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Real Estate Insider: Mayor’s tax reductions not enough?

Mayor’s tax reductions not enough?

No more development subsidies.

That’s a goal Baltimore Mayor Stephanie Rawlings-Blake hopes to eventually achieve by reducing the highest property tax rate in the state. During a news conference on Wednesday, the mayor said one of her goals in reducing property taxes — she wants to lower the city’s rate next fiscal year to $2.13 per every $100 of assessed value for real property — is to eventually cut taxes to a point where the often controversial subsidies for development are no longer needed.

“The more we do to insistently and responsibly reduce property taxes, and responsibly and judiciously use incentives, you can see the growth [and the] results. We have economic growth, we have population growth, and that puts us on a better fiscal path, and when that happens you make Baltimore a more competitive environment for investment,” Rawlings-Blake said. “And I do foresee a time in the future, a time when we wouldn’t have to look for those incentives, and that is my goal in growing the city to have a more healthy and robust economy.”

Projects, such as Harbor Point, that have received tax breaks often have become the focus of outrage among some city residents who resent paying high taxes while developers are able to cut deals. The debate will almost surely erupt again if Under Armour CEO Kevin Plank seeks tax breaks to develop land he controls in the Port Covington section of South Baltimore.

But while some local economists and developers agree with the mayor’s vision to eventually eliminate these subsidies, they argue that bolder action on taxes is needed if the city ever plans to get rid of the hodgepodge of tax incentives currently used to entice development.

David Tufaro, founder of Terra Nova Ventures and 1999 Republican mayoral candidate, argued the existence of the various tax incentives are an invitation to corruption, with developers trying to win favor with elected officials, who in turn relish the power of deciding if a project receives a tax break. He argued that having so many different incentives, as opposed to just implementing a single low tax rate, results in certain developers receiving better deals than others, which creates a bad business environment.

“In all these situations the very fact that they give these tax breaks is an acknowledgment that the tax rate is too high, but they never come out and straight out say it,” Tufaro said.

Stephen J.K. Walters, a professor of economics at Loyola University Maryland’s Sellinger School of Business, said cutting taxes to the point where investment in Baltimore doesn’t have to be incentivized is crucial to Baltimore economy, and that until high taxes are addressed the city will struggle to attract investments.

“That’s the key to the city’s future is, ‘When will we reach the point that we attract unsubsidized investment?’” Walters said.

$6.2M Jersey sale

Towson-based Black Oak Associates and Broad Oak Partners purchased a 98,000-square-foot mixed-use development in Ewing Township, New Jersey, for $6.2 million. The development, which is anchored by Family Dollar and the New Jersey Department of Motor Vehicles, is the third purchase for its investment funding vehicle, Black Oak IV, and the eighth property purchased by Black Oak in the last four years.

Tire sale

Gerry’s Tire Services Inc., located on some interesting real estate at the corner of South Central Avenue and East Lombard Street in Baltimore, has been sold. SNIWT LLC purchased the property, which consists of two adjacent parcels, located at 1301 – 1323 E. Lombard St., totaling 17,603 square feet, with the main service center consisting of 6,400 square feet and two parking lots, from Gerry’s Tire and Mitey LLC. The sellers were represented in the transaction by Trout Daniel & Associates.

Mullan’s merit

The Mullan Contracting Co. won the 2015 Merit Award from the Baltimore chapter of the Associated Builders and Contractors for its renovations to the Carney Village shopping center. The renovation of the 52,000-square-foot shopping center, located at 9613 Harford Road, involved re-facing the center, the installation of two architectural towers as well as the creation of a common green space in front of anchor tenant Mars Supermarket.

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Jim Lighthizer

Principal

Chesapeake Real Estate Group, LLC

Jim Lighthizer

Jim Lighthizer

Education: Bachelor of Arts, political science, Mount Saint Mary’s University

How did you end up in commercial real estate? Recommended by a friend, because of its all-commission, “eat what you kill” compensation structure.

What is the most important part of being successful in your field? Relationships, hard work, and integrity are important in commercial real estate, just like in any other field.

Biggest transaction in the past year? Closing on a joint venture and breaking ground on a 571,000 square-foot speculative industrial building in Harford County

Favorite restaurant: Lewnes’ Steak House in Annapolis – locals love it

Recommend a vacation spot: Park City, Utah — direct flight, short drive, and it offers something for everybody, particularly during ski season.

 

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