When Chesapeake Systems, a computer-support company, opened a new office in Hampden with 22 employees in September, M.J. “Jay” Brodie told the owners not to expect a laudatory article in the media.
“You guys are not big. You’re not in downtown. You’re not in a scandal,” the president of the Baltimore Development Corp. (BDC) recalls saying. “But you are most important to Baltimore. You are the future of Baltimore.”
In much the same way, Brodie says he doesn’t expect the media to report on the BDC’s many successes in spurring economic growth and jobs across the city. But what has disturbed him, he says, is the “vitriol” now directed against the agency.
The BDC came under attack during the mayoral campaign for neglecting city neighborhoods and handing out “backdoor bailouts” to rich developers like David Cordish. In July, picketers gathered in the lobby of the agency’s Charles Center offices to voice their unhappiness with the low-wage jobs that the tourism industry promoted by the agency have spawned in the Inner Harbor.
Another protest is scheduled for 5 p.m. today at 36 South Charles Street sponsored by a group called “Another BDC is Possible.”
Mum on his Own Future
In short, these are tough days for Jay Brodie. He had anticipated that his hard work in helping to create Baltimore’s Harbor East and rounding out the Inner Harbor would bring the kind of adulation that was showered on the late Walter Sondheim (chairman of Charles Center-Inner Harbor Management) and William Donald Schaefer (four-term Baltimore mayor) in the 1980s.
But times have changed, and tempers have flared over the purpose, utility and actual benefits that the city gets from the BDC. There is mounting speculation that Mayor Stephanie Rawlings-Blake will replace Brodie as she undertakes a promised reorganization of the agency following her re-election.
During a series of interviews, the perpetually smiling 75-year-old – who entered city government in 1964 and became head of the BDC in 1996 after 12 years of working in Washington – wouldn’t talk about his own future other than to say that he “serves at the pleasure of the mayor.”
His main interest, he says, is to set the record straight about the agency, its mission, and its plans for the future.
Reviewing the criticism of the BDC, Brodie has come to the conclusion that there are two kinds of people attacking the agency. “People who don’t know” and “People who know better but nevertheless said things that the evidence shows is untrue.”
He added: “I tend to be the face of BDC, and some of [the criticism] has become personal. Nobody likes that, it can hurt. But does one understand it? Yes. Still, I am disappointed that people did not come in and talk to me before they made allegations that were not supported by the facts.”
What the BDC Does
The BDC is a 501(c)3 non-profit corporation on contract with the city of Baltimore to act as its economic development representative.
It was formed in 1991 by a merger of three quasi-government entities – Charles Center-Inner Harbor Management, Howard Street Market Place and the Baltimore Economic Development Corp.
Many people are aware that the BDC has significant power over city-owned land slated for redevelopment in the Inner Harbor and Harbor East.
But the agency is also responsible for the city’s Westside Initiative, consisting of 100 square blocks anchored along Howard and Paca streets; the Russell Street and Washington Blvd. corridors; and city-owned industrial and retail properties in just about every neighborhood.
It holds additional powers administering the Enterprise Tax Credit and Empowerment zones, which encompass large swaths of the city below North Ave. These zones provide property and employment tax credits to eligible businesses, including employers located along Reisterstown Road, York Road, Harford Road and Belair Road.
What’s more, the agency runs the city’s Foreign Trade Zone. This consists of 2 million square feet of import-tax-free industrial and warehouse space in Locust Point, Fairfield, Canton, Orangeville and Holabird.
Blocking and Tackling
“I don’t spent my days giving out tax breaks to Mr. Paterakis,” Brodie said, referring to the 1997 deal brokered by the BDC that saved John Paterakis, majority owner of the Marriott Waterfront Hotel, about $90 million in property taxes through 2022.
In fact, he has a statistic – 94% – which he says is the proportion of projects handled by the BDC that are not located in the downtown.
“It’s not glamorous,” Brodie says of the BDC’s daily work in neighborhoods and administering the foreign trade zone. “It’s blocking and tackling, not long passes. It’s outreach. It’s hand holding. It’s helping hundreds of small and medium-sized businesses expand. It’s finding better places [for companies] so they can remain in the city.”
In the case of Chesapeake Systems, Brodie said, the BDC “helped with a zoning change and with building permits” that allowed the company to move from Mill Centre into the fire-damaged Mt. Vernon United Methodist Church in Hampden. The move allowed the company to expand and open its first retail center.
Attracting and Retaining 58,000 Jobs
The BDC keeps meticulous count of the jobs that it retains or attracts. Since Brodie became president in 1996, the agency claims to have retained or attracted an “estimated” – and it’s a mighty precise estimate – 58,725 jobs in 993 businesses, “resulting in a capital investment of $3.2 billion.”
