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  March 4, 2018

Baltimore Councilman Compares Tax Break to 'Tropical Fruit That I Can't Pronounce'

The glib remark came during a serious debate over the real cost of tax breaks to developers as the city moves forward with new incentives while state analysts warn the final price tag of these expansive private subsidies is unknown by Stephen Janis and Taya Graham
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STEPHEN JANIS: This is Stephen Janis reporting for The Real News Network in Baltimore City, Maryland. I'm standing at the site of the latest pricey tax break that will be given to a developer by Baltimore City. The question is how much are these subsidies really costing the taxpayers? Well, The Real News took an in depth look to find out.

The site of Baltimore's latest proposed tax break for a developer is here. The rundown Northwood Shopping Center, adjacent to the Morgan State University campus. Developers are seeking what's known as a rise tax break, which will allow them to forgo paying property taxes, to use the money to build out the site.

SPEAKER: And today we stand before you in complete unison and a great partnership with four communities, the Hillen Road Improvement Association, Original Northwood, New Northwood and Stonewood - Pentwood - Winston.

STEPHEN JANIS: Proponents argued during a city council hearing last week that the incentive would bring a Barnes & Noble and other amenities to the area.

SPEAKER: And why shouldn't Morgan have those amenities that the students and residents around Towson, and UB and the University of Maryland have?

STEPHEN JANIS: A long overdue move, supporters say, towards equity for a city that has concentrated most of its tax breaks downtown in predominantly white neighborhoods. But during the hearing, a dispute between two councilmen, Ryan Dorsey and Eric Costello, revealed much about the inherent conflict over giving tax breaks without first parsing the fiscal consequences.

RYAN DORSEY: We don't have a dollar amount, you know. We're being asked to, this committee rather is asked to support a tax benefit, a public subsidy, in a yet unspecified amount. I am very interested, and many other constituents that I represent. And as this is money that goes into all of the city's coffers or not, people across the city have an interest in knowing that we are scrutinizing the use of tax subsidies.

STEPHEN JANIS: Dorsey took aim at the city's largest tax break deal to date, a $600 million TIF or tax increment financing deal to a development company owned by Under Armor billionaire Kevin Plank, a tax break that will allow him to plow nearly $600 million of future property taxes into building a veritable city on this waterfront property. Dorsey says the city did not know enough about the deal and voted against Northwood tax break as well.

RYAN DORSEY: You know, while this in no way compares to the TIF that was approved for hundreds of millions of dollars for the redevelopment of Port Covington, in a lot of people's minds, there exists a principle to the matter. In that case, where an outside assessment showed that the financial analysis of their application was, fell woefully short of standards of best practice.

STEPHEN JANIS: But Costello made a startling claim, that the Port Covington tax break included the best deal for the community ever.

ERIC COSTELLO: The study that was referred to was completely biased at best, and that project did result in the most comprehensive community benefits agreement in the history of the United States, valued somewhere in the neighborhood of $135 million. And I would further point out that there is certainly a difference between when certain things are approved, when certain things are executed. No bonds on Port Covington have been floated yet, not to mention that comparing the Port Covington TIF to the... application for Morgan State would be, at best on a very good day, comparing apples and some type of tropical fruit that I can't pronounce.

STEPHEN JANIS: To fact check his claim, we talked to former councilman Carl Stokes, who tried to slow the Port Covington deal before it was pulled from his committee and rammed through the council.

CARL STOKES: For example, BDC would take numbers from someone who came to them to ask for a task break or a grant, and we would accept their numbers, rather than doing an independent audit. It's something no one else does. The businesses that came to us would not conduct business that way.

STEPHEN JANIS: Stokes says the lack of scrutiny of the deal was glaring, which brings us here to Annapolis where the Maryland General Assembly is now in session

Because inside this building, delegates are now vetting legislation that shows just how little is known about the true costs of these tax breaks. The bill would hold the city harmless for the impact of certain tax breaks on school funding, but a fiscal note, which is supposed to inform legislators how much the law could cost, reveals a startling fact. Analysts admit they do not know the long term price tag of TIFs. "The magnitude of future TIF grants for public schools cannot be estimated."

SPEAKER: This just essentially says that the property increase that happens, don't count that as though there is new wealth in the jurisdiction because the money is reserved to pay off the bonds.

STEPHEN JANIS: In fact this bill doesn't cover TIFs like Harbor Point, a $100 million project, authorized in 2013, or the dozens of deals to keep new apartment buildings tax free for years. Couldn't that be a problem down the road?

SPEAKER: It could be down the line. I mean 20 years from now, potentially, but, I mean, if this provision is put in place, then we would be held harmless for that. I mean, the greatest thing ...

STEPHEN JANIS: For TIFs though, not pilots.

SPEAKER: Correct. Just for TIFs yes. For new pilots or new economic development tools, that's a calculation that the city has to make. There is a cost-benefit that is going to have to be determined.

STEPHEN JANIS: We asked the city for more information on the impact of tax breaks, and received this, a list of over 100 deals with few details. So, The Real News will continue to cover this story and economic policy that seems to be flying blind, while systemic poverty and economic isolation continues to plague the city. This is Stephen Janis and Taya Graham reporting for The Real News Network in Annapolis and Baltimore.


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