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“We cannot support another subsidy,” BUILD protesters chant at Harbor East

Hundreds march against tax breaks for wealthy developers amid dilapidated schools and threatened cutbacks to rec centers.

build harbor east banner carrier

Hundreds from the group BUILD marched through upscale city-subsidized Harbor East last night to call on its developer, John Paterakis Sr., to help Baltimore’s dilapidated schools.

Photo by: Fern Shen

Silver-haired ministers, old women with canes, mothers carrying infants, husky-voiced teenage boys, girls punching the sky with clenched fists, men snapping photos with their cell phones – more than 500 people marched last night through upscale Harbor East, the city’s swankiest waterfront district, to ask the developer who built it to share a little of his wealth with Baltimore’s run-down city schools.

As they walked, chanting, past city-subsidized office towers and luxury hotels, glittering boutiques, restaurants and galleries that sparkled in the twilight, the marchers encountered some ugliness:

Someone dumped water on them from the balcony of a luxury condominium, The Vue. “Move away!” parents yelled to their children, as it splattered on marchers’ heads. Further down Aliceanna Street, anti-abortion picketers waved bloody fetus photos.

Marchers protested outside Harbor East buildings that have received lucrative tax breaks, like the Legg Mason building. (Photo by Fern Shen)

Marchers protested outside Harbor East buildings that have received lucrative tax breaks, like the Legg Mason Tower shown here. (Photo by Fern Shen)

And as the pumped-up, chanting group marched along, sturdy, plain-clothed security guards patrolled, rebuking those who strayed from the sidewalk with the warning to “stay off the street.”

“Oh, they know we’re coming,” Douglas Miles, co-chair of Baltimoreans United for Leadership Development (BUILD) told the crowd earlier in the day at Paul Laurence Dunbar High School, staging area for the BUILD-organized demonstration.

The protesters gathered at Dunbar to get their marching orders from BUILD leaders and to share stories about the condition of their schools and concern about the recreation centers the city is threatening to privatize and close, another BUILD priority.

  BUILD organizers like this woman wore stickers that read "Uptown organizer." (Photo by Fern Shen)

This woman wore a sticker that said UPTOWN AMBASSADOR for her trip to Harbor East. (Photo by Fern Shen)

“For three or four years, we’ve had a roof that leaks and after a really rainy weekend, we came back and mold had grown,” said Sharon Wheaden-West, a teacher at Westside Elementary Schools. “Teachers, we’ve been painting our own classrooms.”

The possible closure of city rec centers was what brought Rev. Glenna Reed Huber, pastor of the Church of the Holy Nativity, in West Baltimore, to the rally. “See her?” she said pointing to a woman from her congregation. “She really needs the rec center to be open. She works two jobs, her daughter spends all her after-school time at the center. She depends on that rec center.”

 

“The Money Trail”

BUILD, a coalition of faith and community groups, has found a potent response to arguments that Baltimore can’t afford to fix the city’s aging schools or save its recs. They point to the millions the city grants to Baltimore developers, particularly Harbor East developer John Paterakis Sr., in the form of tax breaks.

Last year, 12 downtown and Harbor East buildings got $14.5 million in tax breaks – and, of that, Paterakis got $9.4 million.

BUILD co-chair Andrew Foster Connors roused the Dunbar crowd with the story behind each of the Harbor East buildings the group planned to “tour” on what they called “the money trail”:

• The Legg Mason tower had $3.99 million in taxes excused last year, thanks to a city tax break in effect until 2024.

• The Marriott Waterfront Hotel had $3.37 million excused last year, under a city tax break in effect until 2022.

• The Laureate office building got a break of more than $954,000 last year, via a deal from the city that stays in effect until 2016.

• Spinnaker Bay Apartments and garage got more than $1 million, thanks to financing in effect until 2024.

 Busloads came from churches across Baltimore to Harbor East last night to call attention to the plight of city schools. (Photo by Fern Shen)

Busloads came from across the city to Harbor East last night to call attention to the plight of city schools. (Photo by Fern Shen)

“We got angry,” Foster Connors said, “asking, why is it that we are giving these kinds of tax breaks to subsidize beautiful buildings such as these, when (school librarian) Terra Hiltner has to watch out for falling roof tiles at Holabird Academy?”

BUILD’s Meeting with Paterakis

On Saturday, he said, BUILD met with Paterakis and made all those points face-to-face. The developer told the group that “’but for’ these subsidies, these kinds of developments would not happen,” Foster Connors said. “Jobs would not be created, Harbor East would still be a wasteland.”

