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On tax breaks for developers, you can't beat City Hall

Baltimore embroiled in another argument over subsidizing developers

Dan Rodricks

6:34 PM EDT, July 3, 2013

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Baltimoreans are having another argument. This one is over Harbor Point and whether City Hall should sell $107 million in bonds and use the money to aid the development of a billion-dollar project on what has been called the primo piece of commercial real estate on the East Coast.

I've been involved in these arguments for years, friends, and here's what I've learned: Right or wrong, you can't beat City Hall. City Hall likes to give money to millionaires and sweeten deals. It's what they do over there, and it's what happens in the capitalist democracy we celebrate on the Fourth of July.

But we always have an argument first — especially when it comes to high-profile development along the great waterfront where thousands will again gather Thursday night for fireworks.

Hard to believe now, but we even had an argument about Harborplace.

Thirty-five years ago, there was a battle over the open space at Light and Pratt streets. Some people in this town wanted to keep all the space open — it was known then as Sam Smith Park — and opposed the decision to turn 3.2 acres over to developer James Rouse for a waterfront mall. Some people — not many, but certainly a vocal minority — couldn't see how Harborplace and all the other downtown redevelopment would help Baltimore's poor.

My views on it ran from ambivalent to skeptical — to narrow, immature and wrong.

The city certainly needed a boost. About 100,000 people had moved to the suburbs between 1975 and 1980, and Baltimore had slipped into the nation's top 10 cities for poverty, with a rate of 23 percent, according to the Census Bureau.

City leaders decided to push Inner Harbor redevelopment, to make it a destination for tourists, conventioneers and all those thousands of former Baltimoreans who had purchased homes in the Villes — Lutherville, Cockeysville, Kingsville, Clarksville — but still liked to visit the city. The waterfront was an appealing place, and people liked to go there. So developing along the Inner Harbor made sense.

But, minus some guarantee that Harborplace would employ none but Baltimore's neediest, it was hard for some of us to see how the emphasis on downtown would help people who lived in the sprawling, impoverished areas of the city.

Hey, what did we know?

Voters approved Harborplace in a referendum, Rouse broke ground in 1979, and the rest is big local history. Baltimore's downtown and its once-industrial waterfront are incredibly different — and better — now. And development has taken place to the west (Camden Yards, University of Maryland) to the east/southeast (Canton, Fells Point, Harbor East) and to the south (Locust Point, Federal Hill).

So, those of us who were cranky about giving Rouse the land for Harborplace — we were all wet.

Of course, the city's poverty rate today might be about the same as it was before Harborplace, with one in four residents living below the poverty level as of the last census. But apparently that's not how we judge the value of a project or the city's investment in it.

I'm also on record as having opposed the millions in tax breaks the city gave John Paterakis, the multimillionaire (some reports say billionaire) owner of H&S Bakery.

This happened in the mid-1990s. The city needed a convention center hotel, preferably one near the taxpayer-funded convention center.

But Mayor Kurt L. Schmoke pushed a deal for Paterakis and a hotel he wanted to build to the east of the Inner Harbor, a full mile from the convention center. Many people thought that was crazy.

Of course, the rest is history. It's called Harbor East and it's a huge success — except for one thing.

After Paterakis got the tax breaks and built his hotel in Harbor East, the city still didn't have a convention center hotel. So you know what we did? We built our own hotel, using more than $300 million in bonds to finance it. It's called the Baltimore Hilton, and it is burdened by millions in debt.

No one connects these dots — that the decision in 1998 to help a multimillionaire/maybe billionaire build a hotel a mile from the convention center cost the city not only millions in property taxes from Harbor East but millions in debt and headaches from the Hilton.

Of course, we take a much broader view of these things.

Where would we be without Harborplace and all that followed?

People look at Harbor East, a city within the city, and marvel at all that has happened there.

Now we're told that Harbor Point, the primo annex to upscale Harbor East, won't be built without sweeteners — $107 million in infrastructure (with bond payments covered by tax revenue the project generates), $88 million in property tax credits for its inclusion in an Enterprise Zone, $24 million in property tax credits because it sits on a contaminated site — and we're having another one of those arguments.

But, as in the past, opponents won't win. For better or worse, City Hall will give millions to millionaires. It's what we do in this country. So enjoy the fireworks.

drodricks@baltsun.com