D BORINSKY LETTER TO THE EDITOR IN RESPONSE TO ARTICLE IN THE SUN ABOUT THE IMPENDING FORECLOSURE ON THE SENATOR THEATER BUILDING:
Regarding your article on Tom Kiefaber’s efforts to stave off bank foreclosure of the Senator Theater property, the reader is left, incorrectly, with the sense that the survival of the Senator is at risk. In fact, the Senator will still be with us, art deco lavatories and all, the day after the auction. Since Mr. Kiefaber seems like the kind of guy who keeps life interesting for the rest of us, perhaps the purchaser at foreclosure will do well to hire him to run things after the sale. If the members of the movie loving community in Baltimore with the money to bid on the building would only resist sentimentality, the bidding at auction will be kept to a figure that reflects the economics of owning the building. Let’s be clear. The future of the Senator as a movie venue is separate from Kiefaber’s ownership of the venue. Only by allowing Kiefaber, good guy that he may be, to fail will press coverage of the Senator return to its natural habitat on the arts and leisure page. As an aside, I’m sorry to hear that my tax dollars have been used to subsidize Keifaber’s ownership of a private business.
PRIVATE RESPONSE FROM LAWYER FOR KIEFABER:
You assume that (i) the purchaser will hold the Senator intact after the sale, a result that is hardly a foregone conclusion, and (ii) that the community (both in the immediate vicinity and over a broader local area) derives no economic benefit from the Senator in its current operating mode. Assume for a moment that there is such economic benefit and that the benefit can be reasonably well demonstrated and that one can reasonably estimate the value of the benefit. Given those assumptions, it would make sense for the City to make some financial contribution to “saving the Senator.”
Of course, how much the benefit is, the amount the City should contribute based on the value of the benefit, and the conditions under which any such contribution might be made are fairly complex decisions. It should be clear, however, that public policy decision matrix is not as simple (or as simplistic) as you make it in your “tax dollars for private benefit—no way.”
My answer to Kiefaber lawyer:
You assume that there is less uncertainty in the path of subsidy, an assumption not borne out by the actual outcome, to wit, subsidy AND foreclosure. The building is, I am certain, on the National Register of Historic Places and so can’t be changed. The only plausible buyer is someone intending to run it as a theater. That’s not 100% certain, but it’s as certain as you can get, or rather, as certain as the city, with finite resources, can afford to get. If the city would competently invest in its core functions, public safety and schools, that area would rock with or without the Senator. Doing so would, to boot, make it more likely that a venue like the Senator would thrive, certainly more so than a direct dollar subsidy to the theater operator (and, of course, it would have the happy side benefit of increasing the supply of precious public goods: education and safety). The fact is that Kiefaber paid too much for the business. First Mariner Bank is the one that is going to take the biggest hit, which is too bad, but not the first and not the last time that will happen. We all, “members of the community” as well as taxpayers (one and the same, obviously) will be better off getting past the distortions caused by his hopeless efforts to recoup unrecoupable sunk costs.
Whatever argument you make could have been used to argue saving the Howard Street shopping area and the Apollo Theater on Pennsylvania Ave and countless other storied businesses that disappeared before you and I were even born. It just doesn’t pay to go down that road.
Get the schools right (which we are slowly doing), manage the policing process (as other cities have been doing more competently than Baltimore) protect the poor from this or that externality of gentrification and we’ll see a dozen Belvedere Square shopping districts in the city. Indeed, there already may be a dozen; the difference is that few if any of the others are of immediate interest to the residents of Roland Park, Guilford, Homeland and Mt Washington, and are therefore less able to enlist the help of those skilled at extracting economic rent.
I’m not against public subsidies per se, but I believe that direct, rifle shot public subsidies to individual operating businesses are almost impossible to justify. (I make a distinction between using public funds to champion a single business (almost impossible to justify) and using public funds to either encourage a type of economic activity (still tough to justify) or to encourage economic activity in a particular area of the city (the easiest to justify)).