Sep 30, 2013
Baltimore City Council just gave final approval to the third special finance deal for Harbor Point, a large development soon to be built near the harbor.
Harbor Point will receive 107 million dollars in tax increment financing (TIF), a way in which the city sells bonds and goes into debt to pay for infrastructure for a project.
Harbor Point has already received another special deal worth 88 million dollars, because the project is in an “enterprise zone,” as well as 25 million dollars more because the project will be built on a “brownfields area,” a polluted site.
All together, taxpayers of Baltimore may end up contributing about 400 million dollars out of the billion dollar-plus-cost for Harbor Point’s new office buildings, apartments and retail space.
Politicians have spent decades promising in every city and state that use of TIFs and “enterprise zones” for development will help the city.
Harbor Point shows pretty well how these deals help the developer, Michael Beatty. With the TIF and enterprise zone status he arranged, Harbor Point delays paying taxes on the value of the property for the next 10 to 12 years.
Beatty learned about such deals from one of Baltimore’s master developers, John Paterakis. Beatty was his vice-president before splitting off as president of Harbor Point, when Paterakis got his own special deals from the city. For example, he owns the Marriott Waterfront, close to the new Harbor Point. Baltimore officials gave him a 25-year deal to pay $1 per year in property taxes. Yes, $1 per year on this very valuable property on the waterfront!
Baltimore’s politicians parrot what the developers claim about creating jobs – supposedly 6,000 permanent ones at Harbor Point. In fact, of this 6,000 Beatty counts 900 employees of Morgan Stanley and 1,400 from Exelon, who are simply moving from another area of downtown to the new waterfront.
Such tricks and deals are carried out around the country. An organization called “Good Jobs First” recently studied the whole country for these multi-million-dollar deals. Its report said states and cities have given away 64 billion dollars as subsidies to the largest corporations in the country.
Baltimore may only have two or three mega-deals, but New York has provided eleven billion dollars to corporations located there. The state of Michigan has done seven billion dollars’ worth of such corporate deals.
While politicians today say they cannot find money needed for schools, health care, or other services, they always seem to find money to line developers’ pockets. Politicians and developers – twin vampires, with fangs stuck deep in the taxpayers’ necks!