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Old March 9th, 2016, 11:56 PM   #1
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BALTIMORE | Port Covington | New Under Armour World Headquarters

Fully built out, this project will consist of 13,000,000 square feet of mixed use space, spurs off of I-95 & Baltimore's central light rail line, 40 acres of park land, a new 7,000 seat athletic stadium, and 3 new water taxi stations.

Port Covington TV ad launched in March of 2016


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Old March 10th, 2016, 12:05 AM   #2
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Port Covington developer asks city for $535 million in support

Natalie Sherman
Baltimore Sun
March 9th, 2016, 4:16pm

The city is being asked to provide $535 million to help develop infrastructure for the proposed redevelopment of Port Covington, where Under Armour CEO Kevin Plank plans a multi-billion dollar project anchored by a campus for his growing company.

The funds would come from bonds sold by the city and repaid by property taxes generated by the project, what is known as tax-increment financing.

The Baltimore Development Corp. is meeting today Wednesday to discuss the request from Sagamore Development, Plank's private real estate firm, for what would be the city's largest tax-increment financing, or TIF, deal by far.

Sagamore said it plans to invest $328 million of its own money in the infrastructure, while also seeking another $574 million in combined federal and state to help pay for the streets, utilities, parks, pedestrian and bike paths, and highway and transit improvements to support the estimated $5.5 billion project over the next 25 years.

Until Wednesday, Sagamore has only said that it would be seeking government support for the massive project, but it has been meeting privately with city and state leaders for months to explain their plans for the area, a peninsula located south of Interstate 95 that juts into the Patapsco River's Middle Branch.

Sagamore and Baltimore-based Under Armour started seeking approval of a master plan for Port Covington in January. An ad campaign touting "We will build it together" launched this month in advance of the tax increment financing review.

Sagamore has said it hopes to secure design approvals by the end of the year — a rapid timeline that would give responsibility for the decision to the administration of outgoing Mayor Stephanie Rawlings-Blake and the current City Council, which also is expected to see turnover.

On Wednesday Rawlings-Blake said she believes it has the potential to be a "catalytic project" for Baltimore.

"I can say that I was excited about the scale of this project in the sense that it will clearly, if realized, represent over a $5 billion dollar investment in [a] development project," she said. "I think this is one of these defining moments in Baltimore's history where we are a witness to a major transformation."

The land in Port Covington is already part of the city's Enterprise Zone, making it eligible for property and income tax breaks.

"I know that there will be a very rigorous process set out by the BDC and the Board of Finance to make a determination and a recommendation about whether or not that request for public supports should be approved," Rawlings-Blake said.

Gov. Larry Hogan also expressed support for the project on Wednesday, though the nature of the support Sagamore is seeking from the state remains unknown.

"Every day, Governor Hogan is focused on helping Maryland companies expand and create more jobs, which is why he is strong supporter of the redevelopment at Port Covington, and was an enthusiastic participant at the groundbreaking for Sagamore Spirit in October," said Hannah Marr, a spokeswoman for the governor. "Kevin Plank's vision for Port Covington will not only be an incredible economic generator for Maryland, but will also play a pivotal role in revitalizing the great city of Baltimore."

Plank, who founded Under Armour and remains its largest shareholder, has spent more than $100 million of his personal fortune on about 160 acres in Port Covington and 40 acres in nearby Westport.

The Under Armour campus, designed to accommodate about 10,000 employees, would occupy about 50 acres south of Cromwell Street. It is not included in the TIF-area, but property taxes from that development would go toward paying for the debt.

The athletic apparel brand is seeking to build about 3.9 million square feet, including three skycrapers, parking for 5,000 cars, a small stadium and a man-made lake — part of a system designed to filter runoff and water pumped from the Patapsco to cool campus buildings before releasing it back into the river.

Sagamore is leading plans for a general mixed-use development on the rest of the land adjacent to the campus.

There, the firm wants approval for between nine and 13 million square feet of buildings, including more than 7,500 rental and for-sale homes, more than 200 hotel rooms, and about 1.5 million square feet of offices. Construction of the Sagamore Spirit whiskey distillery is already underway.

The development would create about 45 city blocks, 17 streets, 58 intersections and about 40 acres of park land, Sagamore said at its first public meeting in January. The proposed master plan also shows a Light Rail spur with two new stops, as well as three new water taxi landings.

With annual sales of nearly $4 billion, Under Armour employs about 1,900 people in Baltimore and plans to grow into a $10 billion company in a few years. It employs about 13,400 people worldwide, the majority in stores or distribution facilities, according to a recent federal filing. About 5,800 of those positions are fulltime.

With a personal fortune valued at $3.2 billion, Plank ranked 527th on Forbes maganize's list of the world's billionaires and is the city's richest individual.

Any TIF deal for Port Covington would need to be approved by the BDC and the City Council, where it could face significant opposition as similar deals have in the past.

Ronald Kreitner, a former state planning director, said the city needs to scrutinize the request to make sure the money is used for legitimate public costs, such as roads or sewer, not private costs.

"The prudent thing for the city to do is a lot of independent analysis of where there are legitimate public costs of the development," he said. "There are certainly ways to support a private development with improved public infrastructure."

Kreitner call TIFs one of the most expensive ways to support development.

The Rev. Andrew Foster Connors of Baltimoreans United in Leadership Development said there must be a clear public benefit before any city assistance is approved.

