This Preliminary Limited Offering Memorandum and the information contained herein are subject to change, amendment and completion without notice. Under no circumstances shall this Preliminary Limited Offering Memorandum constitute
an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration, qualification, or filing under the applicable
New Issue – Book-Entry Only NOT RATED
In the opinion of Bond Counsel, under existing law and subject to the conditions described in “TAX MATTERS” herein, interest on the Bonds
(i) is excludable from the gross income of the owners of the Bonds for purposes of federal income taxation, and (ii) is not a specific item of tax
preference for purposes of the federal alternative minimum tax. Bond Counsel is further of the opinion that the 2020 Bonds and the interest thereon
are forever exempt from all State and local taxes under existing laws, but no opinion is expressed as to such exemption from estate or inheritance
taxes, or as to any other taxes not levied or assessed directly on the 2020 Bonds or the interest thereon. See “TAX MATTERS” herein regarding other
tax considerations.
$133,995,000*
MARYLAND ECONOMIC DEVELOPMENT CORPORATION
SPECIAL OBLIGATION BONDS
(PORT COVINGTON PROJECT)
SERIES 2020
Dated: Date of Delivery Due: September 1, as shown on inside cover
The Maryland Economic Development Corporation (the “Issuer”) is issuing its $133,995,000 Special Obligation Bonds (Port Covington Project),
*
Series 2020 (the “2020 Bonds”), pursuant to the provisions of an Indenture of Trust dated as of December 1, 2020 (the “Indenture”), by and between the
Issuer and Manufacturers and Traders Trust Company, as trustee (the “Trustee”). The 2020 Bonds are being issued to provide funds, together with other
available funds, to finance or refinance certain public and other infrastructure improvements related to the Port Covington development located within the
Port Covington Development District and the Port Covington Special Taxing District (described herein), to make a deposit to the Series 2020 Reserve Fund
and the Series 2020 Capitalized Interest Account (as such terms are defined herein), to pay certain administrative costs related to the Districts (defined
herein) and to pay a portion of the costs of issuance of the 2020 Bonds.
The 2020 Bonds will be issued in the principal amounts, will mature on the dates, will bear interest at the rates and will be offered at the prices shown
on the inside front cover. The 2020 Bonds are subject to optional redemption, mandatory sinking fund redemption, extraordinary mandatory
redemption, extraordinary optional redemption, and special mandatory redemption, as described herein.
Interest on the 2020 Bonds is payable on March 1 and September 1 of each year, commencing March 1, 2021. The 2020 Bonds are being issued in fully
registered book-entry form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”).
Beneficial owners of the 2020 Bonds will not receive physical certificates representing their interest in the 2020 Bonds purchased, but will receive a credit
balance on the books of the nominees of such beneficial owners. Individual purchases will be in principal amounts of $100,000 or any integral multiple of
$5,000 in excess thereof (the “Authorized Denominations”). Payments of principal of and interest on the 2020 Bonds will be paid by the Trustee to DTC for
subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the 2020 Bonds. See “THE 2020 BONDS – Book-
Entry System” herein.
THE 2020 BONDS ARE INITIALLY BEING OFFERED TO “ACCREDITED INVESTORS” ONLY WITHIN THE MEANING OF SECTION 2(15) OF THE
SECURITIES ACT OF 1933, AS AMENDED. THE 2020 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
IN RELIANCE UPON THE EXEMPTION PROVIDED BY SECTION 3(A)(2) THEREIN. NO ACTION HAS BEEN TAKEN TO QUALIFY THE 2020 BONDS
FOR SALE UNDER THE SECURITIES LAWS OF ANY STATE.
THE PURCHASE OF THE 2020 BONDS IS AN INVESTMENT SUBJECT TO A HIGH DEGREE OF RISK, INCLUDING THE RISK OF NONPAYMENT
OF PRINCIPAL AND INTEREST. SEE “RISK FACTORS” HEREIN FOR A DISCUSSION OF SUCH FACTORS THAT SHOULD BE CONSIDERED, IN
ADDITION TO THE OTHER MATTERS SET FORTH HEREIN, IN EVALUATING THE INVESTMENT QUALITY OF THE 2020 BONDS.
THE 2020 BONDS AND INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER AND THE PRINCIPAL OR
PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY, AND INTEREST ON THE 2020 BONDS SHALL BE PAYABLE SOLELY FROM,
AND SECURED EXCLUSIVELY BY, THE TRUST ESTATE (DEFINED HEREIN) OR ANY OTHER MONEYS MADE AVAILABLE TO THE
ISSUER FOR SUCH PURPOSE. THE 2020 BONDS SHALL NOT BE, DIRECTLY, INDIRECTLY OR CONTINGENTLY, A MORAL OR OTHER
OBLIGATION OF THE STATE OF MARYLAND (THE “STATE”), ANY OTHER GOVERNMENT UNIT, OR THE ISSUER TO LEVY OR PLEDGE
ANY TAX OR TO MAKE ANY APPROPRIATION TO PAY SUCH AMOUNTS, AND THE ISSUER SHALL NOT BE OBLIGATED TO PAY THE
PRINCIPAL OR PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY, OR INTEREST ON THE 2020 BONDS EXCEPT FROM THE
TRUST ESTATE OR ANY OTHER MONEYS MADE AVAILABLE TO THE ISSUER FOR SUCH PURPOSE. NEITHER THE FULL FAITH AND
CREDIT NOR THE TAXING POWER OF THE STATE OR ANY OTHER GOVERNMENTAL UNIT OR THE ISSUER IS PLEDGED TO THE
PAYMENT OF THE PRINCIPAL OR PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY, OR INTEREST ON THE 2020 BONDS. THE
ISSUER HAS NO TAXING POWER.
AS MORE FULLY DESCRIBED HEREIN, THE 2020 BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER PAYABLE
SOLELY FROM AND SECURED BY A PLEDGE OF PLEDGED REVENUES (DEFINED HEREIN) WHICH INCLUDES TAX INCREMENT
REVENUES AND SPECIAL TAX REVENUES TRANSFERRED BY THE MAYOR AND CITY COUNCIL OF BALTIMORE (THE “CITY”),
PURSUANT TO A CONTRIBUTION AGREEMENT DATED AS OF JUNE 17, 2020, BETWEEN THE ISSUER AND THE CITY.
THE PLEDGE AND TRANSFER OF TAX INCREMENT REVENUES AND SPECIAL TAX REVENUES PURSUANT TO THE CONTRIBUTION
AGREEMENT ARE SUBJECT TO ANNUAL APPROPRIATION BY THE CITY. NO OTHER ASSESSMENTS OR TAXES ARE PLEDGED TO
THE PAYMENT OF THE 2020 BONDS. THE PLEDGE OF PLEDGED REVENUES UNDER THE CONTRIBUTION AGREEMENT IS NOT A
GENERAL OBLIGATION OF THE CITY.
The 2020 Bonds are offered for delivery when, as and if issued by the Issuer and accepted by the Underwriters, subject to prior sale, withdrawal or
modification of the offer without notice and the receipt of an opinion of McGuireWoods LLP, Baltimore, Maryland, Bond Counsel, as to the validity of the
2020 Bonds and the excludability from gross income of interest thereon for federal income tax purposes. Certain legal matters will be passed upon for the
Issuer by Miles & Stockbridge P.C., for the Underwriters by McKennon Shelton & Henn LLP, Baltimore, Maryland, and for Baltimore Urban Revitalization
securities laws of such jurisdiction.
LLC, as owner, and Weller Development Company, LLC, as developer, by Ballard Spahr LLP, Baltimore, Maryland. It is expected that the 2020 Bonds will
be available for delivery on or about December 30, 2020.
CITIGROUP STIFEL
SIEBERT WILLIAMS SHANK & CO., LLC
This cover page contains information for quick reference only. It is not a summary of the Limited Offering Memorandum. Investors must read the
entire Limited Offering Memorandum to obtain information essential to the making of an informed decision.
December __, 2020
*
Preliminary, subject to change.
$133,995,000*
MARYLAND ECONOMIC DEVELOPMENT CORPORATION
SPECIAL OBLIGATION BONDS
(PORT COVINGTON PROJECT)
SERIES 2020
Due
Amount (September 1) Interest Rate Price CUSIP†
$10,705,000* _.____% Term Bonds due September 1, 2030* / Price __________% / CUSIP† ____________
$38,550,000* _.____% Term Bonds due September 1, 2040* / Price __________% / CUSIP† ____________
$84,740,000* _.____% Term Bonds due September 1, 2050* / Price __________% / CUSIP† ____________
-i-
FIGURE 1: DEVELOPMENT DISTRICT
-ii-
No dealer, broker, salesman, or other person has been authorized by the Issuer or by the Underwriters to
give any information or to make any representations, other than those contained in this Limited Offering
Memorandum, and, if given or made, such other information or representations must not be relied upon as having
been authorized by any of the foregoing. This Limited Offering Memorandum does not constitute an offer to sell or
the solicitation of an offer to buy, nor shall there be any sale of the 2020 Bonds by any person in any jurisdiction in
which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has
been furnished by sources that are believed to be reliable but is not guaranteed as to accuracy or completeness by,
and is not to be construed as a representation by the Underwriters. The information and expressions of opinion
herein speak only as of the date hereof and are subject to change without notice, and neither the delivery of this
Limited Offering Memorandum nor any sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the information contained herein since the date hereof.
The Underwriters have provided the following sentence for inclusion in this Limited Offering
Memorandum: The Underwriters have reviewed the information in this Limited Offering Memorandum in
accordance with, and as part of their responsibilities to investors under, the United States federal securities laws as
applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or
completeness of such information. The information and expressions of opinion herein contained are subject to
change without notice, and neither the delivery of this Limited Offering Memorandum, nor any sale made
hereunder, shall, under any circumstances, create any implication that there has been no change in the affairs of the
Issuer or the Districts since the date hereof.
The 2020 Bonds have not been registered under the Securities Act of 1933, as amended, nor has the
Indenture been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained
in such acts. The registration or qualification of the 2020 Bonds under the securities laws of any jurisdictions in
which they may have been registered or qualified, if any, shall not be regarded as a recommendation thereof.
The Issuer has either provided or reviewed the information under the headings “INTRODUCTION –
General” (as it relates to the Issuer), “THE ISSUER,” “NO LITIGATION” (as it relates to the Issuer), and
“CONTINUING DISCLOSURE” (as it relates to the Issuer) and will not be responsible for any other sections
within this Limited Offering Memorandum. The Issuer has not passed upon the accuracy or completeness of the
remaining sections of this Limited Offering Memorandum.
The City has reviewed the information under the following headings: “INTRODUCTION – General”
(except for the third paragraph), “– City Enabling Acts and Creation of the Districts,” “– Enforcement of Taxes,”
and “– Security and Sources of Payment; Contribution Agreement,” “BALTIMORE CITY,” “SECURITY FOR
THE 2020 BONDS – Contribution Agreement (second paragraph) and “– Subject to Appropriation,” “THE
DISTRICTS AND THE PLEDGED REVENUES” (except for the sections entitled “– Aggregate Full Cash and
Phased-In Assessed Value,” “– Estimated Tax Increment Revenues; Historic Assessed Values,” “– Assessment
Procedures; Tax Credits,” and “– Rate and Method of Apportionment of Special Taxes,” “NO LITIGATION” (as it
relates to the City), “CONTINUING DISCLOSURE” (as it relates to the City) and “APPENDIX L – BALTIMORE
CITY.” The City will not be responsible for any other sections within this Limited Offering Memorandum. The
City has not passed upon the accuracy or completeness of the remaining sections of this Limited Offering
Memorandum. Furthermore, the City has not passed upon the merits of the 2020 Bonds.
This Limited Offering Memorandum does not contain any investment advice for purchasers or Holders of
any of the 2020 Bonds. In making an investment decision, investors must rely on their own examination of the
Issuer, the City, and the terms of the offering, including the merits and the risks involved. Such persons should also
consult their own financial advisors regarding possible financial consequences of ownership of the 2020 Bonds. The
Trustee has neither participated in the preparation of, nor reviewed, this Limited Offering Memorandum.
-iii-
CERTAIN STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE IN THIS LIMITED
OFFERING MEMORANDUM CONSTITUTE “FORWARD-LOOKING STATEMENTS” WITHIN THE
MEANING OF THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995,
SECTION 21E OF THE UNITED STATES SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND
SECTION 27A OF THE SECURITIES ACT. SUCH STATEMENTS ARE GENERALLY IDENTIFIABLE BY
THE TERMINOLOGY USED SUCH AS “PLAN,” “EXPECT,” “ESTIMATE,” “PROJECT,” “ANTICIPATE,”
“BUDGET” OR OTHER SIMILAR WORDS.
This Limited Offering Memorandum is the only version of the Limited Offering Memorandum that has
been authorized by the Issuer to be distributed by the Underwriters. Any other documents purporting to be drafts or
copies of this Limited Offering Memorandum that are not identical to this Limited Offering Memorandum have not
been deemed final, were not authorized to be distributed on behalf of the Issuer, and were not issued by the Issuer.
-iv-
TABLE OF CONTENTS
Page
INTRODUCTION ....................................................................................................................................................... 1
THE ISSUER............................................................................................................................................................... 7
BALTIMORE CITY.................................................................................................................................................... 9
THE 2020 BONDS .................................................................................................................................................... 10
ESTIMATED SOURCES AND USES OF FUNDS ................................................................................................. 16
ANNUAL DEBT SERVICE ..................................................................................................................................... 17
SECURITY FOR THE 2020 BONDS ....................................................................................................................... 18
THE OWNER ............................................................................................................................................................ 22
THE PORT COVINGTON PROJECT ...................................................................................................................... 29
THE DISTRICTS AND THE PLEDGED REVENUES ........................................................................................... 74
APPRAISAL; VALUE-TO-LIEN ............................................................................................................................. 83
TAX INCREMENT AND SPECIAL TAX REPORT............................................................................................... 87
RISK FACTORS ....................................................................................................................................................... 94
THE ADMINISTRATOR ....................................................................................................................................... 103
UNDERWRITING .................................................................................................................................................. 103
LEGAL MATTERS ................................................................................................................................................ 103
TAX MATTERS ..................................................................................................................................................... 103
NO LITIGATION.................................................................................................................................................... 107
NO RATING ........................................................................................................................................................... 107
EXPERTS ................................................................................................................................................................ 108
CONTINUING DISCLOSURE............................................................................................................................... 108
MISCELLANEOUS ................................................................................................................................................ 109
$133,995,000*
MARYLAND ECONOMIC DEVELOPMENT CORPORATION
SPECIAL OBLIGATION BONDS
(PORT COVINGTON PROJECT)
SERIES 2020
INTRODUCTION
General
This Limited Offering Memorandum, including the cover page and Appendices hereto, is provided to
furnish information in connection with the issuance and sale of $133,995,000* aggregate principal amount of the
Maryland Economic Development Corporation, Special Obligation Bonds (Port Covington Project) Series 2020 (the
“2020 Bonds”). The 2020 Bonds are being issued pursuant to the provisions of Sections 10-101 through 10-132,
inclusive, of the Economic Development Article of the Annotated Code of Maryland (as amended, the “MEDCO
Act”), a resolution of the Board of Directors of the Issuer dated March 18, 2019, and an Indenture of Trust dated as
of December 1, 2020 (the “Indenture”), by and between the Maryland Economic Development Corporation (the
“Issuer”) and Manufacturers and Traders Trust Company, as trustee (the “Trustee”).
The Mayor and City Council of Baltimore (the “City”) has authorized the execution of the Contribution
Agreement (defined herein) and the pledge of the Pledged Revenues (defined herein) pursuant to (a) the provisions
of Article II, Section (62) of the Baltimore City Charter (1996 Edition) (as amended, the “Tax Increment Act”) and
Article II, Section (62A) of the Baltimore City Charter (1996 Edition) (as amended, the “Special Taxing District
Act,” and together with the Tax Increment Act, the “City Enabling Acts”) and (b) a Resolution of the City’s Board
of Finance (the “Board of Finance”) dated December 18, 2019.
Capitalized terms not otherwise defined herein shall have the meanings as set forth in “APPENDIX E –
Proposed Form of Indenture of Trust,” except that under the heading “THE DISTRICTS AND THE PLEDGED
REVENUES – Special Tax Revenues,” capitalized terms not otherwise defined shall have the meanings as set forth
in the Rate and Method of Apportionment of Special Taxes (the “Rate and Method”) attached hereto as
APPENDIX D.
The 2020 Bonds will be issued as fully registered bonds in book entry form in denominations of $100,000
or any integral multiple of $5,000 in excess thereof (the “Authorized Denominations”). See “THE 2020 BONDS –
Authorized Denominations” herein. The 2020 Bonds are subject to optional redemption, mandatory sinking fund
redemption, extraordinary mandatory redemption, extraordinary optional redemption, and special mandatory
redemption, as described herein. See “THE 2020 BONDS – Redemption” herein.
The 2020 Bonds are secured by the Trust Estate, as further described herein, which includes certain
Pledged Revenues which are to be transferred by the City to the Trustee, pursuant to the Contribution Agreement
dated as of June 17, 2020 (as amended on December __, 2020, the “Contribution Agreement”), by and between the
City and the Issuer. See “SECURITY FOR THE 2020 BONDS – Trust Estate” and “– Contribution Agreement”
herein.
The 2020 Bonds are being issued to provide funds, together with other available funds, to (i) finance the
Series 2020 Project (defined herein), which is expected to include, as more fully described herein, certain public and
1
other infrastructure improvements that will be located within the Port Covington Development District (the
“Development District”) and the Port Covington Special Taxing District (the “Special Taxing District,” and together
with the Development District, the “Districts”), (ii) make a deposit to the Series 2020 Reserve Fund, (iii) make a
deposit to the Series 2020 Capitalized Interest Account in an amount that is estimated to be sufficient to fund the
interest on the 2020 Bonds through September 1, 2023, (iv) pay Administrative Expenses, and (v) pay all or a
portion of the costs of issuance of the 2020 Bonds. See “ESTIMATED SOURCES AND USES OF FUNDS”
herein.
THE 2020 BONDS AND INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF
THE ISSUER AND THE PRINCIPAL OR PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY,
AND INTEREST ON THE 2020 BONDS SHALL BE PAYABLE SOLELY FROM, AND SECURED
EXCLUSIVELY BY, THE TRUST ESTATE OR FROM ANY OTHER MONEYS MADE AVAILABLE TO
THE ISSUER FOR SUCH PURPOSE. THE 2020 BONDS SHALL NOT BE, DIRECTLY, INDIRECTLY
OR CONTINGENTLY, A MORAL OR OTHER OBLIGATION OF THE STATE OF MARYLAND (THE
“STATE”), ANY OTHER GOVERNMENT UNIT, OR THE ISSUER TO LEVY OR PLEDGE ANY TAX
OR TO MAKE AN APPROPRIATION TO PAY SUCH AMOUNTS, AND THE ISSUER SHALL NOT BE
OBLIGATED TO PAY THE PRINCIPAL OR PURCHASE PRICE OF, REDEMPTION PREMIUM, IF
ANY, OR INTEREST ON THE 2020 BONDS EXCEPT FROM THE TRUST ESTATE OR FROM ANY
OTHER MONEYS MADE AVAILABLE TO THE ISSUER FOR SUCH PURPOSE. NEITHER THE FULL
FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OR ANY OTHER
GOVERNMENTAL UNIT OR THE ISSUER IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR
PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY, OR INTEREST ON THE 2020 BONDS.
THE ISSUER HAS NO TAXING POWER.
THE PLEDGE AND TRANSFER OF TAX INCREMENT REVENUES AND SPECIAL TAX
REVENUES PURSUANT TO THE CONTRIBUTION AGREEMENT ARE SUBJECT TO ANNUAL
APPROPRIATION BY THE CITY. NO OTHER ASSESSMENTS OR TAXES ARE PLEDGED TO THE
PAYMENT OF THE 2020 BONDS. THE PLEDGE OF PLEDGED REVENUES UNDER THE
CONTRIBUTION AGREEMENT IS NOT A GENERAL OBLIGATION OF THE CITY.
The Tax Increment Act provides for the creation of development districts by ordinance of the City Council
of Baltimore (the “City Council”) for the purpose of financing the development of an industrial, commercial, or
residential area. Upon approval of a development district and the passing of an authorizing ordinance, the City may
issue special obligation bonds or provide for the payment by an issuer of debt service on certain State
Obligations (as defined in the City Enabling Acts), the proceeds of which are to be used to finance or refinance the
costs of infrastructure and other public improvements related to the development district and may create a tax
increment special fund into which it shall deposit all property taxes that would normally be paid to the City and that
are derived from increases in the taxable assessed value of the property from the first day of the year preceding the
year in which the development district is created. The payment of principal of and interest, and premium, if any, on
such bonds or State Obligations can be secured by a pledge of the funds in the tax increment special fund after such
funds have been appropriated by the City on an annual basis. The property tax revenues derived from such increase
in the taxable assessed value of property is a portion of the general ad valorem tax levied on that property by the
City.
The Special Taxing District Act provides a method of financing certain infrastructure and other costs and
certain public improvements through the creation of special taxing districts. The Special Taxing District Act
provides for the creation of such special taxing districts by the City upon petition by the owners of at least two-thirds
of the assessed valuation of the real property located within a special taxing district and at least two-thirds of the
2
owners of the real property located within such special taxing district. Upon approval of the creation of the special
taxing district, the City may issue special obligation bonds or provide for the payment by an issuer of debt service
on certain State Obligations, the proceeds of which are to be used to finance or refinance the costs of infrastructure
improvements located within the special taxing district and may levy and collect a special tax within such district to
pay the debt service and administrative expenses in connection with such bonds or State Obligations. The special
taxes levied shall be collected and secured in the same manner as general ad valorem taxes of the City and shall be
subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for
general ad valorem taxes of the City. Special taxes so levied and collected by the City are deposited in a special
fund held by the City to be used, subject to annual appropriation, to pay debt service on such bonds or State
Obligations issued to pay for the infrastructure improvements.
The Development District was created pursuant to Ordinance No. 16-528 (the “Tax Increment Ordinance”),
adopted by the City Council on September 19, 2016, approved by the Mayor of Baltimore City (the “Mayor”) on
September 22, 2016, and effective on September 22, 2016. The Special Taxing District was created by Ordinance
No. 16-530 (the “Special Taxing District Ordinance”), adopted by the City Council on September 19, 2016,
approved by the Mayor on September 22, 2016, and effective on September 22, 2016.
Ordinance No. 16-529 (the “Bond Ordinance,” and together with the Tax Increment Ordinance and the
Special Taxing District Ordinance, the “Ordinances”), adopted by the City Council on September 19, 2016,
approved by the Mayor on September 22, 2016, and effective on September 22, 2016, (i) authorized the issuance by
the City or a State Issuer (as such term is defined in the Bond Ordinance), from time to time in one or more series, of
special obligation bonds or notes pursuant to one or more indentures in the maximum aggregate principal amount of
$660,000,000 for the purpose of financing and refinancing certain costs of the Project (as such term is defined in the
Bond Ordinance), (ii) authorized the execution and delivery of the Contribution Agreement pursuant to which the
City may pledge Tax Increment Revenues and Special Tax Revenues (each as defined herein) to provide for the
payment by the State Issuer of the principal of and interest on the applicable State Obligations and other related
costs (provided that the Tax Increment Revenues and Special Tax Revenues shall not be irrevocably pledged to the
payment of the City’s obligations under the Contribution Agreement and any such payment obligation shall be
subject to annual appropriation by the City), and (iii) authorized the Board of Finance to specify and prescribe by
resolution certain matters pertaining to such bonds or State Obligations.
The Original Assessable Base of the Development District is $90,796,494. The real property in the
Development District was assessed as of January 1, 2018, at $131,022,500, which will be phased-in over the tax
years beginning July 1, 2018, 2019, and 2020. Interim assessments of the parcels within the Development District
are expected to occur after construction is completed on those parcels and reassessment of all properties in the
Development District will occur as of January 1, 2021. See “SECURITY FOR THE 2020 BONDS” and “THE
DISTRICTS AND THE PLEDGED REVENUES – Tax Increment Revenues” herein. See also “APPENDIX C −
Tax Increment and Special Tax Report.”
Enforcement of Taxes
The City has covenanted in the Contribution Agreement, for the benefit of the owners of the 2020
Bonds (the “Bondholders” or “Holders”), that the City will comply in all material respects with the requirements of
the laws of the State relating to the collection of property tax revenues, which include the Tax Increment Revenues.
See “THE DISTRICTS AND THE PLEDGED REVENUES – Tax Increment Revenues – Property Tax Collection
Procedures” herein for a description of procedures relating to the collection of ad valorem taxes, including the Tax
Increment Revenues. The City is not required, nor does the City intend, to advance any of its own funds or any
other money of the City in the event of a delinquency in the payment of the Pledged Revenues.
Port Covington is a 270-acre peninsula (the “Port Covington Peninsula”) located on the Middle Branch of
the Patapsco River immediately south of a stretch of Interstate Highway I-95 in Baltimore City, which includes 237
acres of fast land and 33 acres of riparian rights. The redevelopment anticipated to occur in the Port Covington
area (the “Port Covington Project”) is one of the largest revitalization efforts in the United States. When completed,
the development parties currently estimate that the Port Covington Project will include up to 18 million square feet
3
of new, mixed-use development; 2.5 miles of restored waterfront; and 40 acres of parks and green space. The Port
Covington Project is located just to the south of downtown Baltimore. See Vicinity Map on page 31 herein.
The Development District, which benefits the Port Covington Project, consists of approximately 237 acres
of property and includes the southern portion of the Spring Garden Industrial Area of South Baltimore. The
Development District is generally bounded by the Middle Branch of the Patapsco River to the west, Ferry Bar
Channel of the Patapsco River to the south, Winans Cove of the Patapsco River to the east, and I-95 to the north.
The Special Taxing District, which also benefits the Port Covington Project, consists of approximately 155 acres of
property within the Development District. For additional information, see “THE DISTRICTS AND THE
PLEDGED REVENUES” herein. See also maps of the Districts on page ii herein. Currently, Baltimore Urban
Revitalization LLC, a Delaware limited liability company (the “Owner” or “BUR”), or its wholly-owned affiliates,
owns approximately 92 acres of the land on which a portion of the Port Covington Project will be constructed.
The development of the Port Covington Project, when completed, is currently expected to consist of
multiple phases and will be completed over the course of the next 15 to 20 years. The first phase of the Port
Covington Project, known as “Chapter 1,” totals approximately 3.3 million square feet across nearly 60 acres of land
(the “Chapter 1 Development”). Within the Chapter 1 Development, there are two subphases. The Chapter 1A
subphase (the “Chapter 1A Development”) includes the following completed development and improvements: City
Garage, Sagamore Spirit Distillery, Rye Street Tavern, improvements for the Baltimore Sun’s recently relocated
headquarters, West Covington Park, South Point, and a portion of the Port Covington bike path. All of these
development activities and improvements are complete.
The second and current subphase of this development is Chapter 1B (the “Chapter 1B Development”). The
Series 2020 Project will support the construction of the Chapter 1B Development. The Chapter 1B Development is
expected to include five vertical buildings, including a parking garage with approximately 1,000 spaces, and
approximately 10 acres of publicly available greenspace, including parks, paths, and piers. In addition,
approximately twenty percent of the residential units planned within the Chapter 1B Development will be set aside
as workforce housing for families earning less than 80% of the area median income for the Baltimore Metropolitan
Statistical Area adjusted for family size. For additional information on Chapter 1, and the Chapter 1A Development
and Chapter 1B Development subphases, see “THE PORT COVINGTON PROJECT – Phases of the Port Covington
Project.”
The Owner is a joint venture comprised of two members (each a “Member”): Baltimore Revitalization
Direct Investor, LLC (the “Managing Member”), which currently owns approximately 28% of the Owner, and
Baltimore Urban Revitalization Equity Investor LLC (“BUREI/GS”), a single-purpose Delaware limited liability
company created by Goldman Sachs Urban Investment Group, a division of The Goldman Sachs Group, Inc., which
currently owns approximately 72% of the Owner. The Owner is governed by the Third Amended and Restated
Operating Agreement between BUREI/GS and the Managing Member dated as of August 11, 2017 (as the same has
been and may be further supplemented or amended, the “JV Agreement”). See “THE OWNER” for more
information on the Owner, the Members, and the JV Agreement.
The Owner has caused the Managing Member to engage Weller Development Company, LLC, a Maryland
Limited Liability Company (the “Developer”) to implement the public infrastructure improvements of the Port
Covington Project pursuant to a Master Development Agreement dated November 1, 2017, (the “Master
Development Agreement”) between the Managing Member and the Developer. For additional information on the
Developer and the Master Development Agreement, see “THE PORT COVINGTON PROJECT – The Developer”
and “– Master Development Agreement” herein.
A portion of the proceeds of the 2020 Bonds will be used to finance a portion of the costs of certain public
and infrastructure improvements located within the Districts, including the design and construction of approximately
seven acres of new roads, sidewalks, street trees/landscaping, traffic signals, street lights, bulkhead, stormwater
management facilities, utilities and miscellaneous site furnishings and other related infrastructure improvements in
the Districts (collectively, the “Series 2020 Project”). See “THE PORT COVINGTON PROJECT – Chapter 1B
Infrastructure Improvements” herein. The development of the Series 2020 Project will occur pursuant to and in
accordance with the Funding Agreement (defined herein). See “THE PORT COVINGTON PROJECT – Funding
Agreement” herein and “APPENDIX G – Form of Funding Agreement.”
4
The Chapter 1B Development will also be developed by the Developer pursuant to a development
agreement with the applicable owner of each development parcel. Each development agreement will require the
Developer to undertake general responsibility as developer to manage, arrange, supervise and coordinate the
acquisition, planning, design, financing, and construction of the applicable project. See “THE PORT COVINGTON
PROJECT – Chapter 1B Parcel Development Agreements” herein for descriptions of such development agreements.
See also “THE PORT COVINGTON PROJECT” generally for descriptions of the phases of development
that are completed, ongoing, and expected to occur in the future.
Pursuant to the Tax Increment Act and the Tax Increment Ordinance the City (i) designated the
Development District, (ii) established a special fund for the Development District to be known as the Port Covington
Development District Tax Increment Fund (the “Tax Increment Fund”), and (iii) provided that, for each tax year that
begins after the effective date of the Tax Increment Ordinance (i.e., each tax year beginning on or after July 1,
2017), the City’s Director of Finance shall divide the property taxes on real property within the Development
District, as provided in subsection (d)(3) of the Tax Increment Act, and, if, as, and when appropriated, pay the
portion of the tax collections arising from the taxation of the increase, if any, in the assessed value of real property
subject to taxation located in the Development District since January 1, 2015, exclusive of amounts payable to the
State of Maryland (as more particularly defined herein, “Tax Increment Revenues”) into the Tax Increment Fund.
Pursuant to the Special Taxing District Act and the Special Taxing District Ordinance, the City
(i) designated the Special Taxing District; (ii) established a special fund for the Port Covington Special Taxing
District to be known as the Port Covington Special Tax Fund (the “Special Tax Fund”); (iii) authorized, in the event
Tax Increment Revenues are insufficient to pay the debt service on the Bonds (defined herein) and other amounts
required pursuant to the Indenture, the levy of a special tax (the “Special Taxes”) on all real property in the Special
Taxing District, unless exempted thereby or otherwise by law, for the purposes, to the extent and in the manner set
forth in the Rate and Method; and (iv) directed the City to deposit all Special Taxes levied and collected in the
Special Taxing District, if, as, and when appropriated (the “Special Tax Revenues”) into the Special Tax Fund, if, as
and when appropriated. The Tax Increment Revenues and the Special Tax Revenues are collectively referred to
herein as the “Pledged Revenues.”
Pursuant to the City Enabling Acts and the Ordinances, the City has entered into the Contribution
Agreement with the Issuer, under which the City has (i) pledged the Tax Increment Revenues in the Tax Increment
Fund to secure payment of the 2020 Bonds together with any other Bonds (defined herein) issued upon the order of
the City and pursuant to the Indenture, promptly to be applied to the payment of debt service on the Bonds and
Administrative Expenses and to the replenishment of any deficiency in the Series 2020 Reserve Fund, in accordance
with the priorities set forth in the Indenture and (ii) agreed that, if the Tax Increment Revenues are insufficient to
pay the debt service on the Bonds and Administrative Expenses and to replenish any deficiency in the Series 2020
Reserve Fund, to levy and collect Special Tax Revenues within the Special Taxing District pursuant to the Special
Taxing District Act and the Special Tax Ordinance in an amount sufficient to cure the deficiency. See
“APPENDIX F – Form of Contribution Agreement.”
The 2020 Bonds also are secured by certain funds held by the Trustee under the Indenture.
The City Enabling Acts provide that the City’s obligations under the Contribution Agreement to
transfer amounts to provide for the payment of Debt Service on the 2020 Bonds, are subject to and dependent
on the City’s annual appropriation of the revenues and receipts from the applicable taxes pledged for such
purposes. The City is not legally obligated to make such appropriations. See “SECURITY FOR THE 2020
BONDS – Subject to Appropriation” herein.
The Indenture establishes a debt service reserve fund with respect to the 2020 Bonds (the “Series 2020
Reserve Fund”) that must be maintained in an amount equal to the Reserve Requirement. The Indenture provides
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that the Reserve Requirement is an amount equal to the least of (i) ten percent (10%) of the original principal
amount of the Bonds secured thereby; (ii) one hundred twenty-five percent (125%) of the average Annual Debt
Service on the Bonds secured thereby as of the Closing Date or (iii) the Maximum Annual Debt Service on the
Bonds secured thereby. The Series 2020 Reserve Fund will initially be funded in the amount of
$________________, which is equal to the Reserve Requirement for the 2020 Bonds. For additional information on
the Series 2020 Reserve Fund and the Reserve Requirement, see “SECURITY FOR THE 2020 BONDS – Series
2020 Reserve Fund” and “APPENDIX E – Proposed Form of Indenture of Trust.”
Additional Bonds
The Indenture provides for the issuance of additional bonds (“Additional Bonds”) by the Issuer, subject to
compliance with certain requirements set forth within the Indenture, for any purpose for which obligations of the
Issuer may be issued under the MEDCO Act and the City Enabling Acts, including, but not limited to, completing
the Series 2020 Project or the refunding of any Outstanding 2020 Bonds. Any Additional Bonds will be equally and
ratably secured by the Pledged Revenues and, unless otherwise set forth in the Supplemental Indenture authorizing
such Additional Bonds, the other property pledged under the Indenture. The 2020 Bonds, together with any
Additional Bonds issued under the Indenture, are referred to collectively herein as the “Bonds.” See “THE 2020
BONDS – Additional Bonds” herein.
MuniCap, Inc. (the “Administrator”) will be retained to provide certain services in connection with the
administration of the Districts. See “THE ADMINISTRATOR” herein. See also “THE DISTRICTS AND THE
PLEDGED REVENUES” herein. The Administrator has prepared, based on the assumptions and limitations
contained therein, a Tax Increment and Special Tax Report dated November [24], 2020 (the “Report”) to estimate
anticipated Tax Increment Revenues from the Existing Development (as defined in the Report), the Chapter 1A
Development, and the Chapter 1B Development as proposed by the Owner and the Developer. Based on the Report,
the Administrator has also prepared projections of anticipated assessments of Special Taxes and debt service
coverage for the 2020 Bonds.
The methodology for determining the Special Taxes is set forth in the Rate and Method. See “THE
DISTRICTS AND THE PLEDGED TAX REVENUES – Rate and Method of Apportionment of Special Taxes”
herein and “APPENDIX D – Port Covington Special Taxing District Rate and Method of Apportionment of Special
Taxes.” The Administrator has been designated to determine the Special Taxes that may be required to be collected
in any given year pursuant to the Rate and Method. Special Taxes shall be collected in any given year only if the
Tax Increment Revenues are expected to be insufficient to cover Debt Service on the 2020 Bonds, pay
administrative costs related to the 2020 Bonds and the Districts and maintain certain funds under the Indenture.
The most recent appraisal and market study of the Chapter 1B Development was conducted by Cushman &
Wakefield of Maryland, LLC (the “Appraiser”), which prepared a report entitled “The Appraisal Report,” dated
November 17, 2020 (the “Appraisal and Market Study”). The Appraisal and Market Study provides an independent
value analysis of the properties in the Chapter 1B Development as of June 1, 2020, plus certain undeveloped parcels
within the Districts for the purpose of establishing a framework within which to forecast the taxable values and their
timing in order to estimate Tax Increment Revenues in the Development District with respect to the 2020 Bonds.
The Appraisal and Market Study also provides a market overview and analysis of each proposed component within
the Chapter 1B Development.
The Appraiser estimated the values for the parcels in the Chapter 1B Development upon completion of the
Series 2020 Project and upon completion and stabilization of the proposed vertical development. The Appraisal and
Market Study also included values of the remaining undeveloped parcels in the Special Taxing District. The study
did not independently estimate the value of existing development in the Special Taxing District. The values of these
parcels are estimated based on existing assessed values as determined by SDAT (defined herein). Based on the
assumptions and conclusions set forth in the Appraisal and Market Study, the Appraiser has determined the
aggregate prospective market value of the parcels in the Chapter 1B Development as fully developed will be
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$553,700,000 and the aggregate prospective market value of the remaining undeveloped parcels to be $161,900,000.
The assessed value of the parcels not valued by the appraiser is $126,726,700 (consisting of values of $34,886,700
of currently developed parcels that are expected to be redeveloped and $91,840,000 of developed parcels that are not
expected to be redeveloped). The total value of the parcels in the Special Tax District, assuming completion of the
buildings in the Chapter 1B Development, is estimated to be $842,326,700. This estimate of value compared to the
gross proceeds of the 2020 Bonds results in a value-to-lien of 6.29. For more information with respect to this
calculation, see “APPRAISAL; VALUE-TO-LIEN” herein.
None of the Issuer, the City, and the Underwriters make any representation as to the accuracy of the market
study conclusions or the prospective market value of properties set forth in the Appraisal and Market Study. See
“APPRAISAL; VALUE-TO-LIEN” herein and “APPENDIX A – Appraisal and Market Study.”
Engineer’s Report
An Engineering Report for Port Covington Chapter 1 dated November 11, 2020 (the “Engineer’s Report”),
has been prepared by STV Incorporated (the “Engineer”). The Engineer’s Report contains an overview of the Port
Covington Chapter 1 development area (as described in the Engineer’s Report), discusses the public improvements
that constitute the Series 2020 Project, the land use reviews and approvals required with respect to development,
including, but not limited to, development plan approval, zoning, and environmental review, and certain hindrances
to the development. See “THE PORT COVINGTON PROJECT – Engineer’s Report” herein and “APPENDIX B −
Engineer’s Report.”
None of the Issuer, the City, and the Underwriters make any representation as to the accuracy of the
Engineer’s Report.
Miscellaneous
This Limited Offering Memorandum contains brief descriptions of, among other things, the Issuer, the
City, the 2020 Bonds, the security for the 2020 Bonds, risk factors, the Districts, the Chapter 1 Development, and
the rest of the Port Covington Project, and other information, together with summaries of certain provisions of the
2020 Bonds, the Indenture, and certain other documents related to the 2020 Bonds and the Districts. Such
descriptions and information do not purport to be complete, comprehensive, or definitive. All such descriptions are
qualified in their entirety by reference to such documents, copies of which are available for inspection at the offices
of the Trustee.
THE ISSUER
General
The Issuer is a body politic and corporate and is constituted as an instrumentality created pursuant to the
MEDCO Act. The Issuer was established by statute in 1984 to assist in and complement existing programs of the
Maryland Department of Commerce, by, among other things, providing direct property development capability for
economic development purposes. Pursuant to the terms of the MEDCO Act, the Issuer is authorized to issue
revenue bonds for projects (as defined in the MEDCO Act), including the Series 2020 Project.
The MEDCO Act provides that the Issuer shall be managed by a Board of Directors consisting of twelve
(12) residents of the State. The Secretaries of Commerce and Transportation serve as ex-officio voting Directors.
7
The remaining ten members of the Board are appointed by the Governor with the advice and consent of the Senate
to four-year terms. Two of these ten are to be representatives of local government; three are to be knowledgeable in
real estate or commercial financing; three are to be knowledgeable in industrial development or industrial relations;
and two are to be members of the general public. The Board of Directors elects a chair, vice chair, and treasurer
from among its members. Subject to the approval of the Governor, the Board appoints an Executive Director who
serves at the pleasure of the Board as the chief administrative officer of the Issuer, managing its administrative
affairs and technical activities in accordance with the policies and procedures established by the Board. In addition
to the Executive Director, the Issuer has ten (10) full-time employees.
Robert C. Brennan was appointed the Executive Director of the Issuer in May 2004. Prior to his
appointment, Mr. Brennan served in the Maryland Department of Business and Economic Development (now
known as the Maryland Department of Commerce) as the Assistant Secretary for the Rural Regions in Maryland and
administered the Department’s financing programs. Mr. Brennan began his professional career as an asset-based
lender, and he spent twenty years in the commercial banking and leasing industry. Prior to leaving the field of
banking, Mr. Brennan held the title of Senior Vice President of First Fidelity Bank.
The members of the Board of Directors of the Issuer as of the date of this Limited Offering Memorandum
are listed below. Regardless of term, unless removed, members of the Board of Directors serve until reappointed or
a successor is appointed and confirmed.
• Scott E. Dorsey, Chair, term expires June 30, 2024, Merritt Properties, LLC.
• Rick Woo, Vice Chair, term expires June 30, 2023, Revere Bank.
• Tehma Hallie Smith, Treasurer, term expires June 30, 2024, Law Office of Tehma H. Smith.
• Mary Ann Marbury, term expires June 2023.
• J. Michael Cottingham, term expires June 30, 2022, Rommel USA.
• Barry Glassman, term expires June 30, 2022, County Executive, Harford County, Maryland.
• Jessica Underwood, term expires June 30, 2022, JR Capital Build.
• Harry A. Shasho, term expires June 30, 2024, Shasho Consulting P.A.
• Warren Williams, Jr., term expires June 30, 2019†, The Warrenton Group.
• James Hinebaugh, Jr. tem expired June 30, 2024, Member, Board of County Commissioners
Garrett County.
• Gregory Slater, ex-officio, Secretary of Transportation.
• Kelly Schulz ex-officio, Secretary of Commerce.
†
Although his term has expired, Mr. Williams continues to serve until replaced.
Powers. The MEDCO Act authorizes the Issuer, among other things, to acquire, improve, develop,
manage, market, maintain, lease as lessor or as lessee and operate any project (as defined in the MEDCO Act) in the
State; to acquire, purchase, hold, lease as lessee, and use any property necessary or convenient to carry out its
purposes; to borrow money and issue bonds to finance any part of the cost of its projects; to secure the payment of
such borrowing by pledge of or deed of trust on its properties or revenues; to accept loans, grants or assistance of
any kind from the federal government, a governmental unit, or a private source; to fix and collect rates, rentals, fees
and charges for services and facilities it provides or makes available; and to do all things necessary or convenient to
carry out the powers expressly granted by the MEDCO Act.
Bonds and Notes. As of June 30, 2020, the Issuer had total outstanding bonds and notes of approximately
$2,453,696,847 including indebtedness with respect to over 75 projects of various types, including mortgages, notes,
revenue bonds, lease revenue bonds, industrial revenue bonds, adjustable rate pooled financing revenue bonds, and
first mortgage revenue bonds. The Issuer is also a party to direct financing leases and operating leases.
The several series of outstanding bonds and notes issued by the Issuer are limited obligations of the Issuer,
payable solely from revenues of the Issuer received in connection with the respective project financed or refinanced,
and do not constitute general obligations of the Issuer, and the full faith and credit of the Issuer is not pledged to the
payment of the principal of, interest on, or any redemption price of such series of bonds. Although certain revenue
bonds issued by the Issuer have been in default as to principal and interest, the sources of payment for such
defaulted bonds are separate and distinct from the source of payment for the 2020 Bonds.
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Assets of the Issuer other than the Trust Estate are not available to satisfy claims of holders of the 2020
Bonds. Property and funds held by or mortgaged to the Issuer for a particular issue of bonds are not available to
satisfy claims of holders of other issues of the Issuer’s bonds. The Issuer has no taxing power.
The Issuer intends to issue other series of bonds and notes for the purpose of financing and refinancing
projects, and each such series will be issued pursuant to a resolution or trust agreement separate and apart from any
other resolution or trust agreement, except to the extent a series of bonds may be issued on parity with bonds of
another series if permitted by the applicable resolution or trust agreement or issued pursuant to a general bond
resolution of the Issuer.
THE 2020 BONDS AND INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF
THE ISSUER AND THE PRINCIPAL OR PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY,
AND INTEREST ON THE 2020 BONDS SHALL BE PAYABLE SOLELY FROM, AND SECURED
EXCLUSIVELY BY, THE TRUST ESTATE (DEFINED HEREIN) OR ANY OTHER MONEYS MADE
AVAILABLE TO THE ISSUER FOR SUCH PURPOSE. THE 2020 BONDS SHALL NOT BE, DIRECTLY,
INDIRECTLY OR CONTINGENTLY, A MORAL OR OTHER OBLIGATION OF THE STATE, ANY
OTHER GOVERNMENT UNIT, OR THE ISSUER TO LEVY OR PLEDGE ANY TAX OR TO MAKE
ANY APPROPRIATION TO PAY SUCH AMOUNTS, AND THE ISSUER SHALL NOT BE OBLIGATED
TO PAY THE PRINCIPAL OR PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY, OR
INTEREST ON THE 2020 BONDS EXCEPT FROM THE TRUST ESTATE OR ANY OTHER MONEYS
MADE AVAILABLE TO THE ISSUER FOR SUCH PURPOSE. NEITHER THE FULL FAITH AND
CREDIT NOR THE TAXING POWER OF THE STATE OR ANY OTHER GOVERNMENTAL UNIT OR
THE ISSUER IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR PURCHASE PRICE OF,
REDEMPTION PREMIUM, IF ANY, OR INTEREST ON THE 2020 BONDS. THE ISSUER HAS NO
TAXING POWER.
BALTIMORE CITY
The City is a body politic and corporate and a political subdivision of the State. The City has had a charter
form of government since 1797 and home rule powers since 1918, and is governed by an elected Mayor,
Comptroller, and a City Council. The City has a total area of approximately 92 square miles and the United States
Census Bureau estimates its population to be 593,490 as of July 1, 2019.
Services provided or paid by the City from local, State or Federal sources include police, fire and
emergency services, education, various welfare programs, public works, storm water management, and court and
correctional services. The City also is responsible for adoption and maintenance of building codes and regulation of
licenses and permits, collection of certain taxes and revenues, maintenance of public records, the conducting of
elections and collection and disposal of refuse. There are no overlapping local government entities or taxing
jurisdictions. Accordingly, there is no local government overlapping indebtedness of the City. For additional
information regarding the City, see “APPENDIX L – Certain Information Regarding Baltimore City.”
The City’s financial matters are currently administered through the Department of Finance by the Director
of Finance of the City (the “Director of Finance”). The Director of Finance is appointed by the Mayor on the basis
of experience in financial administration, confirmed by the City Council, and holds office pursuant to the Charter.
The Director of Finance is charged with the administration of the financial affairs of the City, which include the
collection of City taxes, special taxes, special assessments, water, wastewater, and stormwater utility charges, fees
and other revenues and funds of every kind due to the City, the enforcement of the collection of taxes in the manner
provided by law; the custody and safe-keeping of all funds and securities belonging to or by law deposited with,
distributed to, or handled by the City; the disbursement of City funds; and the keeping and supervision of all
accounts. See “THE DISTRICTS AND THE PLEDGED REVENUES – Tax Increment Revenues – Property Tax
Collection Procedures” herein.
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THE 2020 BONDS
General
The 2020 Bonds will be issued in the aggregate principal amount, will bear interest from such date at the
rate, and will mature on the date set forth on the inside front cover of this Limited Offering Memorandum. The
2020 Bonds will be dated the date of delivery and initially issued in fully registered book-entry form, in Authorized
Denominations. See “– Authorized Denominations” below.
The Depository Trust Company, New York, New York (“DTC”), will act as securities depository for the
2020 Bonds. So long as the 2020 Bonds are held in book-entry form, principal or Redemption Price of and interest
on the 2020 Bonds will be paid directly to DTC for distribution to the Beneficial Owners (as defined below) of the
2020 Bonds in accordance with the procedures adopted by DTC. See “– Book-Entry System” below. Payments of
principal or Redemption Price of and interest on the 2020 Bonds will be paid by the Trustee to DTC for subsequent
disbursement to DTC participants who will remit such payments to the Beneficial Owners of the 2020 Bonds.
Interest on the 2020 Bonds will be paid in lawful money of the United States of America semiannually on
March 1 and September 1 of each year (each, an “Interest Payment Date”), commencing on March 1, 2021. Interest
on the 2020 Bonds shall be calculated on the basis of a 360-day year comprised of twelve 30-day months.
