Advocates are calling for the developers of the massive Port Covington project to do more for low-income communities in exchange for receiving the largest-ever special tax deal from Baltimore's government.
Days after the developers announced a multimillion-dollar community benefits agreement with six nearby neighborhoods, two groups stepped up their pressure Monday on Under Armour CEO Kevin Plank's Sagamore Development Co., which is planning a large-scale waterfront community in South Baltimore.
During the City Council's evening meeting, Councilman Carl Stokes introduced a bill backed by advocates for the homeless that would require at least 20 percent of Port Covington's housing units to be set aside for low-income residents — double what's planned.
At the same time, the community group Baltimoreans United in Leadership Development, or BUILD, released a skeptical analysis of the Port Covington project's finances, saying the proposal being considered by council members understates the project's cost to the city. The group called on the City Council to halt plans to award the developer $660 million in bonds.
"We're calling on the City Council to not move this forward until they carry out their own independent analysis," said the Rev. Andrew Foster Connors, co-chair of BUILD. "Baltimore taxpayers will be on the hook for 41 years for the largest TIF subsidy in Maryland history. This is a generational moment.
"You're going to have taxpayers from all other neighborhoods subsidizing services for Port Covington, and missing out on an opportunity to bridge our deep divides."
Sagamore President Marc Weller called some of the group's conclusions flawed, while pointing out that BUILD's analysis agreed with the developer's expectation that more than 25,000 new, permanent jobs would be created — "perhaps the most important benefit" of the project, he said.
The company also said in a statement that it is committed to "building a mixed-income, inclusive community at Port Covington, where the jobs, amenities and opportunities will be shared and enjoyed by everyone." It called its current affordable housing plans "unprecedented and historic in Baltimore."
Sagamore has proposed a mixed-use waterfront development that would include a new headquarters for Under Armour, restaurants, shops, housing and a manufacturing plant, among other features.
The company has asked the city to float $660 million in bonds to build infrastructure for the project. Under a deal called tax-increment financing, the developer would have to pay back the bonds through future taxes.
Proponents see TIF deals as a creative way to finance infrastructure in a city with high property taxes. Critics contend that TIFs divert money for decades from the city's general fund, where it could be used to pay for needs such as firefighters and schools.
Stokes' bill would require the creation of thousands of affordable housing units in the $5.5 billion Port Covington development. The "Housing Our Neighbors Act" would require that at least 20 percent of new housing units — about 1,500 — be available at prices affordable to people with incomes at 30 percent of Baltimore's median. That would enable, for instance, families of four with an annual income of $26,880 to live in Port Covington.
The legislation calls for much more affordable housing than the developers currently envision.
In a deal with Baltimore's government, Sagamore agreed to a goal of making 10 percent of the 7,500 proposed, mostly rental residences "affordable" for families with incomes that are less than 80 percent of the median household income in the Baltimore area. That threshold translates to about $65,700 for a family of four, according to federal estimates.
Stokes argues that the city can do better.
"It's our responsibility as City Council members to ensure that there is enough affordable housing," he said in a statement.
The anti-homelessness group Housing Our Neighbors released a statement praising Stokes' bill. In it, member Damien Haussling said the group supports the legislation "because it will address the root cause of homelessness: a lack of affordable housing."
Stokes, chairman of the council's Taxation, Finance and Economic Development Committee, plans to hold a hearing on the TIF proposal next week.
Meanwhile, BUILD's analysis of Port Covington's finances questioned the optimistic projections on which the city is relying. An analysis prepared for the city by Columbia-based consultant MuniCap projected the development would generate $1.7 billion for the city over 41 years, or an average of $40.3 million annually.
Financial consultants TischlerBise, a firm hired by BUILD, wrote they feel "strongly that the City of Baltimore ultimately need[s] to approve this development project and be a financial participant. However, the question is — at what price to City of Baltimore tax payers?"
The analysts argued that the application for tax increment financing "lacks basic information," understates government operating costs for services and doesn't include necessary capital costs.
"The TIF should probably be renegotiated to only include the type of infrastructure required to get this project off the ground," said Carson Bise, the owner of TischlerBise Inc. "Kayak landings, green space, wetlands — these are aesthetic improvements."
Weller noted that the analysis agrees with the developer's projection that 26,500 new, permanent jobs would be created through the project.
"We are pleased that yet another report validates the jobs projections from the redevelopment, perhaps the most important benefit to the City as a whole," he said in a statement. "The report also confirms ... the need for the TIF to make the project even marginally viable to investors."
But he took issue with some of the analysts' conclusions.
"Some of the report's issues with MuniCap's analysis of impacts on the city derive from a failure simply to ask MuniCap about their process," Weller said. "Had they asked, they would have discovered that MuniCap thoroughly questioned city officials about various budget line items and whether they would or would not be impacted by the addition of a large new economic development project. Finally, it is worth reiterating that MuniCap was independently engaged by the city, not Sagamore, although we have reimbursed the city for the costs as required by city policy."
Last week, developers signed an estimated $39 million agreement with six South Baltimore neighborhoods near Port Covington.
The 30-year deal would create a new entity composed of developers and community members from Brooklyn, Cherry Hill, Curtis Bay, Lakeland, Mount Winans and Westport to spend the money. Potential projects include a community center, athletic fields, a business incubator, a library and a swimming pool, the community groups said.
According to the deal, one-third of the money would be spent on citywide uses, while two-thirds would be used inside the six neighborhoods, called the South Baltimore Six. The composition of the entity that would decide how the money would be distributed has not been determined.
The community benefits deal was the second announced by Sagamore. In April, under a deal with the city, the developer agreed to provide more than $10 million over five years to fund citywide programs related to youth and education.
Foster Connors said BUILD supports Sagamore's deal with the six neighborhood groups, but it wants more.
"Sagamore is targeting upper-class people, the creative class," he said. "If we are publicly subsidizing an upper-class white enclave, it is exactly the wrong time to do that in Baltimore's history. We celebrate with the South Baltimore Six, but we need a citywide agreement."