Port Cov­ing­ton deal OK’d

In 12-1 vote, City Coun­cil ap­proves $660 mil­lion pub­lic fi­nanc­ing pack­age for Un­der Ar­mour

Baltimore Sun - - FRONT PAGE - By Luke Broad­wa­ter

The Bal­ti­more City Coun­cil gave its fi­nal ap­proval Mon­day to a $660 mil­lion pub­lic fi­nanc­ing pack­age for Un­der Ar­mour CEO Kevin Plank’s mas­sive Port Cov­ing­ton project — a deal sup­port­ers say will bring thou­sands of jobs to Bal­ti­more, but crit­ics say is cor­po­rate wel­fare.

City Coun­cil Pres­i­dent Bernard C. “Jack” Young said the water­front de­vel­op­ment pro­posed by Plank’s Sag­amore De­vel­op­ment Co. was too good to pass up.

Young said the $5.5 bil­lion project, which in­cludes an ex­panded head­quar­ters for Un­der Ar­mour, shops, restau­rants, hous­ing, of­fices and man­u­fac­tur­ing space, will spur eco­nomic growth in Bal­ti­more.

“Un­der Ar­mour is No. 2, next to Nike. We don’t want Un­der Ar­mour to move out of the city of Bal­ti­more,” Young said. “We’ve done what we could do. [Sag­amore] is go­ing to take care of the six neigh­bor­hoods sur­round­ing Port Cov­ing­ton. I think we’re mak­ing the right de­ci­sion.”

The coun­cil voted 12-1 to ap­prove the sub­sidy. Coun­cil­man War­ren Branch voted against the deal; coun­cil mem­bers Mary Pat Clarke and Bill Henry ab­stained.

Mayor Stephanie Rawl­ings-Blake plans to sign Kevin Plank

the bill next week, ac­cord­ing to her spokesman.

Rawl­ings-Blake’s ap­proval would al­low the start of decades of work on the de­vel­op­ment.

Sag­amore asked the city to float $660 mil­lion in bonds to build in­fra­struc­ture for the project. The de­vel­oper would pay the bonds back through fu­ture taxes. It’s the largest tax-in­cre­ment-fi­nanc­ing deal in the city’s his­tory, and among the largest in the coun­try.

Pro­po­nents see such deals as a cre­ative way to fi­nance in­fra­struc­ture in a city with high prop­erty taxes. Crit­ics con­tend that they di­vert money from the city’s gen­eral fund, where it could be used to pay for needs such as fire­fight­ers and schools.

The Port Cov­ing­ton project is pro­jected to cre­ate 26,500 per­ma­nent jobs and have a $4.3 bil­lion an­nual eco­nomic im­pact, once com­plete. The land in­cludes the site of The Bal­ti­more Sun’s print­ing press. The Sun has a long-term lease on the prop­erty.

“When we look back years from now, the city will be much bet­ter off with this hap­pen­ing than not hap­pen­ing,” City Coun­cil­man Robert W. Cur­ran said.

Clarke said the project stands to of­fer sig­nif­i­cant op­por­tu­ni­ties for the city but fell short of meet­ing its po­ten­tial — es­pe­cially in guar­an­tee­ing good wages for work­ers.

“A lot of good is in­volved in Port Cov­ing­ton, so I didn’t want to vote against it,” she said. “There are cru­cial el­e­ments that would have been so won­der­ful to in­clude as a model for the fu­ture of Bal­ti­more. It is great to con­trib­ute money, but it’s even bet­ter to help peo­ple earn fair salaries and wages so they can take care of them­selves and their fam­i­lies.”

Sag­amore Pres­i­dent Marc Weller said the tax-in­cre­ment-fi­nanc­ing deal will al­low the firm to ramp up con­struc­tion be­fore the end of the year.

Sag­amore is to be­gin by build­ing a $19.6 mil­lion East Water­front Park that will “pro­vide pub­lic ac­cess to the water­front and con­trib­ute to the eco­log­i­cal up­lift of the Mid­dle Branch,” he said.

“We are ex­cited to get started cre­at­ing tens of thou­sands of jobs, gen­er­at­ing long-term pos­i­tive eco­nomic im­pact for Bal­ti­more City and build­ing this trans­for­ma­tional, in­clu­sive re­de­vel­op­ment, to­gether,” Weller said in a state­ment af­ter the vote.

