Monday, March 14, 2016

To TIF or not to TIF?

For years it was sad to see the City's beggar mentality and the delight of getting just any development at all, no matter how inferior.

For years communities have complained that developers get incentives and subsidies shoved up their rear ends while neighborhoods go to the dogs. Lately the difference between what the City ought to collect in taxes and what it actually did collect resulted in a State funding reduction for schools. (HB 285 by Delegate Maggie Mackintosh seeks to change that).

For years disparities in the performance of rich and poor neighborhoods in health, education, crime, trash, transportation and any number of metrics have grown not shrunk.

So here comes billionaire Kevin Plank and wants over half a billion dollars in tax breaks from the City for a shiny new town in South Baltimore. The answer should be clear, shouldn't it?
Park overlay for the proposed masterplan

But the matter isn't suitable for easy bi-polar discussions such as downtown versus neighborhoods, rich versus poor, white versus black or high profits versus excellence.

Under Amour's development arm, Sagamore, has proposed a project that is without precedent in Baltimore in scope, scale and the size of the tax increment financing they propose. Even the Charles Center, Inner Harbor re-development, although similar in size, doesn't quite work as a comparison. Too much have the role of the City and the funding sources changed. Gone are the days of big community block grants and other federal largess meant to prop up ailing US cities suffering from the still prevailing lopsided policies favoring single family homes in the suburbs and single occupant gasoline powered cars.

As the Baltimore SUN reports, the Sagamore TIF request has squarely landed in the final stage of the mayoral primaries contest with candidates of all stripes trying to be tough on Plank. Workforce development, local hiring, minority participation, community benefits are the most popular requirements candidates suggest as condition for any TIF. The economists quoted by the SUN seem to agree that it is time that the City asserts itself and put tough standards in place.

Certainly, no City should forgo half a billion of possible taxes if it could collect those just the same without credits and incentives. The problem is that in order to know if a project could and would be realized without incentives, requires an insight into the developer's books that the public usually doesn't have and it requires knowledge about the future that neither the City nor the developer have.
Proposed view across the Middle Branch

Another issue is the quality of a project. As I reported here before, Sagamore's proposal for "Plank-Town" a 266 acres 9-13 million squarefoot mixed use "new-town" on mostly industrial land at the Baltimore Port Covington Middle Branch area uses top-notch consultants and seems to do everything according to the best currently available industry standards. "Complete streets, bikeways, pedestrian pathways, eco-zones, parks, stormwater cleaning and filtering, protective habitats and pleasant public overlooks over the water, it is all there. The development even proposes a light rail spur, water taxi piers and turning Hanover Street into an urban boulevard (the latter, so far, the least convincing part of the design proposal).
"It's a $300 billion company. It can build its own [infrastructure]. It doesn’t need us. If Sandtown, Penn North, Oliver and Broadway East get rebuilt first, then we’ll consider it." (Councilman Stokes).
Clearly, a lot of what the masterplan concepts proposes in the public roam is more than just "infrastructure" and belongs into the arena of things that traditionally were funded and constructed by the City: Streets, parks, public transit. Many of the noted items that are not needed to support the intended "global headquarters" of Under Armour, at least, not in the strict sense of pure functionality. In that sense Stokes" assertion that "The project meets none of the criteria" for tax-increment-financing is incorrect. Using future taxes to fund general  infrastructure improvements is certainly part of the original intent of  TIF legislation, especially since the planning area includes parcels not owned by Sagamore. Sagamore representatives, on the other hand, admitted that in order to attract the brightest and best qualified talent to Baltimore, they need to offer extraordinary amenities.

Mayoral candidate David Warnock is right that "We have been out-negotiated by these developers for years," and so is Catherine Pugh when she observes the proximity of severely distressed Cherry Hill just across the water from Port Covington.
Part of the Sagamore design team at UDARP review

While Baltimore could hardly wish for a more attractive way to expand, capitalize on more of its waterfront, and create jobs and economic development at the same time, the larger national picture of the rich getting richer, while the poor are stuck in ever more isolated neighborhoods of distress and innumerable pathologies, cannot be left out of the consideration. Especially not in Baltimore.

A Local Hire Law has been in effect since 2013, so are laws to include affordable housing (Inclusionary Zoning) and laws for minority participation.
Local Hire Law - The Council President's historic Local Hire law requires that 51 percent of new jobs created as a result of a contract awarded over $300,000 and public subsidies approved of $5 million or more be filled by Baltimore City residents. The bill was approved by the City Council on June 3, 2013 and became law on December 23, 2013 (Source)
What is in order is a meticulous analysis of the proposed project, the estimated cost and the benefits that the project promises. The TIF should be broken up into the phases with later TIF bonds being conditional on fulfilling the promises of the earlier ones. Public benefits and the quality of each element of the project need to be carefully codified. Pay-back rates for the municipal bonds should be shortened as much as possible so that tax benefits can be accrued to the City's budget earlier. These steps will take time, but they should be dealt with in urgency. It is in Baltimore's vital interest that Under Armour can grow and realize its campus.
Proposed perimeter park and look-out "perches"

It is unlikely that the City Council will wave a TIF bill right through before the elections. Sagamore probably knew that they will become a ball in the mayoral campaign and that it will be more likely than not, that a new Mayor will bring the matter to a close.

Voters better put a person into office that is up to that task.

Klaus Philipsen, FAIA