City Council approves $660 million bond deal for Port Covington project

"I think we're making the right decision," on Port Covington, City Council president says.

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 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 profit-sharing 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.

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 women-owned 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. Frank Patinella, co-chair of the Baltimore Education Coalition, said he and other advocates urged state lawmakers to make such a pledge.

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.

Baltimore Sun reporters Natalie Sherman and Yvonne Wenger contributed to this article.

lbroadwater@baltsun.com

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