On the day Exelon's gleaming new office tower opens on Harbor Point, I wonder if anyone will remind the company, "You didn't build that."
Remember the hubbub during the 2012 campaign when President Barack Obama said that?
His point was that successful businesses don't get that way all by themselves — they had some help, including from the government that built the roads and public infrastructure necessary to open and run a private business.
The remark drew much huffing and puffing from opponents who thought Obama was trampling on everything from the American dream to self-made individualism to Steve Jobs' grave. And, in truth, he should have added "by yourself" to make his point more accurately. Still, the sentiment got some delayed validation last week in Baltimore.
"Without infrastructure here," developer Michael Beatty said, "you can't build buildings."
Beatty was arguing that he needed $107 million in taxpayer assistance to pave the way for developing Harbor Point, a planned new neighborhood that Exelon chose for its regional headquarters after buying Baltimore's Constellation Energy.
Located between Harbor East and Fells Point, the 28-acre site is mostly vacant right now, having once housed an industrial plant. It needs new roads, extended utility lines and other improvements before the Exelon tower — as well as new housing, shops, promenades and parkland — can be built.
That's where the city, and its taxpayers, come in: Under the plan, the city would issue $107 million in bonds to fund those site improvements, and the debt would be paid off with revenues from the property taxes levied on the new buildings.
Courtesy of another incentive program, it should be noted, Harbor Point also will get a $53 million discount on those very property taxes over a 10-year period. So this is a pretty sweet deal going into the project, and continuing on after it's actually built.
Too sweet for some, including City Councilman Carl Stokes, who are pushing back against the $107 million plan known as tax increment financing. or TIF. The City Council has to approve the deal, but given that it already has the support of Mayor Stephanie Rawlings-Blake and the quasi-governmental Baltimore Development Corp., passing this TIF shouldn't be tough.
I'm not necessarily opposed to all this largesse — I get that you have to spend money to make money. And Harbor Point as it's envisioned would obviously be an improvement over an empty lot, especially one that was polluted by its former tenant, Allied Signal and its chromium plant, and had to be capped off and remediated.
But it's now, before the first spadeful of ground is turned, rather than later that we need to ask some questions. Already, too much of this has been hashed out behind closed doors, as always seems the case with these development deals — last month, The Baltimore Sun and other media outlets were barred from the room when the city's Board of Finance approved the TIF.
Too much "confidential and proprietary information" would be discussed, the door closer said, which — call me cynical — sounds like code for "the peasants would be outraged by how much money we're rolling in." Maybe not, but it seems to me that if you're asking taxpayers for a favor, you should at least give them a seat in the room.
Already, Exelon has had to back off from an offhand comment Beatty made, as reported in the Baltimore Business Journal, on what would happen if the TIF isn't approved: "Maybe they'll keep [the headquarters] in Chicago, I don't know," he said.
Well, actually, they can't: Among the conditions set by the Maryland Public Service Commission when it approved Exelon's merger with Constellation Energy was that the newlyweds had to have a regional headquarters here.
So Beatty's suggestion that maybe Exelon would just pick up and go back home is ludicrous. But then, how often have we heard that threat, whether from a sports team or a company: give us what we want — a new stadium, a peachy tax deal — or we'll take our ball and go somewhere else.
Sports teams and companies no doubt bring benefits to their cities, and cities should grease the wheels for them — but also make sure they're getting enough in return. The projections of x number of jobs and y amount of tax revenues are simply that — projections.
And a nice tax deal is just part of the picture. You only have to remember the $160 million TIF approved in 2008 for Patrick Turner's dream of turning Westport into "Harbor West," another vision of waterfront wonderfulness — homes, hotels, skyscrapers. The project totally stalled, though, when, in the midst of the financial meltdown, no one would buy the bonds. And now the developer is trying to reorganize under Chapter 11 bankruptcy.
The Exelon deal is obviously a different situation, in a different time. Still, there's a cautionary tale in there, if only that nothing is a sure thing. Again, you don't have to look back much further than the tumble of Constellation, Baltimore's last Fortune 500 company, faltering in a volatile marketplace until it had to sell itself off.
So, yes, taxpayers should help Exelon build it, but then Exelon should remember it didn't build it by itself.
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