An artists’ rendering of what Port Covington would look like after development. (Photo Courtesy of Sagamore Development)
Sagamore Development, the real estate firm owned by Under Armour CEO Kevin Plank, is promising net returns to Baltimore should the city approve the $535 million in tax increment funding being sought for the Port Covington redevelopment project. A tax increment funding, or TIF, is when the government borrows money to give to a private company to use for property development. The collateral for the borrowed money is the projected tax receipts of the property that is being developed.
“The value to the City from the redevelopment of Port Covington will be an absolute net positive, and the economic benefits to the City will be extraordinary,” said Sagamore President Marc Weller in an interview via e-mail with the AFRO. He added, “As one of the largest urban renewal efforts in America, Port Covington will have a fundamental and far-reaching positive impact on Baltimore, its economy and its future. A redeveloped Port Covington will mean thousands of new jobs, new businesses, better transit to jobs, 42 acres of parks, new space for manufacturing, fresh opportunities for innovation and entrepreneurship, new ways to reach the waterfront and more for Baltimore City residents.”
If the city sells the $535 million in publicly-backed bonds, the debt would be repaid with tax revenue from the development. And, Sagamore (which owns about 160 acres in Port Covington) and its partners would be responsible for any shortfalls in payments to be paid on the bonds, Weller said.
Since its announcement, the Port Covington development plan has drawn criticism for a lack of transparency regarding its finances, and what some see as efforts to push it through the current city council and outgoing Mayor Stephanie Rawlings-Blake before they both leave office.
The re-imagination of the 260-acre industrial peninsula in South Baltimore is a massive undertaking anchored by Under Armour’s new 50- acre waterfront headquarters and including 40 acres of public parks and about 13 million square feet of residential (7,500 residential units), retail, manufacturing, office, hotel and restaurant space. The build is expected to take place in stages over 25 or more years.
While more than $4 billion in private investment is expected to finance the “vertical” aspect of the build, the $535 million in city bonds would finance infrastructure improvements needed for the project, Weller said. Specifically, TIF bonds will pay for: 8 miles of streets, 1.2 million square feet of sidewalks, 16 miles of curbs and gutters, 42 acres of park land, 9 miles of water mains, sanitary sewers and storm sewers, 17 miles of electric utility connections, 5 miles of telecom utility connections, over 1,000 new street trees and more.
None of the TIF funds would be used for the Under Armour campus, according to the Sagamore plan.
“There are no tax breaks for developers involved; there are no subsidies; there are no handouts,” Weller said. “This is Baltimore City building up Baltimore City for the future.”
The TIF could also allow Sagamore to leverage more than $500 million in state and federal grants to finance local and highway transit improvements, including bike paths, he added.
According to a Board of Finance analysis released in April, issuing the TIF could cost Baltimore almost $2.2 billion over 41 years, including $1.4 billion in debt service payments.
However, the revitalized Port Covington could net the city $1.7 billion in revenue (about $40.3 million annually) after interest payments and other expenses.