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Brodie “hurt” and “disappointed” by Baltimore Development Corp.’s critics

Amid mounting criticism and whispers that his days in the job are numbered, Jay Brodie defends the BDC.

brodie

Jay Brodie stands behind a scale model of the Inner Harbor he was instrumental in building.

Photo by: Mark Reutter

When Chesapeake Systems, a computer-support company, opened a new office in Hampden with 22 employees in September, M.J. “Jay” Brodie told the owners not to expect a laudatory article in the media.

“You guys are not big. You’re not in downtown. You’re not in a scandal,” the president of the Baltimore Development Corp. (BDC) recalls saying. “But you are most important to Baltimore. You are the future of Baltimore.”

In much the same way, Brodie says he doesn’t expect the media to report on the BDC’s many successes in spurring economic growth and jobs across the city. But what has disturbed him, he says, is the “vitriol” now directed against the agency.

The BDC came under attack during the mayoral campaign for neglecting city neighborhoods and handing out “backdoor bailouts” to rich developers like David Cordish. In July, picketers gathered in the lobby of the agency’s Charles Center offices to voice their unhappiness with the low-wage jobs that the tourism industry promoted by the agency have spawned in the Inner Harbor.

Another protest is scheduled for 5 p.m. today at 36 South Charles Street sponsored by a group called “Another BDC is Possible.”

Mum on his Own Future

In short, these are tough days for Jay Brodie. He had anticipated that his hard work in helping to create Baltimore’s Harbor East and rounding out the Inner Harbor would bring the kind of adulation that was showered on the late Walter Sondheim (chairman of Charles Center-Inner Harbor Management) and William Donald Schaefer (four-term Baltimore mayor) in the 1980s.

But times have changed, and tempers have flared over the purpose, utility and actual benefits that the city gets from the BDC. There is mounting speculation that Mayor Stephanie Rawlings-Blake will replace Brodie as she undertakes a promised reorganization of the agency following her re-election.

During a series of interviews, the perpetually smiling 75-year-old – who entered city government in 1964 and became head of the BDC in 1996 after 12 years of working in Washington – wouldn’t talk about his own future other than to say that he “serves at the pleasure of the mayor.”

His main interest, he says, is to set the record straight about the agency, its mission, and its plans for the future.

Reviewing the criticism of the BDC, Brodie has come to the conclusion that there are two kinds of people attacking the agency. “People who don’t know” and “People who know better but nevertheless said things that the evidence shows is untrue.”

He added: “I tend to be the face of BDC, and some of [the criticism] has become personal. Nobody likes that, it can hurt. But does one understand it? Yes. Still, I am disappointed that people did not come in and talk to me before they made allegations that were not supported by the facts.”

What the BDC Does

The BDC is a 501(c)3 non-profit corporation on contract with the city of Baltimore to act as its economic development representative.

The BDC has a wide range of power across the city as the administrators of empowerment and enterprise zones that provide tax credits to businesses in order to stimulate investment and employment. (Courtesy of BDC)

The BDC has a wide range of power across the city as the administrators of empowerment and enterprise zones that provide tax credits to businesses in order to stimulate private investment and employment. (Courtesy of BDC)

It was formed in 1991 by a merger of three quasi-government entities – Charles Center-Inner Harbor Management, Howard Street Market Place and the Baltimore Economic Development Corp.

Many people are aware that the BDC has significant power over city-owned land slated for redevelopment in the Inner Harbor and Harbor East.

But the agency is also responsible for the city’s Westside Initiative, consisting of 100 square blocks anchored along Howard and Paca streets; the Russell Street and Washington Blvd. corridors; and city-owned industrial and retail properties in just about every neighborhood.

It holds additional powers administering the Enterprise Tax Credit and Empowerment zones, which encompass large swaths of the city below North Ave. These zones provide property and employment tax credits to eligible businesses, including employers located along Reisterstown Road, York Road, Harford Road and Belair Road.

What’s more, the agency runs the city’s Foreign Trade Zone. This consists of 2 million square feet of import-tax-free industrial and warehouse space in Locust Point, Fairfield, Canton, Orangeville and Holabird.

