Become a digitalPLUS subscriber. 99¢ for 4 weeks.
News Opinion Readers Respond

Harbor Point development is a bad deal for city taxpayers

Recent debate over city tax credits for the Harbor Point development project miss the point ("BDC says Stokes spreading misleading information about Harbor Point plan," July 2).

Harbor Point is a large parcel that is proposed to accommodate the new Exelon building as well as an entire fantasy land of additional development, including condos, apartments, retail space and office buildings. All of the glossy projections of bountiful tax revenue for the city and thousands of jobs are based on building out this magic kingdom.

The Exelon building is a done deal. This is a project with complete long term occupancy by a blue chip tenant. There is no risk to developer Michael S. Beatty: Financing is a slam-dunk, and its likely that it's set up on a 15-year repayment schedule, meaning he will own the building with a projected value of, say, $150 million at the end of the lease period.

The remainder of the parcel is for the magic kingdom, i.e. speculative development. As Mr. Beatty points out, the parcel has been vacant for a long time and market conditions change over time. As the BDC states, it takes at least a 15 percent return on investment to attract investors to speculative development. Thus, in order to attract money for further development of the parcel the city needs to subsidize the private market.

Herein lies the big issue: This parcel has been vacant so long for the same reason that all of the other prime parcels downtown have been vacant, namely because market conditions will not accommodate major new development of any kind.

The downtown is overbuilt with offices, condos and a huge build of apartments. Things are going to have to change in the national and local economy to warrant any major new development downtown.

Developers with nothing to do exercise their most creative salesmanship during times such as these. But more of any kind of development at Harbor Point will just cannibalize existing space and cause a musical chairs effect. It is a landlocked parcel that will choke the downtown, Fell's Point and Canton with traffic if developed as densely as is being proposed.

Does it make sense for taxpayers to finance $107 million in infrastructure on the parcel, on top of all of the other freebies that already have been bestowed on Mr. Beatty by Mayor Stephanie Rawlings-Blake? The parks and promenade are really just the front yards of the buildings, but the developer has designated them as parks to get them off his tax liabilities and onto public construction expenses and lifetime free maintenance.

The agreement is that the developer and tenants will be responsible for servicing the infrastructure debt. It should be clearly understood, however, that Mr. Beatty and Exelon are the only two parties that will be servicing this debt load. Any additional parties are a long way in the future.

It's interesting that the majority equity party in the parcel, John Paterakis, has atypically pulled out of the deal and will take his money out up front through the land sale to Mr. Beatty for the Exelon building. When the infrastructure debt service comes due he'll be long gone.

Gary Moyer

Copyright © 2014, The Baltimore Sun
Related Content
  • The strength of downtown [Editorial]
    The strength of downtown [Editorial]

    Our view: T. Rowe Price's decision to stay in its Pratt Street headquarters is a reminder of the central business district's vibrancy

  • Harbor Point does not need more studies [Letter]
    Harbor Point does not need more studies [Letter]

    The recent commentary, "Harbor Point environmental questions," (Dec. 2), may lead The Sun's readers to believe that additional studies are necessary before work can begin on the proposed redevelopment there. In fact, these suggested studies have nothing to with the proposed redevelopment, which...

  • Red Line poses health threat, too [Letter]
    Red Line poses health threat, too [Letter]

    The recent commentary concerning Harbor Point and the hexavalent chromium clearly describes the potential harm to the surrounding residents, but there is another issue that should be of a greater concern ("Harbor Point environmental questions," Dec. 2).

  • Make Exelon building a real landmark
    Make Exelon building a real landmark

    The Baltimore City Urban Design and Architectural Review Panel should agree to the request to redesign the Exelon Corporation building at Harbor Point made by the developer ("Developer proposes to convert some Exelon office space to apartments," Sept. 27) upon one condition — that they...

  • Harbor Point and the city's low expectations
    Harbor Point and the city's low expectations

    The principles articulated by Michael Fox and Rachel Kutler ("Harbor Point and 'fair development,'" Sept. 13) are refreshing and thought-provoking. Why do we citizens not demand more accountability from developers?

  • Health hazards at former Allied Chemical site
    Health hazards at former Allied Chemical site

    I can't believe developer Marco Greenberg's quote in reference to the former Allied Chemical site and the potential hazards of building on top of capped chromium that "it's actually safer to build here than virtually anywhere else in the city" ("Harbor Point project stirs environmental...

  • Harbor Point: Stick to the facts
    Harbor Point: Stick to the facts

    Dan Rodricks' column ("Following the big money to Harbor Point," Aug. 18) on the development at Harbor Point contributes very little to the ongoing debate about the best ways of developing Baltimore. Indeed, Mr. Rodricks lapses into needless and unhelpful insults when he makes sophomoric...

  • No more Harbor Point surprises
    No more Harbor Point surprises

    Our view: News that developer Michael Beatty intends to buy the first round of Harbor Point bonds is a modestly pleasant surprise but a reminder of the lack of transparency in this deal

Comments
Loading