The Baltimore City Council made the right choice Monday in unanimously approving an important provision in the deal that will retain Under Armour's corporate headquarters at Tide Point and allow the maker of branded performance apparel to greatly expand its presence here and add as many as 1,600 new jobs over the next decade.
Under Armour is Baltimore's fastest-growing large employer, and Mayor Stephanie Rawlings-Blake was also correct to "protect this house" and take the necessary steps to enable the expansion, which is expected to include a new 80,000-square-foot office building and retail outlet in the short term and eventually an office building three times that size and an 800-space parking garage, as well as athletic fields and walking trails.
The company's presence in Locust Point is an enormous source of pride not only to that neighborhood but to Baltimore and the state of Maryland. The success story of founder and CEO Kevin Plank, a 1996 University of Maryland graduate who parlayed a $17,000 investment into a billion-dollar empire, is as familiar to local sports enthusiasts as his microfiber "HeatGear" line of moisture-wicking clothing.
But we also can't blame those who might raise an eyebrow at the notion of a city struggling to pay the bills for such basic services as police and fire protection and perhaps even recreation centers using tax dollars to benefit a private company. Thankfully, what the council approved this week is not only a win-win situation for taxpayers and Under Armour but, one might argue, an unusually good deal for the city in an era of U.S. corporate welfare.
That's because what the council approved was a special taxing district that will guarantee the city will be able to afford so-called TIF bonds. Those "tax increment financing" bonds allow the city to borrow money and pay it off with the higher property taxes paid by Under Armour as the company expands and its campus becomes more valuable. If UA's higher tax bill doesn't cover the borrowing costs in any given year, the city will be able to directly tax the property to cover it.
In other words, Baltimore taxpayers are fully protected. Even if the retail economy tanks, the taxing district makes sure that the bond payments are met without ever dipping into city revenues — aside from the higher property taxes paid by Under Armour one way or the other.
The best part of the arrangement, however, is what the TIF bonds will finance. Mostly, it's $35 million in improvements to parks, sidewalks and streets adjacent to the Under Armour campus. It's an upgraded recreation center, new bulkheads so tall ships can dock there, street resurfacing, landscaping, better lighting, brick paver sidewalks and public art.
That will make Locust Point a nicer place to work and live, not just for Under Armour employees but for all. And it's entirely made possible by the company's expansion. Meanwhile, UA is gradually adding hundreds more jobs, planning to raise its local payroll from 1,100 to 1,700 in four years and as many as 2,700 in 10 years. (And we do mean local, as about 45 percent of Under Armour employees live in the city).
Under Armour officials might have extracted a great deal more from the mayor and council if they had decided to play hard ball. No doubt there are cities and states across the country that would have offered a veritable grand slam of tax abatements, subsidies, write-downs, tax credits, enterprise zones and other considerations. In these difficult economic times, political leaders have turned to such handouts out of sheer desperation.
We have complained in the past that such deals can be fraught with problems. Often, they don't hold an employer's feet to the fire to sufficiently guarantee that the subsidies are justified. The cost-versus-benefits equation is frequently murky at best. And these arrangements are often done in private meetings without sufficient public involvement or scrutiny — a common complaint in past Baltimore Development Corporation deals. We fully agree with those who call for more transparency and accountability.
But Mr. Plank and Under Armour have demonstrated how to do it right. The company is investing in the city — and making it possible for the city to invest in itself. It's not only a case of "protecting" this house but building a pretty nice neighborhood around it, too.Copyright © 2015, Los Angeles Times