The Baltimore Development Corporation (BDC) today awarded a sweeping tax break to P. David Bramble’s real estate company to reconfigure Baltimore’s Inner Harbor with commercial, retail and high-rise apartment buildings.

The designation of Harborplace as a recipient of a Payment in Lieu of Taxes (PILOT) under new Downtown RISE legislation could potentially reduce the project’s property taxes by 95% for as long as 25 years.

In 1997, the Kurt Schmoke administration approved a PILOT agreement that resulted in a $1 annual property tax bill for the 750-room Marriott Hotel at Harbor East owned by the late bakery-magnate-turned developer John Paterakis Sr.

Today’s press release from BDC does not provide any financial details about the tax break except to say that “the Harborplace PILOT would support approximately $850 million redevelopment” at the Inner Harbor by Bramble’s MCB Real Estate.

So far, Bramble has not announced how he plans to finance the venture, which requires about $400 million in public money for roadway and waterfront promenade improvements.

Authorized by the Maryland General Assembly, the Downtown RISE legislation extends the city’s existing authority to grant PILOTs for private developments to the downtown area.

The program is structured around the “but for” principle that private investment would not be forthcoming without tax write-offs. The new PILOT authorization does not require a developer to meet jobs or investment capital benchmarks, as required by existing law.

The agreement would require payment of only 5% of assessed property taxes on new commercial and multifamily construction. That could translate into many millions of dollars of yearly tax savings for MCB.

Today’s announcement said the West Lexington Street Corridor will also be eligible for PILOT tax breaks. The University of Maryland has proposed a $300 million “college town” there, featuring 404 residential units and about 16,100 square feet of ground-floor retail.

The new legislation gives BDC the power to negotiate PILOTS in the downtown area without input from city agencies or the public – and without final approval by the Baltimore City Council.

Instead, the tax breaks will only require a nod from the Board of Estimates – where three of the five votes are controlled by Mayor Brandon Scott.

The Harborplace tax breaks will only require a nod from the Board of Estimates whose votes are controlled by the mayor.

Councilman Zac Blanchard, whose district includes Harborplace, told The Brew that he was surprised by today’s announcement.

“I was not involved with this agreement. I knew discussions were happening, but I did not know they were this far along,” he explained. He said BDC will be briefing him on the terms.

The councilman has praised Bramble’s plan as a way to get people back to downtown and said he believes tax breaks are needed to jump-start the project.

He said he was more skeptical about why UM Baltimore, a public institution, would need PILOT subsidies for its proposed college town.

Still Missing: Private Financing

So far, MCB has not announced any private financing – an estimated $600 million or more – to replace the two aging Harborplace pavilions at Pratt and Light streets with four new structures, including two sprawling residential towers 32 and 35 stories high.

The necessary building permits are currently under review by the city. Preliminary infrastructure work and demolition of the two Harborplace pavilions are expected to get underway later this fall.

BDC also announced it would establish the Crown Cork & Seal TIF (Tax Increment Financing) District to advance the redevelopment of 31 acres of industrial land off Eastern Avenue between Highlandtown and Greektown.

Bill Struever’s Cross Street Partners is proposing to transform the historic factory site into a mixed-use campus supporting 700 apartment units, 300 businesses and 750 permanent jobs.

Past Tax Breaks

Today’s announcement follows City Hall’s longtime reliance on highly generous tax incentives to unlock private investment, activate underutilized properties and, according to city officials, create economic opportunity and employment.

In 2016, the City Council, including then-Councilman Brandon Scott, approved a $660 million TIF bond package to fund infrastructure for the Port Covington (now Baltimore Peninsula) development spearheaded by Under Armour’s Kevin Plank.

In 2020, the city released a $148 million tranche of TIF bonds to finance the construction of roads and sewers for the first phase of the project.

With that phase now complete, Plank’s attempt to create a multi-billion-dollar “Dubai on the Patapsco,” as he once described it, has stalled and the businessman has sold off his interests.

“This is the kind of progress that our residents deserve”  – Mayor Brandon Scott.

Today the BDC quoted Mayor Scott as hailing the latest tax subsidies as major steps to “drive Baltimore’s Renaissance forward.”

“Together with BDC and our communities, we are working to create jobs, expand opportunity, strengthen our tax base, and deliver investments that benefit every single Baltimorean. This is the kind of progress that our residents deserve,” Scott said.

BDC President Otis Rolley III said the downtown PILOT program demonstrates what is possible when public officials identify a barrier to private investment, then build the right legislative and administrative tools to unleash the city’s potential.

“Working with our city and state partners, BDC helped shape the legislation, built the infrastructure to implement it and is now advancing the first two PILOTs. The result is investment taking shape, projects moving forward and more opportunity for Baltimore,” Rolley said.