Did Baltimore’s development arm green-light new Harborplace tax breaks in secret? What to know.

Two weeks ago, on Aug. 28, the Baltimore Development Corp. board met and gave preliminary approvals to tax breaks for three major planned development projects, including Harborplace.

Public acknowledgment of the meeting came from a news release the development corporation sent the next week. Details of what was discussed at the meeting, the valuation of the tax breaks and other key information have been scant since. Now, local news organizations are accusing the city’s development arm of meeting in secret and violating the state open-meeting law.

There’s a lot going on here, but understanding it is important as the city is poised to approve these tax incentives and has streamlined the process for future tax breaks. Here’s a guide to help you tell up from down.

What tax breaks is the city considering?

The city is considering two kinds of tax breaks for three different projects. The most notable is Harborplace, the long-awaited and much-debated redevelopment of the Inner Harbor pavilions.

MCB Real Estate, led by Baltimore’s own P. David Bramble, has a $900 million plan to raze the pavilions and build, among other things, two luxury apartment towers accompanied by restaurants, retail and offices.

The Baltimore Development Corp. recommended that Harborplace receive a type of tax incentive known as payment in lieu of taxes, or PILOT.

Wait, what’s a PILOT?

Great question. A PILOT is a mechanism by which property owners pay an annual fee to the city that is usually far less than their expected property tax bill. Baltimore has the highest property tax rate in Maryland, and developers usually seek PILOTs to offset what would be a really high bill on their fancy new buildings.

Earlier this year, Baltimore Mayor Brandon Scott and development corporation CEO Otis Rolley III went to Annapolis and convinced the state legislature to give the city the ability to easily award more PILOTs for downtown projects. The idea was to spur development in the city’s struggling downtown, but the legislation was always intended to benefit Harborplace.

Under that legislation, a downtown property’s tax bill could be frozen at its current valuation (tax bills are tied to a property’s value) for up to 25 years. Property records show that the pavilions are jointly assessed at about $25 million, which should mean an annual property tax bill of around $562,000. The new towers would be worth far more.

The exact mechanism of every PILOT varies, and we don’t know what the development corporation recommended for any of the three projects.

You said there were other tax incentives?

The development corporation also gave preliminary approval to a PILOT for a $160 million University of Maryland, Baltimore project on West Lexington Avenue. In a mixed-use project, the university is looking to build more housing and retail.

Across town, the corporation green-lit a different kind of incentive called a tax increment finance district, or TIF, for a 31-acre site near Greektown. TIFs divert property taxes within a defined area to pay for various project costs, usually public infrastructure improvement.

Cross Street Partners, led by Baltimore developer Bill Struever, has a $600 million plan to redevelop the former Crown, Cork & Seal industrial park. Some of the old factory buildings are occupied by artists and craftspeople, and City Councilman Mark Parker who represents that area said the project would be sure to find a way to keep them in the area.

Hold on, hold on. What are these incentives worth?

This is perhaps the most important question at hand. Any time a company or developer receives a tax incentive, it means that the city is sacrificing near-term revenue from the project in the hope for long-term gain. . Developers and public officials often say these incentives are necessary to make projects happen, lest businesses choose to go elsewhere.

But in the case of these three developments, no one in officialdom is saying how much the incentives are worth. Rolley, the development corporation CEO, told the Baltimore Business Journal that information would come out later, once the incentives for Harborplace and the West Lexington Avenue project were brought before the city spending board for final approval, which is required by state law.

He also declined to share those figures with The Banner.

The lack of information about the valuation of the incentives is only part of the potential transparency problems about this process.

A secret meeting?

So, this is where it gets more complicated. When government bodies meet, they have to advertise their meeting ahead of time, including what’s up for discussion, and let the public attend. It doesn’t appear that the Baltimore Development Corp. did that for its Aug. 28 meeting — no notice or agenda was posted online.

The BDC did advertise a meeting for earlier that week, on Aug. 25. A BDC spokesperson, Tamarah Lawrence, wrote in an email that the board announced during the Aug. 25 meeting that it would meet again on Aug. 28. Discussions about the incentives took place both days in closed session.

Lawrence initially described the second meeting as a reconvening, which would make the second meeting a continuation of the first. That’s a key distinction which could be of importance in the near future.

The news organizations calling foul

Given the size and prominence of these projects and the less-than-fully transparent nature of the development corporation’s meeting to give the first round of OKs for tax incentives, some local news organizations are pushing back.

The Baltimore Business Journal and Baltimore Brew wrote a letter to Maryland’s open-meetings watchdog asking that body to weigh in.

“We believe that the lack of notification on an agenda and then the secretive nature of holding meetings and closing meetings by this public agency is a violation of the state’s Open Meetings Law,” editors for both news organizations wrote.

Rolley, the corporation CEO, said in a later statement that the organization would respond to the news organizations’ complaints “through the appropriate process.”

“We take our responsibility to the public seriously and are committed to compliance with Maryland’s Open Meetings Act,” Rolley said.

If the watchdog takes up the issue and rules in favor of the news organizations, it is possible that the development corporation would have to redo its meeting and approve the incentives all over again. If that happens, it could set the entire process back weeks, if not months, because there are more steps before the tax incentives become reality.

What are those next steps?

The development corporation’s approval for all three incentives is just the first step. In the case of the PILOTs, Baltimore’s Board of Estimates, the body that approves city spending, has to sign off.

That appears like a foregone conclusion, considering that Scott controls the majority of the board and, in the news release last month announcing the incentives, voiced support for them.

However, those PILOTs haven’t hit the agenda for next week’s meeting. It’s possible Scott or one of his appointees to the board could add them at the last minute, but doing so could cause a bit of a kerfuffle with the other two members. The board meets next in October.

In any instance, the public will know how much the tax breaks are worth when the board considers them.

In the case of the Crown Cork & Seal TIF, the City Council will have to approve legislation permitting it. Parker, the councilman who represents that area, has said he plans to introduce the required bill before the end of the year.

In an interview, Parker said the TIF was the impetus for “something great happening” versus large portions of the 31-acre site continuing to sit vacant.

Baltimore Banner reporter Emily Opilo contributed to this article.