Westside Looking to Move Forward, but with Major Property Tax Breaks

Westside Moves Forward, But Major Tax Breaks Sought

Not sure there is a more interesting invisible boundary around than the one caused by Fayette St. in the Westside neighborhood of downtown.  On the unit block of Eutaw St., just south of Fayette, there is incredible vibrancy highlighted by the Hippodrome, Alewife and other restaurants and apartment buildings.  But when you walk north crossing Fayette St., one is tempted to say, “What on Earth just happened?”

Everyman Theatre construction on south side of Fayette

Incredible vibrancy quickly becomes blight caused by the Super Block development that has spent the majority of this century stalled, the Howard St. Corridor that has never recovered from the walkability problems brought by the Light Rail, and the open-air drug market surrounding Lexington Market on Eutaw St. and the disinvestment surrounding it.  Mayor Rawlings-Blake has made it a huge priority to revitalize this crucial section of downtown Baltimore and appears willing to take whatever steps necessary so that the sides of Fayette Street aren’t a diagram of success vs. failure.

Just recently we saw the city and state kick University of Maryland’s methadone clinics out of Westside and over to SoWeBo in a measure to clean up drug activity in the area.  With the beautiful new Everyman Theatre nearing completion on the south side of Fayette St., the pressure is really on for the the northern portion of Fayette St. and beyond to kick it into gear.

Blight on the north side of Fayette

Baltimore Business Journal is reporting that Mayor Rawlings-Blake introduced a bill this week for a Payment in Lieu of Taxes (PILOT) for the $150 million Superblock development which will occupy an entire city block bordered by Fayette St. to the south, Howard St. to the west, Lexington St. to the north and Liberty St. to the east.  The PILOT would be applied to the 296-unit apartment building and 650-space parking structure, but not the extensive retail portion of the development.

The 20-year PILOT would give developers Lexington Square Partners a 95% tax break for 15 years and would gradually reduce to 80% at year 20.   So essentially while you are paying 2.26% in taxes, Lexington Square Partners will pay .113 % in property taxes for the next 15 years.

BBJ is also reporting that one block east of the Super Block, the Baltimore Development Corporation (BDC) is seeking a PILOT tax break for a 14-story 92-unit apartment building which would replace blighted buildings on the corner of Liberty St. and Fayette St.  The project will cost $20 million and will include 18 low income units because of a low income housing tax credit they are also seeking.

Potential Site for an Apartment Tower

We have heard the cries that downtown Baltimore desperately needs more housing units and we all know the lack of shopping options that Baltimore City has compared the surrounding counties.  So when you hear about these tax breaks it begs the question, is it worth awarding these tax breaks to gain 388 housing units, new shopping options and construction jobs?  Or is this one of the big causes of inflated property taxes in this city when major developments like Harbor East, Harbor Point and Westside are paying a percentage of what your average homeowner pays in property taxes?

Another question to ask is, does the city fall for a developer’s bluff every time?  Are the developers going to build these projects anyway and they just know they can save some money by telling the city and BDC that they can’t make it work without them?  If the tax breaks are needed, is it worth keeping the areas blighted until a developer is willing to pay the same in taxes that everyone else does?  It certainly is an interesting debate in a city where property taxes are an incredibly sensitive issue and in places like South Baltimore and Canton which have been referred to as “The ATM Machine.”

Here is my answer: It all boils down to that 2.26% property tax figure.  As long as that number is so high, developers are constantly going to look for ways around it and know that many before them have succeeded.  The City has got to find a way to get the property tax number around 1% like Philadelphia, DC and the suburbs. This will lead to a tremendous spike in investment into downtown as thousands more potential homeowners will be looking in Baltimore City because potential monthly mortgage payments will be lowered by hundreds of dollars. This will lead to many more developers looking for projects in Baltimore, and competition for these projects will eliminate the need for so many tax breaks.

What is yours?   

About the Author: Kevin Lynch

Founder and Publisher of SouthBmore.com, longtime resident of South Baltimore, and a graduate of Towson University. Diehard Ravens and O's fan, father of three, amateur pizza chef, skateboarder, and "bar food" foodie. Email me at Kevin@InceptMM.com and follow me on Twitter at @SoBoKevin.