Before the $5 billion extension of Baltimore's skyline can be built up, it literally needs to be built in.
Port Covington needs roads, bridges, sidewalks, a light rail stop and utilities.
It is a $1.4 billion expense paid for in part by $535 million in city dollars, a chunk of change that cleared its first hurdle with a unanimous vote from the Baltimore Development Corporation Thursday morning.
"From here it goes to the mayor and as long as she supports the recommendation, it will go the city's board of finance which is a public body,” BDC President Bill Cole said, “They would meet some time in the month of April and then if they approve it and support it, then it sends it to the Baltimore City Council where the full public hearing process starts."
In those hearings the public will hear about the $535 million and where it is coming from.
It is in the form of what is called tax increment financing – or TIF, money borrowed against the future property taxes generated by this new development and then paid back over time with interest as Port Covington is built out.
It is not unlike a mortgage, but Cole says there are more assurances along the more than 20-year project timeline so that Baltimore will be paid back.
"In an ideal world the city will have capital available and we would simply write a check and we would build all the infrastructure for a project like this, but we don't have that type of money. We have to use a different mechanism."
It is a mechanism the city has used before, most recently for Harbor Point. Mondawmin Mall was built much the same way, but the TIF mechanism figures projected wealth and not current property taxes which can and has thrown public school funding out of whack.
"What I said is it was like artificial wealth, but wealth it was and it impacted our education formulas," Baltimore City Delegate Maggie McIntosh said.
McIntosh introduced a bill that would fix the loop hole by freezing the impact of any TIF on school funding until the legislature could find a permanent solution.
The bill passed the house with an overwhelming majority and is expected to pass the senate soon.
McIntosh says it would fix the unintended consequence of an otherwise sound tool for development.
One she believes, in this case, could change Baltimore much the way Mayor William Donald Schaefer's Harbor Place did.
"I saw the plans, I see the commercials... it expands our downtown by 20 percent, these are all good things. I think for the future of the city, it is a good thing," McIntosh said.
If this bill does not pass, Cole says Sagamore Development will have to go back to square one to figure out a way to not impact city school funding.
Of the millions sought by Sagamore Development, none of it will be used to develop the 50 acres that will be Under Armour's worldwide headquarters.
Currently Port Covington’s 266 acres nets Baltimore City about $1.6 million a year in property tax revenue; the BDC estimates that over the more than 20-year build out of this project, the area would generate $2.6 billion.
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