Inside City Hall: Funds for communities used to sweeten casino package

Yesterday's contract with Caesars Entertainment will earmark $6 million of local impact grants to the Harrah's casino.

harrahs srb lunch

Casino executives and Mayor Rawlings-Blake break bread at a luncheon with the City Council last month.

Photo by: Fern Shen

Render unto Caesars riches meant for Baltimore communities.

That’s one of the unpublicized details of the casino agreement struck yesterday between the Rawlings-Blake administration and investors led by Caesars Entertainment Corp.

Read through the 300-odd contract and exhibit pages, and you’ll find that Caesars will be picking up some nice winnings, the very best of which comes at the expense of Westport and other impoverished communities that surround the proposed Harrah’s Baltimore on Russell Street.

Sound familiar? We’ve been documenting how the city showers upscale projects with tax breaks. Not sharing the bounty with Caesars would seem to be downright un-Baltimore.

Not to worry.

Caesars won’t get the deluxe tax break of Harbor Point, expected to reap at least $100 million in “EZ” (Enterprise Zone) credits over time, or the $20-million-plus in PILOT (payments in lieu of taxes) for the Lexington Street Superblock project, under final consideration by the City Council.

The city said yesterday that the casino will produce at least $11 million in yearly revenues, allowing for a small break in the property tax rate beginning in 2014.

But the world’s largest casino company won’t do poorly when it opens a 3,750-terminal video gambling emporium thanks to some chips left on the table by City Hall.

Lump Sum in 2017

First is the purchase price for city land for the casino’s 4,000-space parking garage.

The headline price is $5.9 million. But CBAC Gaming, majority-owned by Caesars, will only pay $1.2 million at settlement later this year. The remaining $4.7 million is due in late 2017 in a lump sum, without interest.

The brown box, fronted by Russell Street (I-295), is the site of the video lottery terminal building, while a 4,000-car garage will be located in garage (yellow box). Under latest plan, Warner Street between the two structures will be permanently closed.

The brown box on Russell Street (I-295) will be the site of the casino, while a 4,000-car garage will be located in garage (yellow box). Under the latest plan, Warner Street will be permanently closed between the two structures.

By that time, the purchase price will be effectively offset by the city’s diversion of $6 million in “local impact grants” to CBAC. And here’s where the contract gets interesting.

Community Impact Funds

In order to compensate communities for the problems caused by casinos, such as traffic jams and crime, and to improve “economic and community development, including housing,” the Maryland legislature set aside local impact grants.

Coming out of the state’s portion of casino earnings, the grants are to be distributed to communities through “local development councils” appointed by, in Baltimore’s case, the mayor with the concurrence of the state legislators in the affected district.

The General Assembly enacted an elaborate methodology by which the councils were to handle the grant awards. In Cecil County, for example, non-profits are awarded grants on a competitive points system. In Prince George’s County, the funds can be used for community projects within 10 miles of the Rosecroft Raceway.

But in Baltimore, the Rawlings-Blake administration swept aside this process and will instead let CBAC use the first three years of impact grants – totaling $6 million – for infrastructure costs in the immediate proximity of the casino.

“Haven’t Heard a Thing”

Questioned yesterday, community leaders near the casino said they had no idea that the impact grants would be earmarked to Caesars.

“No, I haven’t heard a thing,” said Ruth Sherrill, longtime president of the Westport Community Association. Betty Bland-Thomas, formerly of the Sharp-Leadenhall Planning Council, also said she was unaware of the plans for the impact funds.

Back in 2009, when Canadian developer Michael Moldenhauer proposed the first casino on the site, former Mayor Sheila Dixon established a 15-member local development council.

The group was chaired by former State Senator George Della and included representatives from Westport, Sharp-Leadenhall, Pigtown, Federal Hill and other communities near the casino.

This committee has not met in over two years, according to James Alston, the representative from Westport.

Alston said he recently contacted a member of Mayor Rawlings-Blake’s office about the status of the council. “I told her I was still interested in remaining on the committee, but I was told the committee is on hold,” Alston said yesterday.

Told of the diversion of impact funds to Caesars, Alston said, “This is bad. There was no precedent for thinking that the funds would be used by the developer. This was to go to the communities. Absolutely.”

