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Task force to study incentives to developers

Councilman Carl Stokes

How and why the city grants economic development incentives to private developers is the focus of a newly formed City Hall task force that will include developers, attorneys and business representatives.

The Task Force on Baltimore City Public/Private Development Financing Efforts was detailed on Monday by Councilman Carl Stokes, whose district includes a portion of east Baltimore, Mount Vernon and Charles Village.

The panel of 12 will meet for about two months and focus on tax incentives used to lure private developers to build in the city at a time when federal, state and local revenues have dried up, prompting city worker furloughs, closings of fire stations and tax and fee hikes for parking, hotel rooms and soda pop.

Stokes said the panel will spotlight two controversial forms of incentives: PILOTS, or payments in lieu of taxes, and TIFs, or tax increment financing. Both incentives drastically reduce the amount of property taxes paid by developers once a project opens, often for decades.

“Given the fiscal challenges facing the city and in light of the fact that TIFs and PILOTs arbitrarily divert or forgo tax revenue that would otherwise be available in the general fund to support schools, parks and public safety … that shouldn’t always mean the city  must be a major financier of these projects,” Stokes said.

The city has nine TIF districts, including East Baltimore, Mondawmin Mall, Clipper Mill, Locust Point and HarborView.

The total tax increment financing for seven of those districts is $116.1 million, which means the city has sold bonds totaling that amount to help finance upgrades, infrastructure, land acquisition or pre-development costs. Those bonds must be repaid from diverted property taxes over several years, depriving the city’s general fund of tax revenues.

PILOTs have been used to reduce property tax obligations on certain developments. In the city, there are five types of PILOTs: city-owned property, low-income housing, public housing, residential conversion of commercial buildings and new construction.

The Baltimore Marriott Waterfront hotel, developed by H&S Bakery magnate John Paterakis, received a PILOT from the City Council in the 1990s. The hotel has 31 floors, 732 rooms and 21 suites and, under the terms of the PILOT, pays $1 per year in property taxes for a 25-year period.

This month, the City Council approved a new TIF district near Fells Point called Harbor Point. The designation paves the way for an anticipated request of $150 million in TIF bonds by Paterakis, who hopes to develop the site, located just east of Harbor East, where the Marriott is located.

Stokes said the task force will study this new district.

“I am a strong supporter of economic development,” he said, “but it’s not an either/or situation. I am saying we can do both and that the city can and should make sure things are not unbalanced to good, strong neighborhoods [outside of the TIF districts].”

The task force will be co-chaired by developer Wendy Blair and local businessman Calman “Buddy” Zamoiski. Its members include Robert C. Embry, president of the Abell Foundation; Linda Loubert, an economist at Morgan State University; Jonathan Melnick, president of Jonathan Melnick Auctioneers; Ron Kreitner, executive director of WestSide Renaissance; and Peter G. Angelos, an attorney, downtown property owner and owner of the Baltimore Orioles. Joseph T. “Jody” Landers III, executive vice president of the Greater Baltimore Board of Realtors, is also on the panel.

“My concerns are, how do we get more people to move into Baltimore City and how do we reduce city taxes,” Zamoiski said. “We need more people here.”

One comment

  1. The study is the right thing to do now. Three comments or questions that could be on the Task Force’s Agenda:

    1)How did the Charles Center-Inner Harbor redevelopment program produce billions of dollars of net new taxable private investment without granting any City tax subsidies — at a time when the city was even more desperate for private tax payers than it is now?

    2)How does the net total of tax reductions granted by the City since BDC was created in 1991 compare with the City’s current General Fund deficit, dollar for dollar?

    3) The other reason for the City’s tax problem is that the city boundaries have not been extended since 1918, and a 1948 State law made it necessary for any future annexation to be approved by the affected population; so all of the tax base from the new development in the suburbs since World War II has gone to the counties, leaving the city with just the expensive urban problems. Simply put,the basic solution to the City’s tax problem would seem to be TBS — Tax Base Sharing with the counties — how can that seemingly impossible political issue be addressed?