Stimulus funds boost Fells Point projects

New housing, shops to flank Broadway Market

December 05, 2009|By Lorraine Mirabella | lorraine.mirabella@baltsun.com

Construction could start early next year to transform the blocks around Broadway Market in Fells Point into new housing and shops, thanks to $30.8 million in federal stimulus financing the city approved Friday for that development and two others.

The Marketplace at Fells Point - 160 new apartments, street-level shops and parking in the blocks straddling the market - and the other projects will use bond funding designed to jump-start construction nationwide. Financing was also approved for creating a boutique hotel in the upper levels of historic Penn Station and for building a huge commercial laundry in Curtis Bay to serve the Mid-Atlantic region's hospitals.

Together, the projects are expected to generate at least 462 permanent jobs and 484 construction jobs, as well as $36.8 million in new taxes over 20 years, Baltimore Development Corp. officials said.

Developers of the projects - selected by the BDC and approved by Mayor Sheila Dixon - called the stimulus financing critical to moving forward at a time when commercial lending is scarce.

"Having these bonds will give us a fighting chance to stick to our timeline," said David Holmes, a partner with Daniel Winner in South Broadway Properties LLC, the Fells Point project developer. "The debt and equity market has been extremely challenging and difficult."

"This is a major federal initiative to try to get projects moving that in the current lending climate are not likely to move forward right now," said M.J. "Jay" Brodie, BDC president.

In a statement, Dixon said the projects, chosen from 19 applicants, have the potential to stimulate economic development. "That BDC received so many proposals is a healthy sign that development activity is beginning to pick up in Baltimore."

The $52 million Fells Point project, which includes nearly 30,000 square feet of shops in two buildings east and west of the market at 600 S. Broadway, was approved for $8 million in bonds. The BDC expects the project to generate 300 construction jobs and 285 permanent jobs.

The developers also expect to move forward next year on a second, $10 million phase, which is not being financed by the bonds, to restore the two existing market buildings. The 700 S. Broadway building would house market tenants, while the building in the 600 block would be restored and expanded to include a first-floor food retailer and an upstairs restaurant with harbor views.

The $12.4 million Inn at Penn Station project will convert the vacant upper floors of the train station to a 77-room hotel. The developer, Penn Station Hotel LLC, has been approved for $8.1 million in bonds.

The BDC estimates the project, which will retain the Amtrak station, will create 89 construction jobs and 27 permanent jobs.

Michael Dickens, president of Hospitality Partners, one of the partners in the Penn Station development, said, "We know the project is a good project, and in normal times we could have had this thing going.

"But there's no financing out there at all and for hotels it's even less [available]. We think it's a very good project for Baltimore and for the Charles North neighborhood. It's not a huge hotel, but it will be taking something not being used at all, in a glorious building that deserves to have something in it."

The $25 million Curtis Bay laundry on Hawkins Point Road is a 60,000-square-foot facility to be leased and operated by Crothall Services Group, part of the British conglomerate Compass Group. It will be powered by steam created at the nearby Baltimore Regional Medical Waste Treatment Facility. Developer Himmelrich Associates Inc. will receive $14 million in bonds.

The city estimates the project will yield 95 construction jobs and 150 permanent jobs. Samuel K. Himmelrich Jr., who said the bond financing is a key piece of finalizing the project, hopes to have the laundry operating by the first quarter of 2011.

The federal funding assistance was available to construct or rehabilitate buildings within a new "recovery zone" in Baltimore. A pool of $15 billion in recovery zone bonds was made available nationally for private sector projects through federal stimulus legislation - the American Recovery and Reinvestment Tax Act of 2009.

With financing all but cut off for many commercial projects, the stimulus money allows Baltimore officials to issue bonds that can be sold with tax-exempt interest, thus making them more attractive to investors. Developers get the proceeds from the bonds.

The developers are now responsible for finding buyers for the bonds, typically through private placement with banks or other investors.

Dickens said his team hopes to place the bonds with "people we've done deals with before who are comfortable with the project because they're also on the ownership side."

Brodie said the BDC's board of directors and a special committee selected the three proposals based in part on the likelihood of the projects moving ahead quickly.

Federal guidelines stipulate that the facility bonds must be sold to investors by the end of 2010.

"One of the distinguishing factors was, in our opinion, they were much more ready to go," Brodie said. "These seemed to be farther down the line."

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