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Baltimore approves second, larger-than-expected round of Harbor Point TIF bonds

Baltimore's Board of Estimates approved Wednesday the sale of $39 million more in bonds for the upscale Harbor Point development.

The money — more than triple what the city originally planned to borrow this year — covers unexpected costs for roads, a central square and sewer lines, along with a new pump station and sewage "force main" that were not initially part of the plans for the 27-acre waterfront project.

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The board voted 4-1 for the deal.

City Comptroller Joan M. Pratt cast the lone vote against it, arguing city officials should have negotiated a new cost-sharing agreement with the developer that was more favorable to taxpayers. Currently, the city only shares in revenue from Harbor Point if the developer makes a profit of more than 20 percent.

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"It should have been renegotiated," Pratt said. "I am concerned about the developer's favorable return on investment. I feel that 20 percent is too high."

The second round of bonds is part of $125 million in so-called tax increment financing or TIF bonds, including $107 million for infrastructure, that the city approved for Harbor Point in 2013. Such bonds are to be repaid from the increased property taxes generated by the project.

Developer Beatty Development initially estimated it would need about $12 million for infrastructure when the second round of bonds was issued this year. Now, the infrastructure needs are estimated at about $37 million, according to an analysis presented to the city's Board of Finance.

Baltimore finance director Henry Raymond — who voted in place of Mayor Stephanie Rawlings-Blake, who was traveling — said Wednesday that taxpayers shouldn't worry about the unanticipated costs of the project. If the infrastructure exceeds $107 million, the developer will have to pay for it, Raymond said.

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"Any excess costs will be borne by the developer entirely," Raymond said. Asked if city officials would consider floating more than $107 million in bonds for the project's infrastructure, Henry said they wouldn't. "Absolutely not," he said. "Under no circumstances."

The bonds are needed because the design and scope of items included in the second phase have changed, with more infrastructure expected to be built at this stage, said Marco Greenberg, a vice president at Beatty Development. The overall cost to the city will not change, he said.

"If it costs more than $107 million, it comes out of our pocket," he said. "We have to make it work."

Baltimore Sun reporter Natalie Sherman contributed to this article.

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