OUT OF TRAGEDY, A GIFT
The Port Covington debate echoes the three-decades-old fight over redevelopment of the Inner Harbor Local fund helps children of 9/11 victims go to college
When supporters tout Under Armour CEO Kevin Plank’s $5.5 billion Port Covington project, they often invoke the Inner Harbor, and the transformational effect the decades-old development has had on downtown Baltimore.
When opponents criticize Plank’s plans, they, too, cite the Inner Harbor. By prioritizing the high-end waterfront development, they say, the city has widened the divide between its rich and poor.
More than half a century after city planners and prominent developers used millions in federal funds to turn a group of rat-infested, rotting piers into a thriving tourist hub, Baltimore’s signature attraction has generated 21,000 jobs, and produces an
When Thomas Heidenberger’s wife died Sept. 11, 2001, shock and grief weren’t all the Chevy Chase man had to deal with.
Heidenberger, then a 55-year-old airline pilot, had a daughter attending Loyola College in Baltimore.
He had a son who would be heading to college in a few years.
His wife, Michele, had been the lead flight attendant on board American Airlines Flight 77, the one that crashed into the Pentagon. annual economic impact of $2.3 billion.
It has also laid the groundwork for publicly supported developments in Harbor East, Harbor Point and, now, Port Covington.
But away from the waterfront, much of Baltimore remains poor, segregated and deeply traumatized by a violent drug trade.
In approving breaks for the city’s major downtown developments — not only the Inner Harbor, but also projects from Harbor East to the stadiums at Camden Yards — city and state officials did not demand guarantees that jobs would go to city residents or pay living wages.
Some critics see Port Covington as another example of a failed development model.
Community activist Ralph Moore once debated the merits of the Inner Harbor project with Mayor William Donald Schaefer
When he started recalculating the family finances, Heidenberger believed he’d have to sell their house or take out a second mortgage to finance the children’s educations. Then he met Douglas Schmidt. Schmidt, an investment banker who lives in Towson, founded the Maryland Survivors Scholarship Fund to ensure that the children of Marylanders who lost their lives in the attacks of 9/11 could attend college.
Schmidt, his colleagues and friends raised $300,000. They sponsored dinners and private concerts that brought the families of Maryland victims together for the first time, providing a semblance of community among people who had in
on national television.
“It’s our Baltimore version of the trickledown economic theory, which has not been successful anywhere in the country,” Moore said. “You give all this money to folks who already have money. It’s supposed to benefit poor people eventually, but it never does.”
Tom Geddes, CEO of Plank Industries, says Port Covington will be different.
Plank’s Sagamore Development Co. has proposed a new headquarters for Under Armour, plus restaurants, shops, housing and manufacturing space. The land includes the site of The Baltimore Sun’s printing plant, for which the newspaper has a long-term lease.
Geddes says the development’s impact would be even greater than that of the Inner Harbor, in part because it would directly benefit poor communities nearby, such as Cherry Hill and Westport.
On Thursday, Geddes announced a $100 million citywide benefits deal that includes $25 million to train workers at a new Port Covington training center and $10 million for no-interest loans or other funding streams for minority- and women-owned startups.
The developers also agreed to hire at least 30 percent of all infrastructure construction workers from Baltimore, pay a minimum wage of at least $17.48 per hour, and set aside 20 percent of housing units for poor families. (They say up to 40 percent of such housing could be built away from the development.)
“We expect Port Covington to have all the benefits of the Inner Harbor, but with a further-reaching and more inclusive impact for residents of Baltimore,” Geddes said. “Port Covington is physically many times larger than the Inner Harbor, and therefore capable of providing a more far-reaching sustainable economic impact for the city.”
Sagamore has asked the city to float $660 million in bonds to pay for roads, utility lines and other new infrastructure around the site. Under a system called taxincrement financing, the bonds would be repaid with future tax revenue from the site.
Not everyone is satisfied. Barbara Samuels, an attorney with the American Civil Liberties Union of Maryland, called Port Covington “an example of the economic development paradigm that has failed our city.”
Samuels warns that the plan could be a drain on city resources needed in Baltimore’s existing neighborhoods.
The proposal calls for more than 40 acres of parks, open space and amenities, at a cost of about $140 million — three times more than the city’s current capital budget for all other parks and recreation projects.
