Baltimore City Mayor Sheila Dixon can network 18 hours per day in Las Vegas this week at a retail real estate conference. But chatting up developers and retailers does not mean they will choose to build or to open stores in Baltimore.
Basic rules of supply and demand dictate those decisions be moderated by access to public subsidies. By all measurements, lending is drying up across the board, not just for home mortgages.
As real estate data and research firm Real Capital Analytics wrote in its recent report, “Large Deals and Big Buyers Scarce,” “A potential $55 billion to $80 billion of commercial mortgages is held by securitized lenders who cannot offload them in order to originate new loans. The public markets have seized up, cutting off a vital supply of capital to the commercial real estate markets.”
No amount of tax credits or infrastructure grants are going to make up the difference. And it?s not clear the city has much to offer.
Dixon?s spokesman, Sterling Clifford, said no public financing went into helping Ed Hale to secure another 31 acres for his mixed-use Canton Crossing project. That deal was announced last week and construction on the new section of the mixed-use project is supposed to start in 14 to 18 months, following a cleanup of the former oil refinery and terminal site by ExxonMobil.
But it?s unknown who is paying for the project or how the financing is structured as neither Hale nor partner Greenberg Gibbons Commercial have made the details of the deal public ? making it hard to know if Dixon should really be touting it as planned at the conference.
If she really wants to make Baltimore a showcase city, she should support fundamental changes to tax policy that will make the city attractive to residents who can afford the condos at Hale?s project: Cut property taxes.
She said recently she wants to freeze a planned 2-cent cut this year because of budget trouble. But what she really should be doing is advocating to cut the rate in half. That would bring the city?s rate in striking distance of rates of surrounding counties and make choosing Baltimore attractive for businesses and the highly educated workers they need who would benefit from a shorter and cheaper commute.
Right now the only group the city is good at attracting are nonprofits whose land grab over the past decades means individuals must share a bigger and bigger proportion of the cost of providing basic city services. Even that hasn?t worked, as the most recent statistics show the city losing 46,000 jobs from 2000 to 2005.
If she makes those changes, next year she would really have something to sell.