THE 2020 BONDS AND INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF
THE ISSUER AND THE PRINCIPAL OR PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY,
AND INTEREST ON THE 2020 BONDS SHALL BE PAYABLE SOLELY FROM, AND SECURED
EXCLUSIVELY BY, THE TRUST ESTATE OR FROM ANY OTHER MONEYS MADE AVAILABLE TO
THE ISSUER FOR SUCH PURPOSE. THE 2020 BONDS SHALL NOT BE, DIRECTLY, INDIRECTLY
OR CONTINGENTLY, A MORAL OR OTHER OBLIGATION OF THE STATE, ANY OTHER
GOVERNMENT UNIT, OR THE ISSUER TO LEVY OR PLEDGE ANY TAX OR TO MAKE AN
APPROPRIATION TO PAY SUCH AMOUNTS, AND THE ISSUER SHALL NOT BE OBLIGATED TO
PAY THE PRINCIPAL OR PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY, OR INTEREST
ON THE 2020 BONDS EXCEPT FROM THE TRUST ESTATE OR FROM ANY OTHER MONEYS
MADE AVAILABLE TO THE ISSUER FOR SUCH PURPOSE. NEITHER THE FULL FAITH AND
CREDIT NOR THE TAXING POWER OF THE STATE OR ANY OTHER GOVERNMENTAL UNIT OR
THE ISSUER IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR PURCHASE PRICE OF,
REDEMPTION PREMIUM, IF ANY, OR INTEREST ON THE 2020 BONDS. THE ISSUER HAS NO
TAXING POWER.
THE PLEDGE AND TRANSFER OF TAX INCREMENT REVENUES AND SPECIAL TAX
REVENUES PURSUANT TO THE CONTRIBUTION AGREEMENT ARE SUBJECT TO ANNUAL
APPROPRIATION BY THE CITY. NO OTHER ASSESSMENTS OR TAXES ARE PLEDGED TO THE
PAYMENT OF THE 2020 BONDS. THE PLEDGE OF PLEDGED REVENUES UNDER THE
CONTRIBUTION AGREEMENT IS NOT A GENERAL OBLIGATION OF THE CITY.
The City’s obligations under the Contribution Agreement to pay amounts equal to the Debt Service on the
2020 Bonds from the Pledged Revenues are subject to and dependent on the City’s annual appropriation of such
revenues and receipts. See “SECURITY FOR THE 2020 BONDS – Subject to Appropriation” herein.
Redemption
Optional Redemption
The 2020 Bonds maturing on or after September 1, 20__, are subject to redemption prior to maturity at any
time on and after September 1, 20__, at the option of the Issuer at the direction of the City, as a whole or in part, in
Authorized Denominations, at a Redemption Price equal to 100% of the principal amount of the 2020 Bonds to be
redeemed, plus accrued interest thereon to the date set for redemption.
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In lieu of redeeming the 2020 Bonds, the Issuer shall have the right to purchase such 2020 Bonds or cause
such 2020 Bonds to be purchased on the date named for redemption at a price equal to 100% of the principal amount
of such 2020 Bonds, plus accrued interest thereon to the date named for redemption, and by their acceptance of the
2020 Bonds, the Holders thereof agree to sell the 2020 Bonds to the Issuer or any purchaser obtained by the Issuer
on such date. If there shall have been deposited with the Trustee the purchase price of such 2020 Bonds on such
date, then such 2020 Bonds shall be deemed to have been purchased on such date whether or not the Holders thereof
surrender such 2020 Bonds for purchase and such Holders shall not be entitled to interest accruing on such 2020
Bonds subsequent to such date and shall have no claims with respect thereto except to receive the purchase price of
such 2020 Bonds so held by the Trustee.
The 2020 Bonds maturing on September 1, 2030*, are subject to mandatory sinking fund redemption prior
to maturity at a Redemption Price equal to the principal amount thereof, plus accrued interest thereon to the date set
for redemption from mandatory Sinking Fund Installments on September 1 of the following years in the following
amounts:
The 2020 Bonds maturing on September 1, 2040*, are subject to mandatory sinking fund redemption prior
to maturity at a Redemption Price equal to the principal amount thereof, plus accrued interest thereon to the date set
for redemption from mandatory Sinking Fund Installments on September 1 of the following years in the following
amounts:
The 2020 Bonds maturing on September 1, 2050*, are subject to mandatory sinking fund redemption prior
to maturity at a Redemption Price equal to the principal amount thereof, plus accrued interest thereon to the date set
for redemption from mandatory Sinking Fund Installments on September 1 of the following years in the following
amounts:
Any 2020 Bonds redeemed as described under “– Optional Redemption” and 2020 Bonds purchased by the
Trustee from available moneys on deposit with the Trustee in accordance with the Indenture shall be credited to the
remaining Sinking Fund Installments in the manner described herein. See “– Credits to Sinking Fund Installments
from Redemptions and Purchases of 2020 Bonds” below.
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Extraordinary Mandatory Redemption
The 2020 Bonds are subject to redemption prior to maturity as a whole or in part at any time, at a
Redemption Price equal to the principal amount of the 2020 Bonds to be redeemed, plus accrued interest thereon to
the date set for redemption from:
(1) funds transferred from the Series 2020 Project Account within the Improvement Fund to
the Series 2020 Debt Service Fund after a determination by the Issuer with the consent of the City that such amounts
are not expected to be expended for the purposes of the Series 2020 Project Account, and
(2) funds transferred from the Series 2020 Project Account within the Improvement Fund to
the Series 2020 Debt Service Fund following a certification that the Series 2020 Project has been completed.
The 2020 Bonds are subject to redemption prior to maturity as a whole or in part at any time, at a
Redemption Price equal to 100% of the principal amount thereof plus accrued interest thereon to the date set for
redemption, at the option of the Issuer at the direction of the City upon the occurrence of any of the following
conditions or events: (i) if title to, or the permanent use of, or use for a limited period of, any portion of the
Development District or the Special Taxing District is condemned or the subject of an agreement with, or action by,
a public authority in the nature of or in lieu of condemnation proceedings, or (ii) if any portion of the Development
District or the Special Taxing District is damaged or destroyed by fire or other casualty, in each case to the extent
that the ability of the properties in the Development District or the Special Taxing District to generate sufficient Tax
Increment Revenues or Special Tax Revenues, as applicable, to pay Debt Service on the 2020 Bonds is substantially
impaired in the judgment of the City after approval by the Issuer, which judgment may rely on information provided
by the Administrator and shall be conclusive and binding on the owners of the 2020 Bonds.
The 2020 Bonds are subject to redemption prior to maturity as a whole or in part at any time, at a
Redemption Price equal to 100% of the principal amount thereof plus accrued interest thereon to the date set for
redemption, upon the written direction of the Issuer, from amounts received by the Trustee constituting Special
Taxes paid as a result of an optional prepayment of the Special Taxes pursuant to the terms of the Rate and Method,
on any date on which 2020 Bonds are subject to optional redemption. Upon any such redemption from optional
prepayments of Special Taxes, the Sinking Fund Installments becoming due in each year shall be reduced, pro rata.
The 2020 Bonds are subject to redemption, in whole or in part at any time, at a Redemption Price equal to
100% of the principal amount thereof plus accrued interest thereon to the date set for redemption, upon the written
direction of the Issuer, from amounts received by the Trustee constituting Special Taxes paid as a result of a
Mandatory Prepayment of the Special Tax as defined in the Rate and Method on any date on which 2020 Bonds are
subject to optional redemption at the option of the Issuer at the direction of the City, at the Redemption Price
provided for such optional redemption on such date plus interest accrued thereon to the date set for redemption.
Upon any such redemption from optional prepayments of Special Taxes, the Sinking Fund Installments becoming
due in each year shall be reduced, pro rata.
The 2020 Bonds subject to optional redemption shall be selected in such order of maturity as the Issuer
may direct, with consent of the City. If fewer than all of the 2020 Bonds of a single maturity shall be called for
redemption, the Securities Depository shall select the particular 2020 Bonds or the portions thereof to be redeemed
from such maturity in accordance with its procedures. If the book-entry system has been discontinued, the Trustee
shall select or cause to be selected the particular 2020 Bonds or portions thereof within the same maturity to be
redeemed by lot or in such other random method as the Trustee in its discretion may determine; provided, however,
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that the portion of any Bond of a denomination greater than the applicable minimum Authorized Denomination to be
redeemed shall be redeemed in part only in Authorized Denominations and that, in selecting portions of 2020 Bonds
for redemption, the Trustee shall treat each Bond as representing that number of 2020 Bonds of the minimum
applicable Authorized Denomination that is obtained by dividing the principal amount of such 2020 Bond to be
redeemed in part by the minimum applicable Authorized Denomination.
Credits to Sinking Fund Installments from Redemptions and Purchases of 2020 Bonds
If the Trustee, pursuant to the terms of the Indenture, purchases 2020 Bonds with amounts on deposit in
any account of the Series 2020 Debt Service Fund being held for the payment of any Sinking Fund Installments
becoming due on any Term Bonds in any year, such amounts shall be applied solely to the purchase of such Term
Bonds, provided that, if in any Fiscal Year the amount credited against the Sinking Fund Installment for such Term
Bonds equals or exceeds the Sinking Fund Installment for such Term Bonds due on the immediately succeeding
September 1, any excess amount on deposit in the applicable account of the Debt Service Fund for the payment of
such Sinking Fund Installment shall be applied by the Trustee to the purchase of any 2020 Bonds and then
outstanding as shall be directed by the Issuer, with the consent of the City. Moneys required to pay the principal or
Redemption Price of and interest on any 2020 Bonds shall not be deemed to be available for application as provided
in this paragraph.
If (i) the Trustee purchases Term Bonds during any Fiscal Year at least forty-five (45) days next preceding
any September 1 on which a Sinking Fund Installment is due with respect to such Term Bonds, (ii) the Issuer
delivers Term Bonds to the Trustee for cancellation on or before the 45th day next preceding any September 1 on
which a Sinking Fund Installment is due, or (iii) Term Bonds subject to redemption from a Sinking Fund Installment
are otherwise redeemed during such Fiscal Year, then an amount equal to 100% of the aggregate principal amount of
such Term Bonds so purchased, delivered to the Trustee for cancellation, or redeemed shall be credited against the
Sinking Fund Installment for such Term Bonds. If the aggregate principal amount of Term Bonds purchased by the
Trustee or the Issuer or redeemed in any Fiscal Year is in excess of the Sinking Fund Installment due on such Term
Bonds on the immediately succeeding September 1, the Trustee shall credit such excess against subsequent Sinking
Fund Installments as directed by the Issuer, with the consent of the City.
Notice of Redemption
So long as the 2020 Bonds are held in book-entry form, notice of redemption will be sent by the Trustee
only to DTC and not to the Beneficial Owners of 2020 Bonds under the DTC book-entry only system. None of the
Issuer, the City, and the Trustee is responsible for notifying the Beneficial Owners, who are to be notified in
accordance with the procedures in effect for the DTC book-entry system. See “– Book-Entry System” below. If the
book-entry system is discontinued, notice of redemption, containing the information required by the Indenture, will
be sent by first class mail, postage prepaid, by the Trustee to the registered owners of the 2020 Bonds to be
redeemed at least twenty (20) days prior to the redemption date.
On the date designated for redemption, notice having been given as provided in the Indenture and any
conditions to such redemption having been satisfied, the 2020 Bonds or portions of the 2020 Bonds so called for
redemption shall become and be due and payable at the Redemption Price provided for redemption of such 2020
Bonds or such portions thereof on such date and, if moneys for the payment of the Redemption Price and accrued
interest are held by the Trustee as provided in the Indenture, interest on such 2020 Bonds or such portions thereof so
called for redemption shall cease to accrue, such 2020 Bonds or such portions thereof so called for redemption shall
cease to be entitled to any benefit or security under the Indenture, and the registered owners thereof shall have no
rights in respect of such 2020 Bonds or such portions thereof so called for redemption except to receive payment of
the Redemption Price thereof and the accrued interest thereon so held by the Trustee. If a portion of a Bond which
is not held under a book-entry system shall be called for redemption, a new Bond or new 2020 Bonds in aggregate
principal amount equal to the unredeemed portion thereof shall be delivered to the registered owner upon the
surrender thereof.
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Transfer and Exchange of 2020 Bonds
A 2020 Bond may be exchanged for an equal aggregate principal amount of 2020 Bonds of any Authorized
Denominations, and the transfer of such 2020 Bond may be registered, upon presentation and surrender of such 2020
Bond at the designated office of the Trustee, together with an assignment duly executed by the registered owner
thereof or such owner’s attorney or legal representative. The Issuer and the Trustee may require the person
requesting any such exchange or transfer to reimburse them for any tax or other governmental charge payable in
connection therewith. Neither the Issuer nor the Trustee shall be required to register the transfer of such 2020 Bond
or make any such exchange of such 2020 Bond, during the fifteen (15) days preceding an Interest Payment Date
applicable to such 2020 Bond, during the fifteen (15) days preceding the date of mailing of any notice of redemption
or after such 2020 Bond has been called for redemption.
Authorized Denominations
The 2020 Bonds will be issued in Authorized Denominations of $100,000 or any integral multiple of
$5,000 in excess thereof.
Additional Bonds
The Indenture provides that the Issuer may issue from time to time Additional Bonds under and secured by
the Indenture for any purpose for which obligations of the Issuer may be issued under the MEDCO Act and the City
Enabling Acts, including (without limitation) (i) obtaining funds necessary to finance or refinance the completion of
the Series 2020 Project; (ii) refunding or advance refunding any Outstanding 2020 Bonds; (iii) to pay all costs
incidental to or connected with the issuance of any Additional Bonds authorized in clauses (i) and (ii) above; and
(iv) to make any deposits into the funds and accounts, including but not limited to deposits into any applicable
reserve fund, required by the provisions of the Supplemental Indenture authorizing such Series of Additional Bonds.
All Additional Bonds issued within the limitations and provisions of the Indenture shall be on parity with, and shall
be entitled to the same benefit and security of the Indenture as the 2020 Bonds. Any Supplemental Indenture
authorizing the issuance of Additional Bonds may provide that such Additional Bonds (1) to the extent allowed by
the MEDCO Act, the City Enabling Acts, and the Ordinances, will be secured by the Series 2020 Reserve Fund or
any other reserve fund securing any other Additional Bonds, (2) will not be secured by a reserve fund, or (3) will be
secured by a separate reserve fund.
The requirements for issuing Additional Bonds are set forth in the Indenture, and include (but not limited
to) the requirement that the Administrator, or such other party satisfactory to the Issuer and the City in their sole
discretion, certifies that based upon its reasonable projections:
(i) the Maximum Special Tax in every Fiscal Year in which 2020 Bonds are Outstanding
shall be at least one hundred ten percent (110%) of the total Annual Debt Service for the corresponding
Fiscal Year on the proposed Additional Bonds and any 2020 Bonds that will be Outstanding after the
issuance of such Additional Bonds, as reasonably projected by the Administrator or such other satisfactory
party, to the extent such Bonds and Additional Bonds are secured by Special Taxes;
(ii) the aggregate Tax Increment Revenues from the Applicable Parcels (defined herein) for
each succeeding Fiscal Year, calculated without regard to any real property tax credits for such Parcels, as
determined by the amount of Pledged Revenues collected by the City in the prior Fiscal Year, as adjusted
by any changes in the phased-in assessed values of property within the Development District as determined
by SDAT and estimated Tax Increment Revenues as a result of expected new development of the
Applicable Parcels, as reasonably projected by the Administrator or such other satisfactory party, shall be at
least one hundred percent (100%) of the aggregate of the Annual Debt Service for such Fiscal Year on the
proposed Additional Bonds and any Bonds that will be Outstanding after the issuance of such Additional
Bonds (net of any investment earnings on amounts on deposit in the Series 2020 Reserve Fund and any
other reserve fund securing such Bonds or Additional Bonds); and
(iii) the Value to Bonds Ratio (defined herein) shall be not less than 3.0 to 1.0.
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The term “Applicable Parcels” means, collectively, each parcel within the Development District for which
(A) a Certificate of Occupancy has been issued or (B) a Building Permit has been issued and construction has
commenced pursuant to such Building Permit and, in each case, is not, as of the date of determination, delinquent in
the payment of the real property taxes due on such parcel. The term “Building Permit” means the permit issued by
the City (acting in its governmental capacity and not as a party to the City Documents) with respect to a property
that is required before the commencement of construction of the vertical improvements may lawfully occur on such
property.
The term “Value to Bonds Ratio” means the ratio obtained when dividing (i) the aggregate full cash
assessed value or the appraised value of all the taxable property within the Development District subject to levy of
Special Taxes by (ii) the aggregate principal amount of the proposed Additional Bonds plus the aggregate principal
amount of any 2020 Bonds that will be Outstanding after the issuance of such Additional Bonds, in each case, as of
the Fiscal Year in which such Additional Bonds are issued. The appraised value shall be based on the “as is” value,
except for a parcel for which a Building Permit has been issued and construction has commenced pursuant to such
Building Permit, in which case the value may be estimated based on the value at completion and stabilization for
such buildings.
For more information on Additional Bonds, including the conditions precedent to the issuance of
Additional Bonds to refund or advance refund all of the Bonds Outstanding immediately prior to the issuance of
such Additional Bonds, see “APPENDIX B – Proposed Form of Indenture of Trust.”
For more information on the calculation of the Maximum Special Tax and the Special Tax Requirement
component thereof, see “THE DISTRICTS AND THE PLEDGED TAX REVENUES – Rate and Method of
Apportionment of Special Taxes” herein and “APPENDIX D – Port Covington Special Taxing District Rate and
Method of Apportionment of Special Taxes.”
Book-Entry System
Principal of and interest on the 2020 Bonds are payable, so long as the 2020 Bonds are in book-entry only
form, through a securities depository, as described in APPENDIX M. DTC will act as securities depository for the
2020 Bonds. The 2020 Bonds are marketed as fully registered securities registered in the name of Cede &
Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC.
Interests of Beneficial Owners will be available in book entry only form and purchasers will not receive certificates
representing their interests in the 2020 Bonds purchased.
In the event that the book-entry only system is discontinued, the 2020 Bonds will be delivered by DTC to
the Trustee and such 2020 Bonds will be exchanged for 2020 Bonds registered in the names of the Direct
Participants or Indirect Participants or the Beneficial Owners identified to the Trustee. In such event, certain
provisions of the 2020 Bonds pertaining to ownership of the 2020 Bonds will be applicable to the registered owners
of the 2020 Bonds as described in the Indenture.
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ESTIMATED SOURCES AND USES OF FUNDS*
The 2020 Bonds are being issued to provide funds, together with other available funds, to finance the Series
2020 Project (defined herein), which is expected to include, as more fully described herein, certain public and other
infrastructure improvements which will be located within the Districts. See “THE PORT COVINGTON
PROJECT” herein. The proceeds of the 2020 Bonds will also be used to initially fund the Series 2020 Reserve
Fund, make a deposit to the Series 2020 Capitalized Interest Account, pay Administrative Expenses, and pay all or a
portion of the costs of issuing the 2020 Bonds.
The table below sets forth the estimated and sources and uses of funds with respect to the 2020 Bonds.
Sources of Funds
Par Amount $133,995,000.00
[Net Original Discount/Premium] -
Total Sources $133,995,000.00
Uses of Funds
Series 2020 Project $105,146,917.66
Series 2020 Capitalized Interest Account(†) 14,751,276.96
Series 2020 Reserve Fund 11,305,163.09
Costs of Issuance(††) 2,791,642.29
Total Uses $133,995,000.00
(†)
The amount deposited in the Series 2020 Capitalized Interest Account on the Closing Date is
expected to be equal to a portion of the interest accruing on the 2020 Bonds from their issuance
through September 1, 2023.
(††)
Includes (but is not limited to) fees and expenses of counsel; fees and expenses of the
Trustee; printing costs; Underwriters’ discount; certain other Administrative Expenses; and other
costs associated with the issuance of the 2020 Bonds.
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ANNUAL DEBT SERVICE*
The following table presents the estimated Debt Service schedule for the 2020 Bonds based on the maturity
dates and interest rates set forth on the inside front cover of this Limited Offering Memorandum and assumes no
redemptions other than mandatory sinking fund redemptions are made. The table does not include any
Administrative Expenses with respect to the Districts.
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SECURITY FOR THE 2020 BONDS
The 2020 Bonds are secured by the Pledged Revenues (generated from ad valorem real property taxes and
special taxes as described herein) transferred to the Trustee by the City pursuant to the Contribution Agreement and
by certain other funds and accounts that are part of the Trust Estate, including, without limitation the Series 2020
Reserve Fund.
Except for the Pledged Revenues, no other assessments or taxes are pledged to the payment of the 2020
Bonds. See “– Trust Estate” below. See also “APPENDIX E – Proposed Form of Indenture of Trust.”
The 2020 Bonds do not contain a provision allowing for the acceleration of the 2020 Bonds in the event of
a payment default or other default under the terms of the 2020 Bonds or the Indenture. The ultimate source of
recovery, in the event of a default on the payment of real property taxes or any Special Tax levied, would be the tax
sale provisions described below. See “THE DISTRICTS AND THE PLEDGED REVENUES – Tax Increment
Revenues – Property Tax Collection Procedures” below.
THE 2020 BONDS AND INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF
THE ISSUER AND THE PRINCIPAL OR PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY,
AND INTEREST ON THE 2020 BONDS SHALL BE PAYABLE SOLELY FROM, AND SECURED
EXCLUSIVELY BY, THE TRUST ESTATE OR FROM ANY OTHER MONEYS MADE AVAILABLE TO
THE ISSUER FOR SUCH PURPOSE. THE 2020 BONDS SHALL NOT BE, DIRECTLY, INDIRECTLY
OR CONTINGENTLY, A MORAL OR OTHER OBLIGATION OF THE STATE, ANY OTHER
GOVERNMENT UNIT, OR THE ISSUER TO LEVY OR PLEDGE ANY TAX OR TO MAKE AN
APPROPRIATION TO PAY SUCH AMOUNTS, AND THE ISSUER SHALL NOT BE OBLIGATED TO
PAY THE PRINCIPAL OR PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY, OR INTEREST
ON THE 2020 BONDS EXCEPT FROM THE TRUST ESTATE OR FROM ANY OTHER MONEYS
MADE AVAILABLE TO THE ISSUER FOR SUCH PURPOSE. NEITHER THE FULL FAITH AND
CREDIT NOR THE TAXING POWER OF THE STATE OR ANY OTHER GOVERNMENTAL UNIT OR
THE ISSUER IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR PURCHASE PRICE OF,
REDEMPTION PREMIUM, IF ANY, OR INTEREST ON THE 2020 BONDS. THE ISSUER HAS NO
TAXING POWER.
THE PLEDGE AND TRANSFER OF TAX INCREMENT REVENUES AND SPECIAL TAX
REVENUES PURSUANT TO THE CONTRIBUTION AGREEMENT ARE SUBJECT TO ANNUAL
APPROPRIATION BY THE CITY. NO OTHER ASSESSMENTS OR TAXES ARE PLEDGED TO THE
PAYMENT OF THE 2020 BONDS. THE PLEDGE OF PLEDGED REVENUES UNDER THE
CONTRIBUTION AGREEMENT IS NOT A GENERAL OBLIGATION OF THE CITY. THE PURCHASE
OF THE 2020 BONDS IS AN INVESTMENT SUBJECT TO A HIGH DEGREE OF RISK, INCLUDING
THE RISK OF NONPAYMENT OF PRINCIPAL AND INTEREST. SEE “RISK FACTORS” HEREIN
FOR A DISCUSSION OF SUCH FACTORS THAT SHOULD BE CONSIDERED, IN ADDITION TO THE
OTHER MATTERS SET FORTH HEREIN, IN EVALUATING THE INVESTMENT QUALITY OF THE
2020 BONDS.
Trust Estate
The Trust Estate, as described in the Indenture, consists of the right, title, and interest of the Issuer in the
following: (i) all of the Pledged Revenues; (ii) all moneys from time to time on deposit in the Improvement Fund,
and the Series 2020 Project Account, the Series 2020 Capitalized Interest Account within the Improvement Fund,
the Debt Service Fund, the Series 2020 Reserve Fund, the Pledged Revenues Fund, the Tax Increment Account and
the Special Taxes Account, within the Pledged Revenues Fund, and any other accounts created pursuant to the
Indenture; (iii) the Contribution Agreement; and (iv) any and all other real or personal property of every name and
nature from time to time after the date of issuance of the 2020 Bonds by delivery or by writing of any kind
conveyed, mortgaged, pledged, assigned or transferred, as and for additional security under the Indenture by the
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Issuer or by anyone on its behalf, or with its written consent, to the Trustee (collectively, the “Trust Estate”). See “–
Subject to Appropriation” below.
Contribution Agreement
The 2020 Bonds and the interest thereon are secured and payable from amounts transferred by the City
pursuant the Contribution Agreement. Amounts to be transferred consist of the Tax Increment Revenues, and, to the
extent the Tax Increment Revenues are insufficient, Special Tax Revenues collected from the property within the
Special Taxing District, including any Tax Increment Revenues and Special Tax Revenues recovered by the City
from the proceeds of the sale or redemption of any property in the Districts subject to sale by the City for
nonpayment of property taxes, in each case if, as and when appropriated.
The City covenants in the Contribution Agreement to deposit the Tax Increment Revenues collected from
the Development District into the Tax Increment Fund and the Special Tax Revenues collected from the Special
Taxing District into the Special Tax Fund. To the extent Tax Increment Revenues are insufficient, the Debt Service
with respect to the 2020 Bonds is expected to be funded by Special Taxes, if any, collected, and appropriated by the
City and transferred to the Trustee pursuant to the Contribution Agreement. The Contribution Agreement is
expected to be amended prior to the issuance of the 2020 Bonds to accommodate the principal and interest payments
dates set forth in the Indenture.
For more information on the Contribution Agreement, see “APPENDIX F – Form of Contribution
Agreement.”
Pursuant to the Contribution Agreement, within each Fiscal Year, on each February 15 and the following
June 15 (with respect to payments of principal of and interest on the 2020 Bonds on the immediately succeeding
Interest Payment Date) and on any other date required for the payment of any other obligations relating to the
Districts, the City shall withdraw moneys representing:
FIRST: the Tax Increment Revenues from the Tax Increment Fund, and
SECOND: the Special Tax Revenues from the Special Tax Fund, but only to the extent amounts
provided for in clause FIRST above are insufficient to pay the amounts required by clauses (i) through (iii)
below,
and transfer such moneys, in the following amounts for the following purposes in the following order of priority, to
the Trustee:
(i) such amount as shall be determined by the Issuer to be necessary to pay Administrative
Expenses (as reflected in a certificate of the Authorized Officer of the Issuer delivered to the City),
(ii) the amount necessary after taking into account any other amounts then on deposit in the
Debt Service Fund, amounts on deposit in the Series 2020 Capitalized Interest Account, and any surplus
amounts on deposit in the Series 2020 Reserve Fund available to be transferred to the Debt Service Fund to
make the amount in Debt Service Fund equal the Debt Service due on the immediately succeeding Interest
Payment Date or such other payment date, as applicable, and
(iii) the amount necessary, taking into account amounts then on deposit in the Series 2020
Reserve Fund after giving effect to any amount required to be transferred from the Series 2020 Reserve
Fund to the Debt Service Fund, to make the amount in the Series 2020 Reserve Fund equal the Reserve
Requirement;
provided that the City’s obligation to make such transfers from the Tax Increment Fund and the Special Tax Fund
shall be subject to annual appropriation by the City for such purposes.
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As soon as practicable following receipt thereof, the Trustee shall deposit all Tax Increment Revenues
received from the City pursuant to the Contribution Agreement to the credit of the Tax Increment Account and
Special Tax Revenues received from the City pursuant to the Contribution Agreement to the credit of the Special
Taxes Account.
On or before each Interest Payment Date, on each date on which the principal or Redemption Price of any
2020 Bonds becomes due and on any other date required for the payment of any Administrative Expenses, the
Trustee shall withdraw, first, from the Tax Increment Account and, then, to the extent amounts in the Tax Increment
Account are insufficient therefor, from the Special Taxes Account and transfer the following amounts to the
following funds in the following order of priority: (A) to the Administrative Expense Fund, such amount as shall be
determined by the Administrator and provided to the Trustee to be necessary to pay Administrative Expenses, (B) to
the Debt Service Fund, the amount necessary, taking into account any amounts then on deposit in the Debt Service
Fund and amounts on deposit in the Series 2020 Capitalized Interest Account and any surplus amounts on deposit in
the Series 2020 Reserve Fund available for transfer to the Debt Service Fund, to make the amount in the Debt
Service Fund equal the principal, premium, if any, and interest due on the Bonds on such date, and (C) to Series
2020 Reserve Fund, the amount necessary, taking into account amounts then on deposit in the Series 2020 Reserve
Fund after giving effect to any amount required to be transferred from the Series 2020 Reserve Fund to the Debt
Service Fund, to make the amount in the Series 2020 Reserve Fund equal the Reserve Requirement.
On June 15 of each Fiscal Year, commencing with the first Fiscal Year in which the amount of Tax
Increment Revenues collected by the City is not less than the Debt Service due on the outstanding 2020 Bonds on
March 1 of such Fiscal Year and the September 1 of the following Fiscal Year, as confirmed by the Administrator,
after any transfer required by the Indenture to the Debt Service Fund, the Series 2020 Reserve Fund, and the
Administrative Expense Fund, any balance on deposit in, or deposited to (1) the Special Taxes Account shall be
transferred by the Trustee to the Debt Service Fund, and (2) the Tax Increment Account in excess of the amount
required to pay Debt Service on the 2020 Bonds on the immediately succeeding September 1 shall be withdrawn by
the Trustee and paid to the City free and clear of the lien of the Indenture or transferred to the Debt Service Fund for
application as directed by the City, but in each case subject to appropriation of such amounts by the City for such
purposes.
On June 15 of each year, after the City has made the transfers required by the Contribution Agreement, any
balance on deposit in, or deposited to, (i) the Tax Increment Fund may be withdrawn by the City free and clear of
the lien of the Contribution Agreement and (ii) the Special Tax Fund may be transferred by the City to the Trustee
for deposit to the Debt Service Fund, but in each case subject to appropriation of such amounts by the City for such
purposes.
For additional information on the Pledged Revenues, see “THE DISTRICTS AND THE PLEDGED
REVENUES” herein. For additional information on the security for the 2020 Bonds, see “APPENDIX E –
Proposed Form of Indenture of Trust” and “APPENDIX F – Form of Contribution Agreement.”
Subject to Appropriation
The City Enabling Acts require that the City’s obligations under the Contribution Agreement and its
obligations to pay the costs and expenses of performing its obligations thereunder, including, without limitation, its
obligation to transfer Tax Increment Revenues and Special Tax Revenues to pay principal of and interest on the
2020 Bonds, are subject to, and dependent upon, the City’s annual appropriation of funds deposited in the Tax
Increment Fund and the Special Tax Fund. The City is not legally obligated to make such appropriations. See
“APPENDIX E – Proposed Form of Indenture of Trust” and “APPENDIX F – Form of Contribution Agreement.”
See also “RISK FACTORS – Failure to Appropriate.”
During the fall of each Fiscal Year, each City agency submits operating budget requests to the City’s
Department of Finance and capital budget requests to the City’s Planning Commission. Following review of the
respective budget requests, the Department of Finance and the Planning Commission prepare recommendations that
are submitted to the Board of Estimates of the City (the “Board of Estimates”) for its review and recommendation to
the City Council. The Board of Estimates also conducts formal hearings on the various agency budget requests. On
the basis of its review, the Board of Estimates prepares and submits a proposed Ordinance of Estimates to the City
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Council. The City Council conducts public hearings on the Ordinance of Estimates and may reduce or eliminate
budget items, but may not increase or add new items. In order to approve the Ordinance of Estimates, the City
Council must vote to pass the Ordinance of Estimates as submitted or with reductions to the appropriations included
therein. The Ordinance of Estimates, as approved by the City Council, is submitted to the Mayor who may further
reduce or eliminate budget items, but may not increase or add new items, prior to signing the Ordinance of Estimates
into law.
The Indenture provides that the Series 2020 Reserve Fund must be maintained in an amount equal to the
Reserve Requirement, which is defined in the Indenture to mean, with respect to 2020 Bonds Outstanding (and any
other Additional Bonds issued pursuant to a Supplemental Indenture that provides that such Additional Bonds shall
be secured by the Series 2020 Reserve Fund), an amount equal to the least of 10% of the original principal amount
of the Bonds secured thereby, 125% of the average Annual Debt Service on the Bonds secured thereby as of the
Closing Date or the Maximum Annual Debt Service on the Bonds secured thereby. “Annual Debt Service” means,
for each Fiscal Year, the sum of (i) the interest due on the Outstanding Bonds in such Fiscal Year, and (ii) the
principal amount of and the Sinking Fund Installments for the Outstanding Bonds due in such Fiscal Year. See
“APPENDIX E – Proposed Form of Indenture of Trust” and “APPENDIX F – Form of Contribution Agreement.”
The Indenture establishes the Series 2020 Reserve Fund. The amounts necessary to fund the Reserve
Requirement with respect to the 2020 Bonds will be deposited in the Series 2020 Reserve Fund from proceeds of the
2020 Bonds.
Initially, the Reserve Requirement with respect to the Series 2020 Reserve Fund is equal to
$________________, which is equal to __________________________________.
The Issuer, with the approval of the City, shall have the option to replace the funds in the Series 2020
Reserve Fund with a Reserve Fund Credit Facility (defined herein) to be held by the Trustee to the credit of the
Series 2020 Reserve Fund.
Moneys in the Series 2020 Reserve Fund shall be used solely for the purpose of making transfers to the
Debt Service Fund to pay the principal or Redemption Price of and interest on the Outstanding Bonds secured
thereby when due, in the event that moneys in the Debt Service Fund are insufficient therefor, making transfers to
the Rebate Fund to make any required rebate payments to the federal government in accordance with the provisions
of the Indenture, paying the principal or interest due on the 2020 Bonds secured thereby at the final maturity of such
2020 Bonds, or if the amount then on deposit in a Series 2020 Reserve Fund is at least equal to the applicable
Reserve Requirement, for transfer in accordance with the provisions of the Indenture described below. The Series
2020 Reserve Fund will be replenished from Tax Increment Revenues, to the extent such revenues are available and
appropriated for such purpose, and then from Special Tax Revenues, when and as appropriated, to the extent that the
Special Taxes, if any, may be collected as set forth in the Rate and Method. However, no assurances can be given
that such amounts will be sufficient to satisfy the deficiency or that the City will appropriate funds therefor.
The Indenture provides that on any Interest Payment Date, or on any date at the request of the Issuer or the
City, if the amounts in a Series 2020 Reserve Fund exceed the applicable Reserve Requirement, the Trustee shall
provide written notice to the Issuer and the City of the amount of such excess and shall transfer such excess in the
following order of priority from the Series 2020 Reserve Fund: (i) to the Series 2020 Capitalized Interest Account
during the Series 2020 Capitalized Interest Period and (ii) thereafter, (A) to the Administrative Expense Fund or
(B) to the Debt Service Fund, as shall be directed by the Issuer with the consent of the City.
Whenever the balance in the Series 2020 Reserve Fund equals or exceeds the amount required to redeem or
pay the Outstanding 2020 Bonds secured thereby, including interest accrued to the date of payment or redemption
and premium, if any, due upon redemption, the Trustee shall transfer the amount in the Series 2020 Reserve Fund to
the Debt Service Fund. In the event that the amount so transferred from the Series 2020 Reserve Fund to the Debt
Service Fund exceeds the amount required to pay and redeem Outstanding Bonds secured by the Series 2020
Reserve Fund, and subject to certain conditions set forth in the Indenture, the amount of the excess shall be paid to
the City free and clear of the lien of the Indenture.
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In determining the value of the assets of the Series 2020 Reserve Fund, there shall be credited to the Series
2020 Reserve Fund the amount that can be realized by the Trustee under any letter of credit, insurance policy,
guaranty, surety bond or other similar facility (a “Reserve Fund Credit Facility”) delivered to the Trustee by the
Issuer with the approval of the City if each of the following conditions is met: (i) on the date of delivery of such
Reserve Fund Credit Facility to the Trustee and throughout the period during which such Reserve Fund Credit
Facility is credited to the Series 2020 Reserve Fund, the unsecured indebtedness or claims-paying ability of the
issuer thereof is rated in one of the three highest rating categories of at least one Rating Agency (without regard
to any gradation within such category); (ii) such Reserve Fund Credit Facility requires that the issuer thereof provide
written notice to the Trustee of any downgrade in any rating of such issuer if the result of such downgrade would
cause such rating to fall below the requirements set forth in the Indenture and, as of the date of valuation the Trustee
has not received such notice; (iii) such Reserve Fund Credit Facility permits the Trustee to realize amounts
thereunder at such time as the Trustee is required to transfer any amount (other than any excess) from the Series
2020 Reserve Fund in accordance with the Indenture; (iv) such Reserve Fund Credit Facility permits the Trustee to
realize amounts thereunder (A) prior to the expiration thereof, if no replacement Reserve Fund Credit Facility is
delivered to the Trustee prior to such expiration date, unless the expiration date of such Reserve Fund Credit Facility
is after the maturity date of the Outstanding Bonds secured thereby and (B) upon any downgrade in any rating of the
issuer thereof if such downgrade would cause such rating to fall below the requirements set forth in the Indenture;
and (v) on the date of delivery of such Reserve Fund Credit Facility to the Trustee, there has been delivered to the
Issuer, the City, and the Trustee an opinion of Bond Counsel as required by the Indenture. See “APPENDIX E –
Proposed Form of Indenture of Trust.”
Permitted Investments
Moneys in the funds and accounts created by the Indenture and held by the Trustee are to be invested, as
directed by the Issuer after consultation with the City in Permitted Investments that shall be deemed at all times to
be a part of such funds and accounts. See “APPENDIX E – Proposed Form of Indenture of Trust” for descriptions
of the Permitted Investments.
Any income realized or loss resulting from Permitted Investments shall be credited or charged to the fund
or account from which such investment was made, except that in the event that the Series 2020 Reserve Fund is
funded with cash or securities in an amount at least equal to the Reserve Requirement, investment earnings on the
Series 2020 Reserve Fund shall be applied as described above under “– Series 2020 Reserve Fund” herein.
Moneys in the Special Tax Fund shall be invested by the City in Permitted Investments and moneys in the
Tax Increment Fund shall be invested in any lawful investment for funds of the City.
Neither the Owner, any other owners of property in the Districts, the Developer, nor any affiliate, partner,
member, officer, director, agent or representative of any of the foregoing has pledged its credit or assets or has
provided any guarantee, surety or undertaking of any kind, moral or otherwise, to pay the principal of, premium (if
any) and interest on, the 2020 Bonds, although the foregoing does not limit or release any obligation of the Owner,
or any other owner of property in the Districts, to pay any City ad valorem tax or Special Tax applicable to property
in the Districts owned by such person.
THE OWNER
The information appearing below under this heading has been furnished by the Owner and the Developer
for inclusion in this Limited Offering Memorandum and, although believed to be reliable, such information has not
been independently verified by the Issuer, the City, the Underwriters, or their respective counsel and no person other
than the Owner or the Developer makes any representation or warranty as to the accuracy or completeness of any
information supplied by the Owner or the Developer. The information included under the heading “RISK
FACTORS,” as it relates to the information contained under this heading, is hereby incorporated under this heading
by this reference.
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General
Baltimore Urban Revitalization LLC, a Delaware limited liability company (the “Owner” or “BUR”), is a
joint venture comprised of two members (each, a “Member”): Baltimore Revitalization Direct Investor, LLC, a
Maryland limited liability company (the “Managing Member”), which serves as managing member and now owns
approximately 28% of the membership interests of the Owner (which is expected to reduce to 25% as other capital
contributions are made to the Owner in accordance with the requirements of the JV Agreement (defined herein)),
and Baltimore Urban Revitalization Equity Investor LLC, a Delaware limited liability company (“BUREI/GS”), a
single-purpose Delaware limited liability indirectly owned by The Goldman Sachs Group, Inc., which currently
owns approximately 72% of the membership interests of the Owner (and is expected to increase to 75% as other
capital contributions are made to the Owner in accordance with the requirements of the JV Agreement; see “– GS
Sponsor Overview” below). The Owner is governed by the Third Amended and Restated Operating Agreement
between BUREI/GS and the Managing Member dated as of August 11, 2017 (as the same has been and may be
further supplemented or amended, the “JV Agreement”), certain provisions of which are described below.
The Managing Member is a Maryland limited liability company comprised of (i) Baltimore Revitalization
Indirect Investor, LLC (“BRII”), a Maryland limited liability company, which holds a 90% membership interest, and
(ii) JHWDB Baltimore, LLC (“JHWDB Baltimore”), a Maryland limited liability company, which holds a 10%
membership interest (which interest does not require any capital contributions). The day-to-day operations of
Owner are conducted by the Managing Member, with BUREI/GS having the right to approve major decisions.
BRII is owned by a subsidiary of Sagamore Development Holdings, LLC (“Sagamore”), a limited liability
company formed by Marc Weller, Founding Partner of the Developer, in partnership with Kevin Plank, Founder,
Executive Chairman, and Brand Chief of Under Armour, Inc. (“UA”). JHWDB Baltimore is wholly owned by
MWSS Investments, LLC, an entity with membership interests held by Marc Weller (80%) and Steven Siegel
(20%). See “THE PORT COVINGTON PROJECT – The Developer” herein for additional information on Marc
Weller and Steven Siegel.
While the Owner will engage in pre-development initiatives across the parcels that comprise the Port
Covington Project (as more fully described below), each parcel within the Chapter 1B Development has been
conveyed to a separate entity to undertake the development of that parcel.
The wholly-owned subsidiary of the Owner which owns each of the parcels in the Chapter 1B
Development (as described below) is 300 East Cromwell Street, LLC, which will further transfer such parcels to
separate entities on or around the date of the issuance of the 2020 Bonds to fully develop such parcel. See “THE
PORT COVINGTON PROJECT – Chapter 1B Vertical Improvements” herein for a description of the separate
entities which will own each of the parcels which comprise the parcels included in the Chapter 1B Development.
An organizational chart for the Owner (shown as the “joint-venture” in the chart) and its subsidiaries is on
the following page. (Parcel E7 (as further described herein) will be transferred to an entity related to the Owner to
be created in connection with such transfer and does not yet appear on the ownership structure chart below.)
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GS Sponsor Overview
Goldman Sachs Urban Investment Group. Established in 2001, the Goldman Sachs Urban Investment
Group (“GSUIG”) is a multi-asset class investing and lending business within the Goldman Sachs’ Merchant
Banking Division of The Goldman Sachs Group, Inc. (“Goldman Sachs”), a publicly traded bank holding company
and a financial holding company, and a worldwide, full-service investment banking, broker-dealer, asset
management, and financial services organization. Goldman Sachs provides a wide range of financial services to a
substantial and diversified client base that includes corporations, financial institutions, governments, and high net
worth individuals. As such, it acts as an investment banker, research provider, investment manager, financier,
advisor, market maker, prime-broker, derivatives dealer, lender, counterparty, agent, and principal.
GSUIG deploys Goldman Sachs’ capital to projects that benefit urban communities, and through its
comprehensive community development platform, GSUIG serves as a catalyst for the revitalization of underserved
neighborhoods. Since its inception, GSUIG has committed over $9.6 billion, facilitating the creation and
preservation of over 40,300 housing units - the majority of which are affordable to low-, moderate-, and
middle-income families - as well as over 2,800,000 square feet of community facility space plus over 11,200,000
square feet of commercial, retail, and industrial space.
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BUREI/GS, the wholly owned subsidiary of Goldman Sachs that currently holds a 72% membership
interest in the Owner, will increase such stake to 75% through capital contributions made to the Owner in
accordance with the JV Agreement. Such contributions are required to be made upon the achievement of certain
milestones that enhance the value of the property, such as completion of the Chapter 1B Development (as described
herein) and the completion of the Chapter 1B Infrastructure Improvements. Following the achievement of such
milestones, the JV Agreement requires additional capital contributions from BUREI/GS, which in turn increase its
ownership interests closer to the ultimate 75%.
The Owner was formed pursuant to the JV Agreement to acquire, own, develop, and operate, directly or
through wholly-owned subsidiaries, the Port Covington Project (as more fully described below). Each contemplated
“Chapter” (as described below) of the Port Covington Project and each parcel within each Chapter (each individual
parcel within a Chapter, a “Parcel” and, collectively, the “Parcels,” which defined terms include the Parcels being
developed in the Series 2020 Project and any Parcels now owned or later acquired in accordance with the JV
Agreement) will be described in the business plan included in the JV Agreement, as that plan is modified from time
to time, though no less frequently than annually.
The Owner is organized and formed for the purposes of engaging in the necessary pre-development, master
planning, site clean-up and infrastructure work required to create parcels which are ready for subsequent vertical
development (the “Horizontal Development”) within the entirety of the Port Covington Project and, to the extent
agreed upon, the vertical development (the “Vertical Development”) of the Parcels through separate entities. In the
event that it is determined, in accordance with the terms of the JV Agreement, that the Owner will proceed with the
Vertical Development pertaining to any Parcel, such Parcel will be conveyed to an entity in which the Owner or a
subsidiary is a partner or member.
Key Principals
At all times during the existence of the Owner (provided that the Managing Member or an affiliate thereof
is then the Managing Member of the Owner), the Managing Member is required to ensure that Kevin Plank and
Marc Weller (collectively, the “Key Principals”) continuously maintain, directly or indirectly, control over the
Managing Member. However, the Managing Member does have the right to appoint a replacement Key Principal to
replace Marc Weller, provided that the Managing Member also appoints a corresponding replacement Guarantor (as
defined below) to replace Marc Weller and a replacement developer, each of which such replacements must be
acceptable to BUREI/GS as to reputation, experience and financial wherewithal.
Under the terms of the JV Agreement, BUREI/GS, acting alone, has the exclusive right and authority on
behalf of the Owner to exercise the termination rights under and in accordance with the terms of any contract or
agreement between the Owner or any of its subsidiaries, on the one hand, and Sagamore (in such capacity, the
“Sponsor”), any Sponsor-affiliate or any person in which Sponsor or any Sponsor-affiliate holds an economic
interest on the other hand (each, a “Sponsor Contract”); or any contract or agreement between the Owner or any of
its subsidiaries, on the one hand, and Developer, any Developer-affiliate or any person in which Developer or any
Developer-affiliate holds an economic interest, on the other hand (each, a “Developer Contract”). Neither the
Managing Member nor the Owner can agree to any amendment or modification of any Sponsor Contract or any
Developer Contract except following receipt of any approvals of BUREI/GS.
Except as provided in the JV Agreement, no member of the Owner may engage in or permit a transfer of
any portion of its interest therein. Permitted transfers for the Managing Member under the JV Agreement include
those with consent of all members and transfers that result in the current members retaining at least 85% (either
directly or indirectly), of the interests of the Owner (which amount is reduced to 51% upon the death of any natural
person that is a Key Principal or direct or indirect member of Managing Member date the Owner was formed). In
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addition, after the completion of the Horizontal Development in accordance with the JV Agreement, and provided
that the headquarters for UA, are constructed in the Port Covington Peninsula and remain in Port Covington
subsequent to such transfer, the Managing Member may transfer its interest to a Qualified Developer (as defined in
the JV Agreement to include an entity having experience with development of similar size projects in the area,
having a sponsor that has the financial wherewithal that is commensurate with that of the Guarantors and Key
Principals, and that is otherwise reasonably acceptable to BUREI/GS upon prior written notice to BUREI/GS but
without the prior written consent of BUREI/GS).
BUREI/GS cannot transfer its interest without the prior written consent of Managing Member, except to
(i) any affiliate or fund in which Goldman Sachs is and thereafter continues to be the controlling party and/or
(ii) (subject to offering the Managing Member the right to purchase the interest), any “Qualified Transferee.” A
Qualified Transferee must meet certain criteria as defined in the JV Agreement, including having liquid assets
(including, without limitation, unfunded capital commitments) of at least $200,000,000 (following the
consummation of the contemplated transaction) and has a tangible net worth of at least $2,000,000,000.
At such time as any individual Parcel is ready for Vertical Development, the Managing Member must
provide BUREI/GS the first opportunity to cause the Owner to participate in the Vertical Development opportunity
in such Parcel. If BUREI/GS elects not to approve the applicable Vertical Development opportunity as a Vertical
Development of a Parcel to be developed by the Owner, the Managing Member must endeavor to sell such Parcel,
joint venture such Parcel, or otherwise enter into a transaction that advances the Vertical Development of such
Parcel by a Person other than the Owner, by a date that is no later than the date that is eighteen (18) months after the
outside date for completion of the Horizontal Development of such Parcel as set forth in the business plan in the JV
Agreement. In the event that the Managing Member fails to cause such a transaction to occur with due diligence,
BUREI/GS has the unilateral right to cause the Owner to effectuate a sale of such Parcel, subject to certain extension
rights more fully described in the JV Agreement.
Remedies on Default
Upon the occurrence of a Default under the JV Agreement, among other remedies, BUREI/GS has the right
to replace Managing Member and become the Managing Member or appoint a new manager of the Owner. If
BUREI/GS exercises such right, BUREI/GS must use commercially reasonable efforts to cause the applicable third-
party lenders to release the Guarantors from all liability under any guaranties associated with financing of any part
of the Port Covington Project.
In the event that the Managing Member or any of the Guarantors or Key Principals engages in or commits
an act of fraud, embezzlement or moral turpitude (as defined in the JV Agreement), or commits a felony (each, an
“Extraordinary Default” under the JV Agreement), BUREI/GS has the right to purchase the interest of the Managing
Member for a discounted price.