"We've never been ideologically opposed to the concept of TIFs or PILOTs," he said. "But we've always been concerned that the amount of public resources that have gone into downtown have not benefitted the neighborhoods. We've got to look at the details of the deal. We can't just take Plank at his word that this is going to be good for all of Baltimore. The citizenry needs to weigh in."

City Councilman Carl Stokes, an outspoken critic of city subsidies, said he couldn't take a position without seeing more details. But, he said, he was concerned that a private development this large wouldn't consider paying for its own infrastructure, as such developments do in other jurisdictions.

"Obviously this is a huge, huge, huge financing matter," said Stokes, a mayoral candidate. "The whole development is a huge game-changer. It could be one of the most important projects in the past 100 years or so. I do support the concept of the Port Covington project. There's no way not to support that. But they have to answer questions. TIFs were never meant for huge development, because huge development can pay for their own infrastructure."

Baltimore Sun reporters Luke Broadwater and Jessica Anderson contributed reporting.

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Old March 10th, 2016, 12:08 AM   #3
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Baltimore's largest TIFs - Baltimore Sun

The tax-increment financing deal proposed for Port Covington would be the city's largest by far. The TIFs, both proposed and existing, are ranked by size below.

Port Covington — $535 million for a $5.5 billion project

Harbor Point — $107 million for a roughly $1 billion project

Poppleton — $58.3 million for a $460 million project

University of Maryland BioPark — $17.5 million for a $110 million building

Mondawmin Mall — $15 million for redevelopment

Woodberry — $7.96 million for mill-area redevelopment

Harborview — $7.48 million for condominium project

Source: City of Baltimore, Baltimore Development Corp.
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Old March 11th, 2016, 07:36 PM   #4
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Here's what's next for Sagamore's $535M Port Covington TIF request

Melody Simmons
Baltimore Business Journal
Updated Mar 10, 2016, 5:23pm EST

A $535 million public financing request unveiled Wednesday by Sagamore Development Co. LLC for a massive Port Covington development has been met with both interest and question.

If passed, the tax increment financing, or TIF, request would be among the largest in the U.S., said Joan Youngman, a TIF expert at the Lincoln Institute of Land Policy in Cambridge, Mass.

It could also weigh down the city's bond rating because the TIF bonds — public bonds sold to private investors to raise money to fund infrastructure — count against the city's debt ratio, some city officials said Wednesday.

The city has approved 11 TIFs for projects such as the East Baltimore Development Inc., Harbor Point, Clipper Mill and Mondawmin Mall, said Stephen Kraus, deputy director of finance for the city.

The TIF bonds are repaid to the private investors with diverted property tax revenues figured from the increased value of the property after the development for a period of 30 years. Those property tax funds, in turn, do not go into the city's general fund for three decades.

Marc Weller, president of Sagamore Development, said Wednesday that the TIF funds for Port Covington would be used to fund infrastructure like roads, sewers, cable and public park land on about 210 acres of the 266 acres the firm plans to develop. Sagamore is the real estate arm of Under Armour CEO Kevin Plank.

The TIF would also be used to repay costs Sagamore has spent over the past couple of years to purchase property on the South Baltimore peninsula in preparation for the development, as well as architecture costs, and costs to develop a master plan for the project that is expected to take 25 years to build out.

The TIF would also be used as matching funds for a federal transportation grant that Sagamore officials said they plan to apply for to add new exit ramps off of northbound Interstate 95 and other highway work as well as road work on Hanover Street, Weller said.

Mayor Stephanie Rawlings-Blake said the TIF request made to the project committee of the Baltimore Development Corp. would receive a close eye over the upcoming months.

Sagamore Development officials said they aim to have the TIF for Port Covington addressed and voted on by the current administration and City Council in this calendar year before a new administration and new council is sworn in in early 2017.

"As excited as I am about the project, I know there will be a very rigorous process set out by the BDC and the board of finance to make a determination and a recommendation about whether that request for public support should be approved," Rawlings-Blake said Wednesday. "It will clearly, if realized, represent over a $5 billion investment."

In total, Sagamore expects Port Covington be a $5.5 billion project. The infrastructure costs would come in at more than $1 billion. Sagamore would pay for the remainder "vertical" portion of the development, which includes up to 13 million square feet of new space.

Weller said the Port Covington project would produce at least 26,500 jobs over the years — 10,000 of them at Under Armour's planned global headquarters to be built on 50 acres at Port Covington and encompass 3.9 million square feet. Sagamore officials said the TIF will not pay for infrastructure on the Under Armour (NYSE: UA) site.

There are also plans to build 7,500 residential units and 1.5 million square feet of retail space as well as a 200-room hotel.

"To us, it's the city building the city," Weller said. "You've got jobs, jobs and more jobs."

In the proposal presented to the BDC, Sagamore said the city TIF request would be grouped with other infrastructure costs: $327.7 million of private funds and $573.6 million in state and federal funds.

The state and federal requests had not been made yet, Weller said.

The federal request would be to the U.S. Department of Transportation for highway funds budgeted by Congress last year for state's to apply for. Weller said Sagamore was preparing an application for those funds that was due April 14. He did not disclose the amount the developer was seeking.

The TIF request was being vetted by the BDC and MuniCap Inc., a Columbia-based public financing firm that has worked on several city projects.

"We know that this is a critically important project," said Bill Cole, president of the BDC and a former City Councilman from the 11th District. "Obviously, you are basically building a mini city.

"We're going to continue to dig in and analyze the numbers to make sure the request can be supported by the tax revenue generated. This is not a tax break or a subsidy — what it is is public infrastructure improvements that are funded by the taxes generated from the project."

