Mayor Rawlings-Blake Introduces Public Infrastructure Financing Legislation to Support $1 Billion Harbor Point Project
Monday Jun 3rd, 2013
FOR IMMEDIATE RELEASE
BALTIMORE, Md. <June 3, 2013>—Today, Mayor Stephanie Rawlings-Blake introduced public infrastructure financing legislation to support Harbor Point, a new $1 billion master-planned, mixed-use community that will support thousands of construction jobs and permanent jobs and generate, on average, $19.6 million in new city tax revenue annually. Harbor Point is currently a largely-vacant 27-acre brownfields site— formerly the location of an Allied Signal chrome processing plant—located between the Fells Point and Harbor East communities.
When complete, the project will include an estimated 1.6 million square feet of office space; 914,000 square feet of residential space; 195,000 square feet of retail space; a 220,000 square foot hotel; 1.2 million square feet of public parking with 3,115 spaces; and five distinct public urban parks, culminating in a 4.5-acre public waterfront park.
Architect’s Rendering of Harbor Point at Project Completion
“Like the Inner Harbor revitalization effort of 30 years ago, the Harbor Point project represents a once-in-a-generation opportunity to grow Baltimore by attracting new jobs, new residents, new tax revenue, and new public amenities. In total, more than a third of the development will be public park space that all of Baltimore’s residents can enjoy,” said Mayor Rawlings-Blake. “I look forward to working with the City Council to move this important revitalization effort forward. I’m confident that we will be able to look back at this project together and know that it has made Baltimore better and stronger.” Built in phases over 12 years, the Harbor Point community will include new public infrastructure, including nine acres of public parks and open space, a public waterfront promenade, and public roads and utilities to complement privately financed buildings and privately financed public parking. Project costs will total approximately $920 million of private investment, supported by approximately $106.9 million of city Tax Increment Financing (TIF) bonds to finance public infrastructure that does not presently exist at Harbor Point. In turn, the project is expected to create numerous benefits for Baltimore.New Jobs
- The project will support a significant number of jobs, including:
- An estimated 7,175 construction jobs.
- An estimated 6,611 direct permanent jobs and 2,547 indirect jobs.
- Harbor Point will increase the city’s residential population, furthering Mayor Rawlings-Blake’s goal of attracting 10,000 new families to the City of Baltimore.
- It is anticipated that the Harbor Point neighborhood will have approximately 2,070 residents—a significant number of which will be new to the city.
New Tax and Profit Sharing
- The City has collected (prior to the commencement of development at Harbor Point) approximately $244,000 per year in property tax revenue from the site.
- After development, the City anticipates collecting an average of approximately $19.6 million per year in new tax revenues generated directly by the project, according to an analysis conducted by the City’s independent financial advisor, MuniCap, Inc.
- Harbor Point will sustain and grow the city’s tax base through increased property and other related taxes and revenues, totaling approximately $589 million in net fiscal increase over 30 years, after all costs of financing and City services are accounted for.
- The City will receive profit sharing payments from the Developer of 15% of all net revenue in excess of a 20% return on investment subject to the approval of the Board of Estimates.
- The developer, working in conjunction with the Mayor’s Office of Minority and Women-Owned Business Development, is incorporating an inclusion strategy to comply with the City’s Minority and Women’s Business Enterprise program.
- The developer is working closely with Baltimore Development Corporation and the Mayor’s Office of Employment Development to develop a local hiring plan to ensure that Baltimore City residents will have maximum opportunity to obtain employment related to the project under the mayor’s Employ Baltimore hiring program.
- The developer and BDC are working closely to ensure that minority business owners, contractors, and employees are given maximum opportunity to participate in the project.
New Public Parks
- The project will include 9.5 acres of new passive and active public park land, providing enhanced access to the city’s waterfront for all city residents.
- A half-mile of new public promenade will connect Fells Point with Harbor East, completing the city’s waterfront promenade system from Canton to Locust Point.
Blight Elimination and a Smart Growth Agenda
- The project will reclaim a formerly industrial brownfield site for mixed-use development and eliminate a significant piece of vacant property from the city’s waterfront.
- Harbor Point will be a sustainable, transit-dependent development that will be built to LEED Silver standards or higher.
- The creation of a vibrant, new neighborhood will make Baltimore a better place to live, work, and play. The project is consistent with the City’s land use and economic development plans and policies of supporting high-density, transit-oriented, sustainable development that will produce significant jobs and taxes for the city.