Other items of “Default” by the Managing Member or any Guarantor or Key Principal under the JV
Agreement include certain bankruptcy and acts of insolvency; gross negligence or willful misconduct, knowing
material misrepresentation; and/or material breaches of a material provision of the JV Agreement (including certain
key milestones) beyond any applicable notice and/or cure period; and failure to fund certain cost overruns (which
are all construction cost overruns related to the Horizontal Development (including the Chapter 1B Infrastructure
Improvements, as defined below) that are not otherwise approved, including those that are the result of the gross
negligence or intentional misconduct of the Managing Member).
Rights of Sale
Return of Capital Contributions. If, on a date which is the earlier of (a) July 1, 2022 and (b) twelve months
after the sale of all of the Parcels in the Chapter 1 Development as described below, BUREI/GS has not had a return
of all of its capital contributions made to the Owner, then BUREI/GS has the right to cause the Owner to sell or
26
dispose of as many Parcels in the remaining Chapters as are needed to cause BUREI/GS to have a return of all of its
Capital Contributions made to the Owner.
Under Armour Exit Event. In the event that, at any time during the term of JV Agreement, UA (i) files for
Bankruptcy, (ii) liquidates or otherwise ceases to do business, (iii) determines not to proceed with the development
of its headquarters or moves its headquarters anywhere that is not within the Port Covington Peninsula, or
(iv) experiences a downgrade in its bond rating to or below “highly speculative,” (i.e., either B1, B2 or B3 by
Moody’s Investors Service (“Moody’s”) and either B+, B or B- by S&P Global Ratings (“S&P”)) by both Moody’s
and S&P, then BUREI/GS has the right to cause the Owner to sell or dispose of the Port Covington Project.
Sale of Assets on Death or Incapacity. In the event of the death, or incapacity for a consecutive period in
excess of three (3) months, of either of the Key Principals, BUREI/GS shall have the unilateral right to cause the
Owner to sell or dispose of some or all of the Owner assets.
Guaranties
The obligations (as further described below) of the Managing Member under the JV Agreement (with
respect to knowing breaches only) are guaranteed, jointly and severally, by Marc Weller (and any replacement for
Marc Weller appointed by the Managing Member with the approval of BUREI/GS in accordance with the terms of
the JV Agreement), Sagamore, and Kevin Plank (collectively, the “Guarantors”) pursuant to the terms of a Non-
Recourse Carveout Guaranty and Indemnity Agreement (the “Carveout Guaranty”). The Carveout Guaranty is (1) a
joint and several guaranty of the matters described below, and (2) a joint and several indemnity against certain
customary “bad-boy” acts including (i) fraud or knowing material misrepresentations in connection with the Port
Covington Project, the entities involved and the operating agreement of the Owner; (ii) gross negligence or willful
misconduct; (iii) intentional physical waste of the Port Covington Project; and (iv) violations of environmental laws.
The other guaranteed matters include the following: the Managing Member’s indemnity obligation in
connection with a knowing breach of its representations and warranties in the JV Agreement; the Managing
Member’s indemnity obligations with regard to certain “excluded assets” comprised of the properties owned by
entities within the Port Covington Project that are not part of the BUREI/GS investment, including City Garage, Rye
Street Tavern, Sagamore Distillery, and Nick’s Fish House within the Chapter 1A Development; the Managing
Member’s obligations relative to cost overruns (relating to the Horizontal Development, including the Chapter 1B
Infrastructure Improvements) that have not been approved by BUREI/GS (including those that are the result of the
gross negligence or intentional misconduct of the Managing Member); and Managing Member’s obligation to make
certain reconciliation payments under the JV Agreement with respect to distributions received thereunder.
Additionally, the Carveout Guaranty requires the Guarantors to reimburse BUREI/GS and the Owner for any costs
of collecting amounts due under the Guaranty, including attorney fees.
The Carveout Guaranty provides that Kevin Plank’s liability is limited thereunder, but such limitation does
not apply to the guaranty of reconciliation payments; the guaranty of collection expenses; the personal fraud or
knowing misrepresentation of Kevin Plank; and the personal gross negligence or willful misconduct of Kevin Plank.
The Carveout Guaranty also requires that Marc Weller and Sagamore combined must maintain certain net worth and
liquidity levels, failing which Kevin Plank can propose the addition of another Kevin Plank affiliate as a guarantor
to meet any shortfalls, which must be approved by BUREI/GS.
From time to time, UA is involved in litigation and other proceedings, including matters related to
commercial and intellectual property disputes, as well as trade, regulatory and other claims related to its business.
UA routinely discloses any material litigation as part of its required corporate filings with the United States
Securities and Exchange Commission (the “SEC”). Included in UA’s material pending legal proceedings described
in such filings, UA disclosed that in July 2020, UA, as well as Kevin Plank and David Bergman (together, the
“Executives”), received “Wells Notices” from the SEC relating to UA’s disclosures covering the third quarter of
2015 through the period ending December 31, 2016, regarding the use of “pull forward” sales in connection with
revenue during those quarters. A Wells Notice is neither a formal charge of wrongdoing nor a final determination
that the recipient has violated any law, and to date no legal proceedings have been brought against UA or the
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Executives with respect to this matter. UA and the Executives maintain in filings with the SEC that their actions
were appropriate and are pursuing the Wells Notice process, including engaging in a dialogue with the SEC Staff to
resolve such matter.
UA and the Executives (including certain other current and former members of UA’s Board of Directors
and certain former UA executives) are also subject to stockholder derivative complaints from time to time. One
such outstanding shareholder suit includes allegations related to the purchase price paid with respect to certain
parcels of land located in the Special Taxing District from entities controlled by Kevin Plank through Sagamore.
The operative complaint asserts breach of fiduciary duty and corporate waste claims against the individual
defendants in connection with the UA purchase of these parcels and a claim against Sagamore for supposedly aiding
and abetting those alleged breaches. In UA’s filings with the SEC, UA has stated that it believes that the claims
asserted in these derivative complaints are without merit and intends to defend these matters vigorously. However,
because of the inherent uncertainty as to the outcome of these proceedings, UA is unable to estimate the possible
impact of the outcome of these matters.
Legal proceedings in general, and securities and class action litigation and regulatory investigations in
particular, can be expensive and disruptive. Insurance may not cover all claims that may be asserted against UA or
the Executives and UA cannot predict how long the legal proceedings to which UA or the Executives are currently
subject will continue. An unfavorable outcome of any legal or enforcement proceeding may have an adverse impact
on UA’s or the Executives’ business, financial condition and results of operations or UA’s stock price.
The Owner is committed to providing affordable housing, promoting supplier diversity, creating job
opportunities for Baltimore City residents through local hiring, and fostering the growth of minority and women-
owned firms, contractors, and local businesses, and has entered into certain community benefits agreements with
respect to the Port Covington Project.
Sagamore Development Company, LLC (“SDC”), a full-service real estate company founded by Marc
Weller and Kevin Plank in 2013, entered into the largest community benefits agreement in Baltimore City’s history:
the New Port Covington Amended and Restated Consolidated Memorandum of Understanding dated September 14,
2016, and the supplemental Memorandum of Understanding dated April 26, 2017, each by and between the Mayor
and City Council of Baltimore and SDC (collectively, the “City MOU”). As part of the City MOU, SDC agreed to
(i) certain commitments relating to hiring Baltimore City residents, including workforce development training and
apprentice opportunities and the payment of certain minimum wages and health and pension benefits for employees
in all trades within the Port Covington Project; (ii) maximize the use of minority and women-owned businesses for
contracting opportunities, and (iii) create affordable housing units across a range of income levels equal to, or
greater than, twenty percent of the total to-be developed residential dwelling units in the Port Covington Project, of
which a minimum of twelve percent must be in the Port Covington Project. Pursuant to certain assignment and
assumption agreements, SDC assigned the City MOU (other than certain retained funding requirements) to the
Owner, which assumed the obligations thereunder.
Six neighboring communities to the Port Covington Peninsula formed a coalition (the “SB6 Coalition”) to
collaborate on the community and economic impact on such neighborhoods as well as Baltimore City as a whole.
The SB6 Coalition and Sagamore Development Company Community Benefits Agreement and Memorandum of
Understanding, entered into on July 14, 2016 (the “SB6 MOU”) identified certain on-going and long-term needs of
the SB6 Coalition neighborhoods and contains certain funding requirements to achieve the goals for the
communities as set forth therein, including an obligation for each for-profit user of commercial space in the Port
Covington Project to pay an annual contribution of $0.25 per net square foot, as may be adjusted over time, but
which shall in no event be less than $0.15 per net square foot. SDC additionally agreed to provide funding in the
amount of $10,000,000 in baseline funding and work toward a goal of raising an additional $10,000,000 over time.
Pursuant to certain assignment and assumption agreements, SDC assigned the SB6 MOU (including the agreement
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to fund all of the baseline funding other than $1,000,000, the obligation for which was retained by SDC) to the
Owner, which assumed the obligations thereunder.
The information appearing below under this heading has been furnished by the Owner and the Developer
for inclusion in this Limited Offering Memorandum and, although believed to be reliable, such information has not
been independently verified by the Issuer, the City, the Underwriters, or their respective counsel and no person other
than the Owner or the Developer makes any representation or warranty as to the accuracy or completeness of any
information supplied by the Owner or the Developer. The information included under the heading “RISK
FACTORS,” as it relates to the information contained under this heading, is hereby incorporated under this heading
by this reference.
General
Port Covington is a 270 acre peninsula (the “Port Covington Peninsula”) located on the Middle Branch of
the Patapsco River immediately south of Interstate 95 (“I-95”) (the main highway between Baltimore and
Washington, DC) in Baltimore City (the “City” or “Baltimore City”), which includes approximately 237 acres of
fast land and approximately 33 acres of riparian rights. Until recently, the Port Covington Peninsula was an
underutilized former industrial site with multiple owners. The land assemblage for the redevelopment of the Port
Covington Peninsula into a mixed-use, waterfront neighborhood (as further described below, the “Port Covington
Project” or the “Project”) commenced in 2011 with the acquisition of the first parcel. Marc Weller, in partnership
with Kevin Plank, through Sagamore, continued acquiring and assembling the parcels aimed to attract and retain
world-class talent for Baltimore’s business community, together with the separately planned and developed future
global headquarters for UA. Currently, certain improvements are proceeding for the UA headquarters, while plans
for the full buildout are on hold, however, the development of the remainder of the Port Covington Project is not
dependent on such use.
As one of the largest urban revitalization efforts in the United States, the Port Covington Project is
expected to have a transformative impact on Baltimore City’s future. At full completion, the Port Covington Project
is planned to include up to 14.1 million square feet of new, mixed-use development; two-and-a-half miles of
restored waterfront; and over 40 acres of parks, green space, and rights-of-way. See “– Port Covington Project”
below for amounts spent to date on the Port Covington Project and the approved planned uses.
The Site is master planned for approximately 14.1 million square feet of mixed-use real estate as detailed in
the Port Covington Master Plan approved by Baltimore City in June 2016 (the “Master Plan”). See “– Port
Covington Project – Overview” below. The Master Plan provides that the development of the Port Covington
Project will consist of multiple “Chapters.” While the development timeline for the full buildout of the Port
Covington Project is over a fifteen to twenty-year period, the Chapter 1A Development is completed, and upon the
issuance of the Series 2020 Bonds, all required permits and financing will be in place for the Chapter 1B
Development. A summary of the progress for the Port Covington Project is included below:
In 2017, the “Transform Baltimore” zoning ordinance became effective, providing a by-right entitlement
for a robust list of allowable uses, in addition to unlimited height and density on the predominance of the
Site; the Developer created the Port Covington zoning designations. See “– Zoning” below.
The Chapter 1A Development plus improvements for the Baltimore Sun’s recently relocated headquarters,
have resulted in over 460,000 square feet of improvements that has already occurred on Site and includes
completed buildings such as City Garage, Sagamore Spirit Distillery, Rye Street Tavern, West Covington
Park, South Point, and a portion of the Port Covington Bike Path (the “Bike Path”). See “– Phases of the
Port Covington Project – Chapter 1A Development” below.
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The Port Covington Subdivision II, Amendment I subdivision plat reflecting entitlements with respect to
the Chapter 1B Parcels (defined herein) has been recorded.
Certain developer agreements with the City were approved by the Board of Estimates in 2019 to allow
infrastructure construction. See “– Phases of the Port Covington Project – Chapter 1B Development”
below.
Certain other developer agreements with the City were approved by the Board of Estimates in 2019 to
allow the realignment of Cromwell Street to facilitate the Chapter 1B Development and a closing ordinance
was enacted by the City in August 2020 legally closing Cromwell Street, enabling the conveyance of the
abandoned sections of Cromwell Street by deed upon the issuance of the 2020 Bonds in accordance with a
Closing Agreement executed by the City in October 2020. See “– Phases of the Port Covington Project –
Chapter 1B Development” and “– The Parks Memorandum of Understanding” below.
The Parks MOU (defined herein) addresses the design, construction and permitting for parks. See “– The
Parks Memorandum of Understanding” below.
The Sanitary MOU (defined herein) addresses the design, construction and permitting of a sanitary holding
tank underneath Triangle Park. See “– Engineering and Design for the Chapter 1B Infrastructure
Improvements” below. See also “– The Parks Memorandum of Understanding” below.
The Promenade Easement Agreement (defined herein) was approved by the Board of Estimates in August
2020 and commemorates the completion and maintenance of a bulkhead and publicly accessible waterfront
pathway. See “– The Promenade Easement Agreement” below.
Permits for vertical construction are ready for issuance pending payment of fees (to be paid by the SPE
LLCs (defined herein) and to occur simultaneously with or immediately following the issuance of the 2020
Bonds). See “– Phases of the Port Covington Project – Chapter 1B Development” herein.
The Owner has fully negotiated documents, and Bank OZK has received committee approval, for the Land
Loan (defined herein) that will close in conjunction with the issuance of the Series 2020 Bonds. See “–
Chapter 1B Vertical Improvements – Financing of Land Ownership” below.
The Owner has fully negotiated documents, and Bank OZK has received committee approval, for the
construction loans which will fund the Chapter 1B Vertical Improvements (defined herein) on Parcel E1,
Parcel E5A, Parcel E5B, and Parcel E7, all of which will close at the same time as the issuance of the 2020
Bonds. See “– Financing for the Chapter 1B Vertical Development – Conventional Debt Financing”
below.
The Owner has received a commitment from CDA (defined herein) for a $73,500,000 loan, which may
increase to $73,950,000, with respect to Parcel E6 (the “CDA Tax-Exempt Loan”), and has fully negotiated
documents, and received a commitment from the Initial Funding Lender (defined herein) to purchase the
CDA Note (defined herein), which amounts will fund the CDA Tax-Exempt Loan. In addition, the Owner
has fully negotiated documents and has received a signed commitment for the purchase of the construction
loan by Freddie Mac following construction completion and upon meeting certain conditions to conversion.
See “– Financing for the Chapter 1B Vertical Development - Low Income Housing Tax Credits/Parcel E6
Financing” herein.
The Owner has fully negotiated documents for the LIHTC Equity (defined herein) that will assist in the
financing of the construction of the E6 Building (defined herein). See “– Financing for the Chapter 1B
Vertical Development – Low Income Housing Tax Credits/Parcel E6 Financing” herein.
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Project Location
The Port Covington Peninsula is located within the greater Baltimore-Columbia-Towson Core Based
Statistical Area (the “Baltimore CBSA”), which has the 21st largest metropolitan population in the U.S. with more
than 2.8 million residents. See “APPRAISAL; VALUE-TO-LIEN” herein and “APPENDIX A – Appraisal and
Market Study.” The Baltimore CBSA provides overnight access to one-third of the U.S. consumer market via
ground transportation, and is in close proximity to Washington, DC, Philadelphia, New York and Boston. See “–
Transportation Connectivity” below. Greater Baltimore is home to a diverse base of rapidly growing industries
including healthcare, financial services, information technology, cybersecurity, defense, education, bio/life sciences,
and logistics. Baltimore also has an expansive network of secondary and post-secondary institutions, with
approximately 22 four-year institutions and approximately seven two-year enrollment institutions located in the
Baltimore CBSA.
Two miles from the Port Covington Peninsula is the Inner Harbor, a historic seaport, tourist attraction and
landmark of the City, with many area destinations including Oriole Park at Camden Yards (home of the Baltimore
Orioles Major League Baseball professional baseball team), M&T Bank Stadium (home of the Baltimore Ravens
National Football League professional team), the National Aquarium in Baltimore, the Maryland Science Center,
Power Plant Live and eateries, stores, museums, entertainment and shopping. In addition, the University of
Maryland Medical Center, a leading academic teaching hospital, as well as the University of Maryland Law School
and Medical School are within a short walking distance of the Inner Harbor.
Located approximately 1.4 miles from the Port Covington Project, Fort McHenry is a historical landmark
located in the Locust Point neighborhood of the City. It is best known for its role in the War of 1812, when it
successfully defended Baltimore City and its harbor from an attack by the British navy from the Chesapeake Bay,
which battle inspired the writing of the national anthem of the United States. It is currently a national monument
and a significant tourist attraction in the City. In 2018, approximately 486,000 people visited Fort McHenry and
spent an estimated $28.7 million in nearby communities.
The Port Covington Project benefits from its location within the ever-growing Baltimore-Washington
metropolitan area, part of the larger Northeast corridor, the most heavily urbanized region in the United States.
Situated between Baltimore City and Washington are several counties that are consistently ranked as some of the
most affluent and highly-educated in the country, each of which is, since 2010, substantially outpacing the nation’s
average population growth. See “APPENDIX A – Appraisal and Market Study.”
Transportation Connectivity
Directly adjacent to I-95 via three exits, Port Covington has convenient access to points north and south, as
well as to the Baltimore-Washington Parkway, the metropolitan area’s secondary arterial route to Washington DC.
The Port Covington Project is within fifteen miles of Baltimore/Washington International Thurgood Marshall
Airport (“BWI”), which is served by approximately seventeen different airlines with over 650 daily flights
domestically and internationally, ranking BWI the 22nd busiest airport in the country with an estimated 27 million
passengers traveling through its facility in 2018. In addition to passenger air travel, BWI conducts significant air-
freight business, providing a service for regional manufacturers.
Baltimore City is an industrial port city due to its location on the deep-water portions of the Chesapeake
Bay, leading to the Atlantic Ocean. An affiliate of Sagamore purchased, owns, and operates the Baltimore Water
Taxi system that has planned connections from the Port Covington Peninsula to Fort McHenry, as well as the Inner
Harbor.
The Baltimore Light Rail, which runs from the northern suburbs of Baltimore City to BWI to the south, has
a stop at Hamburg Street in the Federal Hill neighborhood of Baltimore City and another stop immediately across
the Middle Branch of the Patapsco River in the Westport community of Baltimore City. Additionally, the commuter
trains between Baltimore and Washington are available at nearby Camden Station as well as the BWI rail station.
Port Covington also provides easy access to Amtrak service along the Northeast Corridor, the busiest rail corridor in
the United States, through Baltimore’s Penn Station, and at BWI, providing access to New York City in as little as
two hours utilizing Amtrak’s Acela service.
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The Port Covington Peninsula is served by two bus lines operated by the Maryland Transit Administration,
which run north-south and originate in South Baltimore. The Chapter 1 Development of the Port Covington Project
has one existing bus stop, with an additional planned location to be installed subsequent to delivery of Chapter 1B
Development. More service and stops are planned to be constructed as needed over time. Baltimore City also
operates a free circulator bus service which provides a connection to Baltimore City’s core, as well as transit hubs
therein. An extension of this circulator into the Port Covington Peninsula was contemplated within the approved
Master Plan, as well as the Transportation Mitigation Plan established November 14, 2018, by Baltimore City’s
Department of Transportation (“Baltimore DOT”).
Overview
The total master planned development site for the Port Covington Project contains approximately 170
acres (the “Port Covington Project Site”), including two and a half miles of waterfront, of which affiliates of the
Owner own approximately 92 acres, and an approximately 65-acre site owned by UA (the “UA Site”). (For more
information on ownership, see “– Land Ownership” below.) The Site is master planned for approximately 14.1
million square feet of mixed-use real estate generally enumerated below and as detailed in the Master Plan.
The projected planned use of the Port Covington Project Site is as follows.
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As of November 13, 2020, the investment in the Port Covington Project is in excess of $300,000,000 (as
described above under “Port Covington Project”). This investment includes the equity investment made to date by
BUREI/GS and the Managing Member as described above under “THE OWNER – General” and the currently
existing loan with respect to the property. See “– Chapter 1B Vertical Improvements – Financing of Land
Ownership” below.
Description To-Date
USES OF FUNDS
Acquisition Activity $201,771,000
Development Activity 97,236,000
Operating Activity (7,609,000)
Financing Costs 10,982,000
TOTAL $302,380,000
SOURCES OF FUNDS
Equity $224,831,000
Debt 77,550,000
TOTAL $302,380,000
As of November 13, 2020. Amounts are rounded.
Note: The line item “Debt” represents the existing mortgage on the
property. For more information, see “– Chapter 1B Vertical
Improvements – Financing of Land Ownership” below
The Master Plan provides for the development of the Port Covington Project Site and the UA Site, which is
expected to consist of multiple phases known as “Chapters.” The development timeline for the full buildout of the
Port Covington Project is over a fifteen to twenty-year period. While the densities above and as shown below are
contemplated within the Master Plan, the Port Covington Project’s by-right entitlement enables these uses to change
as market demands dictate (see “– Zoning” below). Accordingly, future Chapters are anticipated to generally follow
the approved Master Plan framework, but specific buildings and uses are subject to change based upon absorption,
leasing activity, and market conditions. The first Chapter of the Port Covington Project is known as the “Chapter 1
Development” and totals approximately 3.3 million square feet across more than 60 acres of land. In addition to the
Chapter 1A Development and Chapter 1B Development described below, the remaining phase(s) of Chapter 1 are
anticipated to total approximately 2 million additional square feet of mixed-use density across 10 parcels. The
parcels are anticipated to be sold and/or developed with final Chapter 1 Development deliveries occurring in 2025.
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Chapter 1 Development Rendering
Chapter 1A Development
The Chapter 1A Development, the first development within the Chapter 1 Development, plus the
improvements at Baltimore Sun’s recently relocated headquarters comprise approximately 460,000 square feet. The
Chapter 1A Development includes City Garage, Sagamore Spirit Distillery, Rye Street Tavern, West Covington
Park, South Point, and a portion of the Bike Path, all of which are complete and collectively represent an investment
of over $100 million made by the Owner, Sagamore and its affiliates, the Baltimore Sun, and the owners of in the
Port Covington Peninsula.
For more information on the City Garage, Sagamore Spirit Distillery, Rye Street Tavern developments,
see ”– The Developer – Experience of the Developer” below.
Chapter 1B Development
The current development phase of the Chapter 1 Development, known as Chapter 1B (the “Chapter 1B
Development”), is comprised of both infrastructure improvements and vertical improvements. The infrastructure
improvements are permitted under certain developer agreements with the City which were approved in 2019. The
vertical improvements will utilize building permits issued by the Permit and Plans Review Division of City’s
Department of Housing and Community Development, which is expected to issue such permits upon payment of
permit fees. Such payment is expected to occur concurrently with or immediately following the issuance of the
2020 Bonds.
As part of the Chapter 1B Development, a portion of the proceeds of the 2020 Bonds are expected to fund
the creation of approximately seven acres of new roads and the construction of sidewalks, street trees/landscaping,
traffic signals, street lights, utilities, miscellaneous site furnishings, and other infrastructure improvements related to
the Chapter 1B Development (collectively, the “Chapter 1B Infrastructure Improvements”), as more fully described
below. The Series 2020 Project includes the Chapter 1B Infrastructure Improvements, which improvements provide
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the framework and infrastructure necessary to deliver both the Chapter 1B Development and an additional two (2)
million square feet of vertical density across ten (10) parcels. It is anticipated that Additional Bonds will be issued
to pay for waterside amenities and other ancillary infrastructure. For more information on Additional Bonds,
including the conditions precedent to the issuance of Additional Bonds, see “THE 2020 BONDS – Additional
Bonds” herein.
The planned vertical improvements for the Chapter 1B Development include five vertical buildings,
including a parking garage with approximately 1,000 spaces, and approximately 10 acres of publicly available
greenspace, including parks, paths, and shoreline improvements (collectively, the “Chapter 1B Vertical
Improvements”). In addition, approximately 20% of the residential units planned within Chapter 1B (excluding any
short term extended stay apartments or hotel units) will be set aside as affordable housing for families earning less
than 80% of the area median income for the Baltimore Metropolitan Statistical Area (“AMI”), doubling Baltimore
City’s inclusionary housing requirement. See “– Chapter 1B Vertical Improvements” below. The combined
investment of the Chapter 1B Infrastructure Improvements and Chapter 1B Vertical Improvements represents an
investment of approximately $600 million.
Chapter 1C Development
The area shown below as the “Potential ARE Life Sciences Cluster” represents the future Chapter 1C
Development. As part of the strategy for the Port Covington Project to foster and grow strategic ecosystems in
cyber security and life sciences, the Owner has engaged with Alexandria Real Estate Equities, Inc. (NYSE:
ARE) (“ARE”), to create an urban life sciences cluster at the Port Covington Project. To facilitate the development
of this ecosystem, the Owner has entered into an option agreement with ARE with initial plans to target up to
765,000 square feet of new development on four parcels in Port Covington as illustrated below. While the timing of
this development will be dependent upon market and leasing dynamics, all of the public infrastructure necessary to
develop these parcels will be constructed as part of the Series 2020 Project. There is no obligation on ARE to move
forward with this phase should it decline to exercise its option rights under the option agreement.
Alexandria Real Estate Equities, Inc. ARE is an S&P 500® urban office REIT, is the among the first and
longest-tenured owner, operator and developer uniquely focused on collaborative life science, technology, and
agricultural technology (“agtech”) campuses in AAA innovation cluster locations, with a total market capitalization
of $24.3 billion as of March 31, 2020, and an asset base in North America of approximately 41.5 million square feet.
The asset base in North America includes approximately 28.8 million rentable square feet of operating properties
and approximately 2.1 million rentable square feet of Class A properties undergoing construction, approximately 6.5
million rentable square feet of near-term and intermediate-term development and redevelopment projects, and
approximately 4.1 million square feet of future development projects. Founded in 1994, ARE has established a
significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego,
Seattle, Maryland, and the Research Triangle area in North Carolina. ARE has a longstanding history of developing
Class A properties clustered in urban life science, technology and agtech campuses that provide tenants with
dynamic and collaborative environments that enhance their ability to recruit and retain world-class talent and inspire
productivity, efficiency, creativity and success. The following diagram shows the potential ARE life-science
cluster.
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Investment to Date and Remaining Investment
As noted above under “– Port Covington Project – Overview”, the investment to date in the Port Covington
Project made by the Owner is in excess of $300,000,000, which includes the equity investment made to date by
BUREI/GS and the Managing Member (as described above under “– Port Covington Project”) plus an existing loan
with respect to the property (as described below under “– Chapter 1B Vertical Improvements – Financing of Land
Ownership”).
Following the issuance of the Series 2020 Bonds, the following table contains the anticipated future
Chapter 1B Development costs and additional investment sources as follows:
A portion of the Chapter 1B Infrastructure Improvements will be funded from the proceeds of the 2020
Bonds. Projections of the built-out infrastructure are part of the Master Plan, and include roads, sidewalks, parks
and open space, street trees/landscaping, traffic signals, streetlights, bulkhead improvements, stormwater
management facilities (including an interim holding tank), utilities and miscellaneous site furnishings.
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The budgeted uses for the proceeds of the 2020 Bonds include the following:
DPW Public Works Agreement Bond 1.0% 273,691 Bulkhead Improvements 4,940,827
Premium
Additional Permit Fees 450,000 Bike Path 1,557,660
SWM Bond Premium 205,537 General Conditions & 10,969,939
Contingency
Development & Construction 4.5% 4,827,249 Construction Management 175,000
Management Fee Costs(Outside GMP)
Insurance 450,000 GC Discretionary Fee 250,000
Triangle Park (Design and Engineering) 749,449 Utility Fees (Outside GMP) 756,064
Cromwell Street Park (Design and 949,086 Triangle Park Construction Costs 4,492,863
Engineering)
Sanitary Storage Tank (Design and 700,000 Cromwell Street Park 2,731,717
Engineering) (Construction Costs)
Cost Certifications and Inspections 150,000 Sanitary Storage Tank 3,500,000
(TIF) (Construction Costs)
Soft Cost Contingency 4.8% 1,200,000 Construction Contingency 8.3% 5,751,980
(Outside GMP)
TOTAL SOFT COSTS $25,175,156 TOTAL HARD COSTS $87,074,287
The general location of the Chapter 1B Infrastructure Improvements can be seen in the below diagram:
The Chapter 1B Infrastructure Improvements will also include two public spaces designated as Triangle
Park and Cromwell Street Park which the Owner has undertaken to construct in accordance with a Memorandum of
Understanding with the City (the “Parks MOU”). The proposed 28,000 square foot Triangle Park is situated to be
37
the ‘gateway’ of the Port Covington Project, and as planned, includes a pavilion, play area, and lawn. 2,000 square
foot pavilion structure will accommodate utility services and operational space for the entity responsible for all
operations, security, and maintenance of Port Covington’s public areas. Construction on Triangle Park is expected
to begin in the spring of 2021 and be completed in the spring of 2022. Once completed and following a
maintenance period by the Owner of one year, Triangle Park will be conveyed in fee simple or otherwise dedicated
to the City pursuant to the Parks MOU.
Under the surface of the lawn at Triangle Park is a planned underground sanitary storage facility, which is
needed to address constraints posed by the City’s Modified Consent Decree (“MCD”) with the U.S. Environmental
Protection Agency (“EPA”). Current Baltimore City sanitary sewer infrastructure is insufficient and not readily
available to accommodate the quantity of wastewater expected at the Port Covington Project. A holding tank is
planned to be installed which will service the Chapter 1B Development, as well as a portion of future development
at the Port Covington Project. For more information on the MCD and the constraints to be addressed, see “–
Engineering and Design for the Chapter 1B Infrastructure Improvements” below. Once completed and following a
maintenance period by the Owner of one year, the holding tank will be conveyed in fee simple to the City pursuant
to the Sanitary MOU (defined herein).
Cromwell Street Park is designed as pedestrian-only open-air space adjacent to Cromwell Street. As
planned, it will consist of 14,300 square feet of open space that reconciles the new street grid and misaligned
elevations with existing underutilized open space in front of two existing businesses (Rye Street Tavern and
Sagamore Spirit Distillery). Construction is expected to begin in spring 2021 and be completed in spring 2022.
Once completed and a maintenance period by the Owner of one year, Cromwell Street Park will be conveyed in fee
simple to the City pursuant to the Parks MOU.
The Chapter 1B Infrastructure Improvements also include certain walkways and promenades (the
“Promenades”), and certain bulkhead support structures as more fully described below under “– Engineering and
Design for the Chapter 1B Infrastructure Improvements – Bulkhead Improvements” (together with the Promenades,
the “Promenade Improvements”) which the Owner has undertaken to construct in accordance with a Pedestrian
Promenade Easement Agreement entered into with the City (the “Promenade Easement Agreement”). Pursuant to
the Promenade Easement Agreement, the Owner will grant to the City a non-exclusive permanent easement for
pedestrian ingress and egress in, over and through the Promenades, while retaining full private ownership to the land
underlying the Promenades. The Promenade Easement Agreement provides that, to the extent allowable in
accordance with applicable laws and regulations, the Promenade Improvements along the waterfront of the Patapsco
River be exempt from any buffer mitigation requirements and afforestation requirements in connection with the
construction, operation, repair and replacement of such Promenade Improvements but the Owner will remain
responsible for meeting all storm water management requirements. The Owner shall be responsible for maintaining
and keeping the Promenade Improvements (including any abutting bulkhead improvement) in a safe condition and
in good order and repair.
All of the required developer’s agreements providing the right to construct the Chapter 1B Infrastructure
Improvements on behalf of the City were approved by the City’s Board of Estimates as of November 20, 2019, and
all permits necessary to construct the Chapter 1B Infrastructure Improvements (other than Triangle Park, Cromwell
Park and the holding tank) are anticipated to be received prior to the issuance of the 2020 Bonds.
The construction of the Chapter 1B Infrastructure Improvements is currently underway, and the following
chart describes the status of each improvement with respect to permitting, the cost to construct, and the estimated
completion timeline.
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Expected Percentage
Permit Construction Construction
Public Improvement Permit Required Construction Completion as
issuance Start Cost
Completion of Oct 2020
COM2019-00638 9/4/19
Public R-O-W
DA #1427D 9/18/19 9/4/2019 10/31/2023 20% $29.7M
Improvements
DA #1427E 11/20/19
Sanitary Holding Tank HCD Permit with DPW TBD TBD 10/22/2022 0% $3.5 M
COM2019-00608 5/15/19
COM2019-00609 5/15/19
Bulkhead Improvements MDRCD04CJ-NPDES NOI 5/16/19 6/17/2019 3/1/2020 100% $3.7M
16-0360(2) -Wetlands
8/22/19
License (JPA)
STV is the civil engineering firm responsible for the overall design of the Chapter 1B Infrastructure
Improvements, performed a utility capacity analysis based on the build-out development program and existing uses
scheduled to remain for the Port Covington Project, as well as available public utility systems at the Port Covington
Project’s perimeter. The analysis included water, sanitary sewer, storm drain, and conduit infrastructure. STV
participated in meetings with the local utility providers (Baltimore City Department of Public Works (“DPW”),
Baltimore DOT, Baltimore Gas and Electric (“BGE”), Comcast, and Verizon) to confirm assumptions, assess
system capacities, and verify necessary utility design parameters. See “APPENDIX B – Engineer’s Report.”
Utility Capacity Analysis. To document available water flow and pressure, STV obtained fire flow test
data and prepared a water simulation network model for the new water distribution system. This was done to
confirm the design was appropriate for the given flow into the Port Covington Project. The new water distribution
system, duct bank, gas lines, and other conduit designed to serve the Port Covington Project were specified by
and/or based off standard service requirements from Baltimore City and BGE. As required to facilitate construction
of the Series 2020 Project, interim service provisions were incorporated into the drawings and plans for the Port
Covington Project to maintain uninterrupted utility services for adjacent properties.
Sanitary Sewer Analysis. While coordinating with DPW on sanitary sewer design, it was discovered that
the pump station, into which the sanitary sewer line for the Chapter 1B Development will tie, is constrained by
existing load and certain restrictions placed on DPW under the MCD. Specifically, the existing sanitary main from
Chapter 1 within McComas Street sizes down from a 10” pipe to an 8” pipe, unnecessarily constricting flow to the
McComas Street Pump Station. The City’s sanitary infrastructure therefore experiences intrusion during wet-
weather events, leading to overflows. To mitigate this condition, the Developer has worked with DPW to include an
upgrade to the existing sanitary main to the appropriate size in the approved plans for the Chapter 1B Infrastructure
Improvements, which will be funded with the proceeds of the 2020 Bonds.
In addition to the sanitary main upgrade, the Developer is working with DPW to engineer a wet-weather
holding tank to serve the entirety of the Chapter 1 portion of the Port Covington Project. This improvement will
keep effluent from entering Baltimore City’s sanitary sewer during a large-scale weather event to prevent overflows
at the Gould Street Pump Station and will release effluent into the system once the weather event has completed and
Baltimore City’s system has restored to normal operation. Design and installation of such an improvement is not
atypical for large developments in Baltimore City, which are subject to the City’s constraints under the MCD.
The Developer has entered into a Memorandum of Understanding with the City with respect to the sanitary
sewer solutions described above (the “Sanitary MOU”), which are sufficient for the entirety of the Chapter 1
Development. The Sanitary MOU also contains additional solutions for the remainder of the Port Covington
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Project. See “APPENDIX B – Engineer’s Report – Appendix G” and “RISK FACTORS – Failure to Complete
Sanitary Sewer System” herein.
Bulkhead Improvements. The Port Covington Project was designed to include two new, storm drain
outfalls along the eastern side of the Port Covington Project site adjacent to the Middle Branch of the Patapsco
River. Because the outfall design included improvements below mean high water, a Joint Permit Application was
secured from the State of Maryland Department of the Environment (“MDE”) and the United States Army Corps of
Engineers. One outfall was designed to be installed along soft shoreline and the other to be improved with a new
sheet pile bulkhead at an existing relieving platform under a separate contract (collectively, the “Bulkhead
Improvements”). The Bulkhead Improvements are subject to the Promenade Easement Agreement as described
above.
Construction Documents
STV also prepared the construction documents for the Series 2020 Project, which include three major
components of mass grading drawings, an advanced public works developer’s agreement, and a Public Works
Developer’s Agreement DA-1427-E with the City. Those three drawing packages were consolidated into a single
guaranteed maximum price construction contract with Whiting-Turner (defined herein) for the Series 2020 Project.
Consulting, design, engineering, legal, construction, inspection and other costs necessary for the Series 2020 Project
were contracted by the Developer to be invoiced separately from any work on the Chapter 1B Vertical
Improvements, or were purchased under contracts with scopes that specifically included work for the Series 2020
Project only.
Environmental Review
Environmental studies were performed with respect to all the Port Covington Project Site properties. Geo-
Technology Associates, Inc. (“GTA”) performed numerous Phase I and Phase II Environmental Site
Assessments (“ESAs”) dating from 2015 to 2019 and address specific properties in the Port Covington Project.
According to these ESAs, the common historical uses of the Port Covington Project properties (e.g., railroad loading
operations, storage, maintenance and repairs, and other industrial and machine-based operations, including
operations conducted by Schuster Concrete and the DPW) have resulted in soil and groundwater characteristics that
are generally consistent throughout the Port Covington Project area. Soil sampling showed elevated levels of
metals, polycyclic aromatic hydrocarbons, petroleum hydrocarbons and volatile organic compounds (VOCs), and
groundwater sampling showed elevated metals and petroleum hydrocarbons.
All of the properties owned or controlled by the Owner were entered into the MDE’s Voluntary Clean-Up
Program (“VCP”) prior to formal acquisition. An Environmental Management Plan (“EMP”) was developed by
GTA and approved by MDE on April 5, 2019, to ensure the Chapter 1B Infrastructure Improvements could be
achieved. The EMP was submitted to the MDE for approval so that a No Further Action (“NFA”) letter could be
obtained following implementation of the proposed remedies within the Chapter 1 Development. The proposed
remedies for the site include capping (e.g. asphalt, concrete, and MDE-approved residential clean fill), impacted soil
removal (if necessary), proper management of groundwater during dewatering activities, construction observation to
document the EMP implementation, site-specific Health and Safety Plan (“HASP”) implementation during
construction, and soil material management governed by a Comprehensive Soil Management Plan dated April
2016 (“CSMP”) prepared by GTA that applies to the overall Port Covington Project Site. Engineering and
institutional controls will ensure that the selected remedial methods and designs (e.g., capping, deed restrictions, and
maintenance) meet or exceed regulatory standards that are acceptable to MDE.
During implementation of the EMP, GTA prepares monthly EMP progress reports summarizing the
remedial activities occurring during that month. These monthly progress reports are submitted to MDE to
demonstrate implementation of the EMP. Additionally, quarterly CSMP update reports are submitted to MDE.
Both CSMP and EMP update reports include the Port Covington Project Site and summarize the environmental
management of the identified soil and groundwater impacts thereon.
Following the completion of remedial actions and capping of each Chapter of the Port Covington Project,
MDE will issue a certificate of completion for each of the development blocks acknowledging that the conditions of
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the EMP have been met. A NFA letter is expected to be issued by the MDE once all work on the Chapter 1B
Vertical Improvements and the Chapter 1B Infrastructure Improvements are completed, and the Port Covington
Project Site will then be submitted for acceptance into, and closure through, the VCP. Given the continuous
oversight of the Port Covington Project Site by MDE, the implementation of the EMP, and the existing data for the
Port Covington Project Site, it is expected that each block subject to EMP will be closed out through a No Further
Requirements Determination (“NFRD”) and previously-executed deed restrictions. The NFRD and deed restrictions
will remain associated with each property in perpetuity and will transfer with title during ownership changes. See
generally “APPENDIX B – Engineer’s Report – Appendix J.”
Zoning
On June 5, 2017, a comprehensive rezoning process known as “Transform Baltimore” became effective,
replacing Baltimore City’s 1971 Zoning Code. As part of the approval process for Transform Baltimore, the Port
Covington Peninsula received approvals for its own zoning district and sub-districts, providing a by-right
development entitlement for such district. See “APPENDIX B – Engineer’s Report”.
The key zoning and entitlement highlights for the Port Covington Project include:
An overall zoning district tailored to the Port Covington Project with four sub-districts to achieve the
transformation of Port Covington from a heavy industrial area to a dense, mixed-use community;
Matter-of-right entitlements for residential, commercial, and industrial uses (as detailed more fully with
respect to each sub-district below);
No Floor Area Ratio (FAR) or minimum lot area requirements throughout the Port Covington District;
Unlimited height and density in two of the four sub-districts, comprising 100 acres;
Parking requirements which can be satisfied anywhere within the Port Covington Project zoning district;
and
Flexible signage entitlements allow for a wide variety of sign types, including large-scale digital graphics.
The Master Plan calls for parking garages to be located throughout the Port Covington Project and most
buildings are not designed to accommodate parking on site. The concept is to allow the parking to be located along
routes where people enter the Port Covington Project to minimize congestion and make streets and roads more
pedestrian and bike friendly. Substantially all of the parking needed for the Chapter 1B Development will be
accommodated in the approximately 1,000 space garage to be built on Parcel E1 with additional surface parking
planned to be developed as needed.
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A map of the specific zones within the Chapter 1B Development and a description of the zones in the Port
Covington Project are provided below.
Port Covington Waterfront (PC-1): This area includes the Sagamore Spirit Distillery (a manufacturing use).
Retail, hotel, open space uses, waterfront, and maritime uses are all permitted by-right. Buildings in this district are
limited to 100 feet in height. There are otherwise no floor area ratio (“FAR”), minimum lot area, or setback
requirements.
Port Covington East of Hanover Street (PC-2): This area includes residential, office, a wide variety of
retail, hotels, open space and industrial uses as well as a mix of entertainment uses. The industrial use for this area
includes maker space, manufacturing, and light industrial uses. There are no height limits, required setbacks,
minimum lot area requirements, or FAR limitations.
Port Covington West of Hanover Street (PC-3): This area includes additional industrial uses to the area
East of Hanover Street, with the benefits of a mixed-use district. This area is limited to 200 feet in height; however,
there are otherwise no FAR limitations, minimum lot area, or setback requirements. All PC-3 zoned areas are
outside of the Chapter 1B Development.
Port Covington Under Armour Future Campus (PC-4): This zoning district will accommodate the
headquarters office and innovation space, the light industrial space needed for prototype development, as well as
open space, recreational facilities and other amenities. There are no height limits, required setbacks, minimum lot
area requirements, or FAR limitations.
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Land Ownership
The Owner currently owns approximately 92 of the approximately 270 acres of the Port Covington
Peninsula through various wholly-owned subsidiaries. Another approximately 13 acres are owned by Sagamore and
its affiliates, and UA and its affiliates own approximately 65 acres (for the anticipated development of its future
global headquarters). The balance of the Port Covington Peninsula is currently owned by other entities, including
approximately 36 acres owned by Baltimore City:
The Development District is comprised of approximately 237 acres of fast land and riparian rights located
within the Port Covington neighborhood. The Special Taxing District is comprised of approximately 155 acres of
the larger Development District. The Special Taxing District is comprised of properties which the Owner, through
various wholly-owned subsidiaries, owned at the time the Special Taxing District legislation was approved in 2016.
Other than approximately 1.9 acres owned by Baltimore City, all the property in the Special Taxing District is
privately owned by the Owner and its affiliates, together with Sagamore and its affiliates, and UA and its affiliates.
(See “– Land Ownership” above).
The Development District and the Special Taxing District are shown in the maps on page ii herein. For
more information the Districts, see “THE DISTRICTS AND THE PLEDGED REVENUES” herein.
The “Tax Increment and Special Tax Report” included as APPENDIX C projects $21,732,000* of net
Special Taxes with respect to certain property owned by the Owner and its affiliates, which is primarily
Undeveloped Property but also includes some Developed Property owned by the Owner (collectively, the “Owner’s
Undeveloped Land”) within the Special Taxing District. See “RISK FACTORS – Uncertainty of Methodology of
Calculation; Dependence on Projections” and “– Concentration of Ownership; Failure to Pay Property Taxes or
Special Taxes” herein.
The Owner’s Undeveloped Land subject to Special Taxes has a projected value of $124,250,000 as of
September 2023 in accordance with the Appraisal and Market Study included as APPENDIX A. To facilitate
payment of Special Tax obligations, the Owner has agreed to escrow an amount projected to be approximately
$10,910,000* immediately following the issuance of the 2020 Bonds. See “– Owner’s Undeveloped Land Special
Tax Account” below. While certain Chapter 1B Development project costs and remaining net obligations for
Special Taxes are anticipated to be funded through additional Owner capital contributions totaling approximately
$20.5 million, the following additional sources of funds are anticipated by the Owner to be utilized over time to pay
for any remaining projected Special Taxes obligations to the extent available in the future: (1) revenues resulting
from the sale of Owner’s land in the Port Covington Project Site, which is fully entitled for over two million square
feet of additional development in the remaining Chapter 1 parcels and ten million square feet of additional
development potential in future Chapters; (2) additional private deed restriction payments to the Owner resulting
from additional density being developed in excess of the Chapter 1A Development and Chapter 1B Development
(See “– Phases of the Port Covington Project – Chapter 1C Development” above and “– Financing for the Chapter
43
1B Development” below); and (3) additional real property tax increment generated from additional density
developed within the Development District that would naturally reduce the amount of obligations for Special Taxes
over time.
In addition to the payment arrangement mentioned above, the Owner has further agreed to establish a
second arrangement relative to the amount of Special Taxes payable on parcels in the Special Taxing District owned
by other property owners. See “– Special Tax Escrow Account and Surety Bond (Other Properties).” See also
“– Owner’s Undeveloped Land Special Tax Account” below.
The Owner will impose and record among the Land Records of Baltimore City a “Declaration of Covenants
(Port Covington Tax Supplements)” (the “Tax Supplement”) as a requirement that “runs with the land” and
therefore applies to all future land owners, an instrument that will require each entity owning a Chapter 1B
Parcel that is developed as part of the Chapter 1B Development (for such purposes, each a “Vertical Developer”) to
make certain payments to the Owner to adjust the share of Special Tax obligations as between Owner (to the extent
of its control over undeveloped parcels in the Special Taxing District) and each Vertical Developer, but only to the
extent a Vertical Developer seeks and secures an abatement on City property taxes (including Enterprise Zone Tax
Credits and Brownfields Property Tax Credits (as such terms are defined herein). The amount payable by each
Vertical Developer under the Tax Supplement is determined by subtracting the actual property taxes paid from a
specified “Minimum Required Payment” as described below.
The Minimum Required Payment is based on the actual uses in building, with four defined categories:
- Office Space is simply the actual space, based on assessable floor area that is devoted to office use, as
determined by SDAT.
- Retail Space is the actual space, based on assessable floor area that is devoted to retail uses, as
determined by SDAT.
- Residential Space is measured by dwelling units and is broken into two categories: “Affordable
Residential Units” are either designated for, or are priced to be affordable to, families earning less than
80% of AMI. “Market Rate Residential Units” are all other dwelling units.
The Minimum Required Payment from the Vertical Developer of a building is then based on the sum of
certain calculated amounts, tied to the uses described above. The “Base Office Payment” is $2.50 per square foot.
The “Base Retail Payment” is $2.00 per square foot. The “Base Affordable Residential Payment” is $1,000 per unit.
The “Base Market Residential Payment” is $2,000 per unit. Each of the base amounts increases annually during the
term of the Tax Supplement.
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The following table summarizes the annual Minimum Required Payment by parcel.
Each Vertical Developer will be required to make an annual “Leveling Payment” equal to the sum of the
Minimum Required Payments for the uses in the building, less the amount of actual Baltimore City property taxes
paid. Each Leveling Payment is due no later than the last day of the month in which City property taxes can be paid
without incurring a penalty or interest. The Owner is required to advise each Vertical Developer on or before the
payment date of the Leveling Payment due from the Vertical Developer.
The Tax Supplement only applies to a building for the period its secures the applicable property tax
abatement, which abatements are expected to include either or both of the Enterprise Zone Tax Credits and the
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Brownfields Property Tax Credits (see below for a discussion of Enterprise Zone Credits and Brownfields Property
Tax Credits as they apply to the properties in the Special Taxing District), which are available for up to ten years. It
is not anticipated that any other property tax credits, even if available with respect to the Parcels, will be utilized.
Upon the expiration of the abatement period, the Tax Supplement will be released as to the applicable Parcel.
The table on the following page summarizes the projected Leveling Payments for the Chapter 1B
Development.
