Council Wants Lower Threshold for Developer Tax Incentives

The City Council passed a resolution calling on its General Assembly delegation to create legislation changing state law to increase access to payment in lieu of taxes.

The City Council wants state lawmakers to change the law to allow smaller developments outside of designated urban renewal zones access to special tax incentives.

Payment in lieu of taxes, or PILOTs, allows the city to reduce real estate taxes on a project for a period of time, and accept a negotiated payment instead, making development in the city more attractive.  

These incentives have been criticized as a handout to developers to encourage building in all ready thriving parts of the city, such as Harbor East.

But on Thursday the council passed a resolution calling on state lawmakers to pass legislation allowing the city to grant the incentives to smaller neighborhood based projects.

Currently, to qualify for a payment in lieu of taxes, a project must be built in one of the city’s nine designated urban renewal zones, such as Camden Station, Harbor East and Market Center.

The projects also must meet certain financial requirements such as a private capital investment of $20 million for a hotel, a $10 million investment for a retail center and $5 million investment for a housing development, according to the Baltimore Development Corporations website.

The council's resolution is calling on state lawmakers to create a waiver process so the Board of Estimates can grant payment in lieu of taxes to projects that don't meet the current criteria under state law.

"This simple change to State law for deserving projects—ones that the City Council has approved through a resolution supporting the project—would allow Baltimore the flexibility it needs to support the most effective development projects city-wide, rather than just the largest," the resolution's sponsor Councilman Bill Henry wrote in an email to his colleagues. 

Councilwoman Mary Pat Clarke and Councilman Carl Stokes, who also represnt parts of North Baltimore, were cosponsors of the resolution.

Del. Shawn Z. Tarrant, District 40, said he thinks the city's delegation in Annapolis would be willing to consider creating legislation to make the changes sought by the City Council.

"I think that anytime you can do things on a smaller scale and help out individual neighborhoods we want to accomplish that," Tarrant said.

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Sean Tully December 08, 2012 at 04:30 PM
I am beginning to doubt that tax incentives to developers actually help to turn the city around. Yes, they do make certain areas more attractive but in the whole, Baltimore City has become less populated, more violent, and dirtier than ever, even with Harbor Place and other big projects. Maybe, just maybe, if we lower property taxes more people will be attracted to the city and, according to free market advocates, the businessess will follow. That's how Otterbein changed. They gave away many of those home for $1.00.
Baltimore Matt December 10, 2012 at 02:34 PM
We need tax breaks for everyone (through changing the tax rate) rather than giving tax breaks to a few. What happens when we give breaks to a few...they invest for a few years and the first year their rate is readjusted back to the standard tax rate, they stop investing in their old projects and move on (think about why all of the growth has moved from the Harbor to Harbor East as the properties become subject to the standard $2.26 per $100 rate). We need a reasonable tax rate for all property owners and incentives to encourage everyone to invest in their properties not just a few. I would like to see how this city would look after a decade of having a $.90 per $100 property tax rate (one penny lower than the rate for Anne Arundel County, currently the lowest rate in the metro area), I bet after some very tough years, the city government would be in a fiscal situation that is much more stable because of the growth in commercial and residential development that it would encourage (that will also bring job growth). It would also give lasting reason for businesses to commit themselves to Baltimore for the long term and not to leave once their taxes are readjusted (think about it, Baltimore currently is not a very desirable place for Fortune 500 companies to headquarter themselves because of the insecurity in the tax rates for property and person property...I think with real, lasting tax relief, that could change)
Joe December 10, 2012 at 05:02 PM
Why not just give EVERY developer who throws cash at the elected officials these tax breaks on ANY development? Who needs property tax collections when you have a city full of people with so many who pay no property or income taxes and the others are all much wealthier than the average, just tax them more.


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