No Word from Mayor’s Office

A year ago, Rawlings-Blake indicated that she planned to appoint new members to the council. The mayor’s press office did not respond to questions by The Brew seeking the current status of the council.

Yesterday’s contract stipulates that CBAC would be given three years worth of impact funds to reimburse the developer for “qualified expenses . . . related to the construction of the VLT [gambling] facility and the garage.”

The contract calls on the development council to approve expenditures submitted by the developer, and further states that if the city “fails to pay developer any grant funds pursuant to this section . . . the developer may offset the payment of any rent due and payable [to the city] by an amount equal to the grant funds otherwise payable to developer.”

In other words, the $6 million is locked up to Caesars, even if the city changes its mind – or the development council balks at the payments.

Reached yesterday, Della said the setup was a violation of the law. He said the development councils were established to advise the city on the use of the funds – not to rubber-stamp bills submitted by the developer.

During the period he chaired the council, Della said major strides were made in developing traffic plans that would lessen congestion and make possible access from Russell Street ( I-295) to South Baltimore during Ravens football games.

Under Rawlings-Blake, the review of casino plans is now in the hands of the Urban Design and Architectural Review Panel (UDARP), a panel of architects initially critical of Caesars’ plan for a gargantuan 4,000-space parking garage.

At a meeting last week, the panel muted its criticism of the garage and expressed approval of the developer’s plan to permanently close Warner Street between Bayard and Worcester, which would impact I-295 traffic headed for South Baltimore.

Under yesterday’s agreement approved by the Board of Estimates (Mayor Rawlings-Blake and her two appointees City Solicitor George Nilson and Public Works Director Alfred Foxx voting “yes,” City Comptroller Joan Pratt voting “no,” and City Council President Jack Young not in attendance), the Baltimore Development Corp. is in charge of reviewing the casino’s final design and construction plans.

Community groups – and the local development council – would have no role in this process.

Be sure to check our full comment policy before leaving a comment.

  • Westside Resident

    Oh, to be the favored – the receiver of gifts unasked for – the beneficiary of political and bureaucratic largess from the rest of us schmucks. It is no wonder the city can’t reduce the property tax rate, they are too busy giving perks to “promote development”. Has anyone ever added up these various PILOTS, TIF’s, and other special breaks then figured out how much everyone’s property tax could be lowered if they weren’t made? (Yes, yes I hear the argument that the development investment wouldn’t have been made but-for the incentive, but lets just play along with the idea) 

    • Adugdale

       Lets face it, this city suffers from low self esteem.

  • Kim Trueheart

    Complete disrespect and disdain for BMore’s underserved neighborhoods.  This Mayor is absolutely BENT, yes BENT over for developers and no one can show evidence to the contrary … She couldn’t stand up for US under any circumstance … Can’t be trusted!!! 

  • Ltong1009

    When I lived in Fed Hill, I drove down Warner St all the time to get to 295.  Closing Warner would make everyone take the Hamburg St Bridge into and out of Fed Hill.  This area is a major in/out point of downtown with two stadiums.  It needs as many ways in and out as it can get.  How about a pedestrian bridge over Warner instead?

  • Jg11

    And the city closed fire companies that serve the citizens and negatively impacts public safety.Yet no money from the casinos is slated to go towards public safety even tough the casinos will place more demand on police and ems. What are the mayors priorities?

  • jan angevine

    I don’t understand why these gambling developments that promise to be financial cash cows are given city money. If they are expected to create jobs, boost the economy through the power of their profitability, why don’t they go to the banks for loans. If they are such great deals, where are the venture capitalists? Why does a struggling city lend wealthy, connected developers our community impact funds, at no interest? Why would the community be left out of that decision? The Mayor really needs to get out in front of this thing and explain what has transpired and why. As a supporter of the Mayor, I am losing my trust and faith. If it were not for the Brew, this would all go unreported. They are demonstrating the power and purpose of a free press. Thank you, Brew.

  • bmoreguy

    Is there a plan for the traffic that usually relies on Warner Street as a means of getting to 295 to be diverted to somewhere other than Hamburg St?  I know several people, including myself, who rely on Warner St to get to Bayard and then 295.  Would shutting the light down at Russell and Bayard and then moving it to Russell and Worchester be a possibility?

