After weeks of protests, the Baltimore City Council granted preliminary approval Monday evening to more than $100 million in public financing for the upscale Harbor Point development.
In an 11-3 vote, the council authorized bonds to pay for the project's infrastructure and for nearby parks. The body will take a final vote on the subsidy next month, when approval is expected.
"To me, the long-term return on investment outweighs any shortcomings early on," Councilman Robert W. Curran, a supporter of the plan, said after the meeting. "The bottom line is: It puts cranes in the sky. It creates jobs."
Council members Carl Stokes, Sharon Green Middleton and Bill Henry voted against the deal. Councilwoman Mary Pat Clarke abstained, citing her husband's business relationship with the developer, Michael S. Beatty.
The Harbor Point development is the planned home of energy giant Exelon's new regional headquarters, as well as a Morgan Stanley facility, other office buildings, residential towers, stores and a hotel.
Supporters, including Mayor Stephanie Rawlings-Blake, argue that the project will swell the city's tax rolls and create thousands of jobs. But opponents say the city financing deal is risky and amounts to little more than corporate welfare, allowing the developer to reap millions more in profit.
"This is probably the worst piece of legislation I've ever seen," said Stokes, a frequent critic of city subsidies for developers. "We have polarized our city for no good reason."
Councilman James Kraft, whose district includes Harbor Point, was the only council member to speak during the meeting in favor of the tax increment financing bonds. With them, the city will borrow $107 million to pay for infrastructure such as roads, as well as the parks, a promenade and other amenities. Taxes generated by the development will be used to pay off the bonds.
Kraft said he believed the site would be developed "regardless of the TIF," but that the city had a duty to help provide infrastructure for the difficult development of a contaminated site that once housed an Allied Chemical plant.
"That is the challenge for development here," Kraft said.
The financing is part of about $400 million in public subsidies for the project, including more than $110 million in tax breaks. Some business groups, such as the Downtown Management Authority and Greater Baltimore Committee, asked the council to rethink the legislation, while community activists, clergy and unions protested the plan, which they said favored the rich and well-connected instead of the poor.
Council members who voted against the financing received applause from the crowd.
Some in the audience chanted, "We're people, not peanuts," referring to a comment last week by Councilwoman Rochelle "Rikki" Spector, who dismissed some spectators as a "peanut gallery."
Even the opening prayer, given by the Rev. Joseph L. Muth of St. Matthew's Catholic Church and the Rev. Glenna Reed Huber of the Episcopal Church of the Holy Nativity, asked council members to oppose the financing.
In an interview after the meeting, Beatty noted that the Inner Harbor and other projects also began amid intense opposition.
"People oppose change," Beatty said. "Harbor East, when I first started developing that project, was opposed by many. I think a lot of people who opposed that project now come in and say, 'You know what? That was a pretty good project.' "
After criticism that the project would do nothing to benefit low-income Baltimore residents, Beatty pledged last week to give $3 million to the city's fund for low-income housing. City officials say it would be the largest contribution in the history of the fund, which helps developers build affordable housing.
Currently, the fund has about $70,000 in it, according to Deputy Housing Commissioner Peter Engel. Two developers have contributed to the fund in the past, in one case giving about $1 million, housing officials said.
After negotiating with City Council President Bernard C. "Jack" Young, Beatty also agreed to voluntarily follow the city's new local hiring ordinance — pledging to hire 51 percent of new workers for the project from Baltimore — even though the bill does not become law until next year.
"It's a collaboration with the city, with the private sector, and with the broader community to make sure we do whatever we can to hire locally," Beatty said.
Brenda McKenzie, president of the Baltimore Development Corp., the city's quasi-public development arm that partnered with Beatty on the project, applauded Monday night's council vote. "The discussion has definitely been a tough one, but the end results are promising," she said.
McKenzie said she planned to continue work with Beatty and the council to ensure that the "whole city is able to reap the benefits of this monumental project."
The council's taxation committee voted 3-0 Wednesday night to approve the $107 million in bonds for the waterfront project over the objections of Stokes, the committee chairman, who left the room in disgust as the vote was being taken.
On Monday, Stokes called the committee meeting "Baltimore's own day of infamy" and introduced a resolution calling for the "formation of a special investigative commission to review the effectiveness of the City's Tax Increment Financing program at spurring job-creating investment in Baltimore that would not otherwise have occurred."
The three pieces of legislation given preliminary approval would enable the city to issue the $107 million in tax increment financing bonds, which would accumulate interest and fees for a total debt of $283 million.
The largely vacant Harbor Point site is assessed now at $10 million, but the Baltimore Development Corp. projects it would be valued at $1.8 billion for tax purposes when it is completed years from now. It will include a promenade, connecting a popular walkway and jogging route from Fells Point to Locust Point, and $59 million in public parks.
Even Henry, who voted against the subsidies, acknowledged the finished site — which many have argued is the most desirable piece of real estate in the city — "is going to look beautiful."
Once fully built, city officials say the project will contribute about $20 million a year to the city's budget, which could be used for schools, roads, police and other projects.
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