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Point man on harbor development confronts controversy

When developer Michael Beatty comes home from a hard day of reshaping the city's skyline, first with Harbor East and now with its neighbor, Harbor Point, he relaxes by cooking.

"I love seeing projects through, but they take so long to get done," Beatty said. "So I cook, and I have results in an hour."

Not always good results, though, as Beatty learned the night he decided to make baguettes. They came out of the oven golden and fragrant — but also heavy and inedible as bricks, he remembers telling John Paterakis, his partner at the time at H&S Properties Development.

Paterakis, who knows a bit about bread as head of H&S Bakery, diagnosed the problem: Beatty hadn't given the dough time to rise.

For bread or buildings, it seems, patience comes in handy. After a particularly contentious series of hearings, the City Council is expected on Monday evening to grant Beatty $107 million in public financing for Harbor Point, the capped hazardous-waste site envisioned as home to a new office tower for the energy giant Exelon as well as housing, shops and parks.

In a city of persistent poverty and a crumbling infrastructure, that a total of about $400 million in tax breaks and other assistance is flowing to another gilded waterfront development has sparked outcry in some quarters — much of it directed at Beatty.

The 47-year-old developer maintained an unflappable demeanor, at least in public, even as protesters marched on City Hall wearing mock baseball uniforms of the "Tax Dodgers" team or bearing derisive sentiments on their chests, such as: "Michael Beatty got an $88 million tax break. All we got is this damn T-shirt."

His equanimity may stem from the fact that the sound and fury isn't likely to change anything.

The strong support he enjoys at City Hall virtually assures that Beatty will walk away Monday evening with the Tax Increment Financing, or TIF — followed eventually by other public assistance, including that $88 million tax credit for building in an Enterprise Zone.

Despite being much in the news lately, Beatty is not widely known outside his own circles — to the point that his name is frequently mispronounced. (It's Beet-y, not Bate-y.)

The Long Island native moved to Baltimore in 1990 and three years later joined the spotlight-shunning Paterakis, becoming the public face of the bakery magnate's development of Harbor East — a collection of office towers such as Legg Mason, apartments, boutiques and fancy restaurants that sprang up in just past decade.

Late last year, Beatty split from Paterakis to start his own company to build Harbor Point, the 27-acre site that is Baltimore's last undeveloped swath of land fronting the Inner Harbor.

'I like privacy'

He is decidedly more comfortable talking about his business than himself. A conversation with Beatty can feel like a presentation; a walk through the lively Harbor East and barren Harbor Point is something like a PowerPoint in three dimensions.

"I'm pretty simple. I like food. I like my family," Beatty says. "I like privacy."

He is the son of an architect, the husband of his college-sweetheart wife, Nathalie, whom he still calls "my bride," and the father of three teenage sons whom he declines to name, to protect them from publicity. His family recently took a motor home to drive their oldest son to his second year at Kenyon College, which filled Beatty with what he wincingly describes as "such a pain of sorrow."

His friend and frequent collaborator on development projects, C. William "Bill" Struever, says one of the things he admires most about Beatty is that "he's a rock-solid family guy."

"I'm somewhat jealous of that," Struever said. "He's done a terrific job balancing his life."

Beatty isn't much of a civic joiner, but he has served on the boards of his sons' schools — the School for the Arts and Gilman — as well as those of Maryland Institute College of Art and Johns Hopkins Bayview Medical Center.

Much of his time goes to his business, from lining up financing to recruiting tenants to what he calls the "City Council headaches" of getting the TIF bonds approved for the $1.8 billion Harbor Point project. The city will float bonds to pay for infrastructure and other improvements at the site, and future property taxes generated by the development will be used to pay off the bonds. The bonds will also pay for public parks and a $2 million contribution to the Crossroads charter school.

Beatty plans to buy the first round of TIF bonds himself, expected to be about $35 million.

Beatty has met with opponents who decry what they see as a giveaway of public funds to little public benefit, particularly to impoverished eastside areas that stand in stark contrast to their glittery new neighbor.

"We did a little more listening. I was never a good listener," Beatty said. "They scream and yell, but sit down with them, they're a lot nicer."

