A $5.5 Billion Waterfront Plan for Baltimore Wins Opportunity Zone Status
Jeff Ernsthausen and Justin Elliott have a big scoop on developments with Port Covington, a $5.5 billion waterfront development plan in Baltimore and one of the nation’s largest real estate projects. The project will potentially be the recipient of federal tax break largesse thanks to a mapping error.
Patrick Sisson reported on Port Covington in detail in 2017, placing custody of the aspirations for the project in the hands of Kevin Plank, billionaire owner of Sagamore Development and Under Armour, and a native of Baltimore. Goldman Sachs is also an investor in the project.
"Located on the Patapsco River, this new city-within-a-city is viewed by many backers and Baltimoreans as a catalyst to raise the city’s profile and build a 21st-century economy," according to Sisson in 2017. "[The project] includes 2.5 miles of restored waterfront, 40-plus acres of new parks, 14.1 million square feet of mixed-use development on 235 acres spread across 45 city blocks, a new 3.9-million-square-foot Under Armour global headquarters, a light-rail station, and a score of next-generation manufacturing centers and startup spaces," reports Sisson.
In 2017, the city was already betting on the project to the tune of a $135.9 million benefit agreement and a $660 million Tax Increment Financing deal.
In 2019, however, a mapping error shifted Port Covington's census tract to eligibility for potentially millions in tax breaks as part of the Opportunity Zone program. According to the investigative work by Ernsthausen and Elliott the origina sotyr of Port Covington's Opportunity Zone designation has been revealed:
The Treasury Department released a list of census tracts across the country that were sufficiently poor to be included in the program. Port Covington was not included in that list.
Three weeks later, however, things turned around. The Treasury Department issued a revised list. The agency said it had left out some tracts in error. The revised list included 168 new areas across the country defined by the agency as “low-income communities.”
This time, Port Covington made the cut.
It couldn’t have qualified because its residents were poor. It couldn’t qualify because it was next to some place that was poor. But the tract could qualify under yet another provision of the law. Some tracts could make the cut if they had fewer than 2,000 people and if they were “within” what’s known as an empowerment zone. That was a Clinton-era redevelopment initiative also aimed at low-income areas.
Port Covington wasn’t actually within an empowerment zone, but it is next to one. So how did it qualify? The area met the definition of “within” because the digital map files the Treasury Department used showed that Port Covington overlapped with a neighboring tract that was designated an empowerment zone, Treasury officials told ProPublica.
That overlap: the sliver of parking lot beneath I-395. That piece of the lot is about one one-thousandth of a square mile.
The designation all comes down to misalignment, and Plank and Goldman Sachs will reap the benefits. Still, according to the article, there's no evidence that Sagamore Development influenced the Treasury Department's decision.