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Apartment tax credit cruises through committee

Councilman Carl Stokes still thinks an across-the-board real property tax cut is a better way to encourage development in Baltimore.

But on Thursday, Stokes, the chairman of the Taxation, Finance and Economic Development Committee, joined two other Baltimore City Council members to unanimously recommend the approval of a 10-year tax credit for building apartments citywide.

“I have a strong sense that we should do [taxes] differently. But, having said that, not having an alternative before us anytime soon, I do support going forward with this,” Stokes said. “I just think we should cut taxes across the board for everybody, significantly, in a short period of time.”

The bill will go before the full council for second reader on Monday evening. The second reader is usually the most contentious hearing for legislation, because the bill is commonly open for amendments. But this bill has wide support and is expected to receive approval next week and then the formality of a final, third vote for passage.

The legislation was introduced at the behest of Mayor Stephanie Rawlings-Blake’s administration after she announced her intention to push for the tax credit during her State of the City address in February. The proposed 10-year tax credit would give an 80 percent break on incremental real property tax increases for the first five years after construction. The credit would gradually be reduced to 30 percent in the final year. The credit would be available to developments that create at least 20 market-rate apartments.

The new credit is influenced by an existing 15-year tax credit for market-rate apartments that provides a 100 percent credit on incremental real property tax increases in the first two years. The credit is gradually reduced to 20 percent in the final three years. But that credit is only available to development of at least 50 units located in downtown, Station North, Reservoir Hill, Jonestown, West Cold Spring Lane corridor, Poppleton, York Road corridor and Belair Road corridor.

Several prominent development advocates attended the hearing, including Kirby Fowler, president of the Downtown Partnership of Baltimore, Al Barry, a land use consultant representing the Baltimore Development Work Group and Jon Laria, of Ballard Spahr LLC.

Fowler testified in favor of the legislation because of the success of a similar 15-year tax credit in spurring the redevelopment of office space into apartments downtown.

“We are already seeing buildings renovated and people moving in,” Fowler said.

Barry, the owner of AB Associates, a private planning firm, also spoke in favor of the legislation, saying he was glad the city was considering the legislation because it’s anticipated to spur more growth in the city.

“We do think the city is well positioned to attract additional residents,” Barry said.

Stokes, Councilman William Cole and Councilman Edward Reisinger all voted to approve the legislation in committee. Councilman Bill Henry and Councilman Warren Branch were absent from the hearing.

Despite voting Thursday in favor of the tax credit, after initially voicing support and then expressing doubts, Stokes said credits and similar programs make it harder to enact general tax reform.

“As you start carving out these niches it does make it more difficult to do the broad tax reduction,” Stokes said.