Port Covington Development Approved for $148 Million in TIF Bonds, Construction to Resume This Fall

Posted on June 24, 2020

On Wednesday, the Baltimore City Board of Estimates approved the sale of the first round of tax increment financing (TIF) bonds for the Port Covington development. This round of TIF bonds, which will be sold on the market by the Maryland Economic Development Corporation (MEDCO), will result in $148 million for infrastructure at the 235-acre, $5.5-billion, multi-decade Port Covington project.

A TIF is a bond issued to Baltimore City or any other jurisdiction that is leveraged and backed by a real estate development. TIFs use the increased property tax revenues at the development to pay off the bonds. When the bonds are paid off, all property tax revenues go to the city coffers, but the current property tax revenues at the current rates continue to go to the city. The Port Covington Development Team would be paying the same 2.24 percent property tax rate on all of its properties and on its future assessments, but much of those funds will go to the bonds to pay for the infrastructure. Baltimore City would own the newly-built infrastructure and parks once they are completed. To note, TIF bonds cannot be used for other projects and initiatives around the city, they must be used by the project that backs them.

The Baltimore City Council approved a $534,795,000 TIF package with the Port Covington Development Team in 2016. During the TIF negotiations, the Port Covington Development Team reached a memorandum of understanding (MOU) with the City of Baltimore that it would provide income-restricted residential units equal to 20 percent of all residential units at Port Covington, which could reach 14,000. At least 60 percent of these affordable units must be provided on site, while the balance may be developed off site to address affordable housing needs in other Baltimore City neighborhoods. The Port Covington Development Team also agreed to $135.9 million of commitments to projects in Baltimore such as Youth Works, workforce developments, scholarships, and public improvements throughout Baltimore.

The Port Covington Development Team also signed a $39,000,000 community benefits agreement with the SB6, an organization representing the South Baltimore communities south of Port Covington including Brooklyn, Cherry Hill, Curtis Bay, Lakeland, Mt. Winans, and Westport. SB6 is now called SB7 to include Port Covington.

The TIF will pay for more than 40 acres of parks and plazas; the construction of pedestrian bridges, piers, and trails; the creation of new streets and sewers creating 45 new city blocks; the redevelopment of Hanover St. from Wells St. to the Vietnam Veterans Memorial Bridge/Hanover Street Bridge; the redevelopment of McComas St.; changes to Key Hwy.; and a circulating rail line in Port Covington. (See: SouthBMore.com’s complete breakdown of the projects funded and the costs.)

The Port Covington Development Team is comprised of owners Plank Industries and Goldman Sachs Urban Investment Group with Weller Development leading the development and construction of the project. Whiting-Turner is the general contractor for Chapter 1.

Weller Development Company President and Founding Partner Marc Weller said on Wednesday: “We are pleased with the Board of Estimate’s approval today, and excited about the continued momentum for Port Covington. We were especially thankful and heartened by the passionate words spoken at today’s hearing in support of Port Covington by Mr. Mike Middleton, head of the Cherry Hill Development Corporation and chair of the South Baltimore 7 Coalition. We look forward to continuing our work and partnership with our neighboring communities in South Baltimore, as well as with the current and future City administrations and elected officials.”

Weller told SouthMore.com that construction at Port Covington, which as been halted recently because of the COVID-19 pandemic, will resume in the coming months. “We are excited to resume construction in Port Covington this fall when the TIF bonds go to market,” said Weller. “Our focus is to continue building the neighborhood, being a great partner in the SB7 communities and working towards our goals with this inclusive 20-plus year endeavor.”

The Port Covington master plan includes a 50-acre, 3.9-million sq. ft. global headquarters for Under Armour at the former Port Covington Shopping Center; 1,500,000 sq. ft. of destination, attraction, entertainment, and specialty retail; 500,000 sq. ft. of “maker” and industrial/light manufacturing space; 200-plus hotel rooms; 1,500,000 sq. ft. of office space (in addition to the Under Armour Global Headquarters); and civic and cultural uses including 40-plus acres of public parks, a public waterfront, and other public facilities. It also includes more than 7,500 residential units, which could total up to 14,000 units comprised of rental and for-sale properties at various price-points, and potential sites for a post office, school, library, fire station, police paddock, and cultural center.

The approximately $700-million Chapter 1, which started construction in 2019, is planned to include approximately 1.38 million sq. ft. of office, 337,450 sq. ft. of retail, 976,667 sq. ft. of residential, and 285,000 sq. ft. of hotel space across more than 12 city blocks.

Photo of the new bulkhead in Port Covington