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Inside City Hall: BDC hit for “lack of transparency”

stokes meeting irene van sant

Irene Van Sant at today’s City Hall meeting. From left: Councilman Carl Stokes, Council President Jack Young, Councilman William H. Cole, Councilman Edward Reisinger and chief of bureau of treasury management Steve Kraus.

Photo by: Mark Reutter

Three City Council members took turns today swinging at the Baltimore Development Corp. (BDC) for its lack of transparency.

This isn’t the first time the city’s development arm has been criticized for its closed meetings and lack of timely disclosure – Occupy Baltimore staged a demonstration in front of its downtown offices over these very issues last November.

But today’s meeting between Irene Van Sant, BDC senior project manager, and the Council’s taxation, finance and economic development committee marked a heightened insistence by some Council members that the agency change its ways.

“We want more disclosure sooner,” Carl Stokes, chairman of the committee, told Van Sant. “And more than sooner, to have full disclosure.”

Stokes said that the present system in which the BDC privately makes recommendations to the mayor about tax incentives to developers, then presents the incentives as a fait accompli requiring urgent Council approval has to stop.

“We cannot do our due diligence when you do this,” Stokes said.

Councilman James B. Kraft was more explicit. “The minute the developer asks for money from the city or some concession from the city, they open themselves up for disclosure,” he said.

The BDC provides sparse information about its monthly public meeting. At this meeting, a $41-million PILOT tax break was discussed – after the meeting was placed in closed session. (Photo by Mark Reutter)

The BDC provides sparse information about its monthly public meeting. At this meeting, a $41-million PILOT tax break was discussed – after the meeting was closed to the public and media. (Photo by Mark Reutter)

Councilman Bill Henry endorsed the need for more information from the agency, while Councilman William H. Cole IV cautioned that it was important for developers to be able to engage in discussions with city officials that are “not discoverable.”

Perception of Favoritism

The BDC favors two types of property tax breaks, PILOTs (payments in lieu of taxes) and TIFs (tax increment financing), as incentives for private development.

These “tools” are used only when the BDC determines that the breaks are needed to make a development project happen – known as the “but for” rule.

Kraft said there was a “perception of favoritism” in the awarding of PILOTs and TIFs that could be cleared up if the “BDC [wasn't] so reluctant to disclose anything.”

Van Sant did not commit the agency to any of the suggestions today, saying several times, “We will consider that.”

“We try very hard to be transparent,” she said in defense, but “there’s a line between confidentiality and the public’s right to know.”

The BDC never automatically agrees to a tax incentive proposed by a developer, she told the committee. Instead, the staff does a thorough analysis of the project that may take weeks or sometimes months.

The analysis is then reviewed by the project review committee, which makes recommendations to the BDC’s board, and the board recommends a course of action to the mayor.

Exempts Itself from Open Meetings Act

Van Sant said the BDC holds public meetings, which brought a swift response from Stokes that the agency “goes into private sessions” whenever it discusses its recommendations to the mayor.

The BDC closes its public meetings by invoking an exemption to Maryland’s Open Meetings Act when discussing material that involves financial matters whose disclosure may hurt the parties involved.

Typically the BDC board has a public meeting, then votes to go into closed session and asks the  media and public to leave the meeting room.

Van Sant told Stokes that “we would have wasted your time” by, for example, publicly disclosing a proposed $41-million PILOT tax break for an Exelon building downtown when the deal was rendered moot a few days later by Exelon’s decision to locate at Harbor Point.

The city’s developer tax policies were studied last year by a 15-member task force appointed by Stokes. Today several members offered reasons why the BDC should become more transparent.

Linda Loubert, an economics professor at Morgan State University, said, “For a city like Baltimore needing to have growth, if this good boys club was more open and more transparent, more good things could happen in the city.”

Wendy Blair, head of W.L. Blair Development, argued that the city should establish an independent advisory board to monitor taxpayer-subsidized developments and provide cost/benefits analyses. “We need to evaluate how successful we’ve been,” she said.

Stokes said the committee would hold another working session to develop a consensus of how to improve the overall performance of the tax program and prepare legislation for the City Council.

