A draft lease obtained by The Brew confirms that developer David Bramble would get a sweeping property tax write-off on his Harborplace project, reaping at least $200 million in savings over 25 years if his company’s build-out of commercial, retail and apartment space is completed.

The lease calls on MCB Real Estate, which Bramble co-founded and heads, to pay only “five percent (5%) of the Baltimore City real property taxes otherwise due” through 2051, plus the current, very low property values “preceding the commencement of construction activities.”

Based on the draft lease terms, MCB would likely pay no more than $1 million a year in total property taxes if it adds a promised $500 million in value to the property. This compares to over $11 million due if the completed project paid the current city tax rate ($500 million x $2.248 per $100 of assessed value = $11,240,000).

The difference would result in an annual tax savings of roughly $10.2 million by 2031, the year when MCB hopes to complete the project, leaving the company with 20 more years to enjoy the same tax benefits.

In 2023, Scott and the BOE approved abatement of all rent on the pavilion properties.

• Rent abatement and a three-year grace period handed to Harborplace’s new owner (4/19/23)

The Brew has also learned that Scott administration is weighing whether to hold a special meeting of the Board of Estimates where the mayor would have the votes to push through the property tax write-off.

The board, controlled by Scott and his two appointees, would approve the lease that sets the terms of the deal.

The board’s other two members, Comptroller Bill Henry and City Council President Zeke Cohen, have signaled their support of the new tax abatement program that authorizes the tax break.

The lucrative deal was made possible by the Downtown PILOT program signed into law by Governor Wes Moore.

The lucrative deal was made possible by the Downtown PILOT (payment in lieu of taxes) program signed into law by Governor Wes Moore.

The emergency legislation (HB 1232) was passed by the Maryland General Assembly last April to aid Baltimore’s central business district, which has been plagued by widespread property devaluations, vacant commercial and retail space, and declining foot traffic.

The downtown area has lost over $647 million in property value and has over 1.7 million square feet of vacant or “at risk” office space, the Greater Baltimore Committee told the House Ways and Means Committee that advanced the PILOT legislation.

Public Benefits Cited by Mayor

Mayor Scott pushed hard for a PILOT tax break for Bramble’s project as a way to “drive Baltimore’s Renaissance forward” by transforming the mostly empty Harborplace pavilions – hailed in the 1980s as the key to revitalizing Baltimore’s waterfront – into a mix of high-end apartments and sleek commercial and retail development.

Scott told the House committee that “for each dollar of property taxes that Baltimore foregoes through a PILOT, the city stands to received more than a dollar in return for these improved properties through income taxes, sales tax, hotel occupancy tax and other revenue streams.”

According to his testimony, “PILOT agreements have proven successful in cities across the county and recent agreements in Baltimore have also provided a net economic benefit to the city.”

Scott did not cite any specific PILOT agreements to back up his claim. Most famously, the Kurt Schmoke administration gave a 25-year year PILOT to the late Harbor East developer John Paterakis Sr. that resulted in $1-a-year property tax bill for his 750-room Marriott Waterfront hotel.

On August 31, the Baltimore Development Corporation announced its approval of MCB’s PILOT application, but did not disclose any of its terms, including how much the tax break would cost the city.

The Scott administration has also been tightlipped, refusing to provide a timeline for Board of Estimates action needed for the tax abatement to go into effect. (Under the new legislation, the City Council has no say in evaluating or approving downtown PILOT tax breaks.)

In the meantime, a group of prominent citizens, including developer David Tufaro, former 2nd District Councilman Anthony Ambridge, economist Anirban Basu and architect David Benn, have filed a lawsuit to block the Bramble project, claiming city officials bypassed charter and code provisions and rushed rezoning to hand the property over to a favored developer.

The plaintiffs seek to stop the city from issuing demolition or building permits while litigation in Baltimore Circuit Court proceeds. Separately, Tufaro has submitted an application to the Maryland Historical Trust to place the Harborplace pavilions on a list of historical landmarks to try to save the buildings from the wrecking ball.

The special meeting of the Board of Estimates is premised on permitting Bramble to proceed with construction, including demolition of the Rouse-built Light Street and Pratt Street pavilions.

The draft lease, however, includes a caveat that might hobble the developer’s plans. It says that before construction can begin, MCB “shall submit to the Department [of Housing and Community Development] evidence that Developer has the equity, capital and/or commitments for financing necessary for the construction of such improvement(s).”

But the lease continues with a potential loophole: “provided, however, that Developer shall only be required to demonstrate such financial capacity at the time Developer applies for building permit(s) for any particular Phase of the redevelopment.”

The language suggests that MCB could demolish the two pavilions, while still not showing evidence of securing the $500 million in private investment that Bramble says he needs to complete all phases of the project.