Two of three coalition groups negotiating with the company seeking $660 million in public financing for the Port Covington project have rejected the Sagamore Develoment Company’s “last best offer,” saying it has “a gaping loophole” on affordable housing and that the parties are “oceans apart” on jobs, profit sharing and other issues as well.

“Our coalition didn’t walk away from the table, Sagamore overturned the table,” said Charly Carter, executive director of Maryland Working Families and a co-chair of People Organized for Responsible Transformation, Tax Subsidies and TIFs (PORT3).

Carter said negotiations suddenly deteriorated on Wednesday after City Councilman Carl Stokes stepped away from the closed-door City Hall sessions.

“That’s when things changed. . . We were stunned by what they were saying: ‘By 3 o’clock Friday, we’ll have our last best offer – take it or leave it,’” said Carter.

“We thought we were making progress. . . But by the time they articulated their last, best offer it was almost back to the starting point. It’s now an empty gesture.”

The developer agreed to begin the bargaining after the groups complained  at an acrimonious City Council work session that Sagamore was refusing to meet with them.

Stokes, who could not be reached for this story, has previously said he planned time away with his family this week.

Carter was speaking for Build Up Baltimore, as well as PORT3, two coalitions which represent over 167 labor, housing advocacy, consumer rights, anti-racism, community-based organizations and churches across Baltimore.

Sources say a third coalition group negotiating with Sagamore – BUILD, Baltimoreans United in Leadership Development – has indicated it will sign an agreement in which the developer commits to a mandatory 20% affordable housing requirement.

(The existing Memorandum of Understanding the city signed with Sagamore, specifying a voluntary affordable housing goal of 10%, has been criticized by grassroots groups as too weak.)

Both BUILD and Sagamore indicate they won’t be addressing the matter in detail over the weekend.

“It’s unfortunate that Build Up and Port 3 chose to walk away from the negotiation table,” said BUILD’s lead organizer Rob English.

“BUILD remains engaged and is working hard to negotiate an extraordinary deal for Baltimore’s most vulnerable residents,” he said in an emailed statement. “Once an agreement is finalized, it will clear up any misperceptions being floated in the community.”

Sagamore Development Corporation “won’t be commenting,” said the firm’s publicist John Maroon.

20%? Or Just 5%?

Speaking with The Brew last night, Carter said the coalitions had been initially encouraged by Sagamore’s willingness to strengthen the commitment in the MOU.

The developer agreed instead to a “requirement” that 20% of the 5,300 planned rental units be set aside at affordable rates.

But according to Carter, Sagamore refused to remove loophole language that would permit it “to buy its way out of such obligation by paying a trivial fee.”

The upshot of the language is that the developer and its successors could potentially “make only about 5% of its proposed 5,320 units affordable to families at 80% of AMI, or roughly $66,000 for a family of four,” Carter said.

The two sides also clashed over what percentage of the affordable units should be made available for those at or near the federal poverty line.

By the end of negotiations, Carter said, Sagamore “refused to include any more than 2% of the 5,300. . . residences it expects to construct for households earning 30% of the Average Median Income (AMI).”

“Even this 2% figure (equal to 106 units out of the 5,300 total originally planned) was contingent on the project’s receipt of additional public subsidy in the form of tax credits and project-based Housing Choice Vouchers,”  Carter said in a statement circulated late Friday.

That contingency language, she said, is “a clear indication that Sagamore was unwilling to invest its own considerable anticipated profits (or a portion of the TIF) towards meeting the City’s greatest housing need.”

Carter said the groups had offered to try to offset the cost of building the poorest units by identifying a number of funding resources.

People at the Poverty Line

Sagamore’s best offer, she said, “ultimately designated 85% of its affordable housing set-aside for households with incomes at 60% to 80% of AMI, or $50,100 to $66,800 for a family of four, well above the amount that half the City’s residents earn.”

Carter said the developer also refused to commit to mixed income buildings, “but seemed intent on clustering the poor into segregated sections of the development.”

Carter said the grassroots groups were firm on the need for affordable housing not just for teachers, police and firefighters but for service workers and others with very low incomes.

For Sagamore, she said, “It came down for them to: ‘We can’t get market rents if people are living next to poor people.’”

Jobs, Profit-Sharing

Carter said Sagamore refused to discuss wages, benefits, job access, or any other matters related to the thousands of non-construction jobs they have promised in retail, hotel and office work.

As for construction work, Carter said, the company sought guarantees that would infringe on workers’ rights to speak out about job conditions or to organize.

“We were so excited to sit down with them and talk about the potential,” Carter said. “A person could go to an apprenticeship program and there was enough construction planned over 30 years that they could have retired on this work.”

“It was almost like, ‘Hey, lets bring back Sparrows Point!’” she said, referring to the once-giant, now-closed steel mill.

