With PILOT approved, $75M Fitzgerald project in Baltimore can begin

A local developer has received $12 million in city property tax breaks to build the Fitzgerald, a $75 million apartment complex and parking garage in midtown Baltimore -- a project that has benefited, but also been slowed, by the relationship forged between its developer and the state of Maryland.

The Board of Estimates approved a payment in lieu of taxes (PILOT) last week for the project, which would be built on land owned by the state through its administrator, the University of Baltimore.

"It's an incredibly complex project because it's a public- private partnership," said Toby Bozzuto, a vice president with the developer, the Greenbelt-based Bozzuto Group. "If it was purely a private deal, I would have been able to break ground a year ago."

Bozzuto Group, which owns Harbor East's Spinnaker Bay luxury apartments and manages several other projects in Baltimore, including the Zenith and the Henderson House, responded to a request for proposals issued by UB in 2005 to develop Bolton Yards, a 580- space parking lot at the corner of Mount Royal Avenue and W. Oliver Street.

Bozzuto was selected, according to UB president Robert L. Bogomolny, after a six-month process, but the plan took much longer to move forward because it had to be vetted by the Board of Regents, the state body that governs the University System of Maryland.

Now, nearly three years after its proposal was submitted, Bozzuto plans to break ground on the building in July.

"When I got here [in 2002] ... it was my assessment that the university had to find out ways on its own to do a variety of things," Bogomolny said. "One was to create cash flow, and another was to find alternate sources for capital projects at the university."

All 5,415 of the university's students are technically commuters, said spokesman Peter Toran, because UB does not provide student housing. As a result, the university had a need for a parking garage, but not the cash to build one. Their solution was to attract a private developer to the site to subsidize student parking with an adjacent market-rate private development.

Because Bolton Yards is state-owned, the university pays no property taxes on the site. Once the development is completed, the city will begin to levy taxes that Bogomolny estimated at $200 million over the course of the developer's 65-year lease.

"From the city's standpoint, we've taken non-income producing property, made it into income-producing property, and they've given us a small discount, and over the years, it will produce a huge amount of revenue," Bogomolny said.

M.J. "Jay" Brodie, president of the Baltimore Development Corp., said that the Fitzgerald is a "win-win" -- it will turn property that pays no taxes into a source of revenue for the city, while at the same time breaking down the "metaphorical barriers" between the area around Maryland Institute College of Art, Bolton Hill and Mount Vernon.

"The PILOT came about because we sat and looked at their economics ... and we said, 'Why are the numbers so bad?'" he said. "And basically, the garage has to bring in a subsidized rate for both students and faculty. ... Especially in this difficult economy, it's good to see a development like this one get going."

The university will not lease any space in the building, the president said, because any pledge of credit to a private entity affects the university system's bond rating, but the developer will pay UB a fee of 3 percent of their operating costs over the duration of lease.

Toby Bozzuto said that his company will build a 1,300-space parking garage at a cost of $25 million, which will charge below- market rates for the 950 of its spaces that will be reserved for UB students and employees.

UB will be without Bolton Yards' 580 parking spots when the project breaks ground this summer, while many UB students are already upset about a proposed rise in the general cost of parking at the university.

Full-time students, who pay an estimated $171 for an annual parking pass, would pay more than $1,000 a year to park under the proposed rates if they use a space for more than eight hours per weekday.

The 280-unit apartment building, named for the author F. Scott Fitzgerald, who once lived in nearby Bolton Hill, will cost about $50 million and will be designed by Baltimore's Design Collective.

According to Bozzuto, its style will be "iconic...modern...and plays off of the Brown Center," referring to the Maryland Institute College of Art's main campus building, an avant-garde, metal and glass-clad structure nearby on Mount Royal Avenue.

"What's cool about this is that it's playing off the artistic nature of the neighborhood," he said.

Bozzuto said that the project's new apartments would rent at prices comparable to Symphony Center, a nearby apartment building that charges from $1,699 per month for an 1,100-square-foot two- bedroom unit to $4,394 for the two-bedroom, 2,800-square-foot "Beethoven" suite.

Officials at UB said that public-private development partnerships involving university property are relatively rare, but that they make a lot of sense economically.