UPDATE – As expected, the board unanimously approved the Paterakis property transfers at its meeting this morning – along with other goodies for consultants and contractors that will be detailed in a Brew post later today.
The Board of Estimates is expected to approve several property transfers today that will expedite the start of Harbor Point, the mammoth waterfront project by John Paterakis Sr. that’s been the subject of political controversy owing to its $155 million in tax aid.
On the BOE’s routine agenda are three items that would give Paterakis’ development company full title to a few remaining bits of the 27-acre parcel that once housed the Allied Chemical chromium factory.
Included is city-owned land at 950 S. Caroline St., a portion of the filled-in City Dock canal and four non-improved city roads.
Only the land on Caroline St. is subject to payment by Paterakis. An agreement struck between the developer and the Baltimore Development Corp. (BDC) requires $87,000 at settlement, with an additional $348,000 due to the city over 11 years.
The BOE is expected to give Paterakis rights to Philpot, Wills, Block and Dock streets in return for new streets built on the site. “Based on the known environmental contamination of the [current] roads and the City’s future receipt of improved streets of a greater value and size, no financial consideration will be provided by the developer,” the BOE agenda points out.
Similarly, because of unclear ownership of the filled-in canal, the city will give the Paterakis group the southern portion of the land while retaining the northern portion.
The BOE, which includes Mayor Stephanie Rawlings-Blake and City Council President Bernard C. “Jack” Young, has been strongly supportive of Harbor Point. No discussion (or dissent) is expected among the five-member board.
Paterakis, the owner of H&S Bakery Corp., pleaded guilty in 2009 to violating campaign finance laws by providing a $6,000 payment to City Councilwoman Helen Holton, then chair of the Council’s taxation and finance committee that handled tax breaks for developers.
$155 Million in TIF Funding
What’s made Harbor Point controversial outside of City Hall is the $155 million in TIF (Tax Increment Financing) granted to the $800-million project.
TIF uses the increased property taxes generated by a project to finance the cost of bonds issued by the city to build infrastructure on the site. In so doing, the developer’s property taxes are used to pay off the bonds, rather than go into the city’s general fund. In essence, a TIF is a tax-free loan to the developer.
Harbor Point is the second largest TIF district designated by the city (slightly below the $160 million granted to the currently-stalled Westport project of developer Pat Turner) and fully double the $78 million in TIF bonds awarded to East Baltimore Development Inc.
Without tax increment financing, the project would not go forward, argues M.J. “Jay” Brodie, president of the BDC, because no developer – including Paterakis – would pay for the infrastructure costs needed for the site.
In building Harbor East north of this site, the Paterakis group was granted another tax break called PILOTS (Payments in Lieu of Taxes) for four major projects, including the Marriott Waterfront Hotel and Legg Mason Tower.
Thanks to the PILOT granted to the Marriott, Paterakis will be excused from paying $64.5 million in city property taxes over 25 years, according to material from a task force that released its findings to City Councilman Carl Stokes.
Public Protests and Quiet Concern by Businessmen
More than 500 people marched through Harbor East on Nov. 13 to protest these tax breaks to Paterakis, seeking to dramatize the disparity between his glitzy office towers and hotels and the dilapidated state of city schools and the threatened closure of youth recreation centers.
Another group associated with Occupy Baltimore, called “Another BDC is Possible,” staged a protest in front of the BDC’s office earlier this month. It won a pledge by Brodie to meet with a delegation of protesters about the agency’s alleged lack of transparency and accountability.
The Harbor Point project has also been a source of concern for real estate interests led by lawyer and Baltimore Orioles owner Peter G. Angelos, who cringe at the probable impact of the sprawling development on downtown’s depressed market for office space.
Paterakis plans to build 1,019,010 square feet of new office space at Harbor Point.
Already, his Harbor East buildings have siphoned off major businesses from the Inner Harbor, notably Legg Mason.
In addition to office towers, the developer wants to build 73,000 square feet of retail, 270 condominium units, 346 rental apartments, a 260-room hotel and parking structures for 3,000 vehicles.
That promises to make Harbor Point a self-contained “mini-city” on Baltimore’s waterfront.