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Projected Leveling Payment (Chapter 1B Development)2
Tax Bond
Year Year Chapter 1B Development Leveling Payment
Beginning Ending E6 E5B E5A E7 E1 Total
1-Jul-20 1-Sep-21 $0 $0 $0 $0 $0 $0
1-Jul-21 1-Sep-22 $0 $0 $0 $0 $0 $0
1-Jul-22 1-Sep-23 $0 $0 $0 $0 $0 $0
1-Jul-23 1-Sep-24 $139,189 $64,416 $468,306 $600,835 $178,266 $1,451,013
1-Jul-24 1-Sep-25 $96,270 $40,968 $466,623 $599,501 $149,310 $1,352,672
1-Jul-25 1-Sep-26 $51,737 $16,650 $464,637 $597,816 $119,195 $1,250,035
1-Jul-26 1-Sep-27 $51,563 $16,439 $472,317 $607,700 $119,520 $1,267,539
1-Jul-27 1-Sep-28 $49,346 $15,393 $476,781 $613,643 $116,760 $1,271,923
1-Jul-28 1-Sep-29 $48,085 $14,734 $436,774 $566,608 $115,463 $1,181,664
1-Jul-29 1-Sep-30 $47,158 $14,209 $395,869 $518,538 $114,686 $1,090,460
1-Jul-30 1-Sep-31 $46,130 $13,639 $353,323 $468,522 $113,769 $995,384
1-Jul-31 1-Sep-32 $44,992 $13,023 $309,099 $416,514 $112,701 $896,329
1-Jul-32 1-Sep-33 $43,735 $12,354 $263,160 $362,472 $111,465 $793,186
The Owner has entered into a special tax escrow and surety pledge agreement with the City to establish a
“Special Tax Escrow Account” for the benefit of the City, and to make certain annual deposits into the Special Tax
Escrow Account. The initial amount to be deposited in the Special Tax Escrow Account immediately following the
issuance of the 2020 Bonds is $__________. Under the terms of the Special Tax Escrow and Surety Pledge
Agreement, the Owner will make annual payments (each, a “Excess Special Tax Payment”) into the Special Tax
Escrow Account. The annual amounts payable by the Owner reflect, as of current expectations, the amounts by
which Special Taxes for such parcels exceed 25% of the total Special Tax Requirement for the District (the “Excess
Special Taxes”).
The Owner has also agreed to provide a surety bond (the “Surety Bond”) in the initial penal amount of
$14,210,000*, the cumulative estimated annual payments to be deposited into the Special Tax Escrow. The City can
draw under the terms of the Surety Bond to the extent of any shortfall in amounts required to be maintained in the
Special Tax Escrow Account, as determined by the City. THE SURETY BOND PROVIDER IS NOT
OBLIGATED TO MAKE PAYMENTS OF PRINCIPAL OF OR INTEREST ON THE 2020 BONDS.
Pursuant to this arrangement, the Owner will agree, among other things, that (i) the City shall have the sole
and exclusive right of withdrawal of the moneys in the Special Tax Escrow Account, and (ii) the Owner shall have
no right of withdrawal of the funds on deposit in the Special Tax Escrow Account.
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The table below sets for the estimated Excess Special Tax Payments, and is derived from the appendices the Report attached hereto.
48
THE AMOUNTS ON DEPOSIT, IF ANY, IN THE SPECIAL TAX ESCROW ACCOUNT AND
ANY RELATED SURETY BOND OR PAYMENTS THEREUNDER, IF ANY, ARE NOT PLEDGED
REVENUES FOR THE BENEFIT OF THE HOLDERS OF THE 2020 BONDS NOR INCLUDED IN THE
TRUST ESTATE. ACCORDINGLY, ANY AMOUNTS ON DEPOSIT IN THE SPECIAL TAX ESCROW
ACCOUNT OR PAYMENTS UNDER ANY SURETY BOND ARE NOT PLEDGED TO THE PAYMENT
OF DEBT SERVICE ON THE 2020 BONDS.
Projected Special Tax Requirement after Leveling and Excess Special Tax Payments. The following
table summarizes the Special Tax Requirement after the Leveling Payments and Excess Special Tax Payments are
made.
Projected Special Tax Requirement after Leveling and Excess Special Tax Payments*
Tax Bond Special Tax Requirement
Year Year Chapter Under Armour Distillery
Beginning Ending BUR 1B Development and Affiliates SDH & RST Total
1-Jul-20 1-Sep-21 $0 $0 $0 $0 $0 $0
1-Jul-21 1-Sep-22 $0 $0 $0 $0 $0 $0
1-Jul-22 1-Sep-23 $0 $0 $0 $0 $0 $0
1-Jul-23 1-Sep-24 $2,482,939 $1,609,198 $1,365,749 $2,170 $2,939 $5,462,996
1-Jul-24 1-Sep-25 $2,514,370 $1,516,900 $1,345,585 $2,329 $3,154 $5,382,339
1-Jul-25 1-Sep-26 $2,550,310 $1,420,320 $1,325,504 $2,499 $3,384 $5,302,018
1-Jul-26 1-Sep-27 $2,553,022 $1,446,083 $1,335,093 $2,622 $3,551 $5,340,370
1-Jul-27 1-Sep-28 $1,954,039 $1,472,361 $1,143,463 $0 $3,989 $4,573,852
1-Jul-28 1-Sep-29 $1,844,681 $1,391,830 $1,078,837 $0 $0 $4,315,347
1-Jul-29 1-Sep-30 $1,888,286 $1,307,526 $1,065,270 $0 $0 $4,261,082
1-Jul-30 1-Sep-31 $1,935,252 $1,219,331 $1,051,528 $0 $0 $4,206,111
1-Jul-31 1-Sep-32 $1,979,783 $1,127,124 $1,035,635 $0 $0 $4,142,542
1-Jul-32 1-Sep-33 $2,029,354 $1,030,779 $1,020,044 $0 $0 $4,080,178
To further secure the payment of Special Taxes with respect to the Owner’s Undeveloped Land within the
Special Taxing District the Owner has agreed to deposit certain funds in the approximate amount of $10,910,000* in
a controlled account (the “BUR Special Tax Account”) to be pledged for the benefit of the City as security for the
Special Tax payment obligations of the Owner.
Pursuant to this arrangement, the Owner will agree, among other things, that (i) the City shall have the sole
and exclusive right of withdrawal of the moneys in the BUR Special Tax Account, and (ii) the Owner shall have no
right of withdrawal of the funds on deposit in the BUR Special Tax Account.
In the event of a failure of any of the Owner or its affiliates to pay Special Taxes due and owing with
respect to the Owner’s Undeveloped Land by the applicable date such Special Taxes are due, the City shall be
authorized, but shall not be required, to draw the funds from the BUR Special Tax Account, in whole or in part, to
apply to the applicable unpaid Special Tax obligations, whether declared immediately due and payable or otherwise.
The City shall annually determine the projected Special Taxes for the Owner’s Undeveloped Land and if funds on
deposit in the BUR Special Tax Account exceed the projected amount of Special Taxes, the excess amounts shall be
released to the Owner. In addition, the Owner may seek reimbursement from amounts on deposit in the BUR
Special Tax Account as Special Taxes are paid on the Owner’s Undeveloped Land and up to 15% of the amount on
deposit may be released annually following the last to occur of: the completion of the Series 2020 Project in
accordance with the terms of the Funding Agreement, the end of the capitalized interest period, or the completion of
the Chapter 1B Development.
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The amount of Special Taxes expected to be owed by the Owner related to the Owner’s Undeveloped Land
is shown in the table below, together with the appraised value of the Owner’s Undeveloped Land.
For more information on the projected Special Taxes, see “– TAX INCREMENT AND SPECIAL TAX REPORT –
Projected Special Taxes” herein.
The information in the following table shows the estimated flow of funds with respect to the BUR Special
Tax Account and is derived from Appendix G-13 in the Report.
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Projected Special Tax Pledge Account and BUR Special Tax Requirement*
Tax Bond Owner's Undeveloped Land Special Tax Account(b) BUR Special
Year Year BUR Special Beginning Projected Special Eligible Ending Tax Requirement
Beginning Ending Tax Requirement(a) Balance Tax Release Release Balance After Account Release
1-Jul-20 1-Sep-21 $0 $10,910,000 $0 $0 $10,910,000 $0
1-Jul-21 1-Sep-22 $0 $10,910,000 $0 $0 $10,910,000 $0
1-Jul-22 1-Sep-23 $0 $10,910,000 $0 $0 $10,910,000 $0
1-Jul-23 1-Sep-24 $2,482,939 $10,910,000 $0 ($1,636,500) $9,273,500 $846,439
1-Jul-24 1-Sep-25 $2,514,370 $9,273,500 $0 ($1,636,500) $7,637,000 $877,870
1-Jul-25 1-Sep-26 $2,550,310 $7,637,000 $0 ($1,636,500) $6,000,500 $913,810
1-Jul-26 1-Sep-27 $2,553,022 $6,000,500 $0 ($1,636,500) $4,364,000 $916,522
1-Jul-27 1-Sep-28 $1,954,039 $4,364,000 $0 ($1,636,500) $2,727,500 $317,539
1-Jul-28 1-Sep-29 $1,844,681 $2,727,500 $0 ($1,636,500) $1,091,000 $208,181
1-Jul-29 1-Sep-30 $1,888,286 $1,091,000 $0 ($1,091,000) $0 $797,286
1-Jul-30 1-Sep-31 $1,935,252 $0 $0 $0 $0 $1,935,252
1-Jul-31 1-Sep-32 $1,979,783 $0 $0 $0 $0 $1,979,783
1-Jul-32 1-Sep-33 $2,029,354 $0 $0 $0 $0 $2,029,354
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THE AMOUNTS ON DEPOSIT IN THE SPECIAL TAX ACCOUNT ARE NOT PLEDGED
REVENUES FOR THE BENEFIT OF THE HOLDERS OF THE 2020 BONDS NOR INCLUDED IN THE
TRUST ESTATE. ACCORDINGLY, AMOUNTS ON DEPOSIT IN THE SPECIAL TAX ACCOUNT ARE
NOT PLEDGED TO THE PAYMENT OF DEBT SERVICE ON THE 2020 BONDS.
Businesses located in an Enterprise Zone (defined herein) are eligible for real property and state income tax
credits in return for job creation and investment. The Enterprise Zone Tax Credit Act (defined herein) defines an
Enterprise Zone (for purposes of the credit) as either (a) an area that has been so designated by the Secretary of the
Department of Business and Economic Development (“DBED”) through procedures that are described in the statute,
or (b) an area that is designated as either an Enterprise Zone, an “empowerment zone” or an “enterprise community”
under various Federal laws. The Port Covington Peninsula, including the entirety of the Port Covington Project, has
been designated as an Enterprise Zone. The Enterprise Zone Tax Credit Act obligates the City to grant a property
tax credit to eligible projects in an Enterprise Zone.
The tax credit is available for “qualified property,” which is non-residential property used in a trade or
business located in an Enterprise Zone. The credit is calculated only as to the “eligible assessment,” which is the
increase in the assessed value of the property, presumably representing an investment in new construction or
significant renovation.
The tax credit is good for ten years; in most instances the credit is equal to 80% of the eligible assessment
for the first five years and then scales down by increments of 10% over the final five years (i.e. 70-60-50-40-30%
respectively). For particularly disadvantaged areas that the City recommends and DBED approves the designation
of a “focus area,” the credit will remain at 80% for the full ten years and can also be applied to personal property,
however no “focus areas” have been designated within the Development District.
To the extent that any Enterprise Zone Tax Credits are taken by an eligible property, the State is required to
remit back to the City an amount equal to 50% of the funds that were not collected because of the tax to the extent
included in the State budget.
Businesses locating in an Enterprise Zone can also secure income tax credits for wages paid to certain
employees (including increased credits within focus areas) in accordance with the Tax-General Article of the
Annotated Code of Maryland, for creating new jobs, and under the “One Maryland” tax credit program for eligible
project and start-up capital costs. Although not impactful on incremental tax revenues, such incentives may help to
attract tenants to the commercial buildings and spaces within the Port Covington Project.
There is an application process for the tax credits that is handled through the City of Baltimore
Development Corporation (“BDC”). It is anticipated that all eligible properties will apply for the Enterprise Zone
credits, and that assumption has been applied in preparing the projections of anticipated incremental tax revenues.
See “APPENDIX C – Tax Increment and Special Tax Report”.
Within the Chapter 1B Development, it is anticipated that the buildings located on the E5A Parcel and the
E7 Parcel, as well as retail improvements on the remaining blocks (specifically the E1 Parcel, E5B Parcel and E6
Parcel), will be eligible for the Enterprise Zone Tax Credits, and that the owners of the applicable Chapter 1B Parcel
will apply for and use the credits to the extent available.
Currently, three buildings within Chapter 1A Development are benefitting from Enterprise Zone Tax
Credits: City Garage, Rye Street Tavern and the Sagamore Spirit Distillery, each of which also benefit from
brownfields credits, which are further described below.
For further discussion on Enterprise Zone Tax Credits, see “THE DISTRICTS AND THE PLEDGED
REVENUES – Assessment Procedures; Tax Credits” herein.
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Brownfields Property Tax Credits
Brownfields are vacant or underutilized sites where contamination (or the perception thereof) is hindering
new investment. For sites eligible for VCP set out in the Environment Article of the Annotated Code of Maryland
and operated by the MDE, there is a five-year tax credit of 50-70 percent on the increase in City property tax (10
years if the property is in an Enterprise Zone) following the completion of a redevelopment project on a brownfield
site. The City is authorized under Maryland law to take a number of steps, which if adopted, allow for: (a) an
automatic property tax credit against both the State and City property taxes of 50%, after the application of any other
tax credits, for a period of five years; (b) a discretionary additional tax credit of up to 20% (on both State and local
taxes) based on eligibility criteria of the City’s choosing; and (c) an increase in the duration of the tax credit (both
automatic and discretionary) for an additional five years if the property is in an Enterprise Zone. The City has
adopted legislation to incorporate all three elements of the property tax credit program and to establish the City’s
eligibility requirements for the discretionary portion of the tax credit. By doing so, the City has also committed to
contribute 30% of any increased property tax liability on qualifying properties to the City’s Brownfield
Revitalization Incentive Fund.
To be eligible for the credit, and treated as a “qualified brownfields site,” a property must be contaminated
with hazardous substances and be owned or operated by an “inculpable person” (“Inculpable Person”), meaning
someone who has no current and had no prior interest in the contaminated property when applying for recognition as
an Inculpable Person and who did not cause or contribute to the contamination. In addition, the property tax credit
is not available until the completion of a voluntary cleanup or corrective action under the VCP. There are no use
restrictions for eligibility, so that in contrast with the enterprise zone credit (with which it is often paired), residential
properties are eligible.
The resulting property tax credit is now 50% for five years on eligible properties, with the five years
increasing to ten (10) years for properties located in an Enterprise Zone. The additional property tax credit under
City Code is 20% where the sum of the property acquisition and remediation costs exceeds $250,000. As described
above, the extensive environmental remediation conducted on the Port Covington Project Site will make all
properties eligible for the brownfields tax credit at the 70% level for a period of ten years.
Eligibility for the Brownfields Property Tax Credits is determined through an application process that
typically begins with BDC. Eligibility can be lost if a property is withdrawn from the VCP or if MDE withdraws
approval of a remediation plan. A certificate of completion is typically issued upon completion of the remediation.
All buildings in the Chapter 1B Development are expected to take advantage of the Brownfields Property Tax
Credits. See “APPENDIX C – Tax Increment and Special Tax Report” for properties in the Development District
which either are or are expected to take advantage of the Brownfields Property Tax Credits.
For further discussion on Brownfields Property Tax Credits, see “THE DISTRICTS AND THE PLEDGED
REVENUES – Assessment Procedures; Tax Credits” herein.
The Developer
The Developer for the Chapter 1B Development is Weller Development Company, LLC (the “Developer”),
a privately-held, full service real estate firm created in 2017. The senior management team at the Developer has
over 100 years of collective experience acquiring, entitling, developing and financing large-scale development
projects. See “– Master Development Agreement” herein for details of the development agreement related to the
Chapter 1B Infrastructure Improvements, and “– Chapter 1B Parcel Development Agreements” for details of the
development agreements related to the Chapter 1B Vertical Improvements.
Sagamore Pendry Baltimore Hotel (Baltimore, MD). The Sagamore Pendry is a historic property located
on the Recreation Pier in the center of the vibrant waterfront Fells Point neighborhood, approximately one mile from
the Inner Harbor. The hotel contains 128 guest rooms and luxury suites, private infinity pool, state-of-the-art fitness
center, open air courtyard, renowned culinary destinations by James Beard Award-Winning Chef Andrew
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Carmellini, and 10,000 square feet of event and meeting space including the historic Sagamore Ballroom. The hotel
is owned in part by Sagamore, and in 2018, the Sagamore Pendry was named the number 1 hotel in the United States
by readers of Condé Nast Traveler.
Sagamore Spirit Whiskey Distillery (Baltimore, MD). Completed in January 2017, the 50,000 square-foot
Sagamore Spirit Distillery has the capacity to produce 1.5 million bottles per year, provides a tour and tasting
experience, and pays homage to Maryland’s rye history. This is the first distillery to distill, barrel, age, bottle and
distribute rye whiskey in Maryland since the end of Prohibition (1933). The Sagamore Spirit Whiskey Distillery is
an anchor for the Chapter 1 Development and welcomes thousands of visitors annually at its retail and visitor center
for daily tours and tastings. The Sagamore Spirit Whiskey Distillery is owned in part by affiliates of Sagamore and
is part of the Chapter 1A Development.
Rye Street Tavern (Baltimore, MD). Adjacent to the distilling and processing operation of Sagamore Spirit
Whiskey Distillery is the Rye Street Tavern, a 13,800 square foot restaurant providing a-la-carte seating, private
party space, and indoor and outdoor seating. The Rye Street Tavern is part of the Chapter 1A Development.
City Garage (Baltimore, MD). This 133,000 square foot abandoned warehouse was acquired in 2015 by
Sagamore and underwent extensive redevelopment. City Garage has been redeveloped into an innovation hub for
entrepreneurs and other artisans/artist with a mission to build a community focused on the creation, development,
and production of new innovative products. City Garage is part of the Chapter 1A Development and was the first
project delivered in the Port Covington Project.
Key Individuals
Marc Weller, Founding Partner. Marc Weller is a senior real estate executive with over 25 years of
experience developing and building residential, commercial, and mixed-use real estate development projects. Prior
to founding the Developer, Mr. Weller and Kevin Plank founded SDC as a full-service real estate company with
expertise in acquisitions, development, leasing, construction management, and property management. Since 2013,
Mr. Weller has led almost $200 million of ground-up development or redevelopment projects in Baltimore and
Washington, DC. Prior to founding SDC, Mr. Weller spent thirteen years developing thousands of market rate and
affordable residential units in urban, mixed-use development projects in and around Washington, DC as the
founding principal of Denning, LLC and Ellis Denning Construction and Development. Mr. Weller has led or
participated in successful development projects with numerous development partners including JBG Companies,
Lowe Enterprises, Perry Real Estate Capital, NFAHS, Urban Matters, and the District of Columbia.
Steven Siegel, Partner. Steven Siegel has over 25 years of development, finance, and public policy
experience with a focus on executing large-scale, public-private development projects. Mr. Siegel began his role in
2012 as senior advisor to SDC, then joined the Developer full-time in 2015. Mr. Siegel is responsible for the overall
execution of the Port Covington Development. In addition, Mr. Siegel plays a key role in pursuing and developing
new business opportunities for the Developer. Mr. Siegel also sits on the Developer’s Investment Committee.
Previously, Mr. Siegel was President of Davey Street Partners, Director of Development of the District of Columbia,
and VP of acquisitions for a Mid-Atlantic multifamily developer. During his tenure at the District of Columbia, Mr.
Siegel oversaw the District’s $13 billion public-private real estate development portfolio serving under Mayor
Adrian Fenty from 2007-2010, including several mixed-use developments utilizing tax increment financing.
Mike Gaffney, Chief Financial Officer. Mike Gaffney has over 28 years of experience in finance,
acquisitions, dispositions, and investment strategy. Mr. Gaffney is currently leading the capital markets effort for
the Port Covington Development, focusing on the debt and equity capital raising strategy. Mr. Gaffney also sits on
the Developer’s Investment Committee. Previously, Mr. Gaffney was a member of the Senior Management Team at
Washington Prime Group (NYSE: WPG) where he served as the Executive Vice President and Head of Capital
Markets and his responsibilities included formulating and executing portfolio strategy, including acquisitions and
dispositions, and the capitalization of the company including raising debt and equity capital. Prior to Washington
Prime, Mr. Gaffney spent seven years as Senior Vice President at Simon Property Group (NYSE: SPG).
Duke Fairchild, Director of Finance. Duke Fairchild has over 10 years of real estate investment banking
and development experience, with a concentration on large, transformative, mixed-use development projects located
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in the Baltimore-Washington metropolitan areas. Mr. Fairchild is the Director of Finance at the Developer and is
responsible for executing the underwriting and development feasibility of the Port Covington Development for the
Developer, as well as advising the executive team on matters of financing, venture negotiations, investment
structuring, and investor relations. Previously, Mr. Fairchild worked as a Vice President at the Greenwich Group
International, where he assisted in executing and closing on transactions valued in excess of $2.6 billion. One of Mr.
Fairchild’s signature project’s is The Wharf, in Washington D.C. where he was the lead underwriter in assisting PN
Hoffman and Madison Marquette in securing $220 million of institutional joint-venture equity for the 3.2 million
square foot, world-class, mixed-use waterfront neighborhood. Phase 1 delivered in 2017 and encompasses 2 million
square feet of office, hotels, shops, restaurants and residential space, as well as marinas, parks, piers and docks.
Thomas Maulding, General Counsel. Thomas Maulding is General Counsel at the Developer. He is
responsible for overseeing all legal matters for the company and managing outside counsel and the inside legal team.
Mr. Maulding is a member of the Developer’s Investment Committee. Mr. Maulding works with both the
Developer team and the Weller Management team, assisting project managers with the negotiation and drafting of
contracts, navigating environmental issues or other regulatory and compliance matters, and addressing risk
mitigation and insurance. Mr. Maulding has over 25 years of legal experience with expertise in business
transactions and real estate, litigation, and environmental law. Prior to joining the Developer, Mr. Maulding was
General Counsel for SDC, where he managed and directed the organization of all affiliated companies and played
an integral role in acquiring the real properties purchased to create the Port Covington assemblage.
Scooter Monroe, Vice President of Leasing. Scooter Monroe is Vice President and Head of Office Leasing
at the Developer. He is responsible for leading internal and external teams of leasing professionals responsible for
the marketing and leasing of over one million square feet office space in the Chapter 1 Development. Under Mr.
Monroe’s guidance the leasing team has developed a strategy to attract tenants to Port Covington - locally,
regionally, nationally, and internationally. Prior to his leasing role, he was a Director of Development and was
responsible for executing the Developer’s vision for development projects and operating businesses from concept
through completion and lease-up. He joined the Developer in 2014 (then SDC) and oversaw development and
delivery for 3150 M Street NW, City Garage, Nick’s Fish House, UA House at Fayette, and Rye Street Tavern. On
the City Garage project, he gained experience in grass roots marketing by leasing approximately 134,000 square feet
of office/light manufacturing space in-house. He was also responsible for negotiating leases for Nick’s Fish House
and Rye Street Tavern.
Mr. Monroe has over 14 years of experience in developing commercial and multi-family projects in the
Baltimore and Washington, D.C. metropolitan area. Prior to joining the Developer, Mr. Monroe served in
development project management roles for CSI Support and Development, a senior housing developer, and Conifer,
a nationally ranked affordable housing developer. In both roles, he managed renovation and ground-up development
projects. Previously, Mr. Monroe worked for The Cordish Companies, a nationally recognized developer with
expertise in entertainment, gaming, and hospitality.
Adam Genn, Director of Development. Adam Genn is the Director of Development at the Developer
responsible for entitlements, government relations, and general master planning efforts across all initiatives
including the Port Covington Development Project. Mr. Genn has over ten years of real estate development
experience and specializes in turnkey delivery of ground-up development and construction projects from entitlement
and financing through construction, occupancy, and management. Prior to joining the Developer and SDC, Mr.
Genn worked as a General Contractor and Owner’s Representative on mixed-use and transit-oriented development
projects across the state valued over $250 million. Among these projects was a 3.5+ million square foot, mixed-use
infill redevelopment project adjacent to the Prince George’s Plaza metro, the first phase of which was named the
2014 MBIA multi-family project of the year. Mr. Genn earned his bachelor’s degree from Emory University where
he was a four-year varsity letter winner and two-year captain of the Baseball Team, and was a Dean’s Scholar at the
Johns Hopkins Carey School of Business in the Master of Real Estate and Infrastructure program.
Mary Wilkerson, Vice President of Accounting. Mary Wilkerson is responsible for overseeing all aspects of
accounting operations and investor reporting activities at the Developer. Ms. Wilkerson has over 24 years of
experience in real estate accounting. Prior to joining the Developer in 2018, Ms. Wilkerson worked as a Senior
Accounting Manager in the construction accounting department at Corporate Office Properties Trust, a publicly
traded office property REIT. Ms. Wilkerson earned a B.S. in Economics with a certificate in accounting from the
55
University of Maryland, Baltimore County and an M.S. in Real Estate from Johns Hopkins University. Ms.
Wilkerson is a Certified Public Accountant.
Danny Coffman, Associate. Danny Coffman has over 10 years of real estate development, capital markets,
and investment banking experience. At the Developer, Danny facilitates coordination between the Finance and
Development teams. He is primarily responsible for portfolio modeling, investment underwriting and analysis, and
capital markets activities. Prior to joining the Developer, Mr. Coffman worked at Tradepoint Atlantic, overseeing
the construction and development of over 6 million square-feet of industrial warehouse space on the 3,250-acre
brownfield site at Sparrows Point in Baltimore, Maryland. Formerly, he worked as the Capital Markets Associate at
Realterm, a $2.6 billion assets under management private equity real estate firm managing three logistics-oriented
equity fund series. Mr. Coffman has a degree in Finance and Economics from Franklin and Marshall College.
George Roux, Associate. George Roux has over 6 years of real-estate finance and development experience,
with a focus on acquisitions and investment analysis for mixed-use projects located in the Washington metropolitan
area. In his role, Mr. Roux supports the Developer’s Development and Finance groups in performing vertical-
development underwriting, market-research, pipeline development, and project-management functions for several of
the firm’s fee-development projects. Before joining the Developer, Mr. Roux worked for the JBG Companies in
Washington DC, where he supported investment activities for numerous residential, office, and retail investments
with a concentration on ground-up, mixed-use developments. Additionally, Mr. Roux supported the firm’s portfolio-
integration and investment reporting for JBG’s merger with Vornado Realty Trust in July 2017 (NYSE: JBGS). His
previous work experience includes roles at Prudential Financial (NYSE: PRU) in Arlington, Virginia and Lakewood
Capital in Rowayton, Connecticut.
The design and construction team working on the Chapter 1B Infrastructure Improvements was selected
through a competitive Requests for Qualifications and Proposals process, and the selected team has extensive
experience in comprehensive redevelopment projects across the nation, as well as in Baltimore City specifically.
Civil Engineers
STV is an award-winning professional firm consistently ranking among the country’s top companies in
education, highways, bridges, rail and mass transit sectors. Throughout the United States and Canada, STV’s
professional, technical and support personnel offer a broad range of services. STV’s transportation and
infrastructure division serves the transportation and development industry, meeting the needs of clients and the
traveling public through the planning, design, and construction of major infrastructure projects. Some notable past
projects include: One World Trade Center, Newark Liberty International Airport Terminal One, The Joint Health
Sciences Center and Maddison Park North. STV earned its reputation as a national leader in the transportation and
infrastructure industries by providing high quality service; an integrated, multi-disciplinary approach; exceptional
project experience; and veteran project managers and principals. STV is the engineer of record for the Chapter 1B
Infrastructure Improvements (including the sanitary sewer holding tank) other than the Bulkhead Improvements
described herein.
Moffatt & Nichol (“Moffatt & Nichol”) is a global infrastructure advisory firm working from thirty-six (36)
offices and seven (7) countries. The firm provides practical solutions to clients in the marine terminal,
transportation, energy, environmental, federal, and urban development markets around the world. Moffatt & Nichol
is a multidiscipline professional services firm with specialized expertise in structural, coastal, and civil engineering;
environmental sciences; economics analysis; inspection & rehabilitation; and program management solutions.
Moffatt & Nichol’s waterfront practice was established in the 1960s. Since then, the firm has played a vital role in
the development of waterfronts worldwide. The firm’s planning and design experience in the marine environment,
coupled with our extensive coastal engineering expertise, enables us to create innovative, award-winning, and
sustainable infrastructure that enhances, protects, and defines the world’s waterways and coastlines. Moffat &
Nichol has been contracted as engineer of record for the Bulkhead Improvements described herein.
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Geotechnical and Environmental Engineer
Geo-Technology Associates, Inc. (“GTA”) was established in 1985 and currently has 15 office locations
throughout the mid-Atlantic region and North Carolina. GTA provides services to residential, commercial,
institutional, industrial, and energy clients; state and federal government agencies; and architects, engineers, and
contractors. With more than 375 engineers, geologists, scientists, technicians, and support personnel, GTA focuses
on geotechnical issues such as subsurface exploration; geotechnical and foundation engineering; groundwater
resource and wastewater disposal issues; construction observation and materials testing; environmental due
diligence issues from Phase I Environmental Site Assessments through management of remediation for
contaminated water and soil; and natural resource services ranging from natural resource inventories to federal and
state permit processing. Some notable past projects include: Four Seasons Hotel and Legg Mason Office (Baltimore
City, MD), Principio Business Park (Cecil County, MD), Arm & Hammer Facility (York County, PA) and Liberty
Harbor East (Baltimore City, MD).
General Contractor
The Whiting-Turner Contracting Company (“Whiting-Turner”) serves as the General Contractor for the
construction of the Chapter 1B Project. Based in Baltimore, Maryland, Whiting-Turner has been in business since
1909 and is one of the nation’s largest construction management and general contracting companies. Whiting-
Turner provides the full spectrum of construction services on projects small and large in markets such as retail,
office, education, health care, life sciences, technology, transportation, infrastructure and utilities. Sample mixed-
use projects in the Baltimore and Virginia areas include the Rockville Town Square in Rockville, Maryland (a
mixed-use urban renewal project with a 1,667-space public garage (below-grade and precast), a 252-space private
garage (below-grade), 175,000 square feet of retail, 156 condominium units, 488 apartment units, and 60,000 square
feet of cultural arts space; the project was awarded Best Mixed-Use Project and Best Smart Growth Master Plan by
the Maryland/DC chapter of the National Association of Industrial and Office Properties in 2007) and the Miller &
Rhodes Building renovations in Richmond, Virginia (a historic renovation of a department store into a 438,000
square foot development including a 250-room Hilton Garden Inn, 133 condominium units, and parking). Whiting-
Turner is also serving as the general contractor for the Parcel E7. See “– Chapter 1B Parcels – Parcel E7 – Rye
Street Market” herein.
The Managing Member has engaged the Developer to implement the Horizontal Development of the Port
Covington Project as a fee developer pursuant to a Master Development Agreement dated November 1, 2017 (as
amended or supplemented, the “Master Development Agreement”) between the Managing Member and the
Developer. The Developer has provided certain development services in connection with the acquisition of the
parcels comprising the Port Covington Project Site. Upon completion of each phase of the Horizontal Development
(or otherwise as required by the City), the Owner will dedicate, or convey through fee simple deed or public
easement, as applicable, the infrastructure improvements funded by tax increment financing (including the Chapter
1B Infrastructure Improvements constructed with the proceeds of the 2020 Bonds) to Baltimore City or otherwise
make such facilities available for public use.
The term of the Master Development Agreement, unless sooner terminated, continues until the Horizontal
Development of the Master Plan is completed. The Managing Member has the right to terminate the Master
Development Agreement at any time, for any reason or for no reason, upon ninety (90) days written notice to the
Developer.
The Master Development Agreement is also terminable by the Managing Member or the Owner upon
written notice to the Developer of (a) the sale by the Owner or the Managing Member of all of its right, title and
interest in and to the entire Property (as defined in the JV Agreement) (including any sale by assignment,
foreclosure, deed in lieu of foreclosure, foreclosure or sale of all of the ownership interests in the Owner, the
Managing Member or otherwise); or (b) the sale by the Owner or the Managing Member of all of its right, title and
interest in and to the entire Project (including any sale by assignment, foreclosure, deed in lieu of foreclosure,
foreclosure or sale of all of the ownership interests in the Owner, the Managing Member, or otherwise); or (c) as to
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any individual property, upon the disposition of such property, or (d) upon a default by the Managing Member under
the JV Agreement.
Upon the happening of any Event of Default by the Developer, the Managing Member shall have the
absolute unconditional right, in addition to all other rights and remedies available to the Managing Member at law or
in equity, to terminate the Master Developer Agreement by giving written notice of such termination to the
Developer. “Events of Default” by the Developer under the Master Development Agreement include the failure by
the Developer to observe, perform or comply with any term, covenant, agreement or condition of the Master
Development Agreement which remains uncured; general assignment and bankruptcy proceedings; and willful
misconduct, gross negligence or an act of fraud against the Managing Member.
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Chapter 1B Vertical Improvements
The initial planned vertical improvements for the Chapter 1B Project are comprised of five building or
building clusters (each building or cluster, a “Vertical Improvement Project”) totaling approximately 1.1 million
square feet.
The components of the Chapter 1B Vertical Improvements are listed in the following chart:
UNITS
Residential/Hospitality - Market Rate 448 127 - 121 200 -
Residential – Affordable 89 35 - - 54 -
Total Units (does not include parking) 537 162 - 121 254
Parking 1,039 1,023 16 - - -
Note: 81 of the units in Parcel E5B are currently expected to be hospitality use through an Extended Stay Apartment Hotel as further described below
under “– Chapter 1B Parcels – Parcel E5B”.
Each of the five parcels on which the Chapter 1B Vertical Improvements are located (each a “Chapter 1B Parcel”
and collectively, the “Chapter 1B Parcels”) will be transferred on or prior to the date of the issuance of the 2020
Bonds to a separate LLC created for such purpose (each an “SPE LLC” and collectively, the “SPE LLCs”). See
“Financing for the Chapter 1B Vertical Development–Opportunity Zone Equity – Structure of Fund and Investment”
below.
The Chapter 1B Parcels, together with a number of other parcels in the Port Covington Project, are
encumbered by an outstanding bank financing in the principal amount of $78,100,000. The Owner will obtain a
loan from Bank OZK to refinance such outstanding acquisition debt (the “Land Loan”), which requires that a
number of conditions be met prior to the funding thereof, including an investment of equity by the Owner, a
satisfactory appraisal, a mortgage on the remaining parcels financed with such debt (which will exclude the Chapter
1B Parcels), and a guaranty from entities acceptable to Bank OZK, as well as a number of ongoing financial and
other covenants. The Land Loan has been approved by Bank OZK and the loan documents related thereto have
been executed and placed in escrow with Bank OZK, to be released simultaneously with the issuance of the 2020
Bonds (subject to customary closing conditions, all of which are anticipated to be met on or before the issuance of
the 2020 Bonds). Upon closing of the Land Loan from Bank OZK, the Chapter 1B Parcels will be released from the
lien related to the existing bank financing, and transferred to the SPE LLCs. See “– Financing for the Chapter 1B
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Vertical Development” below for details related to the debt and equity to be used for the Chapter 1B Vertical
Improvements. The Vertical Improvement Project for Parcel E7 will be developed by a subsidiary of the Owner and
the applicable construction loan for that project will be cross-collateralized and cross-defaulted with the Land Loan.
See “– Financing for the Chapter 1B Vertical Development – Conventional Debt Financing” below. One of the
construction loans described in that section will be obtained by an SPE LLC related to the Owner and will be cross-
collateralized and cross-defaulted with the Land Loan. The Funding Agreement, which provides for the funding of
the anticipated costs of the Series 2020 Project upon the terms set forth therein may be assigned to Bank OZK (or
any successor Qualified Capital Source Provider, as defined in the Funding Agreement) for the Land Loan. See “–
Funding Agreement” below. Further, a default under the Funding Agreement will be deemed to be an Event of
Default under the Land Loan documents. Among the remedies upon such an Event of Default is acceleration of the
loan repayment in full. Notwithstanding any acceleration of the Land Loan, the 2020 Bonds are not subject to
acceleration. See “RISK FACTORS – No Acceleration Provision” herein.
The Owner has entered into a Development Agreement with each SPE LLC (each a “Chapter 1B Parcel
Development Agreement”), and a sub-development agreement with the Developer, through which the Developer
shall undertake general responsibility as fee developer of each Vertical Improvement Project to manage, arrange,
supervise and coordinate the acquisition, planning, design, financing, and construction of such Vertical
Improvement Project, in a good and workmanlike manner, and to take such actions as the SPE LLC may reasonably
request within the scope of Developer’s responsibilities in such Agreement (collectively, the “Vertical Development
Services”). The Vertical Development Services include, property acquisition, master planning, development,
construction asset management. Under each Chapter 1B Parcel Development Agreement, the SPE LLC agrees to
provide all amounts required to pay when due all current obligations of such SPE LLC in connection with the
development and construction of the Development Services.
The term of each Chapter 1B Parcel Development Agreement shall continue for a period of two years
following the date upon which the Vertical Improvement Project is completed, unless earlier terminated pursuant to
the provisions contained therein. The SPE LLC shall have the right to terminate the Chapter 1B Parcel
Development Agreement at any time, for any reason or for no reason, upon ninety (90) days written notice to the
Developer. The Chapter 1B Parcel Development Agreement shall be terminable by Owner upon written notice to
Developer of (a) the sale by the SPE LLC of all of its right, title and interest in and to its respective entire Chapter
1B Parcel (including any sale by assignment, foreclosure, deed in lieu of foreclosure, foreclosure or sale of all of the
ownership interests in the SPE LLC or otherwise); or (b) the sale by the SPE LLC of all of its right, title and interest
in and to its respective entire Chapter 1B Parcel (including any sale by assignment, foreclosure, deed in lieu of
foreclosure, foreclosure or sale of all of the ownership interests in the SPE LLC, or otherwise); or (c) as to any
individual property, upon the disposition of such property.
Chapter 1B Parcels
Parcel E1
As planned, the residential portion of the Vertical Improvement Project to be located on Parcel E1 will
have 162 units, which will include approximately 127 market-rate apartments and 35 affordable housing units,
reserved for individuals and families earning not more than eighty percent (80%) of the area median income. The
building is currently planned to include 25,468 square feet of grocery retail space and an approximately 1,000 space
parking garage, and is expected to offer a variety of amenities including a co-working style business center, a club
room, a courtyard gathering area, and a fitness center. The co-working area will be complete with comfortable
seating options, built in USB charging stations, and televisions. Residents will also be able to utilize the first-floor
lobby space to work. The club room features intimate areas with card tables, drop down workspace, and lounge
seating making it a multi-faceted space for residents to enjoy. The third-floor amenities are currently planned to
wrap the courtyard, which will provide residents a tranquil environment with multiple green walls and plantings,
while also offering a place to entertain. In addition to these amenities, residents are expected to have a virtual
concierge service, package room, and the option of dedicated garage parking on their floor.
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Parcel E1 Vertical Improvement Project Rendering
The architectural design team led by Torti Gallas and Partners has issued final construction drawings.
Permit issuance is anticipated by January 2021 upon the payment of building permit fees. Clark Builders Group,
LLC is the general contractor for the Vertical Improvement Project to be located on Parcel E1, and construction is
anticipated to start in January 2021 with delivery expected by December 2022. Pursuant to a traffic mitigation
agreement between the SPE LLC owner of Parcel E1 and Baltimore City with respect to Parcel E1, and as a
condition precedent to issuance of the building permit for the Vertical Improvement Project on Parcel E1, the SPE
LLC will agree to make a one-time contribution to fund the City’s multimodal transportation improvements in the
vicinity of Parcel E1 to the extent practicable. No specific work by the City to improve the City’s multimodal
transportation improvements is required under such traffic mitigation agreement, and it is at the City’s sole
discretion to determine, if, when, where and how any such work may be performed.
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Parcel E5A
The Vertical Improvement Project for Parcel E5A will be an eight-story, approximately 221,500 square
foot office building, inclusive of 9,500 square feet of ground floor retail. The building will benefit from efficient
office floor plates on each floor (exclusive of the ground floor retail and the penthouse) which will each have over
30,000 square feet of rentable square feet. In addition to the retail, the ground floor, as currently planned, will have
a lobby, 16 covered parking spaces, a gym, a bike storage area, and a partially walled-in courtyard designed by
Hoerr Shaudt Landscape Architects. The eighth floor penthouse will include approximately 6,348 square feet of
indoor amenity space including lounge, bar, and shared conference rooms with water views. Outside of the amenity
space, there will be approximately 3,290 square feet of outdoor terrace space.
The architectural design team led by Morgan Gick McBeath and Associates has issued final construction
documents. Permit issuance is anticipated by January 2021 upon the payment of building permit fees. Clark
Construction Group, LLC is the general contractor for the Vertical Improvement Project to be located on Parcel
E5A, and construction is anticipated to start in January 2021 with delivery in August 2022. The first tenant spaces
are expected to be completed by September 2022. Pursuant to a traffic mitigation agreement between the SPE LLC
owner of Parcel E5A and Baltimore City with respect to Parcel E5A, and as a condition precedent to issuance of the
building permit for the Vertical Improvement Project on Parcel E5A, the SPE LLC will agree to make a one-time
contribution to fund the City’s multimodal transportation improvements in the vicinity of Parcel E5A to the extent
practicable. No specific work by the City to improve the City’s multimodal transportation improvements is required
under such traffic mitigation agreement, and it is at the City’s sole discretion to determine, if, when, where and how
any such work may be performed.
The Developer and Jones Lang LaSalle Incorporated (“JLL”) are executing the leasing strategy for the
Parcel E5A (also known as “2455 Banner Street”) office building. The leasing strategy includes a local and national
approach with tactics such as broker outreach/events, attending conferences in target markets, data
analytics/research and direct tenant connections. Given the Port Covington Project Site’s close proximity to
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institutions such as the National Security Agency and Johns Hopkins Hospital, the leasing strategy is initially
focused on building ecosystems that support and attract companies in the Data Science/Cyber Security and Life
Science industries. 2455 Banner Street has large efficient floor plates and is designed to attract larger corporate
tenants, and has experienced significant activity because larger tenants tend to be in the market for space 24-36
months prior to building delivery. There are non-binding, signed letters of intent with respect to approximately
15,000 square feet of 2455 Banner Street, with proposals submitted by the Developer to prospective tenants for
approximately 293,326 square feet, and active touring prospects of approximately 300,000 square feet. It is
currently estimated that there will be over 898,000 square feet of expiring leases with respect to potential leasing
prospects in the third and fourth quarters of 2022, which aligns with the office building delivery timing at Port
Covington.
Parcel E5B
The Vertical Improvement Project for Parcel E5B is planned for short term residential use. The building is
expected to be an eight-story, 132,455 square foot extended-stay apartment hotel, including 5,780 square feet in
ground-floor retail. The building is currently planned to have approximately 81 furnished, extended-stay hospitality
units on floors 2-6 of the building with an additional approximately 40 unfurnished, market-rate residential dwelling
units above on floors 7-8. The market-rate residential units are expected to command the highest residential rents
considering the building’s overall higher-level finishes and the top-floors views. The extended-stay units are
expected to serve as an amenity for the prospective office tenants allowing for flexible stays, ranging from one night
(similar to a hotel) to one year. The Developer is in ongoing management agreement discussions with a high-end,
hospitality-focused, extended-stay operator to operate the entire building. The building is planned to have a high-
end lobby with staffed coffee kiosk serving food and beverages and lounge areas. On the second floor will be an
amenity area, including a bar, lounge seating, and an exterior pool terrace with a high-end seating area surrounding a
fireplace.
The architectural design team led by Hord Coplan Macht has issued final construction drawings. Permit
issuance is anticipated by January 2021 upon the payment of building permit fees. Bozzuto Construction Company
is the general contractor for the Vertical Improvement Project to be located on Parcel E5B, and construction is
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anticipated to start in January 2021 with delivery expected by October 2022. Pursuant to a traffic mitigation
agreement between the SPE LLC owner of Parcel E5B and Baltimore City with respect to Parcel E5B, and as a
condition precedent to issuance of the building permit for the Vertical Improvement Project on Parcel E5B, the SPE
LLC will agree to make a one-time contribution to fund the City’s multimodal transportation improvements in the
vicinity of Parcel E5B to the extent practicable. No specific work by the City to improve the City’s multimodal
transportation improvements is required under such traffic mitigation agreement, and it is at the City’s sole
discretion to determine, if, when, where and how any such work may be performed.
Parcel E6
The Vertical Improvement Project for Parcel E6 is planned as an eight-story, 293,000 square foot
residential building with 16,000 square feet of ground floor retail. As planned, the residential building will have 254
units and is projected to have 200 market-rate apartments and 54 affordable housing units, reserved for individuals
and families earning not more than 50% of AMI. The residential building is planned to have a high-end lobby with
lounge areas, bike storage, mail room, and high-end third floor amenity area, including a bar and lounge, outdoor
balcony, fitness center, meeting room, and billiards room, as well as a rooftop deck.
The architectural design team led by Hord Coplan Macht has issued final construction drawings. Permit
issuance is anticipated shortly after the closing of the 2020 Bonds and upon the payment of building permit fees.
Bozzuto Construction Company is also the general contractor for the Vertical Improvement Project to be located on
Parcel E6, and construction is anticipated to start in January 2021 with delivery expected by November 2022. See
the subheading below entitled, “Low Income Housing Tax Credits/Parcel E6 Financing” below for a description of
the LIHTC Equity (defined herein) available in connection with Parcel E6. Pursuant to a traffic mitigation
agreement between the SPE LLC owner of Parcel E6 and Baltimore City with respect to Parcel E6, and as a
condition precedent to issuance of the building permit for the Vertical Improvement Project on Parcel E6, the SPE
LLC will agree to make a one-time contribution to fund the City’s multimodal transportation improvements in the
vicinity of Parcel E6 to the extent practicable. No specific work by the City to improve the City’s multimodal
transportation improvements is required under such traffic mitigation agreement, and it is at the City’s sole
discretion to determine, if, when, where and how any such work may be performed.
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Parcel E7 - Rye Street Market
Rye Street Market, a central feature of the Vertical Improvement Project for Parcel E7, is planned to serve
as the epicenter of activity and programming in the Port Covington Project. The signature building as proposed will
include a 10,000 square foot marketplace, as well as a high-end European-styled courtyard “Market Square” as a
gathering place to support the building’s overall 38,000 net rentable square feet of retail (which includes the
marketplace). A flexible, state-of-the-art conference and meeting facility is planned for the entire second floor
above the Rye Street Market, offering meeting space for conferencing and events to help office tenants reduce office
leasing costs by eliminating the need to maintain large meeting rooms within their own leased premises. A rooftop
event space overlooking the water and the Chapter 1B Development’s main retail street will provide event and
gathering space for tenants and residents in the Port Covington Project. Co-working is also a planned aspect of the
Rye Street Market office environment, offering flexible memberships for small tenants, start-up businesses and
larger companies seeking to manage temporary office overflow on an as-needed basis.
The total Vertical Improvement Project for Parcel E7 will consist of four concrete constructed buildings of
varying heights (Building A will be 3 stories; Building B will be 2 stories; Building C will be 4 stories; and
Building D will be 6 stories) totaling approximately 273,000 gross square feet with approximately 228,000 gross
square feet of office and approximately 45,000 gross square feet of retail. The Owner has secured appropriate rights
to construct a portion of the buildings within a City right-of-way that will be abandoned in conjunction with the
construction of the Chapter 1B Vertical Improvements, and a deed to that property upon completion of the Chapter
1B Vertical Improvements.
The architectural design team, which includes Morris Adjmi Architects and Morgan Gick McBeath and
Associates, has issued final construction drawings. Permit issuance is anticipated by January 2021. Whiting-Turner
is the general contractor for the Vertical Improvement Project to be located on Parcel E7, and construction of all
buildings is anticipated to start by January 2021 with the delivery of the core and shell of each building expected by
October 2022. Pursuant to a traffic mitigation agreement between the SPE LLC owner of Parcel E7 and Baltimore
City with respect to Parcel E7, and as a condition precedent to issuance of the building permit for the Vertical
Improvement Project on Parcel E7, the SPE LLC will agree to make a one-time contribution to fund the City’s
multimodal transportation improvements in the vicinity of Parcel E7 to the extent practicable. No specific work by
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the City to improve the City’s multimodal transportation improvements is required under such traffic mitigation
agreement, and it is at the City’s sole discretion to determine, if, when, where and how any such work may be
performed.
The Developer and JLL are also executing the leasing strategy for the Rye Street Market office building.
The office leasing strategy includes a local and national approach with tactics such as broker outreach/events,
attending conferences in target markets, data analytics/research and direct tenant connections. Given the Port
Covington Project Site’s close proximity to institutions like the National Security Agency and Johns Hopkins
Hospital, the leasing strategy is initially focused on building ecosystems that support and attract companies in the
Data Science/Cyber Security and Life Science industries. Rye Street Market is designed for tenants with smaller
footprints (under 20,000 square feet), and has achieved some early success with early adopter tenants in the cyber
and tech community having signed non-binding letters of intent. Leasing velocity is expected to increase at Rye
Street Market 12 to 18 months prior to building delivery, in line with the timeframe that small-to-mid sized tenants
typically begin exploring their space requirements. In the Baltimore Metro pipeline, there are over 898,000 square
feet of expiring leases (of which approximately 483,000 square feet are tenants that are currently occupying 50,000
square feet or less) in the third and fourth quarters of 2022, which aligns with the office building delivery timing at
Port Covington. There are non-binding, signed letters of intent with respect to approximately 30,300 square feet of
the Rye Street Market, with proposals submitted by the Developer to prospective tenants for approximately 20,640
square feet, and active touring prospects of approximately 15,000 square feet.
