Public vs. Private Interests

March 05, 1994

What is the proper reaction to the tax bonanza the Schmoke administration attempted to hand a real estate developer: outrage or pity? Actually, both. Pity that Mayor Kurt L. Schmoke could have been so politically inept, and outrage that he thought tax reductions were an appropriate sales tool to offer a single developer.

The bill introduced in the legislature at the mayor's request would have allowed buyers of condominiums at HarborView a hefty reduction in their property taxes for five years. Just at HarborView, the tall, peach-colored building that rises over the former shipyard on Key Highway, dominating the Inner Harbor shoreline. But as written the bill purported to offer the benefit to new buildings anywhere along the Inner Harbor, from west of Fells Point. Only careful reading of the fine print disclosed that HarborView alone would benefit.

An especially contemptible feature of the bill as introduced was the initial impression that it included property of another politically well-connected developer. The measure was clearly drawn to be deceptive, but so clumsily that it could not have survived close scrutiny.

Mayor Schmoke has now backed down on the bill, which only last month was pushed hard by the city's lobbyist in Annapolis. Sales at HarborView are clearly not living up to the expectations of developer Richard Swirnow. Which is not entirely surprising, since luxury condominiums have fared poorly in the Baltimore market. Mr. Swirnow and his Singapore partners believed they could beat the jinx, but they have not. Now what?

Even those who opposed the project in the first place, including many advisers to then-Mayor William Donald Schaefer, who approved it over their objections, now must wish it well. A failure would leave a scar on a conspicuous part of the harbor shore. But what constitutes a failure? There appears to be no danger of a bankruptcy, since there is no mortgage recorded. An auction -- the fate of other luxury condos -- would hurt the investors and reduce the value of the building on the tax rolls, but would not necessarily be a disaster.

What must be averted is leaving a half-empty white elephant on Key Highway. The street is about to be attractively rebuilt. HarborView's neighbors to the south are upgrading their houses for middle-income residents. The project could still be a valuable stimulus to a part of the city that could use a boost. Mr. Schmoke would be justified in figuring out a way to aid this process, possibly by the judicious use of tax credits. But not by clandestinely handing one developer a private bonanza.

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