The Board of Finance unanimously approved plans Monday for more than a half-billion dollars in financing for roads, parks and sewers in Port Covington, where the real estate firm owned by Under Armour CEO Kevin Plank has proposed a multibillion-dollar mixed-use project.
The $535 million for infrastructure would be drawn from about $660 million in bonds, with debt repaid from new property taxes generated by the project. The size of the deal is so large that the city has decided to ask a state agency to issue the bonds on its behalf so the bonds don't count against the city's debt rating.
Approval by the five-person board was widely expected and sends the legislation, which has faced public criticism but received strong backing from politicians, to the City Council for review.
City Councilman Carl Stokes said he is not sure of a timeline but expects the city to vote on the tax increment financing, or TIF, deal before a new mayor and new City Council members assume office at the end of the year.
Sagamore, which controls about 160 acres in Port Covington, has proposed redeveloping the area with new offices, stores, residences and parks, anchored by a new headquarters for Under Armour. Some have criticized the deal as a tax giveaway that would keep new revenue from going into the general fund and benefiting the city as a whole.
Some Board of Finance members, including Comptroller Joan Pratt, said they wanted to make agreements for hiring, as well as a stronger commitment to affordable housing, part of the legislation.
But Alan C. Cason, an attorney for McGuire Woods LLP who is advising the city on the deal, said those issues shouldn't be part of the bond deal itself, lest there be problems with compliance that would trigger a default and have financial repercussions.
"I agree they ought to be fully addressed but perhaps elsewhere," he said. "We don't want a city debt default over a covenant default. The only technical default should be payment default."
Before any bonds are issued, Sagamore would have to show the Board of Finance that there is financing for the project's development and that other parts of the project are in place, officials said.
Board member Dana C. Moulden said she also wants the city to start reporting how the projections are playing out in large deals, such as Port Covington and Harbor Point.
"In general, especially given the scrutiny we're having regarding these large tax increment financing [projects], specifically Harbor Point and Port Covington, that it would probably do the city good and the citizens good to have someone … examine and do a post-mortem," she said.
In Harbor Point, it is clear already that the project's needs are different from what had been anticipated.
Beatty Development is seeking about $39 million in bonds to help pay for infrastructure in the second phase of the project. That's about $20 million more than had been planned, said Steve Kraus, deputy director of the city finance department. The additional costs include about $3.4 million for the Central Avenue bridge, according to a presentation by the Baltimore Development Corp.
The added costs do not change the total amount authorized for the project — $107 million in TIF financing. Kraus said the developer has not requested more financing.
Board members declined to authorize the sale of those bonds, pressing city officials and consultants for more information about what profit the developer received and how it compares to other projects, as well as other assumptions related to the projections.
Board member Larry Silverstein said the discussion shows that the city and the developers receiving such financing will have to provide more information as projects unfold.
"You see from this meeting today that perhaps a little bit more detail is warranted … so that the perception isn't that there's an undue windfall on the back of the city's ability to market these bonds, esentially an undue windfall from the city's credit rating," he said.