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Even though city officials are considering a tax break for the planned $1.5 billion State Center redevelopment, the project may not get approval at the state level. (File photo)

City’s spending board mulls State Center tax break

Baltimore’s spending board is set to vote on a tax break for the developer of the proposed $1.5 billion State Center redevelopment.

The Board of Estimates is scheduled to vote on a Payment in Lieu of Taxes agreement with State Center LLC for the first phase of development of the property. Under the agreement the tax break wouldn’t kick in until state agencies start paying rent and would run for 20 years. A Payment in Lieu of Taxes allows for the developer and the city to negotiate a payment for a set time period instead of having to pay full property taxes right away.

But the future of the full project remains in doubt. Although the state Board of Public Works has approved the first phase, it has yet to be decided if the other portions of the project will move forward. Advisers to Gov. Lawrence J. Hogan Jr. have questioned the need for the project because of doubts about its viability due to the state’s budget crisis and the possibility it would push the state over its debt limit.

Kevin Harris, a spokesman for Mayor Stephanie Rawlings-Blake’s administration, wrote in an email that the Payment in Lieu of Taxes agreement was approved by the Baltimore Development Corp. about four years ago but that process was stopped by pending litigation. He said for the project to move forward an agreement is needed on the portion of the property the state will occupy.

If the board approves the agreement the developer will be able to go back to the state to seek permission to begin the first phase of the redevelopment. The board consists of the mayor, city council president, comptroller, as well as the city solicitor and head of the Department of Public Works, who are appointed by the mayor.

“Those legal impediments were removed in the last few months and the developer restarted its process with the state. In order for phase 1 of the project to move forward, the city must pass a PILOT agreement on the portion of the property that the state will occupy. That’s what is happening now. The terms were negotiated years ago,” Harris wrote.

The complete State Center redevelopment involves building 2.1 million square feet of office space, 1,500 residential units and 265,000 square feet of retail space centered around the State Center Metro Stop on land bordered by Martin Luther King Jr. Boulevard, Madison Avenue, Dolphin Street and North Howard Street.

State Center’s first phase is expected to cost $215 million and involves building 515,000 square feet of office space leased by the state; 15,000 square feet of private office space; 200,000 square feet of commercial space; a parking garage; and 15,000 square feet of retail space.

The state is expected to lease office space at $2.50 per square foot and the first phase of development is expected to generate $1.7 million in tax revenue for Baltimore.

Last March it appeared State Center redevelopment had gained momentum toward becoming a reality when the Court of Appeals ruled a group challenging the procurement project for selecting a lead developer waited too long to file the lawsuit, ending the legal dispute that had halted development. But the election of Hogan, who has made fiscal restraint a major part of his campaign, cast doubt about the future of the project.