The chairman of the Baltimore City Council’s Taxation, Finance and Economic Development Committee has changed his tune regarding a proposed tax credit to encourage developers to build market-rate apartments citywide.
Councilman Carl Stokes, who has been critical of subsidies for development in the city, initially said he liked a proposal for a 10-year tax credit, but he has now changed his mind.
“We have carved out niches for the richest, or the most politically connected developers, generally, in this town, and the smaller developers, or those who do not have the strong connections have been left out,” Stokes said.
That’s in contrast to what he said in February, after Mayor Stephanie Rawlings-Blake proposed the tax credit during her State of the City address.
“I think anything we can do to push forward the impetus of more residents and tax-paying base in our city is a good thing. So I think it’s a good thing to continue to put the right incentives out there to encourage the growth of the tax base,” Stokes said at the time.
Now, he said he believes issues with fairness in development should be addressed by significantly cutting property taxes across the board by as much as 50 percent in the next five to 10 years. He said it’s more important to provide tax relief to homeowners, particularly senior citizens living on a fixed income.
Stokes said residents may be getting a few cents tax relief through the administration’s plan to reduce property taxes 20 cents by 2020, but that the cuts are negated by fee hikes. He also said tax cuts are the best way to increase development and encourage businesses to hire more residents.
“I think this piecemeal approach, frankly, does not incentivize, and actually only increases the tax burden on the majority of property owners in the city of Baltimore,” Stokes said.
Currently, the city has a 15-year tax credit available for market-rate development of more than 50-units built in downtown, Station North, Reservoir Hill, Jonestown, West Cold Spring Lane corridor, Poppleton, York Road corridor and Belair Road corridor. The tax credit provides a 100 percent break on incremental real property tax increases during the first two years of the credit. The credit is gradually reduced and covers only 20 percent of the increase during the final three years.
The current tax credit has been seen as contributing in part to a boom in apartment building downtown, where the credits have been used to aid the conversion of Class B office space into residential rental units.
Steve Bloom, operating partner of PMC Property Group, said his company’s adaptive reuses of buildings at 521 St. Paul St. and 301 N. Charles St. have benefited from the 15-year tax credit, and that the company will be taking the credit on the project his firm plans for the property it bought from the city for $2.2 million at 26 S. Calvert St., 30-36 S. Calvert St. and 31 Grant St.
“I think that it makes the most sense to bring the highest credit you can downtown, because I think downtown’s suffered because of Harbor East, and it’s suffering because of some other localities where you don’t need as large a credit,” Bloom said. “But I think to get things moving in the city this 15-year credit is great.”
The proposed 10-year tax would available for developments as small as 20 units anywhere in the city. The credit would provide an 80 percent break during the first five years, which would gradually be reduced to 30 percent during its final year.
The bill creating the citywide 10-year tax credit was introduced in the council at the behest of the administration last month and was assigned to Stokes’ committee for a hearing. But the bill has yet to be scheduled for a hearing, and Stokes said he is waiting for reports from agencies
The Baltimore Development Corp. has already issued a memo expressing support for the tax credit.
“Passage of this bill is critical to Baltimore’s continued commitment of having diversified housing options throughout the city of Baltimore and expanding the population,” according to the memo.
Councilman Brandon Scott said that he feels the bill has wide support in the council and expects the bill to pass.
“I think it’s a good effort from the administration to try and spread development beyond downtown,” Scott said.