Economic Development: Whose Asset Building?

Business Development and Tax Policy

There are a number of economic approaches and apparatuses that the city can differently support, to enable not only job-creation but real asset-building for all workers in the city.

An equitable innovation economy

The millenial generation is well-known for their innovation with technology and their embrace of diversity and social change, so are important sources for problem-solving and imagining new work forces and new industries. Yet inequity and racial disparity in nearly every Baltimore indicator mean that millenials of color are twice as likely as their white peers to be unemployed, to face staggering amounts of debt if they are able to attend college, and to face innumerable other obstacles. Freddie Gray and Korryn Gaines were millenials, yet his hyper-policed and under-resourced neighborhood hardly represents the work of a city seeking to nurture its next economic leaders[16]. The task of truly creating an equitable innovation economy is a crucial example of the the importance of the interrelated factors, and need for interrelated solutions, as mentioned above.

Democratically controlled economic institutions

The hallmark of solidarity economics are more democratically controlled, forms of business, which take a variety of forms including worker cooperatives, horizontally managed ESOPs (Employee Stock Ownership Plans), worker self-directed non-profits, community land trusts, and other forms of social enterprise that include pathways to employee ownership of capital[17].

Co-operatives and other forms of democratically controlled institutions are not new developments in communities.  There is also a long history of successful co-operatives, ranging from very small “mom and pop” shops to entities with thousands of worker-owners. Land O’Lakes, one of the largest producers of butter and cheese in the United States, is co-operatively owned with several thousand producer-members, and approximately 10,000 employees. There are also forms of democratically controlled enterprise, meaning that employees have a path to ownership or acquisition of capital, in addition to wage-earning.

Such forms of enterprise—based on networks and mutual aid— have been an important part of most traditions of entrepreneurship, and have a particularly important history in Black communities. Indeed, an array of black workers, activists, and intellectuals have either supported or participated in co-operatives (Gordon Nembhard, 2014).  The dearth of such Black-owned cooperatives and Black solidarity economics today in America is a testament to the massive physical and political violence that Whites were willing to employ to halt such activity, such as with the mass lynchings of Black farmers (who were putting together a farm cooperative) in Elaine, Arkansas in 1919, the bombing and obliteration of Black Tulsa (aka Black Wall Street) in 1921 in Oklahoma, or the destruction of Hayti, North Carolina via urban renewal and highway construction through the 1940s and 1950s.

At their best, co-operatives and other forms of democratically controlled enterprise increase the ability of communities to fulfill their needs, tend to provide higher wages and more benefits than other business entities, provide more opportunity for job advancement, and generate more wealth and equity for worker-owners. Furthermore, as they are worker owned and controlled they tend to increase worker engagement in broader society.[18]

There are currently several cooperatives in Baltimore. MECU, one of the largest credit unions in Maryland, is a credit union open to people who live, work, or attend church/school in Baltimore. Red Emma’s, an independent bookstore/coffeehouse, is co-operatively owned. The Baltimore biodiesel cooperative is one of the few biodiesel providers in the region, and is co-operatively owned as well. And there are several attempts to expand the number and types of cooperatives in the Baltimore region. Developing co-operatives in neighborhoods like Sandtown-Winchester can develop neighborhood equity and wealth, significantly increase the range and quality of goods exchanged within them, significantly decrease unemployment, and build civic capacity. The City of Baltimore can enhance support for cooperatives by doing three things:

  1. Provide seed money for democratically controlled institutions directly.
  2. Providing money for training in these institutions’ development and maintenance.
  3. Connect workforce funding to democratically controlled institutions.
  4. Making a portion of city contracts open only to democratically controlled institutions.
  5. Require large private employers to subcontract with democratically controlled institutions. {Austin, 2014 #8166}

Third sector and quasi-governmental actors

Anchor institutions (universities, colleges, NGOs)

Local, state, and national governments have often turned to non-profit organizations, foundations, universities, and think-tanks to provide the equivalent of “research and development”. In fact, the “anchor institutions” model holds that such organizations should be the anchors of a city’s development.[19] However while these public-private partnerships have sometimes worked to the benefit of urban populations they often are unresponsive and unaccountable to the populations they seek to serve.[20] Also, as previously stated, they are disproportionately comprised of civic elites, or run by the political imaginaries that benefit them. Nationally, a number of guidelines have emerged regarding best practices for funders and other third sector actors, including colleges and universities. Recent local and national attention on the systemic nature of racism and inequality have sped up these efforts.

