West Baltimore residents urged a City Council committee Thursday to approve a $58 million subsidy for a mixed-use development in the Poppleton neighborhood, saying it is urgently needed after last month's unrest.
"We had trouble a few weeks ago in Baltimore," said City Councilman William "Pete" Welch, who represents the area and is backing the tax increment financing plan. After the unrest over the death of Freddie Gray, many people are counting on the city to use development incentives in impoverished areas rather than at sites by the waterfront, Welch said.
"We need to start using TIFs in West Baltimore," he told his fellow council members. "We need more housing in West Baltimore. This is that project. West Baltimore has needed this type of development for many, many years. This is a game changer."
Under tax increment financing deals, the city issues bonds to give the developer money to pay for infrastructure improvements and other project costs. The city then uses the increased tax revenue generated by the development to pay off the bonds and their interest.
The planned Poppleton development includes roughly 1,600 new apartments and other residences, 52,000 square feet of commercial space, a park and a school in a neighborhood close to the University of Maryland BioPark. Co-developers La Cite and Diversified Realty Partners LLC estimate that redeveloping the 13.8 acres would cost $460 million over more than 15 years.
Daniel Bythewood Jr., president of New York-based La Cite, said he is "incredibly excited to be able to bring this amazing project to West Baltimore." His firm has worked on projects in Harlem, Miami and Las Vegas.
Bythewood said the Poppleton development will include parks near Edgar Allan Poe's house, including a dog park. He added that the project could do for Poppleton what the Harbor East development did for a vacant piece of land by the Inner Harbor. "It creates a new location for people to come to," Bythewood said.
Officials predict the project would have a rate of return of 9.5 percent without the subsidy — for a profit of $19.5 million — but nearly 15 percent with the TIF, for a profit of $31.4 million. The project also is in line to receive about $520,000 in Enterprise Zone tax credits.
Once built, the properties would pay $8.4 million a year in property taxes, up from $26,000 that comes from the site currently, officials say.
Four of five members of the council's Economic Development Committee were present for the discussion: Chairman Carl Stokes, Warren Branch, Bill Henry and Edward Reisinger. Council member Helen Holton was absent. Stokes said he believed the committee would approve the deal to go to the full City Council for a vote next month.
Poppleton resident William Gunn asked the committee to vote for the project. He said he doesn't want to move out of the city despite his neighborhood being known for "drug dealers and blight."
"Help us out," he said. "Help revitalize my area. You have to put some money in to get some money back out."
Cecil Clarke, who owns property in Poppleton, also urged approval. "The community is desperate for this project to see a new birth," he said.
Lembit Jogi, a city housing development manager, said the project would "transform" more than 500 blighted properties. The neighborhood's vacancy rate is about four times the city average. About 19 percent of its families live in poverty.
Jogi said development at the site is "not feasible" without the incentives.
The agreement with the developer calls for 20 percent of units to be "affordable," In the first phase, 52 of 257 units will be considered affordable — meaning they will rent for $600 to $800 per month versus $1,200 to $2,400 for more expensive units. For each acre devoted to affordable housing, the developer makes $635,000 less, officials said.
Jogi said the plan would draw 4,100 new residents to abandoned blocks and create 226 full-time jobs.
Since 2000, city TIF projects have included improvements at Mondawmin Mall and Belvedere Square, and conversions of former industrial sites such as Clipper Mill and the Procter & Gamble factory used as Under Armour's headquarters. The most recent TIF was awarded to a $1 billion Harbor Point development near Harbor East.
The city has acquired 450 of the 524 parcels of land needed for the project — spending $10 million to date on acquiring property, demolishing it and relocating people.
The deal was approved by the city's Board of Finance last month after board members raised questions about the project's long-term prospects, questioning the financial projections and the affordability of the new apartments for the area's residents. No one raised such concerns Thursday.