The Price of Progress
For too long, urban centers across the country have been ensnared in a cycle of underdevelopment, hindered by property tax disparities, the absence of cohesive affordable housing strategies, and insufficient educational investments. In an effort to counteract these challenges, cities like Baltimore have resorted to controversial tactics, offering lucrative incentives to developers under the guise of benign acronyms like TIF (Tax Increment Financing) and PILOT (Payment in Lieu of Taxes), despite these strategies often exacerbating the strain on their working-class populations.
Tax Broke is not only an exploration of Baltimore’s challenges, but is also a critical examination of a pervasive issue affecting cities nationwide. This investigative documentary delves into the deep-seated problems caused by opaque tax break systems that disproportionately impact the working class, shining a light on a matter of importance far beyond Baltimore’s city limits.
Yet, the promise that such incentives would catalyze urban rejuvenation remains unfulfilled, and cities like Baltimore witness continued population decline. Tax Broke seeks to unravel the complexities of this issue, questioning why Baltimore and other similar cities find themselves in a position where they must subsidize development to achieve growth. The film invites a broader discourse on alternative methods of urban development, aiming to ignite a conversation on the necessity of transparency and fairness in tax break systems.
Through its comprehensive investigation, the documentary Tax Broke positions itself as an indispensable resource for understanding the intricacies of urban development strategies and their ramifications, offering insights that are crucial for other cities grappling with similar dilemmas across the nation.
Transcript
Taya Graham: When you drive around Baltimore, you see a city of contrast: construction cranes dot the downtown skyline while thousands of homes remain vacant; buildings going up while the city is losing population. It’s a divide that is hard to ignore because this version of two cities is, in part, no accident.
The story of how this happened and what it means has not been fully told. It’s a tale about obscure acronyms like TIFs and PILOTs, tax breaks and other incentives, but it’s also about Wall Street and big banks and decisions made decades ago in Washington. It’s about the desire of a city to grow, and people who benefit when it can’t on its own. All the forces that drive inequity here and elsewhere that work behind the scenes to create the divide we live in.
After the death of Freddie Gray in police custody, the world watched as my city, Baltimore, burned. Some called it an uprising.
Dr. Cornel West: And there’s such a fear. There’s a real trembling in the boots of elites at the top when poor people straighten their backs up.
Taya Graham: Others, a reckoning.
Michelle Alexander: We have become the most punitive nation in the world. We have constructed a penal system unprecedented in world history.
Taya Graham: But the anger on the streets was not just about policing; It was also a cry of desperation from residents who had lived with staggering poverty for decades.
Dr. Marisela Gomez: Because he lives in a community that historically has been abandoned, he grew up in housing that has lead paint, and then the whole uprising afterward and the community saying, no more, we’re not taking this nonsense anymore.
Taya Graham: Which made what happened next profound.
Mayor Stephanie Rawlings-Blake: So my office began working with Sagamore development months ago to make sure that all of the people of Baltimore benefited from Port Covington.
Taya Graham: Less than a year after the unrest, the city rushed a deal through the council to approve a $660 million tax incentive, known as a TIF, to Kevin Plank, the billionaire founder of Under Armour, to build a luxury city on the water.
Greg Leroy: Because the TIF was so huge, it’s the fourth biggest TIF, I think the third biggest private sector TIF in US history, the biggest TIF this side of the Mississippi. We couldn’t ignore it.
Taya Graham: My reporting partner, Stephen Janis, and I followed the story. But despite all the promises and protests, the deal was approved.
Speaker 1: For all the money that’s being poured into Baltimore City, it’s just not coming out to us. It’s not enough coming out to us.
Taya Graham: And that wasn’t the only tax break fueling construction downtown — Another type of incentive known as a PILOT was approved for all new apartment buildings with more than 20 units just before the uprising, a move prompting a massive buildout of luxury apartments — All amid a public housing crisis, when advocates struggled to get the city to set aside a small sum to build affordable housing.
Speaker 2: We need for our city leaders to be more than leaders at the podium — We need for them to join us in this great cause.
Taya Graham: And so, in a city where a young Black child has less of a chance of making it out of poverty than a child in many third world countries, people who were already rich seemingly got richer. City leaders argued this was all necessary, just the cost of doing business, that the array of tax breaks were inevitable for a city that couldn’t otherwise attract investment.
Shortly after this, Stephen and I decided to investigate this idea to understand how we got here and why. And even more important, how much do these policies really cost, and who really benefits?
Part 1: What is a TIF?
Rally Speaker: That swift process prevents true transparency, prevents and limits the opportunity for citizens to understand what this deal is all about.
