One Charles Center

Property tax bills for One Charles Center have been underbilled $390,000 since 2011 because of errors in the way the Enterprise Zone credit has been computed. (Kaitlin Newman, Baltimore Sun / September 13, 2013)

Baltimore has underbilled a downtown office tower owned by Orioles majority owner Peter G. Angelos by $390,000 in property taxes since 2011, government officials say — the most recent example of mistakes emerging from the city's Finance Department.

Kevin Harris, a spokesman for Mayor Stephanie Rawlings-Blake, called the billing on One Charles Center an isolated error. But a sampling of tax records shows that the city has also undercharged the owners of two other commercial properties by more than $300,000 in the past four years because of similar errors.

The recent underbillings, which total more than $700,000, mirror previously reported problems in city tax collections. In recent years the city failed to collect more than $2 million because of errors in other tax programs, The Baltimore Sun has found.

City Councilman Carl Stokes says it might be time for the city to hire a private firm to manage municipal tax bills.

"It almost sounds as if whatever fee they'd charge us would be better for us to keep from screwing this up governmentally," said Stokes, chairman of the council's taxation committee.

The new mistakes involve a tax break called the Enterprise Zone Tax Credit. The city also has had chronic problems with a tax break meant to encourage historic renovations. And lax oversight by city and state officials let hundreds of homeowners wrongly claim more than one homestead credit, a tax discount limited to a primary residence.

City officials have said they cannot legally collect most of the taxes that were underbilled years ago. Some of the undercharges ultimately are borne by Baltimore taxpayers, and in the case of the recent property tax errors, by state taxpayers as well.

Last year and the year before, state officials concede, they miscalculated the credit for the office tower at Charles and Fayette streets, where Angelos' law firm is headquartered. City officials failed to catch the mistakes as they underbilled his real estate company by $80,000.

This year, frustrated by what it called the state's calculation errors on several tax break programs, the city took over the job of computing enterprise zone credits — as it had with some other programs. It then undercharged One Charles Center by about $311,000.

On Sept. 9, the day The Baltimore Sun first asked city officials about One Charles Center's bill, the city sent a revised bill for about $311,000 to fix this year's error, bringing the total tax on the building to $496,000. But city officials say they cannot legally collect on the earlier $80,000 mistake.

An Angelos representative said his management company was unaware of any tax bill problems until contacted by a reporter and wants to pay what it owes.

In addition, the city undercharged the owner of a retail parcel in Harbor East by about $126,000 going back to 2010, state officials say. And the city wrongly gave W.R. Grace & Co. a $208,000 tax break this year on its Curtis Bay facility, even though the company said Monday that it hasn't been eligible for years.

Harris and city finance officials did not respond to requests for more detailed comment about One Charles Center or about the Harbor East and Curtis Bay properties.

Asked earlier why the city hadn't taken steps to ensure that the state accurately calculated Baltimore's few hundred enterprise zone credits — which this year will cost the city more than $8 million in forgone taxes — Harris said such verification "fails all benefit to cost ratio tests."

That comment drew a rebuke from City Councilman William H. Cole IV, who represents downtown.

"I would beg to differ," he said. "When we start getting into the six figures, high five figures, until everything is fixed it certainly does make sense for there to be additional staff review."

City officials say the Finance Department is revamping the tax credit process and that will eliminate most errors. While Cole said the city is "well on the path" to upgrading its system, "we still have a long way to go."

"It does make you shake your head a little when you see these large-dollar items," Cole said, "because that's real money."

The state of Maryland reimburses local governments half the cost of the enterprise zone credits, which are designed to spur development in distressed areas. That means the state will spend more than $8 million this year for the roughly $17 million in credits in the city.

Similarly, when companies receive enterprise zone credits that are unduly large, the state's taxpayers end up paying more.