The ACLU argues that the millions of dollars for transit projects for Port Covington would draw money away from roads and bridges elsewhere in Baltimore.
The city transportation department has declared two dozen bridges in the city structurally deficient — an early warning that they are in poor condition. And about 40 percent of the city’s streets are “substandard,” transportation officials say.
In a letter to Baltimore officials, Samuels argued the city couldn’t pay for Port Covington while also addressing those issues. The development, she said, was “in competition with disinvested parts of the city.”
“Baltimore, historically, is the leading city in America for segregation. We started segregated housing. We’re not going to do that, not on the taxpayers’ dime. Not this one.”
Two Baltimores
Critics of Port Covington speak of “two Baltimores” — one that is educated, wealthy and safe, and another that is poor and violent.
The divide opened more than a century ago, when Baltimore became one of the first cities in the country to pass an ordinance that forced blacks into segregated neighborhoods. The “colored blocks,” as they were known at the time, were located in West and East Baltimore, away from the bustling waterfront and its jobs.
Other policies deepened the economic divide between races. In the 1930s, the federal government encouraged home loans to whites — particularly those of British, German and Scandinavian descent — but not to blacks.
Black Baltimoreans were charged more for rent on average than whites, making it difficult for African-American families to accumulate wealth and pass it on to future generations — mirroring trends in other cities. For instance, a 1936 federal government survey reported that rents in Baltimore’s white “best” areas were generally lower than those in black areas, according to research done by the author and historian Antero Pietila. Today, the average white family in America has more than 10 times the wealth of the average black family.
Some Baltimore leaders say they are Councilman Carl Stokes attempting to use Port Covington to right historic wrongs.
“This is a big deal,” said City Councilman Carl Stokes, who chairs the council’s economic development committee. “It is very important to us that we have an inclusive community at Port Covington. There is no way that this committee is going to consider having an exclusive community.
“Baltimore, historically, is the leading city in America for segregation. We started segregated housing. We’re not going to do that, not on the taxpayers’ dime. Not this one.”
Baltimore, built for nearly 1 million people, began losing population after World War II — first many white residents, who were lured to or fled to the suburbs, but then black residents, too.
The departure of one-third of the city’s population coincided with the loss of about 40,000 factory jobs, eroding the city’s economic foundation and replacing its manufacturing punch with a lower-paying service economy.
Between 1950 and 1995, Baltimore lost 75 percent of its industrial employment. At the same time, the racial composition of the city changed from a quarter black in 1950 to about two-thirds black today. Economic despair helped fuel the rise of the violent drug trade, which the government has fought for decades as a war — leaving thousands addicted, imprisoned or dead.
From the 1940s through the 1980s, a succession of mayors — including Thomas D’Alesandro Jr., Theodore McKeldin and William Donald Schaefer — increased property taxes to fund city services. Today, Baltimore’s property tax rate is about twice as high as those in the surrounding counties.
Against this backdrop came the ambitious plan for the Inner Harbor. With a desperate need to remake Baltimore’s economy — and redevelopment hindered by Baltimore’s high tax rate — the city subsidized construction around the harbor.
M.J. “Jay” Brodie shepherded redevelopment in the city under four mayors as head of the Baltimore Development Corp.
“The city was in dire straits. It was emptying out,” he said. “This was the beginning of saying, ‘We’re not just going to sit back and let the city go down the drain.’”
But officials didn’t require the developers to employ local residents or pay union wages.
Voters approved an ambitious proposal In 1964 to remake the waterfront by approving $2 million in bonds for the project. Millions more in federal grant money began to pour in to support the project, and a succession of attractions — the Maryland Science Center, Harborplace, the National Aquarium, shops and restaurants — followed in the 1970s and 1980s.
In the 1990s, the Maryland Stadium Authority directed $600 million in public money to build stadiums for the Orioles and the Ravens.
Officials followed that with an array of tax breaks — from Enterprise Zone tax credits to payments in lieu of taxes — that helped launch the luxurious Harbor East development.
In recent years, city lawmakers have opted for tax-increment-financing deals, such as the one proposed for Port Covington.
According to the watchdog group Good Jobs First, which tracks government subsidies for development, government bodies have spent about $2 billion since the 1970s to build and maintain the city’s tourism facilities.
“Unlike most states and many big cities, Baltimore has no job quality standards or laws requiring subsidized companies to pay a certain wage or to provide healthcare,” Good Jobs First authors Kate Davis and Chauna Brocht concluded in 2002.
