Baltimore’s Board of Finance approved the sale Monday of a portion of the $107 million in tax increment financing bonds OK’d this summer by the City Council to allow construction of the $1 billion Harbor Point development to begin.
The board voted to allow $35.9 million in TIF bonds to be sold early next year to help finance the first phase of the project, expected to cost $255 million.
Following a 45-minute presentation on the complex project, including financing and environmental issues, four members of the five-member board voted in favor of the bond sale. City Comptroller Joan M. Pratt abstained.
JPMorgan Chase Bank NA and its “co-mingled pension trust fund” will own 90 percent of the centerpiece of Harbor Point’s first phase — the 23-story tower that will house the new local headquarters for Exelon Corp., said Stephen M. Kraus, chief of the city’s Bureau of Treasury. The bank will invest $67 million in the project, Kraus told the board.
A subsidiary formed by Harbor Point developer Michael Beatty, Harbor Point Development LLC, will own the remaining 10 percent of the high rise, which will include office space and a trading floor for Exelon, plus retail and 103 apartment units.
M&T Bank will deliver the construction lending, Kraus said.
The bank will be able to disburse the bond funds at an interest rate that is nearly half of what a lender would charge — 3.42 percent as opposed to about 6 percent — because interest will be paid only on the portion of TIF funds that are drawn down from M&T. In a more traditional debt offering, interest would be charged on the full amount of the bond from the closing date.
The TIF bond sale and other Harbor Point construction agreements must be approved by the city’s Board of Estimates before the sale can commence, Kraus said. That should take place in January, followed by the sale of the first set of bonds — to Beatty. The developer will purchase the TIF bonds to jumpstart the infrastructure portion of the project.
Overall, the finance board was told, Beatty Development will need to borrow $178.1 million to build the initial phase of Harbor Point. That includes a $138.5 million loan for the Exelon tower and a $3.6 million loan for a garage to be located next door, plus the bonds approved Monday.
The project has been beset with controversy and debate since its inception nearly two years ago when Exelon chose the site for its local headquarters.
Harbor Point is the former location of the Allied Signal chromium plant, the subject of a $100 million cleanup mandated by the U.S. Environmental Protection Agency in the 1980s. As part of the cleanup, a protective cap was placed over a portion of the site to contain toxic hexavalent chromium.
Beatty has outlined plans for construction of the Exelon tower and other structures that call for piercing of the cap more than 1,000 times to drive pylons into the site to anchor high-rises.
The EPA and the Maryland Department of the Environment gave a preliminary thumbs-up this month to detailed design plans.
An air quality monitoring plan remains outstanding. Beatty has submitted versions of a plan that have resulted in comments and further questions from the EPA and MDE, Jay Apperson, a spokesman for MDE, said Monday.
Construction could begin in the first quarter of 2014 if all approvals are granted.