He said Paterakis told them he is giving $2 million of his next subsidy to build Crossroads Charter School, and that $140,000 of his own money is going to “a jobs strategy to hire more Baltimore residents to work in Harbor East.” But BUILD wants more.

At the group’s behest, Foster Connors said, Paterakis called Mayor Stephanie Rawlings-Blake to ask her to find the money to keep rec centers open and to rebuild and repair schools. It’s unclear whether he will agree to the group’s other requests – that he gather the corporate community to raise $10 million per year for the schools and contribute $2 million of his own money each year as part of that effort.

 Andrew Foster Connors explained that "one man," John Paterakis, seemed to be getting the majority of the tax breaks.

Andrew Foster Connors explained that one man, John Paterakis, has been getting the majority of the tax breaks. (Photo by Fern Shen)

“He told us, through Michael Beatty from [Paterakis's] H&S Properties, that there is a willingness to help,” but “no commitment.”

Foster Connors said that teachers, parents, faith leaders and even now the mayor has “stepped up,” through the bottle tax she is proposing today, to raise money for schools: “What about the corporate community?”

BUILD Drops in to Harbor East

 

The buses pulled in next to Harbor Point, the 27-acre project for which Paterakis is seeking a $155 million tax increment financing bond (TIF) from the city. On the east side of the Thames St. Wharf building there, a black stretch limousine idled. On the west side in the parking lots, a spectacular sunset greeted the marchers.

As the march proceeded along Aliceanna Street, the predominantly white patrons of bars and restaurants looked up from meals and the Ravens game to stare out the windows at the stream of predominantly African-American people snaking down the street in a line chanting “Raise our youth! Raise our city

A woman in a sequined dress, smoking a cigarette outside the Marriott, watched the commotion. A car with diplomatic plates was parked nearby.

These kids were shaking their fists and Monopoly money at the Marriott. (Photo by Fern Shen)

These kids were shaking their fists and Monopoly money at the Marriott. (Photo by Fern Shen)

Carla Hobson, of Mount Washington, said she has a daughter at Barclay Elementary Middle School in Charles Village and a son at Baltimore Polytechnic and joined the march because of the conditions in city school buildings.

“It’s not the teachers or the curriculum I’m talking about, I think they are doing a great job, I’m happy with them,” she said, “but it’s the buildings, the conditions, the lack of janitors.”

 Toney Jackson, a fourth grader who came to the march. (Photo by Fern Shen)

Toney Jackson, a Holabird Academy 4th grader who came to the march. (Photo by Fern Shen)

“My son is always cold,” she said. The girls’ bathroom at her daughter’s school “is like a sauna in winter, it’s like 106 degrees – they have to prop the door open. The heat collects there. Then the rest of the building is cold. The stall doors don’t close.”

Even youngsters in the crowd, like fourth-grader Toney Jackson could easily explain the logic that brought public school families like his on this brisk November night, to this district of doormen, valet parkers and shops selling items like a 111-year-old decorative olive oil urn for $1,250.

“Baltimore is giving too much money to other businesses and companies – they’re cutting taxes for their buildings, instead of giving it to the schools,” 9-year-old Jackson said.

“The investment should be in our children,” said his mother, Shanti Dixon-Gramby. “I feel like the city has lost sight of that.”

Marchers called on the corporate community to invest in city youth. (Photo by Fern Shen)

Marchers called on the corporate community to invest in city youth. (Photo by Fern Shen)

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  • David

    When the city is faced with spending, oh, lets say $5 million on rec. centers v. $5 million on property-tax breaks for a new condo building, there’s a good reason why they would chose the condo building.  Its called long term planning.  If you spend the money on the janitor–where are you next year?  At best, right where you are now.  If you spend the money on the condo, where are you?  Sure, you aren’t getting the property-tax money–but you are getting the income tax from the new residents (and the increased sales tax from the stuff they buy).   If you’re talking about the long term health of a jurisdiction, population is key.  Gaudy weirdness like the inner harbor and harbor east have stopped the population decline that underlies most of Baltimore’s fiscal woes.  Things haven’t gotten better–but they have stopped getting worse, and that’s the first step.

