The company redeveloping the former steel mill in Sparrows Point took the first step toward requesting a county subsidy to help to pay for needed roads and water and sewer lines.
Tradepoint Atlantic asked the Baltimore County Council to pass legislation that would allow tax-increment financing, an arrangement in which the county would help finance the up-front costs of infrastructure projects.
“Having the necessary infrastructure in place will help us attract marquee tenants and high-quality employers by having shovel-ready sites for them,” said Aaron Tomarchio, a vice president for Tradepoint Atlantic.
In tax-increment financing — often referred to as a TIF — a jurisdiction borrows money by issuing bonds for infrastructure projects that benefit development. The developer doesn’t pay the bonds back through cash payments; rather, they are paid off over time from the increased property taxes paid by the development.
Tomarchio said the company hasn’t determined how much of a financing package it might seek or when a deal might be executed. The legislation before the County Council is a preliminary step that creates a five-year window for a tax-increment financing deal.
Following a work session Tuesday at which the bill was discussed, a council vote is scheduled for Monday, Dec. 4.
Tomarchio said talks are preliminary, although Tradepoint floated the idea of a TIF deal more than a year ago. The company commissioned an economic study from Sage Policy Group that recommended a TIF as a way to help pay for at least part of the estimated $200 million needed for roads, bridges, utilities, stormwater management systems, rail upgrades and port improvements.
“This is signaling that we are looking at a TIF. We are still in conversations with Baltimore County,” Tomarchio said.
Tradepoint Atlantic is a joint venture of local firm Redwood Capital Investments and the Chicago-based liquidation and redevelopment firm Hilco. Tradepoint bought the Sparrows Point property in 2014 with ambitious plans to turn the shuttered steel mill into an industrial campus with shipping, logistics and light manufacturing uses.
The site has attracted several distribution centers and an auto import operation.
County Executive Kevin Kamenetz, a booster of the Tradepoint development, has promoted it as a success story in his campaign to become the Democratic gubernatorial nominee who will run against Republican Gov. Larry Hogan next year.
In a statement, Kamenetz said the council bill “simply establishes the physical boundaries of a development district in Sparrows Point. It does not obligate the county to any tax increment financing.”
Will Anderson, the county’s director of economic development, said there have been no talks with Tradepoint about details of what a TIF might look like.
“We’ve discussed this first step because they asked us to,” Anderson said.
Councilman Todd Crandell, a Dundalk Republican who represents the area where Tradepoint is located, said he’s taking a wait-and-see approach to whether a TIF is a good idea for Tradepoint.
“This is very early in the process,” Crandell said. “There’s no TIF to examine, there’s no TIF to analyze or crunch the numbers. I’m waiting for that so we can do our own analysis.”
Crandell said he expects it will be at least several months before a TIF proposal is brought to the council. For now, he said there’s no harm in passing the preliminary legislation because it does not obligate the county to enter into a financing deal.
“I look at this through the lens of opportunity,” Crandell said. “As we move forward and more is known about it, what is the scope of opportunity? Is it worth the bang for the buck? I owe it to our constituency to assess the impacts of this.”
Tax-increment financing is rarely used in Baltimore County — most recently the method was tapped to pay for a parking garage and other infrastructure at the Owings Mills Metro Centre. In that case, the county authorized the TIF, but the bonds were issued by the Maryland Economic Development Corp. Metro Centre, located adjacent to a Metro SubwayLink station, includes retail shops, apartments and branches of the county library and the Community College of Baltimore County.
TIFs have been controversial in other parts of the region, including Baltimore City, where there was disagreement whether the city should extend $660 million worth of financing for Sagamore Development’s massive Port Covington redevelopment in South Baltimore.
And in Howard County, some politicians had second thoughts over a $90 million TIF financing package awarded for a parking garage and other improvements at a proposed development near Merriweather Post Pavilion in downtown Columbia.
If Baltimore County were to extend TIF financing to Tradepoint Atlantic, it would require County Council approval. The legislation currently before the council is a preliminary step to designate the Tradepoint property as a “development district” that could be eligible for a TIF.
Tomarchio said Tradepoint is exploring multiple options for financing the infrastructure upgrades. Tradepoint and Baltimore County recently applied for a $25 million federal grant to help pay for upgrades to the port portion of the property.
Tradepoint also has spent the past three years systematically clearing the site, tearing down most of the old mill buildings, including the L-blast furnace that once towered over Sparrows Point. It was imploded in early 2015.
Tomarchio said Tradepoint’s investors are “in a good place” but said their money has been spread out among various needs.
“This is a very complex redevelopment, so there’s capital being expended at our port, there’s capital being expended at our rail, there’s capital being expended at our environmental remediation that’s being done, there’s capital being invested on the vertical construction that’s happening, there’s capital being expended on the demolition,” Tomarcho said.
“There is extensive capital that has been deployed and will continue to be committed,” he said.
Some of Tradepoint’s tenants thus far include Pasha Automotive, which imports vehicles; FedEx, which operates a distribution center; Under Armour, which plans to open an e-commerce fulfillment center next year; and Amazon, which recently signed a deal to build a massive distribution center there. Amazon is receiving $2 million from the state and $200,000 from the county in loans that will be forgiven if the company employs a certain number of workers at Tradepoint.
Sparrows Point Terminal CEO Michael Moore announces that Tradepoint Atlantic is the new name of the old steel mill while also unveiling its new logo, and brand identity. (Amy Davis, Baltimore Sun video)