Misplaced expectations

August 14, 2007

There's a memorable line in the movie Jerry Maguire, when Cuba Gooding Jr., cast as a frustrated, underappreciated football player, tells his agent just what he expects of him in the next round of contract negotiations: "Show me the money! Show me the money!" The citizens of Baltimore should ask the same of its economic development officials when they offer profit-sharing agreements to developers.

Lost in the fine print of these deals that are tied to lucrative tax breaks for developers is the expectation of when Baltimore would see any money from a profit-sharing arrangement. As past practice has shown: Don't expect the money any time soon.

That's a small detail that should be emphasized when economic development officials come before the City Council and the public seeking approval of government-financed incentives for developers, especially successful ones involved in projects in well-established neighborhoods. But economic development officials argue that any profit-sharing agreement reached with a developer is a bonus -- and not one expected in the early years -- beyond the real benefits of a project: jobs and millions in tax revenue for the city.

That's a valid point, but why even bother with a profit-sharing agreement? It appears that this add-on is really a means to win approval of tax breaks and other incentives.

Of 10 city-assisted development projects approved since 1997, none has reached the agreed-upon investment return for developers to share profits with the city, according to city officials, who require annual audits.

It may be too early for successful ventures such as Power Plant Live, the Baltimore Marriott Waterfront hotel and HarborView apartments and condominiums to generate a profit-sharing check for the city. But it also may be time to review how such deals are structured in the future, and the city's motto should be: "Show me."

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