Doug Southerland Says: DestinyUSA, Opportunity Squandered.
Not! DestinyUSA got all it asked for.
Aug 7, 2012
To the Editor:I disagree with Doug Southerland's opinion piece on DestinyUSA as an opportunity squandered by the City (8/5).
First, he conflates the original "Oil City" cleanup, the creation of Carousel Mall and it's 15 year tax break (1990) with the DestinyUSA project plan (2000) and its 30 year tax break and numerous credits. When DestinyUSA came along, Carousel was---and still is---the most profitable mall in the region. Why offer a 30 year tax break for already developed and hot property? As for environmental cleanup, Pyramid CEO Bob Congel and Co. received, according to published reports, $10 million from the government to cleanup what probably cost around $1 million. So don't thank Congel.
Second, Congel was not obstructed by the City in developing DestinyUSA. The City gave him the go-ahead in 2000. What followed was 5 years or so of an ever expanding project and Congel's requests for more land and additional City, County, State, and even federal tax breaks, credits, and incentives, all of which take time in their normal course, and also were initiated in different years. Congel got everything he asked for. Any "delays" were of Congel's own making.
Third, in 2006, a Common Council vote was necessary to approve contractual tax and incentives changes reopened at Congel's request. The Council did not approve. Mayor Driscoll bypassed the Council somehow and approved the project agreement. City residents surely objected to the DestinyUSA tax breaks, but City administration always helped the project.
Fourth, Southerland talks about increased sales taxes from the project. But with the Tax Increment Financing (TIF) he mentions, any new tax revenue is used to subsidize the project. So, no new property or sales tax revenue for the City. TIFs are a scheme invented by developers to get tax breaks by making it appear, superficially, that a project costs nothing to local government. What is overlooked is the opportunity costs: what else would have eventually been built without tax breaks; and would the developer have built anyway. Given the highly profitable existing mall, there was no need for incentives to expand. And there are and were other developers interested in developing the Inner Harbor area, but were obstructed until Congel gave up his preferred developer status for that land.
In the end, Congel got more incentives than he dreamed of (his words circa 2004). He never committed to more than a mall expansion, and that he got. The $2B - $5B - $10B DestinyUSA "opportunity" was never real and so never squandered. What has been squandered is a large chunk of the City's tax revenue for the next 30 years.
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