Baltimore's Board of Finance moved along a request Monday for a record $535 million in public financing to spur redevelopment in Port Covington, where Under Armour CEO Kevin Plank has privately acquired land and plans to build new offices, stores, apartments and parks.
The proposal from Plank's real estate firm, Sagamore Development, brought a unanimous vote from the four members of the Board of Finance who were present, including Comptroller Joan M. Pratt and Kaliope Parthemos, chief of staff to Mayor Stephanie Rawlings-Blake.
Rawlings-Blake spokesman Howard Libit said the administration was pleased with the board's backing, calling the project a "smart investment for Baltimore."
Approval of plans for the tax increment financing came despite concerns from some members of the public, who say officials have not asked enough of Sagamore when it comes to local hiring, affordable housing and other investments.
"It is scandalous. Nearly one year after the unrest, Mayor Stephanie Rawlings-Blake and Sagamore Development are fast-tracking a deal affecting the lives of Baltimoreans for generations to come without sharing specific ironclad commitments that will benefit not only downtown but uptown," the Rev. Glenna Huber, the co-chair of Baltimoreans United in Leadership Development, said in a statement. "At a time when we need to unite our City, this deal as it stands divides Baltimore — one downtown and the other uptown."
Sagamore, which controls about 160 acres in Port Covington and plans to serve as master developer, would use the TIF funds to build parks, streets and other public improvements in the former industrial area south of Federal Hill on the South Baltimore peninsula.
In addition to the TIF, the firm hopes to secure $573 million in state and federal funds for the project.
Sagamore is contributing about $327 million to the project, a figure that includes more than $114 million for land acquisition and $23.3 million in design and planning. It says that its partners' investments in new construction will bring billions more in private investment.
"The positive economic benefits from transforming Port Covington will be unprecedented and significant," the firm's president, Marc Weller, said in a statement. "We look forward to continuing our work with our community partners, neighbors and local officials on the next steps in this process."
The project was pushed forward even though Baltimore's share of the project's funding is larger than recommended under the city's TIF policy.
But Steve Kraus, the city's deputy director of finance, said the city should make an exception for Port Covington, given the infrastructure needs at the site, a former railyard with few streets and in need of a lot of environmental cleanup.
"The TIF will advance strategic land use and economic development goals," he said. "When you have significant public infrastructure requirements, such as this project has with the brownfields, the lack of any roads … I think it's warranted here."
Sagamore has said it hopes to win approval of the financing by the end of the year.
The Baltimore Development Corp. approved the request in March. The city's Board of Estimates also signed off on deals last week that grant a waiver to inclusionary housing requirements and set goals for local hiring and participation of women and minority owned businesses.
The City Council is scheduled to review the deal after the Board of Finance approves the text for legislation.
City Councilman Carl Stokes, who heads the committee that will examine the TIF, said he has not delved into details yet.
"It's going to take a while," he said. "It's obviously very, very complicated."
An analysis of the project for the city by Columbia-based MuniCap Inc. does not take into account costs to the city if the project affects state funding for schools.
State Sen. Bill Ferguson said the General Assembly is likely to approve broader changes to the state's funding formula for education in the future so that development tools, such as TIFs, which help spur development but do not necessarily lead to increased tax revenue, do not lead to cuts. The state passed a temporary measure this year.
"Nothing is guaranteed, but the passage of this bill is an important indicator that Maryland believes in educating its populace and puts its dollars behind that commitment, and I think we will do that," he said.
Monday's Board of Finance meeting saw turnout from a small crowd concerned about the hefty public incentives expected to go to the project — including more than $760 million in property tax credits — and what they say is a lack of stronger requirements for Sagamore.
The TIF is expected to cost the city $2.16 billion over 41 years, including $1.4 billion in interest payments, according to the MuniCap analysis.
The debt would be repaid by new property taxes generated by the project, which would be valued at about $2.6 billion when complete and generate $1.7 billion in all forms of revenue for the city, or an average of $40.3 million annually, after tax credits, debt service and other expenses.
But much of that revenue, which includes millions from personal income taxes from people working or living in Port Covington, wouldn't come for years.
Sagamore or its partners are expected to have to pay "special taxes" worth more than $291 million to cover the TIF's expenses, including interest payments, until about 2038, when the project finally would start to generate enough property tax revenue to pay for the TIF, according to the analysis.