MOVE over, PILOTs. Make way for TIFs.
In the acronymic world of Baltimore's economic development, tax increment financing bonds are supplanting payments in lieu of taxes as a subsidy of choice.
The city is poised to approve its fourth TIF bond - which pledges expected additional property tax revenues from a specific project, not current tax dollars, to pay off the debt - in seven months.
This one is to fund $5.5 million worth of improvements to spur the conversion of the mostly vacant 19th-century factory Clipper Mill site in Woodberry in North Baltimore into a $55 million residential and office community.
Several more TIFs are in the works.
In contrast, this year the city has approved one PILOT, a schedule of payments less than what property taxes would have been for a certain period - for a 200-unit apartment building and parking garage just west of downtown.
"Fewer PILOTs and more TIFs are a reflection of how useful the tools are," said M.J. "Jay" Brodie, head of Baltimore Development Corp., the city's economic development agency.
One key difference is that PILOTs are limited to designated urban renewal areas and have been used mostly in and around downtown; TIFs can be used anywhere.
Of the first three TIFs approved for the city, which was granted authority by the state to issue the bonds two years ago, only the first was for downtown.
That was for $5 million of pier and bulkhead improvements for 88 HarborView townhouses.
The others were for $3.9 million for a 170-unit Frankford Estates housing development on the east side and for $2 million for the Belvedere Square market in Northeast.
Another difference between TIFs and PILOTs is that if the income from a TIF district exceeds projections, any excess goes to the city; under a PILOT, the city gets a preset payment no matter how well the project does.
To be sure, TIF bonds have restrictions of their own.
Under Maryland law, they can be used for only infrastructure such as sidewalks, streets and utilities. Though undeniably a benefit to developers, and a loss to city funds, that's one reason TIFs have less a feel of a handout than PILOTs. After all, the streets will belong to the people.
As Irene E. Van Sant, project analysis director for Baltimore Development Corp., told a City Council hearing last week, in past years such improvements probably would have been paid for from state motor vehicle funds or citywide bonds. "Those funds are very scarce today," she said.
