When the city sends Tom Clancy his property tax bill, finance officials might want to tuck in a thank-you note.
The multimillionaire novelist's supersized digs at the Ritz-Carlton Residences along the Inner Harbor have by far the highest tax payment of any home in Baltimore this year — almost $350,000. That's more than all the payments from homeowners in some entire city neighborhoods.
Property taxes on the 10 homes with the biggest bills, and the 10 commercial properties at the top of the heap, come to an eye-popping $20.7 million, according to a Baltimore Sun analysis. And city officials, forever trying to expand Baltimore's tax base, say they're very glad for the big payers.
"Imagine if they weren't here," said M.J. "Jay" Brodie, president of the Baltimore Development Corp., the city's economic development arm.
Clancy and his wife, Alexandra, own 17,000 square feet at the Ritz-Carlton — originally six separate penthouse condos bought in 2009 and 2010. Eight typical single-family houses could squeeze into that space, which includes its own movie theater.
To put their Ritz taxes into perspective: The collective payments of everyone who owns property in Dickeyville, the village on the western edge of the city, amount to $7,400 less than the Clancys' tab.
Office towers, hotels and an upscale apartment complex round out of the rest of the properties with the highest tax bills, most in and near downtown. The top homes are largely around the Inner Harbor, and four are at the Ritz-Carlton.
Most of Baltimore's property tax revenue, of course, flows from less high-flying sources. Nearly half the tax bills on city properties are less than $1,800 a year. About two-thirds of all the taxes come from homes, with the rest from commercial property, including apartments.
The Sun analyzed all 237,000 city property tax records. Baltimore officials said they couldn't provide the level of detail required for an in-depth look at who pays what, so The Sun built its own database, copying records from a city website using an automated process called "data scraping."
What almost all the top properties have in common — besides high values — is a lack of tax breaks. None of the fancy new buildings in Harbor East, which are among the city's most valuable properties, cracked the top 10 commercial taxpayers because breaks abound in that part of the city.
The Legg Mason skyscraper, for instance, would have the biggest tax bill of any property in the city if owner H&S Properties Development Corp. paid the full tab. But the company is getting a 90 percent discount thanks to development incentives.
This year's tax bill on that building comes to $468,000, just a fraction of the $4.2 million paid by the owners of T. Rowe Price's downtown headquarters at 100 E. Pratt St. — the biggest single bill citywide.
As a whole, the city's top taxpayers aren't eager to chat about their distinction. Many, Clancy included, did not respond to messages.
Entrepreneur David Oros and wife Marla declined to be interviewed about the $93,000 bill — third-highest among city homes — on their completely rebuilt 1920s North Baltimore house, which sits on more than five acres.
Contractor James W. Ancel Sr., ranked seventh courtesy of the $45,000 tax bill on his HarborView condo, could not be reached at home or work.
One homeowner on the list said he knew his bill was big but didn't realize it was one of the biggest — and he didn't want to talk about it. Officials with a commercial property owner in the top 10 worried that anything they said could be used against them if they appealed the property assessment, something commercial owners frequently do.
Others were intrigued.
Scott E. Dorsey, a trustee for the family trust that owns the most expansive of the Pier Homes in the Inner Harbor, had a quick response when told it has the second-biggest tax bill in the city: "Really! Who's No. 1?" (Given a chance to guess, he got it on the first try.)
Many of the Pier Homes townhouses were built — as their name suggests — on piers in the Inner Harbor. Leroy Merritt, who was born in Dundalk and amassed his fortune developing commercial real estate and building a chain of athletic clubs, bought the two adjoining homes at the end of the north pier in 2007 and turned them into a single residence.
The 9,000-square-foot property has a four-car garage, six bedrooms, seven full bathrooms and three more half-baths. There are a home theater, sauna and elevator. The rooftop deck stretches 75 feet. Nearly everywhere you look, there's water — and views of other top city properties.
Merritt bought the homes in an unfinished condition for $6.1 million and spent millions more building the interior himself. It was his primary residence until his death in 2010, though he owned others, including a house on the Magothy River in Anne Arundel County.
"He liked being on the water, and being on the water in the Inner Harbor was a lot more convenient than being on the water on the Magothy," said Dorsey, chairman and CEO of Merritt's real estate company, Woodlawn-based Merritt Properties LLC.
Now the home is on the market for $8.5 million. That's more than twice its assessed value for tax purposes, but Dorsey says he and fellow trustee Robb Merritt can wait for a buyer who takes their view of its long-term value.
And they believe the property tax tab on the Merritt house — $95,000 this year — isn't going to stop potential buyers in their tracks. Typical purchasers must account for taxes when determining how much house they can really afford, they said. The well-heeled? Not so much.
"You say, 'OK, the taxes are the taxes,' and you pay it," Dorsey said. "People who can afford to live in places like that — like Mr. Merritt and Mr. Clancy — they're not pinching pennies."
Robb Merritt, Leroy Merritt's son and president of the real estate company, added with a laugh: "You notice Scott and I aren't living here."