One of the problems with an approach that privileges a narrow idea of “job creation” is that it disregards the important differences between income and wealth. Wealth takes generations to build, and is not merely measured by dollar valuations. It affords all who are in accumulative streams not only financial advantage, but access to decision-making positions, social spaces, behavioral class-inflections, etc. In short, wealth is exponential, in a myriad of ways. In Baltimore, a majority black city, other than Joe Jones’ Center for Urban Families one is hard-pressed to find a black-founded, board majority, maintained-Executive led-majority or consistently-C-suite organization that constantly receives local foundation dollars totaling more than a million dollars per annum. Even if some exceptions to this are found, it’s important to note the founding date, how long they’ve been around (i.e., staying power not yet demonstrated), and how long they’ve around at that million/year mark. Contrast that with millions spent studying and addressing the city’s problems, add in the racial makeup of those studying—academic funding, big government and private research oriented funding, must be looked at within this context. Both individual interventions and larger systemic calls to action must be framed within that context.


Likewise, there are numerous examples nationally of philanthropic practices that not only reduce or eliminate the obstacles that black community leaders face in seeking funding, they are transforming philanthropy itself. Examples like the Black Social Change Funders Network, or the Solidaire Network, both demonstrate the importance of seeing investing differently; as having previously been investing in moments, not movements, and seeking fundamentally different practices and relationships in order to see real, long-term change.[21]

But it’s important that any such guidelines become both wide-scale and enforceable, if the third sector actors are to truly be accountable, and given the history of extractive and sometimes exploitative relationships.

Further recommendations are in the section on “The Public Square,” but overall examples include:[22]

  • Developing practices that actually seek to disrupt extractive dynamics, that risk even the displacement or obsolescence of existing third sector actors in favor of self-determining organizations, even if these organizations cannot yet be seen or imagined.
  • Developing mechanisms for authentic representation and participation in setting funding criteria and expectations, even the language used in calls and the way that rooms and events are planned and organized: do not merely include, but co-lead with community members, in design.
  • Commit to understanding, and dismantling, structural racism and systemic inequality in Baltimore: actively seek to recruit and hire people of color; make sure that this is true not only in community-engagement positions but leadership and board; train, develop, and support ongoing institutional learning about the decision-making patterns of white supremacy, and the more inclusive organizational strategies that can replace them.
  • Create pathways for small, grassroots organizations to access funds.
  • Create more nuanced ways of measuring success that reflect a mission that is jointly created by the institution and the communities it serves.
  • Model democratic practice in other ways.

Tax policy

Every municipality requires revenue to function and to function efficiently. As a result of a combination of federal, state, and local policy, Baltimore finds itself strapped for revenue even as its needs have increased significantly. Baltimore’s primary revenue strategy has been to increase revenue through providing various tax incentives to corporations and high income earners, working on the assumption that what the city loses in taxes will be made up in increased financial activity. However while this strategy does tend to increase profit margins and the ability of high income earners to retain more of their revenue it rarely (if ever) increases municipal revenue. In fact it often decreases it.

One of the main ways by which Baltimore’s tax policy proliferates racial inequity is through tax increment financing and payments in lieu of taxes, more commonly known as TIFs and PILOTs.  These tools of Baltimore’s tax policy allow the quasi-governmental Baltimore Development Corporation (BDC) to offer wealthy corporate developers tremendous tax breaks that subsidize corporate growth.  Recent examples of TIFs that perpetuate racial inequity include:

  • the $78 million in TIF bonds issued to the East Baltimore Development Inc.(a proxy organization for Johns Hopkins Medical Institutions) to displace 742 Black families, develop a new neighborhood, and rename it Eager Park (replacing the former name Middle East)
  • the $107 million in TIF bonds approved to be issued to Michael Beatty for his Harbor East project that used the demographics of nearby public housing development Perkins Homes to qualify for the TIF as a part of an Enterprise Zone.  Residents of the predominantly Black public housing development Perkins Homes fought to have a signed community benefits agreement connected to  the TIF to help improve their community, but were denied.
  • the $17.5 million in TIF bonds issued to the University of Maryland Biopark developer Wexford Science & Technology to boost research and development.  The developer did sign a $4 million community benefits agreement with residents in the southwest Baltimore community Pigtown while excluding residents of the public housing development Poe Homes and Terraces.  Additionally, the city eliminated the property taxes for the BioPark for 5 years.
  • the $660 million in TIF bonds approved be issued to Plank Enterprises’ Sagamore Development Corporation (SDC) and $760.4 million in tax credits that would go to SDC.  SDC is the development arm of multi-billionaire Kevin Plank[23], CEO of the sports apparel company Under Armour.  In March 2016, SDC submitted a massive TIF request to the BDC that set a new standard for corporate greed and excess.  After a series of massive public hearings in the summer that featured citywide participation of residents protesting the economic and racial inequity in the massive TIF, Mayor Stephanie Rawlings-Blake and SDC signed an memorandum of understanding in September stating that SDC will receive $535 million in TIF bonds from Baltimore City to develop the Port Covington area, from which $139.8 million will go toward parks instead of affordable and fair housing as activists in the PORT3 coalition[24] had pushed for.

