November 6, 2016 10:14 am ET
Another gamble with taxpayer dollars won’t pay off
Photo Credit/TRADEPOINT ATLANTIC
There is a famous scene in the movie The Professional where Natalie Portman, as Mathilda, is on the run from a corrupt DEA agent, played by Gary Oldman. In the scene, Oldman’s character tells the SWAT Team to “be careful” and, when they are not, Oldman responds as if he knew what the outcome was going to be, saying a droll, “I told you.”
Here’s the scene with the violence edited out:
That really brings to mind a column I wrote about Sparrows Point Terminal, which is now known as TRADEPOINT ATLANTIC. (TPA)
Ditto on the “I told you,” which—with the exception of the corrupt association—I say without atonement.
How did I know this would happen? Because I do my homework, which included pouring over some very powerful articles backing up my assessment—rarely do these public-private financing deals for infrastructure issues ever work.
Now, as a former cop and 35-year writer and investigative journalist, there is no chance I would make such claims without what they call, in police language, probable cause.
The first piece of evidence is rather potent. It’s a 12-page article from the NY Times titled, “As Companies Seek Tax Deals, Governments Pay High Price.”
In my cop days, we always had extra clips just in case, so here is some additional ammunition:
If you don’t like that one, here’s one from our own Baltimore Sun: Baltimore’s quick economic growth contributes to loss in state aid to schools [sic]
If that title sounds confusing, this quote won’t:
“Because much of Baltimore’s economic growth has been fueled by a wide array of tax subsidies, city government looks on paper a lot richer than it is, lawmakers and budget analysts agree. Some of Baltimore’s most valuable buildings pay little or no property taxes, but a state formula that determines aid for schools assumes that they do.”
Here’s another little ditty:
“The Baltimore Development Corporation and the City Council often approve what are called “payments in lieu of taxes” and tax-increment-financing deals to favored developments. Harbor East’s Baltimore Marriott Waterfront hotel, for instance, pays just $1 a year in lieu of property taxes for 25 years.”
So you see where I’m going with this. The money is there, but it is in the wrong hands. The developers basically are standing at the job site with a sign stating, “Will work for tax breaks.”
I have often criticized the Sun for what I felt was some sloppy work, but—in this case—this article deserves “front and center” attention. It sort of validates my opinion:
Here are some tough numbers and a quote from Ms. Woods’ article, featuring an interview with Councilman Crandell:
County Councilman Todd Crandell, who represents Sparrows Point, said he’s had “cursory conversations” with TPA officials about infrastructure financing. The Dundalk Republican said it’s too early to say what size or scope of a deal would be appropriate.
In Ms. Woods article here are the dollars and cents TPA is seeking:
“Sage broke down the needed spending on the site’s infrastructure to about $30 million on road and bridges, $35 million on utilities, $100 million on berths and dredging and nearly $19 million on rail improvements over the next five to 10 years.”
See you and raise the taxpayers another???
“Government needs to help create the environment for success,” said Crandell, though he cautioned that the county needs to make decisions that are fiscally prudent.
I wonder if this was part of the “fiscally prudent” conversation Mr. Crandell had where property taxes will have to be raised in order to fund the money TPA will reacquire in tax breaks:
“A public-private partnership likely would take the form of a tax-increment financing agreement in which Baltimore County would issue bonds to pay for infrastructure projects up front. Under such a scenario, the bonds would be repaid by increased property taxes down the line.”
Here is some interesting information that reveals what the deal was all along. Remember that Hilco brought the now bankrupt RG Steel into Sparrows Point. Here’s a quote from the Sun on that:
Steel-making operations stopped at Sparrows Point in 2012, when its last manufacturer, RG Steel, declared bankruptcy, laying off about 2,000 workers and selling the site for $72 million at bankruptcy auction to a joint venture of a Hilco Global company and Environmental Liability Transfer.
Sparrows Point Terminal, a partnership of Hilco and Hanover-based Redwood Capital Investments, took over last September, buying the land and pledging nearly $50 million toward the environmental cleanup. Redwood is an investment firm for the founders of the staffing company Allegis Group, Anne Arundel County entrepreneur Jim Davis, and his cousin, Baltimore Ravens owner Steve Bisciotti.
Today about 300 people report to work at the site each day, many of them working with demolition contractor MCM Management Corp., Levy said.
Here’s another interesting quote:
“Sparrows Point Terminal, (TPA) which purchased the property for $110 million in September, has said it wants to turn the area, which has about 2,400 developable acres, into an industrial business park, with distribution and logistics companies, a hotel and some retail to support thousands of new employees.”
The truth is that there are 690 total employees at TPA right now. That’s a far cry from the 10,000 that Councilman Crandell promised in pushing this deal.
He also never said a word about using our tax dollars for TPA’s gamble with our money in hopes of attracting businesses. The key word here is hope. There was no mention of any possible new tenants.
I also thought another $1,000 donation made by one of TPA tenants to Sparrows Point HS for their new turn field was a bit odd.
I guess this was a retake for some good PR.
Speaking of that retake, regarding the contamination issue at TPA, according to the $48 million set aside, an MDE spokesperson stated that only $4 million of that money has been spent by TPA.
On that very same issue, Mr. Bob Crandell, father of Councilman Crandell, asked a very brave and pointed question during the Q&A period.
Mr. Crandell, asked about the green-space issue involving ballfields for use by the community, and whether or not TPA is moving forward with that issue.
The answer from the TPA spokesperson was not very encouraging, but it was very telling.
The spokesperson stated that, given the current conditions at the TPA property, it is not prudent to move forward with building ball fields.
I think one can easily read between the lines on that.
Given Councilman Crandell’s position in the TPA situation, and my criticism of his political agenda, it took guts for the senior Mr. Crandell to ask that question. I might also add that, in all of our conversations, he never once tried to influence my writing in any way.
Meanwhile, in the Baltimore Business Journal, reporter Melody Simmons wrote, in my opinion, a very poor/terrible article with quotes like this:
Baltimore County is expected to reap an estimated $26 million in tax benefits from the development once it is built out, the report said. The state is expected to gain $73 million in extra tax revenues.
This new study validates TPA potential as an economic driver for the county and the entire Baltimore region,” said Baltimore County Executive Kevin Kamenetz, in a statement.
Ms. Simmons did not mention one word about the taxpayers tab on this venture, or the fact that this is a gamble by TPA using our tax dollars in the hopes of upgrading the infrastructure, which is an attempt to draw the right companies to the site.
I guess she never read The NY Times article or the Obama blunder of $154 billion worth of “can’t miss” new energy scams.
Before I wrap this up with audio and video from the meeting, I want it noted that made my opinion quite clear to Senator Salling and Delegates Bob Long and Ric Metzgar. I did not catch up with Delegate Grammer.
While viewing the video, be sure to note the grandiose vision by TPA and the company hired to present/promote that vision:
Here is the audio version:
Finally, in my opinion, this is another one of those big ventures that wants the taxpayers to gamble the moon and the stars based solely on the promise that the venture will bear fruit. But, as we have seen so many other times, the taxpayers are left holding the bag while those behind the failed venture move on to another project.
As the great Kenny Rogers once sang about The Gambler, “You’ve got to know when to hold ‘em, and know when to fold ‘em.”
And I believe this is going to be a “fold.”