Blocking and Tackling

“I don’t spent my days giving out tax breaks to Mr. Paterakis,” Brodie said, referring to the 1997 deal brokered by the BDC that saved John Paterakis, majority owner of the Marriott Waterfront Hotel, about $90 million in property taxes through 2022.

Leaflets critical of the agency have been posted around Baltimore by "Another BDC is Possible." (Photo by Mark Reutter)

Leaflets critical of the agency have been posted by "Another BDC is Possible." (Photo by Mark Reutter)

In fact, he has a statistic – 94% – which he says is the proportion of projects handled by the BDC that are not located in the downtown.

“It’s not glamorous,” Brodie says of the BDC’s daily work in neighborhoods and administering the foreign trade zone. “It’s blocking and tackling, not long passes. It’s outreach. It’s hand holding. It’s helping hundreds of small and medium-sized businesses expand. It’s finding better places [for companies] so they can remain in the city.”

In the case of Chesapeake Systems, Brodie said, the BDC “helped with a zoning change and with building permits” that allowed the company to move from Mill Centre into the fire-damaged Mt. Vernon United Methodist Church in Hampden. The move allowed the company to expand and open its first retail center.

Attracting and Retaining 58,000 Jobs

The BDC keeps meticulous count of the jobs that it retains or attracts. Since Brodie became president in 1996, the agency claims to have retained or attracted an “estimated” – and it’s a mighty precise estimate – 58,725 jobs in 993 businesses, “resulting in a capital investment of $3.2 billion.”

If correct, that means that the BDC was responsible for 21% of the 275,608 non-government jobs in the city in 2009, according to the U.S. Census Bureau.

Since the city lost more than 28,000 jobs between 2000 and 2009, the BDC’s efforts have either been a godsend or a weak response to the city’s overall employment picture, depending on one’s viewpoint. The head of the BDC takes the half-full rather than half-empty position.

The job numbers tell only part of the story, Brodie says. One of the agency’s greatest successes has been tourism – the part of the BDC’s portfolio targeted for criticism and picketing last July.

By assisting in the creation of many downtown hotel projects – such as the Inner Harbor Marriott, Hampton Inn & Suites, Marriott Residence Inn and city-financed Hilton Baltimore – the BDC stoked and supported the tourist trade that now counts as one of the city’s largest “industries.”

In addition, tax credits and loans engineered by the BDC led to a major turnaround of two important neighborhood shopping districts, Mondawmin Mall and Belvedere Square.

“We start a wave action by taking a risk” on a project or a developer, Brodie explains.

Tax Breaks to Developers

In practice, this means using tax breaks to attract new capital.

The BDC typically negotiates tax breaks for developers through two mechanisms – PILOTs (Payments in Lieu of Taxes) and TIFs (Tax Increment Financing).

PILOTs are the most controversial method. A developer pays the original base property tax (usually minimal because the land has been cleared of property), plus 5% of the assessed value of the improved property. This results in 95% tax forgiveness.

In the case of the Marriott Waterfront Hotel, the BDC entered into a 25-year PILOT with Harbor East Ltd., a Paterakis company. Last year, the company paid $49,566 in property taxes to the city and was excused from $3,374,525 in taxes under the PILOT.

Brodie emphasizes that PILOTs and TIFs were established by state law, and the BDC only administers the law with final approval for all tax breaks coming from the mayor and the Board of Estimates.

His longstanding principle for awarding tax breaks is the “but for” rule, meaning that a project would not be built “but for” the use of the tax credit. “This is always a judgment call,” Brodie cautioned, but it comes as a result of a “lot of study” and “process” by both his agency and other city officials.

What’s more, all 13 PILOTs awarded under his tenure were approved by one of the three mayors he has worked under prior to Rawlings-Blake – Kurt Schmoke, Martin O’Malley and Sheila Dixon.

Meetings with Local Moguls

To get a sense of Brodie’s own schedule and priorities, we asked what business groups he met with in August and September. A meticulous record keeper, he gave us a list of 18 parties.

