Pugh administration seeks $102 million subsidy for East Baltimore, Perkins Homes redevelopment

Mayor Catherine E. Pugh’s administration is seeking a $102 million subsidy for an $889 million East Baltimore redevelopment project that includes replacing Perkins Homes.

The city’s Board of Finance gave preliminary approval this week for a tax increment financing district, or TIF, to pay for roads, a new school and two parks in the area.

A team led by Beatty Development, the firm building the Harbor Point project south of Perkins Homes, was selected by the city to build 500 market-rate houses, 475 subsidized units and 650 very low-income houses to replace the ones at Perkins Homes.

The proposal could face opposition from the Baltimore City Council, where some members are wary of the city’s subsidization of development.

Council President Bernard C. “Jack” Young wants the city to cap any tax increment financing for the Perkins Transformation Project at $75 million, spokesman Lester Davis said.

“A TIF at that level is not what he is expecting,” Davis said on behalf of Young, who was selected for jury duty Tuesday and was unavailable. “There is not an appetite on this council to support a $102 million TIF. In his analysis, the $75 million mark is more appropriate for a discussion or debate.”

In tax increment financing, the additional property tax revenue generated by a project goes to pay off the bonds associated with it.

The next step for the proposal involves internal city negotiations to put together the formal TIF proposal. Later this year that proposal would go back to the Board of Finance, chaired by Pugh, which will be asked to sign off on a final recommendation. If approved, the proposal then would go to the council for consideration. The council must approve the TIF before any bonds could be issued for the project.

The city has endorsed about a dozen TIF deals worth hundreds of millions of dollars to help fund development from Poppleton to Port Covington. They include about $58 million for the long-planned Poppleton redevelopment in West Baltimore, $125 million for Beatty Development’s Harbor Point and $660 million for the massive Port Covington project that includes plans for the new Under Armour headquarters.

Beatty Development officials declined to comment Tuesday on the proposed TIF.

As part of the Perkins plan, Stephen M. Kraus, the city’s deputy finance director, said the administration is looking to issue the bonds in three phases. The first phase would pay for roads, signaling, street lighting, conduits and water and sewer pipes.

Overall, the project includes $155 million in infrastructure improvements, $425 million in new housing and $309 million in mixed-use and commercial development.

According to the TIF application submitted to the finance board, a grocery store, four new office buildings adjacent to the Johns Hopkins Medical Campus and space for job training and a business incubator would be built under the plan. The City Springs Elementary/Middle School would be rebuilt for $35 million on the site of the vacant Lombard Middle School. The old City Springs building would be cleared for housing.

The redevelopment “is not just a real estate project, but an effort to rebuild and revitalize a neighborhood and to change lives,” the 436-page application says.

The TIF bonds would pay for $75 million in public improvements with the balance covering interest, a reserve fund and other assorted costs.

The city is waiting to learn whether Baltimore was selected by the U.S. Department of Housing and Urban Development to receive a $30 million Choice Neighborhoods grant to help pay for the new project. Federal officials visited Baltimore last month and housing officials expect a decision as early as the end of June.

The project would stitch together redevelopment efforts around Johns Hopkins Hospital with some of the city’s wealthier neighborhoods, including Fells Point, Harbor Point and Harbor East. The revitalization plans also include redevelopment at the site of the mostly vacant Old Town Mall. The former Somerset Homes, razed a decade ago, would be turned into a new mixed-income development.

Advocates have expressed concern that the plan will displace some of the city’s most vulnerable residents and further segregate the city.

About 1,300 people, almost all of whom are African-American, live at the 17-acre Perkins Homes. A 2015 survey commissioned by the Housing Authority found most of them wanted to stay in the area or requested more information. About 15 percent said at the time they wanted to leave the neighborhood.

Officials have said those who want to leave will have an option of moving to the new complex at the old Somerset Homes or of using a federal Housing Choice voucher, also known as Section 8, to move.

Kraus said the project also could include the eventual redevelopment of the Douglass Homes, a nearly 400-unit public housing complex.

Baltimore Sun reporter Christina Tkacik contributed to this article.

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