Councilman holds up financing deal for Harbor Point

A rendering of Exelon Corp.'s regional headquarters at Harbor Point in Baltimore.
A rendering of Exelon Corp.'s regional headquarters at Harbor Point in Baltimore. (Rendering by Elkus Manfredi Arthitects)

A city councilman who chairs the influential taxation committee is holding up $107 million in infrastructure financing for the Harbor Point development as he seeks more detailed information he says is needed to justify the deal.

Proponents of the $1 billion project, a mixed-use waterfront development between Harbor East and Fells Point that could break ground as early as August, say Councilman Carl Stokes also is delaying the creation of badly needed jobs.


"They're holding it up," said Rod Easter, president of the Baltimore Building & Construction Trades Council. "It's thousands of construction jobs. The council needs to get off its butt and get people to work."

Stokes has been an outspoken critic of the subsidies proposed for the development. He said he would not hold a hearing on the proposal until he receives an analysis from the Baltimore Development Corp., the city's quasi-public development arm, and other information. Such a hearing would be needed before the City Council could vote on the proposal.

"They want this matter expedited, but I don't think we should expedite" so large and complicated a financial matter, Stokes said. "As chair, I have a responsibility to do due diligence on this matter."

Mayor Stephanie Rawlings-Blake's administration has asked the City Council to approve $107 million in tax increment financing for infrastructure and other improvements for the development, which would house a regional headquarters for the energy giant Exelon Corp.

According to her administration, the Harbor Point project would create about 7,200 construction jobs, and roughly 9,200 jobs would be supported by the businesses that move in.

Supporters contend the public would benefit from plans by Michael S. Beatty's Harbor Point Development Group LLC to use the financing to build public parks and a promenade on the 27-acre property. And they say the project would spur more economic development, boosting poorer areas of southeast Baltimore.

But opponents note that the development has received other government assistance — it has been granted property tax breaks and is eligible for a tax assistance program because it would be built on a contaminated site.

In approving tax increment financing, the Baltimore Development Corp. determined that the project could not happen without such financing.

But Stokes said the development agency has not provided him with that analysis.

"I want to know why 'but-for' the city's dollars this project cannot be done," he said, adding that it's common for legislation to take months to advance through the council.

Ryan O'Doherty, a spokesman for Rawlings-Blake, said the mayor's office released hundreds of pages of documents about the project after introducing the financing legislation. He said the amount of detail supplied by the city is "unprecedented," and if Stokes wants more, he should schedule a hearing to question the developer and city agencies.

"Since the bill was introduced, we made a deliberate effort to put out as much information as possible and be transparent about it," O'Doherty said. "If the objective is to do fact-finding, the best way to do that is to hold the public hearing, so that factual information can be made public in an open and transparent way."

Last year, the council voted to include the Harbor Point site in the city's enterprise zone — meant for economically challenged areas — allowing it to avoid paying about $53 million in local property taxes over 10 years.

Stokes and Councilman Nick Mosby voted against the measure, arguing that the program was meant to encourage development in poor areas, not in upscale neighborhoods.


Stokes called the way the Baltimore Development Corp. redrew the enterprise zone map "indecent." By including census data from Perkins Homes public housing and other poor areas nearby, the Harbor Point site was able to qualify for a break it could not have received on its own, Stokes said.

But even with the enterprise zone tax break, administration officials say the city would take in $143 million in taxes from the project over 10 years.

Stokes said he plans to introduce a resolution Monday asking that developers contribute one-third of their tax savings to the people of Perkins Homes. A resolution is symbolic and carries no weight of law.

"I want a third of the $53 million given to the people of Perkins, so that money and resources can be given to the children for after-school programs, job training and other programs," he said. "If you're going to use these citizens, then let's give them a part of what you're getting."

Marco E. Greenberg, vice president of the Beatty Development Group, said the development team looks "forward to a council hearing at the earliest possible date, so that there can be a thorough public airing of the facts about Harbor Point."

He said the company wants to do its part to grow Baltimore by creating jobs and contributing "millions of dollars in new tax revenues to support Baltimore."

If approved, the $107 million in tax increment financing would be the second-largest of its kind in Baltimore. The city-owned Baltimore Hilton hotel was financed with $301 million in tax-exempt revenue bonds in 2006.

Under tax increment financing deals, the city issues bonds to pay for property acquisitions, infrastructure improvements and other project costs, then uses the increased tax revenue generated by the development to pay off the bonds.

The former site of the Allied Signal chromium plant, Harbor Point now sits mostly vacant. The developer expects work to start this summer on a 23-story skyscraper to house the Exelon headquarters, space the company would lease from Beatty for about $120 million over 15 to 20 years. The site also would be home to Morgan Stanley and other tenants.

Harbor Point would include apartments, hotel rooms and more than 3,000 parking spaces.

The developers would spend $60 million of the tax-exempt bond funding to build seven small parks, $21 million on a promenade and $10.4 million on a bridge extending Central Avenue. They also would make a $2 million contribution to a nearby charter school, the Crossroads. The rest of the money would go to fund infrastructure improvements along the development's streets and piers.

In documents submitted to the Maryland Public Service Commission in 2011, Exelon pledged to build a new regional headquarters in the downtown or harbor area of the city. The company told the regulatory body that approved its purchase of Constellation Energy that its new Baltimore headquarters would add more than 1,100 jobs.

The Baltimore Sun also has sought some of the documents requested by Stokes. Assistant City Solicitor Mark J. Dimenna denied the request made under the Public Information Act, saying the documents were "protected by the deliberative process privilege."

Stokes compared the tax increment financing to a student applying for financial aid at a university or a business seeking a loan from a bank. He said lenders want detailed financial information to ensure that they are investing funds wisely.


"They ask for your tax returns and bank accounts," he said. "I want to see the company's and the CEO's financials, the way any college wants to see mine."

Lester Davis, a spokesman for Baltimore City Council President Bernard C. "Jack" Young, said Young is "well aware" of Stokes' concerns but believes the project should move forward.

"He definitely respects Councilman Stokes' position," Davis said. "At the end of the day, he's confident they can be on the same page."