Mayor backs tax plan to help new homebuyers

December 22, 1993|By Eric Siegel | Eric Siegel,Staff Writer

Baltimore Mayor Kurt L. Schmoke embraced yesterday a proposal to allow new homebuyers to pay their property taxes semiannually as a way of encouraging home ownership in the city.

But he turned a cold shoulder to a variety of other tax incentives suggested in the final report by his Economic Incentives Task Force, saying they were too costly to consider.

The mayor also said he favored a recommendation to turn the city's six municipal markets over to private management -- but said he was unsure whether all the markets would be overseen by a single organization or some would be managed separately.

Under the proposal for semiannual payment of taxes, new homebuyers could elect to pay their property taxes in two installments on July 1 and Jan. 1 of each tax year, which could significantly cut closing costs.

Currently, all property taxes for the tax year must be paid at settlement.

The city would make up for the lost interest by imposing a service charge on the second installment of the payment.

Legislation calling for the semi-annual payment of property taxes for new homeowners was introduced in the City Council in October by Councilman Martin O'Malley, D-3rd. A hearing on the bill is scheduled for Jan. 26.

"We're supporting that. We've found a way to do that," Mr. Schmoke told a downtown meeting of business leaders and city officials assembled for the release of the task force report.

But Mr. Schmoke said the city could not afford to consider other task force recommendations on tax incentives at a time when the city is losing $5 million in property-tax revenue because of the downward reassessments of downtown office buildings. Property taxes account for nearly 60 percent of the city's $800 million general fund, or operating budget. Those recommendations include tax abatements for new rental housing and initial reductions in property taxes for employees of companies relocating to Baltimore who buy houses in the city.

"We haven't found any way so far to do these abatements without taking a hit in the general fund. At this point, we are stuck in the mud on these kinds of tax incentives," Mayor Schmoke said.

The mayor said he wanted to "get out of the business of city subsidies" for the Belair, Broadway, Cross Street, Hollins, Lafayette and Northeast markets.

Housing some 170 small businesses, they are currently run by the Municipal Markets Administration -- which has 23 city employees and an annual operating deficit of more than half a million dollars.

David Borinsky, an attorney who represents the markets' merchants, welcomed the call for privatization of the markets, saying the merchants "feel they can be managed more efficiently." But he said "there's no consensus on the issue" of whether to manage them through a single corporation.

Mr. Schmoke created the task force in 1992. Among its other recommendations:

* Creation of a Small Business Investment Corporation to build equity for local companies.

* Streamlining of the building permit process.

* Development of advertising and promotional campaigns to improve the image of downtown.

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