Cole also said it was too early to determine whether the TIF request would have an impact on the city's debt load.

The initial analysis of the BDC, he said, was to look at whether the taxes generated by the development would be enough to repay the bonds. If not, the property owners — Sagamore or other developers who purchase property from the company to develop it at Port Covington — would be liable through a special tax.

Cole said that if the city attempted to pay for the infrastructure needed at Port Covington with taxpayer funds from the city's capital budget, it would take a decade to do so as the project is currently planned.

He added that another meeting of the BDC committee was set for March 15 at noon to discuss the Port Covington TIF request more.

If the BDC committee approves the request, the entire matter moves to the BDC board, which will vote on the matter and then recommend to Rawlings-Blake whether or not to propose legislation to establish a TIF district in Port Covington. That would make the area eligible for the TIF bonds.

After that, the formal TIF request would be debated by the city council and in public hearings, expected to be held in the summer and fall.

City Councilman Carl Stokes, who heads the Taxation, Finance and Economic Development Committee of the council, will chair those public hearings.

"I support the concept of the development," he said. "But I'm not ready to weigh in on the TIF itself. What if we had just 'pay as you go' to fund some infrastructure...and we could just take the money from the new tax revenue and drive down the property tax for everybody in the city? It's a much better way to go."

"The original intent of TIF was to rebuild high unemployment, high poverty and blighted neighborhoods," Stokes added. "In Baltimore, it has morphed into new levels of development."
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Old March 24th, 2016, 11:52 PM   #5
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BDC moves forward $535 million Port Covington TIF

Natalie Sherman
Baltimore Sun
March 24, 2016, 1:35pm

A record-breaking $535 million in public financing to build infrastructure for billionaire Under Armour founder Kevin Plank's mixed use real estate project in Port Covington is headed to the city's Board of Finance for review, after unanimous approval of the proposal by the board of the Baltimore Development Corp.

The money would be used to add streets, utilities, sewers, bike and pedestrian paths on more than 200 acres on the South Baltimore peninsula, where Plank is planning about 15 million square feet of new construction over about two decades, including nearly 4 million dedicated to a new headquarters for his sports apparel company.

The request from Plank's private real estate firm, Sagamore Development, now moves to the Board of Finance and the City Council. Sagamore is also seeking about $574 million in state and federal funds for infrastructure for the area, which is located in an Enterprise Zone and eligible for significant tax breaks.

The $5.5 billion proposal for Port Covington, which is still under review by the city, includes about 7,500 residences, most of them rental, 5.5 million square feet of offices, including Under Armour's, 1.5 million square feet of retail, 200 hotel rooms, 500,000 square feet of manufacturing and maker space and about 40 acres of parks.

"We're excited to be one step closer to our city transforming Port Covington into a thriving, active and inclusive waterfront neighborhood and economic center for everyone," Sagamore Development President Marc Weller said in a statement. "The redevelopment of Port Covington will mean thousands of good diverse jobs, better transit to those jobs, more parks and significant long-term economic benefit for all of Baltimore."

The $535 million would come from bonds issued by the city and repaid using new property tax revenue generated by the construction. The city has declined to share the full estimate of the costs associated with the proposal, including interest payments and issuance costs, which are likely to add millions.

The project is expected to generate an average of about $34 million in annual city tax revenues for the city over the life of the bonds, after taking costs into account, with much of the revenue appearing in later years, said Keenan Rice of Columbia-based MuniCap, which the city consulted on the deal.

That estimate assumes a 6 percent interest rate , he said.

If revenues are not sufficient to meet the debt payments, Sagamore would be responsible for making up the difference.

The BDC board, which is made up of city officials and professionals from firms such as T. Rowe Price and M&T Bank, signed off on the proposal after three committee meetings, much of which were closed to the public, and less than an hour of discussion on Thursday.

Board Chair Arnold Williams said the recommendation includes conditions that there be no significant adverse impact on school funding and the city's bonding capacity. The BDC also recommends profit sharing as part of the deal.

The terms of the profit sharing — which the BDC said is a standard requirement of tax increment financing deals — will be decided at a later phase, said President William H. Cole IV. The city is also negotiating agreements with Sagamore over requirements for affordable housing, local hiring and minority participation, said deputy mayor Colin Tarbert.

City officials said they plan to sell the bonds in several rounds. The first round of the tax-exempt bonds would be about $49 million and is expected to be purchased by Sagamore, Rice said.

Sagamore is scheduled to continue its presentation of master plan designs before the city today.

Cole said he was not sure what specific infrasucture the first round of bonds would be used for, but none of it would go to improvements inside the Under Armour campus. The city is focused on "core" needs and the project will be subject to additional review, including evidence that the developer has the finances to move forward with the proposed buildings, he said.

"We the city are not going to be issuing bonds for a project that can't demonstrate its capacity to be built and be successful. It's just not going to happen," he said. "There will be a careful analysis of each and every phase before bonds are issued."

Development on Port Covington is already underway.

More than 400 Under Armour employees have relocated to a renovated former Sam's Club and a city garage converted into office and manufacturing space is fully leased. Crews are building a whiskey distillery at 301 E. Cromwell Street, for which the city's Board of Estimates this week agreed to contribute about $219,000 for water, sanitary and streetscape improvements.

MuniCap's analysis is based on a report prepared by Batelle Memorial Institute for Sagamore, as well as other industry sources, Rice said. The city will do an additional analysis before issuing any bonds, he added.

This story will be updated.

