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Behind the dry debate about tax breaks: juicy political maneuvering

ANALYSIS: Debate over PILOTs and TIFs is part of a raw power struggle between O’s owner Angelos and Mayor Rawlings-Blake.

Buddy Zamoiski Carl Stokes

“Buddy” Zamoiski, co-chair of the task force, testifies yesterday before Carl Stokes, chair of the taxation committee.

Photo by: Mark Reutter

Beneath all the high-minded talk about the merits of tax subsidies to bankroll Baltimore development projects – the subject of a report by a special task force appointed by City Councilman Carl Stokes – there’s a potent political subtext.

It’s about power, personalities and money.

The general public knows little about PILOTs, TIFs and other obscure financing tools, but they are a source of controversy and turf battling within the city’s power elite.

And at the top of that elite stands lawyer and Baltimore Orioles owner Peter G. Angelos, a man who isn’t afraid to confront what he considers “handouts” to developers by Mayor Stephanie Rawlings-Blake.

Angelos and Rawlings-Blake have been feuding over various city developments for some time. The lawyer, who owns One Charles Center and other downtown properties, has tried to block, through lawsuits he’s funded, the State Center and “Superblock” projects championed by the mayor.

While the lawsuits center on various procedural issues, the thrust of his opposition is this – why is the city doling out tax breaks to new developments when about 25% of downtown’s office space (including some of Angelos’ own properties) lie vacant?

Peter Angelos has a big property stake in downtown. (businessinsider.com)

Peter Angelos has a big property stake in "old" downtown. (businessinsider.com)

For her part, Rawlings-Blake has denounced “frivolous lawsuits” as holding back the city’s progress and has characterized State Center and other developments as “bold plans” put together by “willing investors who are ready to create jobs [and] rebuild depressed areas of downtown.”

Take away or delay the tax breaks built into these projects and it’s Angelos’ bet that many of them would unravel.

So when Stokes yesterday called for a “moratorium” on PILOTs (Payments in Lieu of Taxes) and new TIF (Tax Increment Financing) districts until the City Council incorporates the recommendations of the task force – he was taking a direct shot at the mayor’s development strategy.

“Reckless” and a Threat to Jobs

Stokes’ idea of a moratorium didn’t float out of nowhere. It was proposed during yesterday’s informational hearing by Tom Marudas, who has represented Angelos on the 15-member task force. Marudas said many members of the task force supported a moratorium, even though it was not part of the report’s published recommendations.

After Task Force Co-chairman Calman “Buddy” Zamoiski indicated his approval of the moratorium, Stokes enthusiastically endorsed the idea. Stokes estimated the moratorium might be in effect for six months to a year.

Reaction from the mayor’s office was swift.

“A moratorium on TIF or PILOT legislation would be reckless, and threatens to kill job creation in the city,” Ian Brennan, a spokesman for the mayor, announced.

As the informational hearing hammered away at the tax breaks, the mayor’s official position was that she was “pleased” the task force had endorsed her development policies.

Her office released a statement hailing the 5,670 jobs supported by PILOTs and TIF districts, adding that this information was “curiously absent from the report.” (Actually it was published in an appendix to the report.)

While the mayor’s handlers tried to blur the report’s recommendations, a moratorium on new PILOTs and TIFs would bring clarity to the debate by actually impacting several high-priority projects, including Westport in South Baltimore, Harbor Point at Harbor East and State Center near Bolton Hill.

And that’s where politics and money come into play.

Developer Dollars

Rawlings-Blake depended heavily on developers and contractors in her 2011 reelection campaign. David S. Cordish, for example, pumped $21,000 into her campaign coffers through various corporate entities.

Cordish is seeking a $3 million rent abatement for Inner Harbor properties he leases from the city in the Inner Harbor. His request is currently under review by the mayor, who has final say on the matter.

Lawyers at Gallagher, Evelius & Jones funneled $45,600 to the mayor, a review of campaign records by The Brew found. Several of those lawyers are active representing developers using, or wanting to use, TIFs and PILOTs.

Pat Turner hosted a lavish fundraiser-birthday party for Mayor Rawlings-Blake last March at Silo Point.

Pat Turner hosted a "birthday under the stars" fundraiser for Mayor Rawlings-Blake to coincide with her 41st birthday. The price of admission: starting at $500.

Westport – the grandiose commercial, residential and retail community envisioned by Patrick Turner in South Baltimore – is in a TIF district. Turner is expected to seek about $160 million in TIF bonds when the real estate market returns and his project can resume. But his plans could be upended if the task force’s recommendation that long-dormant TIF districts (Turner’s was established in 2008) be subject to a review and possible revocation.

Not surprisingly, that particular proposal drew a sharp rebuke at yesterday’s hearing from M.J. “Jay” Brodie, president of the Baltimore Development Corp. (BDC).

Brodie called Westport “a great project” and said it would be unfair to penalize Turner with “formula time constraints” when “no fault can be assigned to the developer.” The delay at Westport, Brodie said, was simply the result of a bum real estate market.

Last March, Turner threw a lavish campaign fundraiser for the mayor at Silo Point, his luxury condominium in Locust Point. On Tuesday night, Rawlings-Blake returned to Silo Point to celebrate her general election victory.

It should be recalled that Turner was identified as “Developer B” during the 2009 corruption trial of former mayor Sheila Dixon. Turner gave the mayor’s office gift cards that he said he thought were going to be distributed to poor children for Christmas. In fact, Dixon used some of the cards to buy gifts for herself.

