Baltimore's property tax privileged and punished

Baltimore’s property tax privileged and punished

The Northwood Plaza shopping center (Algerina Perna / Baltimore Sun)

Everybody wants nice neighbors. Unfortunately for Morgan State University, the property next door is Northwood Plaza, a dilapidated shopping center that includes boarded-up storefronts and abandoned spaces.

“The shopping center has deteriorated to the point where it is the site of serious criminal activity, and it is an eyesore of the highest order,” University President David Wilson testified at a recent Baltimore City Council committee meeting. “It is literally in Morgan’s backyard. Morgan deserves better. We deserve much better than what we see currently in our backyard.”

Of course, residents of the neighborhoods surrounding Northwood Plaza deserve much better too. Like many Baltimoreans, they are adversely affected by dilapidated properties, criminal activity, eyesores and a general lack of access to quality shopping — despite a prime location that seems to make perfect sense for vibrant commercial activity. Northwood Plaza is in the backyard of a university filled with thousands of students and nearby residents who undoubtedly would love easy access to safe hangouts, reputable stores and new job opportunities.

The same frustrating situation exists in many underserved Baltimore communities near other important institutions. One would think that developers and entrepreneurs would be clamoring to fill such obvious needs. And they actually are in the case of Northwood — but in exchange for a sweet deal.

For years now, we’ve heard much about the “two Baltimores,” with the dividing line between them typically identified as race or income. But there is another schism in the city that separates a privileged class from the rest of us: property taxes, and who actually has to pay them.

With the normal real property tax rate at 2.248 percent, a Baltimore City property assessed at $50 million — the price tag for a proposed mixed-use retail and commercial town center on the plaza site, which would be renamed Northwood Commons — slams its owners with an annual bill of $1.124 million. Compare that to an annual bill of $550,000 in Baltimore County, where the tax rate is less than half the city’s.

Moreover, since the personal property tax rate is two and a half times the real property tax rate, business owners in Northwood Commons typically would have to pay a 5.62 percent annual tax on property physically located inside their businesses. Per $100,000 of office equipment or machinery, city businesses pay $5,620 in annual tax versus $2,750 in the county. No wonder Northwood Plaza is in bad shape.

This is life in “Property Tax Punished” Baltimore, where vast tracts of the city suffer from a tax rate that repels much needed investment.

But if developers have the right connections — as, it turns out, the Northwood Commons developers do — then there is a narrow and exclusive path that leads to a “Property Tax Privileged” Baltimore. On Monday the Baltimore City Council voted to support millions of dollars in property tax breaks for the proposed Northwood Commons redevelopment, which is expected to reduce crime, eliminate blight, create jobs, support the university and improve the community.

Once state officials sign off as expected, the blighted shopping center in Morgan State’s backyard will officially be located in a tax break area known as a RISE Zone. And Northwood Commons will rise as $50 million pours into the project, which will receive a generous 80 percent discount in property taxes for five to 10 years. The grand plans include a two-story Barnes & Noble bookstore with a Starbucks, along with the possibility of a grocery store, student apartments, offices and space for campus police.

Sadly, investment dollars will not be pouring into "Property Tax Punished" Baltimore anytime soon. If you are not in a favored area, like a RISE Zone, then rising is virtually prohibited. It is great that Morgan State will finally get the nice neighbor it deserves, but it is a shame that most of Baltimore lacks the right connections.

Until our elected officials decide that the entire city is worthy of privilege in the form of fair and widespread property tax relief, Baltimoreans will be stuck with the dilapidated property next door.

Louis Miserendino is director of the McMullen Scholars Program at Calvert Hall College High School and is a visiting fellow at the Maryland Public Policy Institute. His email is louismiserendino@gmail.com.

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