Baltimore unveils 25-year downtown tax incentive

Baltimore’s new downtown tax incentive, a 25‑year Payment in Lieu of Taxes (PILOT) program, aims to spur redevelopment in the Inner Harbor and central business district.

How the PILOT program works

The city will replace traditional property taxes with negotiated payments for qualifying projects. A recent bill requires an economic analysis before any agreement, but the law does not dictate the analysis format, leaving the Board of Estimates to set its own standards. This flexibility means the city can tailor the assessment to each development’s specifics.

Projects must meet criteria set by the ordinance, and the negotiated payments are capped at a maximum of 25 years. The program targets new construction or major redevelopment within the designated “Downtown RISE” area, which officials have highlighted as a focal point for growth.

Official comments and expected impact

Roy Broderick Jr., chief of business development at the Baltimore Development Corporation, told reporters that details such as the number of awards and exact timelines are still being worked out. “As the program is implemented, BDC will evaluate outcomes and measure its impact as part of our broader economic development efforts,” he said.

Mayor Brandon Scott framed downtown as the city’s “economic engine.” In a 2024 letter to residents he wrote that the Downtown RISE framework was designed to guide the next chapter of downtown Baltimore, making it “more dynamic, inclusive, and prosperous.” He added that the area is already the fastest‑growing residential neighborhood in the city.

Local businesses continue to feel pressure from reduced foot traffic, high rents, and lingering effects of the pandemic. Jim Grieves, vice president of MacKenzie Commercial Real Estate Services, noted that vacancy rates fell from 31.5 percent to 30 percent over the past year, but the market remains tight.

The city has also reported historic drops in violent crime and improvements in neighborhood health, factors that could make the downtown area more attractive to investors. Meanwhile, a large renovation of the Inner Harbor is slated to begin later this year. The plan includes more than 300,000 square feet of commercial space and 18.7 acres of public land, with officials describing the new Harborplace as a “world‑class destination” that will showcase Baltimore’s culinary scene, nature, small businesses, and artistic culture.

Developers who respond positively could generate a steady stream of tax‑free construction that may, over time, increase employment and broaden the tax base once the PILOT payments conclude.

Critics might point out that the program benefits only a limited downtown core, leaving other neighborhoods without similar relief. Yet supporters argue that a thriving central district can create spillover effects that lift the broader metropolitan area.

In the meantime, the city’s economic development team will monitor the first round of agreements closely. Their assessment will inform whether the 25‑year PILOT model can be replicated elsewhere or needs adjustments.