Focus shifts to TIFs, jobs
Candidates want to improve economic opportunity in city
Under Armour CEO Kevin Plank delivered a rich target last week to Baltimore mayoral candidates eager to show voters their willingness to work to correct the city's economic inequities.
The billionaire Plank's private development firm asked the city for an eye-popping $535 million advance on future property taxes to help pay for roads, parks and utilities in Port Covington, where it plans a massive mixed-use development anchored by a new headquarters campus for his athletic apparel company.
The request comes as mayoral candidates are telling voters in advance of the all-important April 26 Democratic primary how they will make business work for them by supporting programs for ex-offenders, workforce training and stronger local hiring laws, while taking a sharper look at using tax breaks and public financing to incentivize real estate projects.
“The priority for economic development in the communities has taken a major step forward in terms of being prioritized,” said Bishop Douglas I. Miles, former co-chair of BUILD, an activist coalition of church groups. “For the first time in recent memory those running for mayor are addressing some of the real economic needs of the city.”
The shift is a product of April's unrest, which explosively punctuated long-simmering debates about widening economic gulfs between poor and affluent neighborhoods and black and white residents in Baltimore.
The debate coalesced around incentives for real estate projects at a Democratic mayoral forum Thursday night in West Baltimore.
Most of the Democrats seeking office — former Mayor Sheila Dixon, state Sen. Catherine E. Pugh, businessman David Warnock, City Council members Nick Mosby and Carl Stokes, attorney Elizabeth Embry and Black Lives Matter activist DeRay Mckesson — voiced support in general for the Port Covington project but expressed varying degrees of concern about the request for aid.
“It was a larger number than I had expected,” Embry said in an interview.
At the mayoral forum, she questioned whether the development would bring sufficient jobs and wealth to the city and said officials had “done a really poor job pushing back” on the proposal.
Dixon said the developers are trying to push through the deal before Mayor Stephanie Rawlings-Blake leaves office in December.
“It should not go forth under this administration,” Dixon said. “If they don't include African-American equity partners, if they don't have a plan to bring back manufacturing the clothes Under Armour produces in other countries, it should not happen.”
Mosby said he wants to explore whether a community-benefits agreement can include future Under Armour manufacturing plants in Baltimore.
“Baltimore is a working class city without the work,” he said. “All throughout this world there are Under Armour manufacturing plants. Why is there is not one in Baltimore City?”
While praising the project, Stokes voiced outright opposition to aiding Port Covington.
“It can build its own [infrastructure]. It doesn't need us,” Stokes said of Plank's development firm. “If Sandtown, Penn North, Oliver and Broadway East get rebuilt first, then we'll consider it.”
Warnock called for a “very, very close” study of the deal, saying the city has been “out-negotiated by these developers for years.”
Some in the city have argued that incentive strategies, such as zones with lower property taxes and tax increment financing like the Port Covington request, are emblematic of policies that fail to benefit all citizens.
In tax increment financing, future property taxes from a development go to pay bonds issued by the city to pay for part of the development, usually infrastructure such as streets and sewer and water lines. That means, however, that the growing property tax base the project delivers may not benefit the city more broadly for years, critics say.
In 2013, debate over a $107 million TIF for Harbor Point came as the city instituted a watershed local hiring law. The issue popped up again last year, when a state formula that assumed the city was receiving more property tax revenue from other subsidized developments led to cuts in aid to Baltimore schools.
Still, the candidates say they wouldn't avoid tools such as tax increment financing and tax abatements, if elected.
“Absolutely [I] support the continuation of TIFs in our communities and neighborhoods,” Pugh said at a recent forum hosted by the Building Owners and Managers Association of Greater Baltimore. “TIFs for the communities, TIFs for downtown and tax incentives, because we are going to be working together. What we're talking about is a more inclusive Baltimore.”
Audrey McFarlane, a University of Baltimore law professor who studies economic development and real estate, said the additional conditions show candidates are thinking about how to distribute the benefits from investments, but they haven't gone far enough.
“There could be further thinking about the level and existence of the subsidies in the first place and that's what nobody's doing,” she said.
The Rev. Heber Brown III, pastor of Pleasant Hope Baptist Church, said he is also looking for more.
“There was a time when it was believed that TIFs and PILOTs were needed to attract development to Baltimore,” he said. “I'm listening for a candidate who'd be open to reassessing that at this point.”
Beyond the hot-button TIF issue, many of the candidates broadly say they want to improve transportation and make city government easier for small business. They want to cut property taxes, but differ greatly on how much. They see tech start-ups, universities and hospitals as important economic engines.
Dixon pledged to triple the city's workforce development budget to $21 million over three years, while Stokes focused on programs that teach IT and construction skills.
Embry and Mckesson say they would beef up local hiring laws. Embry said she also would streamline the patchwork of public, nonprofit and private training programs, while Mckesson said he would introduce financial empowerment centers that would provide debt counseling and lobby against predatory banking.
Mosby proposed that the city pay for expunging criminal records, as well as high school equivalency degree coaching and tests. Warnock said he would lobby to reform of child support laws and to automatically expunge charges that do not lead to conviction.
Many of the candidates have cast their workforce development proposals as critical to reducing the city's violent crime and drug trade.
Richard Clinch, an economist who leads the University of Baltimore's Jacob France Institute, said he thinks the emphasis has shifted in part because Baltimore's economic position has improved, as cities have come back into favor. Baltimore's growth outpaced the state for the first time last year.
“In the past, it was a little bit more hat-in-hand, ‘We need development,' ” said Clinch. “Now you're trying to build equity.”
Despite the city's renewed growth, the region has struggled to replace manufacturing jobs and other well-paid positions lost in the recession — especially for people of color, said Amy Liu, director of the Metropolitan Policy Program at the Brookings Institution, which ranks Baltimore near the bottom of a 100-metro area ranking of economic inclusion.
The median wage of nonwhite workers in the Baltimore region fell 4 percent — to about $30,250 — between 1999 and 2014, according to Brookings data. During the same period, the average wage of white workers climbed more than 12 percent, to about $46,390.
“Economic growth and equity is definitely the right focus,” Liu said. “It means we need to do more to grow good jobs that pay well in Baltimore City and the region and we need to be even more intentional about how we connect workers of color to those good jobs.”
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