We do not begrudge developers for asking for financing from the city. It is their right. And with the city?s onerous tax structure making it more expensive to do business here,tax breaks and other types of subsidies bolster their argument for them.
But why is it that only corporations ? and nonprofits ? receive breaks? Why not the average resident?
One of the latest developers asking for help is Patrick Turner. He wants $90 million in financing ?or 60 percent of the estimated cost of completing the project ? from the city to create Westport Waterfront. He claims it will be a $1.4 billion, 54-acre residential, retail and office development along the Patapsco River?s Middle Branch.
It holds the potential to revitalize a run-down neighborhood by attracting new businesses and residents much like Harbor East did near the Inner Harbor.
But with the real estate market cooling or getting back to normal, depending on who you ask, the city would be taking a big risk to finance the project through Tax Increment Financing. TIFs let the city borrow money to assist developers based on projected tax revenues from the project.
If it doesn?t turn out as promised, taxpayers will be left to finance the deal, much as they pay for the massive institutional presence in the city. About 29 percent of the city?s assessable property base is tax-exempt ? the highest percentage in the state. The city could not provide an estimate of how much the city spends to provide services for nonprofits versus how much nonprofits pay through the energy and telecommunications tax. But the taxes bring in only a small fraction of what the city would receive if nonprofits paid property taxes.
As we have mentioned before, our medical centers are some of the finest in the world and bring prestige to the city. But it doesn?t remove the fact that city homeowners and businesses must subsidize them. Property taxes double those of surrounding areas deter residents and businesses from moving to the city, lure more nonprofits ? who are exempt from paying them, and encourage those already here to expand. It?s a vicious fiscal cycle.
Few mechanisms exist for city residents to apply for breaks. Nor should there be. Can you imagine how many applications would flood the city? That?s why the best way to break the cycle is to lower property taxes for all to levels of surrounding counties. This could be done over time so the city treasury does not take a hit and in conjunction with temporary higher payments from nonprofits to make up the difference as businesses and newcomers decide to make Baltimore home.
Baltimore homeowners, the backbone of Baltimore?s revitalizing neighborhoods, must not be punished for their good deeds. Nor should entrepreneurs.
Rational city taxes would remove the need for breaks and incentives to grow Baltimore.
