Council advances Port Covington deal
Final vote on public financing, community benefits likely next week
The Baltimore City Council voted Monday to advance a $660 million public financing package for Under Armour CEO Kevin Plank's massive Port Covington project — one of the most hotly debated issues the lawmakers have faced in years.
The 12-0 decision came after 11 of 15 council members signed a petition to force a preliminary vote on the deal, bypassing a committee where necessary legislation stalled last week.
“The feeling among the entire group is we're ready for the project to move forward,” said Councilman Eric T. Costello, who led the petition effort. “We've had ample amount of time to review the merits of the project. We've reached a great deal for the city.”
The council is expected to take a final vote next week. If it again voted in favor of the proposal, legislation would go to Mayor Stephanie Rawlings-Blake's desk. She is expected to sign off on the deal.
“We are humbled by the overwhelming support and excitement for Port Covington,” said Marc Weller, president of Plank's Sagamore Development Corp. “Baltimore and its leaders are ready for the tens of thousands of jobs and tremendous economic impact that will come from Port Covington.”
The vote came as the Baltimore Development Corp. for the first time publicly detailed the city's profit-sharing agreement with Sagamore.
If the Port Covington development reaps a profit greater than 15 percent, the city will get 25 percent of any additional profit. By comparison, a profit-sharing agreement with the developer of Harbor Point doesn't kick in unless that development's profit exceeds 20 percent.
“We sat down with the developer and we ended up with exceptionally favorable terms for the city on profit-sharing,” said BDC President William H. “Bill” Cole IV. “If they were to sell the property at a massive profit, we will enjoy in that as well.”
Sagamore has proposed a $5.5 billion mixed-use waterfront development that would include a new headquarters for Under Armour, restaurants, shops, housing and manufacturing space, among other features. The land includes the site of The Baltimore Sun's printing plant, for which the newspaper has a long-term lease.
Sagamore has asked the city to float $660 million in bonds to build infrastructure for the project. The developer would have to pay back the bonds through future taxes.
“What we got out of this Port Covington project is unprecedented,” said City Council President Bernard C. “Jack” Young. “The council made the right decision to move this bill forward. I'm looking forward to working with Sagamore to make sure they do everything they agreed to.”
Earlier Monday, a coalition of faith-based and community groups held a news conference in East Baltimore to urge the council to vote in favor of the deal.
The groups — Baltimoreans United in Leadership Development, the Interdenominational Ministerial Alliance, the Progressive Baptist Convention of Maryland and six neighborhood associations representing communities near Port Covington — said a $100 million community benefits agreement negotiated with the developer is too good to pass up.
“We can not allow a historic deal to be held hostage to changing demands,” said the Rev. Glenna Huber, co-chairwoman of BUILD.
The bonds for Plank's development were expected to advance last week out of the council's Taxation, Finance and Economic Development Committee, chaired by Councilman Carl Stokes. But Stokes unexpectedly stopped short of approving the deal Thursday night. After the panel voted in favor of two of three necessary bills, Stokes abruptly called the meeting to a close without explanation.
Stokes later told reporters he was concerned that the public had not had time to thoroughly review the $100 million deal Sagamore made with the city. The agreement had been announced hours earlier.
Stokes also expressed concern about projections that show the project would cause city schools to lose millions of dollars in state funding.
As a result, 11 of 15 council members signed a petition circulated by Costello to draft the bill out of committee. Those signing the petition were council members James Kraft, Brandon Scott, Robert W. Curran, Rochelle “Rikki” Spector, Sharon Green Middleton, Nick J. Mosby, Helen Holton, William “Pete” Welch, Ed Reisinger, Costello and Young.
On Monday, Stokes called a news conference to pledge his full support for the project — saying he would vote “yes” to all three bills.
“I totally support the Port Covington project,” he said. “I've said that from day one. I say that today.”
Stokes said he recently met with Plank, and Plank pledged he would follow the spirit of an agreement with the city that the development would be inclusive, benefiting all races and income levels.
“I take him at his word,” Stokes said. “I believe him.”
But Stokes said he believed other council members “disrespected” the committee process by bypassing his panel — a move he said “flies in the face of good order and rule of law.”
Sagamore, the Rawlings-Blake administration, key City Council members and BUILD — which had opposed the project — spent weeks negotiating the community benefits deal, thought to be key in winning the council's approval of the Port Covington project.
The $100 million deal builds off a $39 million agreement between the developer and six neighborhoods near the project. That agreement includes $25 million to train workers at a new Port Covington training center and $10 million for no-interest loans or other funding streams for minority- or women-owned startup businesses.
The developers also agreed to hire at least 30 percent of all infrastructure construction workers from Baltimore, pay a minimum wage of at least $17.48 an hour, and set aside 20 percent of housing units for poor and middle-class families — though 40 percent of such housing may be built elsewhere in the city.
Critics contend the agreement on affordable housing is too weak, requiring just 10 percent of Port Covington's affordable housing units be built for people who make less than $26,000, and contains what they call a “loophole” that allows the developer to pay money into an inclusionary housing fund instead of building the units.
Stokes said he believes his committee should get credit for driving a harder deal with the development team than past lawmakers have.
“This committee has moved the ball so far down the field it's amazing,” Stokes said. “Prior to this particular committee doing its job, we have just given away the taxpayer dollars without out any return to the taxpayers. That changed dramatically.”
Despite widespread support on the City Council, some advocacy groups argue that the Port Covington deal isn't good enough.
The American Civil Liberties Union says it is worried an agreement with Sagamore doesn't do enough to protect the city's schools, which are projected to lose state funding when the project is built.
Over the past two years, Baltimore's economy has been growing faster than that of any other jurisdiction in Maryland, thanks in part to a wide array of tax subsidies used to spur development.
That growth has contributed to Baltimore schools losing $50 million in state funding over the past two years under a formula that gives out more money to poorer school systems.
Under the terms of the various tax breaks and special deals, some of Baltimore's most valuable properties pay little or no taxes to the city's general fund. So they improve the economy, causing the state formula to deliver less school aid, but they don't contribute enough revenue to the city to replace the lost funding.
Leaders of the General Assembly have promised Baltimore officials that they will enact a long-term fix to the formula, preventing any loss in state aid for schools.
But Frank Patinella, co-chair of the Baltimore Education Coalition, said he and other advocates want the city to agree to cover any losses suffered by Baltimore schools as a result of the deal.
”The City Council ought to affirm its commitment to fill in any funding loss to City Schools, since it is not yet known if the State will fully exempt City Schools from any reduction in state funding,” he said.
Proponents say the citywide benefits agreement addresses this concern. It states that the developer will not request any bonds be issued “if there is a projected negative impact on State education funding for Baltimore City Schools.”
Councilman Warren Branch was one of three council members who abstained from the vote.
Branch was advocating on behalf of the Berea Eastside Neighborhood Association — one of the largest community groups in his district — which wanted Sagamore to provide millions of dollars for a program that rehabs blighted houses, then resells them as affordable homes in McElderry Park, Middle East, Belair-Edison and other East Baltimore neighborhoods.
“I have one of the most impoverished districts,” said Branch, who lost his bid for re-election in April's Democratic primary. “They're my constituents. I thought we were supposed to be working for the constituents in our districts. We're not supposed to be supporting big business.”
Council members Bill Henry and Mary Pat Clarke also abstained.
Clarke did not vote after attempting to amend the bill to require that construction workers be paid “prevailing wages.”
Young did not allow Clarke's amendments to be considered. He said they were filed improperly and that Clarke was “out of order.”
