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News Opinion Editorial

The jury's still out on Harbor Point

The Baltimore City Council is scheduled to hold at least preliminary debate on $107 million in tax increment financing for the Harbor Point development today, and whenever the final vote occurs, the outcome is not much in doubt.  Despite an unusual amount of public criticism of the city's support for this project, there has in fact been little question that it would be approved since the mayor stood with the City Council president to endorse the deal months ago.

Is it a good thing for the city? That depends on how you look at it.

Mayor Stephanie Rawlings-Blake and other backers say the project — a 28-acre, mixed-use development that would effectively add a new neighborhood to the city's waterfront on par with Harbor East — is a once-in-a-lifetime opportunity for the city that will attract residents and businesses here and create thousands of jobs, both temporary ones during construction and permanent ones afterward. The bonds issued through the tax increment financing deal, they say, are simply a mechanism to help the developer pay for public infrastructure, including roads, a bridge and parks.

There is merit to that perspective. If the project succeeds as developer Michael Beatty promises — and his track record as one of the principal developers of Harbor East gives him some credibility here — it will do more to enliven the city than any other project now under contemplation. The combination of offices, residences, restaurants, retail, parks and (assuming the Red Line is constructed as planned) public transportation would create a singular new public space the likes of which Baltimore hasn't seen since the development of the Inner Harbor.

Opportunity costs

But the question is more complicated than whether we would like to see Harbor Point developed. The catalyst for the project is the decision by Exelon to make its regional headquarters there. The utility giant is required to construct a new building in the city as part of its state approval for the purchase of Baltimore Gas & Electric parent Constellation Energy. That's also a once-in-a-lifetime opportunity, and critics of the Harbor Point deal are right to ask why, under those circumstances, the city would provide any kind of support at all for Exelon. Could Baltimore have done better by making clear from the start that the company would bear the costs alone?

That's the contention of some downtown property owners. The Central Business District, they contend, is suffering as a result of the competition from Harbor East, and Harbor Point will only make it more difficult to hold onto existing tenants and to attract new ones. Indeed, many of the jobs projected for Harbor Point are merely Constellation employees who will move from the company's existing headquarters at Pratt and President streets.

Certainly, there is a great deal of self-interest in this line of thinking, as the downtown interests may either have hoped to lure Exelon to their property or worry that competition from Harbor Point will force them to invest millions in their buildings — as the owners of what is now the TransAmerica tower did after Legg Mason decamped for Harbor East. That point of view boiled over shortly before the City Council's taxation committee voted to endorse the TIF deal. The Downtown Management Authority, a group of property owners and managers in the Central Business District, issued a statement in opposition to the TIF on Tuesday, alleging that the city was creating an unequal playing field and asking why so much support should go to a new development rather than existing ones.

The short answer is that no one is proposing to invest $920 million in a new construction project downtown. But there is also a valid question: Why should the city offer so much support for Exelon to move to Harbor Point when it could have built downtown with much smaller or no subsidies?

Harbor Point supporters point to the much broader impact that the development would have than just the construction of one office building downtown. Harbor Point, when fully built, would include much more than the Exelon tower and, its backers say, will produce more jobs and tax revenue even after accounting for the public subsidies.

The process

Determining whether that's true would be a useful exercise, albeit a difficult one. But it is not at all clear to what extent, if at all, the Baltimore Development Corp. asked those sorts of questions before giving its blessing to the Harbor Point TIF. True to its historically boosterish nature, the BDC has presented its endorsement unabashedly and with little acknowledgment of any doubts it may have had along the way. During the debate over the TIF, BDC officials noted that they had negotiated down the size of the bond package by determining that a parking garage should be privately financed, so the city did engage in at least some effort to get a better deal for taxpayers. But the extent to which they considered the deal in its larger context remains unclear.

If there is one indisputably positive development in the Harbor Point saga, it is a decision by the state's Open Meetings Compliance Board that the city's Board of Finance broke the law when it barred the public from a meeting when it discussed the Harbor Point TIF and voted to send the matter to the City Council. Future such discussions will now be public. Likewise, a BDC analysis of why the TIF is necessary to make Harbor Point happen — and of how much profit the developers might make with or without it — became public as a result of the City Council's deliberations. That should now also be standard practice in future deals.

The somewhat secretive nature of the process has clearly exacerbated a sense of doubt among many ordinary Baltimoreans that the city negotiates deals like this with their best interests at heart. However big a role self-interested property owners played in stoking discontent with this deal, it also sparked an unusual degree of anger among residents across the economic spectrum who either wanted the deal killed altogether or made contingent on significant commitments of funds for community-building projects.

An alternative

The Greater Baltimore Committee came forward Wednesday night with a proposal designed to find some middle ground. It urged the council to approve only the TIF bonds necessary for the first phase of Harbor Point, minus a questionable $2 million to support construction of a new building for a charter school near the development site. That would give the city the chance to see how Harbor Point plays out before committing the full $107 million in TIF bonds and could enable better decisions about how much should be publicly or privately financed. Had the GBC offered that idea three months ago, it might well have been influential, but now it appears unlikely to succeed.

That's a shame, because it is perhaps the most prudent, sensible and rational response that has come out in response to the proposal. Unfortunately, it satisfies neither the development's boosters — who worry it would merely add more opportunities for other property owners worried about competition from Harbor Point to gum up the works — nor its most passionate detractors, who see the issue as a matter of the city providing big benefits to developers but not average residents.

The mayor and Mr. Beatty may see council approval of the TIF as a victory over the moneyed interests in town who, as Ms. Rawlings-Blake once put it, engage in more suing than doing. But they need also to recognize that the emotional response stirred up by this development represents a real sense of alienation between the city's glitzy waterfront and its poor residents. Mr. Beatty's commitment to invest $3 million in affordable housing is a nice start, but he also will need to demonstrate that he is doing everything possible to make sure the new jobs his development creates go to city residents. And Ms. Rawlings-Blake needs to find ways to demonstrate that City Hall is just as interested in helping average homeowners as it is in helping millionaire developers.

Will Harbor Point be good for the city? In the broadest sense, yes, if its benefits are widely shared — and that is yet to be determined.

Copyright © 2014, The Baltimore Sun
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