Yes to Tradepoint
The assistance deal Baltimore County Council members will vote on today manages the risks and amplifies the potential rewards
Our view:
At a superficial glance, the assistance package the Baltimore County Council is being asked to approve for Tradepoint Atlantic has a lot going for it. The $78 million price tag is about half what the developers of the former Sparrows Point site initially asked for. The subsidies would cover road, water and sewer work and would be paid from funds dedicated to those purposes. And if you stack up $78 million to accelerate and enhance the development of the county’s premier new jobs center compared to the $43 million the county approved to help un-stick a much more modest stalled development in Towson, there’s no comparison in terms of bang for the buck.
Still, any public assistance for private development requires deeper scrutiny. What are we getting for our public support that we otherwise wouldn’t? And what’s the risk to taxpayers?
Tradepoint is already a major success. A few years ago, after the long decline of the Sparrows Point steel mill finally came to its inevitable end, it looked like the massive site might lay fallow indefinitely, a hulking reminder of Eastern Baltimore County’s diminished economic fortunes. Today, the site has been cleared and is home to thousands of employees, mainly in warehousing and logistics for big companies including FedEx, Under Armour and Amazon. Tradepoint’s owners have invested $1 billion in the site already without the state or local help (though taxpayers have subsidized some of the tenants), and they reportedly plan to invest another $1 billion or more. Does Tradepoint really need the help?
That’s not a totally clear-cut question. Tradepoint officials say the public assistance wouldn’t change their ultimate plans but would allow them to open up the interior of the massive property — about 75 percent of the total acreage — much sooner than would otherwise be possible. Does that matter to the public? Quite likely. Not only does it mean more jobs sooner — certainly a good thing — but it also stands a good chance of improving the quality of those jobs.
The major lament about Tradepoint in Baltimore County is that the kinds of jobs it has produced aren’t nearly of the same caliber as those that were once plentiful at Sparrows Point. By and large, these aren’t heavy manufacturing jobs with commensurate put-your-kids-through-college wages. During the latest campaign for county executive, this became an issue with candidates pledging to bring manufacturing back to the site. Tradepoint officials say the economic conditions now are ripe for that to happen, and they know of manufacturers hunting for sites in the Mid-Atlantic. Tradepoint has a great location, deep water, rail and highway access, but that won’t matter if the basics — roads, water and sewer — aren’t ready.
That’s no guarantee, and it brings us to our second question: What’s the risk for taxpayers? The answer is, it’s quite minimal thanks to the way the county negotiated the final proposal under the leadership of former County Executive Don Mohler. Initially, Tradepoint asked for a tax increment financing deal in which the Maryland Economic Development Corporation would issue bonds that would be paid back through the increased property taxes on the site. If Tradepoint doesn’t succeed like its owners hope and property taxes couldn’t cover the bond payments, the company would still theoretically have been on the hook for them, but that’s not a zero-risk proposition. Instead, Mr. Mohler’s administration negotiated a more straightforward arrangement in which the county effectively pays Tradepoint to do the infrastructure work — but gets 100 percent of the property taxes the site generates. On the road work, if Tradepoint doesn’t qualify for certain state incentives for job creation, it doesn’t get reimbursed for all its expenses. The arrangement lowers the risk for the county and increases the potential reward.
There are no sure things in economic development. Just a few years ago, county residents were promised that extending Maryland 43 east of White Marsh would open up the most desirable industrially zoned land on the East Coast, but it has largely failed to live up to that potential, more so now that the General Motors plant there is slated for closure.
But this is a pretty good bet. Tradepoint has so far done well at attracting employers — about 3,500 people now work on the site — and this infrastructure is the last piece necessary to enable the full development of the site. Tradepoint officials say they won't be back asking for more in a few years. The risks are manageable and the potential upside is large. We urge the County Council to vote in favor of the proposal.