The Developer’s leasing strategy for the retail program at Rye Street Market is focused on “placemaking,”
featuring a food & beverage-heavy-program centered on the market hall. The high-end design and ground-level
integration with the internal courtyard will allow for outdoor seating designed to attract restaurant tenants and create
an active and energetic environment. The other curated retail, including design stores and a planned café, will
further enhance the pedestrian scale and experience benefitting the office environment above and the surrounding
buildings.
The Chapter 1B Vertical Improvements will be funded from a number of sources, including equity of the
Owner (which includes equity already invested by the Owner, see “THE PORT COVINGTON PROJECT – Port
Covington Project” above), opportunity zone equity, low income housing tax credit equity and conventional
commercial loans, all of which will close concurrently with or prior to the issuance of the 2020 Bonds as more fully
described below. Additionally, the Chapter 1B Vertical Improvements are anticipated to utilize both Brownfield
Tax Credits and Enterprise Zone Tax Credits, as applicable (each as also described herein). Although other tax
credits may be available, it is not anticipated that any other property tax credits will be utilized with respect to the
Chapter 1B Vertical Improvements. See “APPENDIX C – Tax Increment and Special Tax Report”.
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The following chart, entitled “FINANCING FOR THE CHAPTER 1B VERTICAL DEVELOPMENT,” describes the
sources and uses of funds with respect to the Chapter 1B Vertical Development.
Uses of Funds
Acquisition and Hard Costs $ 85,858,594 $ 68,606,626 $ 46,142,007 $ 80,667,476 $ 281,274,703 $ 111,994,591 $ 393,269,294
Closing and Soft Costs $ 12,182,793 $ 15,500,649 $ 8,475,862 $ 21,639,852 $ 57,799,155 $ 25,914,873 $ 83,714,028
Financing Costs $ 8,053,993 $ 7,357,480 $ 3,617,083 $ 8,236,615 $ 27,265,172 $ 6,403,573 $ 33,668,745
TOTAL USES $ 106,095,380 $ 91,464,755 $ 58,234,952 $ 110,543,943 $ 366,339,030 $ 144,313,037 $ 510,652,067
Sources of Funds
Construction Loan $ 52,549,425 $ 55,160,374 $ 19,143,763 $ 73,500,000 $ 200,353,562 $ 62,146,438 $ 262,500,000
Equity - Baltimore Revitalization Vertical QOF $ 795,926 $ 495,041 $ 583,641 $ 467,729 $ 2,342,337 $ - $ 2,342,337
Equity - Port Covington Phase 1A QOF $ 52,265,782 $ 32,507,705 $ 38,325,745 $ 30,714,230 $ 153,813,462 $ - $ 153,813,462
Equity - Sponsor Equity (BUR) $ - $ - $ - $ - $ - $ 66,980,466 $ 66,980,466
1
Equity - LIHTC $ - $ - $ - $ 47,340 $ 47,340 $ - $ 47,340
2
Equity - To-Date $ 484,248 $ 3,301,635 $ 181,803 $ 5,814,643 $ 9,782,329 $ 15,186,133 $ 24,968,462
TOTAL SOURCES $ 106,095,380 $ 91,464,755 $ 58,234,952 $ 110,543,943 $ 366,339,030 $ 144,313,037 $ 510,652,067
1 The LIHTC Equity transaction is anticipated to close simultaneously with the issuance of the 2020 Bonds, however only $47,340 will be received at such
time. The remainder of the LIHTC Equity will be advanced in accordance with the documents related thereto, and is not an additional funding source for
the Chapter 1B Vertical Improvements. See the subheading entitled, “Low Income Housing Tax Credits/Parcel E6 Financing” below.
2 Approximately $5,486,000 of Owner cash equity spent to date with respect to Parcel E7 and shown above in “Equity-To-Date” is included in the total
equity invested by the Owner as described above. See “– Port Covington Project – Overview.” The remaining amounts shown above in “Equity-To-
Date” include imputed values as opposed to cash amounts.
As part of the federal Tax Cuts and Jobs Act of 2017, Maryland was authorized to nominate “Qualified
Opportunity Zones” or “QOZs” to encourage new capital investment in eligible census tracts by allowing taxpayers
to defer taxes on capital gains by investing those gains in eligible business or projects in QOZs. Following
nomination by Governor Larry Hogan, Census Tract 24510230300 (the “Census Tract”) was designated as a QOZ
by the U.S. Secretary of the Treasury.
The Census Tract includes all of the Port Covington Project that is north of the existing right of way for
Cromwell Street. The only properties that are not in the Census Tract are those south of Cromwell Street: the
excluded properties are the parcels acquired by an affiliate of UA (the “UA Campus”), the properties on which both
Rye Street Tavern and the Sagamore Spirit Distillery were developed, the former Tidewater Marina and the
additional properties on the Port Covington Peninsula east of the Marina. All of the Chapter 1B Parcels are included
in the Census Tract except for a small portion of the Parcel E7.
Under current tax law, investors who make eligible investments from qualifying capital gains and hold
those investments for specified periods, can defer the tax on such capital gains until the earlier of the date on which
the investor disposes of the investment or December 31, 2026. If, by December 31, 2026, investors have held their
eligible investment for period of at least five years, or up to seven years, applicable portions of an investor’s
qualifying gain (depending on the length of time held) may be excluded from tax and the rest of the gain is
recognized on December 31, 2026. In addition, if the eligible investment is held for at least ten years, then an
investor can elect to step-up such investor’s tax basis in the investment to the fair market value and exclude from
taxation all gain attributable to the appreciation of the applicable eligible investment, such as the Chapter IB Vertical
Improvements.
Structure of Fund and Investment. Goldman Sachs and other investors will invest approximately $154
million (the “OZ Investment,” described in the line item “Equity - Port Covington Phase 1A QOF” in the chart
above entitled, “FINANCING FOR THE CHAPTER 1B VERTICAL DEVELOPMENT”) in a limited liability company
intended to be certified as a “qualified opportunity fund” providing its investors with the tax benefits under the
opportunity zone program (the “qualified opportunity fund” or “QOF”). A wholly owned subsidiary of Goldman
Sachs will control and be the investment manager of the QOF. As of October 31, 2020, $112,935,488.79 of the OZ
Investment is being held in a brokerage account in the name and on the account of the QOF. As of November 19,
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2020, subscribers to the QOF have committed additional capital in the amount of $42,367,651.00, subject to the
terms of their subscription agreements. The brokerage account is expected to be fully funded prior to the pricing of
the 2020 Bonds.
The QOF will form a limited liability company (the “qualified opportunity zone business” or “QOZB”)
with an entity comprised of individuals and entities affiliated with Sagamore (the “Sagamore QOF”). The Sagamore
QOF will contribute an additional $2.3 million to the QOZB. The QOZB will in turn wholly own four special
purpose limited liability companies (each an SPE LLC, and collectively, the “QOZB SPE LLCs”), which will
acquire from the Owner the respective parcel on which one of the Vertical Improvement Projects in the Chapter 1B
Vertical Improvements will be built. Prior to the date upon which a QOZB SPE LLC acquires the applicable
properties, the QOF held one or more closings pursuant to which investors’ capital commitments to the QOF are
accepted (each date on which any such closing occurred, a “QOF Closing Date”). The initial closing of the QOF
occurred on February 28, 2020, and the final closing and funding is expected to occur prior to November 24, 2020.
At each QOF Closing Date, each person admitted as a member of the QOF in respect of such closing was required to
make a capital contribution to the QOF in an amount equal to 100% of its capital commitment that has been
accepted by the QOF. In addition, to the extent necessary or advisable to satisfy current or expected future expenses
or other obligations of the QOF, each member may, at any time and from time to time after the applicable QOF
Closing Date, be required to make capital contributions in excess of such member’s capital commitment up to an
aggregate amount equal to 10% of such member’s capital commitment. Within the Port Covington Phase 1A QOF,
affiliates each of Goldman Sachs and the Owner will be entitled to receive certain incentive distributions depending
on the overall performance of the four Chapter 1B Parcels, which incentive distributions are subject to certain caps
to conform to the QOZ program requirements. The four Chapter 1B Parcels (and the projects to be developed
thereon) to be owned by the four QOZB SPE LLC’s are: Parcel E1, Parcel E5A, Parcel E5B and Parcel 6.
In addition to the equity contributed by the Owner to date, the equity required for the Parcel E7 project will
be provided by the Owner, and ownership of the land and resulting project will be held by an SPE LLC wholly
owned by the Owner (the “Owner SPE LLC”). BUREI/GS has committed to provide additional funding in an
approximately amount of $57 million and the Managing Member has committed to provide additional funding in an
approximate amount of $19 million to satisfy the requirement of Bank OZK, the conventional construction loan
lender (as described in the line item “Equity - Baltimore Revitalization Vertical QOF” in chart above entitled,
“FINANCING FOR THE CHAPTER 1B VERTICAL DEVELOPMENT”).
Construction financing for four of the five buildings (relating to each Chapter 1B Parcel other than Parcel
E6) constituting the Chapter 1B Vertical Improvements in an amount of approximately $189,000,000 is expected to
have been obtained through conventional construction loans from Bank OZK. (See the chart above entitled,
“FINANCING FOR THE CHAPTER 1B VERTICAL DEVELOPMENT.”) One of the loans will finance the projects to be built
on Parcels E1, E5A and E5B that will be owned by the QOZB SPE LLCs; the other loan will finance the project to
be built on Parcel E7 that will be owned by the Owner SPE LLC. Bank OZK requires a number of customary
conditions to be met prior to the funding of any portion of such loans, including the investment (and expenditure) of
equity by the applicable SPE LLC; a mortgage on the Parcels financed with such debt, and a guaranty from entities
acceptable to Bank OZK, as well as a number of ongoing financial and other covenants. The conditions required to
be met prior to the closing on the loans will be met on or prior to the issuance of the 2020 Bonds. The loans will
bear interest at a floating rate tied to LIBOR or a successor/alternate index and will have an initial term of 48
months, which may be extended if certain conditions are met, and will amortize following the initial term. Each of
the respective QOZB SPE LLCs will be a borrower on the applicable construction loan, with each such property
owner jointly and severally liable, but on a non-recourse basis, with respect to the total contemplated financing. The
construction loan for Parcel E7 will have the Owner SPE LLC as the borrower and will be cross-collateralized and
cross-defaulted with the Land Loan. See “Financing of Land Ownership” above. The documentation for the loans
has been executed and is being held in escrow to be released simultaneously with the issuance of the 2020 Bonds,
subject to customary closing conditions (all of which are anticipated to be met on or before the issuance of the 2020
Bonds). A failure to qualify for advances under the terms of the Funding Agreement will be deemed to be an Event
of Default under the construction loan documents. Among the remedies upon such an Event of Default is
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acceleration of the loan repayment in full. Notwithstanding any acceleration of the loan, there is no remedy with
respect to the loan which related to the 2020 Bonds, which are not subject to acceleration. See “RISK FACTORS –
No Acceleration Provision” herein. Notwithstanding any acceleration of the loan, the 2020 Bonds are not subject to
acceleration. See “RISK FACTORS – No Acceleration Provision” herein.
The residential building (the “E6 Building”) to be located on Parcel E6 will utilize Low Income Housing
Tax Credits (“LIHTCs”) and tax-exempt bond financing issued through the Community Development
Administration (“CDA”), an agency within the State of Maryland’s Department of Housing and Community
Development, and the Freddie Mac Direct Purchase of Tax-Exempt Loans Program. Under this program, the
Federal Home Loan Mortgage Corporation (“Freddie Mac”) is required to issue a forward commitment to provide
permanent financing for the E6 Building by purchasing through a Freddie Mac “Seller-Servicer” the tax-exempt
governmental loan to CDA and evidenced by a governmental note (the “CDA Note”). The Owner has received a
commitment from CDA to issue the CDA Note in a principal amount of $73,500,000, which may increase to
$73,950,000.
On or prior to the issuance of the 2020 Bonds, CDA will originate, utilizing the proceeds of the CDA Note,
a separate mortgage loan in the principal amount equal to the principal amount of the CDA Note to the SPE LLC
which owns the E6 Building. The proceeds of such loan will be used financing a portion of the costs of the
acquisition of property and construction of the E6 Building. M&T Bank and EagleBank, or affiliates thereof
(collectively “Initial Funding Lender”) will be the initial purchaser of the CDA Note and will therefore act as
construction lender. Upon completion of construction and stabilization of the E6 Building, Freddie Mac, through
M&T Realty Capital Corporation, the Freddie Mac Seller-Servicer, subject to satisfaction of all conditions set forth
in its forward commitment, will purchase the CDA Note. It is a requirement of the purchase of the CDA Note that
the Brownfields Property Tax Credits and, to the extent applicable to non-residential portions of the E6 Building,
Enterprise Zone Property Tax Credits be available to the E6 Building, and there is a cap in place for the amount of
stabilized net taxes thereon (after abatements) of $567,525 (as reviewed and approved by Initial Funding Lender).
Additionally, the Stratford Capital Group will be syndicating an equity investment (the “LIHTC Equity”) in
an entity serving as the tenant under a master lease of the affordable dwelling units within E6 Building in
anticipation of claiming LIHTCs with respect to the Port Covington Project (shown in the line item “Equity -
LIHTC” in chart above entitled, “FINANCING FOR THE CHAPTER 1B VERTICAL DEVELOPMENT”). The master lease
provides for rent payments to be made from the master tenant thereunder to PC-E6, LLC (the “Owner and Landlord”
of the E6 Building). Accordingly, the Parcel E6 will be required to be compliant with affordability and reporting
requirements associated with the use of tax-exempt bonds and the resulting tax credits, as well as any additional
restrictions imposed by CDA, Initial Funding Lender, and Freddie Mac, including guaranties from entities which
have met certain net worth and liquidity requirements.
The construction financing for Parcel E6 and the LIHTC Equity investment is expected to occur
simultaneously with the issuance of the 2020 Bonds, although the remainder of the LIHTC Equity not advanced at
closing will not be received until permanent refinance, including completion of the E6 Building. The remainder of
the LIHTC Equity is expected to be used to replace Owner equity already advanced and is not an additional source
of funds for the E6 Building or any other portion of the Chapter 1B Vertical Improvements. See the chart above
entitled, “FINANCING FOR THE CHAPTER 1B VERTICAL DEVELOPMENT.”
Engineer’s Report
The Engineer’s Report prepared by the Engineer is contained in APPENDIX B to this Limited Offering
Memorandum. The Engineer’s Report provides an overview of the Port Covington Chapter 1 development area (as
described in the Engineer’s Report) and discusses the public improvements that constitute the Series 2020 Project,
the land use reviews and approvals required with respect to development, including, but not limited to, development
plan approval, zoning, and environmental review, and certain hindrances to the development.
Based on the assumptions and qualifications contained therein, the Engineer’s Report concludes that the
construction cost estimate prepared by Whiting-Turner of $67,100,000, which includes approximately $1,870,000 in
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contingency, various allowances (i.e. hazardous materials remediation, unsuitable soils, unknown utility
obstructions, extended sediment, and control maintenance) and contractor profit as a guaranteed maximum price for
construction the public infrastructure improvements is reasonable estimate of construction costs considering the
scope of work being performed.
None of the Issuer, the City, and the Underwriters make any representation as to the accuracy of the
Engineer’s Report.
Founded over 100 years ago, the Engineer through its professional, technical and support personnel, offers
services in the United States and Canada to a broad client base including engineering, architectural, planning/pre-
design, environmental services, and program and construction management services. For more information on the
Engineer, see “THE PORT COVINGTON PROJECT – Design and Construction Team for the Chapter 1B
Infrastructure Improvements” herein.
General. The Funding Agreement by and among the Issuer, the City, the Developer, and the Owner dated
as of June 17, 2020 (the “Funding Agreement”), provides for the funding of a portion of the costs of the Series 2020
Project upon the terms set forth therein. Capitalized terms not otherwise defined in this section shall have the
meanings as set forth in the Funding Agreement attached hereto as “APPENDIX D – Funding Agreement.”
Pursuant to the terms of the Funding Agreement, moneys on deposit in the Series 2020 Project Account
will be disbursed in the maximum amount equal to the amount of the proceeds of the 2020 Bonds initially deposited
to the Series 2020 Project Account, plus any available investment earnings thereon to the Owner and the Developer
to pay for the Actual Costs of the Series 2020 Project. The Funding Agreement provides that the obligations of the
Owner and the Developer will not be diminished as a result of any lack of availability of moneys on deposit in the
Series 2020 Project Account. None of the Issuer, the City, or the Trustee shall be obligated to pay for the Actual
Costs of the Series 2020 Project except from amounts on deposit in the Series 2020 Project Account on or after the
Closing Date of the 2020 Bonds.
The Funding Agreement is not assigned as security for the 2020 Bonds.
Under the Funding Agreement, the Developer is required to furnish to the Issuer and the City payment and
performance bonds in form and substance acceptable to the Issuer and the City and as defined in the Baltimore City
Code and supported by a surety acceptable to the Issuer and the City in an amount not less than one hundred percent
of the construction costs of the Series 2020 Project. Payment and performance bonds required by the Funding
Agreement, which secure the payment for and performance of work under a permit relating to the construction of the
Series 2020 Project shall not be released until the work is complete on the Series 2020 Project covered by the
permit, as certified by the Inspector. This release shall be controlled by the terms of the applicable payment and
performance bond document, the Baltimore City Code, and any applicable directives of the Issuer or the City. With
respect to the construction of Triangle Park, Cromwell Park, and the Sanitary Storage Tank, payment and
performance bonds shall be required for only to the extent required by any of the developer’s agreements executed
with the City that provide the right to construct such improvements. For information on the Triangle Park,
Cromwell Park, and the Sanitary Storage Tank and related developer’s agreements executed with the City, see “THE
PORT COVINGTON PROJECT – Chapter 1B Vertical Improvements” herein.
Payments for Series 2020 Project. In order to receive progress payments under the Funding Agreement for
Actual Costs of the Series 2020 Project, the Developer (or the Engineer on behalf of the Developer) is required to
submit a payment request, approved by the Engineer, to the Issuer Representative (with a copy to the City
Representative). Such payment requests must be approved by the Inspector. The Inspector’s review will (i) verify
that the work with respect to the portion of the Series 2020 Project identified therein for which payment is requested
was completed, (ii) verify that all governmental approvals, permits or inspections required in connection with the
construction of such portion of the Series 2020 Project which has been completed to the date of such payment
request have been received or approved, as applicable, (iii) verify that, in reliance upon quality control testing
conducted by the Engineer and certifications provided by the Engineer, such work was completed in accordance
with the Plans and Specifications, with the terms of the Funding Agreement and with all applicable governmental
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approvals or other permits and inspections, and (iv) verify and approve the Actual Cost of such work specified in
such payment request.
“Actual Cost” of the Series 2020 Project is defined under the Funding Agreement as those substantiated
costs of the Series 2020 Project and actually paid or incurred by either Developer Party.
Under the Funding Agreement, approved change orders with respect to the Series 2020 Project that cause
the aggregate of the Actual Costs of any item or category of Actual Costs of the Series 2020 Project to exceed the
Budgeted Costs (defined herein) of such item or category may only be paid from amounts on deposit in the Series
2020 Project Account (A) to the extent of any contingency amounts held by the Trustee in the Series 2020 Project
Account, (B) from any savings resulting from the aggregate Actual Cost of a completed item or category being less
than the Budgeted Costs of such item or category, or (C) upon approval by the City Representative and the Issuer
Representative (such approval not to be unreasonably withheld). In any event, the Issuer Representative shall not
approve any Payment Request if the result would be to (i) pay more than the Actual Costs of the Series 2020 Project,
or such portion thereof, for which payment is requested, or (ii) pay an amount that would cause the sum of all
amounts paid by the Trustee for all Actual Costs of the Series 2020 Project to exceed the amounts available in the
Project Account, including any investment earnings thereon.
“Budgeted Cost” is defined in the Funding Agreement as the budgeted cost of each item or category of
Actual Costs of the Series 2020 Project to be financed with the proceeds of the 2020 Bonds, as set forth in the
Funding Agreement.
Insurance Requirements. At all times prior to the final completion of the Series 2020 Project, the
Developer Parties are required under the Funding Agreement to maintain and deliver to the City evidence of and
keep in full force and effect, or cause the general contractor(s) for the Series 2020 Project to maintain and deliver to
the City evidence of and keep in full force and effect, not less than the following coverage and limits of insurance,
which shall be maintained with insurers and under forms of policies satisfactory to the City: (a) Workers’
Compensation and Employer’s Liability: Workers’ Compensation coverage equal to at least the greater of (i) such
limits as are required by law and (ii) $1,000,000 per injury, $1,000,000 per accident and $1,000,000 per disease, and
Employer’s Liability limits of at least $1,000,000 per occurrence; (b) Comprehensive General Liability: limits of at
least $5,000,000 per occurrence and $5,000,000 in the aggregate; (c) Automotive Liability: Combined Single Limit
- $1,000,000; (d) Flood Insurance: if any of the property owned by the Owner, the Developer, or any Affiliate in the
Districts is identified by the Secretary of Housing and Urban Development as being in an area or community having
special flood, mudslide, erosion or other hazards and if flood insurance is available from the National Flood
Insurance Program (“NFIP”) or other commercial insurer, then flood insurance must be obtained under NFIP or
from such other insurer, as applicable, in an amount equal to the amount equal to the aggregate of the budgeted costs
of the Series 2020 Project or the maximum amount available, whichever is less; and (e) Builder’s Risk – in an
amount equal covering the Series 2020 Project to the 100% completed value thereof. The automobile and
comprehensive general liability policies shall be accompanied by an umbrella policy with a combined limit of
$20,000,000 per occurrence and $20,000,000 in the aggregate. The City and the Issuer, and their respective elected
and appointed officials, employees and agents, shall be named as additional insureds on all insurance policies
described above except Workers’ Compensation insurance.
Termination. The Funding Agreement may be terminated by the mutual, written consent of the City, the
Issuer, and the Developer Parties, in which event the Issuer or the City may (but shall not be required to) either
execute contracts for or perform any remaining work related to the Series 2020 Project not otherwise completed and
use all or any portion of funds in the Series 2020 Project Account or other amounts transferred to the Series 2020
Project Account under the terms of the Indenture to pay for same or apply such amounts to any other purpose
permitted by the Indenture, and the Developer Parties shall have no claim or right to any further payments for the
Actual Costs of the Series 2020 Project thereunder, except as otherwise may be provided in such written consent.
The Issuer and the City, at their option, may terminate the Funding Agreement, without the consent of the
Developer Parties, if:
(a) the Owner, the Developer, or any Affiliate (as such term is defined in the Funding Agreement)
shall voluntarily file for reorganization or other relief under any federal or State bankruptcy or insolvency laws;
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(b) the Owner, the Developer, or any Affiliate shall have an involuntary bankruptcy or insolvency
action filed against it, or shall suffer a trustee in bankruptcy or insolvency or receiver to take possession of its assets,
or shall suffer an attachment or levy of execution to be made against the property it owns within the Districts unless,
in any of such cases, such circumstance shall have been terminated or released within 90 days thereafter;
(c) The construction of the Series 2020 Project shall be abandoned or without reason substantially
suspended, including without limitation failure to make any draws upon the Project Account for a period of six
consecutive months, abandonment or suspension of construction of the Series 2020 Project for a period of six
consecutive months at a time when construction is scheduled to occur, and such abandonment or suspension is not
cured or remedied within 90 days after written demand is made on the Owner and the Developer;
(d) Either of the Developer Parties shall breach any material covenant or default in the performance of
any material obligation under the Funding Agreement and such breach or default is not cured as provided below;
(e) Either of the Developer Parties shall have made a material misrepresentation or a material
omission in any written materials furnished in connection with this Limited Offering Memorandum or bond
purchase contract used in connection with the sale of the 2020 Bonds; or
(f) the Owner, the Developer, or any Affiliate shall at any time challenge the validity of the
Development District or the Special Taxing District or any of the 2020 Bonds or the levy of any ad valorem
property tax, including without limitation, the Special Taxes, within the Special Taxing District, other than on
grounds that such levy was not made in accordance with the terms of the Special Taxing District Ordinance or that
the assessed value upon which such levy was calculated was not correct as expressly permitted by the Funding
Agreement.
If any such event described above occurs under the Funding Agreement, the Issuer or the City shall give
written notice of its knowledge thereof to the Developer Parties (with a copy to the City or the Issuer, as applicable)
and the Developer Parties agrees to meet and confer with the appropriate staff of the Issuer, the City Representative,
and other appropriate City staff as to options available to assure timely completion of the Series 2020 Project. If the
Issuer, with the prior written approval of the City, proposes to terminate the Funding Agreement, the Issuer shall
first notify the Developers (and any mortgagee or trust deed beneficiary specified in writing by the Owner or the
Developer to the Issuer to receive such notice) of the grounds for such termination and allow the Developer Parties a
minimum of 30 days to eliminate or mitigate to the satisfaction of the Issuer and the City the grounds for such
termination. Such period shall be extended, at the sole discretion of the Issuer, with the prior written approval of the
City, if the Developer Parties, to the satisfaction of the City, is proceeding with diligence to eliminate or mitigate
such grounds for termination. If at the end of such period (and any extension thereof), such grounds have not
eliminated or mitigated such grounds to the satisfaction of the Issuer and the City, the Issuer may then, with the prior
written approval of the City, terminate the Funding Agreement.
So long as any event listed in any of clauses (a) through and including (f) above has occurred, notice of
which has been given by the Issuer or the City to the Developer Parties, and such event has not been cured or
otherwise eliminated by any of the Developer Parties, the Issuer may, with the prior written approval of the City,
cease making payments for the Actual Costs of the Series 2020 Project under the Funding Agreement, provided that
the Developer may receive payment of the Actual Costs of any of the Series 2020 Project that was completed at the
time of the occurrence of an event listed in clause (d) or (e) above upon submission of a Payment Request and
compliance with the other applicable requirements of the Funding Agreement.
In the event that the Funding Agreement is terminated by the Issuer for cause (after prior written approval
by the City), in addition to the other remedies available to it, including the redemption of the 2020 Bonds, the Issuer
or the City may (but shall not be required to) execute contracts for or perform any remaining work related to the
Series 2020 Project not otherwise completed and use all or any portion of the funds in the Series 2020 Project
Account or other amounts transferred to the Series 2020 Project Account for such purposes, and the Developer
Parties shall have no claim or right to any further payments to fund the Actual Costs of the Series 2020 Project,
except as otherwise may be provided upon the mutual written consent of the Issuer, the City, and the Developer
Parties, which consent of the Issuer and the City may be withheld in such party’s sole discretion.
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Whenever performance is required of a party under the Funding Agreement, such party is required to use
all due diligence and take all necessary measures in good faith to perform, but if completion of performance is
delayed by reason of floods, earthquakes or other acts of God, or the public enemy, acts of government, acts of
terrorism, riots, insurrection, civil commotion, sabotage, malicious mischief, vandalism, fires, storms, foods,
epidemics, quarantine restrictions, freight embargoes, shortages of labor, equipment material or supplies, material
economic downturn, unusually severe weather, or by any other cause beyond the reasonable control of the party
(financial inability excepted), then the specified time for performance shall be extended by the amount of the delay
actually so caused.
Lender Assignment and Cure Rights. As described in the section entitled “THE PORT COVINGTON
PROJECT – Chapter 1B Vertical Improvements,” Bank OZK is providing a construction loan and a permanent loan
to construct four of the five buildings in Chapter 1B. The Funding Agreement allows the Developer Parties to
collaterally assign their rights and obligations under this Agreement to Bank OZK or any successor Qualified
Capital Source Provider (as defined in the Funding Agreement).
Upon a foreclosure or assignment in lieu of foreclosure by Bank OZK, but subject to the Transfer
Requirements (defined herein), Bank OZK or a Qualified Private Capital Source Provider may assume in full, the
rights, benefits, obligations and burdens of the Developer Parties set forth in the Funding Agreement (in such case,
Bank OZK, any Qualified Private Capital Source Provider, or a wholly owned designee or nominee would be a
“Transferee”). Upon such an event, (i) the Funding Agreement shall continue in full force and effect, in accordance
with its terms, (ii) the Issuer and the City will recognize such Transferee as a party under the Funding Agreement in
the event that such Transferee assumes the rights, benefits, obligations and burdens set forth in the Funding
Agreement, and (iii) provided that the Transferee agrees in writing to assume the ongoing surviving obligations
under the Funding Agreement and comply with same, the Issuer and the City will perform and observe their
respective obligations under the Funding Agreement, including, without limitation, the obligation to make payments
for the Actual Costs of the Series 2020 Project to Transferee pursuant the Funding Agreement.
“Transfer Requirements” means the requirement that the applicable Transferee (x) agrees to engage a
Qualified Developer (defined below), (y) such Transferee notifies the City or the Issuer in writing of such
foreclosure, transfer and/or assignment within 30 days following such event, and (z) such Transferee delivers to the
Issuer and the City its written agreement to be bound by all provisions of this Funding Agreement including, without
limitation, the duty to construct and the indemnification requirements.
“Qualified Developer” means a contractor and/or developer which, (I) together with its controlled affiliates,
has completed the construction and development of at least three projects of a similar type and similar size to the
Chapter 1B Development and satisfies the Qualification Provisions and (II) has the financial wherewithal or
resources to assume its role as a developer hereunder.
The Issuer and the City have agreed to give notice to Bank OZK and any other Qualified Private Capital
Source Provider of any default of any Developer Party under the Funding Agreement and Bank OZK and such other
Qualified Private Capital Source Provider shall have the same right to cure such default(s) as is provided under the
Funding Agreement. In the event of a default, the Issuer and the City may not terminate the Funding Agreement
without affording to Bank OZK or any other Qualified Private Capital Source Provider a period of time to remedy
any such default by any Developer Party equal to (1) sixty (60) days, such period to commence upon the receipt by
Bank OZK or any other Qualified Private Capital Source Provider of written notice of such default, during which
period the Issuer will not withdraw any amounts from the Project Account or otherwise exercise any remedies under
the Funding Agreement (absent the written consent) or (2) if possession of, or title to, property is required to cure
such default, such longer period of time as may be necessary to obtain possession of, or title to, such
property (provided that during such additional period of time, Bank OZK or such other Qualified Private Capital
Source Provider is actively pursuing its legal remedies to obtain title to such property). If such default is cured, the
Issuer has agreed to continue to make payments for the Actual Costs of the Series 2020 Project in accordance with
the Funding Agreement.
For more information on the Lender assignment and cure rights or any other provision of the Funding
Agreement, see “APPENDIX G – Form of Funding Agreement.”
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THE DISTRICTS AND THE PLEDGED REVENUES
The Districts
The Development District, which was created pursuant to the Tax Increment Ordinance to benefit the Port
Covington Project, consists of approximately 237 acres of property. Based on a certificate of the Supervisor of
Assessments, the Original Assessable Base of the Development District is $90,796,494.
The Special Taxing District, which was created by the Special Taxing District Ordinance and also benefits
the Port Covington Project, consists of approximately 155 acres of property within the Development District. For
the boundaries of each of the Districts, see the maps included on page ii herein.
The Pledged Revenues described herein are composed of the Tax Increment Revenues and the Special Tax
Revenues, which have been pledged by the City pursuant to the Contribution Agreement. See “SECURITY FOR
THE 2020 BONDS” herein.
State law requires assessed values to be based on full cash value as established by selling prices in a market
area. Because assessments are performed every three years, the Supervisor of Assessments is required to calculate a
“phased-in” assessment value. For any increase in the full cash value of a property, excepting new construction, the
Tax-Property Article of the Maryland Code requires that the increase in value over the old value be “phased-in” over
the succeeding three years. For example, if a property has an assessment of $100,000 and receives a new
assessment of $130,000, as the new assessment is $30,000 higher than the old assessment, the $30,000 is “phased-
in” in equal amounts over the next three years so that the phased-in assessment value for the first year following the
new assessment would be $110,000, the phased-in assessment value for the second succeeding year would be
$120,000, and the third year phased-in assessment value would be $130,000. See “– Assessment Procedures; Tax
Credits” above.
When construction of improvements is completed with respect to any parcel within the Development
District, it is expected that an interim assessment of such parcel will occur. Property is reassessed for new
improvements semi-annually.
Property in the State is generally re-assessed once every three years and as of January 1 of the assessment
year. According to SDAT, the most recent reassessment date for the properties in the Development District was
January 1, 2018. The next reassessment for all properties in the Development District is scheduled for January 1,
2021.
For purposes of this discussion of Tax Increment Revenues, unless indicated as the full cash assessed value,
any reference to the assessed value of a parcel or the Development District in the aggregate is equal to the phased-in
assessed value.
For additional information on the application of the Tax Increment Revenues and the amounts in the Tax
Increment Fund, see “– Application of Pledged Revenues” above. See also “SECURITY FOR THE 2020 BONDS”
herein.
Pursuant to the Tax Increment Act and the Ordinances, Tax Increment Revenues with respect to the
Development District in any Fiscal Year are the portion of the taxes that would normally be paid to the City and that
represent the levy on the amount by which the assessable base of real property in the Development District subject
to taxation as of January 1 preceding that Fiscal Year exceeds the applicable Original Taxable Value (the “Tax
Increment”). The Original Taxable Value is defined in the Tax Increment Ordinance to mean the assessable base of
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all real property in the Development District subject to taxation as of the January 1 of the year preceding the
effective date of the ordinance that approved the inclusion of such property within the Development District (the
“Original Assessable Base”) adjusted for changes in the assessment ratio.
The City has covenanted, pursuant to the Ordinances and the Contribution Agreement, that until bonds or
State Obligations outstanding with respect to the Development District have been paid in full (or defeased in
accordance with the indenture or indentures pursuant to which the applicable bonds or State Obligations were
issued), the property taxes on real property in the Development District shall be divided such that (i) the portion of
the taxes that is produced by the City’s annual tax rate levied upon the Original Taxable Value shall be allocated to
and, when paid, deposited into the funds of the City in the same manner as taxes by or for the City on all other
property are paid and (ii) the portion of the taxes representing the levy on the Tax Increment that would normally be
paid to the City shall be paid into the Tax Increment Fund to be applied in accordance with the Tax Increment Act
and the Ordinances. Tax Increment Revenues include the proceeds of the tax levy on the Tax Increment that would
normally be paid to the City, including any scheduled payments thereof, interest thereon and net proceeds of the
redemption or the sale of property in the Development District sold as a result of foreclosure of the lien of the City
property tax, up to the amount of said lien and interest thereon, including any penalties collected in connection with
delinquent property taxes, but excluding any expenses of sale or any other administrative expenses collected by the
City in connection with such delinquent taxes, in each case to the extent attributable to such levy on the Tax
Increment. No State real property taxes will be paid into the Tax Increment Fund.
Pursuant to the Tax Increment Act, the Ordinances, the Indenture, and the Contribution Agreement, all Tax
Increment Revenues collected and all amounts in the Tax Increment Fund are, subject to annual appropriation by the
City, pledged for transfer to the Issuer to provide for the payment of Debt Service on the 2020 Bonds and shall be
deposited into the Tax Increment Fund. See “SECURITY FOR THE 2020 BONDS – Subject to Appropriation”
herein.
The Administrator will be retained to provide certain services in connection with the administration of the
Districts. See “THE ADMINISTRATOR” herein. The Administrator has prepared, based on the limitations
contained therein, the Report to estimate anticipated Tax Increment Revenues from the proposed completed or to be
completed Chapter 1A Development and Chapter 1B Development. Based on the Report, the Administrator has also
prepared projections of anticipated assessments of Special Taxes and debt service coverage for the 2020 Bonds. As
of the date hereof, it is projected that the Tax Increment Revenues generated in the Fiscal Year beginning July 1,
2023, and transferred pursuant to the Contribution Agreement will not be sufficient to pay the required Debt Service
beginning with the Interest Payment Date of March 1, 2024, for such year, it is anticipated that Special Taxes will be
required to be levied. See “– Special Tax Revenues” below and “APPENDIX C – Tax Increment and Special Tax
Report.”
As provided by SDAT, there are no properties within the Development District for which the assessed
value is currently under appeal for the tax year 2019-20.
According to the Baltimore City Department of Collections, as of November 1, 2020, no delinquent taxes
were outstanding for any of the fiscal years prior to Fiscal Year 2020-2021.
Prior to 1914, the former Article 81, § 204 of the Maryland Code gave full powers to the local governments
to “value and assess all personal property and to revise all valuations and assessment of real property in their
respective counties, and to lower or increase said assessments of real or personal property and take steps for the
discovery of all unassessed property of every kind.” However, to remedy the flaws in the property assessment and
taxation system, between 1914 and 1916, sweeping changes were made to Maryland’s tax code, including the
establishment of a single State Tax Commissioner with greater authority to supervise local assessments of real and
personal property throughout the state, to standardize assessments throughout the state, and to reassess property at
regular intervals. In 1959, the State Tax Commission was replaced by the current State Department of Assessments
and Taxation (“SDAT”). The State assumption of the valuation and assessment function provides uniform and
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equitable assessments of property throughout the State, in compliance with the “uniformity clause” of the Maryland
State Constitution. Article 15 of the Declaration of Rights provides that the State shall “by uniform rules, provide
for the separate assessment, classification and sub-classification of land, improvements on land, and personal
property . . . and all taxes . . . shall be uniform within each class or sub-class . . . .”
Under the current system, while property tax revenues are a relatively minor revenue source for the State,
the State has assumed responsibility for the valuation and assessment of property even though local governments
levy and collect property taxes. Current law requires real property within the State to be valued and assessed once
every three years.
Local property tax rates are set annually by local governments and are applied to the county and municipal
assessable bases. Generally, local governments are able to set property tax rates at the level required to fund
governmental services. Furthermore, local government statutes may limit the tax rates that may be set. The local
property tax rate established by Baltimore City is expressed as an amount per $100 of assessed value (which may be
supplemented by special levies for various special districts or other assessments). Thus, local governments have the
final authority for determining how much property tax revenue is generated, although the tax rates imposed must be
uniform for all classes of property in counties, while municipalities set rates that are uniform within each class of
property. Furthermore, the constant yield tax rate law, enacted in 1977, imposes a notice requirement on local
governments in the event that a proposed tax rate is higher than the rate that would sustain current revenues.
The City tax rate, tax levy, and collections from Fiscal Year 2009 to and including Fiscal Year 2018 are as
follows. However, there can be no assurance that the real property tax collection experience of the City will be
representative of its ability to collect the taxes, and therefore Pledged Revenues, in the future. See “RISK
FACTORS” herein. See “APPENDIX L – Certain Information Regarding Baltimore City.”
CITY OF BALTIMORE
Property Tax Levies and Collections
(Dollars Expressed in Thousands)
The collection of all real property taxes within the City is the sole responsibility of the City. The Tax
Increment Revenues are a portion of the City ad valorem tax on real property within the Development District. The
Special Taxes will be invoiced and collected from owners of parcels at the same time as real property taxes within
the Special Taxing District. Taxes on real property under the Baltimore City Code are due and payable as of July 1
in each taxable year. The City grants a discount of 0.5% if the tax bill is paid in full before August 1. The taxes are
overdue and in arrears on October 1. Penalty and interest will be assessed on all delinquent real estate property
taxes at the rate of 1% interest per month or fraction thereof on the State portion of the bill and 2% per month (1%
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interest and 1% penalty) or fraction thereof on the City portion of the bill until the bill is paid in full. Under current
law, residents of owner-occupied residential real estate and owners of commercial property whose property taxes do
not exceed $100,000 pay real property taxes semiannually in two installments, without interest but with a service
charge on the second installment, unless they elect to pay these taxes in one annual payment before September 30.
The first installment is due July 1 and is in arrears on October 1. The final installment is due December 1, and is in
arrears on January 1. Appropriate service charges are applied to all semi-annual payment plans as provided by law,
calculated based on related administrative expenses.
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The following chart summarizes key dates related to the collection of taxes and payment of Debt Service on
the 2020 Bonds for any Fiscal Year:
Process Date
Regular property tax assessment notices mailed to property owners December
The “date of finality” (the date assessments for real property become final for next taxable year) January 1
Deadline for appealing reassessment notices (mailed the prior December) Mid-February
Homeowners’ tax credit applications received by this date will have credits reflected on July 1 property tax bills,
if eligible May 1
Appropriation of Tax Increment Revenues and Special Taxes equal to required debt service for subsequent fiscal On or before
year June 30
Director of Finance calculates and mails tax bills July 1
Deadline to submit homeowners’ and renters’ tax credit applications and real property exemptions September 1
Based on projections of Tax Increment Revenues to be available to pay required debt service in the next Fiscal
Year, Administrator notifies City of amount of Special Taxes, if any, that will be needed in such Fiscal Year September
Deadline to pay first installment of real property taxes without penalty (owner-occupied residential property and
owners of commercial property whose property taxes do not exceed $100,000) September 30
Deadline to pay real property taxes without penalty (commercial properties whose property taxes exceed
$100,000) September 30
If Special Taxes are required, bill for Special Taxes sent (payments are due in 45 days) October
Deadline to pay final installment of real property taxes (owner-occupied residential property and owners of
commercial property whose property taxes do not exceed $100,000) December 31
Final bill and legal notice mailed to property owners who have not yet paid taxes February 1
Transfers of Tax Increment Revenues to pay interest due on March 1 and Special Taxes, if necessary to pay such On or before
scheduled debt service March 1
Interest payment due from amounts on deposit in the accounts within the Debt Service Fund March 1
First of two instances of publication of properties going to tax sale March
Mailing of notice to owners of properties subject to tax sale April
Tax sale May
Transfers of Tax Increment Revenues to pay scheduled debt service due on September 1 and Special Taxes, if On or before
necessary to pay such scheduled debt service June 15
Payment of scheduled debt service as described herein September 1
Source: Baltimore City Department of Finance; Maryland State Department of Assessments and Taxation.
Under current State law, the City is not required to initiate procedures to sell any property in the City on
which the total taxes on the property, including interest and penalties, is less than $750 in any one year. Prior to
selling any property at the City tax sale to satisfy the tax obligations then due on such property, the City first will
certify as liens the amount of taxes and other municipal charges in arrears on the property, including any Special
Taxes or other delinquencies that are eligible for tax sale. Thereafter, the City will notify by mail the person last
appearing as the owner of the property on the City’s tax roll that the liens on the property will be sold at public
auction in order to satisfy the entire amount of taxes and other charges then due, including any Special Taxes or
other delinquencies that are eligible for tax sale, and any interest and penalties then due, unless the entire
indebtedness is paid within 30 days. This process currently occurs in early February. Payment of all outstanding
liens, including interest and penalties on or before April 30, can stop the tax sale process. Upon the failure of the
owner of record to pay all liens certified for payment as well as any interest and penalties due, and following two
publications of notice of the date and location of sale in accordance with State law, the City will conduct a sale of
the liens on the property at public auction which generally occurs in mid-May. Such liens will be sold to the highest
bidder at a price not less than the total amount of all taxes and other charges on the property certified as due for
payment, together with interest and penalties and expenses incurred in connection with making the sale. After
payment by the highest bidder of all liens and the high bid premium, if any, the City will issue to the bidder a tax
sale certificate evidencing the sale of the liens which the bidder can use to foreclose the owner’s right of redemption
in the property.
In the event that liens on any property which have been offered for sale for nonpayment of taxes have not
been purchased by a private bidder, the City will “buy in” and hold the liens. When the City retains the liens not
sold at tax sale, the City may pay, but is not required to pay, the delinquent taxes, including any delinquent Special
Taxes, and pays no taxes or Special Taxes during the period after the tax sale but retains the same rights and
remedies with regard to the property as other bidders, including the right to foreclose the right of redemption. The
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City may subsequently sell or assign the tax sale certificate for the property at which time such taxes, interest and
any penalties to the date of sale will be paid by the purchaser of the certificate. In the event that any property in the
Districts which has been offered for sale for nonpayment of taxes has not been purchased by a private purchaser, the
City is able to continue to offer the property for sale pursuant to applicable law.
The City has agreed in the Contribution Agreement that the collection of delinquent taxes to be applied and
paid over as Tax Increment Revenues and Special Tax Revenues will be pursued by the City in the same manner as
the collection of taxes applied to general City purposes and to take steps to enforce payment of the real property
taxes and Special Tax Revenues in a timely fashion.
The City may not execute or deliver a deed to a person who holds a tax sale certificate until the Court
enters a judgment directing the City to execute and deliver such a deed in a proceeding that has been brought to
foreclose all rights of redemption of the prior owner. A holder of a certificate may file a complaint in the Circuit
Court for Baltimore City at any time after six months from the date of sale, but no later than two years from the date
of the certificate. Failure to file a complaint within the two-year period will result in the certificate becoming void.
Once the certificate becomes void, the purchaser ceases to have any right, title and interest in the property and any
money received by the City from the tax sale is forfeited. Prior to any foreclosure of the right of redemption, the
prior owner may continue in possession of the property, provided that a receiver for the property may be appointed
in accordance with State and local law, and the prior owner may redeem the property by paying all taxes, whether or
not in arrears, and any interest, penalties, and expenses relating to the sale as well as interest due at the rate of
redemption accruing from the date of the tax sale. Until the Circuit Court has issued a judgment that forecloses all
rights of redemption, the property shall continue to be assessed as though no sale had been made, and all taxes are
additional liens against the property and are the responsibility of the prior owner. Payment of taxes assessed during
the redemption period is not due and payable by the holder of the certificate until foreclosure of the right of
redemption. If the prior owner does not redeem the property from tax sale and pay all outstanding taxes, no taxes,
including the Special Taxes, will be collected by the City during the redemption period. Such amounts will be paid
by the person holding the certificate on the property following foreclosure of the right of redemption. Upon the
completion of the foreclosure of the right of redemption, the holder of the certificate may obtain from the City a
deed to the property upon payment in full of all the taxes which are then due on the property, together with all taxes,
interest and penalties accrued after the date of sale and the balance of the purchase price.
No assurances can be given that the real property subject to tax sale will be sold or redeemed or, if
sold or redeemed, that the proceeds of such sale or redemption will be sufficient to pay any delinquent real
property tax or Special Taxes. Neither the City Enabling Acts nor the provisions of the Tax-Property Article
of the Annotated Code of Maryland pertaining to tax sales require the City to pay the delinquent real
property tax or Special Taxes relating to any lot or parcel of property offered for tax sale if there is no
purchaser at such tax sale. The Special Taxing District Act specifies that Special Taxes have the same lien
priority in the case of delinquency as ad valorem property taxes.
If delinquencies in the payment of the Tax Increment Revenues exist, there could be a default or delay in
payments to the Holders pending tax sale of property or foreclosure of redemption proceedings and receipt by the
City of delinquent Tax Increment Revenues, if any. However, in the event that the Tax Increment Revenues are
insufficient, the City may, within the limits of the Rate and Method, the Ordinances, and the City Enabling Acts,
adjust the Special Taxes levied on all property within the Special Taxing District in future Fiscal Years to provide an
amount, taking into account such delinquencies, required to pay Debt Service on the 2020 Bonds and to replenish
the applicable account within the Series 2020 Reserve Fund. See “– Special Tax Revenues” above.
Assessment Procedures. While the applicable tax rate is set by the City and is a combination of State and
City taxes, the values of the properties within the Development District are assessed by SDAT. SDAT is an
independent state agency responsible for real and personal property assessment as well as the mapping of all real
estate. Within SDAT, there is a Supervisor of Assessments for Baltimore City (the “Supervisor of Assessments”)
who is appointed by the Director of SDAT after nomination by the Mayor of the City.
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Maryland’s assessment system is based on a three-year cycle in which one-third of all real property is
physically inspected and reassessed each year. Assessments are based upon an estimate of full cash value. The
State assessors utilize three traditional approaches to value: cost, sales comparison, and income capitalization. The
income capitalization approach is not applicable to residential property. To lessen the impact of any increase in full
cash value, a three year phased-in period is implemented for certain assessment increases. This provides for
one-third of the increase in full cash value to be added in the first year of the assessment cycle with the balance
being added in equal installments over the next two years.
If there were to be any new construction in the Districts, the assessor would currently use a cost approach
to determine the initial full cash value using the land acquisition price (if applicable) as the land value and actual
construction costs provided by the developer of such property (if available). No assurances can be given that such
assessment procedure will continue to remain in effect during the term of the 2020 Bonds.
Tax Credits. In addition to the foregoing, there are various limitations and tax credits that can affect the
collection of real property taxes. For example, pursuant to Section 9-103 of the Maryland Annotated Code, Tax-
Property Article (the “Enterprise Zone Tax Credit Act”), certain non-residential real property located in a designated
Enterprise Zone (as defined in the Enterprise Zone Tax Credit Act) and used in a trade or business by a business
entity that meets the requirements of the Enterprise Zone Tax Credit Act is eligible for tax credits (the “Enterprise
Zone Tax Credits”) based on the difference between the assessed value determined for the applicable taxable year in
which the Enterprise Zone Tax Credits are granted and the assessed value for the taxable year immediately prior (the
“Eligible Assessment”). The Enterprise Zone Tax Credits are equal to 80% of the Eligible Assessment in each of
the first five taxable years following the calendar year in which the property initially becomes a qualified property;
70% in the sixth taxable year; 60% in the seventh taxable year; 50% in the eighth taxable year; 40% in the ninth
taxable year; and 30% in the tenth taxable year. These tax credits will reduce the amount of Tax Increment
Revenues available to pay Debt Service on the 2020 Bonds.