    • baltimorebrew

      The current plan (introduced at last week’s UDARG meeting) calls for both Worcester and Bayard to feed into the casino and parking garage. Warner Street would to turned into a covered plaza and bus/taxi stand, stretching a full block.

      The former chair of the local development council, George Della, believes closing up Warner and Worcester to through traffic has major negative implications for South Baltimore/Federal Hill. But so far, there’s been no public meetings or community input on the matter. -mr

      • Gerald Neily

        Closing Warner would deaden the entire surrounding area. It would also ensure that Russell Street will be a congested mess. The city has obviously given up on spin-off development in the surrounding area because they are making the Greyhound site at the south end of Warner a permanent bus station, when it was supposed to be temporary. It will be more isolated than ever, just about the worst possible use for that site. See my Brew article for how they should have done all this.

        • p johnson

          Of course the city doesn’t see the possibilities, no developer has presented it to them. Also they are too focused on the Superblock and Harbor East. :-)

  • Bruce

    Does the pending construction of the casino here have anything to do with the idea to move the Greyhound station to this area? I never understood why the city’s main bus station would be moved to such a remote, hard-to-access location… Seems fishy…

  • Unellu

    Rob from bedraggled Peter and give it to spiffy Paul–that’s been the way of Baltimore.  How chummy, chummy they all look together.  Every mouth in that picture is full of teeth.  The deal’s been sealed, the sealers of the deal feel triumph surging in their collective blood–it must feel good to hemorrhage the poor to help the rich.  This is so utterly perfidious it is brazen.  The Development Council has not convened but it is already being ordered to do as the top honchos want.  Moreover, the council is being told that any action taken to oppose this devious deal would be fruitless because Caesars would subtract the quids of the quid pro quo from the rent it would owe the city– Caesars will get its pound of flesh no matter what. 

    This is an inauspicious beginning to Maryland’s gambling future.  Rawlings Blake seems impervious to the consequences of her imperious actions.  When one begins to think fondly of Sheila Dixon’s tenure in office then one knows that the descent of Baltimore under the current mayor is steep.  This money is coming at the expense of communities in real need.  Rawlings Blake is indulging in shameless capers, deluded she’s actually helping her city.  The USA is no more than a conglomerate of fiefdoms and Rawlings Blake heads the most venal of them all.     

  • Archphips

    The whole casino debate goes from bad to worse; worse even than the most evil meaning detractors could have painted it when casinos were first discussed in our state. Seeing our Mayor, former County Exec Smith and Howard County Exec Ulman march in lockstep in front of the cameras in those pro question 7 commercials always makes me imagine how wonderful it would be if this type of regional push would come about for transit funding instead for casinos.  And now the government of the people is cheating the communities out of the impact funds? To pay the casino project itself? Can this be really true?
    And this huge garage on the waterfront? Didn’t we learn anything from the garage we stuck on pier six?   The AIA Urban Design Committee proposed some 20 years ago to open up the Middle Branch as Baltimore’s second waterfront. Never did we imagine a huge inward looking casino box trumped by an even larger parking box. Instead, we envisioned a natural green marshy park-like area that would be a quieter alternative to the urban Inner Harbor and redefine the gateway into our city. 
    Sharp Leadenhall, Westport and the other communities around the Caesars Palace need every cent of the impact funds. To invest in their well being and to fend off the, no doubt, negative impacts they will experience as neighbors to the gambling empire. Who believes that Baltimore will come out on top in the dog-eats-dog competition of casinos everywhere is naive. Perryville is already crumbling. The winner in our state would be National Harbor. This is why we need to vote against question seven and not add this most deadly competitor in our own state.
    And we need to redesign the Baltimore casino into a creative, well designed friendly village-like waterfront setting. A casino with views and daylight, imagine that! Where people will be treated like humans, not like zombies. And reinstate the impact payments to the communities from day one. Maybe our politicians will be more humble once we defeat them on question 7. Wouldn’t that be nice?

  • Robert Paul

    Thanks so much! I’ve been looking for something like this, and this is fantastic.

    Thanks for sharing with us.

    If you know about casino games, Please feel free visit website.