Taya Graham: This is Taya Graham reporting for The Real News Network here in Baltimore City, Maryland. We’re outside the War Memorial, where the community has converged in force to have their say on the $500 million tax break awarded to Kevin Plank’s Sagamore Development.
Stephen Janis: Why do they want you to stand outside here and wait in the heat for this?
Perkins Homes Resident: It’s about equity, it’s about injustice.
Melinda Roeder (reporter): It seems like it’s being rushed through. People need more information. They need to understand what this is about and how it’s going to impact us for the next 41 years.
Taya Graham: The story of how a city of such stark contrast ended up approving one of the biggest tax incentives ever starts with innocuous sounding acronyms: TIFs and PILOTs. They might seem exotic, but both are fairly common financial instruments used across the country to incentivize growth.
Board of Finance Member: This board is requested to consider concept approval of Port Covington TIF, located on approximately 260 acres, site in South Baltimore.
Taya Graham: A TIF, or Tax Increment Finance, allows a developer to put future property taxes into the property itself.
Roy Meyers: So a TIF is a special tool that local governments use to try and promote economic development in a specific area of a city. So the way it’s done is that the city or county draws a line around a geographic area, and then it says that there’s going to be a special property tax treatment related to that part of the city or county. So what you do, what the city or county does, is it measures the value of the property for tax purposes before the TIF is created. And after that, any of the additional tax increases that come from increased property value is used to pay off the bonds that are sold for infrastructure developments in that TIF.
Taya Graham: What that means is that, unlike you or I, a TIF allows the developer to keep their property taxes and invest them in the project. But this goes beyond not having to pay into city coffers — TIFs refund up to 30 years of tax payments upfront. The city raises this cash by selling bonds to investors at a premium, which means money for vital services like education or public safety goes straight to Wall Street instead. A PILOT grants years of tax exemption from property taxes, which are gradually phased in. But the devil is in the details.
Protester: But now we find out that they’re going to give $535 million to a billionaire, which I think is appalling.
Taya Graham: Because just how necessary or fair these incentives are and how they affect the city depends on who you ask.
Jeff Singer: I think a TIF is, in part, a tax break, but it doesn’t eliminate the taxes, it just changes the way they’re being paid.
Jay Brodie: Well, the TIF is probably the best single weapon that the city has. Or, if you want to think of it as a tool in a kit of tools.
Melody Simmons: It is a tax break because, basically, the money does not go into the public general fund.
Jay Brodie: In the old days, the city was rich. Developer would say, I’m going to build some housing in West Baltimore, and I want the city to put in a sewer system. I want the city to pave streets. Maybe I want the city to do a nice little park, and we would build the housing around the park. City doesn’t have the money to do that anymore.
Melody Simmons: So if you’re having money that’s diverted out of your general fund for 30 years, that means that that’s less money for 30 years on that one project that the city has available.
Taya Graham: And therein lies the dilemma for Baltimore: How can you measure the effectiveness and fairness of an idea that people can’t even agree upon a definition? And who is right? What are they really? Tax breaks, funding for infrastructure? And if they are tax breaks, how much has Baltimore spent, and are they worth the price? Those are the questions we set out to answer. But what we didn’t know is how complicated the answer would be.
Part 2: A chestful of money
Carl Stokes: The Baltimore administrations have given money to people who never asked for it. They have just said, here, here’s a chestful of money, take as much as you want. Don’t worry about the next guy because we’re going to fill it back up with the poor people’s money.
Taya Graham: The fierce debate over defining TIFs, and, to some degree, PILOTs, does leave out a critical question, which may help us understand what they really are: Why do we need them in the first place? How did we get here, where practically nothing could be built without them?
And to answer, we have to go back in time almost 100 years ago, when state leaders made a fateful decision: that Baltimore would forever be separate from the county which surrounded it.
Jay Brodie: There’s two kinds of American cities in the post World War life: There’s the kind like Baltimore, Boston, Cleveland, Detroit, Pittsburgh that lost their power, either politically or legally, to expand. So Baltimore last annexed territory, including where we’re sitting here in Roland Park, in 1919.
Matthew Crensen: And so, as a favor to the county, the state legislature passed a law which empowered a commission of Baltimore Countians to arrange for the construction of their own jail and the rest of it. So finally, by constitutional convention in 1851, the state put the city and the county in two different judicial districts, and that was what brought about the separation.
Jay Brodie: And so, the 80 square miles of Baltimore, a compact little city, hasn’t changed. On the other hand, Houston, Dallas, Phoenix, San Antonio have taken huge amounts of, if you use the Baltimore example, not only the Beltway, but out of the belt, beyond the Beltway in the Hunt Valley.
Matthew Crensen: So Baltimore, I think one other city, St. Louis, is in the same position, is a free standing city, which has some real disadvantages because it means the county, where there are a lot of prosperous communities, has no responsibility for the city, no direct responsibility.
