Dec 6, 2012
The idea of profit sharing between the city and wealthy developers when public tax breaks are involved has been the topic of much debate in Baltimore for years.
City Hall has a history of granting lucrative breaks on large development projects every time the wind blows, as my southern grandmother would say. Those breaks have mostly been in the form of payments in lieu of taxes, or PILOTs, and tax increment financing, or TIF, bonds.
This week, new rules emerged at City Hall.
The Baltimore City Council approved a deal to grant a $22 million PILOT for the long-stalled $150 million Superblock project at Lexington and Howard streets downtown — with a caveat that a profit-sharing plan with the taxpayers be instituted.
The agreement allows the city a 20 percent cut from the net cash flow from the developers, Lexington Square Partners. If the project is sold, the city’s profit sharing would drop to 5 percent of the net. In addition, developers agreed to hire local workers and a percentage of minority workers for the project and will make available 12 of the 296 total housing units to low-income renters.
City Councilman Carl Stokes, who chaired a task force last year that hashed out a list of recommendations for future tax incentives for developers, said he was pleased with the deal. Stokes also chairs the council’s Taxation, Finance and Economic Development Committee that brokered the PILOT-profit sharing deal with Lexington Square Partners.
“One of the things the city should have is profit,” Stokes said this week. “The taxpayers are investing, and these are not to be seen as gifts, but as a value investment to private development. If the project doesn’t go well at all, the taxpayer could potentially lose on this. And if it does go well, most projects don’t give anything back to the taxpayers.”
The Superblock PILOT joins 13 other such breaks in the city including one given to Harbor East developer and billionaire bakery owner John Paterakis to help build the Marriott Waterfront Hotel. That break was granted in 1997 under the administration of former Mayor Kurt L. Schmoke and allows Paterakis to pay property taxes of $1 per year for 25 years for the 752-room hotel.
Baltimore Development Corp. officials estimate it will end up reducing the overall tax bill by close to $62 million — with no profit-sharing options for taxpayers.
At the time, BDC executives said it was the only way to get the Marriott development jumpstarted. Fifteen years later, that is the same hope for the Superblock, only now taxpayers are going to get a slice of the profits.
“We hope that this will reignite the energy moving forward with the Superblock,” Stokes said, of the project that has been stalled for a decade, mostly because of wobbly financing plans and squabbles between the developer and business owners. _____________________________________________________________________________
This week, the Junior Achievement of Central Maryland’s BizTown center in Owings Mills received an early holiday gift.
The home goods and furniture store Ikea donated $13,757 in furniture (and labor costs to assemble it with those famous custom tools) to the educational center to help remodel the “city hall and kitchen/café” area where tweens and teens learn basic economic, community building and civics lessons.
“For years, Junior Achievement has successfully educated children on how to make sound financial decisions, and we were delighted to designate JA as our 2012 project recipient,” said Bill Meiswinkel, a local Ikea spokesman.
The JA BizTown classes are taught to fourth and sixth graders at 80 schools in the region. Lessons begin in their classrooms and then move to the BizTown, a 10,000-square foot model of “any town USA” complete with stores, a health care center, City Hall, even a newspaper office.
Late last month, the first of two new apartment buildings topped off at Metro Centre in Owings Mills.
Owings Mills Transit LLC capped the residential building expected to be completed in March 2013, just as a new six-story building opens nearby with a Baltimore County Public Library branch and a 70,000-square-foot addition to the Community College of Baltimore County.
The apartment building topped off last week is one of two luxury digs to go up at Metro Centre and will hold a total of 56,000 square feet of retail space on the ground floor and 232 market-rate apartments on the upper four levels. The design resembles the successful new development at McHenry Row in Locust Point.
The second building is also under construction and is expected to top off in mid-December.
The apartments will be between 700 and 1,245 square feet and each will have an “open design” kitchen with granite islands, stainless steel appliances and 9-foot ceilings.
Tidbits: Utz Quality Foods Inc. recently inked a lease with St. John Properties Inc. for 12,000-square feet of new office space in Frederick. The building is located at 8445 Progress Drive in the Riverside Technology Park. Utz is the largest independent snack foods manufacturing company in the U.S. and makes chips, pretzels and other snack foods. The company recently acquired Zapp’s potato chips and Bachman pretzels and operates distribution centers in 15 states … NAI KLNB recently leased 28,684-square feet of space in Elkridge to YKK AP America Inc., maker of aluminum building products. The building is located at 6670 Business Parkway … The former Hochschild Kohn department store at 520 Park Ave. downtown will be converted to an apartment building in the near future. The Time Group, developers of the project, plan to convert the historic 225,000-square foot building just as other downtown buildings are being converted into market-rate rental units. This week, plans to convert the tower at 10 Light Street into apartments were also announced … Cushman & Wakefield said this week it has signed a lease with HighTower Holding, LLC for 4,580 square feet of Class A office space at 217 International Circle in Hunt Valley. HighTower is a financial services company.