Some good in tax dispute USF&G case : City gets pledge of commitment for agreeing to lower tax assessment.

April 25, 1996

THERE IS IRONY in the court settlement cutting in half the assessed value used to calculate taxes on the USF&G building downtown. Shortly after opening the office tower in 1974, Baltimore was so grateful to have USF&G as part of the Inner Harbor renaissance that it endorsed a lower first reassessment. This time, the city fought until it became clear that it could not win. But again it got some good out of the deal.

Mayor Kurt L. Schmoke said Wednesday that the tax negotiations had resulted in a statement of commitment to Baltimore and to Maryland by Norman P. Blake, USF&G board chairman and CEO.

Noting that his company is regularly invited to relocate by other states, Mr. Blake said USF&G could have left town instead of consolidating its headquarters in Mount Washington. USF&G is staying here because the city and state have shown they are "serious about being pro-business," he remarked, adding that such an attitude could be the basis for a "long-term successful relationship." Mr. Blake said the reinvigorated relationship with the city and state led him to decide to keep USF&G's life insurance unit in Maryland. The 85 jobs involved had been sought by Tampa and Nashville.

The dispute over reassessment of the office tower could have easily led to a devastatingly adverse result. The case was scheduled to be tried next month. Built for $45 million, the state first assessed the office tower's value at $25.4 million in 1974, then cut it to $13 million after USF&G protested. The property's assessed value had increased over the years to $86 million by 1992, even as the downtown office space market began to collapse.

The settlement now agreed to by the city places the office tower's value at $46 million from 1993 through 1995 and at only $30 million for the current year through 1998. The city must refund $5.1 million in taxes paid at the old assessment rate. And the tower's reduced value means it will pay $1.3 million less in property taxes to the city each year. That's a difficult pill to swallow for a city watching its tax base shrink by the minute. Current budget troubles reflect a dire situation.

For the moment, some comfort can be found in the words of USF&G's Norm Blake. But the city needs a pro-business reputation to win similar expressions of commitment from other firms being enticed elsewhere.

Pub Date: 4/25/96

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