Baltimore is often maligned as a shrinking city beset by crime and intractable poverty. But take a walk down President Street just south of Little Italy on a Friday night, and you will enter a world that appears far removed from the idea of a city that is terminally in decay.
Past the empty pavilions of the Inner Harbor and east of the city’s increasingly troubled downtown business district, a cluster of towering high-rises emerges from the harbor like a defiant mountain range of concrete.
A cobblestone boulevard leads to a European-style thoroughfare dotted with a dazzling array of upscale restaurants and outdoor dining patios. Lines of traffic spill onto the side streets as eager tourists vie for hard-to-find parking spots.
The outdoor bars and retail shops thrum with activity while the upscale Four Seasons Hotel sits astride panoramic views of the tranquil harbor. Stories of luxury condominiums extend into a swanky dance club, which perches atop the building like a palatial penthouse. An express elevator operated by a top hat-wearing attendant delivers partygoers to an often-packed dance floor.
It’s a world unto itself, seemingly far removed from the David Simon-conjured Wire-fied landscape of a failed city beset by corruption, drug dealing, and over policing: An upscale bubble that offers a gleaming rebuke to the naysayers who deem Baltimore a dysfunctional city of a dwindling population and violent crime.
But it’s a success story that comes with a hefty, less obviously apparent, asterisk. Harbor East is, in some sense, a taxpayer-bolstered paradise.
Based on the findings of our nearly year-long investigation into how Harbor East came to be, this shining city within the city is a success story heavily dependent upon public subsidies to an extent that has not previously been reported. It is a waterfront oasis fueled by dozens of tax breaks and incentives, built and sustained by tens of millions of dollars in city money.
How these tax subsidies have both defined and transformed Harbor East is a story entangled in the city that surrounds it. As our ongoing investigation Tax Broke has revealed, it is a tale of how a community walled off from its affluent suburban neighbors turned to tax incentives to reverse years of decay and population loss. But it’s also an example of the secrecy that obscures the details of how much this policy costs and who it really benefits.
As this spreadsheet illustrates, records obtained by TRNN reveal that, between 2012 and 2022, Harbor East received roughly $115.8 million in tax relief from the city through various subsidies and incentives.
However, despite numerous Maryland Public Information Act requests, city officials would release only a limited range of data from 2013–2022 pertaining to Harbor East tax records. They also would not release separate tax bills regarding a series of PILOTs—payment in lieu of taxes—granted to buildings within the development, which led to additional tax savings for developers.
Still, what we were able to obtain paints a picture of a luxury development built upon a foundation of public subsidies.
The most lucrative of these incentives went to the Marriott Waterfront Hotel. To date, $57 million in property tax has been abated, part of a 25-year PILOT that requires a tax payment of $1 per year.
But the city has also granted tax relief to a variety of other buildings.
Roughly 75% of the additional Harbor East properties garnered subsidies worth approximately $58 million in just under a decade. The bulk of the tax breaks were PILOTs, given to at least seven properties comprising the waterfront development.
PILOTs offer fairly straightforward tax relief: Property taxes are phased in over time on a sliding scale, from a small percentage of the actual tax bill to a greater share of what would actually be owed. A ten-year PILOT, for example, might require the property to pay 5% of the entire tax bill for the first three years, then 20% for the next four, and, finally, 80% for the remaining two. But the city has been opaque about the tax savings from individual PILOTs, removing the data from online tax records and ignoring our requests for additional data.
But some properties were granted more than one tax break.
The pricey office tower built to house the Legg Mason investment firm benefited from both an Enterprise Zone credit and a PILOT. The subsidies were intended to maintain 600 jobs and keep the firm’s headquarters in the city.
Legg Mason was acquired by California-based investment firm Franklin Templeton in 2020. The name is currently off the building, but the subsidies remain. Records show the owners of the building have not been required to pay full city property tax since 2018.
In addition to the PILOTs, multiple other buildings within the same development also received Enterprise Zone tax credits and abatements under the Brownfields incentive program. Each forgives a percentage of property taxes ranging from 50% to 75% of the entire tax bill for five to ten years, depending on a variety of criteria.
The Enterprise Zone credit is designed to spur commercial development in poor neighborhoods but was expanded over time to include the entire city. The Brownfields credit incentivizes developers to remediate contaminated properties and offers a similarly generous 75% reduction in tax bills for five to ten years.
The Four Seasons Hotel and Private Residences used a Brownfield credit to save roughly $10.6 million in taxes over the past decade. This incentive included nearly $6 million for the luxury condos that sit atop the hotel.
The $115 million figure does not paint a full picture of the taxpayer tab for Harbor East. The scope of our calculations is limited by the fact that many of the tax credits granted to these developments were in effect prior to 2013—records that were not available, according to city finance officials.
The lack of transparency is, in part, due to how the city bills properties that receive tax subsidies.
Special credits like Brownfields and Enterprise Zones are not detailed online. Instead, we had to ask the city for copies of the separate paper bills it mails annually to developers, which list the value of the credit. From the paper bills, we calculated the 10-year figure for taxes abated through Brownfields and Enterprise Zone tax credits that contribute to the $115 million taxpayer tab.
Even the taxes abated via PILOTs were challenging to calculate. The city told us tax bills for PILOTs are mailed separately from ordinary tax bills, including special credits. We asked for copies of the separate PILOT bills, but the city would not release them, again without explanation or response to our request.
To work around the lack of data, we obtained two decades’ worth of property assessments for all the parcels that comprise Harbor East. We used the value of the buildings to calculate the property taxes owed in any given year. Then, we applied the formulas outlined in council legislation, which authorized several of the Harbor East PILOTs to estimate the tax savings for a given PILOT to arrive at the approximate figure.
