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City to consider $35 million bond issue for Harbor Point

FinancePublic OfficialsBondsCarl StokesJames B. Kraft

City officials on Monday will consider issuing $35 million in bonds for the massive Harbor Point development — among the final steps before construction can begin on the $1.8 billion waterfront project.

Such bond issues by the city's Board of Finance, which manages Baltimore's debt, are typically considered routine. But some are urging the board not to approve the financing until all environmental concerns associated with the former chemical plant site are alleviated.

The Harbor Point development team has received approval from the Maryland Department of the Environment to begin preliminary construction, but hasn't yet gotten permission to penetrate the cap containing chemicals in the soil.

"The concerns are still there," said Stelios Spiliadis, owner of the Inn at the Black Olive, which is near the site. "I hope they can wait until all of the environmental questions have been answered."

Harbor Point, which is between the Harbor East and Fells Point neighborhoods, is the planned home of energy giant Exelon's new regional headquarters, as well as a Morgan Stanley facility, other office buildings, residential towers, stores and a hotel.

If the finance board approves the bond issuance Monday, the $35 million could be available for developer Michael S. Beatty's Harbor Point Development Group LLC by January, according to Kevin Harris, a spokesman for Mayor Stephanie Rawlings-Blake. Beatty has said he plans to buy the initial offering of city-issued bonds for the project. The bonds would earn an estimated interest rate of 6.5 percent; Beatty has said he will use the proceeds to pay for a construction loan.

The finance board is composed of Baltimore finance director Harry E. Black, who attends board meetings in place of the mayor; Comptroller Joan M. Pratt; and three mayoral appointees: Larry I. Silverstein, Frederick W. Meier Jr. and Dana C. Moulden.

The $35 million represents the first stage of $107 million in bonds for the project approved by Baltimore's City Council. Harris, the mayor's spokesman, declined to say if approval is likely Monday.

State and federal environmental agencies have approved Beatty's design plan for the site, ruling it will not harm the environment. That approval allows his firm to begin preparatory construction activities. The state is still evaluating the developer's plan for air monitoring during construction.

Jay Apperson, a spokesman for the state Department of the Environment, said the state could approve the air monitoring plan within 10 days.

In a statement, Beatty called the finance board's vote a "critical step toward beginning construction."

"Assuming we win their support, we look forward to next going before the Board of Estimates — and to completing the remaining approvals — so that we can get to work and create new jobs and opportunities for local businesses in Baltimore," he said. There isn't a firm date for when they hope to break ground, officials said.

City Councilman James Kraft, who represents the Harbor Point area, said he believed the developer has done a "very good job of answering the questions from the community."

"Naturally, they want to move forward as quickly as possible, but whenever I've said, 'You need to hold up,' I haven't gotten any pushback," he said.

But Spiliadis said many questions remain about elevated levels of cancer-causing chromium in groundwater just beyond the area targeted for the upscale development. The developers plan to drive 1,100 pilings into the ground, disturbing the protective cap over land that once held a chromium processing plant.

"Until everyone is 100 percent certain, they should not give them the OK to start construction," Spiliadis said.

The City Council in September gave final approval to the $107 million in taxpayer assistance for the development that the mayor calls a "once-in-a-generation opportunity."

With tax increment financing, the bond sale proceeds are used for improvements — in this case the parks and some infrastructure — and future property taxes generated by the development are used to pay off the bonds.

The tax increment financing is part of about $400 million in public subsidies for the project, including more than $110 million in tax breaks.

City Councilman Carl Stokes, who led opposition to the subsidies on the council, said he does not believe the project should be delayed any further.

"I don't oppose the development. I never did," he said. "I don't think it should have gotten an unprecedented amount of taxpayer subsidies, but we lost that fight. I don't think it should be unduly held up. All things being done correctly, it should continue to move forward."

In addition to environmental concerns at the site, some in the area are also worried about traffic congestion in an already busy part of southeast Baltimore. Kraft said he's waiting on the results of a city-funded study of the traffic impact of the massive development.

"There are too many cars and there's no way to move them around," he said.

The largely vacant Harbor Point site is assessed now at $10 million, but the Baltimore Development Corp. projects it will be valued at $1.8 billion for tax purposes when the development is completed years from now.

Once fully built, city officials say, the project will contribute about $20 million a year in increased property taxes to the city's budget, which could be used for schools, roads, police and other projects.

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Copyright © 2014, The Baltimore Sun
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FinancePublic OfficialsBondsCarl StokesJames B. Kraft
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