The Goal: Lower Property Taxes

The Problem: The property tax rate in Baltimore is currently $2.268 per $100 of the assessed value of the property. What does this mean in practical terms?

If an individual purchases a $200,000 rehab property in Baltimore’s Druid Heights neighborhood, he/she will end up paying $4,536 a year in property taxes to the City of Baltimore. Compare this to the situation in Baltimore County. In the County the property tax rate is $1.11 per $100 of the assessed value. In other words, if an individual purchases a $412,000 house located on a one acre lot in Reisterstown, he/she will end up paying $4,536 a year in property taxes to Baltimore County.

After completing the above math, it is clear why there is little, if any, financial incentive for a family to reside in Baltimore City over Baltimore County. The Baltimore City tax rate is so high that it makes it difficult for those on fixed incomes to afford to own any property in Baltimore City and the rate makes it nearly impossible for renters to qualify for home ownership in the City. Once a renter can afford a $250,000 house they will logically select Baltimore County as the site of their future home since the tax rate there is half that of Baltimore City.

The Solution: We need to have a goal of bringing down the property tax rate to under $2 per $100 of the assessed value of the property by the start of 2010. We should have an identical property tax rate to Baltimore County in 10 years. In order to accomplish this, we must create new revenue streams to make up lost revenue due to tax cuts. Ultimately, we must come up with solutions that do not punish Baltimore residents for choosing to reside in Baltimore City. Below are Adam Meister’s “7 Quick and Simple” revenue-generating plans. Please keep in mind that for every penny per $100 of the assessed value cut the city loses $2.5million:

Plan 1: Every year the state determines what the property tax rate of Baltimore City must be in order to generate the same amount of revenue as the year before. This is called the constant yield tax rate. Every year the Mayor and City Council approve a rate that is higher than this rate! We need to at the very least use the constant yield tax rate as our base. This simple step saves us 4 cents. We are down to $2.228

Plan 2: Commercial property in Baltimore is under-assessed. In Mount Vernon alone there are 100 properties that are under-assessed by at least $100,000 each. It has been said that commercial property underassessment is costing the City $20 million in property taxes each year. Taking a conservative approach, I say we can appeal enough commercial properties in Baltimore to generate $5million in revenue for the City. This will save us 2 cents. We are down to $2.208.

Plan 3: Currently Baltimore does not provide enough transparency in to the housing department for average residents to figure out how many vacant homes there are in Baltimore. Most experts aggress that there are over ten thousand privately owned vacant houses. These vacant homes create many problems for neighborhoods. Owners need to be financially responsible for the negative impact they have on communities. I propose a yearly $300 vacant house fee. This should generate enough money to lower the tax rate by a penny. We are down to $2.198.

Plan 4: In Baltimore, one must pay $18 if they wish to file an eviction notice. There are 150,000 eviction notices filed each year in Baltimore. This fee should be doubled. The additional $18 fee must not be passed on to tenants. This will generate enough money to lower the tax rate by a penny. We are down to $2.188.

Plan 5: The city owns around 10,000 vacant properties (including houses and empty lots). Almost every week a person asks me, “Why can’t I buy property from Baltimore?” Currently Baltimore has Project 5000 which is not an easy process to navigate or understand. Baltimore also has something called the “rolling bid process” that is part of Project 5000. The general public, the every day investor, and even the expert investor does not have time to deal with Baltimore’s baffling and inefficient way of disposing of property. Some of the properties Baltimore owns – like the parcels on Druid Lake Park Drive – are worth over $2 million. Most are worth more than $5,000. The city needs to create an online database of all the properties it owns and list values next to these properties. It should heavily promote this site to potential home owners and investors who want to create home owner opportunities. There should also be a commercial section that favors those who want to bring jobs back to the city (light industry etc.). Bids should be sent in to the City and home owner occupants should be favored on the residential side. All construction must be completed 18 months from the purchase date (mega projects excluded). All purchasers must pay three years of property tax in advance. If this process was started in January of 2008, by the start of 2010 at least $50 million could be generated if only half the city owned property had been sold. Once properties are no longer owned by the city they can be taxed by the city and properly accessed once they are complete.

Plan 6: Non-profits do not have to pay property taxes. Johns Hopkins owns $727 million worth of property. A home owner in Sandtown pays more in property taxes than Johns Hopkins does. Is this fair? Non-profits that own over $100 million worth of property should have to pay some property taxes.

Plan 7: There are some fun ways Baltimore can generate revenue. Bars in uninhabited areas (Powerplant Live, Sonar, Scores, the Side Bar, etc.) should be allowed to purchase new liquor licenses that allow them to stay open and serve alcohol until 4AM. Bars in residential areas should be allowed to purchase licenses (only with neighborhood approval) that allow them to stay open until 2:30 and 3AM. Neighborhood approval would be needed every 2 years to renew the licenses. Making Baltimore a more “night friendly” town, similar to D.C. and New York City, would attract new residents, new business, new conventions, and new hotels, while also increasing foot traffic and revenues at already existing businesses. The economic impact would be substantial.