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In Baltimore Nothing is Sacred……Except TIFs and PILOTs for Businesses

Baltimore City is looking to renegotiate agreements made with non-profit organizations regarding payment-in-lieu-of-taxes (PILOTs) made by the groups to the city:

Elected leaders in Baltimore want to revisit — and potentially renegotiate — a long term, multimillion-dollar deal under which major nonprofit institutions make annual payments to the city in lieu of taxes, arguing that looming budget woes from state school reform mandates and other big-ticket expenses will necessitate increased revenues in coming years.

City Councilman Eric Costello, chair of the council’s budget committee, said he will introduce a resolution Monday calling on signatories to the 2016 memorandum of understanding — including the city’s medical and educational anchor institutions — to brief the council on the deal’s “efficacy” and on “options for reopening and renegotiating” its terms.

“This is about having a discussion,” Costello said, noting that any effort at striking a new deal would ultimately have to come from Mayor Bernard C. “Jack” Young, not the council.

Young, who helped negotiate the 2016 deal and at the time said it would help strengthen city services and finances, said this week that he’s glad Costello and the council are revisiting the deal, in which the institutions are set to pay the city $6 million annually through 2026.

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“It’s something that really needs to be looked at again, since we’re about to face all these budget difficulties,” Young said. “I’m going to take any recommendations that they have.”

The bottom line of Costello’s attempt to renegotiate these agreements is the fact that property taxes pay for a bulk of the city government’s largest expenses, including public school funding. Unsurprisingly, this renegotiation is being pushed by city-based unions and other far-left leaning activists.

If this conversation about city taxes, non-profit organizations, and school spending sounds familiar, it should. Property taxes in Baltimore City have been insufficient to pay for Baltimore City’s education expenses for years. More than once the city has needed a bailout from state taxpayers in order to meet its funding requirements, something that led to a change in state law pushed by Democrats to make such city bailouts permanent. And given how Baltimore City is expected to increase its funding by nearly 100% under the Kirwan Commission recommendations, the city is going to have to find that money somewhere.

What’s interesting, however, is the fact that Costello is looking at renegotiating PILOT agreements with non-profit groups instead of the actual cause of Baltimore’s PILOT problem. As we have discussed in the past, Baltimore leaders are addicted to Tax Increment Financing and PILOT deals for private development that waives property taxes on certain properties in sweetheart deals given to politically connected developers and investors. Remember when the city wanted to float $660 million in bonds for Kevin Plank’s Port Covington scheme? Costello finds it perfectly fine to not consider renegotiating those deals with Kevin Plank or other politically connected city developers at the expense of non-profits.

I guess Costello finds more value in Plank than he does the signatories to this deal, which include Bon Secours, Johns Hopkins Hospital & Johns Hopkins Bayview Medical Center, MedStar Good Samaritan, MedStar Union Memorial, Mercy Medical Center, Sinai LifeBridge, St. Agnes Healthcare, University of Maryland Medical Center, University of Maryland Medical Center Midtown Campus,  Johns Hopkins University, Loyola University Maryland, Maryland Institute College of Art and Notre Dame of Maryland University.

What’s even more amazing about this attempted renegotiation with non-profits is the fact that while this negotiation is going on, Mayor Jack Young is pushing his ill-advised Pimlico deal that, if enacted, will take even more land off of the city tax rolls when the Stronach Group donates the land for Pimlico to a non-profit controlled by Baltimore City. It’s safe to say that this city-controlled non-profit will not be asked to sign any major non-profit tax deal.

Baltimore always does a wonderful job reminding everybody that Democrats are truly the party putting business interests above the needs of the people.

And speaking of renegotiating, Baltimore City government seems to have an obsession with renegotiating deals that already exist. While Costello tries to renegotiate this three-year old deal with non-profits, the city government is also trying to force the state to renegotiate the deal made with casinos regarding the Racetrack Facilities Renewal Account and the compact made with state residents regarding the casino lockbox when voters approved the Constitutional Amendment at the ballot box last year.

If Eric Costello were truly serious about fixing the budget hole that Baltimore finds itself in, there are a number of ways that he could do it. He could work to reduce bureaucratic red tape that makes it difficult to start a business. He could work on reducing crime to make Baltimore a more liveable place. He could work on getting Baltimore’s comically poor streets repaved. He could cut taxes and fees to try to spark growth and development. He could fix or end the PILOT or TIF process for private businesses. But no, Costello decides his priority needs to be going after non-profit institutions that constitute the top eight employers in Baltimore City.

I guess in Baltimore nothing is sacred….except protecting those precious PILOTs and TIFs for wealthy, politically connected business interests.



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