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City Council to get Superblock tax proposal

A 20-year city property tax break for the developers of the $150 million Superblock development downtown was introduced in the City Council Monday night to provide an incentive city officials say is needed for the long-stalled project to move forward.

Shuttered and boarded-up stores at the southwest corner of Park Avenue and West Lexington Street are a legacy of the collapse of the city’s West Side that the Superblock redevelopment is designed to remedy.

The payment in lieu of taxes, or PILOT, calls for a 95 percent tax break for 15 years and lesser tax breaks over the final five years of the deal, said Kathy Robertson, director of the Westside Initiative at the Baltimore Development Corp., which has recommended the PILOT to Mayor Stephanie Rawlings-Blake.

There is no dollar amount attached to the PILOT request because the figures are incomplete, Robertson said Monday.

The Atlanta and New York-based developers, Lexington Square Partners, had asked for a PILOT to fund the entire mixed-use development, but Robertson said the BDC board revised the request to include only a 296-unit apartment tower and a 650-space parking garage.

The developers will be eligible for a state enterprise zone tax credit for the 217,444 square feet of proposed retail space at the project, Robertson said.

Lexington Square Partners officials did not return a request for comment Monday.

The total amount of the PILOT has been guarded by BDC and city officials since late February when the BDC’s board met in a closed session to vote on it.

Rawlings-Blake introduced the legislation at the weekly City Council meeting in favor of the PILOT and it drew no comment.

“Getting things moving on the Westside is an important priority for Mayor Rawlings-Blake and is part of her overall goal of growing the City by 10,000 families over the next decade by encouraging growth and kick-starting stalled projects,” said Ryan O’Doherty, spokesman for the mayor.

The mayor’s office declined to release specific details of the proposed PILOT.

Developers have an April 30 deadline to negotiate a development agreement with city officials.

“It’s our point of view that the PILOT is crucial for them to build the project,” M.J. “Jay” Brodie, BDC president, said Monday. “The developers need this in order to get financing.”

The Superblock project is a massive redevelopment of a city block at the gateway to the city’s West Side, bounded by Fayette, Howard and Liberty streets and Lexington Avenue.

The Superblock has been a controversial project from its inception more than 10 years ago.

Preservationists have fought the demolition of certain buildings in the city’s once-stable downtown retail district, but many have decayed over the years from neglect since the city purchased them for the project.

One building, the former Read’s Drug Store, was the scene of a civil rights-era lunch counter sit-in by Morgan State University students in 1955. The building, now rotted from the inside, will have its façade preserved after months of bitter protest by historians and civil rights activists.

City Councilman Carl Stokes, chairman of the council’s Taxation, Finance and Economic Development Committee, said his panel will schedule public hearings on the PILOT request this summer after the budget is set, saying he saw no reason to hurry.

“We’re going to give it a fair hearing,” Stokes said, adding that many council members hold concerns about giving out tax breaks when the city is facing budget cuts that include closing some neighborhood recreation centers and public pools this summer. “We’re not going to rush it through. The council has not had a chance to break it open yet.”

Councilman William H. Cole IV, whose 11th District holds the Superblock, said Monday the PILOT is needed to help spur development on the city’s West Side, long plagued by decay and vacant businesses.

“It’s an incredibly important project overall and if we’re ever going to move the West Side forward and push this whole concept forward we have to start,” Cole said. “It’s more than one block, really. And it can help drive future retail growth on the west side of downtown.”

When asked about giving tax incentives away to developers while the city struggles financially, Cole said: “Right now, the project is not getting us any tax revenue whatsoever; these properties are sitting in dilapidated shape.”

Brodie said the PILOT is an investment in the city’s future.

“In order to get the city out of the deficit hole, we have to have development. It’s the only way,” he said. “There’s a limit to how much can be cut from city services and we are approaching that limit. A PILOT is a forgiveness of taxes for a certain period, and it ultimately produces taxes. … When the pilot burns off, it will pay full taxes. These are investments in the future.”

Brodie said another potential project for the West Side is scheduled to come before the BDC board this Thursday, a $19.7 million redevelopment at Park Avenue and Fayette and Liberty streets to be known as Liberty Park. The project would be a mixed residential and commercial development.

The BDC is also working on another tax break proposal to present to Rawlings-Blake for a new local headquarters of Exelon, the energy company that recently acquired Constellation Energy, at Harbor Point, near Harbor East.