Developer Michael Beatty pressed the Baltimore City Council to approve the issuance of $107 million in bonds to pay for infrastructure at Harbor Point, saying Thursday that the prime real estate would remain a gravel-covered lot without city-financed roads and sewer pipes.
Finding private investment to construct buildings at the site is difficult enough without having to raise money for utility hookups and parks, Beatty told reporters at a morning news conference.
"Without infrastructure here, you can't build buildings," he said.
Mayor Stephanie Rawlings-Blake gathered Beatty, minority business and union advocates, Council President Bernard C. "Jack" Young and Baltimore Development Corp. head Brenda McKenzie to sell legislation she introduced Monday that would authorize the tax increment financing bonds, a plan opposed by the head of the council's taxation committee. Years ago, Rawlings-Blake said, she voted against a tax deal for the now-flourishing Harbor East and she won't make the same mistake twice.
She doesn't like being on the wrong side of Baltimore's economic development history, she said.
Carl Stokes, chairman of the council's Taxation, Finance and Economic Development Committee, has said the city should pay for the infrastructure out of its annual budget instead of issuing debt. The benefits of building up Harbor Point are too unpredictable to support such stimulus spending, he said.
If the city finds an alternative way to pay for public parks and utilities on the site, that's fine, Beatty said.
But he doesn't see the point of working out another option. The bonds pose little risk to the city, Beatty said, and paying for the infrastructure out of the city's budget would likely mean cutting spending for other services.
Under TIF deals, the city issues bonds to pay for public improvements then uses the increased tax revenue created by the development to pay off the bonds. In this instance, if property tax revenue from the development is inadequate to repay the bonds, Beatty's Harbor Point Development Group LLC would be responsible for the difference.
If Beatty's company is unable to fulfill its obligations, "the city will receive this property," said McKenzie, speaking at the news conference, which was held on the 27-acre Harbor Point site, a peninsula adjacent to Harbor East, which Beatty helped develop. City officials familiar with the deal believe that Beatty will be able to make payments, she said.
"Growing cities need to be bold," McKenzie said.
The utility firm Exelon Corp. is committed to building its headquarters at Harbor Point. Beatty is also planning another 1.6 million square feet of office space, 900,000 square feet of residential space, a hotel and street-level retail.
Overall, there would be about $920 million in private investment at Harbor Point. The TIF-financed infrastructure, including a promenade along the waterfront, a bridge extending South Central Avenue and 9.5 acres of park space, would be public property.
The "transformational" project has significant potential for economic and population growth, Rawlings-Blake said. On Monday, she released a report by MuniCap Inc., a Columbia-based public finance consulting firm, which examined the economics of the proposed TIF legislation.
The development of Harbor Point, which the city says will take 12 years, would create 7,200 construction jobs and 9,200 permanent jobs, the analysis said. Instead of $244,000 a year, the annual pre-development property tax revenue for the site, Harbor Point will contribute an average of $19.6 million a year in property taxes to the city, MuniCap concluded.
Harbor Point's development would lead to more city residents, but the increase would not be overwhelming, MuniCap concluded. Of the 6,611 new employees that MuniCap predicts will work at businesses in Harbor Point when it is complete, 4,320 are expected to live outside the city.
This week, Stokes questioned the validity of MuniCap's analysis and is looking into commissioning a second opinion on the project's economic benefits.
"I'm excited about this project," Young said. It's the city's responsibility to install infrastructure to ensure the project moves forward, he said. "All I want to see is jobs, jobs, jobs."
His sentiment was echoed by Wayne Frazier, president of the Maryland-Washington Minority Contractors' Association, and Rod Easter, president of the Baltimore Building and Construction Trades Council, a union group. Both men said they see significant potential in building up Harbor Point.
"This project represents the largest opportunity ever in the city of Baltimore" to create wealth and economic opportunity, Frazier said. He and Beatty said they have agreed on participation guidelines, including project equity, for businesses owned by racial minorities and women. Minorities will be allocated 25 percent participation, they said, and women will have a 12 percent set-aside.
Rawlings-Blake said she has seen the success of nearby Harbor East, a project she once bet against. Years ago, as a member of the City Council, she voted against a tax incentive for the Marriott Waterfront hotel, she said. The hotel is now at the center of the bustling, upscale community at the foot of President Street.
"At the time, I wanted to support our convention center and tourism," Rawlings-Blake said, and she "just couldn't see" the potential of Harbor East, which Beatty says now produces $38 million a year in tax revenue.
"I know now what to look for [in] opportunities," she said.