By Rhonda Wimbish
(BALTIMORE – June 29, 2016) – Port Covington is anything but a promising development deal. There are no details such as a breakdown of the development phases, cost of infrastructure installation, cost of materials and labor, etc. Baltimore’s Board of Estimates (BOE), Baltimore Development Corporation (BDC) and now Baltimore’s Planning Commission have approved a “Straw-Man” deal.
Next week Baltimore City property owners will receive property tax bills, but our tax money has already been spent. Property tax dollars are used to create bonds; bonds allow the city to borrow money, but the money being borrowed is not being paid back. It’s sounds a little like Bernie Madoff’s ponzi scheme, using someone else’s money to pay another person. The difference is the only money being paid is the tax payers money, not the developer’s money, which makes this a “Straw-Man” deal. Straw-Man deals create a draft proposal, outline the markets for good prospects, present a draft proposal, draft a new proposal and subsequent proposals. There is no liability for the “Straw-man”.
Sagamore is acting as a broker, not a developer. They have land rights, but they want to find other developers to propose development contracts which will include Phase 1, Phase 2, Phase 3 and Phase 4 with the breakdown of money. So where is the property tax money from hard working citizens of Baltimore City going? The money is lining pockets and this massive Tax Increment Financing (TIF), that will never benefit the communities in Baltimore City but will increase the bond rating, so more money can be borrowed. Many of us in the real estate field are aware that this is how the real estate market bubble burst in 2008 and placed our country in a recession. It’s called over-borrowing.
The Securities Act of 1933, which was legislated because of the stock market crash in 1929 and amended as the National Securities Markets Improvement Act of 1996, is the only protection for the residents of Baltimore City against the predatory TIFS that are multiplying without any financial results given to the investors. The tax payers are the investors, not the bond holders. The reason the Securities Act of 1933 applies is because Baltimore City’s general operating fund has only one source of primary stability and that is the property taxes paid into the operating general fund. Property taxes are the primary security of Baltimore City.
Baltimore City Council: Our legislators are responsible for informing the constituents of Baltimore City that pay taxes what kind of financial return is being created on the TIFS that already exist. In 2011, the BDC had a negative $135 million in TIFS that they were managing. The number probably has tripled, but since the BDC holds closed meetings and Baltimore City Council’s President Jack Young has not filed legal action against the BDC, the residents of Baltimore City will be in the position to file legal action against the Baltimore City Council if they choose to vote on Port Covington without any hearings and communication about the existing TIFS.
Rhonda Wimbish is a homeowner, business owner, parent and community advocate in Baltimore, Maryland.