If Harbor Point is so hot, why the need for city investment?

Baltimore already has been generous; let's just pave the sidewalks and streets

June 19, 2013|Dan Rodricks

The mayor of Baltimore does not want to be on the wrong side of history this time, so she fully supports $107 million in tax increment financing to aid the development of Harbor Point, that big slab of old, chromium-saturated land adjacent to Harbor East — you know, Doughville, the upscale city-within-the-city developed by bread magnate John Paterakis.

Apparently, Stephanie Rawlings-Blake regrets the vote she cast 15 years ago against giving a substantial tax break to Paterakis, the wealthy and politically influential owner of H&S Bakery and developer of Harbor East. But Rawlings-Blake, then a member of the City Council, took a stand that was totally logical.

At the time, this city needed a convention headquarters hotel — that is, a hotel near the Baltimore Convention Center. The original convention center had been built through state and city revenue bonds of $51 million in 1979. Public financing also made possible the center's $151 million expansion in 1997.

Then-Mayor Kurt Schmoke had a great idea: Let's protect the public investment in the convention center by building a new convention headquarters hotel with hundreds of badly needed rooms. That way, Baltimore will be able to attract even bigger conferences and give our convention and tourism business a substantial boost.

That made sense. The next part didn't.

Let's build this hotel, Schmoke said, a mile from the convention center, on the other side of the Inner Harbor, way down Pratt Street and south of Little Italy — where Paterakis owns a lot of land. Let's have him build the next big hotel there, said our Ivy-educated mayor, and let's give Paterakis a big break on property taxes for, oh, a quarter of a century.

Of course, almost everyone — except Paterakis, Schmoke and a majority of the 19-member City Council — thought this was a dumb idea. Leaders of the Maryland General Assembly (including the late Pete Rawlings, father of our current mayor), the state treasurer, business leaders, people in the hotel and convention business, this columnist — we all thought the public subsidy for a convention hotel a mile from the convention center made no sense. The deal smelled of bread and politics.

When it reached the City Council, Stephanie Rawlings-Blake was one of only four members to vote against giving Paterakis the tax break to build his hotel in Harbor East. It was worth multiple millions to the multimillionaire.

Recently, Rawlings-Blake said she won't make such a mistake again. She doesn't like being on the wrong side of Baltimore's economic development history, she said.

She said that, of course, because Harbor East is flourishing today, with hotels, restaurants, stores, upscale residences and a generally exciting atmosphere.

Left out of the story is what happened on the other side of town, back at the convention center. Because Paterakis got millions in subsidy for his Harbor East hotel, and because Peter Angelos dropped plans to build a $150 million Grand Hyatt adjacent to the convention center, and because no other developer stepped forward, the city had to finance its own convention hotel. That's why the Hilton stands there today. Some $300 million in revenue bonds were used to build it, one of the costliest projects ever taken on by the city government.

So, Rawlings-Blake's vote in 1998 shouldn't be seen as regrettable, but smart and logical, a vote that probably made her math-genius, budget-savvy dad, chairman of the Appropriations Committee of the House of Delegates, quite proud.

But, you know how this goes — the years fly by, the buildings rise, the restaurants open, and almost everyone forgets about the original deal. They say: Harbor East is a screaming success. Whatever it cost the taxpayers, and whatever politics were at play back in the '90s ... well, whatever.

Now comes Harbor Point, the next phase of Doughville, slated to house Exelon's regional headquarters and other offices, upscale residences and more stores.

This time, Rawlings-Blake isn't holding back. She wants the city to provide $107 million in infrastructure for Harbor Point by issuing bonds that would be paid back with property taxes generated by the new development. Michael Beatty, Paterakis' protege and partner in Harbor East, stood next to Rawlings-Blake recently as she called on the City Council to approve the deal, claiming that the project will produce thousands of construction jobs, permanent jobs after that, and millions in tax revenue.

It might all come to pass — even if the city does nothing more than pave the new streets and sidewalks.

Because of the original investments by Paterakis and the city in Harbor East, Harbor Point looks like the choicest open real estate on the East Coast. It has been called as much and more by the city's former economic developer director. With that kind of buzz, and Exelon's commitment, is municipal subsidy of this scale logical?

I say no. The city already gave Paterakis and Beatty a great start, plus substantial tax breaks from Harbor Point's placement in an Enterprise Zone cynically reconfigured to include a public housing project several blocks away. So the city has been plenty generous. It can be less so now, and Harbor Point will turn out just fine.

drodricks@baltsun.com

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