Developer wants $41M PILOT to lure Exelon to the harbor

As Exelon Corp. officials said Thursday they expect to staff the corporation’s newly merged Baltimore organization by late May, the Baltimore Development Corporation board voted on a request for $41 million in tax incentives to help a developer build a potential new headquarters for the energy giant.

The BDC’s board voted in closed session, said President M.J. “Jay” Brodie, who declined to give the outcome of the vote.

The board’s recommendation on the payment in lieu of taxes for a planned development at the site of the former McCormick & Co. spice plant was sent to Mayor Stephanie Rawlings-Blake for consideration.

It would require legislation and approval by the City Council.

“We understood that there was a time pressure involved with this and we tried to move quickly,” Brodie said of the request for a payment in lieu of taxes from developer Stephen Gorn, of Questar Properties Inc. in Pikesville, that was filed with the BDC at the end of 2011.

“I would say that the BDC board itself and the board’s project committee spent more than” adequate time vetting Gorn’s proposal, he added. “It’s been treated seriously.”

Gorn presented a proposal to build a mixed-use tower on the site of the old McCormick plant at the Inner Harbor, which he and partners purchased for $11.5 million at auction last year. Local development officials have said Exelon requires a trading floor of about 30,000 square feet.

The Baltimore Brew, a local news website, reported Thursday that the proposed Gorn tower would cost $264 million and include 394,000 square feet of office space for Exelon’s employees, parking, retail and residential units for a total of 711,000 square feet. The proposed payment in lieu of taxes would allow Gorn to get a rebate of 95 percent of property taxes on the new development for a specific number of years, the website reported.

Meanwhile, the Public Service Commission announced Thursday that it expects a decision in the merger to be made by Feb. 17. Other decisions by the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission are also pending.

Also Thursday, Exelon officials posted in a newsletter to employees that was also filed with the Securities and Exchange Commission that “it is our goal to have the entire organization staffed within 90 to 120 days after closing.”

“Based on a mid-to-late February close, that would mean staffing and selection would be completed as early as the second half of May, possibly extended to June,” the newsletter said.

Exelon executives in Chicago have said they plan to seek a new or renovated headquarters building for the new company’s energy marketing and renewable development businesses.

This possibility has touched off a competitive flurry among local developers for the ultimate prize of building a new 350,000-square-foot city landmark.

H&S Properties Development Corp., owned by bakery magnate John Paterakis, is seeking to have Exelon build its new headquarters at Harbor Point, where double tax incentives have been granted by the city in the form of Enterprise Zone tax credits and tax increment financing, or TIF bonds. The bonds are sold to private investors to fund expensive public infrastructure upgrades and then repaid with diverted property taxes.

H&S Properties Executive Vice President Michael Beatty did not return requests for comment Thursday.

Other sites under consideration, sources have said, include the former site of the News American newspaper at 300 E. Pratt St. across from HarborPlace, and a portion of the current site of the Harbor Campus of the Baltimore City Community College, at Marketplace on Lombard Street.

Exelon spokesman Paul Elsberg said in a statement Thursday that the company has committed to the construction of a new headquarters building in Baltimore.

“We are exploring multiple locations, and once the site or sites is selected, we will share that information,” Elsberg said in an email. “Exelon has not considered tax incentives specifically in its decisions related to the new headquarters building in downtown Baltimore.

“As with any investment decision, Exelon is being economically prudent in evaluating its real estate options. That means considering the overall cost of occupancy for each property, including base rent, operating expenses and property taxes. Importantly, the development of the new headquarters will produce new property tax revenues for the City of Baltimore and state of Maryland.”

Developers for each site are now involved in a spirited pursuit for the Exelon headquarters, said Kirby Fowler, president of Downtown Partnership of Baltimore Inc., a nonprofit advocacy group for the center city.

Fowler said Thursday that the partnership’s board is lobbying Exelon to establish its new roots in the central business district at sites that include the old McCormick spice plant, the former News American site and a large portion of BCCC’s Harbor Campus, which is likely to be relocated and its property redeveloped by David Cordish in return for a possible annual $1 million payment to the state, which now owns the site, Fowler said.

The Holocaust memorial adjacent to the campus could also be moved, Fowler said, to make a larger development footprint.

Fowler said the partnership’s board is concerned that if Constellation employees are moved from the company’s present headquarters site at 750 E. Pratt St., near President Street, it will add to the city’s office vacancy rate of nearly 19 percent.

“Usually we don’t get involved in these kinds of decisions, but there is a great impact for the city,” Fowler said.

“Our focus is on the assets and appeal of being in the city,” he added, citing meetings he has had with Exelon officials. “I want Exelon to take their time and allow the various sites to make the best presentations possible.”

Mayor Rawlings-Blake said through a spokesman Thursday that she “is committed to strengthening the downtown office and residential markets and would like to see additional private investment in the downtown central business district,” but she declined to specify a favored site for the new Exelon headquarters.