Port Covington TIF debate: Plenty of theater, but any drama?

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A three-bill legislative package providing $535 million in public financing for the redevelopment of Port Covington is expected to provide political theater, but the ultimate decision is expected to lack drama.

The legislation would provide Sagamore Development Co., the real estate firm backed by Under Armour CEO Kevin Plank, the largest tax increment financing agreement in city history.  The Baltimore City Council’s Taxation, Finance and Economic Development Committee will hold an informational hearing on tax increment financing at 4 p.m., Thursday.

The public financing proposal is expected to cost about $660 million once additional expenses, such as debt service reserve funds, capitalized interest and cost of issuance, is factored in. The proposal has been backed by a number of civic leaders as a major coup for the city, but it’s been pilloried by various activists and critics as a giveaway to a developer.

Even if the City Council decides not to approve the legislative package, which is believed to be unlikely, the development is expected to happen, and include a good amount of public support.

“I think it’s very unlikely that the project will simply fall through. Kevin Plank already invested considerable funds in the design of the Port Covington project, and I think what would probably happen would be the whole thing will go back to bargaining between Sagamore and [Baltimore Development Corp.],” said Matthew Crenson, professor emeritus and academy professor in the Department of Political Science at Johns Hopkins University.

Crenson, who has worked for and contributed to the campaigns of Councilman Carl Stokes, a tax increment financing critic and chairman of the Taxation, Finance and Economic Development Committee, said the council will have concerns about issues, such as the percentage of affordable housing included in the development, but that they will not be enough to stop public financing

“But my guess is that, like Board of Estimates, like [Baltimore Development Corp.], the council, the majority of the council, will agree to go along with this, except for Carl Stokes” Crenson said.

Sagamore is proposing building 1.5 million square feet of office space, 200 hotel rooms and 7,500 residential units on roughly 260-acres of underutilized industrial land on the South Baltimore peninsula. Under Armour also intends to build a 3.9 million-square-foot global headquarters, independently, on an adjacent 50 acres.

Sagamore is seeking tax increment financing to build the necessary infrastructure for the development, which is expected to cost $5.5 billion and take 25 years to complete. That type of public financing works by the city issuing bonds to pay for infrastructure improvements that are eventually repaid through associated property tax increases in a specified district.

Although most expect the public financing to be approved, some experts on urban development are not sure the City Council refusing to provide tax increment financing for the project would be bad for city residents, or even cause a chilling effect on future development proposals.

Michael Runnels, a professor at Loyola University Maryland’s Sellinger School of Business who studies urban development, argues this proposed use of tax increment financing isn’t correct, and that it’s playing a shell game with Baltimore’s poor black residents. He said this is a negotiation, and that city leaders need to get the most they can out of this for the city’s most vulnerable residents.

“This TIF doesn’t actually serve the most vulnerable citizens in the city,” Runnels said. “The underlying philosophy behind a TIF, the public policy behind this entire arrangement, is to serve blighted areas, to revitalize blighted areas, to provide an opportunity for this individuals who live in the blighted areas to climb up the socio-economic ladder.”

Correction: A previous version of this article  incorrectly reported the subject of the Baltimore City Council’s Taxation, Finance and Economic Development Committee hearing scheduled for Thursday. The meeting will provide the public information about tax increment financing.