City leaders are considering millions of dollars in incentives for developers to overhaul Perkins Homes, a dated public housing project.
Harbor Point developer Beatty Development was selected in August by the Housing Authority of Baltimore City to lead a team in redeveloping the 17-acre Perkins Homes site into a mixed-income residential complex.
To support the project, the city and housing agency intend to apply for a $30 million federal grant. As a condition of the federal funding, the city would be required to contribute at least three times the grant amount.
To meet its obligation of $90 million or more, the housing authority is considering seeking tax increment financing for the redevelopment. The controversial method involves the city issuing bonds to pay for project-related infrastructure and paying them off with new revenue generated by property taxes on the development.
Beatty's Harbor Point project, a 27-acre waterfront development between Harbor East and Fells Point, is the beneficiary of a $125 million TIF.
Such a TIF is among at least six financing options the housing authority is weighing. Others include tax credits, a federal loan and a state grant designated for redevelopment in Baltimore's blighted neighborhoods.
"The plan itself is being devised, then the financing is secondary and how you meet that financing need," said Baltimore Housing Commissioner Michael Braverman. "There are many options."
Beatty declined to comment Monday.
The TIF approach is often controversial because it gives developers up-front cash to support development work. Once completed, the new buildings' property taxes go toward paying off the city's project-related debt, instead of to the general fund to pay for things such as schools.
Last year, after a political battle, the city approved its largest TIF ever — $660 million for Sagamore Development's Port Covington.
During a panel discussion at an event hosted by the National Urban League in Washington, D.C., this month, Mayor Catherine Pugh said her administration would explore how to better use TIFs for smaller neighborhood revitalization projects.
"Heretofore most of those projects have been focused in on [the] downtown area, and so the question becomes can we do that in neighborhoods and communities and the answer is 'yes'," she said. "And that's what we're focused on doing. How do we do that in neighborhoods and communities around Baltimore that have been neglected for decades."
Pugh did not respond to a request for comment about whether she would support a TIF for Perkins Homes.
Housing advocates say it may not be a bad idea.
"TIFs aren't bad, if you really put some strings to it," said Odette Ramos, executive director of the Community Development Network of Maryland. "There has to be a promise of affordable housing, there has to be a promise of investment in infrastructure, of giving back and making sure neighbors are able to return."
A prime slice of real estate just north of Harbor East and Fells Point, a redeveloped Perkins Homes could create a critical link between the rising development along the harbor, revitalization surrounding Johns Hopkins Hospital and the rest of the city. A TIF could be a way to ensure the project benefits the complex's current residents.
Still, such deals often face criticism and the City Council may not want another fight.
Lester Davis, deputy chief of staff for Baltimore City Council President Bernard C. "Jack" Young said Young would not support a TIF for Perkins Homes.
"The council president has made clear he doesn't have any appetite for a TIF for that project," Davis said.
Tax increment financing is typically reserved for projects for which other funding isn't available. The city should draw from other pots of money, rather than floating new bonds, Davis said.
City Councilman Robert Stokes, who represents the area, said he is waiting to see more from the housing agency and developers.
"When they come back with numbers and more of a concrete plan, then I might have some more comment to make," Stokes said.
Which financing mechanisms the housing authority ultimately pursues will depend on the project's housing plan, which is still in the works, said Janet Abrahams, the Housing Authority's executive director."
That housing plan drives a lot of where we're going, as far as financing, that drives what type of units will be developed, the number of units," Abrahams said. "None of this will happen without every single partner at the table — city, state, you name it — so we can develop a full financing plan."
In addition to Beatty, the city is working on the plan with Mission First Housing Development, a nonprofit affordable housing developer; the Henson Development Co.; and Bank of America.The 75-year-old public housing complex has 630 apartments that are home to some 1,400 people.
As a condition of the federal Choice Neighborhoods Initiatives grant, the city would be required to replace every affordable housing unit it demolishes.
Housing officials have said current residents in good standing would be guaranteed an apartment when the redevelopment is complete, but housing advocates worry that failure to secure that money could threaten that promise.
Housing officials discussed the possibility of a TIF at a meeting with Perkins residents, neighbors in surrounding communities and other stakeholders earlier this month.
Jeffrey May, who lives in Upper Fells Point and attended the meeting, said he thinks redeveloping affordable housing would be a good use of a TIF, especially if it will help the city secure funding through a grant program that may not be around much longer.
The Choice Neighborhoods grant is at risk under President Trump's budget, which would eliminate funding for it in 2018.
"I like what they said they want to do," May said. "I hope they can do it."
Baltimore Sun reporter Ian Duncan contributed to this story.