Daily Record investigation: EBDI salaries, staff increased during recession

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As the nation headed into its worst recession since the Great Depression, staffing and salaries at East Baltimore Development Inc. skyrocketed between 2005 and 2009, Internal Revenue Service documents show.

The pay and benefits at the nonprofit increased by 46 percent, from $2.6 million in 2005-2006 to $5.6 million in 2008-2009, when eight employees made more than $100,000 a year. During that time the staff expanded from 43 to 72, according to Cynthia Swisher, EBDI’s chief financial officer.

(Click here for full coverage of the investigation)

One of EBDI’s highest-paid employees is Arlene Conn, head of relocation services and girlfriend of Baltimore’s housing commissioner, Paul T. Graziano. His agency pumps millions of dollars into EBDI and he is a nonvoting member of the organization’s board of directors. Graziano and EBDI officials say there is no conflict of interest.

(Click here to read a letter to the editor from Arlene Conn)

EBDI officials say they have trimmed staff as acquisition, relocation and demolition work at the 88-acre site of The New East Baltimore winds down.

Swisher said wages and benefits for 2010 fell to $5.1 million, about 10 percent of the nonprofit’s $50 million annual budget. EBDI eliminated five vacant positions and terminated another five employees last year. The EBDI board has not approved a salary increase in two years, she added.

EBDI was formed by the city, the Johns Hopkins University and community leaders in 2002 to serve as the developer charged with rejuvenating East Baltimore. The group was formed as a 501(c)(3), a nonprofit organization, so it does not have to adhere to city hiring, procurement or salary rules.

Staff members at the nonprofit, for example, are not affected by recent pay cuts and furloughs that have rankled city workers, including firefighters and police.

EBDI’s top salaries are considerably higher than those at the Baltimore Development Corp., the city’s development arm, which is also a nonprofit.

In 2008-2009, the most recent year for which tax statements are available, BDC’s top eight earners made only 72 percent of the salaries of EBDI’s top eight earners.

Total salaries for EBDI’s 79 employees who worked at least part of that year came to $5.6 million, while BDC’s salary total for its 70 employees was $4.7 million.

That year, EBDI’s CEO, John T. “Jack” Shannon Jr., earned $263,065, while BDC’s president, M.J. “Jay” Brodie, earned $205,740.

Asked about his organization’s salary structure, current EBDI CEO Christopher Shea said, “I think it’s high.” But “the board approved it,” he added.

Shea’s salary is $219,399.

“It was a salary structure that I inherited when I came here,” said Shea, who became CEO in 2009. “Some people here are better at what they do than anybody else in the country.”

Shannon said staff members were hired when the real estate and financial industries “were at a high employment level” and EBDI needed to compete for talent. Salaries increased, he said, to retain employees in such a “high-stress environment.”

Graziano also defended EBDI’s salaries.

“They have very complicated technical issues they’re dealing with and they’re paying for competency,” he said. “It’s a nonprofit but also engaged in a major redevelopment project but far above a scale of typical nonprofit.”

Conn owns a house with Graziano, according to property tax records, and lives with him there in Bolton Hill. She heads a relocation staff of 11 employees and received a salary of $109,000 in 2008-2009, tax records show. More recent figures are not available.

Graziano and Shea said there is no conflict of interest between Graziano’s position as the city official who oversees millions of dollars that go into The New East Baltimore project and Conn’s job administering some of those funds.

“As CEO of this organization I am absolutely comfortable that there is no inappropriate interaction,” said Shea.

Referring to Conn, he said, “I have the single most qualified person in this position. I don’t see a conflict.”

Before Conn was hired, EBDI consulted a lawyer about her personal relationship with the housing commissioner. The attorney, Michael A. Brown, said he wrote an opinion in which he found no conflict of interest.

“I am not a voting member of the [EBDI] board,” said Graziano. “I have kept out of any matters [that could involve Conn].”