Two luxury condominium complexes alongside Baltimore's waterfront will have to pay nearly $2.3 million in additional property taxes this year, thanks to new assessed values that acknowledge — four years after the first residents moved in — that the buildings' empty units actually exist.
The almost 190 units still owned by the developers of the Ritz-Carlton Residences and Silo Point had been taxed as if they were empty lots, even as residents were paying high-end prices – frequently more than $1 million in the case of the Ritz — to live in other condos in the same buildings.
Inner Harbor complexes' bills in April, and new tax bills were mailed early this month. The tab for each Ritz condo, which had been $1,309, rose as high as $74,000. Silo Point units jumped from $238 tax bills to as much as $24,000.
If the Ritz and Silo Point assessments had reflected market value from the start, the city would have collected more than $10 million in additional taxes over the last several years, according to a Sun analysis that relied on recent sales data.
This year's tax bill on the properties is about fifteen times higher than the $170,000 due on the same condos last summer.
"Wow," said William Rich, who analyzes the city condo market for real estate research firm Delta Associates. "That gives them a lot of incentive to sell the units faster, whether it's by enhancing the marketing or by reducing price."
Officials at the state Department of Assessments and Taxation said the low values assessed over the last several years were not mistakes. Assessors weren't convinced the condos were "substantially completed," the point at which a property's assessment can be raised to account for new construction.
But city permits officials felt confident on that score years ago. They gave the OK in 2008 and 2009 for the condos to be occupied — after the developers requested it.
Legislators told The Sun they see the condos' tax bills as another example of why the entire property-tax system needs a re-assessment of sorts. At what point new construction ought to be fully taxed is just one of the issues that should be addressed as the city tries to grow rather than shrink, they say.
"I think we really need to use this moment to have a broader conversation about property tax credits and development in Baltimore City — and property taxes in general," said state Sen. Bill Ferguson, a Democrat who represents South and Southeast Baltimore.
Owen C. Charles, deputy director of the state assessments agency, said in April that the department would increase the assessed values on the vacant Ritz and Silo Point condos in time for the July property tax bills and had intended to do so even before the Sun inquired. It's not that anything changed about the units. The motivating factor, Charles said, was that so much time had passed since the developers received occupancy certificates.
The typical new assessment for the Silo Point condos, each previously valued at $10,000, is about $420,000. The Ritz assessments jumped from $55,000 each to a median value of $480,000 — with two penthouses surpassing $3.1 million.
Other Baltimore development projects, including the 414 Water Street condos downtown, didn't get the same years-long reprieve from higher tax assessments. Williamsburg-based Bush Construction Corp., which built 414 Water Street, still has about 125 units left to sell, all of which were valued by the state as substantially completed soon after they were built in 2007.
Such differences upset developers and concern political leaders.
"At a minimum it should be consistent," said state Del. Samuel I. Rosenberg, a Baltimore Democrat who has pushed for reforms and audits of property-tax credits.
Andrew Viola, who oversees 414 Water Street, was outraged when he heard about the bills at Silo Point and the Ritz. He said last week that he's asked the state assessments agency to reduce his property's tax value retroactively — essentially to give him the same deal the other developments got.
"I know it won't happen, but certainly they need to know that [the disparity] flies in the face of what should have been fair and reasonable," Viola said.
He's still tallying up his property-tax total for this year, but last year it was $800,000, he said. He chuckled when informed about the two project's new bills.
"Well, it's about time," he said. "New construction values for old construction."