Baltimore's spending panel agreed Wednesday to give H&S Bakery $200,000 to move its Harbor East distribution center as part of a deal officials say will help keep the business in the city.
The Board of Estimates approved the agreement without discussion. Moving the distribution center also stands to financially benefit its owner, John Paterakis, who can use the prime real estate for another purpose. The Harbor East land is eligible for millions of dollars in tax breaks.
Comptroller Joan M. Pratt cast the only dissenting vote on the five-member board.
Pratt said she applauded the bakery for expanding its operations but added that she doesn't believe the company needs the money to complete the move to a 2.8-acre site in East Baltimore's Pulaski Industrial Area. The cash will be used to pay for part of the cost to relocate utilities and toward the developer's architectural and engineering expenses, according to the agreement.
Pratt also said she was disappointed that the city's development arm, the Baltimore Development Corp., failed to negotiate a longer guarantee of employment for the H&S workers. Under the contract, Paterakis agreed to employ at least 70 workers at the new site for six months or face a $2,800 fine for each worker under that total. In all, more than 850 people work for the bakery in Baltimore.
"With the new technology, they may need less employees," Pratt said. "Many may be looking at unemployment in six months."
Paterakis has said he expects to need more, not fewer, workers at the new site. It is difficult to build on, he said, and a number of city utilities are located there. The subsidy helped him decide to build on the property, where the Hollander Ridge public housing development once stood, rather than on land in Baltimore County, Paterakis said.
Mayor Stephanie Rawlings-Blake said she expects the city to "more than recoup our investment." She said the bakery is investing nearly $7 million in the old Hollander Ridge site.
"Job creation is critical to a growing city," Rawlings-Blake said in a statement. "My administration always looks for ways to support businesses that want to invest in Baltimore."
Pratt said she wasn't surprised that the spending was approved without any debate. "It was a done deal," Pratt said.
Brenda McKenzie, president of the Baltimore Development Corp., said H&S is "Baltimore-born and -bred," and the $200,000 investment will keep the business in the city.
"The company has indicated no plans to reduce the workforce at the new distribution facility," McKenzie said in a statement. "Under this agreement, H&S will retain 70 jobs for a wide variety of semi-skilled employees, including drivers, maintenance staff and clerical workers."
Council President Bernard C. "Jack" Young supported the spending as an economic development tool.
"It's a business that's important to the city, and [he] wanted to make sure that they remained in Baltimore City," Young's spokesman, Lester Davis, said.
Whether the cash-strapped city should provide subsidies to help successful businesses expand is a continuing point of contention. Under Rawlings-Blake, the city agreed to provide about $400 million in public subsidies for the Harbor Point development.
The $1.8 billion waterfront project is being developed by Michael S. Beatty, who is a former partner of Paterakis. Some critics estimate that the city has given Beatty and Paterakis more than $1 billion in taxpayer assistance to create Harbor East and Harbor Point in a formerly destitute part of the city filled with old warehouses and vacant lots.
The lot that currently houses the bakery is in the city's Enterprise Zone. New development in the zone can get an 80 percent property tax break for five years with a diminishing break for the next five.
Paterakis said has said he wants to build a Whole Foods Market, apartments and condominiums, a parking garage and possibly a department store on the bakery land and nearby properties.
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