PILOT incentives debated by council

Tax breaks mortgage city's future, opponents say

November 24, 1999|By Gerard Shields | Gerard Shields,SUN STAFF

In one of his last duties as a city councilman, Baltimore Mayor-Elect Martin O'Malley presided over a hearing yesterday to grant $73 million in future property tax breaks to five downtown projects.

City officials who support the hotel, apartment and office proposals contend that they will return $122.5 million to the city in other taxes while creating a projected 1,600 jobs.

The incentive -- known as payments in lieu of taxes or PILOTS -- sparked more than four hours of debate among council colleagues, including opponents who accuse the city of mortgaging its future.

Southeast Baltimore Councilman John L. Cain said the tool created by the state to lure investment into the city is unfair to city homeowners faced with a residential property tax twice the rate levied anywhere else in the state.

"What I see is people leaving the city because of disgust with public policy," Cain said. "I have people wanting to stay in the city telling me it's not fair."

O'Malley, who will take office on Dec. 7 as Baltimore's 47th mayor, supports the tax breaks as the only economic development tool available to boost a city that has lost 1,000 residents each month and has an unemployment rate twice as high as the national average.

The city will not lose tax revenues, O'Malley and proponents contend, because the projects wouldn't be built without the tax incentives.

Northwest Baltimore Councilwoman Rochelle "Rikki" Spector likened the tax exemptions to the $60 million public investment paid to build the Inner Harbor. "Where would Baltimore be today?"

Among the projects reviewed yesterday by the council's Taxation and Finance Committee were:

A $45.5 million office and shopping complex at 600 E. Pratt St. The 11-story building will be constructed on Baltimore Community College property, and developers are requesting $15.2 million in tax breaks over 20 years. In return, the city would receive $35.8 million over that time for the project that would provide the equivalent of 244 full-time jobs.

A $128.5 million hotel at 300 E. Pratt St. to be built on property owned by Harvey Schulweis. The New York developer is asking for $24.4 million in city tax breaks over 20 years for his 605-room hotel that would create the equivalent of 430 full-time jobs. In return, the city would gain a projected $34.6 million.

A $56.7 million office complex at the former Southern Hotel at One Light Street. The project by developer J. Joseph Clarke gained a $6.1 million tax break on the hotel portion of the project earlier this year and would receive an additional $16 million in exemptions under the latest bill. The city projects a return of $24.5 million on the office portion of the project over 20 years.

A $25.6 million apartment building along Key Highway. The HarborView project would require a $2.7 million tax exemption to build 164 low-rise units. The plans are being opposed by state Sen. George W. Della Jr., who questioned the need for the incentives. "Where does the public subsidy stop?" Della said.

A $36 million high-rise apartment building at 26-30 Howard Street. The 302 units would be part of the city's plan to add residences to the downtown area. The city's tax break would be $14.7 million over the next 20 years.

In June, the council approved $81 million in future tax exemptions to hotel projects under the PILOT program. The legislation on the five projects will proceed for a vote to the Baltimore City Council, which will meet again Dec. 2.

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