City Hall: softest touch in town

August 07, 1992

When it comes to the tens of millions of public dollars in city loans that remain unpaid by the developers who received them, the administration of Mayor Kurt L. Schmoke comes across as having a shoulder-shrugging attitude that many citizens could understandably find disturbing.

The Loan and Guarantee Program, initiated in 1976 by then-Mayor William Donald Schaefer, has lent large sums of money to developers whose projects have ranged from successes such as the Omni Hotel and Tindeco Wharf to such failures as the Fishmarket, Pimlico Center and Harrison's Pier V.

Granted, you win some, you lose some. But, while city officials might not realistically expect to recoup loans for projects that flopped, they ought to count on being repaid by developers who used public money to build vital businesses and haven't yet begun repaying the city.

The developers beg off repayment by citing the way the loans were arranged; they need not start returning money until each project turns a profit and they have repaid other loans. Worse, city officials haven't kept proper records of the loan transactions, claiming the current economic crunch prevents the hiring of personnel to do the job.

Galling as it is, the city will probably have to eat these past loans. In the meantime, the mayor says the loan program will continue. We have no quarrel with that. Run well, the program can generate much in the way of tax dollars, tourists and renown for Baltimore. However, for future transactions, we would urge, first, a repayment schedule less generous to developers than the current one and, second, the creation of a strict record-keeping system. If the mayor really lacks the staff for the necessary paper work, then he should ask the Greater Baltimore Committee to recruit a team of civic-minded accountants from local firms to work pro bono on loan records. A City Hall staffer -- surely one can be spared -- could be freed to oversee the volunteer team.

Otherwise, the city government will never shake its reputation as the softest touch in town -- at least where developers are concerned.

5/8

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