A majority of the historic credits in question across Baltimore went to 24 condos at the Canal Street Malt House, a mix of rehabs and new units built in 2006 on the eastern edge of Little Italy.

The city says the 13 renovated units along Fawn Street were entitled to historic credits, and those remain in effect. But the city says the state mistakenly granted the breaks to 24 newly built units, including the fifth-floor penthouse that the Strubles bought last year for $697,000.

Brent Reynolds, who helped develop Canal Street Malt House, said he thought the new units on Bank Street and Central Avenue would receive a different break — a five-year tax reduction for newly constructed homes. That credit would have given these owners a smaller discount.

"I'm somewhat surprised a glitch of this nature happened," Reynolds said, recalling that the development drew a lot of attention from city development and preservation officials.

At a recent City Council hearing, officials displayed a 2006 letter to Reynolds from the city's Commission for Historical and Architectural Preservation listing the 13 rehabbed units as certified for the break. They presented a second letter from 2006 in which the state assessments agency told the owner of one of the newly built condos that he would get the 10-year credit.

To the city, the letters show that the state erred by applying the credit to every condo, new and old.

But Robert E. Young, director of the state Department of Assessments and Taxation, or SDAT, told council members that "we don't believe we got clear information from" the city preservation office on which units qualified for the tax break.

And Owen C. Charles, Young's deputy, said in an email to The Baltimore Sun that ultimate responsibility lies with the city Finance Department, which he said calculated and applied the historic credits to tax bills based on values provided by the state. "SDAT defends its record and does not believe it is responsible for granting of the credits on these units," he wrote.

Harris acknowledges that better communication between city preservation and finance officials could have revealed the invalid credits quickly — before the city lost out on years of tax revenue it can't now collect, and before owners bought based on assurances the credits would last a decade.

Harris says city officials have been working to automate the tax credit system, a change he said would "significantly reduce" the likelihood of future errors.

By the time the Strubles went home-shopping last year, the historic credit on the penthouse condo had been in place for seven years. Sharon Slevin, a Realtor with Prudential Homesale YWGC Realty, listed the condo for the owner, who she said had "all the documentation" for the credit.

That explains why the condo listing — in addition to hailing the "fabulous walk-in closet, gourmet kitchen, vaulted beamed ceiling, hdwd floors and 2-car garage parking" — ended by trumpeting that the taxes would be frozen "for 3 more years with HISTORIC TAX CREDIT!"

Mark Struble, a software tester, says he and his wife love their home and neighborhood. But the tax spike has hurt, he says, especially with a daughter in college: "We were completely blindsided."


Tax error timeline

2011: A Baltimore Sun investigation finds that hundreds of homeowners wrongly received homestead discounts limited to owner-occupants, costing the city more than $700,000 in one year.

2012: The Sun reports that errors by state officials inflated historic tax credits for some commercial buildings by more than $1.5 million over time.

2013: City informs 315 owners that their property tax bills have risen because they had been getting excessive historic credits caused by state calculation errors. State denies blame. City revises a majority of the 315 bills, with some owners' credits restored to previous levels.

2013: The Sun finds that the city has underbilled three commercial properties by more than $700,000 due to erroneously calculated Enterprise Zone tax credits.

2013: City says 36 condos received historic credits that should not have been granted, costing city $2.6 million in potential property tax revenue over eight years.