Jay Brodie: And it’s an enormous difference, and it won’t change.
Taya Graham: The city also pioneered racial segregation, passing a law that legally banned Black residents from living in predominantly white neighborhoods.
Matthew Crensen: That was what Baltimore became notorious for. Other cities around the country used that as a model. It tried to look as though it were racially even handed. It said that no Black person could move into a block where a majority of the residents were white, but no white person could move into a block where a majority of the residents were Black.
Taya Graham: Lines that were used to deny federal aid to those same communities and probably is, in part, responsible for the blight we see today. When the federal government was drafting an earlier plan to use federal money to back housing loans, it redlined Black neighborhoods.
Jeff Singer: So these maps from the 1930s track almost exactly the maps we have today of vacant houses, of arrests, of people in prisons, of gun violence, of educational attainment. They all can be overlaid on each other.
Taya Graham: And so much of the federal aid went to building downtown. And when the federal money dried up, blight got worse, and the long path towards tax incentives took hold — But not without help, because that century-old decision to isolate Baltimore from the surrounding counties also caused this.
I’m standing at the Baltimore City-Baltimore County line, and even though this line might be invisible, it still has huge implications for the future of our city. That’s because, a few feet either way, and the price of owning a piece of property doubles. In other words, a homeowner on this side of the street pays twice the rate as this side.
And thanks to the state, that arbitrary line is etched in stone. In 1948, the Maryland General Assembly passed a law prohibiting Baltimore from expanding at all. The result: a city isolated both economically and, to a certain extent, politically.
And so, as an exodus to the county began, the city was forced to raise taxes to maintain services. In fact, between 1958 and 1978, the city raised them — 15 times. And as the city shrunk, the cost of stepping over this line increased. The result was the city was left in a bind, with a shrinking population, the highest taxes in the state, and the federal government reluctant to help. How could the city save itself?
Part 3: Where’s the blight?
Jay Brodie: So the challenge is to keep businesses in Baltimore and attract new ones, and it’s tough.
Taya Graham: So with the federal government pulling back direct aid and cities looking for ways to develop blighted areas, some turn to tax subsidies.
Carl Stokes: We’re getting people already very, very rich who have the means to just work the system, so to say.
Taya Graham: One was the TIF, and the idea was to use it for blighted communities. And as we’ve heard already, TIFs allowed developers who were willing to build in neighborhoods that were otherwise neglected the ability to reinvest the newly generated taxes into the property. But as legalization to authorize TIFs expanded across the country, something strange happened. The initial idea about blight vanished and the number of TIF districts exploded, and the requirement that a neighborhood needed to be blighted to get a TIF disappeared.
Greg Leroy: So TIFs actually have a very interesting legislative history. The slum alleviation language from the progressive era, almost word for word, some of the early language in those statutes was then grafted onto state laws creating TIF districts starting in the ’60s and ’70s. But it’s vague language. It’s saying areas that are depressed, that have high rates of code violation, or sagging infrastructure, or poverty, or crime, or often it’s a laundry list of conditions, any of which you can grab and say, OK, that fits the problem. The trouble is, over time — And we documented this in a study a long time ago — Over time, states deregulate these geographically defined incentives so that you can have a TIF district anywhere where it will promote commerce and prosperity.
Taya Graham: But here in Baltimore, the idea of a TIF and what it could do about blight took a surprising twist. One of the primary boosters of TIF was this man: Jay Brodie. Brodie was the president of a quasi-public agency known as the Baltimore Development Corporation. What is a quasi-public agency? From Brodie’s perspective, a necessary evil in a city desperate for development.
Jay Brodie: Why form these nonprofits, you might say? Well, the kinds of activity, the economic development activity, were not classic activities of city agencies, but the idea was to not have to hire and fire people through civil service, to try to find people who were more entrepreneurial than the average city civil servant.
Taya Graham: But for others, the worst of both worlds: An agency legally able to operate outside the purview of public scrutiny.
Carl Stokes: And there was always men who sat in rooms after the meetings, before the meetings, and they decided what was good for Baltimore. And they decided how much of the taxpayer money should go to which developer, which project.
Greg Leroy: BDC has an unusual history, right? Because when it was created under then Mayor Schaefer and chartered by the state, it was actually exempt from the state open records act that only got reversed several years ago, 2003.
Taya Graham: And so when the city started to grant TIFs, a pattern emerged: The areas weren’t blighted. In fact, the majority of TIFs were approved for neighborhoods that were not redlined by the feds in the past — Including this massive project called Harbor East, where the city gave developers a 25-year tax exemption to build this massive Marriott hotel — Just $1 a year in taxes for a hotel worth roughly $130 million.
