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Editorial: Who’s minding the store?

The New East Baltimore, a projected $1.8 billion effort to transform 88 blighted acres north of Johns Hopkins Hospital, is a mammoth undertaking with more than $200 million worth of public investment after a decade and precious little public oversight.

That lack of accountability is a fundamental flaw that must be rectified now.

As documented by The Daily Record’s series, “Too Big to Fail?”, the project is off course. Plans for five buildings of “world-class” biotech space bristling with companies eager to be in proximity to the renowned John Hopkins medical institutions have been shelved. One building is up. It is scheduled to be 80 percent occupied in May, three years after completion.

As development lags, so does job creation. To get early federal money, project planners said the biotech park would create 1,750 jobs. There are now 422 employees in the one biotech building, and officials don’t know how many of them were pre-existing jobs that transferred in when their companies moved there.

Housing also is behind schedule. Upfront expenses were driven up by unexpectedly high but completely justified relocation costs paid to members of the African-American community known as Middle East who were moved out to make way for The New East Baltimore. By the time the ground was cleared in 2009, the full brunt of the recession had hit. Today, only 37 percent of the housing scheduled to be built or under construction is underway.

To their credit, state government and the Johns Hopkins University have stepped forward with projects not part of the original vision — a $175 million lab for the state health department and a $60 million graduate student housing tower — to help the project regain momentum. But these tax-exempt buildings are also changing the financial profile of the development, which was to include more private development.

Now the project’s developer, Forest City-New East Baltimore Partnership, is crafting a new vision to attract middle-class residents that includes a hotel, a grocery store, restaurants and a state-of-the-art public school built with private funds and supported by the Johns Hopkins University.

Where the project goes from here is anyone’s guess.

Steering the course of this effort has been East Baltimore Development Inc., a private nonprofit created in 2002 to assure continuity of focus and effort through changing mayoral administrations.

EBDI has provided that continuity, but its status as a private nonprofit allows it to operate with sweeping independence. It is not audited by the city or state governments. It issues public annual reports, which in some cases have included incomplete and inaccurate information. Its federal tax forms are public, but it has declined to provide its internal audits to The Daily Record because it is not legally required to do so.

While EBDI has been allowed to operate with great autonomy, a number of city officials have been unaware of many of the project’s details.

City Councilman Carl Stokes, who represents part of the affected area and is a nonvoting member of the EBDI board, told The Daily Record last fall that he did not understand the complex financial underpinning of the project, specifically, the city’s sale of $78 million in Tax Increment Financing bonds.

Since then Mr. Stokes has created a task force to review Baltimore’s use of TIFs and PILOTs (Payments in Lieu of Taxes) to finance development projects in light of the city’s budget woes.

This is an excellent first step and we commend Mr. Stokes for taking it. Baltimore’s elected officials need to understand that TIFS are not “a kind of free money,” as an expert at the Lincoln Institute of Land Policy says.

TIFs can be a very valuable development financing mechanism, but they should be used with the utmost care. Their use impacts future budgets because they are repaid by property taxes from the development they help generate.

Asked last week if he thought the average citizen understood how TIFs work, Mr. Stokes said that he and his colleagues on the City Council don’t understand it.

Council President Bernard C. “Jack” Young, who grew up in Middle East and formerly represented part of it, was unaware that the city had sold $78 million in TIF bonds when first asked about it by The Daily Record last fall.

Former Mayor Sheila A. Dixon said she did not know the city had sold the TIF bonds while she was mayor.

City Councilman Warren Branch, who represents the bulk of the affected area and is also a nonvoting member of the EBDI board, described himself as a “freshman” who is “still trying to filter” information about The New East Baltimore project. Branch has been in office since 2007.

City housing commissioner Paul T. Graziano, also a nonvoting member of the EBDI board, receives monthly reports from EBDI on the project’s progress but discards them after reading them, his spokeswoman said.

This is no way to run a railroad, much less the nation’s largest urban redevelopment project.

The stakes for the city and state are far too high to keep operating in this manner. If this project is to succeed — and we hope it does — it needs nothing less than the full attention of the public, private and nonprofit sectors to assure the coordination of resources and planning and a fully transparent process to accurately calculate the impact of these decisions in human and financial costs.

As Douglas W. Nelson, chairman of the EBDI board and former CEO of the Annie E. Casey Foundation, which has pumped millions of dollars into the project, said, “If in time we can’t make that community resemble the vision we had for families and kids and workers there, the city is in trouble.”

4 comments

  1. This strikes me as an odd location for a hotel. Is that an area of town that tourists are eager to see?

    I really appreciate the work that must have gone into that article.

  2. The Daily Record would be wise to contract with someone like Joan Jacobson to trace the financial and familial links of the politician and bureaucrats who are essentially carpetbaggers. They came to the neighborhood from New York to create a paper vision that would suck up the government money that was always expected to carry this project. The project was born from a car ride of ed norris and martin o’malley to help norris to get rid of buildings that prevented his cops from getting a clear shot at criminals or those perceived as such. The same applies to the poppleton development forming ebdi’s bookmark on the other side of downtown. this is not like watergate, where you can follow the money. the money is carried by llc’s and other entities designed to hide the names and personal responsibility of the perpetrators.

  3. Rusty Shackleford

    Let’s not forget that Paul Graziano’s girlfriend, Arlene Conn, is one of the highest paid EBDI officials.

  4. To reflect what Mr. Douglas W. Nelson said the city is already in trouble because of false promises and the ignorance of the community and some of our elected officials. Some parts of East Baltimore look like Hell on earth and we must remember this is a direct and intentional way of gentrification.