    • Baltimored

      “stopped getting worse” is so entirely relative to where you are in this city but I’m going to address other things you’ve said.  I think that those who think like you have never truly seen what deplorable conditions many city residents have as an excuse for a learning environment in the public schools.  If any of those yuppies start breeding they might be concerned about the schools instead of the stuff they can buy in their bubble worlds.  The city may be getting better in the skinny corridor that cuts the east and the west, but if 25% of the population is in poverty and many more are struggling somewhere around those lines-clearly it has not gotten better for the huge majority.  Why should the richest people be given tax breaks for their “work”, while women who work 2 jobs to keep their house and family don’t get a break by getting affordable and reliable after-school care at our Rec Centers?  Why can’t we trust that the schools are safe and healthy places for our residents to send their children?  Isn’t that an investment in our future too?  What do you think those kids would be doing if we didn’t give them a safe place to go? There are statistics that show they’d probably be having sex, doing drugs, and joining gangs.  What kind of future is that?  Go to a Rec Center and ask the person in charge how they’re doing and they’ll let you know whats really going on in this city and how things would be if they weren’t around, or maybe go to visit a local city school sometime- call ahead and make an appointment for a tour.  It will blow your mind.

  • Rick

    If John Paterakis couldn’t make Inner Harbor East a financial success without government subsidies, then he should have stuck to baking bread. The idea that prime waterfront real estate would need tax subsidies is appalling. Tax breaks should be saved for high risk ventures in areas where investment is badly needed. The waterfront between Canton and the Inner Harbor has been a “Gold Coast” for over 20 years. Why are taxpayers still subsidizing these ritzy developments??

    • Guest

      It’s misleading to say taxpayers are “subsidizing” these projects.  Both TIFs and PILOTs  are forgiveness on the tax assessments that the developer would pay as a result of improving the property.  So, yes, The City is losing out on property tax money that it would theoretically collect on the new project–money that could potentially go towards school renovations, rec center operations, etc.–but it’s not as if the City is taking money it collects from private citizens and writing a check to the developer.  If a development project doesn’t happen (for example, as a result of not being able to finance the project fully because no public subsidy is available), the City doesn’t get to collect those property taxes on the site improvements anyway.

      • KC

        And we are also losing out on state money for education; the money we DO NOT get from these developers because of the tax forgiveness still counts as part of our tax base in the state formula. So we lose money twice through these programs. 

  • GMan

    Sweet, I’m all for guilt-tripping the city’s elite developer class including forking over cash for community school/development. Don’t know if its a long-term strategy but if they can get $10 million that by all means do it.   

    The responses to this wonderful series of tax break/incentive articles on Baltimore Brew spell out the issues the opposition has addressing the city’s current economic plan of strategic tax breaks and fiscal budget cuts. On one hand, you have the BUILD/Worker’s Rights side who want more stringent rules on worker’s salaries and benefits, tax incentives stopped and more funding directly thrust into the city’s coffers for schools and recs. The long-term goal is that investment in the community/building a middle-class with the current population will pay off down the road, though the time table and end result is both vague and idealistic. The other crop would love to see tax breaks/TIFS/PILOTs extended to businesses beyond the major developments, and eventually a cut in all taxes including the city’s prohibitive property tax which is double the county competitors. The idea is to create a market for ready investment development, though the plan for that transition period and the pains that the working-poor and outright poor would undergo between the cost cuts and end result is also vague and idealistic. Both these viewpoints, in a roundabout way, attempt to address Baltimore’s central issue: poverty. Do we move forward with a Geoffrey Canada “Harlem Project” type movement (which seems to be the ultimate end goal of BUILD, with vast corporate and government investment into saving all aspects of the community), or do we do what D.C. and N.Y. did in the late 90s and use gentrification and real estate investment to marginalize the poorer neighborhoods and push poverty into different, smaller locations P.G. County for D.C./Bronx and New Jersey for Manhattan), which is the ultimate endgoal of the latter group’s thesis. Both movements have financial and geographic barriers that those other metro areas didn’t have to deal with. It’s a tough call all around.  

  • Marc

    When it comes to sheer money, Baltimore City public school students are not being shortchanged. According to this data, about $14,300 is spent per student, the fourth highest rate in the state (surpassed only by Worcester, Montgomery, and Kent counties). So where is all the money going if it’s obviously not going into the physical plant?

    How much money are those administrators and babysitters on North Ave sucking up? There used to be a time when school districts – even big urban school districts – didn’t need any administration beyond a superintendent and school principals. Now school districts are littered with curriculum coordinators (I thought that was the teacher’s job?), program administrators, activity planners, and various other bullshit (and expensive!) bureaucratic positions. Very little money ever filters down to the students, teachers, or to the physical school buildings themselves.

