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Yet another dividing line in Baltimore: property taxes

Most of us have known for a long time that there are really two Baltimores, and we think we know the dividing lines that perpetuate this tale of two cities. Severe economic inequality, racial tension, disparate access to basic services — like food, transportation, health care and affordable housing — all separate the two Baltimores and keep them apart. But an effective strategy for reuniting Baltimore may rest in an understanding of another crucial dividing line: unequal treatment within the city's unfair property tax structure.

There is a "Property Tax Privileged" Baltimore and a "Property Tax Punished" Baltimore. The cozy relationship between our civic leaders and rich, politically connected developers is only a small part of the story. Many of us realize that in "Property Tax Privileged" Baltimore, generous property tax breaks (in a variety of forms) are granted to developers in favored neighborhoods — often downtown or near the waterfront. In the meantime, most Baltimoreans — those in "Property Tax Punished" Baltimore — are stuck with exorbitant property tax rates that are roughly double those of every Maryland county. They seem to have been forgotten by the city's narrow, exclusive and imbalanced approach to development.

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But the story and the dividing line run significantly deeper. Wealthy developers with an inside track are not the only members of "Property Tax Privileged" Baltimore. There many other inequities in our property tax structure, including a surprising one that intertwines with Baltimore's racial divide.

The Baltimore Neighborhood Indicators Alliance-Jacob France Institute of the University of Baltimore makes a variety of Baltimore-related open-source data available online. The data (available here: http://bniajfi.org) includes information about the distribution of Baltimore's historic tax credits for the city's 55 community statistical areas.

The historic tax credit is a property tax incentive program offered to property owners in select neighborhoods designated as "historic." Property owners who meet certain requirements and jump through certain bureaucratic hoops are able to save thousands of dollars yearly on their property tax bills over a 10-year period. The city's website boasts that "the tax credit has generated over $560,000,000 of investment in Baltimore's Historic landmarks and districts."

But according to my analysis of the open-source BNIA data, the historic tax credits are much more likely to exist in majority non-African American communities than majority African-American ones. The most recent year for which the data are available is 2013.

Thirty-six of Baltimore's 55 communities are majority African-American. But residential properties in the 19 majority non-African American communities are five times more likely to receive a historic tax credit. The impact is even more disparate when comparing the 15 highest percentage black neighborhoods to the 15 lowest percentage black ones. Of the 15 most African-American communities, 11 receive no historic tax credits. But only one of the 15 least African-American communities can say the same. And residential properties in the 15 least black areas are nearly 27 times more likely to get a credit than residential properties in the 15 most black areas. Continuing to the demographic extremes, only one of the five most African-American communities receives any historic tax credit at all, while all five of the least black communities receive many. Residential properties in the five least black communities are more than 214 times more likely to get a credit than properties in the five most African-American parts of Baltimore.

To be fair, it is doubtful that anyone in city government has set out to make the historic tax credit discriminatory, but it clearly has a disparate impact against African-American neighborhoods in a city where 64 percent of the residents are African-American. This is especially frustrating when one considers the severe lack of investment in "Property Tax Punished" Baltimore and that granting a historic tax credits cost the city nothing. It is a credit that reduces future property tax increases that result from desirable development that enhances a property's value. Baltimore City loses no already established property tax revenue that already comes from the property in its pre-developed state.

So many of the dividing lines between the two Baltimores have proven very difficult to eliminate. But a lopsided property tax structure that includes unequally distributed historic tax credits is relatively easy to rebalance. How often can we write a law that erases a dividing line? It is time that Baltimore's elected officials do away with "Tax Punished Baltimore" by building an equitable tax structure that makes all Baltimoreans "Tax Privileged."

Louis Miserendino is director of the McMullen Scholars Program at Calvert Hall College High School and is a visiting fellow at the Maryland Public Policy Institute. His email is louismiserendino@gmail.com.

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