Nearly all involved key city development projects. He held meetings with David Cordish and the Cordish Co. (a developer with stakes at the Inner Harbor Power Plant and Westside urban renewal), Forest City Enterprises (prime developer of the East Baltimore housing project north of the Hopkins Medical Complex), Michael Beatty (Paterakis’ real estate chief), Mark Attman of Attman’s Delicatessen, Doug Schmidt, a warehouse owner, and J. Scott Plank, vice president of business development for Under Armour (the sports-wear manufacturer seeking to expand with a TIF district in Locust Point).

He was also involved in prodding along developments that have faced various and at times lengthy delays. Among them: R. Richard Walker’s 25th Street Station (the Walmart project in Remington), “Superblock” (the Westside mixed-used project recently given two extensions by the Board of Estimates), A&R Development (trying to build a supermarket at Oldtown Mall), and Mark Sapperstein’s City Center (which has scaled back its proposed luxury hotel tower).

Brodie speaks to reporters last July about the PILOT tax breaks given to the Marriott Waterfront and other Harbor East buildings. (Photo by Mark Reutter)

Brodie speaks last July about the PILOT tax breaks given to the Marriott Waterfront and other Harbor East buildings. (Photo by Mark Reutter)

Small Businesses and Cultural Tourism

The son of a small shopkeeper in East Baltimore and an architect by training (with degrees from the University of Virginia and Rice University), Brodie is very comfortable talking about the future he sees for Baltimore.

That future will be driven by small businesses in the fields of medicine and biotechnology – many nurtured, he adds proudly, by the Emerging Technology Center run by the BDC.

“It won’t be Bethlehem Steel, Western Electric or other smokestacks,” he says, clicking off the names of companies that have disappeared from the city’s landscape and would scarcely be known by many of the tech entrepreneurs Brodie now describes as the city’s best hope.

In addition to start-ups, Brodie sees Baltimore as a center for warehousing and distribution, a regional hub for financial service companies and a tourist destination that – with the help of BDC tax credits and grants – would include vibrant “cultural tourism” along lower Pennsylvania Avenue and other historic black neighborhoods.

“Call me a dreamer,” Brodie said with his trademark cheerful cackle. “I’m not the only one. Think of what Baltimore would be like today without the Inner Harbor, without Harbor East, without the Marriott. It takes imagination and persistence to work through the process and get results. Yes it does.”

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  • Rick

    Transparency within his “quasi-public” agency is the issue here. If Brodie effectively addresses that, much of the criticism will subside.

  • http://profiles.google.com/daniel.lory.ewald Daniel E

    I’m “hurt” and “disappointed” that Brodie expects the media to be cheering for him. If that pep talk he gave to Chesapeake Systems is his usual spiel for companies not along the water front or those donating to the mayor, hard to shake the image Brodie only works with the rich and powerful. 

    Get off your butt and trumpet the launch of any small business the BDC helps launch. They need the publicity more than those companies that give the BDC a bad name.

  • http://twitter.com/bosconet p johnson

    I don’t understand, if he believes that small business will drive the future of Baltimore why does the BDC advocate so much for tax breaks for large businesses that are ultimately paid for by small business and the residents of Baltimore City.  And why isn’t he (and the BDC) working to make it easier for people to open a business in the city?

  • http://twitter.com/bosconet p johnson

    I don’t understand, if he believes that small business will drive the future of Baltimore why does the BDC advocate so much for tax breaks for large businesses that are ultimately paid for by small business and the residents of Baltimore City.  And why isn’t he (and the BDC) working to make it easier for people to open a business in the city?

  • Ktrueheart

    PiLoTs and TIF for the rich, but how about a little profit sharing for the citizens Mr. Brody!  I guess you can’t when your mission statement says “advocating for the interests of employers”, not the citizens of BMore … We see the hypocracy and know that you don’t work in our best interests … it shows!

