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General Growth, Struever and BB&T Bank to receive special tax bills

City officials this month will send out $652,000 in special tax bills for tax increment financing bond repayments because property taxes collected from three prominent city developments were not enough to reimburse investors.

The Clipper Mill, Belvedere Square and Mondawmin Mall developments did not generate sufficient property taxes to repay TIF bonds, said Stephen M. Kraus, chief of the Bureau of Treasury Management in the city’s Department of Finance.

“It is the economics of the deal,” Kraus said of the Belvedere Square special tax bill, which totals $75,000 and will be sent to a group headed by developer C. William “Bill” Struever.

General Growth Properties Inc., owner of Mondawmin Mall, will be billed $457,000, stemming from a TIF for 2008 improvements and expansion there that included adding a grocery store and a Target.

And BB&T Bank, owner of Clipper Mill in North Baltimore, will get a special tax bill for $120,000.

Tax increment financing has been used by the city as an economic development incentive over the past decade.

The bonds are sold to private investors by the city to help developers underwrite infrastructure costs and for development-related expenses. They are repaid by diverted city property taxes over a period of 20 to 30 years.

TIF bonds have been sold to help finance seven developments in the city.

Baltimore’s largest TIF totals $78 million for the massive redevelopment of Middle East by the nonprofit East Baltimore Development Inc.

As of June 2010, the total outstanding TIF debt in the city was $116.2 million.

Other TIF projects are pending bond sales, including a $150 million bond sale for development of Harbor Point by developer and bakery magnate John Paterakis, and a $160 million TIF bond sale for development of Westport by Patrick Turner.

A special task force formed by City Councilman Carl Stokes is expected to release a report on TIF financing and another development incentive program, payments in lieu of taxes, after Tuesday’s primary election, Stokes said.

The Mondawmin TIF was a $12.1 million bond sale, Kraus said.

TIFs at the 17-acre Clipper Mill totaled $7.8 million, and $1.7 million at Belvedere Square, city records show.

Struever Bros. Eccles & Rouse developed both projects before the company became insolvent, in part because of the recession.

Belvedere Holdings LLC, a group headed by Struever, will be responsible to pay the special tax at Belvedere Square.

BB&T Bank purchased vacant properties and lots at Clipper Mill after Struever lost some of the properties at a foreclosure sale in 2010.

Kraus said no residential property owner at Clipper Mill would get a special tax bill, which could have been levied in addition to their personal property tax bills.

Kraus said the Belvedere Square TIF was approved to hasten the turnaround of the North Baltimore development near the intersection of York Road and Northern Parkway. The strip mall had been nearly abandoned for years after original developer Jim Ward lost the project. The development originally opened in 1986 and reopened to great fanfare in 2003.

“Everybody understood this was for a public purpose effort as well as an economic development effort,” Kraus said of the North Baltimore market, which features gourmet food stalls and produce and bakery stands.

At Belvedere Square on Friday, tenants said they were unaware of the TIF special tax.

“I have a lot of faith in the developer,” said Dorian Brown, manager of Neopol, a savory and smoker gourmet food stand. “They are good people and they have treated us well. And they want the market to work, as well. From a vendor’s side, no one feels like they are going to get the shaft.”

Struever said Friday he planned to pay the special tax bill to make the TIF payment whole for the Belvedere Square development.

He said the Clipper Mill special tax was a result of a flawed property assessment system by the state, which has rendered lower than expected residential property valuations at Clipper Mill.

In addition, Struever said, a 4 percent homestead tax credit offered by the city caps increases on property taxes, also creating a gap that affects the increment needed to repay TIFs.

“The reason there is not enough [TIF] increment at Clipper Mill is the state has not done a fair and equitable job assessing,” Struever said. “The tax base is not accurately reflected and therefore the tax increment is not what it should be. I think it’s a systemic issue the city needs to address.”