Baltimore officials plan to divert $3 million in anticipated casino revenue that had been earmarked for community improvements to replace a major artery in the city's underground steam pipe system.

The proposal has drawn criticism from local elected officials and community leaders who say it is a misuse of the funds to be generated by the new Horseshoe Casino Baltimore. They want the money to be used for neighborhood-oriented projects, such as walking trails or efforts to connect unemployed residents with jobs.


"Snatching $3 million from our neighborhoods to fix a steam pipe for noncommunity use is just wrong," said Keisha Allen, president of the Westport Neighborhood Association. "Why can't their money pay for it?"

City officials say they tried and failed to find other ways to pay for relocating the large pipe, which runs near Horseshoe Casino and pumps steam into downtown. A spokesman for Mayor Stephanie Rawlings-Blake said they are rushing to relocate the steam line by Sunday to ensure that the casino can open Tuesday as planned.

"We certainly understand their frustration, and we're sympathetic to it," Kevin Harris said. "What's important to remember is without the casino we would be missing out on a long-term revenue stream to do a lot of great things in the community."

The Board of Estimates, which is controlled by Rawlings-Blake, is expected to vote on the proposal Wednesday.

The casino is expected to generate up to $15 million a year in local impact funds from slot machine profits, including up to $10 million in first year.

The funds, which were presented as a benefit when voters were asked to approve casino gambling, can be used for nearly any public service or improvement. Under state law, 5.5 percent of slots profits must go to the "community impact grants."

Members of the Baltimore Casino Local Development Council, formed to help City Hall determine how to spend the grants, wants to use the money on additional police, security cameras, neighborhood cleanups, and an employment center, among other items.

State Del. Luke Clippinger, who represents Baltimore and sits on the council, said the funds should not be used for "ordinary" maintenance projects.

"It's a huge cut of those funds," Clippinger said. "People want to see the funds used quickly to improve those areas immediately around the casino. It's a slippery slope. If this steam pipe were in another part of the city, there's no way they would be getting this money."

A casino spokesman declined to comment, saying it was a city matter.

The city's steam lines are used to heat downtown office buildings and hospitals. About 240 buildings — mostly large workplaces such as the University of Maryland campus — use the steam for heating radiators, cleaning laundry and sterilizing equipment.

The line runs under the main pedestrian and vehicle entrance to the Horseshoe Casino, and city officials worried it would break under pressure from the increased traffic.

Under the complex deal, Caesars Entertainment-affiliated developers building the Horseshoe Casino would relocate the line, leased by French transnational corporation Veolia, using Baltimore-based contractor Whiting-Turner. The city has agreed to cover up to $3 million of the cost to move and replace the 45-year-old line, which runs under Warner Street from a plant in the Camden-Carroll Industrial Area to downtown.

Harris said city officials considered all options and tried to mitigate the diversion of community impact grants by taking $1.5 million from this year's funds and the rest from next year's.


"Knowing that the relocation of the steam line would have a significant cost, all options were explored by the city, including not relocating the line or abandoning the line altogether," Harris said. "Those options proved unfeasible."

In the end, he said officials had no choice. "There's no way to get the casino up and running unless this steam line issue is resolved," he said.

"All of us would rather see that money used differently," said City Council Vice Chairman Edward Reisinger, also a member of the Baltimore Casino Local Development Council. "This was something unfortunate that happened. In order for the casino to open, it has to be taken care of."

The $442 million casino, on Russell Street near M&T Bank Stadium, is scheduled to open Tuesday. About half of the casino's 1,700 jobs are expected to be filled by city residents.

Eric Costello, president of the Federal Hill Neighborhood Association, said he understood the need to replace the line, but he questioned the last-minute timing, with the proposal being disclosed so close to the casino's opening. Costello and others only learned of it several weeks ago, he said.

"It's interesting this just came up now, as opposed to a year ago," he said. "A lot of people were surprised."

State Sen. Bill Ferguson, chair of the local development council, called the situation a "tough call."

"There are no great options," he said. "I'd love to find another way to fund the relocation of the steam line. But both for the success of the casino and the community, it's an infrastructure project that needs to be addressed. Ensuring that it is proactively addressed is probably the smartest way to do it."

Baltimore isn't the only locality to be questioned for its use of casino-generated community impact grants.

In Anne Arundel County, where Maryland Live opened in 2012, $72 million in "local impact grants" has been set aide to aid communities closest to the casino. County officials acknowledge that some of the grants have replaced general operating budget spending, as opposed to funding new projects.

In Cecil County, where Hollywood Casino Perryville opened in 2010, officials say they have received more than $13 million, a third of which went to the town of Perryville.

The county has put some of the casino impact money into land preservation, road resurfacing, trucks for the volunteer fire department and equipment for paramedics. But some also has been used to pay operating expenses for items that were planned but not funded.

The slow disbursement of casino revenue earmarked for local neighborhoods also has been controversial.

In July, Councilwoman Rochelle "Rikki" Spector pressed the Board of Estimates to distribute about $1.7 million in slots money for improvements in Northwest Baltimore, including the Park Heights neighborhood. By law, Park Heights receives money from slots profits from the state's other casinos.

"We've gone though so many hoops, and we still don't have the money on the ground," Spector said. "For two years they've been promised, and here we are again holding it up."

At that meeting, Council President Bernard C. "Jack" Young and Comptroller Joan M. Pratt voted against a proposal for Healthy Neighborhoods Inc. to receive the $1.7 million, because the group failed to provide details on how it would spend 40 percent of its budget. The deal ultimately passed by a 3-2 vote.

Young said he didn't want to delay the benefit to neighborhoods but insisted that the city needs to ensure the money is spent properly.


"I attended many meetings where they're frustrated that the money has not hit their communities yet," Young said.

Baltimore Sun reporter Yvonne Wenger contributed to this article.