An apartment building in Baltimore, Maryland by Baltimore Heritage licensed under Creative Commons.

Baltimore Mayor Brandon Scott vetoed a controversial bill Monday afternoon that would have expanded the market for a “security deposit insurance” company tenant advocates have called “predatory.”

The bill, which would require landlords to offer one of two alternatives to traditional security deposits, passed in the Council 12-2, with one abstention. Scott considered the bill up until the very last minute — if he hadn’t vetoed the bill by 5 pm Monday, it would have automatically become law.

“I applaud the bill’s sponsor for seeking to reduce the burden on residents as they seek to secure stable housing in the City of Baltimore,” Scott wrote in a letter to the City Council. He praised one of the two alternatives laid out in the bill — the option to spread the security deposit payment over a three-month period — as a way to help residents struggling with the upfront cost of renting an apartment.

“However, I cannot ignore the concerns raised about the security deposit insurance option included within the legislation,” Scott continued. “Notably, that the provision can hurt the very people that it is intended to help.”

A broad swath of tenant activists and other nonprofits in Baltimore opposed the bill, from the Maryland Consumer Rights Coalition to Baltimore’s NAACP chapter president.

Their opposition centered around one of the security deposit alternatives landlords would be required to offer: “security deposit insurance,” a product primarily sold by a company called Rhino. Carol Ott, Tenant Advocacy Director for the Fair Housing Action Center of Maryland, told GGWash last month that Rhino has “predatory” practices that could hurt tenants.

Rhino’s product — which is legal in Baltimore, but which landlords are not required to offer — is not actually insurance at all, but instead a surety bond. Advocates say:

  • Calling Rhino “insurance” is misleading because it could make tenants think they won’t be on the hook for repairs (they will be);
  • Unlike a security deposit, which can be refunded in full, Rhino premiums are nonrefundable;
  • And tenants using Rhino sign away their right to challenge landlords over repair costs in court; instead, the company uses arbitration, which can’t be appealed.

Council President Nick Mosby, a supporter of the bill, released a statement calling Scott’s veto “modern-day redlining,” saying:

“I see this veto as modern-day redlining with an outsized impact by a vocal advocacy class. When we’re talking about working-class folks — predominantly Black — somehow a product becomes nefarious and predatory. We cannot allow our residents’ broad interests to be overrun by the loudest voices. This is what structural racism looks like in practice: Government’s role turns paternalistic when it comes to poor Black people.”

Lawrence Brown, author of “The Black Butterfly,” a book on redlining and segregation in Baltimore, dismissed Mosby’s comments, comparing Rhino’s product to subprime lending in Black neighborhoods.

The bill isn’t done yet: activists are already lobbying the City Council to try to avoid a veto override. An override would require two-thirds of the Council, or 10 members; to prevent that, some members who voted yes would have to pull their support. Any override vote would have to take place at the Council’s next meeting on June 8.

Libby Solomon was a writer/editor and Managing Editor for GGWash from 2020 to 2022. She was previously a reporter for the Baltimore Sun covering the Baltimore suburbs and a writer for Johns Hopkins University’s Centers for Civic Impact.