Community groups criticize city plan to divert $3 million in casino impact funds

Mayor's office says money needed to relocate steam line fueling downtown

August 19, 2014|By Luke Broadwater, The Baltimore Sun

Baltimore officials plan to divert $3 million in anticipated casino revenue that had been earmarked for community improvements to replace a major artery in the city's underground steam pipe system.

The proposal has drawn criticism from local elected officials and community leaders who say it is a misuse of the funds to be generated by the new Horseshoe Casino Baltimore. They want the money to be used for neighborhood-oriented projects, such as walking trails or efforts to connect unemployed residents with jobs.

"Snatching $3 million from our neighborhoods to fix a steam pipe for noncommunity use is just wrong," said Keisha Allen, president of the Westport Neighborhood Association. "Why can't their money pay for it?"

City officials say they tried and failed to find other ways to pay for relocating the large pipe, which runs near Horseshoe Casino and pumps steam into downtown. A spokesman for Mayor Stephanie Rawlings-Blake said they are rushing to relocate the steam line by Sunday to ensure that the casino can open Tuesday as planned.

"We certainly understand their frustration, and we're sympathetic to it," Kevin Harris said. "What's important to remember is without the casino we would be missing out on a long-term revenue stream to do a lot of great things in the community."

The Board of Estimates, which is controlled by Rawlings-Blake, is expected to vote on the proposal Wednesday.

The casino is expected to generate up to $15 million a year in local impact funds from slot machine profits, including up to $10 million in first year.

The funds, which were presented as a benefit when voters were asked to approve casino gambling, can be used for nearly any public service or improvement. Under state law, 5.5 percent of slots profits must go to the "community impact grants."

Members of the Baltimore Casino Local Development Council, formed to help City Hall determine how to spend the grants, wants to use the money on additional police, security cameras, neighborhood cleanups, and an employment center, among other items.

State Del. Luke Clippinger, who represents Baltimore and sits on the council, said the funds should not be used for "ordinary" maintenance projects.

"It's a huge cut of those funds," Clippinger said. "People want to see the funds used quickly to improve those areas immediately around the casino. It's a slippery slope. If this steam pipe were in another part of the city, there's no way they would be getting this money."

A casino spokesman declined to comment, saying it was a city matter.

The city's steam lines are used to heat downtown office buildings and hospitals. About 240 buildings — mostly large workplaces such as the University of Maryland campus — use the steam for heating radiators, cleaning laundry and sterilizing equipment.

The line runs under the main pedestrian and vehicle entrance to the Horseshoe Casino, and city officials worried it would break under pressure from the increased traffic.

Under the complex deal, Caesars Entertainment-affiliated developers building the Horseshoe Casino would relocate the line, leased by French transnational corporation Veolia, using Baltimore-based contractor Whiting-Turner. The city has agreed to cover up to $3 million of the cost to move and replace the 45-year-old line, which runs under Warner Street from a plant in the Camden-Carroll Industrial Area to downtown.

Harris said city officials considered all options and tried to mitigate the diversion of community impact grants by taking $1.5 million from this year's funds and the rest from next year's.

"Knowing that the relocation of the steam line would have a significant cost, all options were explored by the city, including not relocating the line or abandoning the line altogether," Harris said. "Those options proved unfeasible."

In the end, he said officials had no choice. "There's no way to get the casino up and running unless this steam line issue is resolved," he said.

"All of us would rather see that money used differently," said City Council Vice Chairman Edward Reisinger, also a member of the Baltimore Casino Local Development Council. "This was something unfortunate that happened. In order for the casino to open, it has to be taken care of."

The $442 million casino, on Russell Street near M&T Bank Stadium, is scheduled to open Tuesday. About half of the casino's 1,700 jobs are expected to be filled by city residents.

Eric Costello, president of the Federal Hill Neighborhood Association, said he understood the need to replace the line, but he questioned the last-minute timing, with the proposal being disclosed so close to the casino's opening. Costello and others only learned of it several weeks ago, he said.

"It's interesting this just came up now, as opposed to a year ago," he said. "A lot of people were surprised."

State Sen. Bill Ferguson, chair of the local development council, called the situation a "tough call."

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