Under Armour's value to city overhangs TIF debate

Supporters of Port Covington say Under Armour needs the TIF. Would the firm ever leave?

When the developers of Harbor Point approached a downtown business group three years ago about supporting their request for public financing for the project, the organization's membership was torn.

But this year, when a team backed by Under Armour founder Kevin Plank started wooing allies for a similar request — except that it's about five times larger — there was little hesitation.

As a city vote on the request for $535 million in public financing nears, concerns about keeping the Baltimore-based athletic apparel company's growth in the city hang over the debate.

Though Plank's representatives from Under Armour and his private real estate firm, Sagamore Development, have largely avoided any suggestion that he is anything less than committed to Baltimore, business and political leaders say they want to keep the company happy.

"What's motivating it is not an immediate fear of losing Under Armour, but really a recognition of the importance of Under Armour to our city," said Downtown Partnership President Kirby Fowler, explaining the organization's support. "Under Armour is distinctly connected to Baltimore, and if we were ever to lose it, it would be a terrible, terrible loss."

Sagamore Development has proposed a $5.5 billion plan to remake Port Covington in South Baltimore with offices, apartments and stores next to a new campus for Under Armour. Sagamore is seeking the public financing to help pay for roads, utilities, parks and other projects in the area.

City officials have pressed for approval of the tax increment financing, or TIF, which would be repaid with the project's future property taxes, citing worries that Under Armour could leave Baltimore.

In March, Kaliope Parthemos, Mayor Stephanie Rawlings-Blake's chief of staff, told the Board of Finance that the firm has been courted by other, unnamed jurisdictions. Steve Kraus, deputy director of the city's Finance Department, echoed her comments.

"To think this plan here can only happen here is naive," he said. "They could go anywhere."

The state is not aware of any specific recruitment efforts targeting Under Armour, said R. Michael Gill, the state commerce secretary. Despite that — and Under Armour and Plank's ongoing donations and investments in the city — Gill said he remains vigilant and worried about the ongoing negotiations.

"I do think Kevin's heart is … in Baltimore, but for every individual you reach a point where you say, 'How much more can we do?'" he said. "I never, ever take anything for granted."

Activists, who have pressed the city to require more from the developer related to wages, affordable housing and education funding in exchange for the financing, said there is little evidence to suggest that Under Armour is seriously contemplating leaving the city.

"Mr. Plank has said that he's committed to Baltimore City, so we are working under that assumption," said the Rev. Glenna Huber, co-chair of BUILD. "When you're coming to the city asking for that much public funding, then the city's in a position of power, so why does the city not act from a position of power?"

The city and others are confusing the interests of Under Armour with the interests of Sagamore and other future developers of the mixed-use project, said former state planning director Ronald Kreitner.

"You have to separate things in terms of what's important for a company and retention for a company, and what's a really separate project," he said.

But Under Armour does see the larger project as critical to its planned growth in Baltimore, where it expects to expand its employment fivefold to 10,000 people eventually. Though public funds would not be used on the Under Armour campus, the improvements to the nearby area are essential for future construction on the firm's 50-acre site, said Neil Jurgens, Under Armour's vice president of corporate real estate, in a statement.

"After 20 years of rapid growth, Under Armour is just getting started in the city it calls home," Jurgens said. "We believe many cities or states would welcome the jobs and economic growth from a rapidly growing company in their area.

"Under Armour is committed to Baltimore and its proposed global headquarters at Port Covington has the potential to fuel the company's growth well into the future," he added.

Under Armour, through a spokeswoman, declined to respond to specific questions about how the Baltimore campus fits into the firm's global growth, what divisions the new campus is expected to house or if the expansion would prompt the firm to relocate departments to Baltimore.

Outright relocations of company headquarters remain unusual, but technology allows firms to locate workers and business units based on cost and other considerations, said David Collis, who teaches at the Harvard Business School and has studied corporate headquarters decisions.

"The risk would be that they would keep the corporate headquarters stuff, they'd have some open-space offices … with foosball and all the rest, and then they'd move the support stuff" elsewhere, he said.

In recent years, the company has established offices in cities such as Austin, Texas; San Francisco and Portland, Ore., while outgrowing its space in Baltimore.

It can't keep hiring locally without building, said William H. Cole IV, president of the Baltimore Development Corp.

"They've made no threats that they're going to pull up stakes here in Baltimore, but if they don't have a place to grow here … then other areas and other parts of the country may see the accelerated growth we'd like to have," he said.

Corporate headquarters bring important economic benefits regardless of their size, with their presence alone helping to elevate a city's image, said Thomas Klier, senior economist at the Federal Reserve Bank of Chicago, who has studied headquarters locations.

That's one reason why the Greater Baltimore Committee and others are backing the TIF request, said Donald C. Fry, president and CEO of the Greater Baltimore Committee business group.

"Businesses recognize the importance of having a company of Under Armour's ilk serving as an example of why doing business in Baltimore makes sense," he said. "There's a natural tendency to say yes. We want to give this company every opportunity we can to grow, expand and develop in our community."

As the debate unfolds, Plank himself has kept a low profile, consistent with an approach he outlined earlier this year, when he told the National Association of Governors, "We're a company that does not believe it's our job to hold a city or state hostage for moving … but we certainly need help."

The tension between those two statements has sometimes put advocates for Port Covington in an awkward spot.

At a City Council hearing in July, Sagamore executive Caroline Paff said of Under Armour: "It's either grow here or grow somewhere else."

The public relations firm working on the plan swiftly followed up with reporters, emailing a statement from Jurgens, the Under Armour vice president, that beat back any hint of a threat.

"Under Armour is committed to Baltimore; Baltimore is the City we call home," it said.

nsherman@baltsun.com

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