For two decades, Baltimore has struggled to rebuild itself from the waterfront to the inner city, luring developers with hundreds of millions of dollars in loans.
The aid was targeted for projects that bankers deemed too risky to finance on their own, projects that helped create jobs and stabilize neighborhoods as Baltimore transformed itself from a dowdy old port city into a national attraction. Today, many of those projects are flourishing -- the glitzy hotels near the Inner Harbor, a Charles Street shopping arcade, an East Baltimore textile company, senior citizens' housing in North Baltimore.
But others did not fulfill their promise, leaving a legacy of debt at City Hall.
Now the city is at risk of losing as much as $60 million from developers who are not repaying their loans -- an amount equal to next year's budgets for the city's housing department, library system and state's attorney's office combined.
City records show that Baltimore and the state have already lost $25 million in defaulted loans for bankrupt hotels, failed businesses, and botched revitalization projects since Mayor William Donald Schaefer turned City Hall into a bank for developers in 1976.
More than 200 projects received government aid since then, and city records show that 50 have now been written off by finance officials or classified as troubled -- in danger of not being repaid. But measuring the successes and failures of Baltimore's loan program is difficult. City Hall has not even kept count of how much money was doled to developers during Baltimore's boom years, how much has been repaid and how much has been lost.
And city administrators say they can't assess the impact of the projects they funded with local and federal money because they've never tracked how many jobs were created or how much the property rolls increased. Mayor Kurt L. Schmoke, whose administration inherited the loan program from Mr. Schaefer, said he doesn't have the people or money to perform such a detailed analysis.
Baltimore isn't unique in having only a murky picture of what it accomplished with huge investments of public money. Other cities across the nation have also failed to analyze their loan programs, economists and urban specialists say. As a result, cities don't learn the lessons of history; they don't discover what works and what doesn't.
"Cities just haven't been very good at that," said Marc Levine, who heads the urban studies program at the University of Wisconsin-Milwaukee and is writing a book on Baltimore's economy during the Schaefer years. His research shows that cities often made loans haphazardly instead of as part of a coherent strategy. "There's no clear evaluation criteria: Were jobs created? Were goals met?"
Baltimore's loan program had laudable goals, but the record of non-payment shows the risks that accompanied them. The ventures that failed, for example, include G & M Oil Terminal, a minority-owned company that hoped to employ 100 people but instead went bankrupt; the Fishmarket, an entertainment complex near the Inner Harbor that is now closed; and the Pimlico Center, a Northwest Baltimore apartment renovation project that is now a vacant eyesore.
Even some successful projects haven't returned the city's money. The Omni Hotel, bustling with conventioneers, or Tindeco Wharf, a fully occupied apartment complex in Canton, haven't generated enough revenue, as defined in their loan agreements, to require regular loan repayments to the city. Baltimore's finance officials consider those loans troubled because an inability to make payments now raises doubts whether owners can come up with the balance later.
The repayments were to be the source of a municipal loan fund. Baltimore, hard pressed for money after years of federal cutbacks, could use that money for new development loans, to help first-time homebuyers or to fund anti-poverty and education programs.
For some critics of the city's investment decisions, the troubled loans revive old arguments. For years, neighborhood activists and some City Council members questioned the wisdom of the city's loan policies.
"It seems to me the city is so anxious to get this development that it gives away the store -- and the store is city taxpayer dollars," said City Councilman John Cain, D-1st.
But Mr. Schaefer and others defend the investments as worthwhile. They contend that even though many loans weren't repaid, it would be wrong to consider those deals failures. Some created jobs; some boosted the tax base; some improved the city's image, thus attracting tourists and new developers.
"The intent of [federal development loans] was to have projects built in distressed cities," said Robert C. Embry, Jr., a former city housing commissioner and top federal housing official during Baltimore's renaissance.