But even with all this money flowing to development, there was little attention paid to the behind the scenes deal making, a lack of interest that would change when the city tried to make its biggest deal yet.
Part 4: The worst deal ever?
Melinda Roeder (reporter): It is a pricey piece of waterfront land.
Speaker 3: The greatest development site on the East Coast.
Melinda Roeder (reporter): And the developer has big plans to build a corporate office complex here.
Speaker 4: Because all I want to see is jobs, jobs, jobs.
Speaker 3: If the TIF doesn’t get approved, what we see here today is what we will see for a long period of time, unfortunately.
Carl Stokes: I think this might be the worst deal ever. Ever.
Taya Graham: In 2012, the city made a big bet. It offered its most generous tax break ever, a $106 million TIF to build out Harbor Point, an undeveloped piece of waterfront property. The plan was to build office space and luxury housing, including the Maryland headquarters of the energy giant Exelon. But there was a catch: The area was not blighted. In fact, it was situated in one of the wealthiest neighborhoods in the city, which is why Councilman Carl Stokes had concerns.
Carl Stokes: They obviously were a neighborhood that did not need any incentive in terms of economic boost. It was already a very fine neighborhood, doing very well. The long story short is that because this particular Harbor Point wouldn’t qualify otherwise, they encircled a very large area including the Perkins Homes housing projects, low income project, and said that they were a part of the same neighborhood. Obviously, the income of the residents there were probably all less than $10,000 per annum.
Taya Graham: And nearby residents felt left out.
Perkins Homes Resident: And these places are so, so bad. the rodents, the bed bugs, the smells.
Taya Graham: But the conflict over Harbor Point not only raised questions about the city’s use of tax breaks for neighborhoods that seemed far from disadvantaged — It also exposed just how secret the process was for deciding who gets them.
Melinda Roeder (reporter): When the Baltimore Development Corporation granted preliminary approval for the tax break, Fox45 filed a formal request for details, but the city told us they are withholding that information. And today, when the City Board of Finance took up the issue, they decided to close the meeting, shutting out all media and the public.
Board of Finance Member: So please, I ask you all to please exit so we can conduct our business. Thank you.
Melinda Roeder (reporter): Just before conducting the city’s business, this city board charged with making decisions about your tax dollars kicked us out.
Taya Graham: Councilman Carl Stokes was chairman of the city’s taxation and finance committee. He recalls a pivotal meeting with developer Michael Beatty prior to the approval of the Harbor Point TIF. He wanted Beatty to offer more givebacks to the community. But it didn’t go well.
Carl Stokes: He did. He basically said, I’m not doing anything for anybody. And so, I don’t want to say he’s cursed. I don’t remember, to be honest with you, but he was adamant that he wasn’t doing anything, and he wasn’t going to consider anything. But I think he said that for a couple of reasons. Once, I think, the deal was already cut, I think, as we say, the fix was in. And so, he knew that he had the votes in his pocket, so to speak. And so, the argument that if you’re going to use the poor neighbors and their neighborhood and their community to get free money, you should at least be willing to give something legitimately. And he said no.
Taya Graham: We reached out multiple times to ask Beatty for comment. But for Stokes, the conversation with the developer wasn’t the only troubling aspect of the deal. He was also shocked at how little info the council was provided before they voted on the deal.
Carl Stokes: We’re giving people already very, very rich who have the means to work the system, so to say. And that’s what’s happening. So they’re giving it to rich people, people already rich, not poor people. We’re not making anybody rich. We’re making them a lot richer.
Taya Graham: But why was the process so secret? And what was the city hiding? These are questions that we soon discovered did not lead to simple answers.
Part 5: But…for?
Taya Graham: After Harbor Point was approved, city leaders celebrated. But many questions lingered and remained unanswered, and led us to dig deeper. In part, we wanted to gain a better understanding of what Councilman Stokes found so troubling. How could a city mired in poverty justify such a huge tax incentive? And what we learned was that critical to all these deals was an intriguing process that provided some clues to answer that. It’s called a but-for analysis. It’s supposed to make the case that the project won’t work without the TIF or financial support from the city.
But not everyone agreed that the conclusions were sound. And when New York Times reporter Luke Broadwater dug into the numbers, he uncovered something intriguing.
Luke Broadwater: The but-for analysis is a hypothetical projection that says we could not build this project if it were not for the public subsidy. It’s totally a theoretical enterprise. It is like all these projections and these reports. To a certain degree, they’re all made up.
Taya Graham: The but-for analysis for Harbor Point not only concluded the TIF would make the project profitable, but actually would make it more profitable. In other words, even without the TIF, the developers would still make money. It was just a matter of how much.
