Developer's magic puts people in city

March 28, 2004|By June Arney | June Arney,SUN STAFF

In the late 1990s, with the $70 million Hippodrome Theatre still a glimmer in the eye of city planners and the notion of shaping the west side of Baltimore into a sophisticated place to live and play years from reality, seasoned apartment developer David H. Hillman bought the dream.

With the help of historic tax credits, he spent $20 million transforming Baltimore's old Hecht's department store at Howard and Lexington streets into a sleek 173-unit apartment complex called the Atrium.

But when he opened the doors in September 2001, the Atrium was an island of civilization in a sea of rubble and vacant buildings - a tough sell for the kind of tenants he hoped to attract.

"I got so aggravated with the city," he said recently. "It was supposed to open after other things had opened. It ended up being first."

The timing forced Hillman to settle for short-term rentals and to craft a variety of creative deals to fill the units. But fill them he gradually has. The Atrium is now 85 percent to 90 percent full.

"I don't think people understand what it's like to open a big building there," said Suzanne Dee Hillman, his wife of 20 years. "We were out there alone. We were twisting. But he's like the little Energizer bunny. He kept tweaking and kept tweaking. ... He just never stops."

"It's risky. But everything we do is. David is defined by that," she said.

In fact when it comes to the high risk business of reawakening Baltimore's downtown landscape, Hillman has been at the head of the pack in recent years, tapping millions in state and federal historic tax credits but never asking for a penny of other aid or tax breaks from the city.

From Howard to St. Paul Street, he's been rescuing pieces of the city's history - transforming aging office buildings and warehouses into moderately priced and upscale residential outposts.

His Southern Management Corp., based in Vienna, Va., has extensive property holdings in Virginia and Washington and its Maryland suburbs but has focused its development efforts nearly exclusively on Baltimore for the past eight to 10 years, Hillman said.

In all, Hillman's privately owned company has about 25,000 apartments, about 1,800 of which are in downtown Baltimore.

And in the face of a sometimes skeptical city, he's been filling them with residents.

Less confident or more avaricious developers have sought a steady flow of real estate tax breaks and other deals to buttress their Baltimore projects with money from public coffers.

For instance, the extraordinarily successful Baltimore Marriott Waterfront, a project headed by bakery mogul John Paterakis Sr., got going only after Baltimore ponied up a $5 million grant and another $5 million in loans. In addition, the hotel won't have to pay city real estate taxes for the first quarter-century of its existence, a $75 million windfall.

City boards routinely consider and approve payment in lieu of tax deals to help projects get off the ground.

Through it all, Hillman labors on alone.

`Like waving a red flag'

With the Atrium now largely occupied, Hillman admits that it's precisely the kind of project that energizes him.

"It's fun," Hillman said.

"I especially like doing deals that other people said can't be done," he added. "When I went to Landover in the '70s, they thought I was crazy. I had so much trouble borrowing money, it was incredible. That's like waving a red flag in front of a bull; just tell me I can't do something."

"The banks don't question my projects the way they did," he said. "I've fooled them. I know I'm lucky. They think I'm smart."

At once outspoken and self-effacing, Hillman is a wiry man behind gold, wire-rimmed glasses. Looking younger than his 61 years, Hillman is exacting, but easy-going, winning the loyalty of employees and tenants alike with his attention to detail, fairness and willingness to listen.

He makes sure each of his 1,200 employees can read the financial statement of the property where they work. He throws holiday and seasonal parties for his tenants.

"We make more money the longer someone lives with us," Hillman said. "We force them to have roots in the building. It makes it harder for them to move. We want to develop and maintain these buildings so that people cry if they have to move out."

A bundle of seeming contradictions, Hillman hates technology and doesn't own a computer. His secretary handles his e-mail. He's the head of a company worth an estimated $2 billion, and his number is listed in the phone book.

Hillman's foray into development started simply enough as a way to create tax shelters for his accounting clients while he worked as a CPA. For every $1 they invested, he was able to create $4 in losses, he said.

"I never expected to make any money doing this," he said of what started out as dabbling in development in 1965. Now "my goal is to make some money, not to build an empire. Somehow, 38 years ran by, and here I am."

Hillman is a key player in changing the face of Baltimore's west side, city leaders agree.

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