Neither BDC President M.J. “Jay” Brodie nor members of the mayor’s development staff were present at today’s meeting.

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  • Chris Merriam

    What if the government got out of the business of subsidizing business altogether?

    • http://twitter.com/MairZdoatz Mair

      That would certainly bring an end to all of this ‘leveling the playing field’ nonsense.

  • Iam Gayle
  • PCCP

     Unellu–

    my experience has been that there is no language in the contract book about a bid being defective/non-responsive if a subcontractor is not in good standing with the state taxation.  maybe this has changed, but this has been something that they have only recently at prebid meetings. a contract will not be awarded to a prime if they use a sub who is not in good standing until they come into good standing, or allow a substitute as it seems that is an acceptable practice per M.E.

  • Suave

    i am so grateful they have decided not to waste our time.  or presumably theirs.

  • Parent

    These “tools” are used only when the BDC determines that the breaks are needed to make a development project happen – known as the “but for” rule.

    I’m sure there are thousands of people who would move into the city and fix up old homes “but for” the insanely high taxes.  Will the BDC give them tax breaks? 

  • James

    Not surprising Bill cole is more interested in protecting developers’ privacy than in due diligence and transparency. pretty sure his ‘negotiations’ w/ former BGP developers would make the FBI’s hair stand on end. He’s confused though.  There is a difference between ‘disclosure’ and information being ‘discoverable’ & I think he falls into the typical city council member ‘not too bright’ catgory alla Reisinger et.al. 

  • PCCP

     but I don’t buy that. the claim would be legitimate if say form A ( I think its form A) did have a dollar amount. its the MBE summary sheet where you list the totals for the mbe and wbes to show that you are in compliance. form B ( submitted for each sub) lists what the work is that they will be doing along with the sub signature.

    I just don’t understand how they could have a subcontract agreement 3-4 days prior to the bid and forget to include the dollar amount. at every single city contract prebid, the MWBOO office sends someone there to instruct prospective bidders what they need to do. the forms say all over them that if they are not completed they are subject to be thrown out.

    herein lies the rub: for a competitive bid ( which is what low bid work is), prices come in at the last second. especially so with demolition contractors. some prime contractors are known to take a number and shop it around to other subcontractors to get the best possible number, so subcontractors are hesitant to give out their number until the day of the bid or night before. I have turned in numbers for a bid, only to find out a subcontractor came in lower after the fact.

    if you allow Goel or anyone else for that matter to not have to worry about sealing the bid, making sure all the dollar amounts ( and written words) and percentages are right and just let them put down a subcontractor for a percentage and write in a price at the last possible second, it does constitute an unfair advantage to the other GC’s who filled out the bid per the instructions ( which includes the duplicate bid btw).

    online bidding could defeat that, but maybe M.E. could help me on what it takes to submit a legal bid bond online,  and a comprehensive signature. 

    again. form A is what you need to examine.  if form A is in order then Goel has a legit beef imo.

  • PCCP

    @ @google-2696b2fcff0313d2160ade96a8ea77e7:disqus
     yes there are a lot of things wrong with that. if someone has a good idea for how to do the work, they shouldn’t let a larger company rip off that idea.

    and the lowest possible price is not always the best product. there are contractors the city absolutely does not want to do certain work because they do an awful job. but if they turn in a legal bid there isn’t much they can do. this is not just relegated to the city of baltimore, but for municipalities everywhere.

    I think the current practice is fair. you give everyone an equal shot at the job in question, and everyone has the same information, the same amount of time to make their price proposal. and yes Virginia, they are obligated to turn in a bid that complies with the rules of the contract book.

    the other thing about it is ( which i take offense to) is that people feel like contractors aren’t allowed to make any money at all. its hard work. its dangerous work. machinery is expensive. survey most firms and they will tell you that they didn’t make very much money at all in the last 3 years– if any.  i know dozens of construction companies that have closed their doors since 2008.

    the best possible deal would be one if you assumed your equipment was free ( because you already own it and its paid for) and thus you could take a job cheap to be able to keep your employees. but its not a solvent long term practice, and no tax paying citizen seems to care.

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