  • Tim Pula

    TIF’s are not tax breaks.   They are a mechanism for taking a portion of the future tax revenue generated by a development and using it to pay for the “public” infrastructure necessary for that development, without those funds coming out of the City’s general fund.  The owner still pays the full tax rate everyone else pays, it’s just that 85% to 90% of the tax revenue is directed at infrastructure rather than into the City’s general fund coffers.

    Before you complain about this, keep in mind that virtually every piece of road, sidewalk, water and waste water pipe, and conduits that carry various services to your home or place of employment was paid for by government – mostly directly out of the general fund.  So if you don’t like that BDC is using TIF’s to fund new infrastructure than you should give up your right to use public infrastructure that was funded by all of us tax payers.

    • Gerald Neily

      That sounds great in theory, but outside Baltimore City, much infrastructure to support projects is indeed paid for by the developers. And proposals in the city have often called for the use of TIF funds in other ways, such as the proposal to convert the Baltimore Arena site into a park. The TIF would be paid for elsewhere, not by the project in question. 

      • Marc

        Yup, they’re called “impact fees.”

        • Tim Pula

          Where impact fees exist in the State of Maryland they are in the context of low real estate taxes.  The last thing Baltimore needs, on top of high taxes is impact fees. 

          • Gerald Neily

            Yes, I agree that TIF has its place in funding infrastructure to support the development, as long as it isn’t abused. And yes, Baltimore’s tax rate is a severe disadvantage in competing with the suburbs. Creating a downtown “TIF district” to fund a park would be an example of an abuse. 

          • Marc

            Good point, but what if B’more had a tax climate that was competitive with surrounding areas? Perhaps TIFs would then be unnecessary, and impact fees on top of low taxes wouldn’t really be a deterrent to development (the scenario in many greenfield areas).

            Not only would the competitive taxes help out the big guys who were previously lured by TIFs (hotels, big-name businesses, etc.), they’d also help the usually-discouraged homeowners and small businesses who don’t have the resources, expertise, and prestige/profile to lobby for TIFs. Either the BDC can muster the energy to give TIFs to as many businesses as possible (and I genuinely think they’re trying on this front), or the city can probably take the difficult-in-the-short-run but easier-in-the-long-run approach by setting up a simpler tax and development framework in which it’s easy for *anyone* to engage in development without having to consult special programs/authorities to get benefits to make said development feasible. I think the current TIF-and-PILOT strategy only forces the city into an unsustainable grasping-for-outsiders-to-lure-in situation.

      • Marc
      • Tim Pula

        Gerry, where infrastructure is funded by developers, it’s not public, such as in gate subdivisions.  It’s still a rarity in the way that development is done.  TIF’s work.  They have been a strong tool for Baltimore and they need to stay.  We cannot compete economically with other jurisdictions if we expect to charge people/companies double the tax rate of the next highest jurisdiction yet can’t even build the necessary infrastructure. 

        I’ve actually done a TIF – from start to finish – and I can tell you that they work.  That said, it doesn’t meant they are perfect of the solution for everything.   

  • Marc

    “Jay Brodie sat down with The Brew to explain why he and his agency are more Robert Moses than Mephistopheles.”

    LOL, were those his actual words?! Gee, that’s a relief: “Don’t worry, I’m not a demon. I’m merely an autocratic, power-hungry central planner bent on ramming taxpayer-subsidized megabuildings into insignificant, disposable little neighborhoods.” I don’t think comparing yourself to Robert Moses is something that is reassuring to the general public!

    I guess I’m arguing what I’ve argued before – if B’more had a regulatory and tax climate that was just as fair, simple, and accommodating to small businesses and regular residents as it is to big business, then there’d really be no need for a BDC. Would B’more really have become an industrial powerhouse in the 19th century if all those small industries and small businesses (the tiny firms that were the forerunners to Stewart’s, Hutzler’s, McCormick’s, etc.) had to wait around for tax breaks and preferential treatment from the BDC?

    To foment true, lasting urban growth you need to have economic, tax, and regulatory policies that make it easy for entrepreneurs to create new businesses irregardless of their initial size or clout. Most businesses can’t afford to wait around for special treatment or handouts. But right now most US cities – including B’more and its BDC – have policies that retard real “growth”; rather they’re all engaged in a round-robin game of snatching hotels, factories (Toyota plants, for example), and convention centers from each other. They’re rarely fomenting new homegrown businesses or industries, they’re merely offering bribes to lure businesses from one place to another.

