The city's Board of Finance violated transparency laws by meeting behind closed doors to approve more than $100 million in public financing for the massive Harbor Point development southeast of the Inner Harbor, a state panel ruled.
In response to complaints from The Baltimore Sun and TV station Fox 45, the state's Open Meetings Compliance Board ruled that the city officials illegally barred the public from the May 20 meeting. That day, the finance panel voted 4-0 to approve a request for city-issued bonds that would pay for roads, utilities and parks for the $1.8 billion project.
The ruling released Monday does not reverse the decision, which sent the funding to the City Council for consideration. However, it could force the city to reveal future legislation authorizing tax breaks and special tax deals earlier in the process.
"We've found that to amend legislation, the further it gets down the process, the harder it is to change it," said Jennifer Bevan-Dangel, director of the government watchdog group Common Cause Maryland. "And if it is a bad idea, the harder it is to stop it."
Beginning in October, public bodies that violate the Open Meetings Act could be fined $250 for a first offense and $1,000 for repeat offenses. Currently, public bodies can be fined $100 for violating the act.
Travis Tazelaar, a spokesman for Mayor Stephanie Rawlings-Blake, said city officials were taking the ruling seriously.
"We are reviewing the opinion and expect to fully comply with its expressed principles going forward," he said.
Stephen M. Kraus, the city's chief of treasury management and clerk to the board, also said he was reviewing the ruling. In May, Kraus argued he was entitled to close the meeting about Harbor Point's financing because "there is certain business that is confidential and proprietary."
In documents submitted to the open-meetings board, city lawyers argued that the meeting had been legally closed because it involved relocation of a business and the marketing of city bonds.
The compliance board disagreed, ruling that finance officials were acting as part of a legislative process, which must be public.
Bevan-Dangel urged the city to open future deliberations of taxpayer-funded projects.
"These boards should be erring on the side of too much transparency," she said. "Again and again, they err on the side of too much secrecy. You have bills being created with no public input."
The finance board met for about 90 minutes on May 20 and approved three pieces of legislation related to the development.
Baltimore finance director Harry E. Black, who attends board meetings in the place of Rawlings-Blake, voted in favor of the proposal. He was joined by three mayoral appointees: Larry I. Silverstein, Frederick W. Meier Jr. and Dana C. Moulden. Comptroller Joan M. Pratt abstained.
The City Council's Taxation, Finance and Economic Development Committee will hold a hearing on public assistance for the development on Aug. 7.
Committee Chairman Carl Stokes, who represents District 12, said secret deals do not engender faith that city government has citizens' best interests at heart.
"Of course, to do the public's business behind closed doors smacks of being a disingenuous method and it breeds suspicion," Stokes said. "If they can't do it openly, if they feel they have to close their doors, then they shouldn't be doing business."
If approved, the $107 million deal would be the city's second-largest tax increment financing plan. The city-owned Baltimore Hilton hotel was financed with $301 million in tax-exempt revenue bonds in 2006.
Under tax increment financing deals, the city issues bonds to pay for property acquisitions, infrastructure improvements and other project costs, then uses the increased property taxes created by the development to pay off the debt.
Developer Michael S. Beatty's Harbor Point Development Group LLC is redeveloping the mostly vacant 28 acres, the former Allied Signal chromium plant site. The site would be home to a 23-story regional headquarters for energy giant Exelon Corp. Morgan Stanley also has offices there and other buildings are planned.
Beatty has said the city-issued bonds would be used to pay for new roads, sidewalks, a waterfront promenade, a 6.5-acre public park and a bridige extending Central Avenue to the site. A lawyer for the developer had no comment on the open meetings decision.
Rawlings-Blake has called the Harbor Point development "an important project for the city" and stressed that it would bring thousands of new jobs to Baltimore. City officials estimate 7,000 construction jobs and 3,300 permanent jobs would be created by the development.
Baltimore County Del. Dan K. Morhaim sponsored statewide legislation this year that strengthened the open- meetings law.
The measure requires a public body to announce at its next meeting that the compliance board found it had broken the law. Each member of the group that violated the law also must sign a statement acknowledging the misconduct.
"It happens inadvertently sometimes," said Morhaim, a Democrat, of why public bodies meet illegally in secret. "It happens intentionally other times. Regardless, the public has a right to be at public meetings. Open meetings are staple of society."