Some of Baltimore’s leading Democratic mayoral candidates are continuing their criticism of how the city uses tax increment financing, advocating for creation of a community land trust to help develop mixed-income and affordable housing.
During a Saturday forum on community development and affordable housing at Saints Philips & James Catholic Church and University Parish in Charles Village, four of the top six candidates said they valued tax increment financing as a development tool, but expressed skepticism about how it’s being used.
Councilman Carl Stokes, who chairs the Taxation, Finance and Economic Development Committee that vets tax increment financing proposals, has previously been critical of the city’s use of the development tool but said he was not against public financing. However, he said this form of public financing should not be used if it’s not benefitting the city’s most vulnerable communities.
“So TIFs, as they’re used in Baltimore, are counterproductive to affordable housing, counterproductive to education, counterproductive to neighborhoods, to employment of folk in Baltimore” Stokes said.
Sen. Catherine Pugh said tax increment financing can be used for projects that will have a positive impact on neighborhoods. But, she said, public financing should come with agreements, such as labor agreements regarding the hiring of minority- and women-owned businesses, local hiring and affordable housing inclusion.
“So to have those discussions with developers in terms of where you want that money to place is essential. To talk about what your city’s needs are is essential. To make sure that those agreements are in place is essential,” Pugh said.
Elizabeth Embry, chief of the criminal division for the attorney general, called tax increment financing a tool in the city toolbox for encouraging development. But she argued the city has been using it contrary to the reason it was created.
“TIFs were designed as a way for cities to deal with blight, to deal with areas that were vacant or had been decimated by poverty. So, using TIFs for downtown developments are a distortion of their original purpose,” Embry said.
Former Mayor Sheila Dixon said that she supports the use of tax increment financing, but she said the current administration hasn’t used the approval process to make sure issues, such as affordable housing, are addressed during the approval process.
She cited the use of tax increment financing to build the Baltimore Hilton hotel and redevelop Mondawmin Mall as examples of the public financing being used successfully because they leveraged those agreements to create jobs for residents in surrounding communities.
“You’re going to need someone who’s going to not just pass and allow that developer, and that group, to go forth and do their own thing, but be involved and engaged and track that process,” Dixon said.
City Councilman Nick Mosby and local businessman David Warnock did not attend the forum.
Pros and cons
The use of tax increment financing to pay for infrastructure improvements associated with a development has become increasingly controversial, especially after the city approved a deal to provide $107 million in public financing for the Harbor Point project.
That form of public financing has again become the subject of intense debate because Sagamore Development Co. is seeking $535 million, the largest tax increment financing proposal in city history, to pay for infrastructure to make way for the $5.5 billion redevelopment of Port Covington, a 266-acre area of mostly underutilized industrial land in South Baltimore.
Tax increment financing involves the city issuing bonds that are repaid through property tax increases on properties in a specified district. Advocates of the financing method say that citywide tax dollars aren’t used to pay off the bonds and that it is an effective way to spur development, increase jobs and broaden economic development.
Supporters of tax increment financing say it boils down to the city using funds to pay for infrastructure costs it’s responsible for, and that they’re more equitable because only the increased tax dollars from a specified development go into paying back the bonds, as opposed to general obligation bonds that are paid back with citywide tax dollars.
Opponents of the financing argue it’s too often just a subsidy for developers who can afford to pay for infrastructure improvements. Critics also argue that using this form of public financing is more expensive and that it deprives the city of tax dollars to pay for expenses associated with new development.
All of the candidates said they support the concept of creating a community land trust to help provide more affordable housing.
But only Embry wouldn’t commit to supporting the total amount suggested in a report by Baltimore Housing Roundtable, a coalition of various activist organizations, calling for the city to issue $20 million a year in general obligation bonds, which have to be approved by voters, to be invested in nonprofit and community land trusts via an affordable housing trust fund.
Community land trusts work by investing public funds in properties so that they’re affordable for lower-income residents, and the nonprofit works to help residents buy and stay in the home. But that’s on the condition that when the owner sells the home it’s at an affordable price to another low-income purchaser, according to the National Community Land Trust Network.