The key question for Embry is whether Harbor Point development would occur without the city agreeing to float the bonds and use new tax dollars to pay them off. Embry, a former city housing commissioner, said he doesn't know and thinks there's no way of knowing.
"The people that have to vote on this have to make their best guess," he said, referring to council members.
But the developer says proof exists. Marco Greenberg, who works with lead developer Michael S. Beatty, said the project would sink without city financing assistance.
Greenberg called the profit margin "very, very thin" even with that help. Some potential investors are "walking away from this deal, saying we're not getting involved in that because the risks are high and the returns are low," he said, while declining to provide names.
Experts differed on whether the higher profit is needed to attract investors and lenders. Greenberg noted that the 14 percent figure is the long-term profit forecast not an annual return. City documents estimate the developer's profit at $174 million, compared with $124 million without taxpayer assistance.
The Baltimore Development Corp. did not give Beatty everything he wanted on Harbor Point, said M.J. "Jay" Brodie, who retired last year as president of the city's economic development arm. He said the proposed tax increment financing had been more than $150 million until a parking garage was taken out.
"We were convinced that the project couldn't happen without the incentive," Brodie said. "It wasn't throwing darts at a dart board. Our interest was to get the numbers as low as possible and still allow the development to proceed."
But Ronald Kreitner, state planning director from 1989 to 2000, questions the size of the proposed incentives. "This whole thing is being debated based on an assumption that somewhere it is written that this particular developer is entitled to a profit of X amount," he said.
Kreitner is the longtime head of Westside Renaissance Inc., a nonprofit focused on downtown's west side. The group's chairman is Peter G. Angelos, majority owner of the Orioles and a downtown property owner with a stake in protecting the central business district.
Kreitner thinks the public isn't getting the full story about the bonds. While the principal is projected to be $107 million, BDC documents show that interest charges would add $174 million to the cost — all of it paid out of property tax money that otherwise would be available for city use for other purposes.
He says the public should also realize that one byproduct of Harbor Point development could be a drop in state education funding for the city, based on a state formula that factors in an area's wealth to calculate aid. Kreitner estimates the city would receive $5.8 million less per year.
If so, that would take a bite out of the $19.6 million a year on average that the city projects Harbor Point would produce over 30 years in direct city revenue from income, hotel, property and other taxes — after accounting for bond payments, tax credits and the cost of city services.
The city's figures are drawn from an analysis by MuniCap Inc., a Columbia-based public finance consulting firm. The analysis projects property tax revenue from Harbor Point over 35 years at $839 million.
But because the city has since cut its property tax rate by 2 cents, that estimate would drop by more than $7 million. Rawlings-Blake has said she wants to keep reducing the city's tax rate. BDC spokeswoman Joann Logan said projections would be revised but that there would still be more than enough money to cover the bond debt.
City officials frequently talk about Harbor Point as a source of new jobs, and MuniCap projects 6,611 permanent positions after completion of the nine-building complex. That is based on a ratio of 3.55 workers per thousand square feet of office space. The analysis includes the Morgan Stanley building, which opened in 2010 on the edge of the site and has roughly 850 employees.
While Exelon expects to have up to 1,600 employees in its new building at Harbor Point, most would move from 750 E. Pratt St., said company spokesman Paul Adams.
TIF projections in Baltimore have not always worked out as planned, though city officials say the results show that they are prepared for that possibility.
When the city approved TIF financing for the Clipper Mill mixed-use community in North Baltimore about a decade ago, the project was expected to generate more revenue than was needed to pay off the bonds. Instead, property taxes have fallen short for four or five years because the recession delayed commercial development there and hurt property values, said Stephen M. Kraus, chief of Baltimore's Bureau of Treasury Management.
But the rest of the city's taxpayers haven't had to chip in, he said — even though the original developer lost some of the parcels to foreclosure. Clipper Mill's successor developer has paid a special tax to close the gap, about $116,000 last year. The three other TIFs coming up short have also paid up: the East Baltimore mixed-use redevelopment near Johns Hopkins Hospital ($1.2 million last year), Mondawmin Mall ($438,000) and the Belvedere Square shopping center ($5,000).
The Baltimore convention center hotel is a TIF, too, but its woes aren't due to a shortfall in its property taxes, Kraus said. The problem is, the business isn't making enough money to cover its hotel revenue bonds.