He seems to have partially disarmed some critics, such as Rev. Alvin C. Hathaway Sr., pastor of Union Baptist Church, who said that before he met Beatty, he thought, "Here is an opportunistic, nouveau riche developer looking to maximize his successes so far into his own project. My sense was we're going to have a tussle and a fight."

Instead, Hathaway said, Beatty appears open to collaborating with him and other clergy and activists who want the developer to focus on local workers and companies when it comes time to build and staff Harbor Point. Beatty has discussed training programs at Sojourner-Douglass College, for example, that could provide employees for Harbor Point's needs, as well as goals for local and minority hiring and contracting.

"I put my sword back in my sheath and took out my paper and pencil," Hathaway said. "I'm still cautious, but he has been honest, he has been forthright on what he could do and what he couldn't do."

Left unmollified, though, is City Councilman Carl Stokes, who said he has no problem with Harbor Point, just with the idea that it should get public financing at a time when so much of the rest of the city is hurting.

Stokes said Beatty has rejected his appeals for relatively inexpensive gestures in exchange for the hundreds of millions of public assistance that Harbor Point will ultimately receive — a playing field for a nearby elementary school, for example, or some after-school programs.

"I said to Michael, 'Look, what I'm asking you to do is support the neighborhoods nearby that could use some help,'" Stokes said of a dinner meeting he had with Beatty earlier this year. "He looked me in the eye and said, 'I'm not doing anything for anybody.'"

Beatty denied saying that, and Struever, who is close to both and was at the dinner, also said the exchange didn't happen.

Stokes said Beatty knows that Harbor Point has the support of Mayor Stephanie Rawlings-Blake and the majority of the City Council, and that he doesn't have to make concessions to win him over to get the TIF.

"The arrogance of it all — 'We got it, we don't need you,'" Stokes said. "You've been given so much, give a little back."

Beatty would argue that payback for the neighborhood and city comes when Harbor Point rises from the former industrial site, a polluted tract that has been remediated and reborn as a new waterfront neighborhood where people will live, work, shop, play — and pay taxes.

"I believe five years from now people will look back and say that Harbor Point was a really good idea," Beatty said. "I don't see anyone saying Harbor East has been bad for the city."

Beatty likes to walk visitors through the neighborhood, tracing a history that progresses like a Monopoly game board, from the first and relatively modest block through fancier streets that command higher rents, to Harbor East's own Park Place, the gleaming Four Seasons Hotel.

For a city that still embraces a no-frills identity, as a blue-collar kind of town, Harbor East can seem anachronistic — in but not of Baltimore. And yet, surely those are not all tourists or arrivistes shopping at Whole Foods and Lululemon, dining at Ouzo Bay or living in the Spinnaker Bay apartments.

"We need to be much more aspirational," Beatty said, "instead of, 'Baltimore can only get this.'"

While Beatty will tout the practicality of the neighborhood, with its grocery story (albeit one that's nicknamed Whole Paycheck), a CVS, dry cleaners, movie theater and deli, he purposely recruited high-end tenants.

"I would keep calling Neiman Marcus, Saks, the Four Seasons," he said. "Finally in '03, the Four Seasons called back."

On a recent walk through Harbor East, Beatty embodies the mix of aspirational and practical that he espouses. He is wearing a white shirt with the sleeves rolled up, khaki-colored jeans and an orange Hermes tie. As he walks around, he's recognized by doormen and security guards but not necessarily the passersby enjoying the neighborhood he helped develop.

Beatty and Paterakis met, appropriately enough, over a development deal: Beatty was working on the foreclosure of the hotel at the Baltimore Travel Plaza and says with a laugh that Paterakis tried to "steal" the property from him with a lowball offer. Paterakis then told him that if Beatty thought the property was such a great deal, maybe the two of them should join forces to develop it, the younger man said.

They did, and ultimately created H&S Properties Development in 1995 to build Harbor East. (Paterakis did not respond to requests for interviews for this article.)

Moving into development allowed Beatty to pursue his love of design — he would have become an architect like his father, he said, but he can't draw.

"Michael has always been very respectful to John, and I think John always gave Michael the space to be creative … and the funding," said Doug Becker, the CEO of Laureate Education, who is close to both Beatty and Paterakis.

