O'Malley getting down to business; Mayor-elect turns to diverse, powerful executives for advice

THE BALTIMORE SUN

Although overshadowed by issues of crime and education during the campaign, business quickly came into its own when Mayor-elect Martin O'Malley gave his acceptance speech Tuesday.

Standing on a packed dais at the Columbus Center, O'Malley reiterated his long-held view that controversial property tax breaks known as PILOTs, for "payment in lieu of taxes," and other incentives are necessary economic development tools.

"We must have courage to make the tough decisions necessary to move our city forward," said O'Malley, an attorney and City Council member. "If tax incentives create jobs, then together we must have the political courage to pass them."

While O'Malley's position on PILOTs appears fixed, less clear is how the new mayor will approach other business and economic development issues critical to boosting Baltimore's tax base and viability.

Should enhancing downtown be the focus of the new administration? And what of economic development in the city's neighborhoods? Should O'Malley work to encourage new office towers for businesses to call home or aim at revitalizing Baltimore's flagging manufacturing base? What role should tourism play?

For answers, O'Malley has turned to a diverse, high-powered but largely politically fresh group of city business leaders.

They include James S. Riepe, vice chairman of T. Rowe Price Associates Inc., one of the nation's largest mutual fund managers; Sherry F. Bellamy, chief executive officer of telecommunications giant Bell Atlantic-Maryland; longtime Greater Baltimore Committee consultant Walter Sondheim Jr.; and engineering firm Whitman, Requardt & Associates partner C. Richard Lortz.

The new mayor's primary business advisers will also probably include transition team members such as Harbor Bank of Maryland President and Chief Executive Officer Joseph Haskins Jr., who is co-chairing O'Malley's transition group; Constance R. Caplan, chairman of real estate development firm the Time Group Inc.; Downtown Partnership of Baltimore Inc. President Laurie B. Schwartz; and a host of other consultants rich in economic development experience.

O'Malley's other transition team co-chairman, Gallagher, Evelius & Jones LLP partner Richard O. Berndt, will likely also be consulted on business issues. In addition to being a board member of the Baltimore Development Corp. (BDC), the city's economic development arm, he is also a personal attorney of wealthy H&S; Bakery Inc. owner John Paterakis Sr., whose 750-room Marriott hotel being developed east of the Inner Harbor has received a PILOT valued at $75 million.

Shared sense of urgency

"We were trying to put together the best group we could find," O'Malley said. "And I think the group reflects a good cross section. If it leans toward being corporate heavy, then OK, because the city is actually a big corporation."

While their backgrounds differ, mmebers of O'Malley's newly formed economic development committee appear to share a sense of urgency about the future of the city's businesses.

"The first priority will be the retention of existing businesses, and our next goal will be to assist existing city businesses to grow, be they inside the downtown core or the surrounding communities," said Bellamy, a co-chair of O'Malley's economic development committee.

"And we also consider it a priority to attract new business to the city," she said.

An uphill march

Bellamy and the rest of O'Malley's committee will have an uphill march.

Between 1989 and 1998, the city lost one-sixth of its employment base, averaging 722 jobs a month, according to O'Malley statistics. During the same period, Baltimore saw 40 percent of its heavy-manufacturing jobs erode, 35 percent of its distribution jobs, 28 percent of its banking jobs and 34 percent of jobs in retail.

O'Malley's team has committed to spark economic development citywide, not just in downtown or the traditional central business district.

"The goal is not to zero in on one area but to look at the whole panorama," said Michele L. Whelley, an economic development consultant and former BDC executive vice president who has been named to coordinate O'Malley's economic development group. "The challenge will be how to promote economic development diversity."

'A long way to go'

"A wholesome business environment has a way of permeating the entire city," Haskins said. "Baltimore has come a long way, and it has a long way to go."

The lightning rod for much of O'Malley's economic development efforts will almost certainly be a pair of city agencies: BDC and the Office of Employment Development.

BDC, in particular, has been beleaguered and criticized for failing to stem the hemorrhaging of city jobs and for failing to attract significant new business. Most recently, law firm Piper & Marbury and health care provider Care- First Inc. have decided to move out of the city, taking with them about 1,000 professional, high-paying jobs.

But unlike other, high-profile agencies such as Housing and Community Development where O'Malley has pledged to clean house, BDC personnel -- if not its mission -- remain largely intact.

"I like [BDC President M. J.] Jay Brodie," O'Malley said last week. "I think he may be a bit overstretched, though. But that will be one of the things we look at, is how physically we're conducting economic development."

Since Mayor Kurt L. Schmoke took the helm at City Hall more than a dozen years ago, various economic development groups -- some with overlapping missions and functions -- have been consolidated into BDC.

In 1992, Schmoke combined Center City-Inner Harbor Associates, a group largely devoted to waterfront economic development, with the Baltimore Economic Development Co., a city-wide agency, to form BDC.

"We're going to ask people, employers, what they think has worked well and what hasn't worked well," said Riepe, whose investment firm has more than 1,000 employees downtown.

O'Malley said he also intends to focus on work-force eligibility issues.

"People need to know the ABCs of running a computer," O'Malley said. "People need to have the skills necessary to keep a job with today's employers."

The issue of public safety, that most prevalent of O'Malley issues, is also likely to play a role in the committee's work.

"They go hand in hand," said Bellamy, whose company has more than 2,000 employees citywide. "I don't think you can really begin to stabilize the business base without addressing crime."

"I think making the city a desirable place to live will really help its economy," said Caplan. "If we have a safe place to live and good schools, people will want to be here and work here."

The group, which plans to hold meetings over the next five Mondays, intends to submit a written report with strategies and suggestions to O'Malley by the end of the year.

"I want to identify the tough decisions that have to made up front," O'Malley said. "I want to make things happen, and not just talk about things."

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