Baltimore Mayor Brandon Scott delivered his first veto Monday night on a controversial measure that would have put the financial obligations and rights of tenants at risk, according to housing advocates who organized in opposition to the legislation.
Known as the Security Deposit Alternatives bill and put forth by City Council Vice President Sharon Green Middleton, the measure has been a top priority of Council President Nick Mosby. The legislation initially passed by a vote of 12-2, with Council members Zeke Cohen and Ryan Dorsey voting against, and Kristerfer Burnett abstaining.
Green, Mosby, and supporters of the bill—including the Rhino, the New York-based “insurtech” startup behind the measure—promised to address prohibitively high housing security deposits for city renters.
Under the measure, landlords who own or control 10 or more units would be required to offer tenants one of two alternatives to a traditional first month’s security deposit. The first option—the opportunity to pay the deposit in three monthly installments—was universally supported. The second alternative option would be the purchase of so-called “rental security insurance,” which would enable tenants to move into new housing with less money upfront. Notable: the choice of alternative deposit offered to the tenant would be up to the landlord, not the tenant.
Cohen, Dorsey, and opponents of the legislation objected to the “rental security insurance” alternative portion of the bill, describing it as akin to a surety bond—which could potentially put renters on the hook for more money. In signing a contract for “rental security insurance,” a financial product offered by Rhino—which lobbied the Council on behalf of the bill—renters would also give up rights to legal counsel and to seek redress in court. Instead, they would be forced into arbitration, likely resulting in pursuit by debt collectors. A leaked video of a Rhino’s sales pitch to real estate management companies indicated that it viewed landlord companies as the true market for its rental security product—not renters, promising surety bonds do not “play by [the] rules” of rent court.
The bill, local grassroots organization Organizing Black said in a statement, “enables landlords to bypass Fair Housing laws by giving higher fees to tenants they deem ‘riskier.’ By drawing in more tenants with promises of ‘no security deposit’ leases, those landlords can also become ‘pickier,’ according to Rhino, about who they rent to.”
Baltimore has one of the highest eviction rates in the country. In a 2015 survey by the Public Justice Center, more than half of the renters at the time of eviction had reported a health or safety hazard in their home to their landlord.
In his letter to Council President Mosby and the members of the City Council announcing his veto, Scott applauded Green Middleton for seeking alternative options for tenants unable to afford a traditional security deposit. He also said he supported efforts to allow tenants to spread the cost of a traditional security deposit over a three-month period. “However,” Scott added, he “couldn’t ignore the concerns raised about the security deposit insurance option included within the legislation. Notably, that the provision can hurt the very people that it is intended to help.”
Thank you for taking action to protect Baltimore renters, @MayorBMScott! We + nearly 50 organizations across this city called on you to #VetoRhino + today you did!— BMoreRentersUnited (@b_renters) May 18, 2021
Thanks to everyone who has taken part in this campaign - truly incredible! More to do, but today we celebrate! pic.twitter.com/BDsHcS8rZT
Rhino’s co-founder and chairman Ankur Jain is also the CEO of the hedge fund Kairos. Rhino has been lobbying cities across the country to take up its rental security insurance initiative. Rhino reached out to Middleton and Mosby via contacts at the Greater Baltimore Committee, the Baltimore Brew recently reported based on emails obtained via a public information act request.
After the bill passed the City Council, almost 50 organizations came together under the diverse Baltimore Renters United coalition—including the Public Justice Center, the Baltimore Teacher’s Union, CASA, 1199 SEIU, the Maryland Consumer Rights Coalition, the Maryland Poor People’s Campaign, Jews United for Justice, and Organizing Black—to oppose the measure. The Baltimore chapter of the NAACP also lobbied against the bill, seeking Scott’s veto.
“The bill doesn’t do what people in this city needed it to do,” Rev. Kobi Little, the head of the Baltimore chapter, told the Baltimore Sun. “Any bill like this should retain the right to go to court and also add the right to counsel, and this legislation didn’t do that. It ended up creating risks that outweighed the benefits.”
In terms of inside City Hall politics, observers were waiting for Scott’s decision, in part, to see how the ongoing power struggle between the new mayor and Mosby, the new council president, would play out. Mosby ran for mayor in 2016 before quitting to get behind former Mayor Catherine Pugh. (In her first veto, Pugh reneged in on a campaign promise to support a $15 minimum wage in the city.) Currently under an FBI inquiry along with his wife, City State’s Attorney Marilyn Mosby—which has led to a subpoena of the couple’s financial records and tax statements—Council President Nick Mosby was viewed by some as needing a political win to distract attention from the investigation. Neither of the Mosbys has been charged with any crime.
In a statement after the announcement of the veto, Nick Mosby called Scott’s veto a “modern-day redlining with an outsize impact by a vocal advocacy class” and “structural racism” in practice. That charge was quickly rebuked by, among others, Morgan State professor Lawrence Brown, author of The Black Butterfly: The Harmful Politics of Race and Space in America, who identified himself as a “proud card-carrying member of the “vocal advocacy class.”
First of all, I'm a proud card-carrying member of the "vocal advocacy class." Last I checked, freedom fighters such as Walter P. Carter, Fannie Lou Hamer, Dr. King, and Ida B. Wells were vocal in their advocacy.— Equity Scientist (@BmoreDoc) May 18, 2021
Our job is to analyze policies and how they impact Black Lives. https://t.co/zkpVnGqvkK
“Now to say that this veto is an example of ‘modern-day redlining’ is truly astonishing when there are actual banks that redline Black neighborhoods & public budgets that redline Black neighborhoods,” Brown wrote in a Twitter thread. “Rhino’s bill aimed to SUBPRIME Black neighborhoods! That’s what we pointed out.”
“Part of what makes Rhino so tricky is that they are offering a new product so there isn’t an easy precedent,” Brown later added. “But it’s a new product supported by hedge funds on Wall Street, so that’s one clue. The language they use is another: Renter’s Choice. Which is akin to School Choice.”
Meanwhile, even as they celebrated Scott’s veto, housing advocates and organizers quickly turned their attention to a potential veto override vote early next month.
“The council has 20 days to override,” tweeted Caitlin Goldblatt, an organizer with Baltimore’s Democratic Socialists of America branch and Baltimore Renters United. “Now is the time to reach out to all these council members and tell them to support this veto.”