Sag­amore has en­tered into a prof­it­shar­ing agree­ment with the city. If the Port Cov­ing­ton de­vel­op­ment reaps a profit greater than 15 per­cent, the city will get 25 per­cent of any ad­di­tional profit. An ar­chi­tect’s ren­der­ing shows the pro­posed Un­der Ar­mour campus at Port Cov­ing­ton from the wa­ter. Sag­amore De­vel­op­ment says it plans to be­gin the project by build­ing a $19.6 mil­lion East Water­front Park.

A profit-shar­ing agree­ment with the de­vel­oper of Harbor Point, by com­par­i­son, doesn’t kick in un­less that de­vel­op­ment’s profit ex­ceeds 20 per­cent.

Groups have emerged to both sup­port and op­pose the tax deal.

Sup­port­ers, in­clud­ing Bal­ti­more­ans United in Lead­er­ship De­vel­op­ment, the In­ter­de­nom­i­na­tional Min­is­te­rial Al­liance, the Pro­gres­sive Bap­tist Con­ven­tion of Mary­land and six neigh­bor­hood as­so­ci­a­tions rep­re­sent­ing com­mu­ni­ties near Port Cov­ing­ton have ar­gued that a $100 mil­lion city­wide ben­e­fits agree­ment, al­ready ap­proved by the city’s Board of Es­ti­mates, makes the deal “un­prece­dented” for Bal­ti­more.

The $100 mil­lion deal builds off a $39 mil­lion agree­ment be­tween the de­vel­oper and six neigh­bor­hoods near the project. It 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- or womenowned star­tups.

The devel­op­ers agreed to hire at least 30 per­cent of all in­fra­struc­ture con­struc­tion work­ers from Bal­ti­more, pay a wage of at least $17.48 an hour, and set aside 20 per­cent of hous­ing units for poor and mid­dle-class fam­i­lies (40 per­cent of such hous­ing may be built else­where in the city).

Op­po­nents, in­clud­ing Mary­land Work­ing Fam­i­lies, sev­eral la­bor unions and the Amer­i­can Civil Lib­er­ties Union of Mary­land, ar­gue the de­vel­op­ment does too lit­tle to help Bal­ti­more’s poor. They say a sub­si­dized de­vel­op­ment should pay “pre­vail­ing wages” — sev­eral dol­lars higher than pro­posed — on all con­struc­tion jobs, and liv­ing wages there­after.

Crit­ics con­tend the affordable hous­ing agree­ment is too weak. It re­quires 10 per­cent of Port Cov­ing­ton’s affordable hous­ing units be built for peo­ple who make less than $26,000, but it con­tains what the crit­ics call a “loop­hole” that al­lows the de­vel­oper to pay money into an in­clu­sion­ary hous­ing fund in­stead of build­ing the units.

The devel­op­ers do not have to build the hous­ing for the poor un­less they re­ceive fed­eral low-in­come hous­ing cred­its.

“The cur­rent agree­ment fails to en­sure the cre­ation of a min­i­mally ad­e­quate num­ber of units — ei­ther on-site or off — that are in­clu­sion­ary and affordable to house­holds at a range of in­come lev­els below the area me­dian,” said Mon­isha Cher­ayil, an at­tor­ney with the Pub­lic Jus­tice Cen­ter.

Crit­ics also say the de­vel­op­ment will cause the city to lose mil­lions of dol­lars in state aid to Bal­ti­more’s pub­lic schools be­cause it will cause the city to look wealth­ier on pa­per, but will not con­trib­ute money to the city bud­get un­til af­ter the bonds are re­paid.

A city-funded anal­y­sis found that the de­vel­op­ment would cost Bal­ti­more schools about $315 mil­lion in lost state aid over 40 years un­der cur­rent fund­ing for­mu­las.

Lead­ers of the Gen­eral Assem­bly have promised city of­fi­cials they will en­act a long-term fix to the for­mula to pre­vent any loss in state aid for schools.

But Frank Patinella, co-chair of the Bal­ti­more Ed­u­ca­tion Coali­tion, said he and other ad­vo­cates want the city to agree to cover any losses suf­fered by the schools.

The de­bates over affordable hous­ing and mi­nor­ity and lo­cal hir­ing have set a prece­dent for fu­ture re­quests, said Don­ald C. Fry, pres­i­dent and CEO of the Greater Bal­ti­more Com­mit­tee.

“If any com­pany is look­ing to come to Bal­ti­more and get some form of govern­ment as­sis­tance or sup­port in the na­ture of TIF or [pay­ment in lieu of taxes], I think they’re go­ing to know there are some things that are go­ing to be ex­pected,” Fry said.

BOHLIN CYWINSKI JACK­SON + NEL­SON REN­DER­ING

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