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Harbor Point's risk not worth reward

The talk about city projects always goes round and round. The mayor's glowing study for the magic kingdom of Harbor Point shows that there will be 9,200 permanent jobs and 7,200 construction jobs ("Mayor, builder push for Harbor Point tax deal," June 7). Another study shows 6,611 new jobs, of which 4,320 employees will live outside of the city. The developers state the obvious — that without public infrastructure, no development can take place. The cost of infrastructure is the city's responsibility so if it costs nothing, why not go ahead with it? It will be paid for by the windfall of property taxes from the magic kingdom development!

There are several pieces of reality which never seem to be discussed. While new development is generally good, it can be a bad thing if it's the wrong product, or wrong timing. Adding office space, apartments, and condos in Baltimore City at this time is a stretch and a risk that the taxpayers shouldn't be involved with. There is a large overhang of office space downtown, and the large apartment build currently underway will undoubtedly create an overhang of dwelling units, as well.

New space at Harbor Point will create musical chairs in the office space market and leave the downtown with even higher vacancy. The magic kingdom concept that all developers use is being fully implemented here. The glossy renderings of the fully occupied, gleaming towers, with shared prosperity for all is a tired old ploy. The fact of the matter is that without users in advance, there will be no subsequent construction beyond the Exelon building, until economic and market conditions change.

There seems to be a lack of understanding of the construction business by the general public. New buildings do not create permanent jobs as the numerous articles imply. Construction creates temporary jobs. The commercial construction business is a mercilessly competitive business and work is done by specialized trades. The trades are professions that are composed of some of the most dedicated, highly-skilled, and hardworking Americans. The work is physically and emotionally draining. It requires years of participation in each trade to become highly productive and produce the high quality product required by the commercial building business. The business survives precariously, based upon the productivity and reliability of the trades, since its margins do not allow for error in this respect. The idea of assigning unskilled people to the construction trades solely by virtue of their home address, or minority quotas, is always laughable. When projects are conducted on this basis, the builders simply inflate their projected costs to accommodate for the inefficiency and taxpayers have an unintended public welfare program.

In the case of Harbor Point, the magic kingdom projection is somewhat thinly veiled. The wealthy landowner of Harbor East and almost everything east of it extending to Fell's Point, John Paterakis, has oddly stepped aside from his normal ownership position, leaving Michael Beatty in the driver's seat. Because the initial building of the development has a full user, the developer need not have a large bank account and Mr. Paterakis' bank account is not required to get financing. This is where the risk to the taxpayers lies.

If the development does not turn into the magic kingdom immediately as projected, it's not likely that Mr. Beatty will have the personal resources to make the required payments for the infrastructure expense to the city. Without Mr. Paterakis' participation, the city becomes the risk taker for Harbor Point. Upon completion of the initial building in the magic kingdom, Baltimoreans will be able to enjoy the view of Exelon's glorious new building, and will have an additional several hundred thousand square feet of vacant office space downtown, as well as a nice new road, bridge and park — and debt service on $107 million. The several thousand construction jobs will be a fond memory.

The discussion always goes round and round and seldom has its feet on the ground.

Gary Moyer, Baltimore

Copyright © 2015, CT Now
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