    Just be wary of any North Ave people in the protests – they might use fuzzy-sounding rhetoric  like “Invest in our kids!” but ultimately any money spent will only be poured into useless administration and bureaucracy (It’s a win-win situation for North Ave!). Clearly the money isn’t being spent efficiently now – B’more should be getting excellent results if it’s the fourth-richest school district in the state.

    Slash administration even further (to the point where the district wouldn’t even need an administration building anymore) and use the savings to set up a dedicated building maintenance fund. Spend the money you already have more efficiently, and stop begging for ever-more feel-good handouts. (Also stop expecting the schools to serve as parents, and return that role to the real parents who have gleefully offloaded their responsibilities and duties onto overloaded teachers/babysitters. Education begins at home, and you’ll save even more money when parents instill an appreciation for it in their kids.)

  • Rick

    David, the real question boils down to this: are taxpayer subsidies needed for places like Harbor East? I am more than happy to see people moving into Baltimore and buying condos with waterfront views. But why should there be taxpayer subsidies when Harbor East is already a marquee location? Real estate is about location, location, location, right? Well, there are not many hotter locations on the East Coast than the Baltimore waterfront. And its been that way for a long time. If we must invest tax dollars into high-end residential development, why not do it in an area of the city that developers are not already focused on?

  • UpperFells

    The shame is not that Paterakis got tax breaks. The shame is that the rest of Baltimore doesn’t pay the same effective tax rates.  The property tax rates in the city discourage development and 

    In other words, the breaks aren’t too big. The normal tax rate is too damn high. 

    And David has it exactly right. Cities need to encourage development because the people who fill those developments pay a lot of money to the city in income taxes, parking taxes, etc. 

  • Gerald Neily

    Harbor East is the same kind of high priced, highly concentrated development which the city has been continually attempting ever since Charles Center in the early ’60s. And it hasn’t worked yet; during that time, the city has lost a third of its population. Charles Center and even the Inner Harbor are now in need of renovation to their renovation. And Harbor East is still getting even more stimulus – two routes of the Charm City Circulator and the multi-billion Red Line, completely separate from the rest of the MTA transit system which is considered unworthy enough even though taxpayers pour hundreds of millions into it every year.

    Harbor East is attractive for developers for precisely the same reason it does not stimulate the rest of the city. It remains separate from the rest of the city.The original infrastructure built in the ’90s to stimulate Harbor East turned out to be insufficient anyway. Brand new streets, promenades, utilities and even Victor’s waterfront restaurant had to  be ripped up and rebuilt to accommodate the Marriott, Legg Mason, Four Seasons, and the rest of the development not built in accordance with the original plan.Periodically, there are signs of hope for a broader based recovery in the city, but it is always based on broader based economic conditions, like the ’00s housing bubble, not on any discrete catalyst effect from places like Harbor East. The city needs a comprehensive framework for economic development, instead of pouring more and more money into whatever area is considered hot at the moment.

    • Curtis

      The benefit to a strong downtown is more jobs and tax revenue for the city as a whole.  Works like a charm for many places.  To your point, if the best locations get major subsidies, then the benefit to the neighborhoods is greatly reduced, unless the workers who fill those buildings choose to live in the city and there are decent wages.    

      • Carol

        Yes Curtis. Have you looked at who gets the jobs and where they drive in from? The city invests the money to stimulate jobs for county residents.

  • Baltimoreplaces

    Baltimore has a habit of treating the symptoms of illness and not the actual sickness. 

  • Curtis

    Great comments everyone!
    My two cents:  i) the city’s brains know the tax rate is too high and is a disincentive to investment and job growth; if only every home owner and business could “strike a deal.”  ii) Inner Harbor East didn’t need the tax break it got, but other factors were at play. 

    I don’t know the details of the financing, business deal or structure.  I’m guessing there was a huge cost of land from one entity to another (I use “entity” loosely, because it can be with the same corporation or individual). Cost of construction would EASILY be covered with loans based on rents and modest investment.  If the cost of land is too much, then it is overpriced and you don’t pay it.  The land owner can then either a) sit on it, b) lower his price, or c) offer a “seller’s note” (if numbers work) which, in layman’s terms, means he gets his price and brags to his friends, but gets paid over time.  The big BUT:  if the land owner was going to sit on it and the city really, really wanted development now and not wait indefinitely, then the city decided it had to offer something so people would like their chops.  

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