This is Stephen Janis reporting for the Real News Network in Baltimore City, Maryland.
Tax breaks for developers have been a big issue in Baltimore, and some thought that
story was over. But it turns out it's just beginning.
To get a sense of just how expensive Baltimore's latest tax break finance development deal
is, you have to drive. The project will encompass huge swaths of the city's low-income neighborhoods,
including a former outdoor mall called Old Town, and a low-income housing project, Perkins
Homes. The city says the deal will span over 200 acres, and includes rebuilding a school,
and a recreation center. But like many of the most recent deals to redevelop the city,
who benefits and who doesn't paints a picture of just how Baltimore works for some and not
for others. That's because Perkins and Old Town has suffered from decades of neglect
and little direct investment, and its residents are mired in poverty.
You know, this is round about the third time they said they was going to tear the property
down, and then leave us hanging. And you know, these places are so, so bad. You know, the
rodents, the bed bugs, the smells, the pipes, everything is wrong with these places.
But even with this fraught history of neglect, the city has floated a plan to give a generous
tax incentive to developers who have proposed this massive redevelopment. The city is considering
offering a possible $250 million TIF, or tax increment finance incentive, to a group of
wealthy out of town developers, says Baltimore Business Journal reporter Melody Simmons.
My sources are telling me the TIF is somewhere around $250 million, even though the price
tag has not been identified yet.
A TIF allows the developer to plow all future property taxes back into the project through
city-backed bonds. It's a boon for developers that city officials often justify by arguing
the TIF pays for infrastructure or amenities.
And they're also going to be adding a lot of infrastructure and cables for high tech,
which that area doesn't have right now.
And for this particular TIF, it is linked to a developer who has a fraught history of
taking advantage of city largesse: BD Development. In 2013, BD used Perkins Homes to sweeten
his deal for this project, Harbor Point. He included the household incomes of Perkins
to qualify for an additional $80 million i n enterprise zone tax credits, even though
Perkins residents receive nothing.
That they're going to move all of us back in here, and it's going to be a better place
and all that, because half the people are not going to be able to come back at all.
Which is why City Council President Jack Young says he is opposed to the TIF for the Perkins
Oldtown project.
At first it was just supposed to be Old Town. Then they're adding Perkins because they're
going after a choice neighborhood grant.
He says he wants assurances residents of Perkins can come back once it's completed.
If they're not going to bring these people back then I'm not, I don't have an appetite
for a TIF. I have to have a guarantee that these folk who live there can come back, because
what I don't want to see is that neighborhood gentrified.
And it could be quite a big, I mean, people are saying $250 million TIF for a developer.
I have no appetite for no $250 million TIF. At all.
Why not?
Because it's just too large of a TIF.
A concern echoed by Councilman Robert Stokes, whose district includes a vast majority of
the project.
TIFs should be based on we can get as many people back there, because they stayed there
when it was riddled with crime, no recreation, no afterschool programs. They should have
the same opportunity to come back and enjoy w hat's going to change in that neighborhood.
We asked BD for comment, but he did not reply. But perhaps an indication of just how lucrative
Baltimore's tax break haven has become is a looming presence of investment bank Goldman
Sachs. Goldman is one of the largest investment banks in the world, and has been accused of
predatory practices. And yet Goldman has invested $233 million in the city's largest tax break
to date, Port Covington, a veritable city on the water owned by Under Armour CEO and
billionaire Kevin Plank.
But the Real News has learned that Goldman is an investor in this: a 200 apartment complex
on the city's West Side. A project that also benefits from a tax rate called a PILOT, which
allows a developer to forgo paying property taxes for years. We asked the mayor about
the latest series of deals.
There's this article about the TIF for Perkins Homes redevelopment, and the Old Town Mall.
Have you taken a position on that? Do you support the tax break for developers to redevelop
that-.
Well, I am actually meeting with the team that's working on the Perkins Homes project,
and I can give you more information after that. But let me just say, as we give tax
incentive financing to areas in our downtown part of our city, I think it's important as
we're developing neighborhoods and communities that we look at the kind of opportunities
and tax breaks that we'll get for that kind of development, as well.
Do you feel like the residents of Perkins Homes are going to benefit? I mean, you're
basically going through the developers, not to the residents.
Well, again, I haven't had a conversation with them yet. We haven't determined how the
TIF would be used, if in fact it will be used at all.
You're not sure if you support a TIF yet, you haven't made up your mind, or are you
still considering? Just so I understand.
Well, I don't, again, I'm meeting with the group. I think it's this week, it's on my
schedule. And I'll be able to give you better information. I don't like to give misinformation.
And the involvement of Goldman Sachs.
No, they were in just last week. Didn't say anything about the bonds. Did talk about,
they came in with Goldman Sachs. Goldman Sachs is investing, as you all know, is one of the
investors in Port Covington. They are also one of the investors in [la sete]. I've also
asked them, Goldman Sachs, to take a look at what we're doing at Mondawmin. I asked
them to look at the possibility of a movie theater in Mondawmin, so that they are taking
a look at that.
Former Councilman Carl Stokes says businesses like Goldman are lured to Baltimore because
the deals are too enticing to pass up. Money, he said, should go to helping residents, not
wealthy out of town developers.
The developers are asking, as they should. It's self-interest. It's the city who reneges
on the taxpayers. It's the city who says, take all the money you want. Here. Here's
some more money. It's the city who does that. I know in more than one deal that has come
across my desk that the developer, as best I can tell, put up a number that he assumed
there would be a negotiation around. He put up a high number and assumed the city would
start fighting with them to get down to a lower number. I say that's because more than
once a developer has called me a year in advance, two years in advance, and said, I need X number
of dollars. You think they may work with me? And I said, of course, call them. Let's see
what happens. And when it gets to me the number is, you know, two and a half times larger
than it was. And I said, what the hell's going on?
At least one time a developer was frank enough to share with me, and said, the city said,
you can ask for more. You can ask for more. Right. And they just accepted that number.
But with the latest proposal to rebuild the Old Town and Perkins Homes communities, it
seems the deals just keep getting better. This is Stephen Janis and Taya Graham reporting
for the Real News Network in Baltimore, Maryland.