Meeting behind closed doors, the city's Board of Finance on Monday approved more than $100 million in taxpayer assistance to help fund a massive, waterfront development project that will host energy giant Exelon Corp.'s regional headquarters.
After barring the public from the 90-minute meeting, board members voted 4-0 to approve a developer's request for $107 million in tax increment financing to pay for roads, utilities and parks for the $1 billion Harbor Point mixed-use development on the waterfront between Harbor East and Fells Point, according to Stephen M. Kraus, the city's chief of treasury management.
Kraus asked members of the media to leave the board room while the city's development arm, the Baltimore Development Corp., explained why the taxpayer assistance was needed.
"There is certain business that is confidential and proprietary," Kraus said afterward.
Harry E. Black, the city's finance director — who attends board meetings in the place of Mayor Stephanie Rawlings-Blake — and three mayoral-appointed citizens, Larry I. Silverstein, Frederick W. Meier Jr. and Dana C. Moulden, voted to approve the deal. Comptroller Joan M. Pratt abstained from the vote, Kraus said.
If approved, the $107 million deal would be the city's second-largest tax increment financing plan. The city-owned Baltimore Hilton hotel was financed with $301 million in tax-exempt revenue bonds in 2006. 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.
Under tax increment financing deals, the city issues bonds to pay for property acquisitions, infrastructure improvements and other project costs for a project, then uses the increased property taxes created by the development to pay off the bonds.
Developer Michael S. Beatty's Harbor Point Development Group LLC is redeveloping the mostly vacant 28 acres, the former site of the Allied Signal chromium plant. Officials expect work to start this summer on a 23-story skyscraper to house the Exelon headquarters. The site also will be home to Morgan Stanley and other tenants.
Beatty has said proceeds from the city-issued bonds would be used to pay for new roads, sidewalks, a waterfront promenade, a 6.5-acre public park and an extension of the Central Avenue bridge. Property taxes generated by the eventual development of up to 3 million square feet there would pay the bond's debt service.
Harbor Point Development's arrangement with the city would include a private construction loan to start the work and an agreement by the developer to repay debt service in the event of a revenue shortage, placing more of the risk on the developer, according to Beatty. Beatty also helped develop the adjacent Harbor East community of offices, shops, hotels and apartments.
Earlier this month, city officials denied a public information request from The Baltimore Sun for documents detailing the proposal. Assistant City Solicitor Mark J. Dimenna wrote that such documents are "protected by the deliberative process privilege."
Rawlings-Blake has called the Harbor Point development "an important project for the city."
"Despite the perceived wealth of the developer or the company, the project itself has to be profitable, the numbers have to work," the mayor said last month. "We have the possibility of creating jobs and to keep a major corporation in the city of Baltimore with this project."
In documents submitted to the Maryland Public Service Commission in 2011, Exelon pledged to build a new headquarters in the downtown or harbor area of the city. The company told the regulatory body, which approved its purchase of Constellation Energy, that its new Baltimore headquarters would add more than 1,100 jobs into Maryland's economy.
In September, the City Council approved a decade of tax breaks for Harbor Point. The council voted to include the area, which is adjacent to affluent Harbor East, in Baltimore's Enterprise Zone, a statewide credit program for economically disadvantaged areas.