Port Covington developer: Opportunity Zone criticism 'entirely unfair'
By Marc Weller
Jun 25, 2019 at 6:00 AM
The deal could bring an estimated $39 million in the neighborhoods of Brooklyn, Cherry Hill, Curtis Bay, Lakeland, Mt. Winans and Westportover the next 30 years. (Algerina Perna/Baltimore Sun video)
I am a longtime Maryland resident who fell in love with Baltimore. Another person who fits this description happens to be one of America's great entrepreneurs, Kevin Plank. When he reached out to me about helping him invest in Baltimore's future, I didn't hesitate. I have now devoted seven years of my life to investing in this city, creating hundreds of jobs and joining the many other people who work passionately every day to make Baltimore a better place.
The biggest opportunity for impact that I have in front of me is Port Covington. Until only a few years ago, the Port Covington peninsula was a mostly abandoned and contaminated industrial wasteland with only a handful of residents and no signs of potential investment or redevelopment on the horizon. With some of the largest private investment in Baltimore's recent history, this is rapidly changing, and changing both the city and its reputation for the better.
Despite this positive impact, there has been criticism of the project. Some has been fair, and, in response, we have made adjustments and found partners to help us maximize shared impact for the city. And some is entirely unfair, such as the assertion that Port Covington's designation as an Opportunity Zone is in some way inappropriate or not in the spirit of the legislation.
Much of the Port Covington development project in Baltimore qualifies as an opportunity zone for lucrative tax breaks due to misaligned maps.
By Jeff Ernsthausen and Justin Elliott
Jun 19, 2019 at 4:00 AM
The Opportunity Zone legislation was developed in a bipartisan fashion to spur investment in and around economically distressed areas. Places were nominated for the program because of their near-term redevelopment potential and scalable, transformative opportunities in communities previously all but ignored by investors. So how does the program attract investors? If they sell long-held assets and redeploy proceeds into an Opportunity Zone, they can mitigate their capital gains tax on those assets. Let me be clear, it is not a "tax break" for the project and its owners but an incentive for investors who might not otherwise seek to make an impact in cities like Baltimore.
When parts of Port Covington were designated as an Opportunity Zone, we immediately recognized the chance to further accelerate the attraction of capital, creation of jobs and support for community development programs in Baltimore at a time when it is greatly needed in our city. One of the unique aspects about Port Covington is that it may be one of the only shovel-ready, build-to-suit projects of its size and scale in the country. This makes it feasible to bring significant outside capital and more economic opportunity to Baltimore, just as we did through our partnership with Goldman Sachs Urban Investment Group.
Gov. Larry Hogan is proposing spending $56.5 million to support development and business creation in state "Opportunity Zones," through such initiatives as providing state tax credits, job training programs, small business loans and affordable housing.
Being a part of an Opportunity Zone will also advance and strengthen the development team's ability to deliver on its commitments to the city and the communities of South Baltimore and beyond. In September 2016, we reached a historic $100-million, city-wide benefits agreement with city officials after a comprehensive process with leaders from Cherry Hill, Brooklyn, Curtis Bay, Lakeland, Mt. Winans and Westport (the "SB6" communities). Under this agreement — the most substantial in Baltimore's history — funds generated by the success of the Port Covington development will provide tens of millions of dollars directly to those communities, as well as support the city's local hiring, supplier diversity and affordable housing initiatives. But these benefits only occur if the project is successful.
Even before construction got underway in earnest this spring, the Port Covington development team has been dedicated to delivering on its promises and commitments to neighboring communities and the city as a whole. Working with philanthropic partners in the city and beyond, we have begun to make an impact, with much more to come in the very near future. In recognition of this partnership, the SB6 communities last year invited the Port Covington Development team to join their coalition, now known as SB7. We are one team, and we will build this — together.
Many stakeholders across our city have a generational vision for a better Baltimore. We plan to do our part.