Tuesday, April 11, 2017

What a revamped BDC could look like

Once again, it is popular to equate business and politics, no surprise with a deal maker and real estate mogul as President and Governor. The Mayor likes to call herself the CEO of the City.

It is no surprise, then, that the Baltimore Development Corporation has moved into focus. The Mayor wants to revamp this quasi governmental non-profit, a critter that defies easy description.
The Baltimore Development Corporation (BDC) is a non-profit organization, which serves as the economic development agency for the City of Baltimore. Our mission is to retain and expand existing businesses, support cultural resources, and attract new opportunities that spur economic growth and help create jobs. BDC serves as a one-stop shop for anyone interested in opening, expanding or relocating a business in Baltimore City.(BDC website)
Ostensibly cities created these development non-profits as a tool of communication with the business sector outside the usual government framework and their regulations with the goal "to get things done". Stemming from the time of the new deal, the concept is to pry development from the clutches of the political machine and open it up to the "rational approach of business so that cities can become better places. From FDR to Lyndon Johnson and Jimmy Carter urban development corporations have been embraced as vehicles to eliminate blight, poverty and implement urban renewal. In many cases distance between government and development agencies was an explicit objective. Cinicinnati's 3CDC, for example, has no government representatives on their board and does not depend on the mayor to appoint their CEO.
Usually seen as a success: Charles Center and Inner Harbor, the products
of non governmental development corporations 

To the end of effective development the powerful tool of eminent domain has been bestowed on development corporations through federal enabling legislation. The legal concept of public purpose of urban renewal has been stretched to the point where BDC could condemn a private property on the grounds of slum and blight removal and give it a day later to a private development entity for private development. This is how Charles Center and the Inner Harbor redevelopments got done and it was only logical that the Baltimore Development Corporation was created  in 1991 by merging the already merged Charles Center and Inner Harbor Development Corporations with Howard Street Market Place, the Market Center Development Corporation and the Baltimore Economic Development Corporation (BEDCO).

Charles Center and Inner Harbor have pretty much gone down as success stories in Baltimore's history. However, with population shrinkage and abandonment running unabated over the decades following the creation of BDC, the agency and its leadership became frequently the focus of criticism. Being simply a conduit for mighty developers who exact tax credits and public benefits from BDC so they can build and invest in areas where such incentives aren't needed  while "the neighborhoods" would go down the drain is one of the accusations.
Much power in one hand: Former BDC CEO Jay Brodie in front of a
downtown model in BDC's lobby

Especially the deals around Harbor East and the Convention Center Hotel elicited this type criticism. BDC's typical formula came to a screeching halt when it tried the big land assembly to big master developer concept of the seventies to the Baltimore Westside on the now infamous "Superblock" along Lexington and Fayette Streets. Mostly shuttered, the area still hangs like an albatross around the neck of the Westside.

Once having been a Housing Commissoner here, trained architect Jay Brodie came back to Baltimore in 1996 to head BDC after a successful time of heading the Pennsylvania Avenue Development Corporation in DC. He retired in 2012, age 75, after 16 years at the helm of BDC. Stephanie Rawlings Blake had difficulties finding a dynamic successor and after a troubled two year interregnum Councilman Cole was appointed head of the agency in 2014. Since then BDC has taken a more small scale pragmatic approach to redevelopment and seen some small success with that tactic. Large parts of Baltimore's Westside continue to sit fallow, though, and coordination between the Downtown Partnership (another entity which has taken on planning), Transportation, Housing and BDC seems still to be lacking; a cohesive, convincing economic development strategy is still elusive, for Baltimore as a whole and especially for the Westside.

After the 2015 unrest the question of BDC's mission can't be put off any longer. Catherine Pugh's transition team realized this and came up with a detailed set of receommendations. It wants to transform the agency from an implementer of development to a curator of small business. Pugh, herself a small business owner (she co-owns a consignment fashion store on Washington Boulevard) embraces the recommendation to shift BDC's focus, namely
The back of the Mayfair Theater after BDC orchestrated demolition. In
the background new development by Time Group (Photo: Philipsen)
to increase the City’s tax base; enhance and improve the physical and cultural environment of the City; improve the economic health of the City through attraction of new businesses and retention of existing businesses; and increase the participation of minority business enterprise and women business enterprise in development activity.
The recommendations of the transition report regarding BDC are quite explicit:
The Pugh Administration is committed to seeing retail and small businesses succeed in the neighborhoods of Baltimore that have seen little or no economic development in recent decades. This requires a marshaling of resources and a deliberate focus on community development. It also requires resources and a skill set that the BDC does not currently have. To focus on its core mission, BDC should divest itself of the many “community development” functions it has collected from other agencies (such as the Main Streets Program, Fa├žade Grants, and Food Policy Program). These functions should be placed within a separate community development agency that can formulate a cohesive strategy and provide the appropriate focus and expertise for the task.
BDC should have a formal outreach program to existing medium and large businesses with the explicit goal of understanding concerns/issues, advocating for businesses within City Hall, and encouraging local businesses to remain and expand in the City.  To improve small businesses’ access to business expertise and social capital, the Board of BDC should establish a working advisory board that includes seasoned/retired executives who could mentor and consult with small- and mid-sized business leaders and owners.
The idea of taking some of the community development functions away relate to Pugh's other focus, the Housing Department. She wants to split that mega department into Housing (managing the City housing stock) and Community Development. New agency heads still need to be named.
The Mechanic Theater was demolished, new development is languishing
in the courts. Could BDC have helped?

This is quite interesting because Mayor Pugh's idea of shifting community  development to HCD (the only other agency with condemnation rights) goes back to the debates of the relationships between housing and urban development that characterized the debate some 75 years ago when non-profit development corporations came into being in the US. At that time the shift went in the other direction because many Housing Agencies had been seen as too corrupt.

Although BDC is 90% funded by the City, it shuns many of the rules and regulations of actual City agencies. The matter of sunshine and open meeting laws have frequently become a matter of dispute. BDC did, indeed, increase its power base by jumping in wherever the City departments didn't act. When the Planning Department had snoozy leadership, BDC took it on to request proposals for masterplan services or even prepare them directly all over the City. This was blurring the line between planners and implementers that the City likes to cite when describing the division of labor among departments. BDC's nearly complete financial dependency on City coffers doesn't sit well with Pugh and her transition team either. The report laments:
Though BDC is considered a quasi-independent organization, more than 90 percent of its funding comes from City government. This represents a missed opportunity to have greater engagement with Baltimore’s private sector and become better aligned with its needs.BDC must begin working to raise funds from the private sector for specific small-business initiatives, and making funders conscious about where their money is going and how it is used. It should also create an expectation that the Board of Directors will participate in fundraising campaigns.
However, the Mayor still wants to control BDC, the rport leaves no doubt that a majority of Board members should be subject to the Mayor's appointment.
Org chart for BDC as suggested by transition report

It isn't that Baltimore doesn't need astute shepherding of difficult development any longer.  From Oldtown to Park Heights, there are many cases where real estate development is still needed, especially in neighborhoods. The cases of Housing being at the helm of neighborhood developments (Uplands, Park Heights) are not encouraging. Maybe a new community development commissioner can do much better, but it isn't obvious why this function should shift, even though the additional BDC task of helping to attract and support small business is worthwhile. It probably would make a lot more sense to give the millions of dollars spent on "stabilization and demolition" (for example for the Mayfair on the Westside) to small businesses to take root in the still ailing former retail core, but it should still be BDC organizing it.

Bill Cole has welcomed the transition team recommendations. A matter of survival, I suppose.

Klaus Philipsen, FAIA

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