  • Gerald Neily

    Let me try to relate the city predicament to Question 7, since in all the media bombardment (with The Brew an island of clarity), no one else seems to have. Bottom line: The city screwed it royally when the first casino question was approved by the voters. Back then, Baltimore City had a huge lead over Anne Arundel County (competing with Laurel racetrack) and the rest of the state in the casino race. The city squandered its lead on the charlatans of the Baltimore Entertainment Group and on a far too small site hugging the Middle Branch. The city has been reacting ever since, expanding the site to Russell Street, abandoning its long range Middle Branch “Gateway South” plan, and now pushing for table games and tax concessions. In addition, the entire state has second-guessed its maximum tax strategy which initially repelled all the national casino “big boys”, most notably MGM at National Harbor, leaving the way for David Cordish and Arundel Mills. So because of the political second-guessing, they’ve since been bending over backwards with tax breaks and table games.

    So the city “giving away the store” to Caesar is a related but separate indication from Question 7. If the state had gone for a lower casino tax rate and table games from the start, Maryland would have had MGM, Caesar, Penn National, etc. falling all over themselves to build. There would have been glamorous hotels and Vegas style amenities proposed for the sites, including Middle Branch. But now we’re getting the worst of both worlds – second-rate casino plans, a lukewarm jobs potential, tax breaks, concessions and seemingly meaningless mantras about “education funding” (insert “transit” for Klaus). And we’re getting Jonathan Ogden threatening us instead of Ray Lewis building his proposed Middle Branch complex.

  • Westside Resident

    The more I did into development projects and the city’s involvement the more I think there is just a fundamental issue of math illiteracy. Can we send elected officials to math camp and accounting camp for a few weeks? I think that would be taxpayer money well spent.

  • Cwals99

    At a time when we all know that Wall Street and the financial industry is systemically fraudulent it is clear that developing a financial economy based on gambling only extends exposure to this corruption. We need to remember that the people pushing this are the same people who, for the decades that business sector fraud and the massive mortgage fraud moved all money to the top, are now expanding the capability to harm.  It is an industry that bets on people losing their money for goodness sake!

    More importantly, it was the Vegas casinos a few decades ago that had all employees strike for almost 5 years to fight the labor abuses and poverty wages.  Maryland already allows much labor exploitation….this will be another sure case against workers.

  • BeTrue

    It’s interesting you pride yourself in “stirring things up” however a few facts would be good. The contract you mention, is it APPROVED if so by whom? The Board of Estimates is the only entiiy who can “Approve” contracts–as such have they done so? Misinformation is worse then no information. I find your articles are sensational but lack integrity.

    • baltimorebrew

      Among the article’s many facts is that the agreement was approved by the Board of Estimates. You should read more carefully before casting stones. -mr

  • T-more

    What our Mayor does never surprises me. Baltimore is a wonderful city with great families, resources, parks, history, etc but it fells constantly to elect innovative and futuristic leaders. Ms. Rawlings-Blakke has failed over and over again to look out for communities and families at risk in Baltimore. She continues to pander to big business while her city starves, education fails, citizens are murdered, and leaders raping resources including herself. I am just done with this poor leadership. I will work aggressively to de-throne this mayor, she does not want what’s best for Baltimore, she wants what’s best for her friends, legacy and herself; that’s not leadership, that’s dictatorship, ask Ms. Pratt. 

  • malilo

    So where are the good mayorial candidates?  I’m a dem but at this point I might even vote for a conservative if they were honest and wanted to fix up baltimore.  So sick of corrup pols…

  • Baltimoreplaces

    I think Gerald Neily nailed it.  

    I do have real concern about yhe commercial that has been airing with the threatening commercial with the Mayor and Jonathan Ogden.  I think it is supposed to be cute, but it comes off thuggy.  In Baltimore, I do not believe, we need to send out the message that if we don’t get what we want in life, the approproate response is to follow up with violence.  I think it is a bad message for impressionable people, especially children.

More of the Daily Drip »

Below the Fold

  • March 24, 2014

    • Last Thursday, I sent an email to the Mayor’s Office of Communications asking for some basic responsiveness: Please return our emailed queries and phone calls about stories. Please send us the same routine emails you send to other members of the media. Lately, more so than usual, they haven’t been. It’s a shame because, even [...]