The Baltimore Development Corp. today closed its public meeting, telling reporters to leave the room as it went into a “closed session” to hear details of the $535 million TIF tax subsidy proposed for Under Armour’s Port Covington project.
Arnold Williams, chairman of the quasi-public arm of city government, invoked an exemption to the Maryland Open Meetings Act to close the meeting.
The exemption allows a government body to close a meeting when discussing material that involves financial matters whose disclosure may hurt the parties involved.
For years, the BDC’s practice of closing its meetings to determine whether to use public money to underwrite private projects has met with objections by the media and, occasionally, from developers excluded from the process. The agency has been faulted for its lack of transparency by neighborhood groups and by City Councilman (and mayoral candidate) Carl Stokes.
Before today’s meeting was closed, BDC board member Deborah Hunt Devan asked if the group had any business it could do in open session. Williams said that he wanted to go right into closed session. He said the group would be discussing the marketing of public securities and contended that the board has the authority to close the meeting because of “the section of the law that deals with the city determining any strategies, etc.” pertaining to financing.
Kimberly Clark, executive vice president of the BDC, said the board received “an opinion from our corporate counsel,” Bill Carlson of Shapiro, Sher, Guinot and Sandler, saying that it could close the meeting. Carlson was not present at the meeting. No one was present from the city’s Law Department.
In addition to Ed Gunts of The Brew, Melody Simmons of the Baltimore Business Journal and Natalie Sherman of The Baltimore Sun were asked to leave the meeting.
Since the mammoth $535 million Port Covington TIF was announced last week, there has been no detailed information about the proposal.
Typically, staff from the BDC prepares a “Tax Increment Finance Application” that includes project information, project costs, and the economic justification for creating a TIF district to use property tax revenues generated by the project to pay debt service on bonds issued by the city.
The city says it uses the “but-for” test to establish that a project is not financially feasible without TIF financing.
In the last case of TIF financing – $107 million allocated in 2013 to Harbor Point, site of the new Exelon headquarters – the Rawlings-Blake administration justified the funding as necessary to bring an internal rate of return of 12.55% to the developer, Michael Beatty.
Without TIF financing, Harbor Point would generate an IRR of 9%, which the administration said would not be enough to attract outside investors.
Helping “Blighted” Communities
TIF financing was passed by the Maryland legislature chiefly to aid economically distressed and “blighted” communities by leveraging public funds to encourage private construction and job creation.
At Port Covington, the area is zoned industrial with no blighted community in the vicinity. In fact, the nearest neighborhood, Riverside, is a rapidly appreciating home-owning district of South Baltimore.
The BDC is expected to approve the Port Covington TIF and send a confidential report to the mayor’s office for review.
At the mayor’s discretion, legislation will then be drawn up for approval by the City Council, where Councilman Stokes has already gone on record as saying the Port Covington TIF package appears to be unjustified.
It is widely believed that Mayor Rawlings-Blake wants the current Council to approve the Port Covington TIF before its – and her own – terms in office end in December.