Aug
02
2016

Great Organizing in Baltimore Wins Delay in Nation’s Third-Largest TIF Deal

An incredible community-labor mobilization in Baltimore has tied up what would be the third-biggest private-sector tax increment financing (TIF) deal in U.S. history. Led by Baltimoreans United In Leadership Development (BUILD, an Industrial Areas Foundation affiliate) and a broad spectrum of housing, labor, legal, and other community groups, the campaign came to a red-hot peak Wednesday night when 800 angry people stood and cheered as Rev. Glenna Huber of BUILD made it clear they would not stand for another gold-plated waterfront project that again neglects the city’s neighborhoods.

The disputed project, Port Covington, is located on an isolated peninsula now mostly owned by billionaire Kevin Plank, founder of the sports apparel company Under Armour. His Sagamore Development Corporation, which is less than three years old, seeks a $660 million TIF deal to turn mostly vacant industrial land into about 45 city blocks that he would sell to others for upscale housing and mixed use. Plank has been rushing the deal through Baltimore’s approval process at break-neck speed while lame duck Mayor Stephanie Rawlings-Blake is still in office. But by the end of Wednesday’s hearing, that fast track was clearly derailed, with an August 8 city council vote on the deal no longer expected.

The deal was unveiled in a burst of high-priced public relations during last spring’s hotly contested mayoral race. Local airwaves were filled with as many ads for Port Covington -- the new shining “city within a city” -- as there were for the ten candidates.

The huge new development, at the mouth of the Patapsco River where it empties into Baltimore Harbor, would require not only 41 years of TIF debt but massive federal and state infrastructure subsidies. Its 42 new city blocks would dwarf the city’s iconic Inner Harbor. Plank’s marketing materials make it clear he hopes to attract creative class millennials with household incomes averaging $100,000 or more. The TIF application seeks nearly $140 million in taxpayer money to build covered walkways, bike trails, kayak slips, an “archeological pier,” and the groundwork for an exclusive streetcar system. That’s nearly three times what the city currently spends each year to keep existing parks barely functional.

Source: Sagamore Development artist rendering filed in TIF application to Baltimore City, May 23, 2016

Baltimore is known for its endemic poverty and violence, like that portrayed in the HBO’s 2002 hit series “The Wire.” Plank’s dream promises to address those ills, and toward that end he has used his money and vast political influence to create a new drama that could well be called “Wired.” Plank and his associates courted the governor, the mayor, city council president, city development officials, and the state’s congressional delegation. Plank even reportedly played two rounds of golf with President Obama.

But many in Baltimore have lived through 40 years of broken promises about how high-end harbor-based development would trickle down benefits to the city’s struggling neighborhoods. Community leaders are now asking whether, in light of the uprisings that followed the death of Freddy Gray, this new shining “city with a city” would lead us closer to One Baltimore, or whether it would more deeply divide the city along race and class lines. If we build the new “city within a city,” what will happen to the city we already have?

The Devil is everywhere in the Port Covington details. Plank was able to circumvent the city’s affordable housing and inclusive job laws. Rather than setting aside 20 percent of the expected 7,500 to 14,000 new housing units for affordable housing, Plank agreed to a “goal” of 10 percent and with a definition of “affordable” that starts at $1,255 a month (in a city where the annual median family income is just $41,819). And rather than honoring a city law that calls for 51 percent of all jobs at taxpayer-subsidized projects to be filled with city residents, the project has an unenforceable agreement to strive to fill 20 percent of jobs with Baltimoreans.   For the construction-phase jobs, Plank’s development company offered area trade unions prevailing wages on just 25 percent of the TIF infrastructure construction jobs, but the unions would have to agree to not picket or disparage the project or its principals for 41 years. The Trades were insulted and turned out in force. (Some states attach prevailing wage even to TIF-funded construction; watch the Good Jobs First website for a new report on that issue soon.)

Baltimore’s City Council President Jack Young, sensing rising public opposition, responded by accelerating a city council vote originally slated for mid-Fall, to the dog days of summer – August 8th. This set the stage for city council’s first public hearing, this past Wednesday evening July 27th.  

On one of the hottest days of the summer, about 800 city residents gathered outside Baltimore’s War Memorial Building, the city’s largest public meeting space. After letting about half the people in, Council staff announced the room was full and no one else would be allowed to enter. Both groups erupted, with those outside chanting, “Bring the hearing out here!” and those inside chanting, “Let them in!”  Chaos ensued, a bigger room was opened, and the tense hearing began an hour late.

After needlessly long, overly detailed (and sometimes borderline condescending) presentations from Sagamore, the Baltimore Development Corporation and the city’s Finance department, it was three and a half hours after the scheduled starting time before the first public voices were heard.

That’s when Rev. Huber, an Episcopal priest and clergy co-chair of BUILD, brought the audience to its feet several times as she recited the long trail of broken development promises that have created two Baltimores: desperately poor residents throughout the city and wealthy, subsidized enclaves around the harbor. “It’s hard to trust when you have been played so often,” she shouted. Sampling UnderArmour’s marketing slogan (“We protect this house”), she declared that the people of Baltimore would protect their house from a project that as proposed would only expand the city’s deep divides.

A panel of union representatives, including representatives from the Baltimore AFL-CIO, several Building Trades and their apprenticeship programs, the Baltimore Teachers Union, UNITE HERE, and AFSCME  joined the demand for stronger jobs, housing and other community benefits called for by BUILD.

The hearing also featured an independent consultant who criticized the Sagamore TIF application: Maryland-based Tischler Bise found several flaws in the application, including a lack of documentation to support Sagamore’s rosy projections for new residents and jobs pouring into what is now a polluted and largely vacant space cut off by Interstate 95.  

Tischler Bise’s report also criticized the TIF application for understating the costs the city will incur providing services once the project is built. The consulting firm that assisted Sagamore on the TIF application defended its numbers, writing that there would be no need for services like substance abuse counseling, help for mothers with HIV, aid to seniors with dementia, or a clinic to help asthma sufferers even though the neighborhood lies beneath an eight-lane Interstate.  But then, with no deeply affordable housing included, Sagamore apparently doesn’t expect many low-income people will live in Port Covington.

Key among the things called for by community groups, labor and concerned citizens are:

  • A legally binding commitment that 51 percent of all jobs would go to city residents, and that those jobs would provide living wages and health benefits.
  • A legally binding affordable housing commitment of at least 20 percent and at deeper affordability rates.
  • A commitment to hold the city schools harmless from losses in state aid that may come as a result of the Port Covington TIF. In recent years, Baltimore City Schools lost $24 million in state aid as a result of another large TIF. The State Legislature passed a three-year fix to reverse this funding loss, but for now there is no permanent fix.
  • An independent review of project costs and financing that reality-tests the TIF application numbers and a full publication of all the underlying market analyses and assumptions.  

Facing such strong community-labor solidarity, Council President Young abandoned his plans for a quick vote. Committee Chair Carl Stokes, Jr. drew thunderous applause when he announced there would be “no vote this week, next week, or the week after that.”

[Full disclosure: Good Jobs First staffers Greg LeRoy and Scott Klinger have actively assisted BUILD in this campaign. Our 2002 report on Baltimore, Subsidizing the Low Road, is still being rediscovered periodically by activists seeking positive alternatives to the city’s persistent development problems.]

To learn more: Port Covington TIF by the numbers

Baltimore Sun op-ed by GJF: The Baltimore City Council should ponder these questions regarding Port Covington (August 2, 2016)