdown in 2008. The most recent NAR data indicates the new face of first-time homeownership is older, richer, more likely to be unmarried, and more likely to be moving right from their parents’ home.

Perhaps the most striking shift is the age of new homebuyers. The median age of someone purchasing their first home in 1981 was 29. Over the next 30 years that figure barely creeped up, rising to just 30 in 2010. But in the past decade, the median age has ticked up even higher, reaching a record of 36 last year. And according to Jessica Lautz, the deputy chief economist and vice president of research for the NAR, there’s reason to believe first-time buyers will skew older for the foreseeable future. Higher mortgage rates are stretching budgets thin, while a dearth of housing inventory keeps prices elevated, meaning new buyers need to build up a larger nest egg before hopping into the market.

“It makes sense that they would have to save for a longer period of time, unless they have family help,” Lautz said.

Other changes in the typical first-time homebuyer also reflect the growing challenges of saving up for a down payment. In 2020, the median household income for first-time homebuyers reached $90,539 in inflation-adjusted dollars, the highest level since 2001 and well above the national median income for all households of $71,186. The median income for repeat buyers also peaked at $117,753 that year. Median incomes for both first-time buyers and repeat buyers fell in 2021, to $71,000 and $96,000. But Lautz told me that the drop didn’t necessarily mean that more homes became accessible to people with lower incomes — rather, the people who ended up being able to make their first purchase were buying in markets that were cheaper in the first place.

“We see more buyers in small towns, outer suburban areas, rural areas, and those are more affordable areas overall where a buyer can purchase on a lower income,” Lautz said.

More new buyers are also delaying traditional life milestones like getting married or moving out of their parents’ house. Unmarried couples accounted for 18% of first-time buyers between June 2021 and June 2022, the highest share recorded by the NAR, up from 4% in 1985 and 12% in 2010. And many of today’s hopeful homebuyers are trying to build up their savings by living in their childhood bedrooms longer: 27% of first-time buyers in the NAR’s most recent survey moved directly from a family member’s home into the home they purchased, the highest percentage recorded and up from 15% in 1989.

The racial makeup of first-time homebuyers also set records in 2022, but the lack of progress in Black homeownership was perhaps most shocking. Just 3% of first-time homebuyers last year were Black, the lowest percentage since the NAR began tracking the data in 2003, when about 6% of the cohort were Black. The percentage of first-time homebuyers who were white hit a two-decade high of 88% last year, up from 83% in 2003.

This gap mirrors the astonishing divide between white and Black homeownership rates, which is now larger than it was in 1960. Last year, 43.5% of Black households owned their home, compared with 74.6% of white households, according to the US Census Bureau. That gap — 31 percentage points — is 2 points higher than it was more than six decades ago.

The ‘haves’ and the ‘have nots’

Housing-market experts say the reasons for these shifts come down to one major thing: affordability. The jumps in age and income, and even the racial disparities, reflect the brutally high barriers to entry for today’s housing market. The typical down payment for a home more than doubled during the pandemic, reaching a peak of $66,000 in May 2022, according to Redfin.

“The housing market has really become a market of ‘haves’ and ‘have nots,’ and the first-time homebuyers are the ones who are losing in this environment,” Lautz told me. “They do not have housing equity, and they do not have the ability to quickly move into the housing market without that.”

Waiting longer to purchase your first home may not be entirely a bad thing. Older people tend to be more financially stable and have a clearer idea of what they want for the long term, Danielle Hale, the chief economist at Realtor.com, told me. But for better or worse, homeownership remains the most popular form of building wealth for most American households. A delayed home purchase can mean missing out on years that could have been spent amassing equity. “The ability to build that housing wealth over a lifetime really does shrink,” Lautz told me.

With more people delaying their first-home purchases, the wealth gap between people who own a home and those on the outside of ownership will only grow. Over the past decade, the average homeowner has accumulated $210,000 in equity, according to the NAR.