Portions of the development are located in an Enterprise Zone. As such, and as set forth in the Report, the
Administrator has accounted for the impact of the Enterprise Zone Tax Credits in determining the amount of Tax
Increment Revenues available to pay Debt Service by assuming that the Enterprise Zone Tax Credits will continue
to be available and all owners of eligible property in the Development District will apply for and receive the
Enterprise Zone Tax Credits. See “APPENDIX C – Tax Increment and Special Tax Report.”
The City provides “Brownfields Property Tax Credits” that is designed to encourage the re-development of
contaminated, abandoned, and/or under-utilized industrial/commercial sites and provides tax credit for qualified
Brownfields sites equal to 50% (70% for projects that spend more than $250,000 in certain eligible work) of the
site’s increased property tax liability after completion of a voluntary cleanup or corrective action plan. If the
applicable site is located in an Enterprise Zone, the credit will be applied over a ten-year period, with the Enterprise
Zone Tax Credits applied first. The credit will be applied to sites not located in an Enterprise Zone over a five-year
period. “Increased property tax liability” means the remaining property tax liability, after first applying all other
property tax credits applicable to the site, attributable to the increase in the assessment of a Brownfields site,
including improvements added to the site within the tax credit period, over the assessment of the site before its
voluntary cleanup. The credit is transferable to a purchaser of the property for the remaining life of the credit.
Termination of the credit occurs if (i) the recipient withdraws from the voluntary cleanup program that provided the
basis for the credit; (ii) MDE withdraws approval of a response action plan or a certificate of completion under
applicable State law; or (iii) the recipient otherwise ceases to qualify for the credit under applicable law.
Portions of the Port Covington Project are located in located on a “qualified brownfields site” and has
received the necessary designations from MDE. As such, and as set forth in the Report, the Administrator has
assumed that the Brownfields Property Tax Credits would be available and has included such credits in determining
the amount of Tax Increment Revenues available to pay Debt Service. See “APPENDIX C – Tax Increment and
Special Tax Report.”
For additional information on the assessed values of the properties in the Development District, the
reassessment of such properties, and any applicable tax credits, see generally “APPENDIX C – Tax Increment and
Special Tax Report.” For a summary of the coverage on projected Debt Service based on estimates of Tax
Increment Revenues to be generated and the potential effects of tax credits that may be available for the Districts on
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an aggregate basis, see “– Tax Increment Study; Debt Service Coverage” below. For information on the application
of the Enterprise Zone Tax Credits and the Brownfield Tax Credits to the Port Covington Project, see, as applicable,
“PORT COVINGTON PROJECT – Enterprise Zone Credits” and “– Brownfields Property Tax Credits” herein.
The following description is qualified in its entirety by reference to the Rate and Method set forth in
“APPENDIX D – Port Covington Special Taxing District Rate and Method of Apportionment of Special Taxes.”
Capitalized terms not otherwise defined in this section or in the Indenture (See “APPENDIX E – Proposed Form of
Indenture of Trust”) are as defined in the Rate and Method.
General
Pursuant to the Special Taxing District Act, the Special Taxing District Ordinance has authorized the levy
of Special Taxes in the event that Tax Increment Revenues are insufficient to pay debt service, pay Administrative
Expenses, or replenish certain accounts or funds held by the Trustee. Prior to the delivery of the 2020 Bonds, the
City will record among the land records of Baltimore City, Maryland, a Notice of Special Tax with respect to the
Special Taxing District.
Part of the Trust Estate for the 2020 Bonds includes the Contribution Agreement, in which the City has
pledged, subject to annual appropriation, the Special Tax Revenues. Special Tax Revenues include the net proceeds
of the Special Taxes received by the City, including any scheduled payments thereof, interest thereon and net
proceeds of the redemption or sale of property in the Special Taxing District sold as a result of foreclosure of the
lien of the Special Taxes up to the amount of said lien and interest thereon, including any penalties collected in
connection with delinquent Special Taxes, but excluding any expenses of sale or any other administrative expenses
collected by the City in connection with such delinquent taxes. See “SECURITY FOR THE 2020 BONDS” herein.
Prior to the beginning of each Fiscal Year, and pursuant to the Special Taxing District Ordinance, the
Administrator will inform the Authorized Officer, after taking into account the amount on deposit in the funds and
accounts as provided by the Indenture, and the amount of Tax Increment Revenues expected to be collected during
the next Fiscal Year, if Special Taxes need to be collected in the applicable Special Taxing District.
If it is determined that the collection of any Special Taxes is required, the Authorized Officer will ascertain
the relevant parcels on which the Special Taxes are to be collected, taking into account any parcel splits during the
preceding and then current Fiscal Year and shall determine the amount of Special Taxes within the Special Taxing
District required during the ensuing Fiscal Year for the purposes set forth in the Special Taxing District Ordinance,
including the payment of the principal of and interest on any Outstanding Bonds, any replenishment of any Reserve
Fund and an amount estimated to be sufficient to pay the Administrative Expenses during such Fiscal Year, taking
into account the balances in such funds, the Tax Increment Fund and the Special Tax Fund. The Authorized Officer
shall make such determination in accordance with the Ordinances and the City Enabling Acts. The Authorized
Officer shall take all necessary actions to cause such amount of Special Taxes to be collected in each Fiscal Year in
which Special Taxes are required to be collected under the Indenture. See “APPENDIX D – Port Covington Special
Taxing District Rate and Method of Apportionment of Special Taxes.”
The City is required under the Special Taxing District Act and the Special Taxing District Ordinance to
cause the levy and collection of Special Taxes in an amount determined according to the Rate and Method that is
appended to the Special Taxing District Ordinance, and the City has entered into a contract with the Administrator to
assist the City in carrying out such responsibilities. See “APPENDIX D – Port Covington Special Taxing District
Rate and Method of Apportionment of Special Taxes.”
The methodology for determining the Special Taxes is set forth in the Port Covington Special Taxing
District Rate and Method of Apportionment of Special Taxes (the “Rate and Method”). See “THE DISTRICTS
AND THE PLEDGED TAX REVENUES – Rate and Method of Apportionment of Special Taxes” herein and
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“APPENDIX D – Port Covington Special Taxing District Rate and Method of Apportionment of Special Taxes.”
The Administrator will be designated to determine the Special Taxes that may be required to be collected in any
given year pursuant to the Rate and Method. Special Taxes shall be collected in any given year only if the Tax
Increment Revenues are expected to be insufficient to cover Debt Service on the 2020 Bonds, pay administrative
costs related to the 2020 Bonds and the Districts and maintain certain funds under the Indenture. In the event that
Special Taxes are required to be collected in any given year, the amount of Special Taxes that the City may collect
in any year is strictly limited by the Maximum Special Tax Rates (as such term is defined in the Rate and Method)
approved by the City pursuant to the Special Taxing District Ordinance creating the applicable Special Taxing
District.
Annual Special Tax Requirement. The Special Tax is levied on taxable property in accordance with the
Rate and Method. The City has covenanted in the Contribution Agreement that so long as any 2020 Bonds are
Outstanding, it will comply in all material respects with the City Enabling Acts and the Rate and Method to the
extent required to assure the timely collection of the Tax Increment Revenues and the Special Tax for the payment
of the 2020 Bonds. The Special Taxing District Act and the Special Taxing District Ordinance provide that the City
shall levy the Special Tax against taxable property within the Districts according to the Rate and Method in each
Fiscal Year in which the Tax Increment Revenues are insufficient to pay Debt Service on the 2020 Bonds in the
corresponding Bond Year, to the extent necessary and permitted by the Special Taxing District Act and subject to
the Adjusted Maximum Special Tax (as defined below) in order to yield an amount (the “Special Tax Requirement”)
equal to (A) the sum of: (1) Debt Service and any other periodic costs (including deposits to any sinking funds) on
the 2020 Bonds, (2) unpaid Administrative Expenses to be incurred in the applicable fiscal year or incurred in any
previous fiscal year, (3) any amount required to replenish any reserve fund established in connection with the 2020
Bonds, (4) an amount equal to the estimated delinquencies expected in payment of the Special Tax not otherwise
taken into account, as determined by the Administrator, and (5) the costs of remarketing, credit enhancement, bond
insurance and liquidity facility fees (including such fees for instruments that serve as the basis of a reserve fund
related to any indebtedness in lieu of cash), minus (B) the sum of: (1) Tax Increment Revenues estimated to be
available to apply to the Special Tax Requirement for that fiscal year, (2) any credit such as capitalized interest or
investment earnings on account balances pursuant to the Indenture, and (3) any other revenues available to apply
against the Special Tax Requirement.
Special Tax Rates. According to the Rate and Method, the Maximum Special Tax for the 2017-2018 Fiscal
Year for each parcel of developed property shall be equal to the product of the number of residential dwelling units,
building square footage, rooms, or spaces to be built on such parcel and the Maximum Special Tax Rate for the
applicable class of property shown in the following table.
Developed property means parcels of taxable property for which a building permit has been issued that
allows the construction or rehabilitation of a structure. On each July 1, commencing July 1, 2018, the Maximum
Special Tax Rates shown in this table shall be increased to 102 percent of the respective Maximum Special Tax Rate
in effect in the previous fiscal year.
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The Maximum Special Tax for any fiscal year for each parcel classified as undeveloped property is
essentially equal to the Special Tax Requirement and is allocated to each parcel of undeveloped property by the net
land area of each parcel of undeveloped property. Undeveloped property means parcels of taxable property not
classified as developed property.
Special Taxes may not be collected from any parcel in excess of the “Adjusted Maximum Special Tax” for
the parcel. The Adjusted Maximum Special Tax for a Parcel is equal to the Maximum Special Tax for a parcel
minus a special tax credit for the parcel. The special tax credit for a parcel means, for any fiscal year, Tax Increment
Revenues related to the parcel available to apply as a special tax credit pursuant to the Indenture and included in the
Special Tax Requirement for that fiscal year.
Special Taxes are collected to fund the Special Tax Requirement in the following order of priority:
First: The Special Tax shall be collected proportionately from undeveloped property up to 100 percent of
the Adjusted Maximum Special Tax for such parcel to the extent necessary to fund the Special Tax
Requirement.
Second: If additional monies are needed to fund the Special Tax Requirement after the first step has been
completed, the Special Tax shall be collected proportionately from developed property up to 100 percent of
the Adjusted Maximum Special Tax for such parcel, to the extent necessary to fund the Special Tax
Requirement.
APPRAISAL; VALUE-TO-LIEN
The most recent appraisal and market study of the Chapter 1B Development and the remainder of the
Districts was conducted by Cushman & Wakefield of Maryland, LLC (the “Appraiser”), which prepared a report
entitled, “The Appraisal Report,” made as of June 1, 2020 (the “Appraisal and Market Study”). The Appraisal and
Market Study provides an independent value analysis of the properties in the Chapter 1B Development and the
remainder of the Districts for the purpose of establishing a framework within which to forecast the taxable values
and their timing in order to estimate Tax Increment Revenues in the Development District with respect to the 2020
Bonds. The Appraisal and Market Study also provides a market overview and analysis of each proposed component
within the Chapter 1B Development plus certain redeveloped parcels and undeveloped parcels as set forth therein.
The Appraiser estimated the values for the parcels in the Chapter 1B Development upon completion of the
Series 2020 Project and upon completion and stabilization of the proposed vertical development. The Appraisal and
Market Study also included values of the remaining undeveloped parcels in the Special Taxing District. The study
did not independently estimate the value of existing development in the Special Taxing District. The values of these
parcels are estimated based on existing assessed values as determined by SDAT. Based on the assumptions and
conclusions set forth in the Appraisal and Market Study, the Appraiser has determined the aggregate prospective
market value of the parcels in the Chapter 1B Development as fully developed will be $553,700,000 and the
aggregate prospective market value of the remaining undeveloped parcels to be $161,900,000. The assessed value
of the parcels not valued by the Appraiser is $126,726,700 (consisting of values of $34,886,700 of currently
developed parcels that are expected to be redeveloped and $91,840,000 of developed parcels that are not expected to
be redeveloped). The total estimated value of the parcels in the Special Tax District, assuming completion of the
buildings in the Chapter 1B Development, is estimated to be $842,326,700. This estimate of value compared to the
gross proceeds of the 2020 Bonds results in a value-to-lien of 6.29.*
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The table below sets forth in the calculation of the value-to-lien ratio for the 2020 Bonds.
Value-to-Lien*
In addition to the value-to-lien ratio with respect to the 2020 Bonds, the value-to-estimated future Special
Taxes was also estimated on a per-parcel basis. Future Special Taxes are estimated to occur during the period
property tax credits are applicable. The property tax credits are estimated to be in place for ten years following
building completion. Once the property tax credits expire, the Tax Increment Revenues are expected to be sufficient
to pay Debt Service on the 2020 Bonds. For more information on the property tax credits, see “PORT
COVINGTON PROJECT – Enterprise Zone Tax Credits” and “– Brownfields Property Tax Credits” herein. See
also “THE DISTRICTS AND THE PLEDGED REVENUES – Assessment Procedures; Tax Credits” herein.
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The table below shows the value-to-estimated future Special Taxes for Developed Property for which the
values are estimated based on current assessed values as reported by SDAT.
Cumulative Value to
Assessed Estimated Future Estimated Future
Property Value Special Taxes Special Taxes
Developed and Redevelopment Parcels
Baltimore Sun Building $23,013,900 $523,060 44.00
AFP $6,082,200 $9,393 647.50
Former Walmart $15,000,000 $316,916 47.33
McComas Street Rowhomes $923,600 $5,640 163.77
Rye Street Tavern & Sagamore Spirit Distillery $10,929,900 $17,018 642.26
City Garage $11,000,000 $9,621 1,143.34
Under Armour Building 37 $41,640,800 $67,966 612.67
The value-to-estimated future Special Taxes for the parcels that are to be developed in the Chapter 1B
Development are based on the ratio of the market value of the land assuming completion of the public improvements
as reported in the Appraisal and Market Study relative to the cumulative estimated future Special Taxes. The table
below shows the value-to-estimated future Special Taxes based on the as is appraised value of the land after
completion of the public improvements.
Cumulative Value to
Appraised Estimated Future Estimated Future
Property Value (Land) Special Taxes Special Taxes
To be Developed Parcels (Chapter 1B parcels)
Parcel E6 $13,600,000 $321,172 42.34
Parcel E5B $6,850,000 $131,439 52.12
Parcel E5A $10,450,000 $473,614 22.06
Parcel E7 $13,250,000 $583,376 22.71
Parcel E1 $10,850,000 $481,646 22.53
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The table below shows the value-to-estimated future Special Taxes based on the prospective market value
of each building at stabilization as reported in the Appraisal and Market Study.
Cumulative Value to
Appraised Value Estimated Future Estimated Future
Property (Building Stabilization) Special Taxes Special Taxes
To be Developed Parcels (Chapter 1B parcels)
Parcel E6 $118,500,000 $321,172 368.96
Parcel E5B $62,350,000 $131,439 474.36
Parcel E5A $114,800,000 $473,614 242.39
Parcel E7 $144,700,000 $583,376 248.04
Parcel E1 $113,350,000 $481,646 235.34
The value-to-estimated future Special Taxes for Undeveloped Property is based on the ratio of the
appraised value as reported in the Appraisal and Market Study relative to the cumulative estimated future Special
Taxes and is set forth in the table below.
Cumulative Value to
Appraised Estimated Future Estimated Future
Property Value (Land) Special Taxes Special Taxes
Undeveloped Parcels
BUR (excludes developed parcels) $124,250,000 $17,736,304 7.01
UA Port Covington Holdings, LLC
(excludes developed parcels) $37,650,000 $26,389,668 1.43
The value-to-estimated future Special Taxes for the Undeveloped Parcels owned by UA is low. In order to
mitigate the low value-to-estimated future Special Taxes, an arrangement with respect to the applicable Special
Taxes was put in place by the Owner. This arrangement provides for an Excess Special Tax payment to be made to
UA by the Owner in the event Special Taxes levied on the property owned by UA pursuant to the Rate and Method
exceed 25% of the Special Taxes for the Special Taxing District as a whole. Funds in the amount of up to
$14,623,892 have been secured for this purpose. For more information on this arrangement and the funds set aside
for this purpose, see “PORT COVINGTON PROJECT – Overview of the Development District and Special Taxing
District – Special Tax Escrow Account and Surety Bond (Other Properties)” herein.
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The value-to-estimated future Special Taxes following the Excess Special Tax payment is set forth in the table
below.
Cumulative Value to
Appraised Estimated Future Estimated Future
Property Value (Land) Special Taxes Special Taxes
Undeveloped Parcels
UA Port Covington Holdings, LLC (excludes
developed parcels) $31,000,000 $11,698,743 2.65
None of the Issuer, the City, and the Underwriters make any representation as to the accuracy of the market
study conclusions or the prospective market value of properties set forth in the Appraisal and Market Study. See
“APPENDIX A – Appraisal and Market Study.”
MuniCap, Inc., the “Administrator,” has prepared, based on the assumptions and limitations contained
therein, a Tax Increment and Special Tax Report dated November [24], 2020 (the “Report”) to estimate anticipated
Tax Increment Revenues from the existing and to-be-completed development as proposed by the Owner, the
Administrator has also prepared projections of debt service coverage and anticipated assessments of Special Taxes
for the 2020 Bonds. Complete projections of the Tax Increment Revenues and the Special Tax Revenues, debt
service coverage and Special Taxes through the term of the Series 2020 Bonds can be found in “APPENDIX C –
Tax Increment and Special Tax Report.”
The Report contains a “Scenario A,” “Scenario B,” and “Scenario C,” which estimate projected Tax
Increment Revenues through the term of the 2020 Bonds based on different assumptions. Scenario A includes base
tax revenues from the Original Assessable Base value and (1) completion of Chapter 1B Development; (2) property
values of the Existing Port Covington Development and Chapter 1A Development are based on actual 2020
assessed values; (3) property values of Chapter 1B Development are as estimated and subsequently described in the
Report; (4) property values increase at a 2% annual rate of inflation; and (5) the real property tax rate remains static
at the 2020 level in future years.
The calculation for Scenario B is the same as Scenario A except that it assumes Property values do not
increase with inflation.
The calculation for Scenario C is the same as scenario A except for the following assumptions:
• Property values for the Existing Development, Chapter 1A Development, and Chapter 1B
Development are decreased from values assumed under Scenario A by 10% for the assessment
year beginning January 1, 2021;
• Property values remain at the assumed decreased level through the assessment year beginning
January 1, 2023 (for the duration of the triennial reassessment to occur as of January 1, 2021);
• Property values revert to pre-pandemic levels as of the triennial reassessment to occur on January
1, 2024 (with the increase in values phased in over a three-year period); and
• Property values increase at a 2% annual rate of inflation commencing as of the triennial
reassessment to occur on January 1, 2027.
The assumptions in Scenario C are meant to be illustrative of potential impacts of the COVID-19 (defined herein)
pandemic. See “RISK FACTORS – COVID-19 Pandemic” herein.
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As noted herein, some of the Existing Development and the Chapter 1A Development are receiving
Enterprise Zone and Brownfield property tax credits. The Owner anticipates this to be the case for the eligible
parcels within the Chapter 1B Development. For more information on the property tax credits, see “PORT
COVINGTON PROJECT – Enterprise Zone Tax Credits” and – Brownfields Property Tax Credits” herein. See also
“THE DISTRICTS AND THE PLEDGED REVENUES – Assessment Procedures; Tax Credits” herein. The Report
includes analyses including the projected property tax credits (as summarized above); the Report also includes
analyses excluding such property tax credits.
See “APPENDIX C – Tax Increment and Special Tax Report” for more details on the calculations and the
assumptions on which such calculations are based.
Under Scenario A, the assessed values are projected to reflect stabilization (as described in the Report) in
the bond year ending September 1, 2026. The projected incremental assessed value of real property in the
Development District at this time is estimated to be $439,111,197. Under Scenario B, the projected incremental
assessed value of real property in the Development District at stabilization is estimated to be $389,157,228. Under
Scenario C, the projected incremental assessed value of real property in the Development District at stabilization is
estimated to be $373,158,771. The information in the below table is derived from Table VII-H in the Report
attached hereto.
Estimated Incremental
Assessed Value at Original Assessable Assessed Value at
Stabilization(a) Base Value Stabilization
A – Base case
Existing Port Covington Development $115,704,135 - -
Chapter 1A Development $24,212,382 - -
Chapter 1B Development $345,670,033 - -
Residual land $44,321,141 - -
Total $529,907,691 ($90,796,494) $439,111,197
B – No inflation
Existing Port Covington Development $104,796,800 - -
Chapter 1A Development $21,929,900 - -
Chapter 1B Development $313,083,999 - -
Residual land $40,143,023 - -
Total $479,953,722 ($90,796,494) $389,157,228
C – COVID-19
Existing Port Covington Development $101,303,573 - -
Chapter 1A Development $21,198,903 - -
Chapter 1B Development $302,647,866 - -
Residual land $38,804,922 - -
Total $463,955,265 ($90,796,494) $373,158,771
(a)
Based on assessed value as of January 1, 2025 for tax year beginning July 1, 2025, payable towards debt service in
bond year ending September 1, 2026.
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Projected Tax Increment Revenues at Stabilization
The projected incremental assessed values shown above are the basis for estimating the Tax Increment
Revenues. As described in the Report, some parcels within the Development District are eligible for certain property
tax credits, effectively lowering the taxable value of the applicable parcels for the life of the property tax credits.
Under Scenario A, the projected Tax Increment Revenues for the real property in the Development District at
stabilization are $2,142,005 including the effect of property tax credits and $9,278,947 excluding the effect of
property tax credits. Under Scenario B, the projected Tax Increment Revenues for the real property in the
Development District at stabilization are estimated to be $1,778,462 including the effect of property tax credits and
$8,223,359 excluding the effect of property tax credits. Under Scenario C, the projected Tax Increment Revenues
for the real property in the Development District at stabilization are estimated to be $1,659,692 including the effect
of property tax credits and $7,885,293 excluding the effect of property tax credits.
B – No inflation
Including credits $1,778,462 $165,530,633
Excluding credits $8,223,359 $224,868,503
C – COVID-19
Including credits $1,659,692 $227,228,938
Excluding credits $7,885,293 $287,441,811
(a)
Based on assessed value as of January 1, 2025 for the tax year beginning July 1, 2025, payable
towards debt service in the bond year September 1, 2026.
Annual projections of Tax Increment Revenues for the term of the 2020 Bonds can be found in the Report. See
Appendices A-5.a through A-5.c, B-5.a through B-5.c, and C-5.a through C-5.c of the Report for such information.
The total principal amount of the 2020 Bonds to be issued is $133,995,000*. The tables on the following
pages summarize the debt service coverage under each of the above-referenced scenarios after including the effect
of property tax credits. The information in these tables is derived from Tables I-H through I-J and Table I-L in the
Report. Annual projections of Tax Increment Revenues for the term of the 2020 bonds can be found in the Report.
See Appendices A-5.a through A-5.c, B-5.a through B-5.c, and C-5.a through C-5.c of the Report for such
information.
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Debt Service Coverage Scenario A (Including Tax Credits)*
90
Debt Service Coverage Scenario B (Including Tax Credits)*
91
Debt Service Coverage Scenario C (Including Tax Credits)*
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Projected Special Taxes
As shown in the preceding tables, the assumed property tax credits result in a Special Tax Requirement
during the life of the property tax credits. As shown in the following tables, the Report provides estimates of the
Special Tax Requirement, as well as the Special Tax Requirement to be collected from Undeveloped Property and
Developed Property (as such terms are defined in the Rate and Method).
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Projected Special Tax Requirement by Owner*
The Owner has agreed to certain arrangements regarding the Special Taxes to be collected from certain
parcels within the Special Taxing District. For more information on these arrangements and their effect on Special
Taxes projected to be paid by the Owner and its affiliates, see “PORT COVINGTON PROJECT – Overview of the
Development District and Special Taxing District – Special Tax Payment Arrangements” herein. See also
“APPENDIX C – Tax Increment and Special Tax Report.”
Complete projections of the Tax Increment Revenues and the Special Tax Revenues, debt service coverage
and Special Taxes through the term of the 2020 Bonds can be found in “APPENDIX C – Tax Increment and Special
Tax Report.”
RISK FACTORS
Investment in the 2020 Bonds involves certain risks. The following is a discussion of certain risk factors
which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the
2020 Bonds, which are not rated by any rating agency. This discussion does not purport to be comprehensive or
definitive. The occurrence of one or more of the events discussed herein could adversely affect the ability or
willingness of property owners in the Districts to pay their real property taxes or Special Tax when due. Failure of
property owners to pay all or a portion of the real property taxes or Special Tax could result in the inability to make
full and punctual payments of Debt Service on the 2020 Bonds. In addition, the occurrence of one or more of the
events discussed herein could adversely affect the value of the property in the Districts and thereby reduce the
amount of the Tax Increment Revenues or Special Taxes that are generated from property in the Districts.
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Limited Obligations
The 2020 Bonds are payable solely from the Pledged Revenues transferred by the City to the Issuer and
certain other funds on deposit with the Trustee or which may be deposited with the Trustee in the future, including
earnings and investments on funds on deposit with the Trustee.
THE 2020 BONDS AND INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF
THE ISSUER AND THE PRINCIPAL OR PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY,
AND INTEREST ON THE 2020 BONDS SHALL BE PAYABLE SOLELY FROM, AND SECURED
EXCLUSIVELY BY, THE TRUST ESTATE OR FROM ANY OTHER MONEYS MADE AVAILABLE TO
THE ISSUER FOR SUCH PURPOSE. THE 2020 BONDS SHALL NOT BE, DIRECTLY, INDIRECTLY
OR CONTINGENTLY, A MORAL OR OTHER OBLIGATION OF THE STATE, ANY OTHER
GOVERNMENT UNIT, OR THE ISSUER TO LEVY OR PLEDGE ANY TAX OR TO MAKE AN
APPROPRIATION TO PAY SUCH AMOUNTS, AND THE ISSUER SHALL NOT BE OBLIGATED TO
PAY THE PRINCIPAL OR PURCHASE PRICE OF, REDEMPTION PREMIUM, IF ANY, OR INTEREST
ON THE 2020 BONDS EXCEPT FROM THE TRUST ESTATE OR FROM ANY OTHER MONEYS
MADE AVAILABLE TO THE ISSUER FOR SUCH PURPOSE. NEITHER THE FULL FAITH AND
CREDIT NOR THE TAXING POWER OF THE STATE OR ANY OTHER GOVERNMENTAL UNIT OR
THE ISSUER IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR PURCHASE PRICE OF,
REDEMPTION PREMIUM, IF ANY, OR INTEREST ON THE 2020 BONDS. THE ISSUER HAS NO
TAXING POWER.
THE PLEDGE AND TRANSFER OF TAX INCREMENT REVENUES AND SPECIAL TAX
REVENUES PURSUANT TO THE CONTRIBUTION AGREEMENT ARE SUBJECT TO ANNUAL
APPROPRIATION BY THE CITY. NO OTHER ASSESSMENTS OR TAXES ARE PLEDGED TO THE
PAYMENT OF THE 2020 BONDS. THE PLEDGE OF PLEDGED REVENUES UNDER THE
CONTRIBUTION AGREEMENT IS NOT A GENERAL OBLIGATION OF THE CITY.
Failure to Appropriate
Consistent with the requirements of the City Enabling Acts, the transfer of amounts pledged to the Issuer to
be available to pay Debt Service on the 2020 Bonds in each Fiscal Year pursuant to the Contribution Agreement is
dependent upon the City’s appropriation of Pledged Revenues for deposit into the funds and accounts held under the
Indenture. The City Council is not obligated to make any appropriation, or to make a sufficient appropriation, to
make payments under the Contribution Agreement in any Fiscal Year. The City’s failure to appropriate amounts
sufficient to pay amounts due and owing under the Contribution Agreement for the payment of Debt Service coming
due during the next ensuing Fiscal Year would not constitute an event of default under the Indenture.
Upon the issuance of the 2020 Bonds, a substantial portion of the land within the Special Taxing District
will be initially owned by the Owner or affiliates or related parties of the Owner. The Owner is a limited liability
company the primary assets of which consist of interests in subsidiaries that own property located in the Special
Taxing District, cash accounts, and investment to date in the proposed public improvements to be financed by the
2020 Bonds. The lack of diversity in the obligation to pay the real property taxes and Special Taxes, if any, both
before and after completion of the Chapter 1B Development, presents a risk to Holders of the 2020 Bonds in that the
timely payment of the 2020 Bonds depends on the willingness and ability of the Owner, and any other present and
future owners of property in the Districts, to pay real property taxes and Special Taxes, if any, when due. Failure of
the Owner or other owners to pay real property taxes or Special Taxes, if any, when due could result in the rapid
depletion of the Series 2020 Reserve Fund. In that event, there could be a default in payments of the principal of,
and interest on, the 2020 Bonds.
For more information on the Owner’s obligations to pay Special Taxes, see “THE PORT COVINGTON
PROJECT – Overview of the Development District and Special Taxing District – Special Tax Payment
Arrangements.”
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Failure to Develop the Chapter 1B Development
General Considerations. The projections of Tax Increment Revenues also assume that these
improvements will be of a certain type and scope and will occur within certain timeframes. See “APPENDIX C –
Tax Increment and Special Tax Report.” If the Owner fails to complete the Chapter 1B Development within the
projected time frame, and if rental of housing and commercial units do not occur or are delayed, or such commercial
buildings and/or other properties within the Chapter 1B Development are substantially less valuable than projected,
the assessed value of property in the Development District and, as a result, the Tax Increment Revenues, could be
less than projected. In such events, there could be a default in payments of principal of, and interest on, the 2020
Bonds.
Economic Considerations. Development of land is also subject to economic considerations. The failure to
complete the Chapter 1B Development or the required infrastructure or substantial delays in the completion of the
Chapter 1B Development or the required infrastructure due to litigation, the inability to obtain required funding or
other causes may reduce the value of the property within the Districts and may affect the willingness and ability of
the owners of property in the Districts to pay the real property taxes or Special Taxes when due which may result in
a default in payments of the principal of and interest on the 2020 Bonds.
Land Use Approvals. In addition, land development is subject to comprehensive federal, State and local
regulations. While a substantial portion of land use approvals have been obtained by the Owner or the Developer
with respect to each vertical development, additional approvals are required from various entities in connection with
the layout and design of the Chapter 1B Development, the nature and extent of improvements, construction activity,
land use, zoning, school and health requirements, occupancy of buildings, street closures and any applicable transfer
of property between the City and the Owner, as well as numerous other matters. See “THE PORT COVINGTON
PROJECT – Chapter 1B Vertical Improvements” and “APPENDIX B – Engineer’s Report.”
Failure to obtain any such approvals in a timely manner could delay or adversely affect a portion or all of
the Series 2020 Project and the Chapter 1B Development. The inability or delay in the completion of the Chapter
1B Development will inhibit the ability of the Owner or other owners of such units to generate rental income. This
could cause the Owner or such other owners to be unable or unwilling to pay the real property taxes, and to the
extent Special Taxes would be required under this circumstance to be collected to pay Debt Service on the 2020
Bonds, the Owner may be unable or unwilling to pay such Special Taxes when due. Failure to collect real property
taxes or Special Taxes as anticipated may result in a default in payment of the principal of and interest on the 2020
Bonds.
Chapter 1B Development. The City’s current collection system does not have the capacity to convey the
expected additional daily flow of waste water that will be required when the Chapter 1B buildings are completed.
Consequently, the Developer is required to include an upgrade to the existing sanitary sewer main and to install a
wet-weather holding tank to serve all of Chapter 1 of the Port Covington Project.
The Owner and City have entered in a memorandum of understanding (which requires preliminary and
final plans for the temporary storage tank must be processed consistent with existing laws, rules, and regulations and
that additional agreements and approvals regarding the maintenance and operation of these facilities are required.
There is currently no set timeframe for the design and approval of the temporary storage tank, and no assurances can
be given that the temporary storage tank will be constructed as described herein or in the Engineer’s Report.
Any delays in the construction of the temporary storage tank could cause a delay in the issuance of
certificates of occupancy for the Chapter 1B buildings, which could result in a substantial decrease in Tax Increment
Revenues and the willingness of owners of properties within the Special Taxing District to pay Special Taxes when
due. In such an event, there could be a default in payments of the principal of, and interest on, the 2020 Bonds.
Future Development. The City’s current collection system, following the improvements mentioned above,
will not have the capacity to convey the expected additional daily flow of wastewater that will be required for the
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development of future phases of the Port Covington Project. The memorandum of understanding requires the
Owner to design, construct and install a wastewater treatment plant and related facilities (collectively, the “Long-
Term Solution”) to provide capacity for the development of the remainder of the Port Covington Project beyond
Chapter 1. No assurances can be given that the Long-Term Solution will be constructed or if it is constructed, when
it will be constructed. Failure to construct the Long-Term Solution could result in a delay in constructing the
remainder of the Port Covington Project, which delay could be substantial.
If for any reason (whether it be an inability to procure the required approvals, construction-related issues,
or any issues that the arise during the planning of, permitting of, construction of, or negotiation of required
maintenance and operations agreements) construction of the Long-Term Solution is delayed for any material length
of time, such delay will have an adverse effect on the ability of the Owner and the Developer to complete the
remaining phases of the Port Covington Project, which will limit the amount additional Tax Increment Revenues
that will be generated by the future phases of construction.
For more information on the temporary sewer tank and the Long-Term Solution, see “THE PORT
COVINGTON PROJECT – Status of Chapter 1B Infrastructure Project – Engineering and Design for the
Chapter 1B Infrastructure Project” herein and “APPENDIX B – Engineer’s Report.”
When complete, the Chapter 1B Development will need to enter into commercial and residential leases to
be successful. The financial health of the businesses that are expected to pay the Tax Increment Revenues and any
Special Taxes is in part dependent on the strength of the local economy. The economic turmoil over the past few
years has had and may continue to have negative repercussions. To date, this turmoil has particularly impacted the
real estate market and the financial sector, prompting a number of banks and other financial institutions to seek
additional capital, to merge and, in some cases, to cease operations. These events collectively have led to a scarcity
of credit, lack of confidence in the financial sector, volatility in the real estate and financial markets, fluctuations in
interest rates, reduced economic activity, increased business failures, increased unemployment and increased
consumer and business bankruptcies. Other factors that affect the local economy include (but are not limited to)
rates of employment and economic growth; demographics; natural disasters; the level of residential and commercial
development; and federal, state, and local government spending and taxing levels.
The failure to lease the units in the buildings within the Chapter 1B Development, failure by the lessees to
operate profitably, defaults by lessees under the terms of their leases, the inability to recover overdue and unpaid
rents or to lease space vacated by defaulting lessees, or other similar factors could adversely affect the Chapter 1B
Development and could reduce the ability or willingness of the Owner or any other owners of the property in the
Districts, to pay the real property taxes and Special Taxes levied on the property in the Special Taxing District.
In the event that a natural or manmade disaster, such as a hurricane, fire, earthquake, tornado, war or
terrorist attack destroys the Chapter 1B Development, or any substantial portion thereof (including the public
improvements being constructed), the assessed value of real property within the Districts could be drastically
reduced, leading to a corresponding decrease in the Tax Increment Revenues and an unwillingness or inability of the
Owner and other owners of property within the Special Taxing District to pay Special Taxes.
Climate Change
The City is located in a coastal region and is affected by rising sea levels and by increased frequency and
severity of storms. To plan for and adapt to the effects of rising sea levels, more frequent and destructive storms, and
other consequences of climate change, the City adopted a Disaster Preparedness and Planning Project in December
2018, which was approved by the Federal Emergency Management Administration in February 2019 (the “DP3
Plan”). The DP3 Plan integrates an All-Hazard Mitigation Plan, a Climate Adaptation Plan, and identifies
opportunities to better prepare the City to adapt to new climate conditions. It notes that climate-related impacts are
already affecting the City including heat waves, sea level rise, and flooding due to more extreme precipitation
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events. While those impacts are projected to affect the City’s environmental, social, and economic systems more
intensely than in the past, building adaptation into the DP3 Plan will allow the City to reduce risks associated with
natural hazards and increase overall resiliency. Through the DP3 Plan, a Sustainability Plan, and other efforts, the
City is committed to planning for, mitigating and adapting to the impacts of climate change and to maintaining its
financial condition. The outcome of these efforts, however, cannot be assured. Additionally, in July 2018, the City
filed a lawsuit in the Circuit Court of Baltimore against certain fossil fuel companies to seek climate change related
adaptation costs. The lawsuit is pending and the City can give no assurance as to whether it will be successful in
obtaining the requested relief from the court.
COVID-19 Pandemic
Severe acute respiratory syndrome coronavirus 2 (“SARS-CoV-2”) is a novel strain of coronavirus that
causes coronavirus disease 2019 (“COVID-19”), the severe respiratory illness responsible for the COVID-19
pandemic. SARS-CoV-2 has been declared a “public health emergency of international concern” by both the World
Health Organization (the “WHO”) and the Centers for Disease Control and Prevention. The widespread outbreak of
COVID-19, together with the resulting voluntary and governmental actions, including mandatory business closures,
public gathering limitations, restrictions on travel and quarantines, has disrupted, and is expected to continue to
meaningfully disrupt, the global economy and markets. Although the long-term economic fallout is difficult to
predict, the COVID-19 pandemic has caused, and is expected to continue to cause, ongoing material adverse effects
across many, if not all, aspects of the global economy, including the U.S. real estate industry.
The COVID-19 pandemic and measures taken in connection therewith may result in significant delays to,
and a material increase in costs associated with, construction, development and/or upgrade work relating to the
Properties due to, among other things, (i) a lack of availability of raw materials and/or component parts (e.g.,
resulting from supply-chain disruptions), (ii) a diminished or restricted labor supply and (iii) the inability of
contractors and other service providers to perform their contractual obligations due to economic failures or
otherwise. The Owner, the Developer, or any owner/developer of any of the properties in the Port Covington
Project may also encounter a reduction in the availability of, and/or adverse changes in the terms of, capital or
financing that could hinder its ability to proceed with the planned development schedule. Such delays and increased
costs could lead to contractual penalties, and the failure to develop, progress and/or reposition equity investments in
the manner which was initially intended.
Further, even after development of the Port Covington Project has been completed, the COVID-19
pandemic, together with the actions undertaken in connection therewith, may have an adverse impact on the long-
term viability and profitability of the properties developed and to be developed in the Port Covington Project.
Demand for the retail, residential, office, and commercial space therein may be depressed, which may negatively
affect the ability to lease such properties on favorable terms, or at all. Moreover, the government could take certain
measures that would impact the stream of rental income with respect to such properties, including (but not limited
to) permitting rent reliefs, disallowing property owners from taking measures against defaulting tenants, and/or
allowing other relief or deviations from existing agreements in light of any such widespread crisis. In addition,
market volatility resulting from the COVID-19 pandemic or another ongoing public health crisis could lead to
uncertainty regarding the valuation of real estate such as the Port Covington Project and the properties that make up
the Development District.
More generally, public health crises such as the COVID-19 pandemic and related containment efforts may
adversely affect the ability, or the willingness, of a party to perform its obligations under its contracts and lead to
uncertainty over whether such failure to perform (or delay in performing) might be excused under so called
“material adverse change,” force majeure and similar provisions in such contracts. In addition, insurance coverage,
particularly with respect to business interruption insurance, may be limited or unavailable, or even if available, may
be materially more costly, which may adversely impact the Fund. Further, the risks associated with the widespread
outbreak of a contagious disease such as COVID-19 may also make it more likely that equity participants will fail to
fund certain obligations when due. All of these factors could have a material adverse effect on a property owner’s
ability or willingness to pay real property taxes and/or any special taxes levied, which could result in a material
decrease in the Tax Increment Revenues and an unwillingness or inability of the Owner and other owners of
property within the Special Taxing District to pay Special Taxes.
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The extent of the impact of COVID-19 on the Port Covington Project will depend largely on future
developments, including the severity, duration, and spread of the outbreak throughout the United States and the rest
of the world, the scope and interval of any related border, business, and supply chain closures or disruptions, travel
advisories, and other restrictions on a wide range of activities, and the effects on the global economy, all of which
are highly uncertain and cannot be predicted, but the impact could be material.
The amount of the Tax Increment Revenues available to be transferred pursuant to the Contribution
Agreement to pay principal and interest on the 2020 Bonds is determined by the assessed value of taxable real
property in the Development District, the tax rate of the City, and the percentage of taxes actually collected and paid
into the Tax Increment Fund. The assessed value of real property in the Development District must increase
significantly and rapidly in order to produce Tax Increment Revenues sufficient to pay principal of and interest on
the 2020 Bonds without requiring that the Special Tax be collected or the Series 2020 Reserve Fund be drawn upon.
Various factors may adversely affect the value of property in the Development District. Property values
could be adversely affected by prolonged social unrest, economic instability, or any further decline in economic
conditions generally and in the Development District in particular, which could adversely affect the ability of
owners of property within the Districts to pay the real property taxes and Special Taxes, as applicable, and the
amount realized upon any sale of the property at tax sale. It is not possible to predict to what extent any changes in
economic conditions, demographic characteristics, population or commercial and industrial activity will occur and
what impact such changes could have on the assessed value of property in the Districts and the collection of Tax
Increment Revenues and any Special Taxes. Property values also may be adversely affected by natural or other
disasters resulting in the destruction of property in the Districts.
There can be no assurance that the property and improvements within the Development District will be
assessed at the levels projected in “APPENDIX A – Appraisal and Market Study” and “APPENDIX C – Tax
Increment and Special Tax Report,” nor can there be any assurance that the assessed value of the property will not
decrease. Property owners have the right to protest the assessed value of their property in the Development District
and are not required to tender their property for ad valorem taxation at any agreed upon level. Property values also
may be adversely affected by natural or other disasters resulting in the destruction of property in the Development
District. The assessed value of the property and improvements will finally be determined and certified in
accordance with the procedures described in “THE DISTRICTS AND THE PLEDGED REVENUES – Tax
Increment Revenues” herein and may be at a value lower than projected. See also “SECURITY FOR THE 2020
BONDS” herein.
The amount of Tax Increment Revenues which will be available to pay the 2020 Bonds on an annual basis
is unknown at the present time. Appendix C to this Limited Offering Memorandum entitled “Tax Increment and
Special Tax Report” contains projections of the amounts that are projected to be available based on the assumptions
set out in Appendix C. These projections constitute “forward-looking” statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown
risks, uncertainties and other factors which may cause the actual results, performance and achievements to be
different from the future results, performance or achievements expressed or implied by such forward-looking
statements. Investors are cautioned that the actual results could differ materially from those set forth in the forward-
looking statements.
The assumptions used to make the projections were provided by the Owner. The City has not
commissioned an independent feasibility analysis of any of the assumptions upon which the financial projections are
based.
The assessed value of the property and improvements will be finally determined and certified in accordance
with the procedures described in “THE DISTRICTS AND THE PLEDGED REVENUES – Tax Increment
Revenues” herein. Tax Increment Revenues are collected based upon such assessed value. The method of assessing
properties within the Development District could have a significant impact on the Tax Increment Revenues that
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become available. The assessment method or combination of methods that the Supervisor of Assessments uses with
respect to the Development District is within the discretion of the Supervisor of Assessments and may change from
time to time. See “SECURITY FOR THE 2020 BONDS.” A change in the particular method of assessment or a
combination of methods with respect to property in the Development District may, over time, cause a decrease in the
Assessable Base in the Development District and, therefore, result in a reduction in the Tax Increment Revenues
generated from the Development District available to pay Debt Service on the 2020 Bonds. No assurances can be
given that the methodology for the State assessment system will not be changed during the term of the 2020 Bonds
and changes to the assessment method or combination of methods that the Supervisor of Assessments uses for the
calculation procedures could have a material adverse effect on the Tax Increment Revenues available to pay Debt
Service on the 2020 Bonds.
The projections of the Pledged Revenues in APPENDIX C are based upon the laws and regulations in
effect as of the date of this Limited Offering Memorandum. No assurance can be given that a change in law or a
judicial decision after the date of this Limited Offering Memorandum will not have a materially adverse effect on
the Tax Increment or the availability of Pledged Revenues to pay Debt Service on the 2020 Bonds.
Maximum Rates
Within the limits of the Rate and Method, the City may adjust the amount of the Special Tax levied on all
property within the Special Taxing District to provide for the collection of an amount required to pay Debt Service,
if necessary, on the 2020 Bonds and the amount, if any, necessary to replenish the Series 2020 Reserve Fund to an
amount equal to the Reserve Requirement and to pay all annual Administrative Expenses (as such term is defined in
the Rate and Method) and make rebate payments to the United States government. However, the amount of the
Special Tax is subject to the maximum rates provided in the Rate and Method. See “SECURITY FOR THE 2020
BONDS – Special Tax Revenues” and “THE DISTRICTS AND THE PLEDGED REVENUES – Rate and Method
of Apportionment of Special Taxes.”
Tax Delinquencies
In order to pay Debt Service on the 2020 Bonds, it is necessary that real property taxes and any Special
Taxes must be paid in a timely manner. Under provisions of the City Enabling Acts, the real property taxes and any
Special Taxes, from which funds necessary for the payment of principal of, and interest on, the 2020 Bonds are to be
derived, are billed to the properties within the Districts by the City. Special Taxes are due and payable at the same
time as regular real property tax installments (from which the Tax Increment Revenues are derived). The
unwillingness or inability of a property owner to pay real property tax bills (which affects the Tax Increment
Revenues generated) and Special Taxes as evidenced by property tax delinquencies also may indicate an
unwillingness or inability to make payments of real property tax and Special Taxes in the future. If the Owner and
any other owners of properties within the Development District fail to pay the real property tax installments or any
Special Taxes when due, there could be significant tax delinquencies. See “– Concentration of Ownership; Failure
to Pay Property Taxes or Special Taxes” herein.
In the event that any tax sales of the property or individual parcels are necessary, and if the Series 2020
Reserve Fund is depleted, there could be a delay or reduction in payments to Holders of the 2020 Bonds pending
such tax sales and receipt by the City of the proceeds of sale.
For a discussion of the provisions which apply, and procedures which the City is obligated to follow in the
event of delinquencies in the payment of real property taxes or Special Taxes, see THE DISTRICTS AND THE
PLEDGED REVENUES – Tax Increment Revenues – Property Tax Collection Procedures.” See also “– Potential
Delay and Limitations of Tax Sales” below and “– Bankruptcy” below, for a discussion of limitations on the City’s
ability to recover delinquent revenues from tax sales.
The payment of real property taxes and Special Taxes and the ability of the City to recover delinquent
unpaid real property taxes and Special Taxes may be limited by bankruptcy, insolvency or other laws generally
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affecting creditors’ rights. See “THE DISTRICTS AND THE PLEDGED REVENUES – Tax Increment Revenues
– Property Tax Collection Procedures” herein and “– Bankruptcy” below.
In addition, potential investors should be aware that any recovery of unpaid real property taxes and Special
Taxes is subject to City procedures for providing notice to record holders of the property of the pending tax sale and
delays by subsequent purchasers of property at tax sale to initiate proceedings to foreclose redemption of the
property. Potential investors should also be aware that during any period of time in which property offered for sale
remains unsold, none of the delinquent real property taxes and Special Taxes will be paid.
The ability of the City to recover delinquent unpaid real property taxes or Special Taxes on properties
through the sale of such properties may be limited with regard to properties in which the Federal Deposit Insurance
Corporation (“FDIC”) may acquire an interest. If a lender takes a security interest in property in one of the Districts
and becomes insolvent, such lender could fall under the jurisdiction of the FDIC. The FDIC has adopted policies
regarding the payment of state and local property taxes, including ad valorem and non-ad valorem special taxes and
assessments. While this federal instrumentality has acknowledged a policy of paying ad valorem and non-ad
valorem special taxes and assessments in certain circumstances, it has also indicated an intention to assert federal
preemptive power to challenge any prior taxes, special taxes and assessments where it is in its interest to do so,
including the requirement that local agencies obtain the consent of the FDIC in order to sell property at tax sale to
recover delinquent special taxes. If the City is required to obtain the consent of the FDIC in order to sell properties
located in any of the Districts at a tax sale, such consent could be denied and the City might be unable to recover ad
valorem and Special Taxes on such properties. Additionally, any delay in receiving the consent of the FDIC to a tax
sale would delay recovery of any delinquent real property taxes or Special Taxes. This, in turn, could result in a
delay or default in payment of the 2020 Bonds.
Delays and uncertainties in recovering delinquent real property taxes or Special Taxes create significant
risks for Bondholders. Delinquencies in payments of real property taxes or Special Taxes that continue during the
pendency of protracted tax sale proceedings could result in the rapid, total depletion of the Series 2020 Reserve
Fund prior to replenishment from the resale of such property. In that event, there could be a default in payments of
the Debt Service on the 2020 Bonds. See “– Concentration of Ownership; Failure to Pay Property Taxes or Special
Taxes” herein.
The Appraisal and Market Study provides an independent value analysis of the properties in the Chapter 1B
Development and the remainder of the Districts for the purpose of establishing a framework within which to forecast
the taxable values and their timing in order to estimate Tax Increment Revenues in the Development District with
respect to the 2020 Bonds. The Appraisal and Market Study also provides a market overview and analysis of each
proposed component within the Chapter 1B Development plus certain redeveloped parcels and undeveloped parcels
as set forth therein. The conclusions are based on certain definitions, contingencies, assumptions and limiting
conditions contained in the Appraisal. None of the Issuer, the City, or the Underwriters makes any representation as
to the accuracy of the Appraisal. Prospective purchasers of the 2020 Bonds should review the Appraisal as set forth
in “APPENDIX A – Appraisal and Market Study” for a description of all assumptions made by the Appraiser.