Luke Broadwater: And it basically says we’d make this much money with it and this much without it. And both times they’re making a ton of money.
Taya Graham: Which raised questions: Who created this analysis, and how? We learned it was a firm called MuniCap, a consulting firm that specialized in public finance. But for Stokes, it was a business that was benefiting from both sides of the process.
Carl Stokes: We had the fox in the hen house. The company who was going to be handling the bonds and making money off of the whole selling of the bonds, et cetera, was the person who did the numbers for the entire project and said, these numbers are great, these numbers work. These are the best numbers in the world.
Greg Leroy: But-for, we think, should just go away and die in the woods because it is really covering up the whole issue of a developer’s black box, their decision-making process. When people criticize a politician for overspending on a deal, they can say, well, but the developer signed the but-for clause. We’re all good to go. It wouldn’t have happened otherwise. But nobody can verify that because the developer’s decision-making process is a black box. Nobody goes in there and checks the balance, reads the board of director’s minutes, looks at the consultant’s reports to verify the truthfulness of that claim. So it gets the politician off the hook.
Taya Graham: Which raised another concern about the deal: Was the but-for analysis an accurate assessment of the risk and rewards, and who was involved in analyzing the details? To answer these questions, we went straight to the source.
Stephen Janis: Hello, Mr. Rice. Hi, this is Stephen Janis from The Real News. How are you?
Taya Graham: An official from MuniCap, the firm that both creates the but-for analysis and manages the bonds which finance the TIF.
Stephen Janis: Do you consider a TIF to be a tax break, or some people say it’s just to fund infrastructure, some people say it’s a development tool. From your perspective, how would you define a TIF?
Keenan Rice: Well, it actually varies by project, and it can vary by law. In Maryland, a TIF can only be used to fund public infrastructure. So as a matter of law in Maryland, that’s the only way it can be used.
Taya Graham: And we asked him how could a firm which determined if a project was viable also make money from it when the deal was approved? How could your company remain objective? And wasn’t the arrangement a conflict of interest?
Stephen Janis: Does the developer pay for the but-for or does the city? I wasn’t clear on that when I was talking to city officials. Who pays for you to do this?
Keenan Rice: Well, the city hires us to do it, but they make the developers pay for all of the application costs.
Stephen Janis: So does that present any conflicts to have both sides paying you in this situation, do you think?
Keenan Rice: No, it’s not, because it’s not that both sides are paying us, it’s just the developer has to pay the cost of our work, but we work under contract to the city.
Stephen Janis: Now, let me ask you again: You’re doing the but-for to justify it, the bonds, you’re going to make money off the bonds. Does that, in your mind, present a conflict?
Keenan Rice: Well, how would you find anyone to do the work if they don’t get paid for the work?
Stephen Janis: Well, no, I’m saying, but if the bond, you’re saying this is a good deal, and then the bonds get issued, and then you make money on the bonds. I’m just asking you if that, in your mind —
Keenan Rice: Yeah, to be clear, we make no decisions in the process. We’re not a decision maker. What we do is we prepare an evaluation, and the evaluations we prepare, we always use objective data.
Taya Graham: And his answer was, like many we encountered reporting on TIFs and other tax breaks: It’s complicated. But is it really? Because as you look around the city, the consequences of these complicated decisions are simple to see. A veritable city within a city, one that is shiny and new and one that is forgotten and neglected. Not a tale of two cities as we had imagined when we started this investigation, but actually two communities born out of a single idea: one that is taxed and one that is not, an idea that city leaders and developers said was the only path to growth. Which left us a single question we had yet to answer: Is that true?
But the only way to truly answer that question was to wait; Wait to see if the promises made by city leaders would come true, that TIFs and PILOTs would attract more residents, create jobs, and save a city that cannot grow. So we did. We waited. And as we did, we kept digging and watching and following the story. And when we decided it was time to assess the results, we were fortunate to be joined by legendary investigative reporter Jayne Miller.
Jayne Miller: There’s just not a single, easy, accessible place to look at all of them in real time and say, ah, there’s the number.
Taya Graham: First we delved into the data, but we realized it was not just difficult to find, but, in some cases, did not exist at all.
Jayne Miller: Just an example, under state law, the city is supposed to file reports every year reporting the economic benefit of about six or seven projects. All of them have PILOT agreements, Payment in Lieu of Tax agreements. What we discovered in the investigation was, since 2018, no reports have been filed. We started asking around about it, suddenly there they are for ’19, ’20, and ’21. But it’s just a good example of the lack of transparency around this process.
And so it’s frustrating that you can’t see, A, the total value. And what you want to be able to know is whether these incentives and subsidies and tax breaks are doing what they’re supposed to do, and that is to spur development, spur economic development, create jobs, et cetera.