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Old March 25th, 2016, 12:39 AM   #6
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Looks nice but I rather see that type of redevelopment in Baltimore's Downtown rather then the outskirts of the Harbor area...
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Old March 28th, 2016, 08:34 PM   #7
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Originally Posted by Nexis View Post
Looks nice but I rather see that type of redevelopment in Baltimore's Downtown rather then the outskirts of the Harbor area...
I hear what your saying - keep in mind though that there's several projects already underway right now in & around Baltimore's historic CBD, including 414 Light Street which is set to become the city's 3rd tallest once completed.

I think the location is more related to available land and access to Interstate 95. Keep in mind this project is roughly 13,000,000 to 15,000,000 square feet. I'm not sure if there's enough develop-able space in the city's core to accommodate that growth within the required time span.
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Old April 18th, 2016, 07:58 PM   #8
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Old April 23rd, 2016, 08:52 AM   #9
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Old April 29th, 2016, 07:30 PM   #10
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Financial details behind Port Covington TIF proposal are released by city

Melody Simmons
Baltimore Business Journal
Apr 22, 2016, 7:01pm EDT Updated Apr 26, 2016, 4:18pm EDT

A total of $1.4 billion is expected to be paid out in debt service over a 41-year-period for the $535 million tax increment financing package being requested by Sagamore Development Co. for its massive Port Covington project, documents released by the city's Finance Department Friday afternoon show.

Over the same period — between 2017 and 2058, the city is expected to receive $1.7 billion in fiscal growth through the project, according to the TIF application filed by Sagamore Development officials city showed.

The 534-page application was posted on the Board of Finance website late Friday.

It is the first public glimpse into the public and private financial details of the 266-acre project by Under Armour CEO Kevin Plank's Sagamore Development to convert Port Covington from an industrial peninsula in South Baltimore to a mixed-use development and global headquarters for the sportswear giant.

On Monday, the finance board is scheduled to meet to consider the Sagamore TIF application.

The TIF application prepared by Sagamore and its attorneys said the $535 million TIF investment in public infrastructure "has the potential to leverage an additional $573 million in state and federal funding for highway and local transit improvements. These investments, along with Sagamore's land development efforts, can generate an estimated $2.6 billion in assessed value" in today's dollars with a 3 percent inflation rate added in, the document said.

The Sagamore Development TIF request has been on a fast-track since it was first unveiled on March 9.

The board of the city's quasi-public development arm, the Baltimore Development Corp., voted on March 24 to approve the TIF request after a committee of the board held three meetings that were closed to the public.

The BDC board approved the TIF request with several stipulations that included the TIF not encroach and impact city school aid from the state, figured on a formula based on property tax revenues, and a profit-sharing agreement.

The city has eight outstanding TIFs with debt that totals $147.2 million, city finance officials said last month.

The Port Covington documents released Friday show that Sagamore Development is seeking to sell the first batch of private TIF bonds by mid-June 2017 for a total of $61.9 million.

A second batch for $208.2 million will be issued in June 2018, a third batch for $169.6 million in June 2023 and a fourth batch of TIF bonds for $218.7 million in June 2028.

Each batch of bonds will be repaid to investors over a period of 27 years from the time they are issued. The totals include the additional costs built into the bond sale for interest, fees and issuance costs.

The interest portion of the TIF bonds is expected to total close to $50 million and issuance costs are $3 million, the documents showed. Over a 41-year period, the document showed, the total TIF with debt service paid out would total $1.4 billion.

The return rate of investment for the city is 10.3 percent for the first batch of bonds to be sold.

Sagamore Development is seeking the $535 million TIF to help pay for infrastructure — roads, cables and sewers — on 216 acres of the land. The 50 acres that the Under Armour campus will be built on will not utilize any TIF funds for infrastructure, company officials have said.

TIF bonds are sold by the city or state to private investors and then repaid over a period of years through new taxes generated by the development.
At Port Covington, the TIF bonds are expected to be repaid through fiscal year 2057, the application said.

Included in the plans for the project are 1.5 million square feet of retail space, 1.5 million square feet of office space, 7,500 residential units and a 200-room hotel. There will also be 40 acres of public parks and 5,000 square feet of manufacturing space. The project is expected to create thousands of jobs.

On Wednesday, the city gave an early OK on local hiring, diversity and affordable housing requirements for the project.

Sagamore Development earlier this month applied for $76 million in federal transportation funds to construct highway ramps off of Interstate 95 into Port Covington and other major road repairs in the area and is relying on the passage of the TIF to help match those funds with $43 million in TIF funds.
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Old April 29th, 2016, 07:44 PM   #11
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Board of Finance backs Port Covington TIF

Natalie Sherman
Baltimore Sun
April 25th, 9:16pm

Baltimore's Board of Finance moved along a request Monday for a record $535 million in public financing to spur redevelopment in Port Covington, where Under Armour CEO Kevin Plank has privately acquired land and plans to build new offices, stores, apartments and parks.

The proposal from Plank's real estate firm, Sagamore Development, brought a unanimous vote from the four members of the Board of Finance who were present, including Comptroller Joan M. Pratt and Kaliope Parthemos, chief of staff to Mayor Stephanie Rawlings-Blake.

Rawlings-Blake spokesman Howard Libit said the administration was pleased with the board's backing, calling the project a "smart investment for Baltimore."

Approval of plans for the tax increment financing came despite concerns from some members of the public, who say officials have not asked enough of Sagamore when it comes to local hiring, affordable housing and other investments.