Becker's company, formerly Sylvan Learning Systems, was Harbor East's first tenant and is in its third building in the neighborhood. Beatty was "incredibly diligent" about making sure he understood Sylvan's and then Laureate's needs, and keeping the company in the neighborhood even as it grew, Becker said.

"The first building he built for us was professional but not really notable," he said. "You can see the architectural standard and ambition grow. I've been delighted in how the neighborhood has progressed."

Landing the company was something of a coup for the developers — it was the first time in more than 20 years that a national company of Sylvan's size had moved its headquarters to Baltimore City, in this case from suburban Columbia.

Struever, who helped recruit Sylvan and other companies to Harbor East, said Beatty gets unfairly criticized for stealing companies away from downtown, but in fact, many of those companies would have moved to the suburbs or beyond. Baltimore's competition for headquarters and jobs, he said, is increasingly global and needs developments like Harbor Point, Struever said.

"If the city is interested in growing jobs, office workers are the biggest source these days," Struever said. "We have to grow places where decision-makers want to be in the city."

Mark Fetting, until last year the CEO of Legg Mason, one of the city's largest money management companies, said corporations are drawn to "spectacular buildings" such as the new New York Times building in Manhattan, where the company has offices.

Fetting said he was skeptical initially of moving from downtown but "quickly became a convert."

"When we were on Light Street, it's primarily a business location," he said. "When you walk outside, you mostly see other people going to or from work. In Harbor East, you see folks going in and out of stores and where they live and going to the movies."

It is that kind of lifestyle that Beatty loves to promote. He will proudly point to the overflowing bike racks outside the Morgan Stanley building, the one part of Harbor Point that has already been built, noting that 68 percent of the employees live in the city, 62 percent within a couple of miles of their workplace.

Beatty himself, though, lives in the suburbs — Ruxton, specifically, where his home is currently assessed at close to $1.5 million. He and his wife lived in Henderson's Wharf in Fells Point when they first moved here, then a home in Federal Hill. "And then we had dogs and then kids," he said, explaining the move to Ruxton.

But he can envision a time when the boys are grown, and he and Nathalie, who serves on the board of the new Baltimore Design School, move back downtown.

Regardless of where he lives, Beatty says, his developments and the city are inextricable, and he is committed to both. But there are limits to what one development can do, he said.

"There've been issues raised that have nothing to do with development," Beatty said of critics who contend that his projects have not fixed the city's persistently high unemployment. "We can't go out and solve the city's problems."

Still, he said, he is focused on making sure jobs and contracts go to local residents. He also sees Harbor East spurring more development and thus providing more opportunities to less prosperous neighborhoods to the north and east.

Mayor Rawlings-Blake said Beatty has addressed his critics and shown a willingness to work with them. Given that he also is involved in possible projects in other parts of the city, such as the transit-oriented redevelopment plan proposed for Penn Station, Rawlings-Blake envisions a growing role for Beatty in the city.

"He's a major player in the development of a major growth area in the city," she said. "And the Penn Station development has the potential to be transformative for that area.

"Time will tell if he'll someday be mentioned in the same breath as a Jim Rouse," Rawlings-Blake said of the visionary developer of Harborplace and Columbia, "but he's certainly headed in that direction."

Beatty split from Paterakis at the end of last year to form his own development company to accommodate his interests beyond the Harbor East and Harbor Point area. There was no disagreement, Beatty said, and they remain friends and continue to work together. He bought out Paterakis' share of the Harbor Point land, for a price that he declined to disclose other than it was "a lot" of money.

And it appears that Paterakis has sole ownership of any bread-baking between them. Beatty said that while he enjoys being in the kitchen or at the grill during his off hours, he realized that baking required too much precision while cooking could be more improvisational.

"You can always fix it," he said. "If something's too salty, you can always add lemon."

jean.marbella@baltsun.com

twitter.com/jean_marbella

Michael S. Beatty

Age: 47

Title: President

Company: Beatty Development

College: Villanova University

Job History: As a 9- or 10-year-old in Shoreham, N.Y., started a lawn-cutting and house-painting company called Par Excellence. After college, worked for South Charles Realty, which handled commercial real estate repossessions of the MNC banking company, until joining Paterakis in 1993 and later forming H&S Properties Development.

Family: Wife, Nathalie, three sons

Copyright © 2014, The Baltimore Sun
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