The city's Board of Finance approved $58.6 million in financing Monday for new homes, shops and other construction near the University of Maryland Biopark and the Edgar Allan Poe House — an area that has suffered from disinvestment and blight.
The Poppleton development, a $460 million plan to be built over 15 to 20 years, could add 1,600 rental and for-sale homes to the area, as well as a school and about 150,000 square feet of retail space.
The tax increment financing would include about $38 million to pay for public improvements such as upgrades to streets, sidewalks, utilities and new parks.
For the deal to go forward, it must receive approval from Mayor Stephanie Rawlings-Blake and the City Council, as well as the Board of Finance when the bonds are issued.
"There's a lot of work between now and final approval, but we're certainly pleased that the project is able to move forward," said Peter Engel, the city's deputy housing commissioner for project finance and development.
City analysts say the 14-acre project, proposed by New York-based La Cite Development, would bring about $430 million in revenue after debt service and other expenses.
The city has spent about $10 million acquiring properties for the development.
The five-member Board of Finance approved the deal on a voice vote. Comptroller Joan M. Pratt abstained.
Pratt said she supports the project, but is skeptical of some of the developers' projections, which compare the development to luxury developments, such as Silo Point.
She said she is also concerned that the development could suffer if the Red Line does not move forward.
"I think the project is good because it does bring benefits to the community, and there are a lot of blighted properties over there, but I just want to make sure that it makes good financial sense," she said.
The Baltimore Sun could not reach La Cite Development after the vote Monday evening.
Engel said projections for the first buildings would not be affected by delays to the Red Line project. He said the developers want to transform the area in a way that could lead to higher rents.
"What they're looking at here is place-making," he said. "Clearly today it would be problematic to get a Silo Point rent."
Plans have been in the works for nearly a decade, since La Cite won rights from the city in 2005. New Jersey-based Diversified Realty Advisors LLC is also a member of the development team, charged with remaking about 12 blocks, roughly bordered by Mulberry Street and Fairmount Avenue to the north and south, and North Carrolton Avenue and Amity Street to the east and west.
The project stalled while La Cite looked for financing during the recession and the city worked to acquire some of the more than 500 private properties involved. In 2012, La Cite sued to stop the city from terminating its agreement.
The dispute was resolved in 2013, and in April, the city approved designs for the first buildings — two six-story high-rises on Schroeder Street with 257 apartments. About 20 percent of the units are to be reserved for moderate- and low-income families.
Construction on the first part of the development is to begin by July and last about two years, said Lembit Yogi, a senior housing development manager for the city.
Financing for the $72.5 million first phase would include low income housing tax credits and about $8.5 million in tax increment bonds, he said. City analysts said the first part of the project would bring the city about $255,000 in revenue each year.
City subsidies for major redevelopment projects have come under scrutiny in the past. Last year, the City Council approved $107 million in tax increment financing for the luxury waterfront development Harbor Point after critics questioned the size of the aid package.
City Councilman Carl Stokes said he had not seen the details of the Poppleton Center/West proposal and did not have a position on the financing.
"Every such project that is seeking government incentives and et cetera will be, as you say, scrutinized," he said. "I don't think it matters if it's on the harbor or not."
The figure for the cost of the project's first phase has been revised from an earlier version of this story due to a source error.