Tomorrow, the Baltimore City Council will hold its second hearing on the multi-billion-dollar taxpayer subsidy for Port Covington, the new "city within a city" proposed by Under Armour CEO Kevin Plank; interest in the first hearing last week was so strong, it had to be moved to a larger room to accommodate the roughly 500 people who showed up. The stakes could not be higher: As the costliest development proposal in our city's history, it will shape Baltimore for generations to come, both through the 45 new city blocks it would create and its effect on development in the 92 square miles we already have.
In order to build Port Covington's infrastructure, the city and state will sell $660 million of tax-exempt bonds. By the time these bonds are paid off in 2058, their cost, including interest, will total $1.4 billion.
As property values increase in Port Covington, the tax base will rise. But instead of these revenues flowing to city coffers to pay for public safety, education, parks, libraries and sanitation, they will be diverted to pay off investors holding the new debt. So while Port Covington's new tax dollars will pay for completely new roads, water lines, parks, bike trails and kayak landings, the rest of the city's taxpayers will also have to pay more than $2 billion over 40 years for the public safety, schools, snow and trash removal and every other city service used by those who will call Port Covington home.
To date, city leaders have rushed the project through the approval process at break-neck speed. Last week, City Councilman Carl Stokes promised to thoroughly vet the proposal and not move forward until the "best possible" deal is struck; we would therefore expect a significant slowdown in the process, along with increased soliciting of public input. We would also ask that council members consider three questions as they continue deliberations:
Is such a large public subsidy needed to develop Port Covington?
The purpose of an incentive is to enable something to happen that would not otherwise happen. There's little doubt that converting such a large area from industrial to mixed use will require some city investment in basic services like roads, water lines, sewers and schools. But Mr. Plank's development team envisions a project that includes high-end amenities like covered promenades, kayak slips and trolley car circulator tracks that will cost taxpayers more than three times the amount the city spends annually on all of its parks. If the city declined to pay for fancy parks, kayak moorings and a neighborhood trolley, would Mr. Plank walk away? I doubt it.
Should the city seek a second opinion on the financial viability of the project?
Anyone facing major surgery wouldn't think twice about seeking a second opinion. Port Covington is major surgery on Baltimore's finances.
MuniCap, the city's consultant on Port Covington, used data supplied by Mr. Plank's company in advising city leaders to move ahead with the project. MuniCap also advised the city on the 2013 Harbor Point development; cost overruns on that project have already tripled its infrastructure bill, forcing the city to accelerate bond financing. Port Covington is more than five times bigger; if its infrastructure costs tripled, that could devastate city finances.
MuniCap makes some of its money advising cities like Baltimore on TIFs and selling TIF bonds. It also makes money providing administrative services for TIF districts that can last 20 or 30 years. Its website states that MuniCap administers more than 120 special districts — including Harbor Point. The City Council should ask: Do these dual roles affect MuniCap's ability to provide impartial advice?
How will Port Covington affect the city?
Mr. Plank has spent more than half a million dollars on splashy TV ads showing images of his vision for a new "city within a city." But what about the city we already have? Put another way: What else could we do with billions of dollars over the next 41 years to benefit the people who already live in Baltimore and who need better wages and housing?
The BUILD organization has called upon the City Council to contract for an independent analysis of Port Covington and has made very specific suggestions: 51 percent of those hired for all jobs be city residents; a sharing of profits from land sales for hotels, apartments and office towers; a dollar-for-dollar commitment of money for development in the rest of the city; and holding schools harmless from potential funding losses throughout the project.
Baltimore's decades old harbor-focused development bias has helped create the two Baltimores that tear at the fabric of our city. Our City Council has a historic opportunity to change course: One Baltimore for us all — or two, including a completely new one, paid for by us and our children?
Scott Klinger is a resident of Baltimore City who works at Good Jobs First, advocating for improved public discussion of taxpayer subsidies. His email is: Scott@GoodJobsFirst.org.