Port Covington developer asks city for $535 million in support

The city is being asked to contribute $535 million to help finance the redevelopment of Port Covington, where billionaire Under Armour CEO Kevin Plank has embarked on a plan to transform the peninsula with offices, homes, shopping, restaurants, parks and a state-of-the-art campus for his growing company.

The city money would help pay for streets, utilities, parks, and highway and transit improvements for the roughly $5.5 billion project.

Sagamore Development, Plank’s private real estate firm, estimates that infrastructure for the project would cost in excess of $1.1 billion. It plans to seek an added $574 million in federal and state funds to cover the cost.

Sagamore officials have been meeting privately with city and state leaders for months to build support for its plans on the peninsula south of Interstate 95, jutting into the Patapsco River’s Middle Branch. An ad campaign touting “We will build it together” launched this month.

The Baltimore Development Corp., the city’s economic development agency, began reviewing Sagamore’s request Wednesday.

Baltimore’s $535 million would come from bonds sold by the city. Property taxes generated by the project would pay off the debt, in a sometimes controversial support mechanism known as tax-increment financing.

If it moves forward, the request would be the largest tax-increment financing, or TIF, deal in Baltimore history and among the largest in the country.

“What we’re going to talk about today is huge, monumentally huge,” Sagamore President Marc Weller told the BDC on Wednesday. “It’s a transformational project that’s going to create a lot of opportunity, a lot of jobs throughout Baltimore.”

Weller said the company hopes to win approval before the end of the year, if not sooner — a fast-track timeline dictated by Under Armour’s urgent need to expand and Sagamore’s desire to seize on federal funding opportunities.

Under that timeline, approval would rest with outgoing Mayor Stephanie Rawlings-Blake’s administration and the current City Council, which is expected to see turnover in a heated election in which some have questioned whether such deals benefit the city at large.

Rawlings-Blake said Wednesday that she believes Sagamore’s proposal could be a “catalytic project” for Baltimore.

“This is one of these defining moments in Baltimore’s history where we are a witness to a major transformation,” she said.

City officials say it is too early in the review process to share estimates of how much debt the city would be taking on. They said they expect to sell the bonds in several rounds over a number of years and would not approve something that would jeopardize the city’s bond rating or capacity.

Port Covington is part of the city’s Enterprise Zone, making any project 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.

Republican Gov. Larry Hogan expressed support for the project Wednesday, saying he expects it to create jobs in the city.

“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 Hogan spokeswoman Hannah Marr. “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 is its largest shareholder, has spent more than $100 million of his personal fortune to buy about 160 acres in Port Covington and 40 acres in nearby Westport.

A former rail yard, the area today includes empty land and The Baltimore Sun’s printing plant, for which the newspaper has a long-term lease. BDC President William H. Cole IV described the plan as basically “building a mini-city.”

Sagamore and Under Armour started seeking approval for their plans in January.

The sports apparel brand wants to build a headquarters complex of about 3.9 million square feet on 50 acres south of Cromwell Street, including three towers, parking for 5,000 cars and a small stadium.

Sagamore is leading plans for a mixed-use development on land adjacent to the headquarters. The firm wants approval for buildings comprising 9 million to 13 million square feet, including more than 7,500 homes for sale or rent, more than 200 hotel rooms and about 1.5 million square feet of office space. Construction of the Sagamore Spirit whiskey distillery is underway.

The development would create nearly 50 city blocks, 17 streets, more than 60 intersections and about 40 acres of parkland, Sagamore said. The proposed master plan shows a light rail spur with two new stops.

Under Armour employs about 1,900 people in Baltimore, has annual sales of nearly $4 billion, and plans to grow into a $10 billion company in a few years.

Plank, whose personal fortune is valued at $3.2 billion, ranks 527th on Forbes magazine’s 2016 list of the world’s billionaires and is the Baltimore region’s wealthiest individual.

Under Armour has said it would not seek public support for infrastructure on its campus, designed to accommodate as many as 10,000 employees. Property taxes from that development would help pay for the TIF debt.

If revenues generated in the TIF district fail to satisfy the bond obligations, Sagamore would be responsible for making up the difference.

Any TIF deal for Port Covington would need approval from the BDC, the city’s Board of Finance and the City Council and could face opposition.

Calling tax increment financing one of the most expensive ways to support development, 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.”

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,” he said. “But we’ve always been concerned that the amount of public resources that have gone into downtown have not benefited 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.”

City Councilman Carl Stokes, an outspoken critic of city subsidies, said he could not take a position on the proposal without seeing more details. But he said he is concerned that a private development this large would not consider paying for its own infrastructure.

“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.”

Baltimore Sun reporters Luke Broadwater and Jessica Anderson contributed to this article.

nsherman@baltsun.com

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Baltimore’s largest TIFs

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

Sources: City of Baltimore, Baltimore Development Corp.