(IND) Expanded Baltimore apartment tax credit would benefit new Inner Harbor projects

The developers of two prominent downtown Baltimore apartment projects will be among the key beneficiaries of Mayor Stephanie Rawlings-Blake’s expanded tax incentive plan for apartment development.

Questar Properties Inc.’s proposal for a high-rise apartment tower at 414 Light St. and the Abell Foundation’s effort to redevelop the former University of Maryland Specialty Hospital at 601 S. Charles St. are both outside of two tax incentive zones the city had offered developers. But Rawlings-Blake’s bill set for introduction Monday expands the tax incentive zone citywide, answering calls to make the southern portion of downtown eligible for the tax incentive.

Kimberly Clark, executive vice president of the Baltimore Development Corp., said there was concern that tax credits wouldn’t be available to large projects such as Questar’s Light Street property, a site that has stood vacant since McCormick & Co. Inc.’s spice plant was razed in the 1980s.

“It’s a discussion we had with the administration, and because there were also other developments that were coming online citywide, we looked at it and decided to introduce the bill,” Clark said. “This is our response to them being extended.”

To reduce the impact on taxpayers, the tax abatement has been reduced from 15 years to 10 years. The threshold for eligibility is also now lower: Buildings of 20 units or more are now eligible instead of the 50-unit limit that was offered under the old bill.

Clark said the tax abatement will be 80 percent in the first five years after improvements are completed, and it then it gradually decreases by 10 percent in years six through 10. The developer then pays taxes in full in the years after.

The former tax incentive plan offered a 100 percent abatement in the first two years, then gradually reduced the percentage of the abatement to 20 percent in years 13 through 15. But that incentive was only available to parts of downtown and seven other neighborhoods.

Robert C. Embry Jr., president of the Abell Foundation, said his organization is in negotiations with Florida-based apartment developer Zom Realty Inc., which has said tax incentives will be key to redeveloping 601 S. Charles St.

“They think it’s critical to them to develop any residential downtown that there be a phased in reduction of property taxes,” Embry said. “Whether they want to proceed or not is what’s going to happen with the legislation.”

Questar CEO Stephen M. Gorn called the tax incentive “an important factor in any underwriting,” but did not say his proposal depended upon it.

“It would certainly be nice if it were” extended, Gorn said. “It would be a nice motivator.”

Gorn’s proposal calls for a 40-45 story apartment tower.

Source: Baltimore Business Journal