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City had no choice but to tap into community impact funds, mayor says

Explains reasons why city used $3 million in community impact grants to relocate a steam line next to the new Horseshoe Casino

Above: Kimberly Clark of the BDC answers media questions today about the relocated steam line while Mayor Rawlings-Blake looks on.

The mayor recently allocated over $18 million in general funds to pay for  rebuilding the 26th Street retaining wall, but said today that moving a problem steam pipe at the Horseshoe Casino could only be funded from one source – $3 million earmarked for local communities.

“There is no magic pot of money for this to come from,” the mayor said of her decision – approved by the Board of Estimates today with only Comptroller Joan Pratt voting “no” – to use community set-aside funds to move the underground line.

At its prior location, the line exposing gamblers to “hot manhole covers and steam exiting those manholes” near the entrance of the casino, the mayor said, and could cost the city as much as “$90,000 per day every time the street was closed” for repairs.

“My administration worked diligently to identify other [funding] alternatives, [but] this was the best alternative.”

The quasi-public Baltimore Development Corp. represented the city in handling the pipeline relocation, working with Caesars Entertainment, the casino operator, and Whiting-Turner, the casino builder. The decision to “order the pipe” and move the line was made last May, said Kimberly Clark, executive vice president of the BDC.

City Could Use Lease Payments

Several members of the Casino Local Development Council called the steam-pipe project an inappropriate use of funds earmarked to improve the quality of life for neighborhoods impacted by the casino.

The money should be used to help “blighted communities” like Westport immediately south of the casino, said LDC member James Alston, not support projects serving the city or the casino.

“The city will collect lease payments from the casino. This could be an alternative source” for infrastructure needs around the casino, Alston said.

Asked today if the city planned to use impact grants for future infrastructure projects, Rawlings-Blake said, “I didn’t fight this project [the Horseshoe Casino] to pay for unrelated expenses. I fought for a project that will bring us property tax reduction and school construction.”

But “if there is ever a time in the future, because of the casino, there are directly-related infrastructure costs, I will take a look at all of the options, including the community impact fund, as I think is responsible to do.”

Complex Transaction

Under today’s amended agreement with CBAC Borrower, the legal entity for Caesars Entertainment and related investors, the city will reimburse the group the $3 million cost of the relocated steam line.

The reimbursement will most likely not come out of this year’s impact funds, but in fiscal 2016 and 2017. However, if the casino generates more than $10 million in impact funds this year, “the city would prioritize those funds for the cost of the steam line,” the mayor’s office said in a two-page memorandum about the transaction and its rationale.

The memo emphasized that without the steam pipeline, the city and other downtown users, such as the University of Maryland Medical System, Convention Center and federal government offices, would face significantly higher heating bills.

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