"It is scandalous. Nearly one year after the unrest, Mayor Stephanie Rawlings-Blake and Sagamore Development are fast-tracking a deal affecting the lives of Baltimoreans for generations to come without sharing specific ironclad commitments that will benefit not only downtown but uptown," the Rev. Glenna Huber, the co-chair of Baltimoreans United in Leadership Development, said in a statement. "At a time when we need to unite our City, this deal as it stands divides Baltimore — one downtown and the other uptown."

Sagamore, which controls about 160 acres in Port Covington and plans to serve as master developer, would use the TIF funds to build parks, streets and other public improvements in the former industrial area south of Federal Hill on the South Baltimore peninsula.

In addition to the TIF, the firm hopes to secure $573 million in state and federal funds for the project.

Sagamore is contributing about $327 million to the project, a figure that includes more than $114 million for land acquisition and $23.3 million in design and planning. It says that its partners' investments in new construction will bring billions more in private investment.

"The positive economic benefits from transforming Port Covington will be unprecedented and significant," the firm's president, Marc Weller, said in a statement. "We look forward to continuing our work with our community partners, neighbors and local officials on the next steps in this process."

The project was pushed forward even though Baltimore's share of the project's funding is larger than recommended under the city's TIF policy.

But Steve Kraus, the city's deputy director of finance, said the city should make an exception for Port Covington, given the infrastructure needs at the site, a former railyard with few streets and in need of a lot of environmental cleanup.

"The TIF will advance strategic land use and economic development goals," he said. "When you have significant public infrastructure requirements, such as this project has with the brownfields, the lack of any roads … I think it's warranted here."

Sagamore has said it hopes to win approval of the financing by the end of the year.

The Baltimore Development Corp. approved the request in March. The city's Board of Estimates also signed off on deals last week that grant a waiver to inclusionary housing requirements and set goals for local hiring and participation of women and minority owned businesses.

The City Council is scheduled to review the deal after the Board of Finance approves the text for legislation.

City Councilman Carl Stokes, who heads the committee that will examine the TIF, said he has not delved into details yet.

"It's going to take a while," he said. "It's obviously very, very complicated."

An analysis of the project for the city by Columbia-based MuniCap Inc. does not take into account costs to the city if the project affects state funding for schools.

State Sen. Bill Ferguson said the General Assembly is likely to approve broader changes to the state's funding formula for education in the future so that development tools, such as TIFs, which help spur development but do not necessarily lead to increased tax revenue, do not lead to cuts. The state passed a temporary measure this year.

"Nothing is guaranteed, but the passage of this bill is an important indicator that Maryland believes in educating its populace and puts its dollars behind that commitment, and I think we will do that," he said.

Monday's Board of Finance meeting saw turnout from a small crowd concerned about the hefty public incentives expected to go to the project — including more than $760 million in property tax credits — and what they say is a lack of stronger requirements for Sagamore.

The TIF is expected to cost the city $2.16 billion over 41 years, including $1.4 billion in interest payments, according to the MuniCap analysis.

The debt would be repaid by new property taxes generated by the project, which would be valued at about $2.6 billion when complete and generate $1.7 billion in all forms of revenue for the city, or an average of $40.3 million annually, after tax credits, debt service and other expenses.

But much of that revenue, which includes millions from personal income taxes from people working or living in Port Covington, wouldn't come for years.

Sagamore or its partners are expected to have to pay "special taxes" worth more than $291 million to cover the TIF's expenses, including interest payments, until about 2038, when the project finally would start to generate enough property tax revenue to pay for the TIF, according to the analysis.

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Old May 2nd, 2016, 07:39 PM   #12
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17 things to know about the Port Covington TIF

Natalie Sherman
Baltimore Sun
April 29, 2016, 4:53pm

Sagamore Development wants to redevelop more than 200 acres of mostly empty industrial land in South Baltimore, creating a ring of riverfront parks and building new apartments and condos, stores and offices, as well as manufacturing space and a new headquarters for Under Armour.

But the area, which the city has wanted to see redeveloped for decades, has few roads and utilities, and extensive environmental problems. It's also cut off from the rest of the city by a tricky highway and road network.

To make the project happen, the firm, which is owned by Under Arnour CEO Kevin Plank, is seeking $1.1 billion in support from local, state and federal governments for needed infrastructure.

The firm, working with the state and city, applied this month for $76.1 million in federal highway funding, which the state has committed to backing with $33 million in state funding.

The city is weighing a request for $535 million in tax increment financing, with funding coming from municipal bonds and repaid through new property taxes generated by the project.

While the proposal has sped through city review so far, some have protested it as a "tax giveaway."

Here's a look at some of the project details and what city officials are considering.

How big is the TIF?

Sagamore has requested $535 million for infrastructure. The city would end up issuing about $658.6 million in 30-year bonds, including $5 million for issurance costs and $65.8 million for a reserve fund, according to an analysis by Columbia-based MuniCap, a consulting firm hired by the city to review the project.

That bonds would not be issued all at once, but sold in smaller amounts at different times depending on needs, starting with $49 million for infrastructure — $62 million in total bonds — in June 2017.

The city would review the project each time a new round of bonds is sought in order to make sure the development is on track, officials said.

What would the TIF pay for?

About $139.8 million would go to parks; $273.2 million would go to create a new street grid; and about $68.8 million would go to site work, such as stormwater management, fencing and erosion control, and demolition of existing utilities. Another $52 million would go to more singular projects, such as an internal rail circulator and a pedestrian swing bridge connecting Port Covington to Westport, where Plank also owns land.

TIF funds would not be used for infrastructure inside the proposed Under Armour campus.

