Giving the store away

Howard Street: City may have squandered millions in accepting merchants' dubious claims.

February 10, 2002

ANY BALTIMOREAN who wants to learn how City Hall wastes taxpayers' money should read an auditor's report that was made public last week. It will knock your socks off. Guaranteed.

City Auditor Yovonda D. Brooks' review focuses on the west-side initiative. During the past two years, the city spent $3.3 million to compensate 32 businesses that could either move or liquidate their inventory when they were displaced to enable redevelopment.

Mayor Martin O'Malley - trying to appease vocal merchants and their aggressive lawyers - insisted on that compensation choice, which was far more generous than what the federal government's rules allow. And some merchants took full advantage of it.

One Howard Street jewelry store presented the city with a $625,547 bill, claiming that was the amount it lost in liquidating a $1 million inventory of gold watches and earrings. The city paid the claim, but later, auditors could discover no invoices for the merchandise, only handwritten general descriptions of items.

A Howard Street record store was paid $532,571 for inventory and property losses, including $152,164 for 3,814 pagers and $167,580 for pager accounts. Again, there was no incontrovertible documentation to verify that those assets had ever existed.

The audit details several other instances in which merchants' words were accepted without verifiable documentation. The total of questionable claims: $2.4 million.

A Jan. 22 response from Baltimore Development Corp.'s Sharon R. Grinnell and housing acquisition director William Burgee did not explain why their bureaucracies did not insist on more authentic records from merchants.

Instead, those officials claimed newly adopted corrective measures should prevent these kinds of shenanigans from being repeated. But that response failed to end the dubious practice of compensating for inventory losses, which is at the heart of the problem.

Mayor O'Malley should acknowledge that he made a serious error in judgment. He should also follow the clear and proven federal guidelines in city compensation cases, regardless of whether federal funds are used or not. In this case, all the money came from city or state budgets.

It's time for this sorry spectacle to end. As west-side redevelopment spending continues, Mayor O'Malley must establish safeguards to protect the city and its taxpayers from being taken for a ride.

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