The Baltimore Development Corporation's approval today of the $535 million public financing plan for the ambitious Port Covington redevelopment championed by Under Armour founder Kevin Plank means the project has passed a critical milestone, but there are more ahead. The stakes are exceedingly high — a potential $5.5 billion investment that will not only accommodate the high-flying sports apparel company but transform the city's gateway waterfront.
Such an enormous project deserves intensive scrutiny, and we expect the City Council to review every detail from what impact the proposed investment in city infrastructure will have on Baltimore's borrowing capacity to exactly how Under Armour and other businesses that settle in the 260-acre Port Covington footprint will promote the hiring of city residents. In a recent meeting with The Baltimore Sun's editorial board, for example, officials with Sagamore Development said they expect to set a local hiring goal — but declined to specify what that might be (although they offered assurances that it will be announced shortly).
Unfortunately, it appears a great deal of misinformation has already attached itself to the project, a problem seemingly exacerbated by an election in progress with a plethora of mayoral candidates vying for attention. In a perfect world, city government wouldn't be making such an important decision in the midst of such politicking, but the rapid growth of Under Armour and the potentially high cost of delay (and the probability that well-paid UA jobs might be headed elsewhere out of sheer necessity) doesn't offer Baltimore's civic leaders that luxury.
Here are the two things every Baltimorean should know about the Port Covington proposal. First, it's among the largest urban redevelopment projects in the country right now, a mixed-use project that would not only create a campus-like setting for UA headquarters but would also draw in other new businesses including manufacturing and potentially thousands of new jobs. The project involves the creation of new public parks, new roads as well as new interchanges on Interstate 95 and a new rail spur off the city's light rail system.
The second point to understand is that the $535 million public financing under an arrangement known as a TIF, or tax increment financing, does not mean that city taxpayers are being asked to subsidize a private development. What it means is that the city would float bonds to pay for public infrastructure — roads, water and sewer lines and similar investments — and would pay back that borrowing with tax revenue generated by the Port Covington project alone. In the worse case scenario — in the unlikely event tax revenues failed to keep up with bond payments — the developers would be held accountable for making up the difference.
That means not a dime of public funds would be spent on Under Armour's new headquarters or the other buildings in the project, only on the kind of infrastructure the city normally finances through borrowing anyway. There are, of course, many city businesses and residents who would love to see such a major public investment made in their neighborhoods, too, but none can offer such a spectacular return: In exchange for $535 million in tax revenue the city would not otherwise generate over 30 years (as well as a similar amount from the state and federal government) we get not only new, publicly owned infrastructure in a currently isolated part of the city but also an estimated $4.4 billion in private investment and the creation of 26,500 jobs by the time the project is fully realized.
Small wonder at the winter meeting of the National Governors Association last month in the District of Columbia, Mr. Plank found himself courted by elected officials from across the country. Mr. Plank's self-made success — turning a pittance of an investment into a Nike rival with nearly $5 billion in revenues and 14,000 employees within two decades — is the stuff of entrepreneurial legend. That Baltimore is home to Under Armour may prove to be one of the city's greatest assets. Just as UA has raised its profile by signing top athletes to promote its products, Baltimore's identity as home to Under Armour may be just the antidote the city needs to distinguish itself from its competitors in these challenging times.
That doesn't mean Sagamore's plans should get a free pass. Far from it. Mr. Plank may have proven himself a strong supporter of the city and of local charitable causes, but that doesn't mean we shouldn't think carefully about how the deal is structured and ask questions like whether there is a chance such a large TIF could impact the city's bond rating or whether the state and federal investments in this project might crowd out other priorities for the city. Still, all involved need to stick to the facts and not misrepresent the nature of a TIF, a public financing mechanism that has proven extremely valuable in the past, nor try to pit one neighborhood against another. Baltimore can ill-afford to let a project of such potential slip away because of public misconceptions, whether the result of a simple misunderstanding or a deliberate act of political opportunism.