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Field of Dreams

Business & Developmentby David A. Plymyer9:24 amMay 13, 20210

Is the community benefits package at Port Covington still enforceable?

The jobs promised at Port Covington have vanished. Is the community benefits package next? The Scott administration needs to do the due diligence that wasn’t done by City Hall in 2016 [OP-ED]

Above: Watching over the ceremonial signing of the CBA between Kevin Plank and residents in 2016: State Delegate Brooke Lierman, Senator Bill Ferguson, Baltimore Mayor Stephanie Rawlings-Blake and Councilman Eric Costello. Standing among them: Sagamore Development Vice President Alicia Wilson and Plank Industries CEO Tom Geddes. (Fern Shen)

It appears that Baltimore officials may finally reassess the extraordinary $660 million public financing deal that the city struck with Kevin Plank in 2016 for the redevelopment of Port Covington.

Better late than never.

Mayor Brandon Scott says he intends to speak with outside legal counsel about the future of the project.

Comptroller Bill Henry says his office will conduct an audit of the project’s local and minority hiring practices.

City Council President Nick Mosby says the project’s tax increment (TIF) financing should be re-evaluated in light of the city’s other pressing needs.

(For the record, Mosby and Scott, both city councilmen in 2016, voted to approve the TIF financing, while Councilman Henry abstained.)

While they’re at it, Baltimore’s three top elected officials should examine the viability and enforceability of the $135.9 million Community Benefits Agreement (CBA) and related MOUs signed by Plank’s Sagamore Development Co.

The CBA was crucial in winning City Council approval five years ago, and it’s now an even more important part of the deal because hopes that the project would create tens of thousands of new jobs in Baltimore are all but gone.

The city must get unequivocal answers to questions largely left unanswered in 2016 before more bond funds are issued for the project.

Reversal of Fortune

Last month’s announcement by Under Armour of its plan to build a drastically downsized global headquarters at Port Covington underscores how far the fortunes of Under Armour and its founder have fallen since 2016.

Back then, city officials were giddy with excitement over the advertised $5.5 billion Port Covington project to be undertaken by Plank’s Sagamore, which he claimed would have a $4.3 billion annual economic impact when completed.

The deal, then-City Council President Jack Young gushed, “was too good to pass up.” Now his successors are starting to face the reality that it was too good to be true.

ALL SMILES: In a largely symbolic groundbreaking ceremony in May 2019, then Mayor Jack Young shares a shove with Plank associate Marc Weller. To Young's left is then-City Councilman Brandon Scott and Comptroller Joan Pratt. (Brew file photo)

ALL SMILES: In a largely symbolic ceremony in May 2019, Jack Young shares a shovel with Plank associate Marc Weller. To Young’s left is then-2nd District Councilman Brandon Scott and Comptroller Joan Pratt. (Brew file photo)

Evaporating Jobs

Baltimore government has a dubious record of subsidizing redevelopment that does little more than shuffle residents, shoppers, and office workers from one part of the city to another.

Much of the economic impact of the $107 million in TIF financing approved for Harbor Point appears to have come at the expense of the city’s central business district. (A recent example: T. Rowe Price’s decision to move its global headquarters from Pratt and Light streets to Harbor Point by 2024).

The city does not need to move existing jobs around; it needs job growth. Therefore, a 2016 market study predicting that Port Covington would create about 26,500 permanent new jobs by 2037 caught the eye of city officials.

By the time the Board of Estimates approved the issuance of $148 million worth of bonds for the first phase of the project last June, the dream of explosive job growth was gone.

The hope that Amazon would locate its second headquarters at Port Covington was dashed in January 2018.

A few months later, Port Covington branded itself “Cybertown USA.” That name was abandoned earlier this year. At last report, no leases have been signed for office space.


GLOSSY GRAPHICS: This assembly of soaring skyscrapers at Port Covington comes from 2016. The mundane reality of a downsized UA campus surrounded by parking lots (BELOW) was shown to the press last month.

Another view of the proposed UA headquarters complex south of Cromwell Street at Port Covington. (underarmour.com)

Lure of Community Benefits

In addition to the number of promised jobs, the advertised size of the CBA was key to winning City Council approval of TIF financing.

So much money was promised to so many people for various things that Port Covington became a politically unstoppable force.

Plank’s company originally agreed to pay $39 million over 30 years for amenities and new facilities to six South Baltimore community associations (the SB6) in exchange for their advocacy of the public financing of Port Covington.

The SB6 coalition became the SB7 and, pushed by BUILD, an interfaith advocacy group, the agreement was incorporated into a larger MOU signed by Sagamore and Mayor Stephanie Rawlings-Blake.

The agreement was hailed as a “giveback” by Sagamore to the community worth $135.9 million, including a $25 million pledge to fund workforce development programs and $10 million to fund small business loans.

That’s a lot of money for programs that otherwise could go unfunded in a cash-strapped city. Indeed, the package appeared, at least on paper, to be the most lucrative CBA in the country.

CBAs are a relatively new phenomenon. They are intended as a way for residents, particularly those in low-income neighborhoods and communities of color, to share in the benefits of real estate developments.

But questions linger about their enforceability.

Mayor Stephanie Rawlings-Blake signs three bills giving Kevin Plank's company $660 million in financing for Port Covington. (@MayorSRB)

“TRANSFORMATIONAL” is what Mayor Stephanie Rawlings-Blake called Port Covington in 2016 when she signed legislation that paved the way for TIF bond money. To her left are Jack Young, Joan Pratt, Marc Weller and members of BUILD. (@MayorSRB)

Questions Needing Answers

The two agreements that Sagamore signed stipulate that they shall not be recorded in city land records and do not confer rights or obligations on third parties.

Each agreement contains a generic “successors and assigns” clause, stating that it “shall be binding upon, and inure solely to the benefit of, the parties hereto and their respective successors and their assigns.”

What does that mean?

For one thing, it means that the obligations imposed by the CBA do not run with the land. In other words, an entity purchasing land within Port Covington from Sagamore does not necessarily assume Sagamore’s obligations under the CBA. Beyond that, it means that only Sagamore’s assets secure the obligations unless another entity or entities assume the obligations.

In 2017, Weller Development Company, run by Plank associate Marc Weller, became the master developer for the parcel north of the proposed site of the new Under Armour campus.

Goldman Sachs committed $233 million to become a partner in the project, and Sagamore was relegated to the status of a minor partner.

According to the offering statement that accompanied the sale of the bonds last December, the obligations under the CBA have been assigned to Baltimore Urban Revitalization LLC, a joint venture identified in the statement as the owner of the project.

The assignment, however, is subject to unspecified conditions in “assignment and assumption agreements.” It is worth a close look to understand and verify what these conditions are.

Baltimore’s new city solicitor, the experienced and well-respected James Shea, should identify the assets – if any – that stand behind the CBA and confirm that the changed circumstances will not reduce the benefits conferred by the agreement.

The task of Shea, Mayor Scott and other city officials can be boiled down to this: Making sure the CBA is worth $135 million more than the paper it is printed on.

David A. Plymyer retired as Anne Arundel County Attorney in 2014. He writes on matters of law and public policy and can be reached at dplymyer@comcast.net

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