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Deal would possibly cut ‘rain tax’ up to 85% for port businesses

Baltimore officials are close to an agreement with port and other harbor-area industries that could significantly reduce the amount those businesses would pay under the city’s proposed stormwater fee.

Disparaged as a “rain tax” by opponents, the city’s proposed remediation fee for commercial property owners — intended to pay for storm drain and water management upgrades — is the highest among the 10 Maryland jurisdictions required to impose the charge.

In response to federal Environmental Protection Agency requirements to improve Chesapeake Bay water quality, the General Assembly passed legislation last year creating the mandate.

But industries and businesses near the water that meet certain other criteria could receive a credit of as much as 85 percent of that fee, determined by a property’s amount of impermeable surface. That could mean hundreds of thousands of dollars for some businesses.

Marcie Collins, the Department of Public Works’ legislative liaison, said in a recent interview that the credits would be folded into the department’s regulations. The final City Council work session on the fee structure is scheduled for Tuesday.

City Councilwoman Mary Pat Clarke — vice chairwoman of the Judiciary and Legislative Investigations Committee, which is considering Mayor Stephanie Rawlings-Blake’s fee proposal — said port industries already pay enormous property taxes to the city and that many have their own industrial stormwater treatment systems.

“That is substantial, and I think we should support that,” Clarke said of the credit. “There’s no sense double-dipping on our part.”

Under the revised regulations, about 150 port and industrial businesses surrounding the harbor that have already obtained an industrial stormwater permit from the Maryland Department of the Environment would receive a 55 percent credit against their assessed stormwater fee, based on the number of Equivalent Residential Units — an area defined as 1,050 square feet — that are covered by surface that does not absorb rainwater.

Businesses and industries that maintain their own stormwater systems with pipes that discharge directly into the harbor rather than filtering through the city’s system would be eligible for a credit of as much as 30 percent. The credits can be combined to total 85 percent of the fee, Collins said.

Without the credit, port industries would have been unfairly impacted, said Margaret M. Witherup of Gordon Feinblatt LLC. Witherup has represented the Maryland Industrial Technology Alliance and Amports Inc. during weeks of negotiations with the city.

“I think my client could have taken the position they should have been completely exempt from these fees,” Witherup said. “But I think they recognize this is a problem they all share, and they wanted to be part of the solution. … This will get us, I think, to a range of what our clients can live with and survive.”

Anirban Basu, chairman and CEO of Sage Policy Group Inc., said reducing rates for port industries is critical because of the competitive nature of the shipping business and the state’s ample investment in the Port of Baltimore.

“The state of Maryland has put a lot of money into the Port of Baltimore and into dredging,” Basu said. “The state is taking an approach to try and reindustrialize parts of Maryland’s economy, and on the other hand they make industrial activities much less appealing due to this stormwater tax. It shows there is a lack of consistent theory in action.”

Richard Scher, a spokesman for the Maryland Port Administration, said state-owned public terminals at the Port of Baltimore had “stormwater conveyance systems separate from the public system” and that those terminals would not be subject to stormwater fees imposed by the city or Baltimore County.

While the port and other waterside commercial developments in the city will see their fees decrease because of the credits, other city businesses and nonprofits are concerned about the amount they will have to pay. Under the city’s initial proposal, businesses would pay a fee of $18 a quarter for every 1,050-square-foot area covered by impermeable surface. Residential property is assessed on a three-tier system that ranges from $12 to $36 per quarter.

Clarke said she has proposed that businesses across the city have their stormwater fees capped at 20 percent of the amount they pay in property taxes, but the city administration is not inclined to support such a plan.

“Our position is that we don’t feel like caps really respect the fee structure we have in place,” Collins said.

Clarke, however, said some businesses with lots of employees and large parking lots could be forced out of the city by fees that could be more than double the amount charged by the next most-expensive jurisdiction, Baltimore County.

“The notion that a stormwater fee would exceed their property taxes is outrageous,” Clarke said. “They’re the heart of our future, and we want them to stay, and we want to work with them and we don’t want to put them in financial peril either, let alone drive them out.”

Nonprofits are concerned about what the fee will do to their expenses, too. A proposal drafted by the Baltimore Jewish Council would limit the annual fee imposed upon religious groups to $10 per Equivalent Residential Unit, a cap that Clarke called “reasonable.”

Clarke said the council’s task is to ensure that the fee contributes to improving the health of Chesapeake Bay without alienating city residents and businesses in the process.

“That balance can be struck,” she said. “But it’s a lot of moving parts to fit together.”