The Appraisal and Market Study provides an independent market analysis. While the Appraisal and
Market Study concludes that the total value of the parcels in the Special Tax District, assuming completion of the
buildings in the Chapter 1B Development, is estimated to be $842,326,700, it identifies a number of underlying
critical assumptions and limiting conditions and notes that the conclusions reached in an economic analysis are
inherently subjective and should not be relied upon as a determinative predictor of results that will actually occur.
Future competition could diminish demand and potentially result in delays or abandonment of portions of the
Chapter 1 Development and the rest of the Port Covington Project. These factors could negatively impact the
assessed value of property and could adversely affect the ability or willingness of property owners in the Districts to
pay property taxes or Special Taxes. None of the Issuer, the City, or the Underwriters make any representation as to
the accuracy of the Appraisal and Market Study. Prospective purchasers of the 2020 Bonds should not assume that
the build-out and absorption of the Chapter 1B Development will occur as set forth therein and should review the
applicable studies for a description of all assumptions made therein. See “APPRAISAL; VALUE-TO-LIEN” herein
and “APPENDIX A – Appraisal and Market Study.”
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Competition
The Chapter 1B Development is located in close proximity to the other similar mixed-use developments.
Competition from these developments and other existing or future developments around the Baltimore-Washington
metropolitan area could adversely affect the profitability of the Chapter 1B Development. Increased competition
could adversely affect the Chapter 1B Development in numerous ways, including failure of the Owner to lease the
commercial units in the Chapter 1B Development, failure by the lessees to operate profitably, defaults by lessees
under the terms of their lease agreements, and inability of the Owner or any other owner of such units to recover
overdue and unpaid rents or to lease space vacated by initial lessees. A discussion of competition with respect to the
Port Covington Project can be found in the Appraisal and Market Study. See “APPENDIX A – Appraisal and
Market Study”
No Acceleration Provision
The 2020 Bonds do not contain a provision allowing for the acceleration of the 2020 Bonds in the event of
a payment default or other default under the terms of the 2020 Bonds or the Indenture. Further, the Indenture does
not specify any events of default or remedies nor does it require the Trustee to seek any remedies. The ultimate
source of recovery by the City in the event of a failure by a property owner to pay real property taxes or Special
Taxes is the tax sale provisions described under “THE DISTRICTS AND THE PLEDGED REVENUES – Tax
Increment Revenues – Property Tax Collection Procedures” and “APPENDIX F – Proposed Form of Contribution
Agreement.”
Bankruptcy
The various legal opinions to be delivered concurrently with the delivery of the 2020 Bonds (including
Bond Counsel’s approving legal opinion) will be qualified by moratorium, bankruptcy, reorganization, insolvency or
other similar laws affecting the rights of creditors.
Although a bankruptcy proceeding would not extinguish the City’s right to collect unpaid real property
taxes and Special Taxes, the amount and priority of any tax lien could be modified if the value of the property falls
below the value of the lien. If the value of the property is less than the lien, such excess amount could be treated as
an unsecured claim by the bankruptcy court. In addition, bankruptcy of a property owner could result in a delay in
completing a tax sale of the property. Such delay would increase the likelihood of a delay or default in payment of
the principal of, and interest on, the 2020 Bonds and the possibility of delinquent tax installments not being paid in
full.
There can be no guarantee that there will be a secondary market for the 2020 Bonds or, if a secondary
market exists, that such 2020 Bonds can be sold for any particular price. Occasionally, because of general market
conditions, lack of current information, the absence of a credit rating for the 2020 Bonds or because of adverse
history or economic prospects connected with a particular issue or industry, secondary marketing practices in
connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is
being made will depend upon then prevailing circumstances. Such prices could be substantially different from the
original purchase price. Accordingly, the 2020 Bonds should be considered long-term investments to maturity.
As discussed under the caption “TAX MATTERS,” the interest on the 2020 Bonds could become
includable in gross income for federal income tax purposes retroactive to the date of issuance of the 2020 Bonds as a
result of a failure of the City or the Owner to comply with certain provisions of the Code. Should such an event of
taxability occur, the 2020 Bonds are not subject to early redemption and may remain Outstanding to maturity or
until redeemed under the optional redemption or mandatory sinking fund redemption provisions of the Indenture.
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Other Taxes
The willingness and/or ability of an owner of land within the Special Taxing District to pay the Special
Taxes could be affected by the existence of other taxes, assessments and special taxes imposed upon the land by the
City. Various special taxes and assessments, including the Special Taxes and ad valorem taxes levied to pay
principal of and interest on the 2020 Bonds, would be payable at one time. The City may also impose additional
assessments, fees, or taxes that could encumber the property burdened by the Special Taxes.
THE ADMINISTRATOR
MuniCap, Inc. (the “Administrator”) will be retained by the City and the Issuer to provide certain services
in connection with the administration of the Development District and Special Taxing District, which include (but
are not limited to) the determination of the Special Taxes that are be required to be collected in any given year
pursuant to the Rate and Method.
The Administrator is a public finance consulting firm with a specialized practice providing services related
to the formation and administration of special tax and assessment districts. These services include the preparation of
tax increment projections and special tax and assessment methodologies, calculation of annual special tax and
assessment levies, and continuing disclosure and financial services related to the administration of tax increment and
special tax and assessment districts. The Administrator has its principal office in Columbia, Maryland, and provides
district administration services to approximately 140 special tax and assessment districts in 18 states.
UNDERWRITING
The 2020 Bonds are being purchased for reoffering by Citigroup Global Markets Inc., Stifel, Nicolaus &
Company, Inc., and Siebert Williams Shank & Co., LLC (collectively, the “Underwriters”). The 2020 Bonds are
being purchased at a price equal to $________________ (representing the aggregate principal amount of the 2020
Bonds of $________________, plus a premium of $________________, less an Underwriters’ discount of
$________________). The purchase contract pursuant to which the Underwriters are purchasing the 2020 Bonds
provides that the Underwriters will purchase all of the 2020 Bonds if any are purchased. The obligation of the
Underwriters to make such purchase is subject to certain terms and conditions set forth in such contract of purchase.
The Underwriters may offer and sell the 2020 Bonds to certain dealers and others at prices different from
the prices stated on the inside front cover of this Limited Offering Memorandum. The offering prices may be
changed from time to time by the Underwriters.
The Owner has agreed to indemnify the Issuer, the City, and the Underwriters against certain liabilities,
including certain liabilities under federal and state securities laws.
LEGAL MATTERS
McGuireWoods LLP, serving as Bond Counsel, will render an opinion with respect to the 2020 Bonds
substantially in the form set forth in Appendix H to this Limited Offering Memorandum. Copies of this opinion will
be available at the time of delivery of the 2020 Bonds. Certain matters will be passed upon for the Issuer by Miles
Stockbridge P.C. Certain matters will be passed upon for the Underwriters by McKennon Shelton & Henn LLP.
Certain legal matters will be passed upon for the Developer and the Owner by Ballard Spahr LLP.
TAX MATTERS
Bond Counsel’s opinion will state that, under current law, interest on the 2020 Bonds (i) is excludable from
the gross income of the owners of the 2020 Bonds for purposes of federal income taxation under Section 103 of the
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Internal Revenue Code of 1986, as amended (the “Code”), and (ii) is not a specific item of tax preference for
purposes of the federal alternative minimum tax.
Bond Counsel’s opinion speaks as of its date, is based on current provisions of the Code, and other current
legal authority and precedent, and covers certain matters not directly addressed by such authority and precedent, and
represents Bond Counsel’s judgment as to the proper treatment of interest on the 2020 Bonds for federal income tax
purposes. Bond Counsel’s opinion does not contain or provide any opinion or assurance regarding the future
activities of the Issuer or about the effect of future changes in the Code, the applicable regulations, the interpretation
thereof or the enforcement thereof by the Internal Revenue Service (the “IRS”) or the courts. The Issuer has
covenanted, however, to comply with the requirements of the Code.
Although Bond Counsel is of the opinion that interest on the 2020 Bonds is excludable from gross income
for federal income tax purposes, the ownership or disposition of, or the accrual or receipt of interest on, the 2020
Bonds may otherwise affect the federal tax liability of an owner of the 2020 Bonds. The nature and extent of these
other federal tax consequences depend on the owner’s particular tax status and levels of other income or deductions.
Bond Counsel will express no opinion regarding any such other tax consequences and prospective purchasers of the
2020 Bonds should consult their own tax advisors with respect thereto.
In delivering its opinion regarding the tax treatment of interest on the 2020 Bonds, Bond Counsel is relying
upon certifications of representatives of the Issuer, the underwriters of the 2020 Bonds, the City, the Owner and the
Developer, and other persons as to facts material to the opinion, which Bond Counsel has not independently
verified.
In addition, Bond Counsel is assuming continuing compliance with the Covenants (defined herein) by the
Issuer and the City. The Code and the regulations promulgated thereunder contain a number of requirements that
must be satisfied after the issuance of the 2020 Bonds in order for interest on the 2020 Bonds to be and remain
excludable from gross income for purposes of federal income taxation. These requirements include, by way of
example and not limitation, restrictions on the use, expenditure and investment of the proceeds of the 2020 Bonds
and the use of the property financed by such 2020 Bonds, limitations on the source of the payment of and the
security for such 2020 Bonds and the obligation to rebate certain excess earnings on the gross proceeds of such 2020
Bonds to the United States Treasury. The Tax Compliance Certificate to be entered into by the Issuer and the City
(the “Tax Certificate”) with respect to the 2020 Bonds contains covenants (the “Covenants”) under which the Issuer
and the City, as applicable, have agreed to comply with such requirements. Failure by the Issuer or the City to
comply with the Covenants could cause interest on the 2020 Bonds to become includable in gross income for federal
income tax purposes retroactively to their date of issue. If such a failure occurs, the available enforcement remedies
may be limited by applicable provisions of law and, therefore, may not be adequate to prevent interest on the 2020
Bonds from becoming includable in gross income for federal income tax purposes.
Bond Counsel has no responsibility to monitor compliance with the Covenants after the date of issue of the
Bonds.
Certain requirements and procedures contained, incorporated or referred to in the Tax Certificate, including
the Covenants, may be changed and certain actions may be taken or omitted under the circumstances and subject to
the terms and conditions set forth in the Tax Certificate. Bond Counsel expresses no opinion concerning any effect
on the excludability of interest on the 2020 Bonds from gross income for federal income tax purposes of any such
subsequent change or action that may be made, taken or omitted upon the advice or approval of counsel other than
Bond Counsel.
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Original Issue Discount
“Original issue discount” is the excess, if any, of the amount payable at maturity (excluding certain
“qualified stated interest” that is unconditionally payable at least annually at prescribed rates) of any maturity of the
Bonds purchased as part of the initial public offering over the issue price of the maturity. The amount of original
issue discount that has accrued and is properly allocable to an owner of any maturity of the 2020 Bonds with
original issue discount (an “OID Bond”) will be excludable from gross income to the same extent as interest on the
2020 Bonds for federal income tax purposes. In general, the “issue price” for each maturity of the 2020 Bonds is the
first price at which a substantial amount of the 2020 Bonds of that maturity was sold to the public, which may differ
from the price shown on the inside cover page hereof.
The Code provides that the amount of original issue discount accrues in accordance with a constant interest
method based on the compounding of interest. In the case of an original owner of an OID Bond, the amount of
original issue discount that is treated as having accrued on such OID Bond is added to the owner’s adjusted basis in
determining, for federal income tax purposes, gain or loss upon the disposition of the OID Bond (including its sale,
redemption or payment at maturity). The amounts received upon such disposition that are attributable to accrued
original issue discount will be excluded from the gross income of the owner for federal income tax purposes.
The accrual of original issue discount and its effect on the redemption, sale or other disposition of OID
Bonds that are not purchased in the initial offering at the issue price may be determined according to rules that differ
from those described above.
In addition, original issue discount that accrues in each year to an owner of an OID Bond is included in the
calculation of the distribution requirements of certain regulated investment companies and may result in some of the
collateral federal income tax consequences discussed below. Consequently, owners of any OID Bond should be
aware that the accrual of original issue discount in each year may result in additional distribution requirements or
other collateral federal income tax consequences although the owner of such OID Bond has not received cash
attributable to such original issue discount in such year.
Prospective purchasers of OID Bonds should consult their own tax advisors with respect to the precise
determination for federal income tax purposes of the original issue discount accrued upon sale or redemption of such
OID Bonds (including OID Bonds not purchased in the initial offering at their issue price) and with respect to state
and local tax consequences of owning OID Bonds.
Bond Premium
In general, a 2020 Bond purchased at a price (excluding accrued interest) producing a tax basis in excess of
the principal amount payable at maturity is a “Premium Bond” and the amount of the excess constitutes the “Bond
Premium” on the Premium Bond. Under the Code, the Bond Premium is amortized based on the owner’s yield over
the remaining term of the Premium Bond (or, in the case of certain callable Premium Bonds, to an earlier call date
that results in a lowest yield on the Premium Bond). The owner of a Premium Bond must amortize the Bond
Premium by offsetting the qualified stated interest allocable to each interest accrual period against the Bond
Premium allocable to that period. No deduction is allowed for such amortization of Bond Premium and the owner is
required to decrease the adjusted basis in the Premium Bond by the amount of the amortizable Bond Premium
properly allocable to the owner.
Prospective purchasers of any Premium Bond should consult their own tax advisors regarding the treatment
of Bond Premium for federal income tax purposes, including various special rules relating thereto, and state and
local tax consequences, in connection with the acquisition, ownership, sale, exchange, or other disposition of, and
amortization of Bond Premium on, such Premium Bond.
The following is a brief discussion of certain collateral federal income tax matters with respect to the 2020
Bonds. It does not purport to address all aspects of federal taxation that may be relevant to a particular owner
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thereof. Prospective purchasers of such 2020 Bonds, particularly those who may be subject to special rules, are
advised to consult their own tax advisors regarding the federal tax consequences of owning or disposing of the 2020
Bonds.
Prospective purchasers of the 2020 Bonds should be aware that the ownership of tax-exempt obligations
may result in collateral federal income tax consequences to certain taxpayers including, without limitation, financial
institutions, certain insurance companies, certain corporations (including S corporations and foreign corporations),
certain foreign corporations subject to the “branch profits tax,” individual recipients of Social Security or Railroad
Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry
tax-exempt obligations and taxpayers attempting to qualify for the earned income tax credit.
Prospective purchasers should be aware that the interest on the 2020 Bonds is subject to information
reporting to the IRS in a manner similar to interest paid on taxable obligations. In addition, interest on the 2020
Bonds may be subject to backup withholding if the interest is paid to an owner who or which (i) is not an “exempt
recipient” and (ii) (a) fails to furnish an accurate U.S. taxpayer identification number in the manner required, (b) has
been notified of a failure to report all interest and dividends required to be shown on federal income tax returns, or
(c) fails to certify under penalty of perjury that the owner is not subject to withholding. Individuals generally are not
exempt recipients, although corporations and other entities generally are.
The reporting and backup withholding requirements do not in and of themselves affect the excludability of
interest on the 2020 Bonds from gross income for federal income tax purposes, and amounts withheld under the
backup withholding rules may be refunded or credited against the owner’s federal income tax liability, if any,
provided that the required information is timely furnished to the IRS.
The IRS has established a program to audit tax-exempt obligations to determine whether the interest
thereon is includible in gross income for federal income tax purposes. If the IRS does audit the 2020 Bonds, the IRS
will, under its current procedures, treat the Issuer as the taxpayer. As such, the beneficial owners of the 2020 Bonds
will have only limited rights, if any, to participate in the audit or any administrative or judicial review or appeal
thereof. Any action of the IRS, including but not limited to the selection of the 2020 Bonds for audit, or the course
or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the marketability or
market value of the 2020 Bonds.
Legislation affecting tax-exempt obligations is regularly considered by the U.S. Congress and various state
legislatures. Such legislation may effect changes in federal or state income tax rates and the application of federal or
state income tax laws (including the substitution of another type of tax), or may repeal or reduce the benefit of the
excludability of interest on the tax-exempt obligations from gross income for federal or state income tax purposes.
The Treasury and the IRS are continuously drafting regulations to interpret and apply the provisions of the
Code and court proceedings may be filed the outcome of which could modify the federal or state tax treatment of
tax-exempt obligations. There can be no assurance that legislation proposed or enacted after the date of issue of the
2020 Bonds, regulatory interpretation of the Code or actions by a court involving either the 2020 Bonds or other tax-
exempt obligations will not have an adverse effect on the Bonds’ federal or state tax status, marketability or market
price or on the economic value of the tax-exempt status of the interest on the 2020 Bonds.
Prospective purchasers of the 2020 Bonds should consult their own tax advisors regarding the potential
consequences of any such pending or proposed federal or state tax legislation, regulations or litigation, as to which
Bond Counsel expresses no opinion.
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Opinion of Bond Counsel - Maryland Tax Treatment of the 2020 Bonds
Bond Counsel’s opinion will also state that, under existing law of the State of Maryland, the 2020 Bonds
and the interest thereon are forever exempt from all State of Maryland and local taxes under existing laws; however,
the law of the State of Maryland does not expressly refer to, and no opinion is expressed concerning, estate or
inheritance taxes, or any other taxes not levied directly on the 2020 Bonds or the interest thereon.
Interest on the 2020 Bonds may be subject to state or local income taxes in jurisdictions other than the State
under applicable state or local tax laws. Prospective purchasers of the 2020 Bonds should consult their tax advisors
regarding the taxable status of the 2020 Bonds in a particular state or local jurisdiction other than the State.
NO LITIGATION
At the time of delivery of the 2020 Bonds, the Issuer will certify that there is no action, suit, proceeding,
inquiry, or investigation, at law or in equity, before or by any court, regulatory agency, public board, or body,
pending with respect to which the Issuer has been served with process or is otherwise aware, or, to the knowledge of
the officer of the Issuer executing such certificate, threatened against the Issuer, affecting the existence of the Issuer,
the Districts, or the titles of officers of the Issuer to their respective offices or seeking to restrain or to enjoin the sale
or delivery of the 2020 Bonds, the application of the proceeds thereof in accordance with the Indenture, or the
collection or application of any revenues provided for the payment of the 2020 Bonds, or in any way contesting or
affecting the validity or enforceability of the 2020 Bonds, the Indenture, the Contribution Agreement, any action of
the Issuer contemplated by any of the said documents, or the collection or application of any revenues provided for
the payment of the 2020 Bonds, or in any way contesting the completeness or accuracy of this Limited Offering
Memorandum or any amendment or supplement hereto, or contesting the powers of the Issuer or its authority with
respect to the 2020 Bonds or any action of the Issuer contemplated by any of said documents.
At the time of delivery of and payment for the 2020 Bonds, the City will certify that, except for litigation
that in the opinion of the City Solicitor of the City has no material adverse effect on the City, there is no action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or
body, pending with respect to which the City has been served with process, or, to the knowledge of the officer of the
City executing such certificate, threatened against the City affecting the creation or validity of the Development
District or the Special Taxing District or the titles of its officers to their respective offices; seeking to restrain or to
enjoin the sale or delivery of the 2020 Bonds, the application of the proceeds thereof in accordance with the
Indenture; in any way contesting or affecting the validity or enforceability of the Contribution Agreement, or any
action of the City contemplated by any of the said documents; or the collection or application of any revenues
provided for the payment of the 2020 Bonds; or contesting the powers of the City or its authority with respect to the
City’s approval and the Issuer’s issuance of the 2020 Bonds or any action of the City contemplated by any of said
documents.
At the time of delivery of and payment for the 2020 Bonds, the Owner and the Developer will certify that
there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government
agency, public board of body, pending or threatened by or against the Owner or the Developer, respectively: (i) in
any way questioning the due formation and valid existence of the Owner or the Developer; (ii) in any way
questioning or affecting the validity of the Funding Agreement or the consummation of the transactions
contemplated thereby; (iii) in any way questioning or contesting the validity of any governmental approval of the
Chapter 1 Development or any aspect thereof, or (iv) which would have a material adverse effect upon the financial
condition of the Owner or the Developer or the ability of the Owner or the Developer to undertake any development
within Districts.
NO RATING
The Issuer has not and does not contemplate making an application to any rating agency for the assignment
of a rating to the initial offering of the 2020 Bonds.
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EXPERTS
MuniCap, Inc. served as financial advisor in connection with the issuance and delivery of the 2020 Bonds.
MuniCap, Inc. has prepared the methodology for levying the Special Taxes appearing under the caption “THE
DISTRICTS AND THE PLEDGED REVENUES – Special Tax Revenues” herein and the “Tax Increment and
Special Tax Report” contained in APPENDIX C and such methodologies, projections, and schedules are set forth in
this Limited Offering Memorandum with the permission of MuniCap, Inc.
The references herein to Cushman & Wakefield of Maryland, LLC, as the Appraiser, the Appraisal and
Market Study contained in APPENDIX A, and the references thereto in this Limited Offering Memorandum been
approved by the Appraiser.
The references herein to STV Incorporated, as the Engineer, the Engineer’s Report contained in
APPENDIX B, and the references thereto in this Limited Offering Memorandum have been approved by the
Engineer.
CONTINUING DISCLOSURE
An undertaking for the benefit of the Bondholders to provide continuing disclosure pursuant to the
provisions of Rule 15c2-12 of the Securities and Exchange Commission (the “Rule”) is not legally required with
respect to the 2020 Bonds based on an exemption that exists under such Rule for obligations that are offered in
Authorized Denominations of $100,000 or more and are being sold to no more than 35 knowledgeable and
experienced investors not purchasing with a view to distribute.
Notwithstanding the above, the Issuer, the City and the Owner have agreed to provide certain financial
information, operating data and event disclosures. See “APPENDIX I – Form of Owner’s Continuing Disclosure
Agreement”, “APPENDIX J – Form of the Issuer’s Continuing Disclosure Agreement”, “APPENDIX K – Form of
City’s Continuing Disclosure Agreement” for specific provisions regarding the obligations of the Issuer, the City
and the Owner and the Developer to provide continuing disclosure.
The Issuer has determined that no financial or operating data concerning the Issuer is material to any
decision to purchase, hold or sell the 2020 Bonds, and the Issuer will not provide any such information. The Issuer
has undertaken all responsibilities for any continuing disclosure required by the Rule (except as described below) as
described above, and the Issuer shall have no liability to Bondholders or any other person with respect to such
disclosure, other than as described above. During the past five years, the Issuer inadvertently omitted certain
operating data required to be filed quarterly and annually as part of its filings under certain of its existing and prior
continuing disclosure agreements in accordance with the Rule and did not provide notice of such failures to file and
filed one audited financial statement late under two continuing disclosure agreements and did not provide notice of
such failure to file. The Issuer has made supplemental filings to provide all such omitted information and notices of
rating changes and has implemented procedures to prevent further omissions.
The City failed to comply with some of its obligations under certain of its continuing disclosure
undertakings within the last five years. In particular, in accordance with its continuing disclosure obligations for the
fiscal year June 30, 2016, the City determined that its audited financial statements would not be completed in time to
meet the filing deadlines; therefore the City filed unaudited financial statements within the time period required
under its continuing disclosure obligations and the audited financial statements for these three most recent fiscal
years were filed although after the required deadline. In addition, in accordance with its continuing disclosure
obligations for the fiscal year ended June 30, 2018, the City filed unaudited financial statements, due March 27,
2019, on February 28 2019, because it determined that its Comprehensive Annual Financial Report (“CAFR”) for
the fiscal year ended June 30, 2018 (the “2018 CAFR”) would not be available for filing when due on March 2,
2019. The City filed the 2018 CAFR when it became available on March 29, 2019. Delays in the receipt of the
City’s CAFRs, as described above, caused delayed filings with respect to certain continuing disclosure undertakings
relating to the City’s parking facilities bonds, convention center revenue bonds, and certificates of participation.
Similar delays occurred with filings relating to the City’s water and wastewater revenue bonds.
108
The City failed to file event filings in connection with bond rating changes that occurred as a result of the
upgrade of the underlying credit rating for certain of the City’s bonds and changes in the ratings of bond insurers
that secured certain bonds issued by the City. The City has subsequently disclosed these rating changes on EMMA.
When filing information with the EMMA system, the City inadvertently failed to index properly certain
filings with each relevant outstanding debt issue. To the extent a filing was made without all of the associated
CUSIP numbers, the filing was otherwise available on EMMA in connection with another City debt issue. The City
has made supplemental filings with EMMA to provide information to correct these filings.
The City is committed to complying with its continuing disclosure obligations and in connection with such
commitment, has established written policies and procedures with respect to such obligations and City personnel
responsible for carrying out the City’s continuing disclosure undertakings stay abreast of current continuing
disclosure requirements.
Neither the Owner nor the Developer has entered into any continuing disclosure undertakings pursuant to
the Rule within the last five years.
MISCELLANEOUS
The quotations from, and summaries and explanations of the Indenture, the Funding Agreement, and other
statutes and documents contained herein do not purport to be complete, and reference is made to such documents,
the Indenture, and such statutes for full and complete statements of their provisions.
This Limited Offering Memorandum is submitted only in connection with the offering of the 2020 Bonds
by the Underwriters. All estimates, assumptions, statistical information and other statements contained herein, while
taken from sources considered reliable, are not guaranteed by the Issuer, City, the Underwriters, or the Owner. The
information contained herein should not be considered as representing all conditions affecting the City, the Owner or
the Developer, the Chapter 1 Development, future development of the Port Covington Project, the Districts, or the
2020 Bonds.
Any statements made in this Limited Offering Memorandum involving matters of opinion or estimates,
whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is
made that any of the estimates will be realized.
109
The execution and delivery of this Limited Offering Memorandum have been approved by the Maryland
Economic Development Corporation.
By:
Executive Director
110
APPENDIX A
IN AN APPRAISAL REPORT
As of June 1, 2020
Prepared For:
Maryland Economic Development Corporation
300 E. Lombard Street, Suite 1000
Baltimore, MD 21202
And
Prepared By:
Cushman & Wakefield of Maryland, LLC
Valuation & Advisory
One East Pratt Street, Suite 700
Baltimore, MD 21202
Cushman & Wakefield File ID: 20-26007-900083-001
A-1
CUSHMAN & WAKEFIELD OF MARYLAND, LLC
ONE EAST PRATT STREET, SUITE 700
BALTIMORE, MD 21202
A-2
One East Pratt Street, Suite 700
Baltimore, MD 21202
Tel +1 (410) 685-9595
cushmanwakefield.com
Steve Siegel
Partner
Weller Development Company, LLC
1000 Key Highway East
Baltimore, Maryland, 21230
Re: Appraisal and Market Study for MEDCO- Port Covington, Series 2020 Bonds
Port Covington Special Taxing District- Private Property
Situated on the Middle Branch of the Patapsco River
Baltimore, MD 21230
In fulfillment of our agreement as outlined in the Letter of Engagement copied in the Addenda, we are pleased to
transmit our appraisal and market study of the above referenced property, as herein defined, in the following
Appraisal Report. This appraisal report has been prepared in accordance with the Uniform Standards of
Professional Appraisal Practice (USPAP) and the Code of Professional Ethics and Standards of Professional
Appraisal Practice of the Appraisal Institute.
We acknowledge that the Developer’s anticipated construction start date to begin all building components for
Chapter 1B as defined herein, which was forecast as of the effective date of this appraisal as of September 1, 2020,
has been revised to January 1, 2021. It is our opinion that this change in the start date of the project, and
corresponding completion dates and stabilization dates of the project components, should not materially impact the
value conclusions presented in this report.
Intended Users: The Intended Users of this appraisal report and market study include the Maryland Economic
Development Corporation (“MEDCO” or “the issuer”), the Baltimore Urban Revitalization, LLC, Weller Development
Company, LLC (“the developer”), the City of Baltimore, and the underwriters and the buyers of the Port Covington,
Series 2020 Bonds (the “Bonds”) including counsel and advisers to each of the foregoing.
Intended Use: The purpose of this appraisal and market study will be for the inclusion in a limited offering
memorandum for the issuance of Port Covington, Series 2020 Bonds (“the Bonds”). This appraisal and market
study will provide MEDCO and bond buyers with information on the Property and estimated value.
A-3
Mr. Jeff Wilke Cushman & Wakefield of Maryland, LLC
Maryland Economic Development Corporation
November 17, 2020
Page 4
Property Overview: The subject property is part of the master-planned mixed-use development known as the Port
Covington Development District situated on about 237 acres of land on a peninsula between Interstate 95 to the
North and the Middle Branch of the Patapsco River to the South in Baltimore City. Port Covington is one of the
largest urban revitalization projects in the United States. The developer, Weller Development Company, plans to
remake the formerly industrial waterfront area in South Baltimore into a vibrant live-work-play community anchored
by a proposed Under Armour Global Headquarters located on about 58 acres of land within the Port Covington
Development District. The Port Covington Development District, upon full build-out, will feature 18.6 million square
feet of mixed-use development including office, residential, retail, entertainment, hotel and recreational uses, as
well as 40 acres of public parks, green space and civic uses along 2.5 miles of waterfront. The first phase of the
development, referred to as “Chapter 1B”, is proposed to be completed and stabilized over the next four years.
Goldman Sachs Urban Investment Group committed to invest $233 million in the project as an equity investor and
groundbreaking was in May 2019. Future chapters will be developed after the completion and stabilization of
Chapter 1B with a development timeline forecast over the next two decades. The development of the future chapters
is conceptual and will likely change with market demand and preferences.
Public Improvements- TIF: The Port Covington Master Development Plan was adopted by the Baltimore City
Planning Commission on June 23, 2016 after a six-month public master planning process conducted by Baltimore
City officials. The City of Baltimore subsequently approved issuing $658.6 million in Tax Increment Financing (TIF)
bonds to fund infrastructure work for the proposed development. The developer is seeking the first tranche of public
bond financing to fund infrastructure costs supporting Chapter 1B of the proposed development, which is estimated
to total $112,249,443 as presented in this report. The TIF monies will be used for new public roadways, walkways,
public utilities and other infrastructure allowing for pad-ready development sites within Chapter 1B. All major public
infrastructure is scheduled for completion by April 30, 2022. The developer has spent $33,653,201 as of June 2020
on engineering, site work and other TIF-eligible costs, which will be reimbursed by the TIF bonds once issued.
Port Covington Special Taxing District: This appraisal report includes an analysis of privately-owned property within
the Port Covington Special Taxing District. Exhibits and tables presented in this section provide a summary of the
privately-owned parcels within the Port Covington Special Tax District defined as “To Be Developed Parcels”
(Chapter 1B Parcels), “Undeveloped Parcels”, “Redevelopment Parcels” and “Developed Parcels”. As requested,
this appraisal provides an As-Is market value opinion of the To Be Developed Parcels (Chapter 1B Parcels) and
the Undeveloped Parcels (as of June 1, 2020), and a prospective market value opinion of the Chapter 1B Parcels
and Undeveloped Parcels upon completion of all major public infrastructure, referred to herein as Public
Improvements, by April 30, 2022. We also provide the prospective market value opinion upon completion and
stabilization of the proposed improvements for the entire Chapter 1B project forecast by September 30, 2023.
Based on the agreed-to Scope of Work as outlined in this report, we also provide a summary of the latest assessed
values of the designated “Redevelopment Parcels” and “Developed Parcels” within the Port Covington Special
Taxing District as determined by the Maryland Department of Assessments and Taxation. The following is a
summary of each component of the Port Covington Special Taxing District presented in this appraisal. The
requested value opinions determined in this appraisal report are presented at the end of this section.
To Be Developed Parcels (Chapter 1B Parcels): The “To Be Developed Parcels”, also referred to as Chapter 1B,
are the first phase of the proposed Port Covington development. Chapter 1B is a mixed-use development proposed
to contain eight buildings with 945,305 square feet of net rentable building area (1,142,080 square feet of gross
building area (GBA), excluding garage GBA) improved on 8.62 acres of land area. The proposed project will include
537 apartment units within three buildings, of which 89 units will be reserved for affordable housing and 81 units
will be operated as short-term apartment rentals. The project will also include office and retail space, and an above-
grade structured parking garage containing 1,023 parking spaces. The Port Covington Special Tax District map
and exhibits on the following pages provide a summary of the proposed development within Chapter 1B.
A-4
Mr. Jeff Wilke Cushman & Wakefield of Maryland, LLC
Maryland Economic Development Corporation
November 17, 2020
Page 5
A-5
MR. JEFF WILKE
MARYLAND ECONOMIC DEVELOPMENT CORPORATION
NOVEMBER 17, 2020
PAGE 6 CUSHMAN & WAKEFIELD OF MARYLAND, LLC
Note: The map above is for informational purposes only. STV Map numbers referenced in this report reflect updated Parcel designation.
Chapter 1B- Project Status/ Construction Timeline: The developer broke ground on May 13, 2019, and site
development and engineering are on-going as of the effective date of this appraisal. The following table provides a
summary of the developer’s estimated building construction start dates and completion schedule for each project
component. The developer anticipates construction to begin for all building components for Chapter 1B by
September 1, 2020 with completion of the entire project by July 31, 2022. The table also includes the forecast
economic stabilization date of each project component, and the forecast date that the entire Chapter 1B project will
be completed and stabilized based on our analysis presented in the following report.
Chapter 1B Office Pre-Leasing: The developer has executed three office leases to cyber-security firms totaling
39,595 square feet. Port Covington was nicknamed “Cyber Town, USA” following the October 2018 announcement
that three cyber-security firms will move their headquarters to Port Covington upon completion of the first phase.
The developer reports they have had tremendous momentum with office leasing interest from many diverse
companies including headquarters uses and technology and cyber-security firms. The rental rates achieved for the
leases signed to date are the highest in the market for comparable space, demonstrating demand for subject’s
location and proposed improvements as will be discussed in this report.
Chapter 1B Short-Term Rental Agreement: The developer is in negotiations with a short-term apartment rental
operator to manage 81 apartments within Parcel E5B for short-term rentals. For purposes of this appraisal, we
assume the management agreement with the short-term rental operator will be completed as described by the
developer and presented in this appraisal. A published report by Cushman & Wakefield Research on the Short-
Term Rentals market is presented in the Addenda of this report.
Chapter 1B Affordable Housing: The developer reports 89 apartment units will be reserved for affordable housing
within two of the proposed buildings as reflected by the Property Summary exhibit previously presented. The
affordable housing units within Parcel E1 will be restricted to tenants earning not more than 80 percent of the Area
Median Income (AMI), and the affordable housing units within Parcel E6 will be restricted to 50 percent of the AMI.
Chapter 1B Tax Credits: The subject benefits from being located within a designated Baltimore City Enterprise Zone
(EZ). The EZ tax credit program provides real estate tax savings over a 10-year period after project completion for
the subject’s commercial components (office, retail and garage). The amount of the tax credits will be based on 80
percent of the taxes due on the increase in assessed value over the first five fiscal tax years. The tax credit
decreases 10 percent annually thereafter to 30 percent in year 10. The subject will also benefit from Brownfield
Property Tax Credits applicable to the subject’s apartment components and the remaining percentage not available
for the Enterprise Zone Tax Credit for its commercial components. The Brownfield Property Tax Credit provides a
reduction in Baltimore City and State of Maryland real estate taxes for 10 years at a 70 percent discount. For
purposes of this analysis, we have separately estimated the net present value (PV) of the remaining tax credits for
each project component upon stabilization. The present value of the remaining tax credits is included in the
prospective market value opinions presented in this appraisal. The subject property is also located within a
designated U.S. Federal Opportunity Zone, which provides future tax benefits to investors in the project. A published
report by Cushman & Wakefield Research on Opportunity Zones is presented in the Addenda of this report.
A-9
MR. JEFF WILKE
MARYLAND ECONOMIC DEVELOPMENT CORPORATION
NOVEMBER 17, 2020
PAGE 10 CUSHMAN & WAKEFIELD OF MARYLAND, LLC
Undeveloped Parcels: This appraisal includes the valuation of Undeveloped Parcels (vacant land) within the Port
Covington Special Tax District as summarized by the following table:
The Undeveloped Parcels within the Port Covington Special Tax District include the former Atlantic Forest Product
site (AFP Site), Baltimore Sun Parcels, 301 E. Cromwell Street Parcels, and UA Port Covington Holdings Parcels.
A map highlighting the Undeveloped Parcels was previously presented. A summary table is presented on the
following page that reflects the proposed development for each Undeveloped Parcel.
AFP Site: The unimproved AFP Site includes four contiguous parcels containing about 3.286 acres of vacant land
located between West Dickman Street, along its southern border, and West Donaldson Street along its northern
border, and South Hanover Street along its eastern border. Directly west of the site is the former AFP warehouse,
which is included in the Redevelopment Parcels as will be discussed. The Port Covington Master Development
Plan (Master Plan) presented in this appraisal reflects this land area in the West End - Parcel W9, which is proposed
for mixed-use development including two 9-story apartment buildings containing 214 apartment units, 20,860
square feet of street-level retail space and a 162 space parking garage. For analysis purposes, we reflected this
land area as a separate parcel; however, the site will benefit from the redevelopment of adjacent land area directly
west of the site referred to as Parcel W8 in the Master Plan, which is also proposed for mixed-use development.
A-10
MR. JEFF WILKE
MARYLAND ECONOMIC DEVELOPMENT CORPORATION
NOVEMBER 17, 2020
PAGE 11 CUSHMAN & WAKEFIELD OF MARYLAND, LLC
Baltimore Sun Parcels: The Baltimore Sun Parcels includes 27.19 acres +/- of vacant land located north, northeast,
west and south of The Baltimore Sun printing and distribution facility. The Baltimore Sun leases the 402,000 square
foot building from the developer, which acquired the in 2014. The Baltimore Sun building is located adjacent to the
proposed Chapter 1B development. The building was completed in 1990 and is considered an interim use pending
redevelopment as part of the Port Covington development. The Baltimore Sun building is included in the Developed
Parcels list as will be discussed.
For analysis purposes, the developer provided an alternative Master Development Plan assuming The Baltimore
Sun facility remains. The alternative Master Plan presented in this report proposes 15 mixed-use buildings, including
10 apartment buildings with a capacity of up to 4,241 units, four office buildings with 1,064,010 square feet (gross
building area), street-level retail space improved in each of the buildings totaling 138,000 square feet, and one 235-
key hotel. The Master Plan envisions buildings up to 31-stories in height located toward the northern side of the
site, decreasing in size to 8 stories for buildings located proximate to the waterfront along the southern end of the
site. The Baltimore Sun Parcels will be developed in future phases after the Chapter 1B Parcels are completed and
stabilized, which is forecast over the next 20 years.
301 E. Cromwell Street Parcels: The 301 E. Cromwell Street Parcels includes two contiguous parcels of land
totaling 0.559 acres of land area along the waterfront, fronting the south side of E. Cromwell Street, and located
directly west of the existing Rye Street Tavern restaurant. The Port Covington Master Plan reflects this site improved
with one 10-story mixed-use building with 12,300 square feet of street-level retail space and 89,670 square feet of
office space. The south side of the building will front a public promenade and community pier along the waterfront.
UA Port Covington Holdings Parcels: The UA Port Covington Holdings Parcels (Undeveloped Parcels) consists of
about 40.39 acres of land area (31.6 acres of fast land), which are part of the proposed Under Armour (UA) global
headquarters campus site. The site was a former rail yard that was redeveloped as a power center anchored by
Walmart and Sam’s Club in 2002. Sam’s Club vacated the property in 2008 and Walmart vacated in 2016. Under
Armour acquired the 67 acre site (58.2 acres +/- of fast land) in 2014 to be utilized as their global headquarters. At
the time of the acquisition, Under Armour was a fast growing sports apparel company that had nearly reached its
capacity at their existing headquarters known as Tide Point located in the nearby community of Locust Point in
South Baltimore. After acquiring the site, Under Armour converted the former Sam’s Club and Walmart stores for
office and research and development space as interim uses pending future development of its global headquarters.
These buildings are listed as Redevelopment Parcels and Developed Parcels as presented in the following section.
The Port Covington Development District includes the Under Armour global headquarters site proposed for about
3.9 million square feet of development. Under Armour submitted plans for its Port Covington global headquarters
to Baltimore City planners in 2016, which included 2,928,500 gross square feet of office space, 529,000 square
feet of amenity space, 100,000 square feet of manufacturing space, 331,875 square feet of service space and a
5,000-space parking garage. The proposed office space included three “tall and slender” office towers with a height
up to 450 feet each. The proposed amenity space included two large recreational facilities, including an athletic
field house with indoor practice facilities, located adjacent to a manmade lake, and a 5,000-seat outdoor stadium
at the southern tip of the property, with a capacity to grow to 12,000 seats.
The proposed Under Armour Global Headquarters site benefits from superior waterfront views, as well as a zoning
classification (PC-4) as compared to other areas of the Port Covington Development District, which allows for
greater flexibility and project density. The Zoning classification and approved Planned Unit Development (PUD)
ordinance does not specify density limits, but provides a master plan and conceptual density. Under Armour
submitted plans for Phase 1 of the project in 2016, which included a 1,500-space parking garage, with capacity to
expand to 5,000 spaces in the future, and a 506,000 square foot office tower referred to as the Headquarters
Building. The project had been approved by Baltimore City’s Urban Design and Architectural Advisory Panel, but
had not been approved by the Planning Commission at the time the project was put on hold.
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MR. JEFF WILKE
MARYLAND ECONOMIC DEVELOPMENT CORPORATION
NOVEMBER 17, 2020
PAGE 13 CUSHMAN & WAKEFIELD OF MARYLAND, LLC
The proposed Under Armour global headquarters project has been on hold as Under Armour has recently
undergone reorganization. In addition, the recent COVID-19 global pandemic has negatively impacted Under
Armour, as it has the entire retail industry, as will be discussed in this report. Under Armour has not indicated a
timetable for the proposed headquarters development. Based on our analysis presented herein, we have assumed
the project will remain on hold in the near-term, and not begin until after the Chapter 1B project is completed and
stabilized. We have valued the Undeveloped Parcels within the proposed Under Armour’s global headquarters
campus assuming prospective future development of the site as a corporate office campus over the next 20 years.
Under Armour reported that the proposed development would support up to 10,000 employees at full buildout
should the project come to fruition, which would be a primary demand generator for apartments and retail uses
within the adjacent Port Covington Development. Based on review of the Under Armour Master Plan and
discussions market participants, we have assumed the subject’s Undeveloped Parcels could accommodate up to
two million gross square feet of office space with supporting parking, and additional office and other proposed uses
improved on the remaining parcels. In addition, a parcel located at the northeastern section of the site (STV Map
26G) is proposed for development of two small 8,000 square foot retail buildings fronting East Cromwell Street
(E10A-E10B) as reflected on the Port Covington Master Development Plan, which we included in the analysis.
Redevelopment Parcels: Based on the agreed-to Scope of Work as outlined in this report, we also provide a
summary of the latest assessed values as determined by the Maryland Department of Assessments and Taxation
of the private property designated as “Redevelopment Parcels” and “Developed Parcels” within the Port Covington
Special Taxing District. The assessed values are listed in tables presented on the following page. Redevelopment
Parcels includes the former AFP warehouse, the former Walmart store now used by Under Armour, seven single-
family rowhomes, the former Schuster Concrete warehouse facility and a parcel to be improved with a waterfront
promenade and pier amenity. The total assessed value of redevelopment parcels equates to $34,886,700 as
reflected by the exhibit on the following page.
Developed Parcels: A description of the existing developed parcels within Port Covington are discussed within the
Local Area Analysis section of this report, which includes the adaptive reuse of the City Garage building, Nick’s
Seafood Restaurant, Under Armour Building 37, the Rye Street Tavern and adjacent common area courtyard and
future roadway parcels. The total assessed value for the Developed Parcels equates to $91,840,000.
A-13
MR. JEFF WILKE
MARYLAND ECONOMIC DEVELOPMENT CORPORATION
NOVEMBER 17, 2020
PAGE 14 CUSHMAN & WAKEFIELD OF MARYLAND, LLC
16 23-10-1078-002 2600 Insulator Drive Nick's Seafood- Restaurant 83,524 1.9174 4,623 1985 $4,000,000 $800,000 $4,800,000 2600 Insulator Drive, LLC
25E 24-06-1053-010I 2601 Port Covington Drive UA Land Unit 5- Building 37 348,916 8.0100 130,210 2002 $5,607,000 $36,033,800 $41,640,800 UA Port Covington Holdings, LLC
80 24-06-1053-012 301 E. Cromwell St.- LU1 Land Unit 1- Distillery 63,554 1.4590 49,888 2017 $603,700 $6,978,800 $7,582,500 Sagamore Whiskey Properties, LLC
80A 24-06-1053-012A 13 Rye Street Land Unit 2- Rye Street Tavern 8,289 0.1903 12,966 2017 $414,400 $2,933,000 $3,347,400 301 East Cromwell Street, LLC
80C 24-06-1053-012C 301 E. Cromwell Street Land Unit 4- Courtyard 39,857 0.9150 - 2017 $378,700 $0 $378,700 301 East Cromwell Street, LLC
80E 24-06-1053-012E 301 E. Cromwell Street Land Unit 6- Parking/ Roadway 8,059 0.1850 - - $76,700 $0 $76,700 Interim-E10 LLC
81* 23-06-1053-001 301 E. Cromwell Street Baltimore Sun Building 825,723 18.9560 256,033 1990 $4,739,000 $18,274,900 $23,013,900 300 East Cromwell Street, LLC
TOTAL- DEVELOPED PARCELS (ASSESSED VALUE) 1,673,014 38.4071 594,756 $17,513,000 $74,327,000 $91,840,000
* Parcel To be subdivided ** Last Assessed 1/1/2018
Markey Study Overview: The following is an overview of the Baltimore region, the local area and market
fundamentals for each of the subject’s proposed project components.
Baltimore Regional Summary: Baltimore’s mature economy continued its expansion path as strong port activity,
coupled with healthy wage gains, continue to spark economic growth through early 2020, prior to the impact of the
COVID-19 pandemic. The region’s Gross Metro Product grew 1.4% in 2019, driving an overall nonfarm employment
growth rate of 1.2%. Overall, the Baltimore CBSA’s Gross Metro Product is projected to increase at a compound
annual growth rate of 2.7% over the next five years, adjusted for near-term economic impacts of the COVID-19
global pandemic. Rising industries like cyber-security, medical research and distribution have shown success in
economic and private sector growth recently. The historically strong industries like financial activities, professional
and business services, transportation and warehousing, and education and health services continue to drive long-
term growth in the private sector.
Local Area Conclusions: The subject is located within the planned urban development of Port Covington, just south
of Interstate 95 in South Baltimore. The local area is a densely developed urban area improved with a mix of
commercial, residential and institutional facilities. The local area is undergoing urban renewal, with older obsolete
buildings being renovated or redeveloped for commercial and residential uses. The local area benefits by excellent
transportation linkages including major traffic arteries and public transportation that connects the local area to the
surrounding metropolitan area. Recent revitalization of the urban core has attracted new employers, as well as
young professionals and empty-nesters back to the city, stabilizing the population and households as will be
discussed in the following market analysis section. The near and long term outlook for the local area is for
substantial growth as revitalization continues. The long-term outlook for the subject’s locale should remain desirable
to market participants.
Apartment Market Analysis Summary: The subject’s Baltimore City apartment market has historically experienced
stabilized vacancy rates and increased rental rates supported by apartment demand generators including college
students, young families and workers, empty nesters and retirees. The recent increase in vacancy is reflective of
new deliveries. Vacancy is expected to stabilize as new inventory is leased in the near-term. REIS is projecting a
steady decline in the vacancy rate to stabilized levels within the next five years once the current pipeline of new
projects are delivered and stabilized. Nonetheless, there is some near-term supply risks until recently delivered
projects and apartment projects under construction are delivered and stabilize within the next three years. In
addition, it is anticipated that the COVID-19 pandemic may slow leasing demand over the next three to six months,
or until.
Hotel/ Short-Term Apartment Rental Market Analysis Conclusions: The survey data presented on the following
pages indicates the regional lodging market had continued to stabilize prior through early 2020 prior to the COVID-
19 pandemic, after declines in occupancy and ADR in 2015 and 2016. Based on discussions with market
participants and local area planners, the amount of monies invested recently by the federal government in
infrastructure, as well as the expansion and continued investment in the nearby Bayview Hospital complex, bode
well for future demand for lodging facilities in the subject’s immediate market once the region recovers from the
COVID-19 pandemic. Each of the primary market demand segments for transient accommodations in the subject’s
market remain positive including commercial demand, meeting and group, and leisure due in part to the strength of
the local economy and regional attractions. The subject should also benefit from the limited supply of comparable
short-term rental and extended-stay facilities in the subject’s immediate market.
Subject Property Competitive Market Position- Office Space: Port Covington is considered a periphery submarket
southeast of the central business district. The location is proximate to major thoroughfares including Interstate 95.
Primary office demand generators in the subject’s immediate market include educational and medical-related
companies, government agencies, government contractors, financial service firms and other professional service
firms. As discussed, three cyber-security firms have pre-leased space in the project, which is a primary demand
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MR. JEFF WILKE
MARYLAND ECONOMIC DEVELOPMENT CORPORATION
NOVEMBER 17, 2020
PAGE 16 CUSHMAN & WAKEFIELD OF MARYLAND, LLC
generator for office space in the region due to the location of the U.S. Cyber Command, the National Security
Agency (NSA) and Defense Information Systems Agency at Fort Meade located about 13 miles southwest of the
subject, which direct access to Port Covington from MD Route 295- the Baltimore Washington Parkway.
