Digital Harbor: Will it float?

Vision: Baltimore leaders are pushing to recast the city as a technology hub. But not all observers are sure this high-tech strategy is going to succeed.

May 20, 2001|By Stacey Hirsh | By Stacey Hirsh,SUN STAFF

California has Silicon Valley. Austin has the Digital Downtown. San Diego has dubbed itself the first city of the 21st century. Even Buffalo has hopped on the bandwagon by adopting the unofficial slogan, "Moving into the New Millennium."

Now, Baltimore is trying to become a "Digital Harbor" - a multimillion-dollar effort to create a technology hub, where the city helps start-ups get off the ground and recruits and clusters other high-tech firms.

No one can be sure, though, whether the effort will be a huge success or just another virtual reality.

The leading proponents of the Digital Harbor - mainly politicians and businessmen in the city - say the effort could bring tens of thousands of jobs to the region.

But industry experts caution that the city is coming late to the game, and its effort to capture a niche that is so minute and that so many other cities crave might be futile.

"I think starting from the bottom on that would be a very difficult row to hoe," said David L. Birch, president of Cognetics Inc., an economic research firm in Waltham, Mass.

There are about 350,000 rapidly growing companies in the United States, only 2 percent of which are high-tech, according to a Cognetics study. But the tech companies that make up that 2 percent are fiercely sought after, and a tremendous concentration of them are in several other cities, Birch said.

"If you're going after growing companies," he said, "why ignore 98 percent of them to go after the 2 percent, particularly when all the rest of the world is focusing on the 2 percent?"

And at a time when several tech companies are struggling financially and cutting back, the task of luring and creating technology companies becomes more daunting. Compounding the problem, experts say, is the city's image as a place hampered by crime and poor public services, such as troubled schools.

"You've got the killer combination of high taxes and poor services," said Fred Siegel, a New York-based senior fellow with the Progressive Policy Institute of Washington.

Proponents are gambling that the Digital Harbor will work, and they're betting with taxpayer dollars.

The city has outlined a plan that calls for $300 million in state funding over five years to pay for a variety of projects, from building and repairing roads and piers to improving public transportation, according to the Baltimore Development Corp., the city's economic development arm and a supporter of the Digital Harbor.

Gov. Parris N. Glendening has committed to spending $50 million over five years, including $7 million this year, to fund a handful of community improvement programs in the city, one of which is the Digital Harbor, said Mike Morrill, a spokesman for the governor.

Glendening has also agreed to fund additional infrastructure projects, including road repairs, promenades and other projects being negotiated, Morrill said.

The state and the city are offering other incentives: money for employee training, tax breaks to companies and money against down payments on homes to encourage companies to expand into the city.

Del. Howard P. Rawlings, chairman of the state House Appropriations Committee, has described the $300 million plan as "ambitious" but said it is comprehensive and focused.

"I think if the city shows annual progress in attracting firms and increasing employment in this arena that they'll be supported," Rawlings said. "But once that's not the case, then I'll be leading the list to cut this project back."

Though proponents say the concept is regional in scope, all the projects outlined in the $300 million plan are in the city.

Newt Fowler, head of the technology group at the law firm of Venable, Baetjer and Howard, said the money would benefit tech workers who live in Baltimore and commute to other counties.

He added, "You've got to have a healthy city to have a healthy region."

But large technology companies - such as fiber-optics giants Corvis Corp. in Columbia and Ciena Corp. in Linthicum - tend to choose suburbs over cities.

So, creating a tech hub in Baltimore that incorporates the entire region might be tricky, said Jason Spicer, associate director of research and analysis for the New York-based commercial real estate services company Cushman and Wakefield. "In terms of reality," Spicer said, "the types of tech companies that are going to go to Columbia are not the types of tech companies that are going to locate on Pratt Street."

Initially, Mayor Martin O'Malley said, there was apprehension that the Digital Harbor was just a city strategy, excluding anything not located on the water. He argues that's not true, saying the Digital Harbor is "the whole Baltimore metropolitan region, the center of which is this great old city and the port [on] which it grew."

"When people around the country think of the Corvises and the Cienas and the other big companies, they think Baltimore," O'Malley said. "They have visions of the city of Baltimore."

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