DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT: DEVELOP AND ADOPT STATE SMART CODE

12-B
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT: DEVELOP AND ADOPT STATE SMART CODE
Problem Identification:
If HCD does not participate in the development and adoption of the state-wide SMART code for building rehabilitation, HCD will impede capital investment for building rehabilitation in Baltimore City and lose state monetary incentives.HCD currently uses and enforces the BOCA Code (a national building code) with amendments peculiar to Baltimore City. The Code is designed for new construction and is not as germane for rehabilitation of older urban structures. The SMART Code (modeled after the New Jersey building code for rehabilitation) is intended to create a building rehabilitation code which is more sensible and which will encourage rehabilitation of older buildings. There are no sanctions if Baltimore does not adopt the SMART Code, but if the City adopts the Code without amendment, it could benefit from significant financial incentives.

Recommended Action:
Develop and adopt SMART Code:

– Participate in the development of the state-wide SMART building rehabilitation code to ensure that the city’s peculiar code interests are met without requiring amendments to the Code.

– Adopt code (without amendments if possible) in order to encourage capital investment in the rehabilitation of City buildings and to qualify for state monetary incentives.

Classification:
Revenue Enhancement

Function/Operation Area:
HCD Housing Inspection, Construction & Building Inspection, and Permitting

Estimated Annual Impact:
$3,250,000 in net revenue to HCD (see analysis).

Estimated Implementation Costs:
Cost of publishing new code, cost of training inspectors (paid by State), cost of administering 2 codes (building and rehabilitation codes)

Barriers to Implementation:
Possible HCD staff resistance.

Projected Implementation:
1 year

Next Steps:
Appoint senior HCD or other qualified City official to lead effort to draft SMART code. Negotiate amount and use of incentive grants with state. Adopt code without modification, if possible. Lobby Maryland DHCD to fund grants to program hand-held devices with new SMART code and link data to HCD databases.

Analysis:
Costs:

– Adoption & publishing of new Code$ 20,000
– Total Costs $ 20,000

Benefits:

Increase rehabilitation (‘rehab’) investment in Baltimore City by 30% (a conservative estimate ‘ rehab investment in Newark, Jersey City and Camden, New Jersey increased by 40%-80% as a result of adopting codes similar to those anticipated by the MD SMART code enabling legislation).

Increased Building Permit Fees (to HCD) $ 1,470,000 [1]

Training funds from State to train inspectors $300,000
(to HCD)

Incentive grants from State (DHCD Mortgage Financing program, Maryland Department of Transportation (MDOT), Neighborhood Conservation program, MDOT Transportation Enhancement program)$ 1,500,000

[1] Although permit fees are paid at an average rate of 10% of construction costs, the costs on permit applications are normally understated and not all construction is permitted. As a consequence, we have assumed that construction costs for the purposes of calculating permit fees are 50% less than actual rehab construction costs. Assuming a 30% increase of rehab investment of $29 million ($89 million X 30%) X 50% reported rehab construction costs for permit fee purposes X 10% permit fee rate = $1.5 million.

Total increased revenue to HCD $ 3,270,000

Net Benefits to HCD $ 3,250,000