The premium design proposals that Sagamore has presented for public areas likely wouldn't happen without a TIF, said architect Klaus Phillipsen, president of ArchPlan Inc.

Others have questioned the need for the city to pay for some of the improvements.

"There's not a crying need for a park there," said developer David Tufaro, founder of Terra Nova Ventures. "Why wouldn't the developer do it on its own?"

What about the proposed $573 million in state and federal money?

Sagamore has proposed to spend $165.4 million in state funds for a light rail spur. The firm wants to spend $362.2 million, including $199 million in federal funds, for modifications to Interstate 95. The state money could include Maryland Transportation Authority bonds.

What would Sagamore pay for?

Sagamore estimates its contribution at $327.8 million, including $114.7 million spent acquiring properties and $23.3 million for design, planning and construction.

The firm would spend $47.5 million on land development and $21.3 million on other projects, including $5.5 million to reconfigure property leased by The Baltimore Sun; $1.1 million for lighting on the Vietnam Veterans Memorial Bridge along Hanover Street; and a $1 million trash-collecting waterwheel for the Gwynns Falls.

Sagamore has said it expects partners to invest $4 billion in development, including the Under Armour headquarters, offices, shopping, hotels and 7,500 residences, if the TIF moves forward. At full build-out, MuniCap projects the area will have an assessed value of about $2.6 billion.

Is the TIF a tax break?

Tax increment financing is not a tax break. But the project would receive tax breaks because it is located in an Enterprise Zone and involves environmentally damaged property. The Enterprise Zone and brownfields credits could be worth more than $760 million, according to an estimate by the MuniCap analysis.

Given the tax credits, will the properties generate enough tax revenue to pay for the TIF?

Not until 2038, according to MuniCap. But Sagamore, or whatever companies the firm sells land to, would need to pay "special" taxes estimated at $291 million to make up the difference.

Sagamore or its partners also would be responsible for covering the TIF's costs through special taxes if property values plunged in a real estate crash.

What if Sagamore, or one of the new property owners, goes bankrupt or doesn't pay the tax for some other reason?

The property would go to tax sale and the buyer would be responsible for paying the special tax.

Jack Orrick, a partner at Linowes and Blocher LLP in Bethesda, said the tax sale process ensures the city can collect the money. But because property taxes are typically small relative to the worth of a property, the scenario is "very unlikely," he said.

The bond issuance also includes money for a reserve fund, which is required to pay debt service if the TIF revenues are insufficient for some reason.

How much has Sagamore spent on television advertising for this issue?

Sagamore Development has spent more than $266,000 for ads on two stations in Baltimore, according to filings with the Federal Communications Commission. The figure is more, because the firm has purchased ads on at least two other stations.

The firm has also bought other advertising, including from The Baltimore Sun, and launched social media campaigns.

Will the city issue the bonds?

Maybe not. The size of the deal means that officials are concerned it could limit the city's ability to sell bonds for other projects or affect its bond rating. The city is considering asking another entity, such as the Maryland Economic Development Corp., to issue bonds on its behalf.

"Any TIF of this size we're going to have to use a conduit issuer," said Steve Kraus, the city's deputy finance director. "We just can't take on this kind of a liability at this time."

Who will buy the bonds?

Sagamore, working with third parties, is expected to be the initial buyer in each bond sale. The city says selling to Sagamore is likely to yield a lower interest rate than if the bonds were sold on the public market — roughly 3.5 percent. For the developer's investors, income received from interest payments would be tax-exempt.

The bonds would be resold on the public market, with interest rates MuniCap estimates at 6 percent to 6.5 percent, after about three years in each round as more of the project is completed. This is the same process the city is using in Harbor Point.

How much money would Sagamore make?

The TIF under consideration is structured to allow the firm to earn a profit of about 9 percent, or about $402.3 million. That calculation only includes the impact of the TIF as well as tax credits and land sales by Sagamore to partners.

Sagamore also has developed some buildings on the site, which are leased to Under Armour and others, but unless such building becomes a larger part of Sagamore's business plan it won't be considered by the city.

The city and Sagamore have not yet settled on a "profit-sharing" agreement, a typical part of TIF deals.

Will the city make money?

MuniCap estimates the project would generate $1.7 billion in revenue for the city, after expenses, interest payments and other costs over 41 years.

The expenses include $1.4 billion in interest payments on the TIF, as well as about $2.16 billion that includes additional city services, such as fire and police.

New revenue includes $1.5 billion in new property taxes, after the TIF payments, as well as $1.6 billion in personal income taxes from those living or working in Port Covington.

How will this deal affect funding for city schools?

At this point, it's unknown. City schools are jointly funded by the city and the state.

The state grants local school aid based on the assessed wealth of a community, requiring wealthier jurisdictions to contribute a greater share. If the project increases the city's property values, but tax receipts don't keep pace, that could lead to state cuts.

The state this year passed a measure, which expires in 2019, designed to hold jurisdictions harmless for the impact of new TIFs. Politicians have said they expect the impact of economic development incentives to be taken into account in a broader revision of the state funding formula expected in a few years.

The MuniCap study does not consider the impact of the legislation on state aid.

Bebe Verdery, education reform director for the ACLU, said if the project moves forward it's "imperative" it not affect state education aid.

What about community benefits?

Sagamore is working with neighborhood groups in South Baltimore, including Cherry Hill and Westport, on a community benefits agreement. It also faces negotiations with the City Council.

The firm already has signed agreements with the city setting goals for local hiring, supplier diversity and affordable housing.