    “The BDC came under attack during the mayoral campaign for neglecting city neighborhoods…”
    While the BDC itself may not care much about regular neighborhoods, these neighborhoods certainly haven’t been neglected. CDBG money and other federal and state largess has been dumped on East and West Baltimore since the 1960s, and what is there to show for it? If anything, after all the big spending lavished on these neighborhoods, they’ve only gotten worse – all the money seems to have disappeared into a black hole. And people are calling for more of the same?! From this perspective I understand why the BDC would focus on some flashy downtown business rather than giving money to some decrepit West B’more neighborhood to be pissed away on poverty pimpage.

  • Marc

    “Jay Brodie sat down with The Brew to explain why he and his agency are more Robert Moses than Mephistopheles.”

    LOL, were those his actual words?! Gee, that’s a relief: “Don’t worry, I’m not a demon. I’m merely an autocratic, power-hungry central planner bent on ramming taxpayer-subsidized megabuildings into insignificant, disposable little neighborhoods.” I don’t think comparing yourself to Robert Moses is something that is reassuring to the general public!

    I guess I’m arguing what I’ve argued before – if B’more had a regulatory and tax climate that was just as fair, simple, and accommodating to small businesses and regular residents as it is to big business, then there’d really be no need for a BDC. Would B’more really have become an industrial powerhouse in the 19th century if all those small industries and small businesses (the tiny firms that were the forerunners to Stewart’s, Hutzler’s, McCormick’s, etc.) had to wait around for tax breaks and preferential treatment from the BDC?

    To foment true, lasting urban growth you need to have economic, tax, and regulatory policies that make it easy for entrepreneurs to create new businesses irregardless of their initial size or clout. Most businesses can’t afford to wait around for special treatment or handouts. But right now most US cities – including B’more and its BDC – have policies that retard real “growth”; rather they’re all engaged in a round-robin game of snatching hotels, factories (Toyota plants, for example), and convention centers from each other. They’re rarely fomenting new homegrown businesses or industries, they’re merely offering bribes to lure businesses from one place to another.

    “The BDC came under attack during the mayoral campaign for neglecting city neighborhoods…”
    While the BDC itself may not care much about regular neighborhoods, these neighborhoods certainly haven’t been neglected. CDBG money and other federal and state largess has been dumped on East and West Baltimore since the 1960s, and what is there to show for it? If anything, after all the big spending lavished on these neighborhoods, they’ve only gotten worse – all the money seems to have disappeared into a black hole. And people are calling for more of the same?! From this perspective I understand why the BDC would focus on some flashy downtown business rather than giving money to some decrepit West B’more neighborhood to be pissed away on poverty pimpage.

    • Mirage55313

      Irregardless isn’t a word and until you learn to use proper English, you’ll continue to be perceived as an uneducated fool.

      • Marc

        “Irregardless” is slang and fairly common now. If you don’t agree with my comments address them directly and don’t try to sidetrack the discussion with stupid grammar nazi behavior.

  • Sergio

    It’s worth pointing out the clear lie that folks protested him without actually reaching out to the office.  For example, United Workers, who are supporting a worker-led fight for fair development in the Inner Harbor, had been trying for some time  to get a meeting with Brodie, but after not responding to at all for a couple of months, they began protesting. 

  • Sergio

    It’s worth pointing out the clear lie that folks protested him without actually reaching out to the office.  For example, United Workers, who are supporting a worker-led fight for fair development in the Inner Harbor, had been trying for some time  to get a meeting with Brodie, but after not responding to at all for a couple of months, they began protesting. 

  • bdc’d into hades

    This corporation gives carte blanche to corporations and the boot to small businesspeople.
    Good luck trying to get beyond the bureaucracy, what you get is stonewalled. It disgusts me that this character wants pity while the honest entrepreneur geta the shaft.

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