If correct, that means that the BDC was responsible for 21% of the 275,608 non-government jobs in the city in 2009, according to the U.S. Census Bureau.
Since the city lost more than 28,000 jobs between 2000 and 2009, the BDC’s efforts have either been a godsend or a weak response to the city’s overall employment picture, depending on one’s viewpoint. The head of the BDC takes the half-full rather than half-empty position.
The job numbers tell only part of the story, Brodie says. One of the agency’s greatest successes has been tourism – the part of the BDC’s portfolio targeted for criticism and picketing last July.
By assisting in the creation of many downtown hotel projects – such as the Inner Harbor Marriott, Hampton Inn & Suites, Marriott Residence Inn and city-financed Hilton Baltimore – the BDC stoked and supported the tourist trade that now counts as one of the city’s largest “industries.”
In addition, tax credits and loans engineered by the BDC led to a major turnaround of two important neighborhood shopping districts, Mondawmin Mall and Belvedere Square.
“We start a wave action by taking a risk” on a project or a developer, Brodie explains.
Tax Breaks to Developers
In practice, this means using tax breaks to attract new capital.
The BDC typically negotiates tax breaks for developers through two mechanisms – PILOTs (Payments in Lieu of Taxes) and TIFs (Tax Increment Financing).
PILOTs are the most controversial method. A developer pays the original base property tax (usually minimal because the land has been cleared of property), plus 5% of the assessed value of the improved property. This results in 95% tax forgiveness.
In the case of the Marriott Waterfront Hotel, the BDC entered into a 25-year PILOT with Harbor East Ltd., a Paterakis company. Last year, the company paid $49,566 in property taxes to the city and was excused from $3,374,525 in taxes under the PILOT.
Brodie emphasizes that PILOTs and TIFs were established by state law, and the BDC only administers the law with final approval for all tax breaks coming from the mayor and the Board of Estimates.
His longstanding principle for awarding tax breaks is the “but for” rule, meaning that a project would not be built “but for” the use of the tax credit. “This is always a judgment call,” Brodie cautioned, but it comes as a result of a “lot of study” and “process” by both his agency and other city officials.
What’s more, all 13 PILOTs awarded under his tenure were approved by one of the three mayors he has worked under prior to Rawlings-Blake – Kurt Schmoke, Martin O’Malley and Sheila Dixon.
Meetings with Local Moguls
To get a sense of Brodie’s own schedule and priorities, we asked what business groups he met with in August and September. A meticulous record keeper, he gave us a list of 18 parties.
Nearly all involved key city development projects. He held meetings with David Cordish and the Cordish Co. (a developer with stakes at the Inner Harbor Power Plant and Westside urban renewal), Forest City Enterprises (prime developer of the East Baltimore housing project north of the Hopkins Medical Complex), Michael Beatty (Paterakis’ real estate chief), Mark Attman of Attman’s Delicatessen, Doug Schmidt, a warehouse owner, and J. Scott Plank, vice president of business development for Under Armour (the sports-wear manufacturer seeking to expand with a TIF district in Locust Point).
He was also involved in prodding along developments that have faced various and at times lengthy delays. Among them: R. Richard Walker’s 25th Street Station (the Walmart project in Remington), “Superblock” (the Westside mixed-used project recently given two extensions by the Board of Estimates), A&R Development (trying to build a supermarket at Oldtown Mall), and Mark Sapperstein’s City Center (which has scaled back its proposed luxury hotel tower).
Small Businesses and Cultural Tourism
The son of a small shopkeeper in East Baltimore and an architect by training (with degrees from the University of Virginia and Rice University), Brodie is very comfortable talking about the future he sees for Baltimore.
That future will be driven by small businesses in the fields of medicine and biotechnology – many nurtured, he adds proudly, by the Emerging Technology Center run by the BDC.
“It won’t be Bethlehem Steel, Western Electric or other smokestacks,” he says, clicking off the names of companies that have disappeared from the city’s landscape and would scarcely be known by many of the tech entrepreneurs Brodie now describes as the city’s best hope.
In addition to start-ups, Brodie sees Baltimore as a center for warehousing and distribution, a regional hub for financial service companies and a tourist destination that – with the help of BDC tax credits and grants – would include vibrant “cultural tourism” along lower Pennsylvania Avenue and other historic black neighborhoods.
“Call me a dreamer,” Brodie said with his trademark cheerful cackle. “I’m not the only one. Think of what Baltimore would be like today without the Inner Harbor, without Harbor East, without the Marriott. It takes imagination and persistence to work through the process and get results. Yes it does.”