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Decision near on slots in the city

Just as Inner Harbor redevelopment transformed Baltimore's derelict port of rotting wharves and abandoned warehouses, Mayor Sheila Dixon's administration believes that a slot machine casino could revive a moribund industrial district while reducing city property taxes.

But critics contend that a gambling venue in the shadow of M&T Bank Stadium would worsen the poverty and crime that plague neighborhoods just beyond the city's center. They doubt that such a project would bring meaningful tax relief.

The city's reputation and future could be shaped when voters decide next week whether to legalize 15,000 slot machines at five locations around the state, including in Baltimore and near Laurel Park race course.

The decision could take Baltimore in the direction of other postindustrial cities, such as Detroit and St. Louis, which have turned to gambling to prop up the economy and government. Or voters could tell Baltimore leaders to stay on the path of trying to reverse years of decline by attracting high-end housing and white-collar jobs.

"The Inner Harbor is the centerpiece for the city," said former Gov. William Donald Schaefer, who championed the urban renewal project while Baltimore mayor in the 1970s and '80s. He worries that slots would change the area's character. "And I'm not happy about that," he said.

"I do understand slots have to be somewhere," he added. "So I don't disapprove 100 percent, because it is a moneymaker."

If the slots referendum passes, the Baltimore casino would be situated in an industrial wedge of city-owned land roughly bounded by Russell Street and the Patapsco River at the southern highway entrance to the city. The warehouse district is about a mile south of the Inner Harbor. The location was specified in a General Assembly-approved measure that put the matter to a vote.

The site appears to be a compromise that would put the casino within walking distance of sports stadiums, the Baltimore Convention Center and other attractions while shielding residential neighborhoods.

Deputy Mayor Andrew Frank said the city lobbied for strict geographic limits, including a requirement that slots be at least a quarter mile from residential areas. Dixon opposed putting slots at Pimlico Race Course or the Inner Harbor, Frank said.

City officials and business groups say a casino would create jobs, boost convention center bookings, spur economic development on one of the city's few remaining waterfront parcels and ensure that tourism dollars are not siphoned off by slots parlors in other locations.

"Tourism is Baltimore's second-largest industry. This helps round out the package," Frank said. "We think that entire section of the city is ripe for redevelopment."

The city casino could house up to 3,750 slot machines, and the licensee would be required to invest at least $188 million in construction and related costs. That puts the casino on par with other recent development projects, including the $300 million Hilton hotel at the convention center.

The city also would benefit from millions of dollars in local impact aid, and by law, 95 percent of its lease proceeds would have to be used to reduce property taxes or improve schools.

Baltimore officials say that slots revenue would enable the city to reduce its property tax rate by at least 10 cents per $100 of assessed value. The current tax rate is more than twice that of surrounding jurisdictions and is considered a barrier to economic growth and attracting residents.

The slots parlor would be adjacent to the planned Gateway South development of office, retail and sports-themed entertainment.

Samuel Polakoff, whose Rockville-based Cormony Development LLC plans to build Gateway South, said he hoped that a slots casino would be compatible with his vision for 1 million square feet of upscale retail and office space, including a football-shaped tower, and a "state-of-the-art" complex developed in partnership with Ravens linebacker Ray Lewis featuring playing fields, indoor golf, a fitness center and swim club.

"We would hope that the slots operator, if they come into our neighborhood, would be producing a facility to the same standard," Polakoff said.

Construction of Gateway South is expected to begin by the middle of next year, he said. A Baltimore casino would open its doors around August 2011, and state officials say that it would be among the most lucrative in the state.

But some analysts warn that financial and geographic restraints could result in the construction of a low-end facility that would appeal mainly to area residents rather than high-income "destination" gamblers who go to places such as Atlantic City, N.J., and Las Vegas.

In Maryland, slots operators would pay a 67 percent tax rate - among the highest in the country. And the Baltimore operator must pay rent or share profits with the city, which would further squeeze the profit margin.

Jeffrey Hooke, an investment banker and gambling analyst, said such a "tax on top of a tax" could dampen enthusiasm among potential bidders for the gambling license.

"How much blood can you squeeze out of a stone?" he said. "They might be holding a party and nobody shows up."

Hooke said the city's projections for lease income are far-fetched. Baltimore Comptroller Joan M. Pratt, a slots opponent, also raised concerns about revenue projections.

Aside from local developer David S. Cordish, no developers or gambling companies have publicly acknowledged interest in a potential Baltimore casino. Frank, who oversees economic development at City Hall, said he has not been approached and that city officials have "sent a very clear message" that they would not engage in talks with bidders until after the Nov. 4 vote.

Some officials have said that a more viable option for Baltimore would be a full-scale casino that would be more likely to draw tourists as opposed to local residents. Sen. George W. Della Jr., a Democrat whose district includes the proposed slots location, said that he has consistently opposed the legalization of slots but that a casino offering cards and other games would have been "more palatable."

Such a facility in a downtown hotel would "take money from people who don't happen to live here," Della said.

Pratt, who believes that a Baltimore slots casino would bring crime and blight, said the machines are "an easy game to play that appeals to a wide variety of people" while "high rollers usually do blackjack or craps." She contends that the city should focus on attracting industry and building affordable housing.

"Government should find other ways to fund itself," Pratt said. "And it should not be on the backs of people who can least afford it."

But unlike other potential slots locations in Maryland, the Baltimore site has not generated much protest from the local community - partly because there is not much of one there. The area was zoned for industrial use decades ago, and few homes remain.

Priscilla Sykes, who moved to a Ridgely Street rowhouse with her family in the early 1990s, said they picked the place partly because they liked the views of a great span of highway overpass. Sykes, who now lives with her 15-year-old son in a home surrounded mostly by warehouses, says they have been isolated from drug and gang activity found in more populated areas.

Slots, she said, would be a welcome neighbor.

"I don't think [slots] will change that much," she said. "Nobody is going to move here."

John Gilbert, manager of the Holiday Inn Express on Russell Street, says that a nearby slots parlor would be "super" and a boon for his business.

Even workers at the Baltimore Animal Rescue and Care Shelter, which would have to be moved if a slots casino is approved there, do not object. Jennifer Mead-Brause, the executive director, said she has talked with city officials about moving to a newer shelter and that the area could use some sprucing up.

"There's not a whole lot happening," she said. "It's just a lot of run-down buildings and vacant lots."

by the numbers Baltimore's estimated share of slots revenues:201120122013Rental of city land or profit-sharing income$36 million $37 million $38 million Local development grants from state taxesNA$11.9 million $19.2 million Pimlico-area grants from state taxes$387,500 $9.1 million $12.5 million online by the numbers

Copyright © 2014, The Baltimore Sun
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