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SPECIAL: The Port Covington Development: ‘Structural Inequality on a Massive Scale’

Staff Writer

Corey Payne '18

· Corey Payne

“Port Covington or Port Covet-a-ton?” asked a community organizer in East Baltimore, on the local blog A Path. For those who have paid attention to city politics this summer, the Port Covington development has been a main topic of conversation. It has inspired heated debate on all sides and has pushed the city’s progressive organizations into an unprecedented coalition. Protests have disrupted city meetings and development company events. The project has seemingly drowned out all other issues in Baltimore this summer, from the ‘Fight for $15’ minimum wage, to the Justice Department’s report on excessive policing, to the ongoing campaign for mayor. But what exactly is the Port Covington project?

Port Covington is a 260 acre abandoned industrial and commercial ‘neighborhood’ in south Baltimore. The area is nearly completely empty—there are no current residents and only a few business tenants. The land has been steadily acquired by Under Armour CEO Kevin Plank and his firm, Sagamore Development., Sagamore released a $6.9 billion plan to ‘revitalize’ the area, including: Under Armour’s new 50-acre headquarters, entertainment and specialty retail centers, more than 14,000 residential units, a half-million square feet of industrial and manufacturing space, 200 hotel rooms, 1.5 million square feet of office space, 40 acres of parks, and a public waterfront. Despite appearing excessive, the development seems acceptable, even for progressive activists. There are no residents to displace, no local businesses to compete with, and no immediate gentrification. But the situation is far more complicated than that. Sagamore has requested a $660 million tax increment financing (TIF), and is receiving support from the Mayor’s office. A TIF is a manner of publicly financing a private development that is ‘paid for’ by diverting expected property tax revenue increases from the district towards the development project. That means that the City would begin diverting those property taxes towards the financing very soon. However, the project is supposed to begin to balance—meaning the cost of continued financing becomes less than the taxes—in 25 years. At this point, Sagamore will begin recuperating the costs of the financing before the city can begin to use it as a source of revenue. According to the company’s calculations, this will be in approximately 40 years.

A TIF is a standard method of financing urban developments that city leaders believe will benefit the public—they have been in use in the United States since the early 1950s. There has always been debate surrounding their merit, but the Port Covington project has heightened the discussion. This is the largest TIF in the history of Maryland and one of the largest in the country. The sheer size of the TIF, as well as the 25-year gap between the initiation of costs to the City and the beginning of the revenue recovery, gives it particular risks that other projects have not carried. Any city at any time would face pushback from its citizens with this project. But Baltimore is not just any city, and this project does not exist in a vacuum.

In a poignant critique of the development, Barbara Samuels of the ACLU writes, “the Port Covington Master Plan is a prime example of structural inequality on a massive scale—and of the same old waterfront-focused economic development approach that hasn’t worked to reverse Baltimore’s decline, and may have contributed in fact to the disinvestment in other neighborhoods.”

The TIF, city officials say, will pay for itself, but there is a 25-year delay during which the $660 million stays on the city’s books. And in the meantime, the costs of running and maintaining the new infrastructure—not to mention the current and future costs of expanded public services such as transportation, police, fire, schools, and maintenance—will all be siphoned from the City’s General Fund, which contributes to public works and services throughout the city. This means that residents in East and West Baltimore who may never see any of the supposed benefits of the project will be using their tax dollars to pay for it.

Moreover, the project claims that by 2040, over 15,000 jobs will be created. But a report by the ACLU and the Public Justice Center contend that only a third of the jobs created are expected to held by city residents—and that the average income for full-time employees in the development district is just $26,745—far short of a living wage and the median city income. What’s more, Sagamore doesn’t deny these claims—they say in their own Master Plan that many of the jobs will be low wage retail. The residential units, which would not begin construction until after 2030, are expected to house over 12,000 people. However, the ACLU and Public Justice Center argue that the residents are expected to be incoming “millennials and empty nesters” making more than $100,000 a year—the only income bracket that can afford to rent or buy in the new development. City regulations normally require that 10% of the housing units built in any new development be designated for affordable and inclusionary housing, but the City unequivocally exempted Sagamore from the rule.

In a non-binding memorandum of understanding (MOU), Sagamore and the City agree that the development will “try” to reach 10% inclusionary housing for those making 60% or less of the area median income—far higher than Baltimore City’s median income. The MOU also offers Sagamore a loophole to avoid providing affordable housing altogether; he will have an option of paying into a city fund for affordable housing instead. According to calculations provided by AHC Greater Baltimore (a housing advocacy non-profit), the costs of this option are far less than dedicating affordable units. Sagamore estimates the cost of providing each unit to average $172,734. According to the MOU, for each thousand units constructed, a hundred would need to be dedicated to inclusionary housing—costing Sagamore an estimated $17,273,400 per thousand units. However, the loophole allows Sagamore to instead contribute “an amount not to exceed $5 million” per thousand to the City fund. This would be an 80% cost discount for refusing to dedicate affordable housing units.

Even if Sagamore agrees to meet the unenforceable MOU levels, housing advocates say it is not enough. A new bill by City Councilman Carl Stokes is pushing to require a minimum of 20% affordable units in the development. Other advocates, such as Housing Our Neighbors, are pushing for 25%, and a shift from 60% or less median average income cap to 80% or less.

“Other than low-end service jobs at the commercial establishments or as janitors and such in the residential complexes, there is no place for the average Baltimorean [whose median income is about $40,000] in this business plan,” says Daniel Pasciuti, Assistant Professor at Georgia State University specializing in urban sociology and a researcher at JHU’s Arrighi Center for Global Studies, who has been involved in the inclusive housing advocacy. “This finally brought the hypocrisy of the law to the forefront. The City can issue bonds for hundreds of millions of dollars to subsidize high end development but has no way to subsidize low income housing for people in the same development because it has no money.”

Furthermore, this project comes at a time when the class and racial fault lines of the city have been pushed to the forefront. After the uprising in the spring of 2015, many had hoped that the city government would no longer ignore the racist and classist city policies—from the excessive and repressive policing tactics to the allocation of funds for education, community centers, and transportation. At a time when the excluded, exploited, and oppressed parts of Baltimore have been calling out for just and equitable investment and protection from the city, the push for the creation of another white, bourgeois enclave is a slap in the face.

 

For many, the entire project is a spectacle on how city governments are beholden to their wealthy capitalist residents. Kevin Plank and Under Armour have threatened to leave Baltimore if the TIF isn’t awarded or if the restrictions are too burdensome. As Under Armour is Baltimore’s only chance of ever getting on the coveted Fortune 500 list, the demands of the company are paramount to city officials, and therefore take precedence over the concerns of everyday Baltimoreans. But this entire spectacle is nothing new, argues Pasciuti, who cites the Charles Center and Inner Harbor Development as similar examples. “People in Baltimore were told that if you just wait a few years, all this new money would come to the City that would allow it to rebuild and fix all the schools, roads, etc. But the problem is that [these developments] require a lot of money to keep them successful,” he says. “So all this new revenue is being funneled back into the [developments] to keep them successful and 40 years on, the rest of the City is still waiting for this new revenue stream that is going to allow new schools and better roads to be built in places like West Baltimore.”

It appears the rest of the City will keep waiting—revenues are not supposed to flow in for the Port Covington development until 2045. And if history is any guide, the exploited and excluded communities in Baltimore will be waiting much longer than that.

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