Finance Professor: City Should Be Cautious in Selling Assets to Pay for Programs
August 27, 2015
Contact: University Relations
Phone: 410.837.5739
Interviewed by WYPR, Steve Isberg, associate professor of finance in UB's Merrick School of Business, says the City of Baltimore should carefully consider what it should do with its real estate assets—in this case, the downtown Hilton Hotel and four parking garages—as it makes plans to fund programs that benefit local citizens. Isberg was questioned for a piece that explores various ideas for the city to sell off some of its real estate holdings in order to fund community programs, specifically, upgraded youth recreation centers bearing a multi-million dollar total pricetag.
In principle, "it's logical for the city to hold on to those assets and not dispose of them," Isberg says.
At issue is whether it's economically feasible for the city to sell off the hotel and/or the parking garages in order to pay for improved rec centers. Isberg says neither asset should be sold, given the amount of money it would cost Baltimore to dispose of the bonds that were used to leverage the assets, plus the potential for the assets to no longer generate taxes and other revenues.
As an alternative, Isberg says, the city might consider devoting a certain percentage of those revenues to the rec center improvement plan. Whatever is done, he says, due diligence should be employed first and foremost.
Listen to the WYPR coverage.
Learn more about Prof. Isberg and the Merrick School of Business.