Buy low, sell high. Isn?t that the motto of every rational investor?
From the looks of some of its deals, Baltimore City?s motto should be: Buy high and sell low to favored developers ? in secret.
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The Examiner found out, through a Maryland Public Information Act request, that a little-known city agency, the Industrial Development Association, has financed about $390 million of city projects since 1986 without bringing them before the City Council or voters for approval. One of those deals was the 2002 sale of the old Paramount Hotel on North Howard Street for $1 million to Bank of America?s development corporation ? after first buying it for $8.7 million from New York hotelier Ramesh K. Bhatia in 2001.
The IDA, run by three private citizens, two city employees and one City Council member, financed $6 million of the sale, which was questioned at the time because the city ended up paying $1.75 million more than it first offered. The first price did not include the value of a franchise (in the process of being revoked) from Comfort Inn or the price of avoiding court, depending on who speaks.
We call this a raw deal on both sides and would like to know how this project helped city taxpayers ? the ones who pay the highest property taxes in the state, never receive an 88 percent discount or inflated offers for property taken through eminent domain like the hotel, and who are still waiting for the West Side to blossom.
The secret financing given to Bank of America goes against the spirit of open government, if not the law, and basic principles of good governance that call for an open bidding process and full airing of the details of the project. The state?s highest court recently endorsed these principles in forcing the Baltimore Development Corp. ? a quasi-public organization in part funded by the city ? to adhere to open meetings laws and the Maryland Public Information Act. To circumvent those principles in the name of expediting deals is a flagrant abuse of power. Treasury officials say the IDA saves the city money because its bonds are cheaper to finance than those that go through the city. That?s a good thing ? but nowhere does it follow that the bond issues and the hundreds of millions spent on other projects should be completed without public review.
All city contracts ? including those made through the IDA and any other city-owned organization ? above $10,000 should be available online in an easily searchable database to make it easier for residents to see how our elected officials spend our money.
The state and a number of counties are in the process of launching Web sites with contract and grant information. At a time when the city openly worries about a tax shortfall, creating the database would show its commitment to open and fair government and sound fiscal policy.
