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The burnt out DTLR store on Pennsylvania Avenue in Northwest Baltimore the day after the riots. (The Daily Record / Maximilian Franz)

Baltimore recovery funds require businesses to pledge not to sue

If a riot-damaged business wants a recovery grant or loan from the Baltimore Development Corp. it first has to agree not to sue the city over damages it incurred.

The BDC, a 501(c)3 private corporation that contracts with the city to provide various economic development services, is overseeing the Baltimore Business Recovery Initiative, which offers financial assistance to enterprises hurt by April’s riots. But the loan and grant applications come with a release that stipulates businesses waive their rights to file a lawsuit against the city.

“It’s unconscionable to me that an organization working closely with the mayor, which is not supposed to be a political corporation whatsoever, and not supposed to engage in activities that are designed to benefit any individual or private interest would … present these waivers so that many of these business owners get a very, very small fraction of assistance from the city, and unwittingly give up their right to recover all of their damages,” said Ray Shepard, of The Shepard Law Firm LLC.

Shepard’s firm, along with Sung & Hwang LLP, represents a “few dozen” businesses that were damaged in the riots, and has sent a number of notice letters to the City Solicitor’s office — a possible precursor to a lawsuit.

The busted front door of the Ace Cash Express check cashing store at the intersection of Pennsylvania and North Avenue the day after the riots. (The Daily Record / Maximilian Franz)

The busted front door of the Ace Cash Express check cashing store at the intersection of Pennsylvania and North Avenue the day after the riots. (The Daily Record / Maximilian Franz)

The BDC is offering affected businesses grants of up to $5,000 from its Storefront Recovery Grant Program as well as zero percent loans. Matthew Nayden, Baltimore City Law Department’s Litigation Practice Group chief, said it was appropriate to require businesses to waive their litigation rights when accepting aid because the Court of Appeals has defined the corporation as an agent of the city.

“We believe it is reasonable for the City and BDC to avoid having to respond to or defend potential claims by entities who the City is trying to help financially with regard to the very same issues that such claims would be based upon,” Nayden wrote in an email.

Roughly 390 businesses have reported damage from the April riots. As of Friday morning seven grants had been awarded to businesses. The corporation hopes to shortly begin processing “a handful of loan applications,” according to Susan Yum, the corporation’s managing director marketing and external affairs.

Riots in the city broke out on April 25 and again on April 27 in response to the death of 25-year-old Freddie Gray, who died as a result of injuries suffered while in police custody. Following the riots, six Baltimore police officers were charged in Gray’s death.

It’s still unclear how much damage, in terms of dollars, businesses suffered from the riots. In the weeks following the unrest, a figure of $9 million was released and attributed to the U.S. Small Business Administration. William Cole, the Baltimore Development Corp.’s president and CEO, has since said that number is inaccurate.

Ray Shepard, defense attorney with Ober/Kaler, in 2007. (File)

Ray Shepard, defense attorney with Ober/Kaler, in 2007. (File)

Shepard also said the corporation seemed to be hiding the waiver by only including it with physical copies of grant and loan applications but not with versions posted on the Baltimore Business Recovery Initiative’s website, which he called “underhanded.”

“If there is a business that suffered less than $5,000 worth of damage …this might actually be a good deal. But offering to fix your windows when your entire business has been burned out is really like putting a Band-Aid on a bullet wound, and saying, ‘There you go, but if you accept this Band-Aid you’re not entitled to any hospital care,'” Shepard said.

Yum, in an earlier email, said the corporation’s staff has been delivering many loan and grant applications in person, and helping some businesses fill them out. She said this effort has reduced the chances of a miscommunication, but that they’ll continue to work with businesses to make sure they understand what the agreements involve.

About Adam Bednar

Adam Bednar covers real estate and development for The Daily Record.