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A big bet on Maryland Live

Viewers of HGTV or similar cable television fare have no doubt watched the various real estate "flipping" shows and observed how business decisions inevitably come down to this: Either invest as little as possible and milk what you can out of a property or aim high and invest more with the expectation of a much larger payoff.

So it is with commercial development decisions as well. Earlier this week, the Anne Arundel County Council made its choice to pay more, committing to a $22.5 million investment in bonds so that The Cordish Cos. might build a $150 million, 300-room, 17-story hotel and conference center adjacent to the Maryland Live casino at Arundel Mills.

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The 4-3 victory was hard won, but even opponents described it as a close call. As profitable as Maryland Live, the state's largest casino, has been, its place in the market is far from guaranteed. The $1.2 billion MGM National Harbor hotel and casino is little more than one year away from its opening day, and the self-styled destination resort outside Washington, D.C. — Maryland's sixth casino — is likely to prove a formidable competitor.

What is $22.5 million going to buy? First, county taxpayers should recognize it won't cost them a dime. The debt will be repaid as a TIF, or tax increment financing, which means that the money to pay back the bonds will come from the project itself — in the form of higher tax revenue. The new hotel is certain to raise Maryland Live's property values and profits, which in turn generates higher real property taxes, personal property taxes and hotel taxes, which help pay for the new hotel — call it the commercial development circle of life.

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In return, the $22.5 million gets plowed into infrastructure, such as construction of a 269-space parking garage and 650-space parking lot and the relocation of public utilities and the ring road. And here's the real payoff: The construction of the hotel is expected to create over 1,000 permanent jobs as well as 400-600 temporary construction jobs. So even if the property tax revenue falls short of expectations (and worst comes to worst, it takes longer than 30 years to pay back the bonds), the county will greatly benefit from the expansion.

As economic development gambles go, this is a pretty safe bet — and far better than anything available on the casino floor. Already, Maryland Live has demonstrated its staying power, having easily withstood the opening of the Horseshoe Casino in Baltimore 13 months ago. During the last fiscal year, Maryland Live produced $626.2 million in revenue at twice the $23-million-a-month pace the Horseshoe generates.

Indeed, the Maryland Live expansion ought to set off alarm bells at City Hall and Caesars, Horseshoe's operator. Last spring's unrest after the death of Freddie Gray was unhelpful to Baltimore's tourism industry, the Horseshoe included. How is the Horseshoe going to wow suburbanites who might otherwise drive to Maryland Live or MGM National Harbor? Other than tinkering with payouts and gaming tables or one-time events and promotions, there doesn't appear to be any investment plan along the lines of what Cordish is doing.

That's troubling, not because Baltimore needs to have Maryland's most prosperous casino but because there are serious consequences to losing market share. Under state law, the casinos generate substantial local aid — 5.5 percent of slots profits go to "community impact grants" for a variety of projects from street improvements to summer learning programs. The less money the casinos generate, the less available for local benefits. Baltimore's stake is even greater because of a profit-sharing arrangement, the proceeds of which go toward school construction and property tax relief.

That's not to suggest the Horseshoe hasn't been a success. Considering its circumstances, particularly the challenge posed by April's unrest and the recent rise in the city's homicide rate, the casino has fulfilled much of its promise, particularly in local hiring. But Maryland Live is proving a formidable competitor, and thanks to the Arundel council's actions, it is bound to become even more popular among gamblers as well as those who come to dine, see a show, or soon, attend a business meeting or conference. Like the home renovator, Caesars (and city government) will eventually have to decide whether keeping up with Maryland Live requires investing in the equivalent of a marble bathroom and chef's kitchen or just a coat of paint.

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