2 Council bills would provide city tax breaks

Hotel, office building are targets of Schmoke administration moves

September 28, 1999|By Gerard Shields | Gerard Shields,SUN STAFF

Returning from its summer break last night, the Baltimore City Council picked up where it left off in June -- introducing bills to grant property tax breaks to two proposed downtown developments.

The council introduced a Schmoke administration measure that would provide tax breaks for a proposed $124-million, 600-room Westin Hotel on the former News American site at 300 E. Pratt St.

The second bill, also an administration measure, would benefit a planned $90-million office tower and parking facility on land owned by Baltimore City Community College at 600 E. Pratt St.

They are the latest projects for which developers are seeking payments in lieu of taxes (PILOTs). In June, the council approved $81 million in future tax breaks for two other downtown hotels, an action criticized by citizens groups.

The measures were introduced last night without discussion and assigned to the council's Taxation and Finance Committee, chaired by Councilman Martin O'Malley, the Democratic mayoral nominee.

O'Malley criticized

Republican mayoral nominee David F. Tufaro, a Roland Park developer, criticized O'Malley yesterday for supporting the tax breaks.

On a noon radio show, Tufaro, 52, said the city should have a plan for when it will offer the economic incentives.

"We use government in a way to provide special opportunities to special interests instead of the citizens," Tufaro said. "We need to apply a standard so they are not used willy-nilly."

He also criticized O'Malley for receiving $12,000 in campaign contributions from Harvey Schulweis, the developer of the News American site.

O'Malley supported the tax breaks approved by the council in June, contending that if the projects are completed, the city will receive $6.6 million in other levies, such as parking and hotel taxes.

After last night's council meeting, O'Malley said the council will scrutinize the Pratt Street projects to ensure that granting the tax breaks are in the best interest of city residents.

"If they're good for this city, members of this body will pass and approve them," O'Malley said. "I, too, would like to get away from them, but for the here and now, it's the only tool we have."

Competitive advantages

Hotel developers contend that the tax breaks lower their financing costs and reduce room rates and are needed for the hotels to be competitive.

M. J. "Jay" Brodie, president of Baltimore Development Corp., said he did not have at hand the specifics of the tax savings on the two latest projects but will have the information available when they come up at the committee hearing on the measures.

Citizens groups have criticized the measures, saying they weaken the city's tax base and can be subject to political favoritism.

In 1989, Tufaro got a similar tax break for his Waterloo Place apartments at St. Paul and Centre streets.

He said that although the tax payments were deferred, they were paid in full.

O'Malley used Tufaro's tax break to contend that no association exists between campaign contributions and economic incentives.

"David had a bill introduced, and I doubt it was because the Republican nominee gave a lot to the Democratic candidate at the time," O'Malley said.

Schulweis took exception to Tufaro's suggestion any contribution to O'Malley's campaign is related to the proposed project.

Two mayoral campaigns

"I did it without anyone asking me to," said Schulweis, who also donated $4,000 to City Council President Lawrence A. Bell III's mayoral campaign. "I did it because I believe Martin O'Malley was the best candidate, which has been confirmed by a majority of the citizens of Baltimore, and I have the opportunity to back up my convictions with a little money."

In June, the $117 million Inner Harbor East hotel being built by bakery mogul John Paterakis at President and Fleet streets was provided $75 million in tax breaks.

Developer J. Joseph Clarke gained a $6.1 million PILOT for his proposed $120-million, 35-story hotel and garage on the site of the Southern Hotel at 1 Light St. Clarke is also seeking $9.5 million in exemptions for the office portion of the project.

Benefits equal financing

Schulweis, a New York developer, boasted initially that he would build his hotel without the tax breaks. But yesterday he said getting the benefits would help secure financing.

"The only way we can make the project is to reduce our expenses, and that includes property taxes," Schulweis said.

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