Kevin Plank’s pitch
Our view: The Under Armour CEO has laid out his vision for Port Covington; now is the time for him to answer the remaining questions and seal the deal
It’s about time we heard from Kevin Plank. Almost precisely six months after the Under Armour founder and CEO’s development company requested a jaw-dropping $535 million tax increment financing deal to facilitate a new city-within-a-city in Port Covington, and on the eve of word that a new community benefits agreement is to be announced, Mr. Plank made his first extensive public comments about the proposal in a full-page advertisement in Wednesday’s Sun. Weappreciate that, as he says in his open letter, he has a rather demanding day job, but a request of this size is not just something you delegate. This project has clearly been his vision from the start, and we needed to hear him make the case personally. The open letter doesn’t completely cover what we need to hear from Mr. Plank — it would be helpful for him to testify before the City Council as it considers approving the deal and for him to engage in public dialogue with the project’s critics, as James Rouse did in unveiling his vision for Harborplace a generation ago. But it’s a good start.
Mr. Plank makes six points regarding the proposal, covering many of the important questions the project raises. He answers some and leaves others.
Investment and jobs
“Port Covington will bring billions of dollars in private investment and thousands of jobs.” This is true; at full build-out, the private investment (including land acquisition costs) is projected to total more than $4 billion. State and federal funding for infrastructure would total $573 million, and the TIF would support $535 million in work on streets, utilities and parks (though the city or some pass-through entity would actually have to issue almost $660 million in bonds because of financing costs). The firm that analyzed the TIF request for the city estimated that over the decades-long scope of the project, it will directly generate 22,000 permanent jobs (though it’s unclear how many of those are net-newtothe city and howmanyamounttodisplacement of other economic activity) and14,000 temporary jobs.
Mr. Plank says in his letter that Port Covington would be a new “front porch” for Baltimore “seen by forty-two million cars a year passing by on I-95,” a fact that also raises the question of whether those jobs will be much more accessible to commuters zooming in to this isolated parcel of the city on the highway than they will be to city residents navigating through the crowded streets of South Baltimore or coming across the Hanover Street bridge. He partially addresses that issue by noting his proposal for a new light rail spur into the development and his recent purchase of the city’s water taxi service, which he promises to upgrade to connect with the rest of the city, including Westport and Cherry Hill.
That’s good to hear, but a light rail spur is a long-term goal at best, as are proposed new pedestrian and bike connections to the peninsula. Will Under Armour or Sagamore, Mr. Plank’s development company, commit to job shuttles from highunemployment neighborhoods in the meantime?
“The redevelopment is projected to deliver over a billion dollars of net positive tax revenue to the city in the coming years.” This is also true, depending on your definition of “coming years.” The TIF analysis projects that the development will produce a cumulative net surplus of property taxes for the city of $1.1 billion sometime in the mid-2050s. Of course, the development will also produce additional income, hotel, personal property and other taxes, but also new costs to the city for police and fire protection, schools, park maintenance and so on.
The city’s analysis anticipates that Sagamore will be on the hook for a total of nearly $300 million in special taxes (on top of regular property taxes) to cover debt payments on the bonds for nearly all of the project’s first two decades. Is that sustainable?
‘We also take on the risk’
Which brings us to Mr. Plank’s third point: Only property taxes from the project go to pay for the TIF, and the funds only go to infrastructure, not to Sagamore, Under Armour or Mr. Plank. “We also take on the risk.” That’s true — to an extent. The TIF bonds don’t pledge the city’s full faith and credit, and if the incremental property tax revenues generated by the deal don’t suffice to meet the annual bond payments, it is the developer, not the city, who must make up the difference.
The city’s analysis presents only one scenario for how this development unfolds, and that is precisely according to plan for 41 years. Even then, the expectation is that the developer will be paying special taxes for 18 consecutive years. What if Sagamore’s projections of the demand for residential, retail and office space are too optimistic — or, worse yet, the real estate market collapses again? It’s not Under Armour that’s backing this up or even Mr. Plank personally but Sagamore. When Mr. Plank says, “We also take on the risk,” who is “we?” TIF deals sometimes fail. What if this one does?
Mr. Plank also says that the money will “build public infrastructure — streets, sewers, utilities...” It also builds parks, promenades, a kayak launch and other items that do not appear Under Armour CEO Kevin Plank made his first extensive comments on his proposed Port Covington development in a fullpage ad in Wednesday’s Sun. absolutely essential. Mr. Plank needs to explain why they belong in the TIF.
Sagamore “is making unprecedented commitments to local hiring, inclusionary housing and opportunities for local minority — and women-owned companies.” The inclusionary housing goals the company and city initially agreed to, in particular, were unimpressive, but the new deal addressing those issues appears to be substantially better. It’s unlikely that everyone will be happy no matter what the company does, but we hope the details of the agreement truly set a new standard for how a big development project like this can create a more inclusive city and spread opportunity where it is truly needed.
There is little question that Mr. Plank is right in his fifth point, that Sagamore has already agreed to an unprecedented level of community benefit agreements to help surrounding neighborhoods (and to some extent, the city generally) on priorities like “education, recreation centers, workforce development, prevailing wages, better streets, parks, playgrounds” and more. He pegs the total at over $100 million, and the newagreement being announced will apparently increase that figure markedly.
We commend that effort and the company’s willingness to engage with surrounding communities to bring them on board in support of the project. But it doesn’t really alter the basic questions about whether the city is really committing only the minimumlevel of public support needed to make this project happen and whether taxpayers are fully protected.
A major lingering issue Mr. Plank doesn’t mention is whether a TIF deal for a development of this size could lead to a reduction in state aid for Baltimore schools. Legislators enacted a temporary fix, but a permanent solution needs to be hashed out by the new CommissiononInnovationandExcellenceinEducationheadedby former University SystemofMarylandchancellor William E. “Brit” Kirwan and then approved by the General Assembly and governor. A recent letter from the House speaker and Senate president promising a resolution to the issue is heartening, but a commitment by Mr. Plank to lobby in support of a solution would be appropriate. If he shows up in Annapolis, legislators will line up to listen.
Under Armour’s future — and Baltimore’s
“We can’t wait.” Mr. Plank’s sixth point hasn’t gotten much attention, but it is important. Under Armour is fast outgrowing its Tide Point offices and needs somewhere to go. A few hundred workers are already in Port Covington at the site of the old Sam’s Club, and Mr. Plank envisions a world-class corporate campus there. “Today there is no Fortune 500 company that calls Baltimore home ... yet,” Mr. Plank writes in a bit of well-earned chutzpah. Whether — or, really, when — Under Armour achieves that distinction isn’t just a question for Mr. Plank’s ego but one that matters for the city. Under Armour may be the best thing Baltimore’s got going for it from a branding standpoint. The more closely the city can be associated with a company of the future, the better, particularly when it comes to attracting talent, fostering an entrepreneurial culture and creating tomorrow’s opportunities for everyone in this city.
Mr. Plank is right that the redevelopment proposal for Port Covington presents a turning point for Baltimore. It is an opportunity not just to lock in the city’s fastest-growing company for the foreseeable future but also to show that a year after the post-Freddie Gray unrest, we have taken to heart the need to foster prosperity across the city and not just hope that it will trickle down from the waterfront to the neighborhoods. Mr. Plank says his vision is for “a strong inclusive city known globally as a hub of business, trade, entrepreneurship, diversity, arts, culture and important American history.” We believe that’s possible and that Port Covington can be an important catalyst in making it a reality. Mr. Plank, it’s time for you to seal the deal.