The real estate firm developing the University of Maryland Baltimore BioPark is seeking $17.5 million in public financing and a special designation that would eliminate property taxes for at least five years to build its next building on the West Baltimore campus.
The subsidy for the roughly $110 million project is designed to help BioPark developer Wexford Science & Technology lure a branch of the Cambridge Innovation Center to Baltimore. The Massachusetts-based firm provides co-working space to start-ups and would lease about 40 percent of the 250,000-square foot building.
Jim Hughes, UMB's vice president of enterprise and economic development and president of the nonprofit running the UMB BioPark, said the eight-story project would create hundreds of jobs.
"We think it's a great project that can give a huge boost to a neighborhood in Baltimore that needs this kind of boost," he said.
The BioPark first introduced plans in 2008 for an office building, but dropped the proposal amid the economic downturn. The BioPark wants the building to be a base for start-ups, Hughes said, but it has been difficult to move forward on the project without a large lease.
Public support is critical to getting the office building out of the ground, he said.
"We've been trying to do it without a [tax increment financing deal] for coming on seven years now," Hughes said. "Although we've had success with other buildings there, single-purpose buildings … we've not been able to build a multitenant building for all of that time and that becomes critical to the expansion of the BioPark."
The proposal, which is supported by Mayor Stephanie Rawlings-Blake, is an unusual use of tax increment financing, which has been a controversial tool in Baltimore. Typically, the city borrows to build public infrasucture such as roads or parks in a wider area, taking new tax revenue generated by development to pay the debt.
In this case, the money would be used to subsidize the construction of a single office building at 873 W. Baltimore St.
The TIF deal depends on the state's approval of a Regional Institution Strategic Enterprise, or RISE zone, designation, which, when combined with other incentive zones, would allow the developer to avert property taxes and receive other tax benefits.
Hughes said the subsidies would allow Wexford to get an 8 percent return on the development, without which the firm would not move forward.
A spokeswoman for Wexford said the right person was not available to comment Monday. The firm is owned by a real estate investment trust that recently announced a deal to be acquired by The Blackstone Group, one of the country's largest financial firms.
The Cambridge Innovation Center, which has been expanding to new cities, also did not respond to a request for comment.
The project is expected to create about 360 full time construction jobs and more than 900 full time permanent jobs, with average annual salaries of more than $80,000, according to the Baltimore Development Corp., the city's economic development agency, which reviewed the proposal and recommended support of the project.
The development will spur other economic activity in the area, BDC spokeswoman Susan Yum wrote in an email.
"Currently, there is an empty lot where the proposed development site will be," she wrote. "BDC explored every other possible way to help this project move forward before concluding that this was the only way."
The BDC did not answer questions Monday seeking clarification about how much the benefits from the TIF and the RISE zone are estimated to be worth. Today, the property is valued for tax purposes at about $1 million.
While the tax abatements are in place, revenue from another property in the Biopark — the Maryland Proton Treatment Center — as well as contributions by Wexford would be used to pay the city's debt, Hughes said.
Tax increment financing deals, which provide long-term financing at low rates, have been controversial in the past. The city approved $107 million in financing for Harbor Point in 2013, at the time the second-largest plan, after the $301 million used for the city-owned Baltimore Hilton hotel.
The Clipper Mill development received $14.5 million in such bonds for public roads, sidewalks and utilities in 2004. Mondawmin Mall has received $17 million in TIF bonds.
The state, which approves the RISE zone designation, typically takes the lead from local leaders and would reimburse 40 percent of the deferred property taxes, said Mark Vulcan, who adminsters the program for the state Department of Commerce. The RISE zone can be renewed for another five years, he added.
City Councilman Carl Stokes, who heads the council committee reviewing the proposal, said he supports what he knows about the project.
"I think they're making a good argument," Stokes said. "We're trying to capture more of the people going to our research centers and trying to get them to stay, entrepreneurially in Baltimore."
The Cambridge Innovation Center has housed more than 2,500 companies since its inception in 1999. Those firms have attracted $2 billion in investment, according to its website.
The BioPark became interested in the Cambridge model about three years ago, hoping to replicate its success fostering new companies, but then decided to bring in the "expert," Hughes said.
The BioPark hopes to receive financing approval this year and start construction in the spring, Hughes said. The office building received design approval from the city in January.
No specific companies have committed to the CIC or the remaining space, but the BioPark's other buildings are at capacity, with firms looking to expand, Hughes said.