- The project will create new and diversified office, residential, and retail options for city residents.
- The Harbor Point development project and the TIF will enhance and expand an existing public charter school, the Crossroads School, which will construct new educational facilities partly as a result of TIF assistance.
Background on Estimated Tax Revenue: The Harbor Point project will produce significant new tax revenues for the City. The pre-development assessed value of the property is estimated at $10,764,500. The City has collected pre-development property taxes in the amount of approximately $244,116 per year. At project completion, the property is expected to be assessed at over $1.8 billion, and the City anticipates collecting on average of $19.6 million per year at full build-out, after netting out the costs of TIF financing and City service costs. No other current project in the city promises these types of revenue gains. The following revenues are anticipated over a 30-year period: Estimated New Tax Revenues*:
|New property revenue**||$682,634,636|
|New business personal property tax revenue||53,065,468|
|Enterprise Zone tax credit state reimbursement||44,191,862|
|New hotel tax revenues||57,272,422|
|New utility tax revenues||21,259,355|
|New City income tax revenues||343,462,168|
|Recordation tax revenues||7,182,267|
|Additional new City revenues||44,408,769|
|Total new City revenues||$1,012,177,594|
|State brownfield tax payment||($3,878,268)|
|City costs (police, fire, maintenance, repairs)||(419,581,482)|
|Net new fiscal gain in City revenue||588,717,844|
|Average new City revenue per year (30 yrs.)||$19,623,928|
*Based on analysis conducted by the City’s independent financial advisor, MuniCap, Inc., dated May 9, 2013. **This figure includes $88,383,724 of Enterprise Zone tax credits and $24,469,947 of Brownfields tax credits on the private buildings at Harbor Point.Background on Public Infrastructure Financing: The Harbor Point project includes approximately $106.9 million in new public infrastructure and recreation improvements.
- 9.5 acres of new public open space, including five new and distinct public parks ($59,131,248)
- A half-mile of new public promenade, extending and connecting the existing promenade from Harbor East to Fells Point ($21,634,628)
- Expansion and enhancement of the Crossroads School public charter school ($2,000,000)
- New public roads, sidewalks, and utilities ($13,317,399)
- A new public pedestrian and vehicular bridge connecting South Central Avenue with Harbor Point ($10,400,000)
- A new public water taxi stop and piers ($448,001)
Constructing public infrastructure on Harbor Point is more expensive than constructing similar infrastructure at other sites, due to limitations placed on construction by a consent decree with the U.S. Environmental Protection Agency and the Maryland Department of the Environment. With limited exceptions for driving piles, the consent decree generally requires that all construction take place above the existing asphalt cap on the site. This means that all of the roads, utilities, parks, and promenade, and all of the private development, must be built in the air above the cap in clean and contained fill—essentially building the site up an average ten feet above its existing grade. This is complicated and costly, but necessary in order for the site to be developed in an environmentally responsible way. Tax Increment Financing is a form of municipal finance used successfully by cities in many states throughout the country. Historically, cities such as Baltimore would construct public infrastructure such as roads and parks ahead of new private development. The Harbor Point site currently has no public infrastructure, so the City must look at innovative ways to pay for such infrastructure so that private development can occur and the City can reap the benefits of the project, such as new jobs, new city residents, eliminating blighted and vacant property, and significant new tax revenues. In today’s budget climate, Baltimore is unable to fund this infrastructure by simply paying for the improvements from city, state, and federal funds. With TIF, the City is able to borrow the necessary funds at competitive market prices and repay the borrowed funds with new revenues generated directly from the project, without detracting from any City services or using any existing City revenues. The Mayor and City Council of Baltimore must consider and approve all TIF-related legislation, and all bond financing terms must be approved by the Board of Finance.Additional Information:
- Harbor Point Tax Increment Financing Q&A Fact Sheet [Attached]
- Tax Revenue/Fiscal Impact Analysis conducted by the City's Financial Advisor, MuniCap, Inc. [Attached]
- Harbor Point - Projection 28-B, prepared by MuniCap, Inc.
- Harbor Point Tax Increment Financing (TIF) Legislation [File ID: 13-0234]
- Harbor Point Special Taxing District Legislation [File ID: 13-0233]
- Harbor Point Development District Amendment Legislation [File ID: 13-0232]
- Architect’s Renderings of Harbor Point at Project Completion: