The Port Covington TIF (tax increment financing) should be front page news everyday. It's the apotheosis of the modern day Baltimore development strategy as well as a signal that even in a post-Uprising world, business in Baltimore literally goes on as usual. But the fighting for this new mondo-TIF has also created the same usual polarity: to TIF or not to TIF? This isn't to say that folks aren't thinking about the issue critically—many of them are—but I believe that there are more creative ways to engage with an active TIF on the table.

I vote TIF, but with a twist.


But, first things first, what is a TIF, really? In plain terms, a TIF is a funding tool used by cities to spur development. Usually, a developer (like Sagamore Development) comes to a city (like Baltimore) and starts talking some "The Simpsons"-style Monorail business, although it is usually something much less interesting than a monorail, like luxury condos or a new corporate campus, which is the case here. Sagamore Development says to the city, "We would love to develop this huge plot we purchased in South Baltimore and bring jobs and manufacturing and retail and affordable housing and tenants and everything else you could ever want in a Neighborhood Indicators report, but we can't afford to do the whole thing ourselves: we need money." So, Baltimore's elected sets about raising that money. The city raises the necessary funds by issuing bonds. The bonds will pay an interest rate to its investor on top of the principal like other types of investments.

Now, you might ask, where is Baltimore getting the money to issue these bonds? Are they just leveraging some of the secret gold they keep in the basement of the War Memorial? No. This is where the TIF-Magic comes in. Baltimore is betting that the efforts of Sagamore Development will increase the property values and, in turn, the property taxes coming from their development to such a degree that the costs of the TIF are taken care of and more. The city has already earmarked this ostensible increase in the coffers to pay off the debts of the past (AKA Now). There are no guarantees that the development will be successful or that the city will feel the positively forecast financial effects. Baltimore bears tremendous risk when it issues a TIF, especially the largest TIF ever sought in an amount of over half a billion dollars. Also, with how precarious this plan of action is, the actual benefits for the local workaday folks are generally of the fallacious neoliberal trickle-down variety with a few unenforceable promises for community support thrown in for good measure. I will let you decide whether this is robbing Peter to pay Paul in a way usually justified by a slack-jawed junkie who also has a gambling problem.

But still, I support the TIF—with a few fixes. As a guy who is both a self-proclaimed progressive and an attorney/non-profit administrator/musician, I constantly find myself attempting to launder policies and projects that will benefit Baltimore's disenfranchised through a system that's primarily interested in keeping the disenfranchised disenfranchised. What I'm trying to say is that, at least at this point, I am committed to using the systems available to benefit the most people possible. And, as a city with few carrots to dangle in the real estate/economic development zone, it is not odd that Baltimore relies so intensely on the TIF. The question most overlooked in every TIF kerfuffle, though, is how can the TIF serve the public good in a more direct way, especially for individuals who will not live in, work at, or visit Port Covington?

The usual tactic by anti-TIFers is to cry for commitments for community benefits to be supplied by the TIF beneficiary. In this case, all Sagamore Development has done thus far is set non-binding "goals" for local hiring, supplier diversity, and "affordable" housing like studio apartments starting at approximately $1,255 a month (how affordable housing requirements work in this city is also due for its own omnibus polemic). As Natalie Sherman of the Baltimore Sun reported recently, an attorney advising the city on this issue suggested that community benefits "should not be part of the bond deal itself, lest there be problems with compliance that would trigger a default and have financial repercussions." Yeah, god forbid Baltimore City make the stakes high enough that it is more likely than not that the community benefits actually come to fruition.

Without any real mechanism to guarantee benefits for the community, the TIF beneficiary is essentially in control as soon as they receive approval, which may happen sooner than later if the proposal continues to barrel through Baltimore's bureaucratic process at light speed. To me, merely asking for the TIF beneficiary to supply these types of community benefits is comparable to conceding defeat in war while asking for the spoils of said contest. These community benefits aren't gonna happen.

A TIF requires substantial investment to fund, and I think there is an investment opportunity staring us all in the face without us knowing it that would give the community leverage in this situation. One of my favorite aspects of the commonplace TIF is that some of the bonds sold to fund the TIF are routinely purchased by the entity asking for the TIF in the first place. This means that the entity who needs the TIF money to complete their development project will also make money from the interest on the bonds sold to raise that money, which they will also say they need to complete the project. It's some fractal shit.

In dumber terms: the City is using TIF money to support Sagamore Development's initiative; Sagamore Development is buying some of the bonds used to pay for the TIF that supports its initiative; Sagamore receives benefits from the TIF money and about $402 million profit on the bonds, the interest payments of which are tax-exempt. And so, Sagamore Development will be the initial buyer of bonds for the TIF and receive a lower interest rate, about 3.5%. Later the bonds will be resold on the public market, which will likely garner 6% to 6.5%—it's great bargain shopping Baltimore City. To me, this is a lot of taxpayer money going to one entity for something that is primarily positioned to benefit that one entity.

Look, I know, Sagamore will argue that they are spending Billions of Dollars of Their Own Money on this development, so they have skin in the game and aren't getting anything for free, but this is missing the point: Sagamore is still very much getting taxpayer money that regular folks would never, ever have access to, and on top of that, they are going to make a profit of hundreds of millions of dollars off of tax-exempt bond interest payments that are the result of the city allowing a private entity to speculate on future public moneys. We give and we give and we give and they take and they take and they take.

So, Sagamore gets the TIF and Sagamore gets interest payments on the bonds sold to fund the TIF. So, how do we get in on these bonds?

Instead of allowing this fiscal Cartesian circle to transpire, we should buy the bonds. By we, I mean the people of Baltimore City, collectively, and set up something like: The Baltimore Retirement Fund. Over 41 years, Baltimore City will pay out $1.4 billion in interest payments on the TIF. Holy Shit. A fund dedicated to the retirement of Baltimore's disenfranchised that could net about $34 million a year? Cha-ching! We could even undercut Sagamore on the interest payments bid—Baltimore loves a deal. But we would be able to reinvest the millions we receive each year into another vehicle to keep it growing.

Just imagine what it would be like if we truly aligned the interests of Baltimore's corporate golden child and an aggregation of individuals for whom the word "investing" has always been a lexical throwaway. Think of it as a communal retirement plan without the bigtime employer running the pension fund.


Now, I've never started a retirement fund (or any fund) and I know enough to know that securities laws are complicated and quite frightening. This isn't the place to sort out the details, although, I think that there might be some creative solutions buried in the Debt Based Crowdfunding Exemption (Section 11-601[16] of the Maryland Securities Act, Corporations and Associations Article, Title 11, Annotated Code of Maryland) that was passed into law in 2014. If we put some smart folks to this task we could probably figure it, or something similar out. Something that provides tangible benefits to the community and city.


Now, I realize that this way of thinking will draw claims of ineptitude, naivete, and light to severe socialism. We might not have the law on our side, the numbers might not add up, Sagamore won't simply take something like this lying down, and god have mercy this just isn't how things are done—but, what if we gave it a shot?

TIFs are not going to stop happening. The facts and outcomes of every previous TIF have not stopped Baltimore City from issuing these things even though the benefits for the city routinely approach negative infinity. And, yet, I get why they do it: Our system is built to do these types of things (i.e. build complex horse trading situations only navigable by the wealthy that are surreptitiously subsidized by the poor). But, we have seen that the aggregation of wealth within disenfranchised communities is an extremely powerful tool that usually amounts to the best option for wealth empowerment in those communities for which free money (the kind that has a lot of commas) is not available from the government or the private sector (from Obama's fundraising approach to informal lending circles).

Without intervention, Sagamore is clearly going to reap the benefits from this TIF without giving up anything more then a line on a spreadsheet with a dollar level so low that it bears no need for inspection. So why don't we use the system to actually spread the wealth around for once, but not like fake wealth, real wealth, as in cold hard cash?

Adam Holofcener is the executive director of the non-profit Maryland Volunteer Lawyers for the Arts (MdVLA) and a musician.