J. Michael Martin, chief investment officer at Financial Advantage Inc. in Columbia, said the type of tax his high-net-worth clients gripe about is income tax. "I really never hear them complain about the property tax," he said, and that includes the families he advises in Baltimore.
"Don't forget, it's deductible from an IRS point of view," Martin said. For people in higher income-tax brackets, that can cut the true cost of the property tax almost in half, he said.
Kirby Fowler, president of the Downtown Partnership of Baltimore, an advocacy group, wasn't surprised to hear where the city's top properties are clustered. The partnership says downtown — defined as encompassing a one-mile radius from Pratt and Light streets — accounts for 4 percent of the city's land mass yet generates 13.5 percent of all property taxes. Eight of the top 10 residential properties and all but one of the top commercial buildings fall within that footprint.
City Councilman William H. Cole IV, whose district includes most of the top homes and commercial properties, said he sees it as an encouraging sign "that we have high-profile, high-wealth individuals who are willing to invest in the city."
"On the residential side, a lot of the highest units are units that have been built in roughly the last decade or less," Cole said. "That's an indication we obviously have new construction that is obviously helping our tax base significantly. It also indicates that while property taxes remain a huge issue to our growth and development, for some it simply is not a deterrent. Location means a lot."
Dan Melia, Mid-Atlantic regional vice president at REIT Management & Research LLC, doesn't have a bone to pick about either the city's highest-in-the-state property tax rate or the $1.2 million bill on the Candler Building, which his company manages.
He thinks it makes sense that the 540,000-square-foot office building on Market Place in the Inner Harbor area — packed full of tenants such as Johns Hopkins — has one of the city's top tax bills.
"Naturally I'd love to see lower taxes, but you start lowering taxes, you start taking away from services in the city," Melia said. "Everyone has an obligation. If you're going to work in the city, you should pay your fair share."
What gives him pause is that some other buildings have had their taxes dramatically lowered by various breaks. The Candler Building, which has none, isn't far from Harbor East and its major buildings with tax discounts.
"I think sometimes they do a disservice to the city, unless they're drawing [businesses] from outside," Melia said of tax breaks. "If you have a gas station across the street from my gas station, and you get a tax incentive on your gas and you get to charge $2.50 a gallon while I have to charge $3, where's everybody going to go?"
H&S Properties, the developer of Harbor East, did not respond to a request for comment. But the BDC, which recommends tax-deal packages to elected officials, has long argued that tax subsidies for some are worth the cost.
Brodie, after hearing a rundown of the commercial properties with the biggest bills, said "almost all of those were done with some form of city assistance." The Renaissance Baltimore Harborplace Hotel (No. 3 on the top 10) was built on a city-owned urban renewal site, he said. So was the top-ranked 100 E. Pratt.
The fourth-place Hyatt Regency Baltimore is actually owned by the city — the Hyatt leases the site and pays the taxes. And No. 2 on the list is the Hilton Baltimore, the Convention Center hotel owned by a nonprofit created by the city.
The Hilton is one of the rare top properties with a subsidy related to property taxes. The Baltimore Hotel Corp. paid the full $4 million due this year, but that money didn't flow to the city's general fund — and neither will payments for years to come — because it's earmarked to pay off the revenue bonds issued to build the hotel.
Brodie looks at the rest of the top payers and sees in them Harbor East's future — eventually. The tax breaks all have an expiration date.
"As they end and convert to full taxes, you'll see some major additional addresses on your list," he predicted.
Most owners of the top properties paid quickly enough last summer to get the city's early-bird discount, which at half a percent added up to numbers impressive by themselves. The Clancys' discount topped $1,600. For 100 E. Pratt St., the savings were nearly $20,000.
But the Oros family waited so long to pay for the tax year that ends June 30 that they've been hit with penalties — also substantial.
David Oros, the dot-com entrepreneur who is now running a Baltimore hedge fund, declined to be interviewed but said in an email that the payment delay was related to an assessment appeal last year. He said the bill was recently paid. The city had no record of that as of Friday afternoon, but finance officials say it can take a few days for payments to be processed and show up in their system.
Interest and penalties come to about $4,600 — more than twice the typical city homeowner's total bill.
About this series
Taxing Baltimore is a series of occasional articles examining Baltimore's highest-in-the-state property tax rate.
To report the series, The Sun requested information from the city showing the net tax bill and any tax credits for every property in the city. Baltimore's Finance Department said it couldn't provide that level of detail because the information was essentially trapped inside an aging mainframe computer.
Using an automated process called "data scraping," The Sun instead created its own database of all 237,000 city property tax records by copying the information, one record at a time, from the individual tax records publicly available on the city's website.
The first articles, published last month, detailed how the Homestead Property Tax Credit has morphed into a massive subsidy fueling widespread inequality among homeowners — a problem made worse by errors in billing and inadequate government oversight.
When the city sends Tom Clancy his property tax bill, finance officials might want to tuck in a thank-you note.