Board’s Decision Raises More Questions about Tax Breaks for Developers

Stephen Janis examines the debate about the fairness of lucrative tax breaks in light of a recent decision to withhold one from a struggling city neighborhood

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Story Transcript

STEPHEN JANIS, PRODUCER, TRNN: Earlier this month, inside this building, an obscure city board did something that almost never happens in Baltimore: they voted against a tax break for a developer. Not just any tax break, but something known as a TIF, or Tax Increment Financing, a popular mechanism for subsidizing growth in Baltimore, which allows developers to take property taxes and pour them back into their project.

But it’s why they chose to say no that is raising questions.

BRANDON SCOTT, BALTIMORE CITY COUNCILMAN: You can’t just be about TIFs in [projects] for downtown. It has to happen in neighborhoods, as well.

JANIS: Not just about the project, a proposed revitalization of the troubled West side Poppleton neighborhood with apartments and retail, but about tax breaks in general. That’s because even while construction cranes dot the city skyline in Baltimore and development is booming, much of the growth is subsidized by taxpayers. And it’s who gets those subsidies and where that is the heart of a fierce debate inside city hall.

BILL HENRY, BALTIMORE CITY COUNCILMAN: I don’t have a problem with investing in private sector projects for the betterment of the city, but I would like to see more of that investment happening out in the neighborhoods where most of us live.

JANIS: Particularly since Poppleton is a long way from this: the gleaming Inner Harbor, where similar tax breaks have little trouble gaining approval.

Just two years ago, the same finance board passed a $141 million TIF with little fanfare or debate for developer Michael Beatty. The money’s slated to fund the development of a teeming mini-city and Maryland headquarters of the energy giant Exelon. Meanwhile, this is the site of the tax break that’s been deferred for now, Poppleton. It’s a distressed area with dilapidated housing and vacant lots.

Interestingly, Poppleton was just the sort of neighborhood TIFs were designed to help. Heralded three decades ago as a remedy for urban decay, TIFs seek to incentivize development in areas where there is little prospect for growth. That’s why some say Poppleton fits the bill and should be approved.

HENRY: I have yet to hear anybody say anything bad about it directly on merit, so absent that, I would expect to be supportive.

JANIS: The fight for approval may be an uphill battle. Giving the city’s penchant for giving away TIFs, it appears to have conspicuously avoided areas like Poppleton. In North Baltimore, the upscale food market Belvedere Square was the beneficiary of a $2 million TIF. The same is true for the city’s Convention Center hotel, which is directly adjacent to the celebrated Camden Yards baseball stadium. It was financed by a $300 million TIF. And, of course Harbor Point, which sits astride the city’s most valuable stretch of real estate, the Inner Harbor. Which is why some say they are skeptical about the board’s reluctance to move forward.

CARL STOKES, BALTIMORE CITY COUNCILMAN: This is an African-American developer in an African-American community. In a hard-pressed, distressed inner city neighborhood.

JANIS: City Councilman Carl Stokes has been an outspoken critic of TIFs. He says the down vote is symptomatic of what TIFs are really about: keeping wealth concentrated downtown.

STOKES: Of the very people in the hard-pressed neighborhoods, they’re the ones who have to pay their taxes every year to subsidize the people who don’t pay taxes. It’s an amazing thing.

JANIS: Towson University Professor John Bullock has similar concerns. He lives in the area where the project will be built, a $480 million, 10-year investment in market-rate apartments and affordable units. Retail and park space Bullock says the neighborhood needs to thrive.

JOHN BULLOCK, PROF. OF POLITICAL SCIENCE, TOWSON UNIVERSITY: You do need something happening down in the West side district, particularly Poppleton, which has been destabilized for so long.

JANIS: The Real News Network contacted the Board of Finance. They told us they will reconsider the TIF later this month at a special meeting.

Regardless of what happens to the TIF, all agree the final decision will say much about the true intent of tax breaks like TIFs, and just how fair they are, particularly in a city that seems to cross the illusory boundary between poor and rich in a matter of blocks; a community that is either growing or declining, depending on where you stand.

Stephen Janis for the Real News Network, in Baltimore.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.