Harborplace developer never formally applied for downtown tax break

With one of the largest tax breaks in city history weeks away from finalization, the Baltimore Development Corp. has not released information about how or why it approved the incentive package for Harborplace.

Otis Rolley III, president and CEO of the city’s public-private economic development agency, said Monday that MCB Real Estate, Harborplace’s developer, submitted an application for the award. But on Wednesday, the city law department told The Banner in response to a records request that no applications exist.

The BDC’s board green-lit the tax break, known as a PILOT, or payment in lieu of taxes, in a closed-door session at the end of August.

The Board of Estimates, the city’s spending board, which is effectively controlled by the mayor, is expected to approve the tax break, though the timing is uncertain. The board will reconvene Oct. 21 and has the ability to call special meetings.

Once the tax break takes effect, MCB could avoid paying hundreds of millions of dollars in future property taxes as it remakes the Inner Harbor. Its plans call for demolishing the waterfront pavilions, reconfiguring the streetscape and building luxury residential towers, an office building, retail space and a new park. It’s unclear when the project — which was once estimated to cost $900 million — will break ground.

Alexandra Hughes, a spokesperson for MCB, declined to comment. BDC officials did not respond to requests for comment.

Tracy Lingo, president of a union representing Baltimore hospitality workers, said that while she is excited about the potentially transformational effects of the Harborplace redevelopment, she’s frustrated about the lack of transparency. She said she wants commitments from the developer about jobs and community benefits before the tax break is approved.

“We’re not going to get them after,” said Lingo, who spoke on behalf of With Us For Us, a coalition of left-leaning organizations in Baltimore. “You never got those commitments after.”

At the urging of Baltimore Mayor Brandon Scott and Rolley, state legislators gave the city the authority this spring to more easily award PILOTs for downtown projects. The idea was to spur development in the city’s struggling central business district, with officials specifically mentioning Harborplace.

At the time, Rolley called Harborplace an “ideal” candidate for the tax break. He said this new PILOT would turn what had been a nine- to 18-month process into a three- to nine-month process. He said Baltimore’s old system for awarding PILOTs — which required the sign-off of the City Council — was “too long and too convoluted.”

This new law routes the approval process away from the City Council and to the BDC. Final approval remains with the Board of Estimates. One of the law’s few requirements is an economic analysis of the project.

While the law does not require a formal application for the tax break, BDC officials said as early as March that there would be one.

“Our intention is to be really clear in terms of the rules of engagement going forward,” Rolley said.

The General Assembly passed the law creating the PILOT on April 10, and it went into effect two weeks later.

That month, Scott and Rolley touted it as a “big win” for Baltimore.

“You heard from the very beginning of Harborplace that in order for this to move forward, it was a desire for a pretty substantial public subsidy,” Rolley said. “The PILOT will advance that.”

The BDC held an information session in July for developers interested in the tax break.

“The PILOT application is officially going to open on the 29th (of July). Around that time, you’ll see some links on our website,” said Jeremy Watson, BDC’s chief real estate officer. “We’re going to do this all digital, so there will be no paper submissions. We’ll have an intake form with which you can submit your information, your models.”

On Aug. 28, the BDC gave preliminary approval for tax breaks on two projects: a $300 million “college town” development by Wexford Science & Technology on the campus of the University of Maryland, Baltimore, and the redevelopment of Harborplace.

The BDC’s board deliberated on the tax breaks in a closed session. It’s unclear what was discussed. The Banner’s request for meeting minutes was denied.

Rolley said Monday that the BDC formalized its application process for the tax break in late September — after MCB and Wexford applied — and no one has submitted since.

The 17-page application requires detailed information on financing, timelines, workforce diversity and feasibility, as well as more than a dozen attachments.

“It is not an easy process. There is a lot of due diligence that has to occur,” Rolley said. “As part of the application process, there’s a lot of work that has to be done.”