Taya Graham: But we were also intrigued by a book recommended by a friend and what it said about the promise that cutting taxes for some would pay off for all. It’s called Baltimore Unbound. Written by a city planner named David Rusk in 1990, its thesis was stunning: Baltimore, he argued, was inexorably designed to fail.
The book details how the fateful decision to set Baltimore’s boundaries in 1948 made it impossible for the city to grow. Isolated economically and responsible for the vast majority of the region’s poor, the city would be forced to raise taxes and inevitably shrink. But what struck me the most was the conclusion: never had a city he called “inelastic”, like Baltimore, grown or got wealthier. No city had overcome the artificial boundaries imposed upon it.
And from that simple truism, it dawned on all of us that the tax system we had been trying to unravel was a product of this same design. That is, TIFs and PILOTs and other tax breaks weren’t a byproduct of some communal failure. Instead, it was the inevitable result of the decision to isolate us.
But to understand this idea fully, we needed more than Rusk’s words and ideas. We needed to see how this concept affected the city itself, to view the reality that could not be obscured by hiding facts and figures, burying reports, or not even filing them at all. So we decided to drive and find out.
Jayne Miller: So we’re going to take a visit to Port Covington, which is the new development going on on the south end of downtown. Now, this is phase one, but it did sit empty for a while, clearly, and I think there was a lot of questions like, well, are they going to do this?
Taya Graham: [Inaudible] Tell me a little bit about the Marriott Hotel.
Jayne Miller: This is the original deal in Baltimore, the original tax deal.
Taya Graham: Hello, my name is Taya Graham, and welcome to The Inequality Watch.
Protesters: [Inaudible] Let’s go. Hey, hey, hey. [Inaudible].
Taya Graham: The Marriott Harbor East, situated on Baltimore’s swanky waterfront. As we pointed out in the show, that hotel was the recipient of a generous tax break.
Jayne Miller: This is kind of what opened the gate to the idea of really lucrative incentives for a developer. This has a Payment in Lieu of Tax agreement, PILOT. It’s still in effect all these years later, went into effect in 2002, it’s still in effect. It’s more than $50 million that has been abated over that period of time — And it’s sold.
We are going right around the corner from the hotel, which was the first thing built here. And now this is what was known as the Legg Mason building. So this was the building that was built for the Legg Mason investment firm, and it has sold — And sold for the highest square footage amount ever in the City of Baltimore. There is a profit sharing agreement on this property with the City of Baltimore. And the question is, did the city get its share or take its share of the profit sharing agreement?
One thing we know is that the developer, original developer, Carbon Point, has sold now for, apparently, a profit. Looks like a nice profit.
This is like the heart of downtown. Charles Street, Baltimore Street, major transit stop, hotels around. And this is this huge hole in the heart of downtown. And it’s been like this for, what…?
Taya Graham: Since 2015?
Jayne Miller: 2015, right.
Stephen Janis: Sometimes you gotta go outside the city to get context, right?
Jayne Miller: Absolutely. Especially a city like Baltimore, which is surrounded by relatively thriving suburbs, and suburbs where developers flock to.
his is a relatively new community in Howard County between Columbia and Ellicott City. And in order to build these houses, they’d build new streets, run water, sewer, all that infrastructure. And what happens here in Howard County is the developers who build residential housing are subject to an impact fee.
Taya Graham: So why do you think areas like Howard County, Ellicott City are able to ask for impact fees from developers, but Baltimore City instead has to give away a tip?
Jayne Miller: Because developers will pay them.
Stephen J.K. Walters: So I’ve been studying cities for 40 years, never have I found a city that had a high property tax rate and was surrounded by a low property tax rate — In our case in Baltimore, roughly half the rate that we pay — I’ve never found a case where that situation created a viable, thriving, flourishing city.
Sandy Coles: How you doing? You a registered voter here in Baltimore City?
Louis Miserendino: The goal of Renew Baltimore is to bring about amendments to the Baltimore City Charter that would cut property taxes for all Baltimoreans over a six-year period.
Sandy Coles: How y’all doing? Are you registered voters here in Baltimore City?
Speaker 5: Yes, and I have already signed the petition.
Sandy Coles: Yay! Oh, wow. Wonderful. Alright, I love you.
Speaker 5: Thank you.
Stephen J.K. Walters: Almost invariably, those cities suffer a crisis of disinvestment. The capital flows, the capital investments are invariably from the core area to the surrounding, more favorable tax climate.
Louis Miserendino: I think one of the main challenges we face is that there’s a certain segment of Baltimoreans who worry that our plan will lead to cuts to the city budget and cuts to city services. But we’re optimistic that we have a responsible plan, and we’re confident that we know of many ways that the city can deal with any potential short run difficulties, should they arise.
