To keep Legg Mason in Baltimore in the style it is accustomed to and accommodate an additional 200 to 300 of its employees, Mayor Sheila Dixon is willing to forgive about $33 million in taxes for the developer of a proposed waterside office tower complex that will house the money management firm. Without the assistance, city officials claim the project won't go forward. How's that for a little pressure?
Let's be clear: There's only one reason to support this aid package, and that's to keep Legg Mason and its employees, who earn on average $111,000, in Baltimore, and that's an investment in the city's growth and future.
It may be hard to convince the workaday Baltimorean that a developer as successful as bakery magnate John Paterakis and his H&S; Properties Development Corp. needs the city's help in building yet another waterfront project. Or that one of the top 10 money managers in the world couldn't afford whatever rent the developer wanted to charge without city aid.
But Legg's decision to relocate from its downtown skyscraper to the east side of the harbor will deepen the redevelopment there, and the city says the overall project will generate about $162 million in an assortment of taxes over the 25-year term of the financial aid package, a 30 percent rate of return on its investment. That, of course, depends on the project's success.
The aid package provides tax relief on an underground parking garage that will be shared by Legg Mason and an adjoining Four Seasons Hotel and condo tower. The developer would pay full taxes on the land but only 5 percent of estimated taxes on the garage for 25 years and on the office building for the 15-year term of the lease.
The proposal calls for the city and the developer to reach a profit-sharing agreement, and the aid is contingent on a lease agreement with Legg Mason, disclosure of all owners in the project, a prohibition on a sale of the project before it is completed and a commitment to use minority businesses and hire city residents first. Those conditions make it less of a giveaway and more of an in-kind contribution.
Still, as the City Council reviews the aid package, it should strengthen the profit-sharing agreement in the city's favor - it's only fair.