Kevin Plank Argues Against TIF Funding
We’ve talked previously about Baltimore City leaders needing a bailout from the rest of Maryland to fund the Port Covington project. Well in an open letter to the people of Baltimore .
Unfortunately for the cheerleaders of this project, Port Covington developer and Under Armour boss Kevin Plank makes a compelling argument <i>against</i> using Tax Increment Financing for this project.
As reported by the Baltimore Sun, Plank penned an open letter to the city of Baltimore:
Under Armour CEO Kevin Plank urged support for the Port Covington project and proposed investing more than $100 million in recreation centers, job training, schools and parks in a full-page ad Wednesday in The Baltimore Sun.
The open letter marks Plank’s most prominent personal effort moves to drum up support for the $5.5 billion project that hinges on tax-increment financing from the city.
“We are at a decision point,” he said in the letter. “We want to invest in Baltimore, hire in Baltimore, live in Baltimore, and give in Baltimore. I hope that you agree that we have a special opportunity here. I hope that the City Council will review and approve the TIF, to make this all possible for our city.”
Plank’s real estate firm, Sagamore Development, has proposed to develop Port Covington in South Baltimore with offices, apartments and stores, in addition to a new campus for Under Armour. The plan calls for issuing a total of $660 million in city-approved bonds to pay for infrastructure, roads, parks and utilities as well as bond-related costs.
City officials also have urged support for the financing — which would be repaid with Port Covington’s future property taxes — citing concerns that Under Armour could leave Baltimore.
So let’s break this down a little bit:
- Plank wants TIF financing to build Port Covington;
- The TIF financing will be serviced by the city, at cost to city taxpayers and the city budget; but
- Plank will spend $100 million on city capital projects that would otherwise be funded out of the city budget, a city budget that will be reduced thanks to TIF financing, but also;
- The project is contingent on $660 million in bonds to pay for city infrastructure that would not be built if the project were not being built.
So if you follow the logic here, the TIF financing is basically just moving money around the city budget. Plank gets reduced costs for financing the project, but still shells out a lot of money on capital projects that the city could fund without the reduction in tax revenue.
Get the feeling that the TIF for Port Covington is little more than a pyramid scheme?
Whether he meant to or not (and you can read it for yourself below) Kevin Plank has made a perfect argument as to why Baltimore should reject Tax Increment Financing for this project. By promising to spend $100 million on other city projects, Plank proved that he and Under Armour have the access to the capital necessary to float private bonds that can fully fund the project. By Plank’s own logic, there is no need to apply TIF, no reason to use taxpayer funds to invest in this private project, and no reason to create an artificial shortfall in K-12 funding. If city leaders really want to help out Port Covington and many other projects across the city, this is the perfect opportunity for them to lower property taxes and the cost of doing business for all Baltimore citizens and businesses, not just one.
Kevin Plank should be commended for investing in Baltimore City. But he should only be investing his own money, not the money of taxpayers across Baltimore.