Notwithstanding the fact that city residents will be held responsible for repaying TIF bondholders if SDC defaults, other essential costs are absent from the public discourse.  As BDC head Bill Cole has remarked, developing the Port Covington area constitutes “building a mini city” (Sherman 2016).  After building this mini city for an additional 7,500+ households, additional public goods will be needed such as police & police stations, firefighters & fire stations, teachers and public schools, libraries, parks & recreational centers, et al.  These public services will cost additional tens of millions each year along with the capital expenditures required to build new public facilities.  Meanwhile, the rest of the city will be subsidizing these costs for 30 years for Port Covington as the taxes collected from Port Covington will be diverted and will not go into the general fund.  Residents living in disinvested, redlined Black neighborhoods will be helping to pay for new high-quality public services that don’t exist in their own neighborhoods if this mega-TIF is approved.  Hence, residents in Black neighborhoods with dilapidated infrastructure will be helping to subsidize new infrastructure for a neighborhood that is unlikely to have a majority of Black residents.

With this in mind the following policies offer a way to generate revenue which can then be used to provide services and increased opportunities for Baltimore residents (taken from Progressive Policies for Raising Municipal Revenue):

Fee Policy proposals

  1. Stormwater Drainage fees.
  2. Sidewalk Utility fees.
  3. Landlord Permit fees.
  4. Income based fines.

Tax policy proposals

  1. Luxury tax.
  2. Transient-Occupancy tax.
  3. Service-based sales tax.
  4. Internet sales tax.
  5. Earmarking sales tax revenue for progressive purposes.
  6. Eliminate tax breaks.
  7. Eliminate business improvement districts and special economic zones.

[16] “The Ready Generation: Millenials of Color and the Moment for Equity and Prosperity.” Policy brief prepared for the Brioxy White House Summit. April, 2016.

[17]BASE Baltimore, “Mapping the Democratic Economy.” 10/19/15.

[18]According to an October 2005 report co-ops had the following economic impact in the agricultural, financial, utility, and real estate sectors:

  • Agricultural co-ops have a gross business volume of more than $111 billion per year and 2.8 million members.
  • The Farm Credit System has approximately $125 billion in assets and $96 billion in loans outstanding.
  • Credit unions have $668 billion in assets and more than 86 million members, who receive billions of dollars in benefits annually from lower loan rates and higher savings rates.
  • Electric utility co-ops serve 37 million people and their lines cover more than three-quarters of the U.S. land mass.
  • Food and grocery co-ops generate $33 billion in annual revenues while retail food co-ops alone pay back an estimated $4 million a year to their members.
  • Housing cooperatives have combined budgets in excess of $11 billion, and make an estimated $1.2 billion in property improvements each year. (National Cooperative Month Planning Committee 2005)


[20]Brown, Lawrence, Ashley Bachelder, Marisela B. Gomez, Alicia Sherrell, Imani Bryan. “The Rise of Anchor Institutions and the Threat to Community Health.” Kalfou, Vol 3, No 1 (2016).

[21]Invested Impact. “We Can’t Grant our Way of White Supremacy; We Can’t Grant our Way out of Racism.” Nov 22, 2016.

[22]Allied Media Project. “Twelve Recommendations for Detroit Funders.” 12/15/15.

[23]Kevin Plank’s net worth is $3.5 billion.

[24]PORT stand for People Organized for Responsible TIFs, Tax Breaks, and Transformation. It included groups such as Maryland Working Families, Jews United for Justice, Housing Our Neighbors, MCRC, the ACLU, the Public Justice Center, Build Up Baltimore, and the Baltimore Redevelopment Action Coalition for Empowerment (BRACE).