Sandy Coles: It’s compassion. That’s the word, knowing you’ve got to see and feel and you’re able to give them what they need.
Stephen J.K. Walters: It’s terribly unfair. That’s the key thing that I’m just astounded that, in a city that stresses equity, that we think that doing this, that giving a tremendous subsidy to the people who are savvy enough to negotiate the quarters of power and get this done, and then the small homeowner or the small business person gets nothing because they can’t lobby.
Sandy Coles: How y’all doing? Good, good, good. Are y’all registered voters here in Baltimore City? I know y’all want to sign a petition to cut property taxes. Here you go. Right here. OK.
Stephen J.K. Walters: The status quo does work, to some extent, for some connected individuals. If you’re in City Hall and you are the broker of all these special deals, it’s, to some extent, an invitation to corruption. If people have to come to you to make their project economically work, well, I have a strong incentive to maintain that system, that status quo. That’s a structural factor that works for me, just doesn’t work for the city. And that’s why it’s necessary to go around the power structure and maybe take it directly to the people in the form of a referendum.
Sandy Coles: We picked up the mobile unit this morning, so we’re going to be canvassing neighborhoods over the next few days, hoping to gain more signatures for the petition to bring this issue to the ballot this November.
Part 6: The price we pay
Melody Simmons: So about four years ago, it came to our knowledge that there was a plan in the works to redevelop Perkins Homes. Perkins Homes, as you know, is an aged public housing development that is in a location, a golden location just north of Harbor East. So here comes this plan to tear it down, redevelop it, we’re going to turn it into a whole new area in the city — Of course, a TIF had to come with that.
The only way the numbers would work is if they upped the number of luxury apartments, market rate apartments in the Perkins Homes former public housing footprint, and reduced the number of reduced rate units. The Perkins Somerset TIF alone is a 36-year deal, and of that $105 million, $77 million is going to go to debt service repayment. $28 million of the $77 million is going to bond administration, legal fees, and other financial costs. So a lot of that money is going to the lawyers and the lobbyists.
Former Perkins Homes Resident 1: We’ve been doing this gathering since 1985. Every summer we have a gathering down here, and the people who lived here in the ’60s, ’70s, they’ll come back to see each other because sometimes they haven’t seen each other for 30 years. Since Perkins is going down, and they tearing it down, we decided to have another gathering.
Former Perkins Homes Resident 2: This was home. It was home. It was a lot crazier stuff going on. But this was home. I loved it. Even after we moved from down here, I still came to hang out.
Tom Hyatt: I moved to Perkins Homes when I was nine. It was in the spring of 1955. But this whole street was lined with townhouses and businesses, and none of it was rich, not at all. But it was just an amazing kind of place. But you can see in the city how the needs that came about became so drastic and so great, it would be almost impossible to keep up with all of that, I think.
Former Perkins Homes Resident 3: We got here in 1966. I came here when I was one year old. Whatever parent, you left your parents in Mason Court, the parents in Dallas Court will become your parents. If you get your [inaudible] Court, they will become your parents.
Former Perkins Homes Resident 4: It is home, babe. It’s going to always be home no matter what they do to it, tear it down, rebuild it back up, it’s home.
Taya Graham: [What do] you think of what the developers are doing here?
Tom Hyatt: It is very complex. I think that new development takes place, but it needs to incorporate the people who lived here before.
Odette Ramos: Hi, my name is Odette Ramos. I’m the councilwoman from the 14th District. In April, I introduced legislation to create a study and report so we can really drill down on the impact of TIFs, Tax Increment Financing, in the city, and think about a little bit differently how they can be applied to see if we can utilize money from TIFs for addressing our vacant property issue.
It’s not on a website anywhere. You can do the MPIA requests, but it’s very hard to get to really all of the data, and especially if you’re asking about impact, it’s very hard to get. The pitch that people are given when a TIF is introduced is, well, this is going to have all this economic activity — But what does that mean?
This legislation requires that the Department of Finance produce a report about the impact of our Tax Increment Financing projects and policies so far, examination of some of the reasons why some have failed. I had one in my district that failed.
Councilwoman: I question studies because I just, through projects within my district, when we get studies, it seems to continue to delay and delay the project.
Councilman 1: So, I see the TIFs already working. We should not be doing this, but right now the TIF works.
Councilman 2: OK. Is there a motion to move the bill favorably as amended? Second by Dorsey. Costello’s a no. Burnett? Dorsey? McCray? This bill fails with four votes in opposition, three in support. OK, next bill.
Odette Ramos: Did you just see that?
Stephen Janis: Yeah, yeah.
