Bigger tax breaks sought for industrial sites in Southeast Baltimore

The Rawlings-Blake administration plans to propose bigger property tax breaks for industrial properties in Southeast Baltimore — including the site of a new Amazon warehouse — to bring more jobs to the area.

A new "focus area," which must be approved by the state, would give property owners a 10-year 80 percent property tax credit on value added by physical improvements. It also boosts the credits granted for wages paid to new employees and offers breaks for investments in "personal property," such as machinery.


Mayor Stephanie Rawlings-Blake said the legislation is intended to spur development of the "many industrial properties that continue to remain underdeveloped and underutilized."

"I don't think a week goes by where someone doesn't say to us, 'I need help with getting a job,'" Rawlings-Blake said. "We're using economic development tools when we need them to get the results we need."


The proposed focus area contains properties already located in the city's 14,000-acre Enterprise Zone, where they are eligible for some degree of tax relief. The city already operates three focus areas, including properties in Station North and the site of the new Horseshoe Baltimore Casino.

The properties in the new targeted area include the location of the future Amazon warehouse and two operations that are set to close: the Sun Products plant and Mars distribution center.

The resolution to create the new area will be introduced at Monday's City Council meeting, officials said. The city must submit its application to the state by April 15. Baltimore Development Corp. President Brenda McKenzie said the city does not have an estimate for what the program could cost the city in lost tax revenue.

"We won't know until the investment has been done," she said.

The new credits are designed to enhance what is offered in Enterprise Zones. Under that program, the property tax credit phases out over 10 years, falling from 80 percent in the first five years to 30 percent in the last year. The Enterprise Zone also includes one or three-year credits for wages paid to new employees, usually a one-time credit of $1,000 per worker that would jump to $1,500 in the focus area.

Jon Laria, a managing partner at the Baltimore office of law firm Ballard Spahr who chairs the Maryland Sustainable Growth Commission, said creating "creative and aggressive" tax incentive programs are essential to helping Baltimore attract business, given the city's high property tax rate.

"Credits that lower the tax burden for a period of time really make a difference in terms of our ability to attract business and compete," he said. "Everybody wins when these things happen. We bring residents or we bring businesses or we bring economic investment."

Amazon, which was already due to receive more than $43 million in state and city incentives for its new distribution center, did not respond to requests for comment.

Gregory Hummel, a Chicago-based partner at the Bryan Cave law firm who spoke in November at a session on tax incentives organized by the Baltimore Efficiency and Economy Foundation, said creating a focus area around the Amazon site could be an effort to jump-start creation of a "supplier campus" that would feed off the new center.

"I've seen that work," he said. "It's rarely city-wide because in order to achieve clustering you need some density of development."

Greg LeRoy of the Washington-based research center Good Jobs First, said property taxes can often be a company's largest tax.

"If the city feels like that's the meaningful variable and those reductions would improve the [return on investment] and reduce the risk perception of an investor, it could be meaningful," he said. "The tension there obviously is: Are you paying a company to do something they would have done otherwise?"


Many of the properties have been underutilized for years. In 2011, the Pulaski Limited Partnership, of which Willard Hackerman was the principal, proposed a big-box store, warehouses or a combination of the two for the Pulaski Incinerator site. The BDC sought development for the former Ainsworth paint plant at 3200 E. Biddle St. before demolishing the plant in 2012.

City Councilman Brandon Scott, whose district encompasses much of the proposed new focus area, said he believes the incentives are needed.

"This is great because this is an example of focusing on old-school Baltimore, old-school industrial areas. It's focusing on the areas that have blue-collar jobs," he said. "It's supporting industries that typically don't get that kind of support."

The properties involved, many of them clustered around rail lines rather than highways, have been tough to develop, with obstacles that in some cases go beyond high property taxes, said Chris Ryer, director of the Southeast Community Development Corp.

Still, he said, it could help.

"These are very difficult sites," he said. "It couldn't hurt."

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