What kind of jobs will the project generate?

MuniCap expects the project to generate nearly 35,000 permanent jobs when fully built out, including positions that are part time or located elsewhere in Baltimore.

That includes the equivalent of about 22,602 full-time positions on site, of which 17,521 would be office positions; 4,857 in retail; and 139 in manufacturing. Those estimates include the 10,000 employees Under Armour expects to fill its new campus. (About 2,000 currently work in its Locust Point headquarters.)

MuniCap also estimates that there will be the equivalent of about 14,603 new full-time, temporary construction jobs at the site over the life of the project.

The firm's analysis expects about 33 percent of the employees to be city residents — higher than the goals outlined in a recent agreement between Sagamore and the city. Sagamore estimates that it has already produced employment for almost 200 city residents through its existing projects, such as the Recreation Pier renovation in Fells Point.

How many people would live in Port Covington?

MuniCap estimates that about 12,000 people, including about 880 students, would live in the area. Its cost-benefit analysis assumes that those people will be new residents to the city, not simply people moving from other neighborhoods.

Will there be affordable housing on the site?

That depends on whom you ask. As it has for other projects, the city waived a requirement that 20 percent of new residences be affordable, citing the law's other requirement: that the city compensate the developer for the units.

But Sagamore and the city signed an agreement that commits the firm to a goal of making 10 percent of new residences affordable. The agreement defines affordable homes, presumably rental, pitched to families earning less than 80 percent of the median household income in the Baltimore metro area. That could be as much as $50,200 for an individual or $71,700 for a family of two, with rents starting at $1,255 a month for a studio, according to city calculations.

Baltimore Housing Commissioner Paul Graziano said the threshold could be lower, because the developer is expected to make "commercially reasonable" efforts to apply for low-income housing tax credits, which typically serve families with more moderate incomes.
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Old May 23rd, 2016, 08:50 PM   #13
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Bills to spur Port Covington project advance to City Council

Luke Broadwater
Baltimore Sun
May 17, 2016, 10:31am

The Rawlings-Blake administration on Monday introduced a series of bills before the Baltimore City Council to authorize a special tax district and float $660 million in bonds for Under Armour CEO Kevin Plank's massive Port Covington development in South Baltimore.

City Council President Bernard C. "Jack" Young said he was bullish about the project, but wants to see Plank make certain deals with nearby communities before approving the subsidies. Young called plans for the project "wonderful" and said he believed it could transform Baltimore into a Los Angeles of the East Coast.

"We want to see inclusionary housing, affordable housing in there," Young said. "We want to see certified apprenticeship programs. We want to make sure minorities have a stake in Port Covington. I think this is going to be a catalyst to put the city on the level of, I'll say, L.A. It'll be a destination. This is going to spur growth of the city."

The deal would be the largest tax-increment-financing project in Baltimore's history.

About $535 million of the $660 million would go to infrastructure with the rest going to fees and related costs. The bonds, which would be paid off with future property taxes from the project, are projected to accrue about $1.4 billion in interest for a total cost of more than $2.1 billion. Plank's development firm says it plans to attract more than $5 billion in private investment for the project.

Under tax increment financing deals, the city issues bonds to give the developer money to pay for infrastructure improvements and other project costs. The city then uses the increased tax revenue generated by the development to pay off the bonds and their interest. Critics contend such deals divert money for decades from the city's general fund, where tax revenue could pay for services, such as firefighters and schools.

The community group Baltimoreans United in Leadership Development on Monday called on the council to "not fast track" any vote on Port Covington until "specific deals are negotiated to benefit neighborhoods citywide."

"BUILD calls on the City Council to make Sagamore Development treat the City of Baltimore as an investor," the Rev. Andrew Foster Connors, BUILD's co-chair said in a statement. "As such, the City must have a specified return on our investment in writing as part of the agreement — to include a share of all profit on the project, 51% local hiring on all jobs with claw backs, an equal investment in affordable housing and blighted neighborhoods, and a written guarantee to hold education funding harmless."

Young said he was disappointed that Harbor Point, the most recent project to use tax increment financing, was not hiring a majority of its workers from Baltimore. Around 30 percent of Harbor Point's employees are from Baltimore. He said he hoped Port Covington would hire more Baltimoreans.

"It does concern me," Young said. "Most of these companies already have their workforce when they come here. We're tracking that and we're watching that. I showed my displeasure to them. I want to see more Baltimore City residents hired for these jobs."

Meanwhile, City Council member Mary Pat Clarke introduced a resolution calling on the city to establish new rules — including requiring living-wage jobs — before agreeing to future tax-increment-financing projects.

"It sets a framework," Clarke said. "It does not get into negotiations for individual projects, but sets some overarching principles that would have to be met. Jobs should pay living wages and should have health benefits and provide permanent skills and training for future careers for city people."

The Port Covington redevelopment is expected to generate $1.7 billion for the city, or an average of $40.3 million annually, after tax credits, debt service and other expenses, according a consultant's projections. Plank's private real estate firm, Sagamore Development, plans to build 15 million square feet in new construction, including an Under Armour headquarters, residences, offices, shopping and hotel rooms.

The development is expected to create thousands of new jobs.

The analysis, by consultant MuniCap, measures the costs to the city generated by the 12,000 people expected to live in the area, including students, but it does not take into account how the project would affect the state's funding for city schools.