Odette Ramos: Did you see that?
Stephen Janis: How often does it happen when a council votes against a colleague who just has something and wants a report on something?
Odette Ramos: I don’t know. I’ve only been here for two years. I’m sure it’s happened before.
Stephen Janis: You seemed upset though.
Odette Ramos: Oh, I’m pissed. I’m really upset. I mean, I had no inclination that there was going to be any problems.
Jayne Miller: I mean, this is like needles in a haystack in terms of really trying to quantify what’s the number? How much money is not going to the general fund? how much money is not being used for city services, for resources for people, et cetera, et cetera because of these tax breaks and these tax subsidies and incentives, whatever you want to call them.
Greg Leroy: This tax break-industrial complex we have in America really is the way neoliberalism plays out in economic development for states and cities. That is, you use public dollars to reduce private risk. In some cases, in TIF, you actually guarantee a certain level of profitability for a developer by guaranteeing them future revenues to support a project. But it’s regressive taxation. In fact, we’ve got scholars now using our data to prove that, that places that use subsidies more heavily have greater degrees of inequality.
Speaker 6: Everyone who’s been responsible for Baltimore City’s economic development has faced the uphill challenge of how do you bring businesses and other development to a city that has twice the surrounding jurisdictions’ tax rate, a less effective school system, is best known nationally and internationally for its homicide rate?
Stephen Janis: As a reporter who’s covered TIFs for the better part of 10 years, the thing that disturbs me the most is telling the stories, the fiction that surrounds it, the fiction of things like infrastructure. One day I was just sitting at my computer looking at the numbers, and there’s no mention of infrastructure when they estimate how much a TIF is going to be worth. It has all to do with some speculative future value.
Jayne Miller: Since 2010, Baltimore’s population has dropped by about 35,000 people. I think we’re losing — I figured it out, it’s 294 people a month. And this has been going on for 40 years. Baltimore has yet to stop its population loss.
Stephen Janis: And this is a generational policy. These are generational decisions. The people who are going to be impacted is the future generation, not just us. And they have no say.
Greg Leroy: Baltimore is hardly alone in this problem. This is a national issue, affecting many big cities and counties and all the states. All the control over information over the public sector so that public officials, even if they wanted to effectively represent public interests in economic development bargaining, can’t.
Jayne Miller: It’s amazing the number of different credits, incentives that are offered in this city to try to convince people to live here, to build here, et cetera. And yet, with all of that, in the last 10 years, we’ve lost 35,000 people.
Stephen Janis: A lot of the media here likes to report on crime and the constant drumbeat of Baltimore being a failed city of crime and dysfunction. But isn’t it a bigger crime to take hundreds of millions of dollars out of our general fund that could go for police and schools? Whatever underlies community, it has to begin with fairness. And how fair is it to ask a grandmother on Pennsylvania Avenue to pay more taxes than a rich developer from Towson? How is that fair?
We have made the inescapable conclusion that the future belongs to the few, not to us, not to the residents, not to the people who pay the taxes, but the few who have the power to avoid them.
Part 7: We are worthy
Taya Graham: But just like a tax break is an idea, so too is a city. Meaning, what I learned telling this story is that Baltimore is not just a result of geography or boundaries or even buildings — It is an idea shaped by those who live in it. A sense of place, a community where people dream and struggle, thrive and survive in abeyance of a world that wants us to fail. And I could feel documenting this story something intangible, even hopeful, a desire within us to beat the odds despite the obstacles imposed on us, to succeed on our own terms because this is our home and we will decide how to shape it. The unassailable power of a community that will not be denied.
@KLoveThePoet: You are worthy. You are worthy. Even with all your woes, even after all the nos, even after slacking on your goals and letting yourself go. If he decides to stay or she decides to go, whether standing right next to them or feeling completely all alone. I’m talking with or without, you’re worthy.
Speaker 7: Our children are not going to have better. They’re going to have no homes.
Speaker 8: If it’s really important to know where the money’s coming from and what’s the impact of TIF and where this group is a little bit different. I’ve been in fair housing or working in this work for 22 years. I’ve never seen it being led mainly by women.
David Rusk: Hey, hello. How are you doing? How are you?
I pulled this book out just to show you the greatest book cover ever.
Taya Graham: Oh, that’s an amazing cover [Janis laughs].
David Rusk: I was a member, a voting member of the 13-member task force on inclusionary housing appointed by the city council. And we came up with a study and a set of proposals and a draft legislation that was vastly different from the facade that was adopted, ultimately, by the city council, it was an inclusionary housing bill in name only, not an actual impact. So what you’re doing is giving tax breaks to developers, who are, for the most part, increasing the level of economic segregation in Baltimore City.
[CREDITS ROLL]
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