Proposed Tax Breaks for Perkins Homes Fuel Controversy

By Stephen Janis and Taya Graham, Special to the AFRO

During the uprising after the death of Freddie Gray in police custody attention focused on Baltimore’s stark inequality.

The flourishing downtown and Inner Harbor fueled by tax incentives was often compared to Gillmor Homes, the crumbling city-owned housing project where Gray was arrested; both were considered contrasting examples of how one Baltimore was thriving while the other suffered from neglect.

Now the city says it wants to fix the blight in one of Baltimore’s oldest and most decrepit public housing projects, Perkin Homes. But, the proposed use of a tax break to fund the development is fueling controversy.

Artist rendering of what a renovated Perkins Homes housing project (located in the shadow of the glittering Harbor East community near Fells Point), would look like. The developer is seeking more than $100 million in Tax Increment Financing (TIF) from the city. (Illustration: Baltimore City Housing Department)

Situated a short distance from the Inner Harbor and adjacent to Fells Point, the city wants to tear down Perkins Homes as part of a larger $889 Million plan to build 1,345 mixed income housing units within a 244-acre “transformation zone,” that includes a makeover of the predominantly vacant Old Town Mall and rebuilding City Springs Elementary School.

Last week Mayor Catherine Pugh announced the project won a $30 million “Choice Neighborhood” grant from the Department of Housing and Urban development (HUD).  The grant will fund in part what Pugh characterized as a unique opportunity to revitalize a section of Southeast Baltimore that has seen little substantive development.

“I am committed to providing Perkins residents the opportunity to live in a “community of choice,” Pugh said in a statement sent to supporters touting the fact that current Perkins residents would be temporarily relocated until the project is complete.

“Our goal is to gradually move all of our existing Perkins residents to alternate housing as we tear down the public housing and build a larger, mixed-income community,” Pugh said.

But the grant is just one part of the financing city officials say is needed to make the deal work. Last month the city also laid out plans to grant a roughly $102 million tax break to group of developers that will manage the project.

The aid will come in the form of a TIF, or Tax Increment Finance deal.  A TIF allows the developer to plow decades of future property taxes into the project using city-backed bonds.

Like past deals, city officials tout the TIF as a way to finance infrastructure including the $33 million overhaul of City Springs.

The companies that stand to benefit from the TIF include Henson Development, St. Louis based McCormack Baron Salazar, Cross Street Partners, and Beatty Development.

Beatty in particular is no stranger to TIFS.

The longtime Baltimore developer netted a $106 million TIF to build out Harbor Point, a piece of property that extends into the Inner Harbor and is now the home to the Maryland headquarters of energy giant Constellation Energy.

The controversial deal marked an ever-escalating use of TIFs to fund downtown construction, which culminated in a whopping $660 million TIF to Under Armor founder Kevin Plank to build out Port Covington, an old industrial park south of 1-95.

Both tax breaks fueled controversy that led to heated council meetings, which is why City Council President Bernard “Jack” Young says he still is not completely committed to the deal for Perkins.

“I don’t really have an appetite for another large TIF,” Young told the AFRO.

“I know they’re saying this is for the community, but when we did the Harbor Point TIF the people were screaming next they are going to come and take Perkins, now look what’s happening.”

Indeed, the property included in the Perkins plan would form an almost contiguous swath of development linking Old Town Mall to Harbor East, the upscale neighborhood built from scratch by late Baltimore developer John Paterakis.

Still, despite concerns over financing, the project has a variety of backers, including Rep. Elijah Cummings.

“I commend HUD for awarding the grant to help improve housing and living conditions for residents who have been neglected for far too long. It is an investment in a community that will impact the lives of future generations,” Cummings said in a written statement.