Baltimore Sun reporters Yvonne Wenger and Natalie Sherman contributed to this article.
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Old May 23rd, 2016, 10:13 PM   #14
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Old September 21st, 2016, 10:44 PM   #15
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City Council approves $660 million bond deal for Port Covington project

Luke Broadwater
The Baltimore Sun
September 19th, 2016, 8:50pm

The Baltimore City Council gave its final approval Monday to a $660 million public financing package for Under Armour CEO Kevin Plank's massive Port Covington project — a deal supporters say will bring thousands of jobs to Baltimore, but critics say is corporate welfare.

City Council President Bernard C. "Jack" Young said the waterfront development proposed by Plank's Sagamore Development Co. was too good to pass up.

Young said the $5.5 billion project, which includes an expanded headquarters for Under Armour, shops, restaurants, housing, offices and manufacturing space, will spur economic growth in Baltimore.

"Under Armour is No. 2, next to Nike. We don't want Under Armour to move out of the city of Baltimore," Young said. "We've done what we could do. [Sagamore] is going to take care of the six neighborhoods surrounding Port Covington. I think we're making the right decision."

The council voted 12-1 to approve the subsidy. Councilman Warren Branch voted against the deal; council members Mary Pat Clarke and Bill Henry abstained.

Mayor Stephanie Rawlings-Blake plans to sign the bill next week, according to her spokesman.

Rawlings-Blake's approval would allow the start of decades of work on the development.

Sagamore asked the city to float $660 million in bonds to build infrastructure for the project. The developer would pay the bonds back through future taxes. It's the largest tax-increment-financing deal in the city's history, and among the largest in the country.

Proponents see such deals as a creative way to finance infrastructure in a city with high property taxes. Critics contend that they divert money from the city's general fund, where it could be used to pay for needs such as firefighters and schools.

The Port Covington project is projected to create 26,500 permanent jobs and have a $4.3 billion annual economic impact, once complete. The land includes the site of The Baltimore Sun's printing press. The Sun has a long-term lease on the property.

"When we look back years from now, the city will be much better off with this happening than not happening," City Councilman Robert W. Curran said.

Clarke said the project stands to offer significant opportunities for the city but fell short of meeting its potential — especially in guaranteeing good wages for workers.

"A lot of good is involved in Port Covington, so I didn't want to vote against it," she said. "There are crucial elements that would have been so wonderful to include as a model for the future of Baltimore. It is great to contribute money, but it's even better to help people earn fair salaries and wages so they can take care of themselves and their families."

Sagamore President Marc Weller said the tax-increment-financing deal will allow the firm to ramp up construction before the end of the year.

Sagamore is to begin by building a $19.6 million East Waterfront Park that will "provide public access to the waterfront and contribute to the ecological uplift of the Middle Branch," he said.

"We are excited to get started creating tens of thousands of jobs, generating long-term positive economic impact for Baltimore City and building this transformational, inclusive redevelopment, together," Weller said in a statement after the vote.

Sagamore has entered into a profit-sharing agreement with the city. If the Port Covington development reaps a profit greater than 15 percent, the city will get 25 percent of any additional profit.

A profit-sharing agreement with the developer of Harbor Point, by comparison, doesn't kick in unless that development's profit exceeds 20 percent.

Groups have emerged to both support and oppose the tax deal.

Supporters, including Baltimoreans United in Leadership Development, the Interdenominational Ministerial Alliance, the Progressive Baptist Convention of Maryland and six neighborhood associations representing communities near Port Covington have argued that a $100 million citywide benefits agreement, already approved by the city's Board of Estimates, makes the deal "unprecedented" for Baltimore.

The $100 million deal builds off a $39 million agreement between the developer and six neighborhoods near the project. It 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 startups.

The developers agreed to hire at least 30 percent of all infrastructure construction workers from Baltimore, pay a wage of at least $17.48 an hour, and set aside 20 percent of housing units for poor and middle-class families (40 percent of such housing may be built elsewhere in the city).

Opponents, including Maryland Working Families, several labor unions and the American Civil Liberties Union of Maryland, argue the development does too little to help Baltimore's poor. They say a subsidized development should pay "prevailing wages" — several dollars higher than proposed — on all construction jobs, and living wages thereafter.

Critics contend the affordable housing agreement is too weak. It requires 10 percent of Port Covington's affordable housing units be built for people who make less than $26,000, but it contains what the critics call a "loophole" that allows the developer to pay money into an inclusionary housing fund instead of building the units.

The developers do not have to build the housing for the poor unless they receive federal low-income housing credits.

"The current agreement fails to ensure the creation of a minimally adequate number of units — either on-site or off — that are inclusionary and affordable to households at a range of income levels below the area median," said Monisha Cherayil, an attorney with the Public Justice Center.

Critics also say the development will cause the city to lose millions of dollars in state aid to Baltimore's public schools because it will cause the city to look wealthier on paper, but will not contribute money to the city budget until after the bonds are repaid.

A city-funded analysis found that the development would cost Baltimore schools about $315 million in lost state aid over 40 years under current funding formulas.

Leaders of the General Assembly have promised city officials they will enact a long-term fix to the formula to prevent any loss in state aid for schools. Frank Patinella, co-chair of the Baltimore Education Coalition, said he and other advocates urged state lawmakers to make such a pledge.

The debates over affordable housing and minority and local hiring have set a precedent for future requests, said Donald C. Fry, president and CEO of the Greater Baltimore Committee.

"If any company is looking to come to Baltimore and get some form of government assistance or support in the nature of TIF or [payment in lieu of taxes], I think they're going to know there are some things that are going to be expected," Fry said.

Baltimore Sun reporters Natalie Sherman and Yvonne Wenger contributed to this article.

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