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Thursday, March 19, 2015

Under Armour Needs Your Help!

Big business in Baltimore gets bailed out

By John J. Waters via MPPI

Baltimore City residents may soon get their chance to do their part for Under Armour, one of the biggest businesses in the city. CEO Kevin Plank debuted his plans for a massive development in southern Baltimore earlier this month, and he’s already asking for taxpayer help with the bill.

While we don’t have the full details yet, Plank has revealed that he will be seeking tax increment financing, or TIF, to pay for the necessary improvements to local infrastructure to support his plans. A TIF is a means of financing development in an area that would otherwise not be an ideal candidate for investment. In essence, it reduces the cost of building in an area by using anticipated future property tax revenue to pay for construction.

The Minnesota Office of the State Auditor produced a short video explaining TIF. Much like this video from Cook County, Illinois, the emphasis is on restoring “blighted” areas. The idea is that, in some areas, development and revitalization is impossible without subsidies and financial incentives to potential investors.

This is, by no means, a new concept for Baltimore City residents. It would probably be easier to identify the few parts of Baltimore that aren’t having difficulty attracting investment than to list off all the neighborhoods that could qualify as blighted. Using TIF and other types of subsidies (such as grants, loans, or tax breaks) to spur development has been the way business gets done for decades in Baltimore.

Undeniably, the City needs more companies like Under Armour to locate offices and storefronts in Baltimore. A city with a wealth of job opportunities attracts tax-paying residents who support their local community. And that’s certainly one way to do it: allow our elected officials to choose who builds what where by giving away our tax dollars. By keeping the barriers to entering the Baltimore City business community high, we ensure that only the businesses we want to succeed will do so.

The other way is to reduce barriers and unnecessary expenses as much as possible so that businesses can afford to make investments without first asking for a handout. The single most significant way for Baltimore City to accomplish this would be to limit property tax rates to a level equal to its surrounding counties, thereby removing one of the most compelling reasons to locate outside city borders.

The fact that city officials are willing to play ball with companies asking for taxpayer help to expand and invest shows a tacit understanding that the current cost of doing business in Baltimore is too high. Instead of cutting deals for a select few, why not allow all businesses to bring jobs and prosperity to neighborhoods starved for investment?

John J. Walters is a research associate with the Maryland Public Policy Institute; Director of Marketing for TestSoup, an education startup; and a social media marketer for Wasabi Ventures, an entrepreneurial firm.

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