Pat Turner hasn't yet used $160 million in TIF bonds.

Pat Turner hasn't yet used $160 million in TIF bonds awarded by the city. (chabadhopkins.org)

Another example of the nexus between tax breaks and campaign contributions can be seen by the generosity bestowed on the mayor by A&R Development, which has gotten TIF grants to rehab Lockwood Place and Redwood Towers downtown.

Its principal, Theo C. Rodgers, showered $12,500 on the mayor’s recent reelection through eight business entities, according to Maryland Board of Elections records.

A&R was founded in 1977 by Rodgers and the late William L. “Little Willie” Adams.

Angelos Dollars

In his own bid for reelection, Stokes found a benefactor – Peter Angelos. Last spring, when Stokes toyed with the idea of running against Rawlings-Blake, Angelos kicked in $5,000, while his close associate, Samuel Bates, contributed another $2,500.

When Stokes dropped out of the race and found himself in a difficult primary contest to retain his city council seat, Angelos stepped in and wrote $15,000 in checks through six business entities. Stokes won by a comfortable margin.

In an interview yesterday, Stokes said that concern about the public perception that City Hall favors downtown development over neighborhood improvements led him to establish the task force to look into the matter.

He picked a group of leading businessmen and community leaders, including people like Andy Frank, a former BDC officer and deputy mayor under Sheila Dixon, and Robert C. Embry, a former housing commissioner who now heads The Abell Foundation.

More Intrigue Coming in the City Council

Stokes expressed confidence yesterday that he had the power to stop new TIF districts and PILOT projects as chairman of the City Council’s Taxation, Finance and Economic Development Committee.

“If a bill is not heard [by the committee], it can’t move forward,” he said, adding that he hoped the mayor would agree to a “self-moratorium” while the committee put together its package of reforms.

The key to Stokes’ future clout is whether he’s reappointed as chairman of the taxation committee in the next session of the council. City Council President Bernard C. “Jack” Young will make that determination very soon.

Stokes and Young are considered close political allies (Stokes, for example, assumed Young’s seat on the council when Young was made council president in February 2010).

But there is always the chance that an angry mayor could undermine Stokes’ position with Young or other council members.

Then again Stokes is a veteran of political intrigue at City Hall. Plus he’s got a patron who isn’t afraid to throw a punch.

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  • GMan

    Plenty of room to clean up economic development process in Baltimore, though TIFs and PILOTS will, as the report says, continue to be vital if property taxes stay double of the city’s competing neighbors. But take no credence in anything Peter Angelos supports. From his working fighting the Westside to his horrible management of 1 Charles Center and Orioles/MASN to his want to by places like Boccaccio’s in Little Italy (which received another ‘hardship’ waiver from the liquor board. Really, Billionaire Angelos? Hardship waiver?) and sit on them for ever, old Pete appears to only thrive  when Baltimore’s institutions decline. Now, he wants to set a moratorium on some of the only tools that spur development, when really, what small businesses and retailers want, in the city’s current tax climate, is to have more access to these types of tools? 

    And Carl Stokes? A political old-timer who re-acquired a new taste for the game, and found both an angle and a political backer to continue his ambitions. Lets not forget how he basically screwed Odette Ramos and his own former chief-of-staff out of a shot to change the dynamic of city council thanks in part to Angelos’ financial help. Beh to all of them. 

    • Guest

      The ironic things is that I would gladly support some sort of tax incentive for one of Peter Angelos’ properties if it would get him to stop sitting on key real estate.  Let’s not forget that not only does Angelos own small vacant properties throughout the city that he has bought with absolutely no plans to renovate or lease–Boccaccio’s, Marconi’s, etc.–he also sits on the 2 large, completely vacant properties: The F&D Building at 210 N. Charles Street, a gorgeous historic building with every possibility of being a successful rehab project; and 10 N. Charles Street, the former home of JHU Carey School (which Angelos could easily have kept in City Center had he even raised a pinky to accomodate their growth needs), and now just a vacant building with a landlord who refuses to consider any of the lease proposals brought before him.

      Bless the developers who are taking advantage of the subsidies available to them to MOVE PROJECTS FORWARD.

  • Ktrueheart

    It’s disappointing that a spokesman for our Mayor, without benefit of understanding the context in which Councilman Stokes commented about a moratorium, out-right rejects the concept.  It would be prudent to implement the recommendations offered by the task force, which will enhance the City’s execution of TIFs and PiLots, before any new ones are approved.  Continuing to execute these economic development tools without improving the process fails to maximize benefit to the citizens of BMore … which I assumed was their purpose!

  • Anonymous

    Does Carl Stokes really live on the 2400 block of Guilford? Well at least we know he screwed over Odette Ramos.

  • http://profiles.google.com/tomandsveta Tom Brown

    Great article that should have been written by the Sun years ago.  I don’t know squat about the inner politics of the City, but I do know two things.   Baltimore must move forward with new developments or it will stagnate.  Look at Harbor East and the new Baltimore Hilton; both developments are great for our city.  Who the hell says they want to go downtown to Charles Center?  Second, Peter Angelos is a money-grubbing old man who needs to retire and play more with his grandkids..

  • Baltimore

    Let’s repeal past pilot programs and make Angelos pay property taxes on all of his buildings. Then I might support his idea.

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