Carter said Sagamore was not willing to make promises about that kind of permanent work or program.

“They just wanted to talk about ‘job readiness programs,’” Carter said. “There are something like 20 job readiness programs already in town.”

She said the company refused to disclose details of a profit-sharing agreement it has already entered into with the Baltimore Development Corporation (BDC) and refused to commit to closing any gap in education funding that comes about as a result of the TIF.

Attention Turning to Council

Carter said the groups are continuing to press for changes they want through the City Council.

“We would hope the Council would see our demands as reasonable and pass some amendments to the TIF (Tax Increment Financing) legislation,” she said.

“We never viewed Sagmore as the people we were ultimately negotiating with – it’s the Council.”

A number of Sagamore team members were present during the negotiations, Carter said.

Along with Sagamore president Marc Weller, they included Caroline Paff, Alicia Wilson and Steven Siegel, attorney Jon M. Laria and one of the firm’s powerful lobbyists, Sean Malone.

Also present was Michael Huber, representing City Council President Bernard C. “Jack” Young, and South Baltimore Councilman Eric T. Costello.

“Costello was there for every meeting,” Carter said.

The Council’s Taxation, Finance and Economic Development Committee is scheduled to meet on Sept. 8 at the War Memorial Building near City Hall and could vote on the legislation at that time.
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Membership in the two coalition groups is listed as follows:

Build Up Baltimore
BRIDGE Maryland
CHOICE AFL-CIO
Baltimore Metro CLC
American Federation of Teachers
UNITE HERE and 32BJ SEIU
People Organized for Responsible Transformation, Tax Subsidies and TIFs (PORT3)
Maryland Working Families
Interfaith Worker Justice
Jews United for Justice
Maryland Consumer Rights Coalition
Showing Up for Racial Justice (SURJ)
Baltimore Redevelopment Action Coalition for Empowerment (BRACE)
Communities United
City Advocates in Solidarity with the Homeless
Public Justice Center, ACLU of Maryland and Housing Our Neighbors (HON)

Comments some members of the coalitions provided today:

Charly Carter, executive director of Maryland Working Families and a co-chair of People Organized for Responsible Transformation, Tax Subsidies and TIFs (PORT3): “The community came together in an unprecedented way to negotiate with Sagamore Development. The 167 members of the PORT^3 and BuildUp coalitions we were willing to negotiate to try to close what we perceived to be a shrinking gap. We felt that thru negotiation over the past 2 weeks we had become partners in trying to solve the financing issues that Sagamore outlined, while providing for the needs of Baltimore residents.

“Unfortunately, Sagamore felt they had enough to claim victory without giving meaningful consideration to remaining issues such as: a good jobs guarantee; inclusionary housing; sharing an estimated $1 billion profits with the taxpayers; or the possibility of City Schools losing millions of dollars in state funding.”

“The term ‘unprecedented’ has been used a lot over the past few months to describe Port Covington and their request for a half billion dollar public investment,” said Robyn Dorsey of the Maryland Consumer Rights Coalition and PORT3 co-chair.

“What was truly unprecedented, was the coming together of BRIDGE, CHOICE, the AFL-CIO, HON, and dozens of individual community organizations to declare an end to business-as-usual development in Baltimore. Our cooperation represents a new beginning and a new direction for Baltimore and underscores the commitment we all have to doing more for it’s residents.”

Barbara Samuels of the ACLU of Maryland said, “The massive Port Covington investment by Baltimore taxpayers must embody a new approach to development, which at the very least must mean that they are fully in compliance with the City’s Inclusionary Housing law. Low-income working families deserve investment too, and need to gain opportunities for good affordable housing if the city makes investments in market rate and luxury housing developments.”

“As a coalition, we were happy that we were able to push Sagamore to concede to marginal concessions in the MOU with the city, but sadly the systemic deficiencies remain,” said Rev. Bryan Murray, co-chair of BRIDGE-Maryland and member of Build Up Baltimore. “Our coalition is committed to building up Baltimore City residents with good jobs, family sustaining wages, and fair and equitable housing.”

Father Ty Hullinger of Maryland Interfaith Justice for Workers said, “The U.S. Catholic Bishops said in their pastoral letter on the Economy: ‘Decisions must be judged in light of what they do for the poor, what they do to the poor and what they enable the poor to do for themselves. The fundamental moral criterion for all economic decisions, policies, and institutions is this: They must be at the service of all people, especially the poor.’ (Economic Justice for All, #24). It is becoming clear to us that Sagamore Development has no intention of providing truly affordable housing for the neediest of Baltimore’s working families within its Port Covington development. This is unacceptable by any reasonable moral calculation. Developments which receive substantial public subsidies (like over half a billion dollars in TIF financing) must provide really affordable housing for working families who are struggling to stay housed with dignity in this city. It is a scandal that Sagamore refuses to agree.”