“The city has neglected to enact standards to ensure that the new tourism jobs were of high quality,” they wrote. “As a result, low wages and part-time hours were so prevalent that all but three of the city’s non-managerial tourism jobs pay less than the federal poverty line for a family of four; many pay far less.”
Daraius Irani, the chief economist at Towson University’s Regional Economic Studies Institute, says the Inner Harbor counts as a success by many measures. It has been emulated by cities around the world.
But he says a more deliberate approach to using development to combat poverty is needed. “Everyone wants to live next to water,” he said. “The city needs to leverage its assets.”
Replacing the lost jobs
The death of Freddie Gray last year, and the protests it ignited, drew fresh attention to Baltimore’s entrenched poverty.
Councilwoman Mary Pat Clarke served on the council when parts of the Inner Harbor development were debated. She said the city can no longer support development that doesn’t benefit poor and working-class Baltimoreans.
“We’re two cities,” said Clarke. “We built the Inner Harbor for one reason: not because we wanted to have a beautiful place to go. We needed to replace the jobs we were losing to manufacturing. We had to make ourselves a tourist city and attract thousands of people, which we successfully have.
“But the idea was ‘this is to create jobs for people [that] will provide livings for families.’ They don’t.”
Bishop Douglas I. Miles, a leader with Baltimoreans United in Leadership Development, says the city’s track record on downtown development leaves much to be desired. The city has become a tourist destination, he says, but residents away from the waterfront have not benefited.
“We were told if we support one project after another, then we would soon reach the promised land of one Baltimore,” he said. “All that development, and nothing changed in what now has become Freddie Gray’s Baltimore.”
BUILD initially opposed the Port Covington project, but after helping to negotiate the community benefits agreement, the organization now is an enthusiastic supporter, touting the project as a “new day” for Baltimore.
Samuels, of the ACLU, remains unconvinced. She says the benefits agreement does little to alleviate concerns that the development will reduce economic and racial segregation in Baltimore. She argues assurances on building affordable housing are too weak, and allow the developer clauses to get out of actually building much of the housing for the poorest Baltimoreans.
“That is not inclusive community,” she said. “They’re building a wealthy white enclave. If we want to keep doing what we’re doing, we’re going to keep getting the same results. The same results are more uprisings. Two Baltimores is not sustainable. Trickle-down economics has failed.”
Brodie bristles at the suggestion that the city focused only on waterfront areas during his time in office. He says he tried to take a balanced approach, directing resources to both the downtown area and city neighborhoods. A majority of the largest tax deals were focused on the waterfront and downtown areas.
Brodie recalls working on projects in Upton, along Pennsylvania Avenue and at Old Town Mall — though the mall is desolate today. Inner Harbor developer James Rouse led a $130 million effort to remake Sandtown-Winchester in West Baltimore — the neighborhood where Freddie Gray was arrested — but it did not produce lasting change.
In recent years, Baltimore’s economy has begun to turn around. The population loss has stopped, and the city is adding jobs for the first time in decades.
From 1990 to 2010, Baltimore lost about 50,000 jobs. But it has gained more than 22,000 jobs since then.
Under Armour — now second to Nike in worldwide sports apparel sales — has been a part of that growth. The firm is the 12th-largest employer in the city, with nearly 2,000 workers.
Plank’s charitable donations, from a renovated football field at Dunbar High School to new boots on the feet of city firefighters to, last week, $1 million in scholarships to the city’s Catholic schools, are noticeable across Baltimore.
In an earlier era, Brodie says, the Port Covington plan would have been in line for substantial federal and city support, much as the Inner Harbor was.
Given Baltimore’s current fiscal constraints, he says, tax-increment-financing is likely the smartest way to pay for infrastructure at the site.
But Brodie thinks the large-scale historic and societal problems that many want to see solved are likely beyond the ability of the poor city government to fix.
“The Inner Harbor needed doing for the future of Baltimore,” he said. “No thinking person would have claimed that it would have solved Baltimore’s other problems: white flight, a loss of jobs, economic and racial segregation, the perceived deterioration of the public schools and drugs.
“America is a private-sector economy. The city can be a catalyst; it can help the private sector with incentives. It can produce infrastructure. But investment ultimately comes from the private sector.”