The developer of the $1 billion Harbor Point project on the city’s waterfront misstated the case in saying that Exelon Corp. may bow out if the city does not approve $107 million in tax incentives, a spokesman for the energy company said late Thursday.
Michael Beatty, president of Harbor Point Development Group LLC, said the 28-acre site would remain as barren as it is today and that Chicago-based Exelon might not locate its regional headquarters in Baltimore if the tax increment financing, or TIF, package is not approved.
“It will not happen,” Beatty said Thursday morning in response to a question about whether he would embark on building the 12-year project without the lucrative public subsidies.
“Right now, we have a commitment with Exelon, they are a great company, they made a fantastic commitment to Baltimore to put a new headquarters here, we’re excited to move that project forward and brings thousands of jobs here in the construction side and the long-term side, but without this infrastructure, we cannot build that building,” he said.
Hours later, a spokesman for Exelon, Paul Adams, issued a statement refuting what Beatty said about its intentions.
“Exelon is fully committed to developing a new Baltimore headquarters that will house key parts of our business and ensure that we remain an important part of this community for years to come,” the statement said. “The project is an important component in a more than $1 billion package of Maryland benefits that is expected to create up to 6,000 jobs in the region including up to 1,000 construction jobs.”
Beatty’s comments were made after he joined Mayor Stephanie Rawlings-Blake, City Council President Bernard C. “Jack” Young and local labor officials for a press conference, using the stately glass towers of Harbor East as a backdrop. The group had assembled to lobby for the tax breaks introduced on Monday as legislation before the City Council.
Exelon would be a tenant with a long-term lease in the tower that Beatty is building at Harbor Point, and not the owner of the building.
Adams said that the local headquarters for its offices after the merger last year with Constellation Energy would be built in the city, notwithstanding Beatty’s threat.
While Exelon remains headquartered in Chicago, the Maryland Public Service Commission’s February 2012 approval of the Constellation-Exelon merger calls for Exelon to “invest in new construction in the downtown/harbor area of Baltimore City” to house the headquarters of the company’s competitive energy businesses and its renewable energy development arm.
At the news conference, Rawlings-Blake said that that the city’s proposed deal with Beatty for the tax breaks was structured to ensure that private investment would be a part of any development at Harbor Point.
“The recommendation from the Board of Finance and [Baltimore Development Corp] was structured to ensure that the private investment would be there,” the mayor said, offering few details of the deal.
Brenda McKenzie, president of the Baltimore Development Corp., the city’s quasi-public development arm, stepped up at the news conference to say that city taxpayers are not “at risk” of losing out in the deal if the $107 million TIF legislation is passed to construct infrastructure, a four-lane vehicle bridge, a charter school and park at Harbor Point.
“There is no risk to the city’s bottom line,” McKenzie said. “I think if we continue to dwell in negativity, we’re never going to be able to grow this city, let alone in an inclusive manner. We really do need to believe in our growth. We’ve had an independent analysis, we’ll look at the numbers and make sure the numbers are conservative. We’ve also had a developer who is willing to put their finances on the line to ensure the city would not be in debt, and should they not be able to meet the things that they say they will, and should they not be able to meet those obligations … the city will receive this property.”
The Harbor Point TIF would be the city’s largest such break to a developer and would come in the form of a bond sale to private investors who would be repaid over 30 years in revenues from the increased property taxes at the site. The tax revenue would be diverted from the city’s general fund for the decades to repay the investors under the structure of the deal.
The Harbor Point project has been controversial since it was proposed last year.
It will be placed on top of the site of the former AlliedSignal chemical plant, where highly toxic chromium was produced for many years. Beatty has said that to anchor the 23-story Exelon tower there, engineers would have to pierce a protective cap that the former landowner, Morristown, N.J.-based Honeywell International Inc., placed over the toxic chemicals in an environmental cleanup.
Others have also questioned the need for the whopping taxpayer assistance on the project. Harbor Point is next door to $1.6 billion Harbor East, a successful development by Beatty and his partner, H&S Bakery President John S. Paterakis Sr. They were given lucrative tax breaks to build it.
Beatty said Thursday that Paterakis was not a partner in the Harbor Point project or an investor.
Also, the TIF will not be the only public incentive for Harbor Point. Last year, after state officials rejected Beatty’s initial application, the BDC redrew a city map of the area to include a public housing project nearby so Harbor Point would be eligible for state Enterprise Zone credits.