These trends only compound the bad economic news for millennials, who make up the majority of today’s first-time buyers. Many members of the generation have suffered a series of setbacks including the Great Recession and the pandemic in their adult lives, and they’ve accumulated more student debt and less wealth than previous generations as a result. Now the housing market is doing them no favors. In the decade after the housing crash, builders started construction on roughly 21,000 single-family homes per 1 million people each year, barely half as many as they were building in each of the three decades prior. The underbuilding, combined with the sheer size of the millennial generation, created an extreme housing crunch as many in the cohort aged into their prime homebuying years. That leaves millennials and subsequent generations in a precarious position.

“They’re scared they’re not going to be able to ever afford a home. They’re scared there won’t be homes for them by the time they get there,” said Wendy Gilch, the founder of Selling Later Search and the host of the podcast “The Real Estate Replay,” in which she shares cautionary tales from buyers and sellers. “They just feel abandoned.”

Hope is a fickle thing

There’s some slight relief on the horizon for first-time homebuyers. The recent escalation in mortgage rates is making home payments more expensive, but it also means the bidding wars that defined the pandemic-era housing boom are now much less common. Buyers who can stomach higher borrowing costs are finding they may no longer have to put in outrageous offers and waive inspections in order to have a chance of landing a home.

Many housing experts have also predicted that cooling demand could result in home-price declines this year, which could ease affordability concerns for buyers. But available homes, particularly the lower-priced starter homes that so many first-time buyers rely on, remain scarce. Homebuilders, who were ramping up construction when demand was hot during the first two years of the pandemic, are now pulling back in the face of recession fears, which will only deepen the shortage.

Policymakers are taking note of the bleak prospects for first-time homebuyers. In 2021, House Democrats introduced two bills that aim to level the playing field: the First-Time Homebuyer Act, which would offer a tax credit equal to 10% of the purchase price of a home up to $15,000, and the Downpayment Toward Equity Act, which would issue grants of up to $25,000 for first-time buyers. The latter has advanced to the full chamber, but both face an uphill climb in a Republican-controlled House.

Nonprofits around the country are working with potential homebuyers to provide down-payment assistance and financial education, but their work can only go so far without massive policy overhauls to aid first-time buyers.

“Without federal resources like that, it will always be a game of catch-up, and we will always be falling behind the times,” said Sunshine Mathon, the CEO of Piedmont Housing Alliance, one of these nonprofits, in Charlottesville, Virginia.

Ultimately, though, the struggles of first-time buyers reflect a fundamental disconnect in the US housing market. Shelter is a universal need, but homeowners also expect their investments to increase in value. The prospect of cheap and plentiful housing represents a direct threat to that wealth.

“If we’re just relying on the unrestricted markets around homeownership costs, frankly, it will be out of reach for young people and for many communities of color in perpetuity,” Mathon said.

The dynamic is broken’

I first spoke with Talej, the Richmond-area would-be homebuyer, in December. Three years had passed since he backed away from the $315,000 home in his area — a steal by today’s standards, even if it needed tens of thousands of dollars’ worth of repairs. He couldn’t shake the feeling that an opportunity like that wouldn’t come around again.

“The dynamic is broken for the foreseeable future,” he told me. “I don’t see it going back anytime soon.”

About a month later, we talked again, and he had an update: He had just gone under contract on a three-bedroom house for $385,000. It was pricier than the home he almost bought in 2019, and it needed another $10,000 worth of work. But it was in an area with a good school district, about five minutes from his parents’ place.

For Talej, the pending purchase is a bittersweet conclusion to his homebuying journey. Despite finally winning out on a home, he said he felt no more optimistic about the state of the housing market than he did a month ago. He attributes his success mostly to luck: The seller needed to make a deal quickly and was willing to cut down the original asking price of $419,000, at a time of year when sales are typically slower. Take away those circumstances, and Talej isn’t sure where he would have ended up.

“I have a sinking feeling,” he said, “that had I not moved on this one, it would be more of the same nonsense.”

 

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