The subject’s Southeast office submarket contains about 3.8 million square feet and reflects a stabilized overall
vacancy rate of 5.6 percent. The subject’s proposed office development will be located within a mixed-use
development offering on-site housing and shopping, restaurants and other amenities that are attractive to
prospective office tenants.
The developers proposed office development in Chapter 1B includes two mid-rise buildings totaling 404,299 square
feet, which will be competitive to other recently developed Class A office buildings in the subject’s market including
interior finish, amenities and floorplates. As will be discussed, the owner has pre-leased 39,595 square feet of office
space to three tenants cyber-security tenants. The rental rates achieved are the highest in the market over $40.00
per square foot on an equivalent full service- net of electric basis, demonstrating demand for subject’s location and
proposed improvements.
The property also benefits from its proximity to various institutional facilities, which are primary demand generators
for office space in the subject’s market including The Johns Hopkins Bayview Medical Center. Based on the
subject’s locational characteristics, proposed building quality, the subject is considered to have a good competitive
market position upon completion.
Retail Market Analysis Conclusions: Overall, the local retail market area is considered well-established, stabilized
and in strong demand by national, regional and local area retailers as evidenced by the subject’s current leasing
activity. Baltimore Regional Retail market fundamentals have improved over the past year. Vacancy is forecast to
improve over the next five years due in part of limited new supply and increased demand. Average asking rental
rates are forecast to reflect stable increases as the market improves over the next five years. Competitive properties
are generally well maintained and have high occupancy rates. Generally, the subject’s proposed anchor tenant
alignment upon completion is typical for comparable projects. As such we believe the property will serve a market
encompassing a radius of one to three miles. Over the next five years, both the population and number of
households in the subject’s trade area are projected to remain stable. The subject has very good accessibility via
the regional Interstate network and local arterials that provide linkages throughout the Baltimore CBSA. Based on
our analysis we concluded that the subject will be well positioned within its market area and the prospect for net
appreciation in real estate values is expected to be good. The area will continue to be a viable retail location and
desirable to market participants. The subject property should capture its fair share of market demand to support its
proposed retail use and achieve stabilized occupancy assuming aggressive marketing and management of the
property once the COVID-19 pandemic has stabilized.
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MR. JEFF WILKE
MARYLAND ECONOMIC DEVELOPMENT CORPORATION
NOVEMBER 17, 2020
PAGE 17 CUSHMAN & WAKEFIELD OF MARYLAND, LLC
Value Conclusions: As requested, we provide market value opinions of the subject property As-Is (land value),
upon completion of Public Improvements (land value), and upon completion and stabilization of the proposed
development within Chapter 1B. We valued the Undeveloped Parcels (future chapters) based on forecast land
uses, with consideration of the Port Covington Master Development Plan and Under Armour’s Planned Unit
Development. Due to the unique nature of the proposed developments, we base the future chapters’ valuation on
the land value as determined herein for Chapter 1B. This is deemed appropriate as the Chapter 1B land value
includes consideration of the benefits of the TIF and various tax credits as well as entrepreneurial incentive. We
also estimated a reasonable development timeline and discounted the future land values at a rate commensurate
with the risk and costs for each proposed project within the Port Covington Development District.
The commercial real estate market has historically been driven by investor demand and strong liquidity. Asset
values can change in short periods of time if either of these two factors, often in conjunction with many others,
change significantly. While Cushman & Wakefield is closely monitoring the latest developments resulting from the
COVID-19 pandemic, the reader is cautioned to consider that values and forecast incomes are likely to change
more rapidly and significantly than during standard market conditions. Furthermore, the reader should be cautioned
and reminded that any conclusions presented in this appraisal report apply only as of the effective date of value.
The appraiser makes no representation as to the effect on the subject property of this event, or any event,
subsequent to the effective date of the appraisal.
Based on the agreed-to Scope of Work as outlined in this report, the following value opinions were determined:
Prospective Market Value Upon Completion and Stabilization: Assuming upon completion of Public Improvements as well as
upon completion and stabilization of the To Be Developed Parcels
Prospective Market Value (E1) Leased Fee September 30, 2023 $81,100,000
Prospective Market Value (E1B - Garage) Leased Fee September 30, 2023 $32,250,000
Prospective Market Value (E5A) Leased Fee September 30, 2023 $114,800,000
Prospective Market Value (E5B) Leased Fee September 30, 2023 $62,350,000
Prospective Market Value (E6) Leased Fee September 30, 2023 $118,500,000
Prospective Market Value (E7) Leased Fee September 30, 2023 $144,700,000
Prospective Market Value- To Be Developed Parcels- Chapter 1B (Aggregate) Leased Fee September 30, 2023 $553,700,000
Prospective Market Value- Undeveloped Parcels (Aggregate) Fee Simple September 30, 2023 $161,900,000
Prospective Market Value- To Be Developed and Undeveloped Parcels Leased Fee September 30, 2023 $715,600,000
A-17
MR. JEFF WILKE
MARYLAND ECONOMIC DEVELOPMENT CORPORATION
NOVEMBER 17, 2020
PAGE 18 CUSHMAN & WAKEFIELD OF MARYLAND, LLC
In addition, the Client has requested two hypothetical value opinions as follows:
Hypothetical Value Conclusions
Hypothetical Value 2: Value of Undeveloped Parcels (excluding To Be Developed Parcels) assuming completion of Public Improvements
as of the date of appraisal
Hypothetical Value- Undeveloped Parcels Fee Simple June 1, 2020 $123,600,000
The following is a summary of the aggregate Assessed Values of the Redevelopment Parcels and Developed
Parcels determined by the Maryland Department of Assessment and Taxation as previously presented:
Assessed Values Summary
Extraordinary Assumptions
For a definition of Extraordinary Assumptions please see the Glossary of Terms & Definitions. The use of
extraordinary assumptions, if any, might have affected the assignment results.
The prospective market value opinions presented in this report are based upon market participant attitudes and
perceptions existing as of the effective date of our appraisal (June 1, 2020), and assumes the subject's proposed
project components are completed and achieve stabilization as of our forecast prospective dates. We assume no
material change in the physical characteristics and condition of the subject property, or in overall market conditions
between the effective date of Value As-Is and the forecast prospective dates of value, except for those identified
within this report.
We assume that the project will be completed within the timeframes, for the costs and in the manner presented in
this report. If the scope of construction and timing substantially changes from that represented by ownership and
presented herein, the value conclusions may change.
We assume approved Tax Increment Financing (TIF) through the issuance of public bonds will adequately fund
public infrastructure (roads, utilities, etc.) needed to support the subject's proposed development. We assume
future real estate taxes upon completion and stabilization of the proposed improvements will adequately fund the
TIF debt service over the analysis period.
We assume 81 units of the proposed 121-unit apartment component of Parcel E5B will be operated as a short-term
rental facility by a third-party operator. For purposes of this appraisal, we assume the management agreement, or
partnership in lieu of a lease structure with the third-party operator, is completed for the terms as described by the
developer and presented in this appraisal.
The owner reports they are entitled to Enterprise Zone Tax Credits from Baltimore City and Brownfield Property
Tax Credits from the State of Maryland. The owner believes they will be successful in securing the tax credits.
Eligibility for the Enterprise Zone Tax Credits and Brownfield Property Tax Credits is expected by the time the
project components are completed. Based on our analysis, it appears reasonable to assume the developer will
receive the tax credits, which we have included in the valuation of the subject property (Chapter 1B).
A-18
MR. JEFF WILKE
MARYLAND ECONOMIC DEVELOPMENT CORPORATION
NOVEMBER 17, 2020
PAGE 19 CUSHMAN & WAKEFIELD OF MARYLAND, LLC
Hypothetical Conditions
For a definition of Hypothetical Conditions please see the Glossary of Terms & Definitions. The use of hypothetical
conditions, if any, might have affected the assignment results.
The hypothetical market value of the Property as of the date of the appraisal (June 1, 2020) assumes completion
of the Public Improvements.
The hypothetical market value of the Property, excluding the To Be Developed Parcels (Chapter 1B), as of the date
of the appraisal (June 1, 2020) assumes completion of the Public Improvements.
This letter is invalid as an opinion of value if detached from the report, which contains the text, exhibits, and
Addenda.
Respectfully submitted,
A-19
PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY TABLE OF CONTENTS
Table of Contents
Summary of Salient Facts and Conclusions ............................................................................................................ 22
Property Photographs .............................................................................................................................................. 32
Scope of Work .......................................................................................................................................................... 39
Overview .............................................................................................................................................................. 39
Report Option Description .................................................................................................................................... 40
Identification of Property ...................................................................................................................................... 40
Property Ownership and Recent History.............................................................................................................. 43
Dates of Inspection and Valuation ....................................................................................................................... 44
Client, Intended Use and Users of the Appraisal ................................................................................................. 45
Regional Analysis..................................................................................................................................................... 49
Baltimore Regional Overview ............................................................................................................................... 50
Local Area Analysis.................................................................................................................................................. 61
Market Study ............................................................................................................................................................ 78
Apartment Market Analysis- National Overview................................................................................................... 78
Apartment Market Analysis- Baltimore Regional Overview ................................................................................. 87
Competitive Apartment Properties Overview ....................................................................................................... 94
Short-Term Apartment Rental Market / Hotel/ Extended-Stay Market................................................................. 99
National Hotel/ Extended-Stay Industry Overview ............................................................................................... 99
Local Hotel/ Extended-Stay Market Demand Generators .................................................................................. 107
Office Market Analysis- National Overview ........................................................................................................ 115
Office Market Analysis- Baltimore Regional Overview ...................................................................................... 123
Retail Market Analysis........................................................................................................................................ 133
Retail Market Analysis- National Overview ........................................................................................................ 133
Retail Market Analysis- Baltimore Regional Overview ....................................................................................... 151
Retail Trade Area Overview ............................................................................................................................... 157
National Supermarket Industry Overview .......................................................................................................... 159
Demographic Profile........................................................................................................................................... 170
Parking Market Analysis..................................................................................................................................... 177
Property Analysis ................................................................................................................................................... 190
Site Description .................................................................................................................................................. 190
Improvements Description (Proposed Phase 1- Chapter 1B)................................................................................ 208
Improvements Description – Parcel E1 (Proposed) ........................................................................................... 210
Improvements Description – Parcel E5A (Proposed) ........................................................................................ 217
Improvements Description – Parcel E5B (Proposed) ........................................................................................ 223
Improvements Description – Parcel E6 (Proposed) ........................................................................................... 229
Improvements Description – Parcel E7 (Proposed) ........................................................................................... 235
Real Property Taxes And Assessments ............................................................................................................ 241
Tax Credits ......................................................................................................................................................... 253
Zoning ................................................................................................................................................................ 269
Valuation ................................................................................................................................................................ 271
Highest and Best Use ........................................................................................................................................ 271
Valuation Process .............................................................................................................................................. 273
Land Valuation ................................................................................................................................................... 274
Public Infrastructure Costs - TIF ........................................................................................................................ 274
Land Valuation – To Be Developed Parcels (Chapter 1B) ................................................................................ 276
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY TABLE OF CONTENTS
A-21
PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SUMMARY OF SALIENT FACTS AND CONCLUSIONS
SITE INFORMATION
Land Area: Square Feet Acres
To Be Developed Parcels (Chapter 1B): 375,666 8.62
Undeveloped Parcels: 3,111,194 71.42
Redevelopment Parcels: 1,495,627 34.33
Developed Parcels: 1,673,014 38.41
Total Land Area: 6,655,501 152.79
Site Shape: Irregularly shaped
Site Topography: Level at street grade
Frontage: Good
Site Utility: Good
Flood Zone Status:
Flood Zone: X
Flood Map Number: 240087-0025F
Flood Map Date: April 2, 2014
MUNICIPAL INFORMATION
Assessment Information:
Assessing Authority: Baltimore City
Assessor's Parcel Identification: See accompanying tables for individual parcel IDs
Zoning Information:
Municipality Governing Zoning: Baltimore City
Current Zoning: PC-1, PC-2, PC-3, PC-4 (Port Covington Development
District) - See accompanying tables for parcel zoning
Are proposed uses permitted?: Yes
A-22
PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SUMMARY OF SALIENT FACTS AND CONCLUSIONS
46B 24-06-1053-001C N/s E. Cromwell Street Baltimore Sun- West Land Bay 1,394 0.0320 300 E. Cromwell Street, LLC PC-2 C11, C12, C13,
46C 24-06-1053-001D N/s E. Cromwell Street Baltimore Sun- West Land Bay 1,220 0.0280 300 E. Cromwell Street, LLC PC-2 C16, C17
19 24-06-1053-009A E/s Hanover Street Baltimore Sun- West Knuckle 33,846 0.7770 300 E. Cromwell Street, LLC PC-2
81E 24-06-1053-001E N/s E. Cromwell Street Baltimore Sun- South Parcel 39,378 0.9040 300 E. Cromwell Street, LLC PC-2 -
81F 24-06-1053-001F 2400 Banner Street Baltimore Sun- East (Plaza) 78,408 1.8000 300 E. Cromwell Street, LLC PC-2 -
81J 24-06-1053-001J 400 Atlas Street Baltimore Sun- East (E3) 65,253 1.4980 300 E. Cromwell Street, LLC PC-2 E3
81K 24-06-1053-001K 300 Atlas Street Baltimore Sun- East (Triangle Park) 28,488 0.6540 300 E. Cromwell Street, LLC PC-2 -
81L* 24-06-1053-001L 250 Atlas Street Baltimore Sun- East (North Area) 62,560 1.4362 300 E. Cromwell Street, LLC PC-2 E2
Subtotal- Baltimore Sun Parcels 1,184,448 27.1912
301 E. Cromwell Street Parcels
80F 24-06-1053-012F 301 E. Cromwell Street East End- Waterfront 17,772 0.4080 301 E. Cromwell Street, LLC PC-2 E11
80G 24-06-1053-012G 301 E. Cromwell Street East End- Waterfront 6,578 0.1510 301 E. Cromwell Street, LLC PC-2 E11
Subtotal- 301 E. Cromwell Street Parcels 24,350 0.5590
UA Port Covington Holdings Parcels
25A 24-06-1053-010B 2601 Port Covington Dr. Land Unit 1- Land Area 974,786 22.3780 UA Port Covington Holdings, LLC PC-4 -
25B 24-06-1053-010F 2601 Port Covington Dr. Land Unit 2- North Entrance 188,005 4.3160 UA Port Covington Holdings, LLC PC-4 -
25C 24-06-1053-010G 2601 Port Covington Dr. Land Unit 3- North Lot 131,595 3.0210 UA Port Covington Holdings, LLC PC-4 -
25D 24-06-1053-010H 2601 Port Covington Dr. Land Unit 4- Waterfront 380,322 8.7310 UA Port Covington Holdings, LLC PC-4 -
25G 24-06-1053-010K 2601 Port Covington Dr. Land Unit 7- Knuckle 84,550 1.9410 UA Port Covington Holdings, LLC PC-4 E10A-E10B
Subtotal- UA Port Covington Holdings Parcels 1,759,258 40.3870
TOTAL UNDEVELOPED PARCELS 3,111,194 71.4232
80 24-06-1053-012 301 E. Cromwell St.- LU1 Land Unit 1- Distillery 63,554 1.4590 49,888 2017 Sagamore Whiskey Properties, LLC PC-1 East End- E13
80A 24-06-1053-012A 13 Rye Street Land Unit 2- Rye Street Tavern 8,289 0.1903 12,966 2017 301 East Cromwell Street, LLC PC-1 East End- E13
80C 24-06-1053-012C 301 E. Cromwell Street Land Unit 4- Courtyard 39,857 0.9150 - 2017 301 East Cromwell Street, LLC PC-1 Open space
80E 24-06-1053-012E 301 E. Cromwell Street Land Unit 6- Parking/ Roadway 8,059 0.1850 - - 301 East Cromwell Street, LLC PC-1 East End- E12
81* 23-06-1053-001 301 E. Cromwell Street Baltimore Sun Building 825,723 18.9560 256,033 1990 300 East Cromwell Street, LLC PC-2 Central- multiple buildings
TOTAL- DEVELOPED PARCELS 1,673,014 38.4071 594,756
* Parcel To be subdivided GBA SF- Gross Building Area Square Feet
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SUMMARY OF SALIENT FACTS AND CONCLUSIONS
VALUATION INDICES
Prospective Land Value Upon Prospective Market Value
Market Value As-Is Completion of Public Upon Stabilization
(Land Value) Improvements (Entire Chapter 1B Project)
Value Date: June 1, 2020 April 30, 2022 September 30, 2023
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SUMMARY OF SALIENT FACTS AND CONCLUSIONS
VALUATION INDICES
Prospective Land Value Upon Prospective Market Value
Market Value As-Is Completion of Public Upon Stabilization
(Land Value) Improvements (Entire Chapter 1B Project)
Value Date: June 1, 2020 April 30, 2022 September 30, 2023
PARCEL E5A
Land Value- Sales Comparison Approach
Land Value- Office $9,550,000 $9,550,000 $9,850,000
Land Value- Retail (Inline) $550,000 $550,000 $600,000
Land Value- Sales Comparison Approach: $10,100,000 $10,100,000 $10,450,000
Cost Approach: N/A N/A $114,000,000
Sales Comparison Approach: N/A N/A $114,750,000
Income Capitalization Approach
Direct Capitalization Method N/A N/A
Net Operating Income (Stabilized Year): $6,227,548
Overall Capitalization Rate: 6.00%
Preliminary Value: $103,792,467
PLUS: Present Value of Remaining Tax Credits: $9,900,000
Preliminary Value: $113,692,467
Indicated Value (Rounded): $113,700,000
Yield Capitalization N/A N/A
Projection Period: 11 Years
Holding Period: 10 Years
Terminal Capitalization Rate: 6.25%
Internal Rate of Return: 7.25%
Indicated Value (Rounded): $114,800,000
Income Capitalization Approach: N/A N/A $114,800,000
VALUE CONCLUSIONS (PARCEL E5A): $10,100,000 $10,100,000 $114,800,000
PARCEL E5B
Land Value- Sales Comparison Approach
Land Value- Multifamily (Apts. Short-Term) $6,300,000 $6,300,000 $6,500,000
Land Value- Retail (Inline) $350,000 $350,000 $350,000
Land Value- Sales Comparison Approach: $6,650,000 $6,650,000 $6,850,000
Cost Approach: N/A N/A $59,500,000
Sales Comparison Approach: N/A N/A $62,550,000
Income Capitalization Approach
Direct Capitalization Method N/A N/A
Net Operating Income (Stabilized Year): $3,015,213
Overall Capitalization Rate: 5.25%
Preliminary Value: $57,432,624
PLUS: Present Value of Remaining Tax Credits: $4,700,000
Preliminary Value: $62,132,624
Indicated Value (Rounded): $62,150,000
Yield Capitalization
Projection Period: 11 Years
Holding Period: 10 Years
Terminal Capitalization Rate: 5.75%
Internal Rate of Return: 7.00%
Indicated Value (Rounded): $62,350,000
Income Capitalization Approach: N/A N/A $62,350,000
VALUE CONCLUSIONS (PARCEL E5B): $6,650,000 $6,650,000 $62,350,000
A-29
PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SUMMARY OF SALIENT FACTS AND CONCLUSIONS
PARCEL E6
Land Value- Sales Comparison Approach
Land Value- Multifamily (Apts. Mixed-Income) $12,200,000 $12,200,000 $12,600,000
Land Value- Retail (Inline) $950,000 $950,000 $1,000,000
Total Land Value Parcel E6 (Rounded): $13,150,000 $13,150,000 $13,600,000
Cost Approach: N/A N/A $118,200,000
Sales Comparison Approach: N/A N/A $118,400,000
Income Capitalization Approach
Direct Capitalization Method N/A N/A
Net Operating Income (Stabilized Year): $5,144,926
Overall Capitalization Rate: 4.75%
Preliminary Value: $108,314,233
PLUS: Present Value of Remaining Tax Credits: $9,700,000
Preliminary Value: $118,014,233
Indicated Value (Rounded): $118,000,000
Yield Capitalization N/A N/A
Projection Period: 11 Years
Holding Period: 10 Years
Terminal Capitalization Rate: 5.00%
Internal Rate of Return: 6.25%
Indicated Value (Rounded): $118,500,000
Income Capitalization Approach: N/A N/A $118,500,000
VALUE CONCLUSIONS (PARCEL E6): $13,150,000 $13,150,000 $118,500,000
PARCEL E7
Land Value- Sales Comparison Approach
Land Value- Office $10,250,000 $10,250,000 $10,500,000
Land Value- Retail (Inline) $2,700,000 $2,700,000 $2,750,000
Land Value- Sales Comparison Approach: $12,950,000 $12,950,000 $13,250,000
Cost Approach: N/A N/A $143,100,000
Sales Comparison Approach: N/A N/A $144,800,000
Income Capitalization Approach
Direct Capitalization Method
Net Operating Income (Stabilized Year): $7,260,296
Overall Capitalization Rate: 5.50%
Preliminary Value: $132,005,382
PLUS: Present Value of Remaining Tax Credits: $11,950,000
Preliminary Value: $143,955,382
Indicated Value (Rounded): $144,000,000
Yield Capitalization
Projection Period: 11 Years
Holding Period: 10 Years
Terminal Capitalization Rate: 6.00%
Internal Rate of Return: 7.00%
Indicated Value (Rounded): $144,700,000
Income Capitalization Approach: N/A N/A $144,700,000
VALUE CONCLUSIONS (PARCEL E7): $12,950,000 $12,950,000 $144,700,000
A-30
PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SUMMARY OF CRITICAL OBSERVATIONS
Strengths
The subject property is the initial phase of a proposed 237-acre, 18.0 million square foot mixed-use development
known as Port Covington, which will offer efficient building sites and new infrastructure to support the project.
The location offers waterfront views for apartment residents and office workers. The proposed project is
designed to offer a pedestrian-friendly live-work-play environment with walkability to employment, shopping and
recreational amenities. Primary demand generators for apartments include young professionals and workers
from nearby major employers, empty nesters and college students.
The subject property will represent new Class-A office, retail and luxury apartments due to its superior project
and unit amenities, which will provide a competitive advantage over comparable projects in the market.
The subject property will benefit from real estate tax credits with upon completion including State Enterprise
Zone and Brownfield Tax Credts. The property is also located within a Federal Opportunity Zone.
Port Covington will be anchored by the proposed Under Armour Global Headquarters.
Weaknesses
The subject property has near-term construction and lease-up costs associated with leasing vacant apartments,
office and retail space upon completion of each project component. Leasing costs include tenant improvement
allowance, leasing commissions and lost net operating income until tenants occupy and commence rental
payments.
Recent government actions and public fears brought on by the COVID-19/ coronavirus outbreak and global
pandemic may impact near-term risks associated with development and lease-up of the subject's proposed
project components.
Conclusions
Based on the preceding strengths and weaknesses, the subject property's specific outlook is considered to be
stable while the general outlook for the overall market is concluded to be cautionary due to recent events brought
on by the COVID-19/coronavirus outbreak and global pandemic.
A-31
PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY PROPERTY PHOTOGRAPHS
Property Photographs
AERIAL PHOTOGRAPH
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AERIAL PHOTOGRAPH
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AERIAL PHOTOGRAPH
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AERIAL PHOTOGRAPH
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Page two
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY PROPERTY PHOTOGRAPHS
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A-38
PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SCOPE OF WORK
Scope of Work
Overview
Scope of work is the type and extent of research and analyses involved in an assignment. To determine the
appropriate scope of work for the assignment, we considered the intended use of the appraisal, the needs of the
user, the relevant characteristics of the subject property, and other pertinent factors. Our concluded scope of work
is summarized below, and in some instances, additional scope details are included in the appropriate sections of
the report:
Research
We inspected the property and its environs. Physical information on the subject was obtained from the property
owner’s representative, public records, and/or third-party sources.
Regional economic and demographic trends, as well as the specifics of the subject’s local area were
investigated. Data on the local and regional property market (supply and demand trends, rent levels, etc.) was
also obtained. This process was based on interviews with regional and/or local market participants, primary
research, available published data, and other various resources.
Other relevant data was collected, verified, and analyzed. Comparable property data was obtained from various
sources (public records, third-party data-reporting services, etc.) and confirmed with a party to the transaction
(buyer, seller, broker, owner, tenant, etc.) wherever possible. It is, however, sometimes necessary to rely on
other sources deemed reliable, such as data reporting services.
Analysis
Based upon the subject property characteristics, prevailing market dynamics, and other information, we
developed an opinion of the property’s Highest and Best Use.
We analyzed the data gathered using generally accepted appraisal methodology to arrive at a probable value
indication via each applicable approach to value.
The results of each valuation approach are considered and reconciled into a reasonable value estimate.
This appraisal employs all three typical approaches to value: the Cost Approach, the Sales Comparison
Approach and the Income Capitalization Approach. Based on our analysis and knowledge of the subject
property type and relevant investor profiles, it is our opinion that all approaches would be considered meaningful
and applicable in developing a credible value conclusion.
This report is intended to comply with the reporting requirements outlined under USPAP for an Appraisal Report.
The report was also prepared to comply with the requirements of the Code of Professional Ethics of the Appraisal
Institute and in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP).
Cushman & Wakefield of Maryland, LLC has an internal Quality Control Oversight Program. This Program
mandates a “second read” of all appraisals. Assignments prepared and signed solely by designated members
(MAIs) are read by another MAI who is not participating in the assignment. For this assignment, Quality Control
Oversight was provided by Lynda Gallagher, MAI.
A-39
PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SCOPE OF WORK
Describes the real estate and/or personal property that is the subject of the appraisal, including physical,
economic, and other characteristics that are relevant
States the type and definition of value and its source
Describes the Scope of Work used to develop the appraisal
Describes the information analyzed, the appraisal methods used, and the reasoning supporting the analyses
and opinions; explains the exclusion of any valuation approaches
States the use of the property as of the valuation date
Describes the rationale for the Highest and Best Use opinion
Identification of Property
Common Property Name: Port Covington Special Taxing District- Private Property
Addresses: Situated on the Middle Branch of the Patapsco River, Baltimore, Maryland 21230
The subject property includes numerous parcels, which are summarized in the
property ownership section as presented later in this section. It is anticipated
with the redevelopment of Port Covington, and the creation of a new street grid,
parcel addresses will change.
Assessor's Parcel IDs: Baltimore City Assessor Parcel Numbers are reflected in a summary table
presented at the end of this section.
Legal Description: The subject property is part of the Port Covington Development District as
designated by the City of Baltimore. The Baltimore City Planning Commission
approved the Final Subdivision Plan for Port Covington on April 18, 2019, which
was recorded on May 3, 2019 as subdivision MB-4357. A survey produced by
STV Incorporated for the Port Covington Special Tax District was provided by
the developer and is presented at the end of this section.
A-40
PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SCOPE OF WORK
Property Overview: The subject property is part of the master-planned, mixed-use development
known as the Port Covington Development District, situated on about 237 acres
of land on a peninsula between Interstate 95 to the North and the Middle Branch
of the Patapsco River to the South in Baltimore City. Port Covington is one of
the largest urban revitalization projects in the United States. The developer,
Weller Development Company, plans to remake the formerly industrial
waterfront area in South Baltimore into a vibrant live-work-play community
anchored by a proposed 3.9 million square foot Under Armour Global
Headquarters located on about 58 acres of land within the Port Covington
Development District. The Port Covington Development District, upon full build-
out, will feature about 18.6 million square feet (gross building area) of mixed-use
development including office, residential, retail, entertainment, hotel and
recreational uses, as well as 40 acres of public parks, green space and civic
uses along 2.5 miles of waterfront.
Port Covington Special Taxing District: This appraisal report includes an analysis
of privately-owned property within the Port Covington Special Taxing District.
For analysis purposes, exhibits and tables presented in this report provide a
summary of the privately-owned parcels within the Port Covington Special Tax
District defined as “To Be Developed Parcels” (Chapter 1B Parcels),
“Undeveloped Parcels”, “Redevelopment Parcels” and “Developed Parcels”.
To Be Developed Parcels The first phase of the development, referred to as “Chapter 1B”, is proposed to
(Chapter 1B Parcels): be completed and stabilized over the next four years. Future chapters will be
developed after the completion and stabilization of Chapter 1B with a
development timeline forecast over the next two decades. The development of
the future chapters is conceptual and will likely change with market demand and
preferences. The following is a summary of Chapter 1B. Additional detail of each
project component is presented later in this report.
Chapter 1B- Project Status/ The developer broke ground on May 13, 2019, and site development and
Construction Timeline: engineering are on-going as of the effective date of this appraisal. The following
table provides a summary of the developer’s estimated building construction
start dates and completion schedule for each project component. The developer
anticipates construction to begin for all project components by September 1,
2020, with completion of the entire project by July 31, 2022, or a 23 month
construction period.
A-41
PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SCOPE OF WORK
Chapter 1B Office Pre- The developer has executed three office leases as of the effective date of this
Leasing: appraisal totaling 39,595 square feet within Chapter 1B, which includes cyber-
security firms. The developer reports they have tremendous momentum with
office leasing interest from many diverse companies including headquarters
uses and technology and cyber-security firms. The rental rates achieved for the
leases signed to date are the highest in the market for comparable space
demonstrating demand for subject’s location and proposed improvements.
Chapter 1B Short-Term Rental The developer is in negotiations with a short-term apartment rental operator to
Agreement: manage 81 apartments within Parcel E5B for short-term rentals. For purposes
of this appraisal, we assume the management agreement with the short-term
rental operator will be completed as described by the developer and presented
in this appraisal.
Chapter 1B Affordable The developer reports 89 apartment units will be reserved for affordable housing
Housing: within two of the subject’s proposed buildings. The affordable housing units
within Parcel E1 will be restricted to tenants earning not more than 80 percent
of the Area Median Income (AMI), and the affordable housing units within Parcel
E6 will be restricted to 50 percent of the AMI.
Chapter 1B Tax Credits: The subject will benefit from being located within a designated Baltimore City
Enterprise Zone (EZ). The EZ tax credit program provides real estate tax savings
over a 10-year period after project completion for the subject’s commercial
components (office, retail and garage). The amount of the tax credits will be
based on 80 percent of the taxes due on the increase in assessed value over
the first five fiscal tax years. The tax credit decreases 10 percent annually
thereafter to 30 percent in year 10. The subject will also benefit from Brownfield
Property Tax Credits applicable to the subject’s apartment components and the
remaining percentage not available for the Enterprise Zone Tax Credit for its
commercial components. The Brownfield Property Tax Credit provides a
reduction in Baltimore City and State of Maryland real estate taxes for 10 years
at a 70 percent discount. For purposes of this analysis, we have separately
estimated the net present value (PV) of the remaining tax credits for each project
component upon stabilization. The present value of the remaining tax credits is
included in the prospective market value opinions presented in this appraisal.
The subject property is also located within a designated U.S. Federal
Opportunity Zone, which provides future tax benefits to investors in the project.
A-42
PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SCOPE OF WORK
Undeveloped Parcels: The Undeveloped Parcels within the Port Covington Special Tax District include
the former Atlantic Forest Product site (AFP Site), Baltimore Sun Parcels, 301
E. Cromwell Street Parcels, and UA Port Covington Holdings Parcels. A
discussion of each Undeveloped Parcel is presented later this report.
Redevelopment Parcels: Based on the agreed-to Scope of Work as outlined in this report, we also provide
a summary of the latest assessed values as determined by the Maryland
Department of Assessments and Taxation of the private property designated as
“Redevelopment Parcels” and “Developed Parcels” within the Port Covington
Special Taxing District. The assessed values are listed in tables presented in
this report. Redevelopment Parcels includes the former AFP warehouse, the
former Walmart store now used by Under Armour, seven single-family
rowhomes, the former Schuster Concrete warehouse facility and a parcel to be
improved with a waterfront promenade and pier amenity. The total assessed
value of redevelopment parcels equates to $34,886,700.
Developed Parcels: A description of the existing developed parcels within Port Covington are
discussed within the Local Area Analysis section of this report, which includes
the adaptive reuse of the City Garage building, Nick’s Seafood Restaurant,
Under Armour Building 37, the Rye Street Tavern and adjacent common area
courtyard and future roadway parcels. The total assessed value for the
Developed Parcels equates to $91,840,000.
Public Improvements- TIF: The Port Covington Master Development Plan was adopted by the Baltimore
City Planning Commission on June 23, 2016 after a six-month public master
planning process conducted by Baltimore City officials. The City of Baltimore
subsequently approved issuing $658.6 million in Tax Increment Financing (TIF)
bonds to fund infrastructure work for the proposed development. The developer
is seeking the first tranche of public bond financing to fund infrastructure costs
supporting Chapter 1B of the proposed development, which is estimated to total
$112,249,443 as presented in this report. The TIF monies will be used for new
public roadways, walkways, public utilities and other infrastructure allowing for
pad-ready development sites within Chapter 1B forecast upon completion by
April 30, 2022. The developer reports they spent $33,653,201 to date on
engineering, site work and other TIF-eligible costs for Chapter 1B, which will be
reimbursed by the TIF bonds once issued.
Sale History: The Port Covington Special Taxing District Ownership Summary table presented
at the end of this section lists the last recorded sales price and recording date
by Baltimore City Land Records by ownership entity for each privately-owned
parcel within the Port Covington Special Tax District.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SCOPE OF WORK
The developer reports the land area for the first phase of the project, referred to
as Chapter 1B, was included in their acquisition of The Baltimore Sun parcels
previously owned by MD-Sun Park, LLC. The owner reported the initial purchase
sale agreement and deposit was in October 2014, and the property closed in
December 2014 for $46,706,773, including closing costs.
The As-Is value opinions presented in this appraisal are reflective of current
physical and economic characteristics of the subject property, which have
improved since the assemblage of the parcels.
Current Disposition: To the best of our knowledge, the property is not under contract of sale nor is it
being marketed for sale.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SCOPE OF WORK
Intended Use: The purpose of this appraisal and market study will be for the inclusion in a
limited offering memorandum for the issuance of Port Covington, Series 2020
Bonds (“the Bonds”). This appraisal and market study will provide MEDCO and
bond buyers with information on the Property and estimated value. This report
is not intended for any other use.
Intended Users: The Intended Users of this appraisal report and market study include the
Maryland Economic Development Corporation (“MEDCO” or “the issuer”), the
Baltimore Urban Revitalization, LLC, Weller Development Company, LLC, the
City of Baltimore, and the underwriters and the buyers of the Port Covington,
Series 2020 Bonds (the “Bonds”) including counsel and advisers to each of the
foregoing.
Please see the Engagement Letter in the Addenda.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY SCOPE OF WORK
120-250 Dickman Street, LLC 9 23-10-1058-005A 120 W. Dickman Street AFP Site- West End Land 55,452 1.2730
120-250 Dickman Street, LLC 10 23-10-1058-005B N/s W. Dickman Street AFP Site- West End Land 21,127 0.4850
120-250 Dickman Street, LLC 11 23-10-1058-005C N/s W. Dickman Street AFP Site- West End Land 12,807 0.2940
120-250 Dickman Street, LLC 12 23-10-1058-001 150 W. Dickman Street AFP Site- West End Land 53,753 1.2340
120-250 Dickman Street, LLC 13 23-10-1055-001 250 W. Dickman Street AFP Site- Warehouse 457,336 10.4990
Subtotal- 120-250 Dickman Street, LLC 600,475 13.7850 5/5/2015 $8,000,000
301 East Cromwell Street, LLC
301 East Cromwell Street, LLC 80F 24-06-1053-012F 301 E. Cromwell Street East End- Waterfront 17,772 0.4080
301 East Cromwell Street, LLC 80G 24-06-1053-012G 301 E. Cromwell Street East End- Waterfront 6,578 0.1510
301 East Cromwell Street, LLC 80A 24-06-1053-012A 13 Rye Street Land Unit 2- Rye Street Tavern 8,289 0.1903
301 East Cromwell Street, LLC 80C 24-06-1053-012C 301 E. Cromwell Street Land Unit 4- Courtyard 39,857 0.9150
301 East Cromwell Street, LLC 80E 24-06-1053-012E 301 E. Cromwell Street Land Unit 6- Parking/ Roadway 8,059 0.1850
301 East Cromwell Street, LLC 80B 23-06-1053-012B 301 E. Cromwell St. Waterside Walkway- Pier 68,868 1.5810
Subtotal- 301 East Cromwell Street, LLC (Note: 149,423 3.4303 4/9/2016 $2,000,000
UA Port Covington Holdings, LLC
UA Port Covington Holdings, LLC 25A 24-06-1053-010B 2601 Port Covington Dr. Land Unit 1- Land Area 974,786 22.3780
UA Port Covington Holdings, LLC 25B 24-06-1053-010F 2601 Port Covington Dr. Land Unit 2- North Entrance 188,005 4.3160
UA Port Covington Holdings, LLC 25C 24-06-1053-010G 2601 Port Covington Dr. Land Unit 3- North Lot 131,595 3.0210
UA Port Covington Holdings, LLC 25D 24-06-1053-010H 2601 Port Covington Dr. Land Unit 4- Waterfront 380,322 8.7310
UA Port Covington Holdings, LLC 25G 24-06-1053-010K 2601 Port Covington Dr. Land Unit 7- Knuckle 84,550 1.9410
UA Port Covington Holdings, LLC 25E 24-06-1053-010I 2601 Port Covington Drive UA Land Unit 5- Building 37 348,916 8.0100
UA Port Covington Holdings, LLC 25F 24-06-1053-010J 2601 Port Covington Dr. UA Land Unit 6- Walmart 810,260 18.6010
Subtotal- UA Port Covington Holdings, LLC 2,918,433 66.9980 6/30/2016 $70,300,000
200 West McComas Street, LLC 34 23-10-1040-001 200 W. McComas Street Doggie Daycare 28,367 0.6512 4/4/2016 $5,575,000
Total Recorded Sales $149,799,773
Regional Analysis
REGIONAL MAP
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The Baltimore CBSA encompasses approximately 2,600 square miles and consists of Baltimore City and the six
surrounding counties of Anne Arundel, Baltimore, Carroll, Harford, Howard and Queen Anne’s. The Baltimore
region benefits from its proximity to Washington, D.C., the nation’s capital, which is located about 39 miles
southwest of downtown Baltimore City. The Baltimore CBSA is part of the U.S. Census’ Washington-Baltimore-
Arlington Combined Statistical Area (CSA). This megalopolis is the nation’s fourth-largest consumer market with an
estimated population of approximately 9.7 million.
Baltimore has historically been an important port and rail transportation hub for the Mid-Atlantic region, as its central
location along the eastern seaboard, with access to all major distribution routes along the East Coast, makes it
highly appealing to distribution and manufacturing companies. The region also benefits from its proximity and
convenient access to the Chesapeake Bay and the Atlantic Ocean. The Port of Baltimore is one of the busiest deep-
water ports along the East Coast.
The presence of three major Federal government military installations, as well as its proximity to Washington, D.C.,
are demand generators for Federal government agencies and government contractors to locate in the region. In
addition, major universities and healthcare systems provide a stable employment base in the greater Baltimore
Region.
The private and public sectors have directed significant investment into Baltimore City over the past three decades,
which has spurred revitalization of the region’s urban core. As a result, Baltimore City has become the financial,
legal, corporate and political center of Maryland, while maintaining its status as an important port, educational and
cultural center. The revitalization of Baltimore City has stabilized the out-migration of population and households
from Baltimore City to surrounding suburban communities, which has encouraged new multifamily housing and
retail development in downtown Baltimore.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY BALTIMORE REGIONAL OVERVIEW
Demographic Trends
Population
The Baltimore CBSA is the twenty-first largest region in the United States with an estimated population of
approximately 2.8 million. From 2009 through 2019, the region’s compound annual population growth rate was
estimated to be 0.4 percent, slightly trailing the national annual growth rate of 0.7 percent over the same time. The
region’s population growth is projected to decelerate slightly through the near term, to a compound annual growth
rate of 0.2 percent through 2024. The following tables illustrate the population trends in the Baltimore region:
0.8%
0.4%
0.0%
09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Source: Data Courtesy of Moody's Analytics, Cushman & Wakefield Valuation & Advisory
Note: Shaded bars indicate periods of recession
Howard and Anne Arundel Counties have led the region’s population growth for the past decade, at 1.3 percent
and 0.8 percent, respectively. Baltimore City’s population decreased slightly over the same timeframe, falling by an
annual average of 0.3 percent and Baltimore City is forecast for modest annual declines over the next five years.
New multifamily development, and continued efforts to revitalize the urban core, have helped to slow the out-
migration of population from Baltimore City to suburban communities. Howard, Queen Anne’s and Anne Arundel
Counties are forecast to continue to have the most population growth in the Baltimore CBSA through 2024.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY BALTIMORE REGIONAL OVERVIEW
Household Formation
The Baltimore CBSA has approximately 1.1 million households. Howard, Queen Anne’s and Anne Arundel Counties
have displayed the healthiest household formation rates for the region over the past ten years, and the trend is on
schedule to continue over the next five years. Overall household formation is projected to closely parallel the last
decades levels of growth through 2024, increasing 0.4 percent annually through 2024. Increased demand for new
apartment construction in Baltimore City has been driven by positive household formation from empty nesters and
young professionals who seek multifamily developments within an urban environment. The following tables illustrate
the household formation trends in the Baltimore region:
1.0%
0.5%
0.0%
09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Source: Data Courtesy of Moody's Analytics, Cushman & Wakefield Valuation & Advisory
Note: Shaded bars indicate periods of recession
Household Income
The growth rate for the Baltimore CBSA’s median household income outperformed both the State of Maryland and
the national average for the past ten years. According to Moody’s Analytics, the median income for households in
the Baltimore CBSA was $83,079 as of first quarter 2020, which is $19,603, or 29.8 percent higher than the national
average. Over the next five years, the region’s median household income is projected to increase by a compound
annual rate of 2.7 percent, trending closely to the state and national growth rate.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY BALTIMORE REGIONAL OVERVIEW
The following table illustrates the latest data available for historic and projected median household income trends
for the United States, Maryland, the Baltimore CBSA and local jurisdictions:
Economic Trends
Gross Metro Product
Baltimore’s Gross Metro Product (GMP) increased at a compound annual growth rate of 2.1 percent from 2009
through 2019, outpacing the nation’s GDP growth rate over the same period. The GMP increased at an annual
average of 2.2 percent from 2015 through 2019 and is forecast to decrease by 1.7 percent in 2020. Over the next
five years, Baltimore’s economic growth is expected to remain healthy, with a projected average annual GMP
growth rate of 2.7 percent.
The following graph compares historical and projected annual GMP growth for the Baltimore CBSA and United
States:
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY BALTIMORE REGIONAL OVERVIEW
Employment Distribution
The Baltimore region has transformed from being a historically manufacturing-based economy to one centered on
service-providing industries. Today, the economy is comprised of multiple industries, which make up an extensive
employment base across sectors such as construction, education, health care, utilities and professional services.
The industries with the largest share of employment are the education & health services, trade, transportation, &
utilities, government, and professional & business services industries, which represent a combined employment
share of 70 percent as of first quarter 2020. Given the number of higher learning institutions as well as medical and
research centers, education & health services make up a fifth of all employment in the CBSA. The following graph
compares non-farm employment sectors for the Baltimore CBSA and the U.S. as a whole:
The following table reflects recent non-farm employment trends by industry group in the Baltimore CBSA:
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY BALTIMORE REGIONAL OVERVIEW
Manufacturing, led by shipping and steel production located proximate to the Port of Baltimore, was a leading
industry in the local economy and accounted for roughly 20% of region’s employment as recently as 1975. However,
redirection of the national economy caused many manufacturing companies in Baltimore, such as Bethlehem Steel,
General Motors and Maryland Dry Dock, to shrink and a loss of employment share. By 1995, manufacturing
employment represented less than 10% of the local workforce. At the end of 2019, manufacturing employment
represented only 4% of the region’s employment and is forecast to decline by 1% annually over the next five years.
Today, Baltimore’s regional economy is wide-ranging across multiple employment sectors. The private sector has
shifted towards service, trade and technology-based employment. While the manufacturing industry still exists in
the region, high-tech contractors, educational institutions, public utilities, retailers and financial institutions have
become the main economic drivers. With proximity to Washington, D.C., the government sector plays a large role
in the local economy accounting for 15.8% of the region’s total employment through the end of 2019. Additionally,
government employment aides the private sector through government contractors and services that assist
government agencies. The heavy presence of the federal government is mainly positive for the region, as it helps
stabilize employment and economic growth, but employment growth may be limited in the future due to budgetary
constraints from continued high federal government debt levels.
Educational & Health Services: The Baltimore CBSA is known for its research universities and medical institutions
as it is home to twenty-two 4-year and seven 2-year enrollment colleges, such as Johns Hopkins University and
University of Maryland-Baltimore. Through the end of 2019, the education and health services industry represented
20% of the region’s total employment. Johns Hopkins University, MedStar Health, the University of Maryland
Medical Center and Bayview Medical Center make up some of the largest private employers in the region.
Recreation & Tourism Industries: The Baltimore region is a vibrant tourist center with many attractions including the
Inner Harbor, National Aquarium, Maryland Science Center, Arundel Mills Mall, Baltimore Zoo, Baltimore Ravens
(NFL), Baltimore Orioles (MLB) at Camden Yards, three casinos (Maryland Live! at Arundel Mills Mall, Horseshoe
Casino in Baltimore City, and the Hollywood Casino in Perryville), passenger cruises at the Port of Baltimore, and
historic communities in Baltimore City including Little Italy, Fells Point, Federal Hill, Canton and Mount Vernon. The
Leisure and Hospitality industry represented about 9.8% of the region’s employment base through fourth quarter
2019 and has continued to display strong employment growth.
Major Employers
There are three major Federal Government military installations in the Baltimore region – Fort George G. Meade in
Anne Arundel County, the U.S. Army Aberdeen Proving Ground in Harford County, and the U.S. Naval Academy
in the City of Annapolis. The Fort Meade Military Base is a 13,000-acre Army post and is the largest employer in
the State of Maryland and home to the U.S. Cyber Command, the National Security Agency (NSA) and Defense
Information Systems Agency. Fort Meade is centrally located in the Baltimore-Washington Corridor and is generally
bordered by MD Route 175 to the north and east, MD Route 32 to the south and MD Route 295 to the west. Fort
Meade is one of the largest joint service centers in the U.S. and has the third-largest workforce of Army installations
in the United States. In 2005, the Base Realignment and Closure (BRAC) process relocated about 5,400 military,
Department of Defense (DoD) civilian, and contract employees to Fort Meade, as well as 4,900 family members.
This, coupled with the expansion of the NSA and the establishment of the United States Cyber Command,
significantly increased the military and civilian personnel. Combined, Fort Meade and NSA generate a total of $17.8
billion in economic activity in Maryland, or 49.4% of the total $36 billion in economic impact from all of the military
installations, according to Mission Maryland: Measuring Economic Impact of Maryland’s Military Installations by the
Maryland Department of Business and Economic Development. Fort Meade and the NSA create or support 125,729
jobs earning an estimated $9.2 billion in employee compensation. The direct Fort Meade and NSA employment of
48,389 accounts for 1.4% of all employment in Maryland and, when multiplier impacts are included, the 125,729
jobs in, created or supported by Fort Meade and the NSA account for 3.6% of all employment in Maryland. Due to
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY BALTIMORE REGIONAL OVERVIEW
the relocation and expansion of military facilities at Fort Meade, defense-related government contractors required
to locate within ten miles of the facility have expanded within the region.
Per local county government economic development officials, every U.S. government job added at the military base
typically creates two new contractor jobs at companies across the Baltimore region. The U.S. government recently
spent $1 billion on development of the U.S. Cyber Command at Fort Meade. The project was built on five square
miles of land area, which expanded the cyber-defense capabilities at the Installation. The elevation of U.S. Cyber
Command to the status of an independent Unified Combatant Command will continue to spur new contracting
opportunities outside of Fort Meade by defense contractors. Companies like Northrup Grumman, Booz Allen and
Boeing have expanded in the area as a result of the growing U.S. Cyber Command. Federal government agencies
and expanding companies located nearby the military base, are primary demand generators for office, flex and
research and development space in the Baltimore region. Employees of these companies and government
agencies also drive demand for housing and shopping in the local area, which has driven increased demand for
apartments and retail development in the market.
The following table reflects the top-20 largest employers in the Baltimore region:
Largest Employers
Baltimore-Columbia-Towson CBSA
No. of
Company Employment Sector Employees
Fort George G. Meade/ National Security Agency Fed. Govt. – Military Installation 53,733
Johns Hopkins University Education and Health Services 27,300
Johns Hopkins Health System Education and Health Services 23,470
University of Maryland Medical System Education and Health Services 22,619
Aberdeen Proving Ground (U.S. Army) Fed. Govt. – Military Installation 22,797
U.S. Social Security Administration Government Agency 14,351
MedStar Health Education and Health Services 11,766
Northrop Grumman Corp. Defense and Technology 10,660
LifeBridge Health Education and Health Services 10,535
Abacus Professional and Business Services 8,000
Wal-Mart Stores Inc. Retail Trade 7,506
Giant Food Stores LLC Retail Trade 6,000
Constellation Energy Group Energy 5,245
T. Rowe Price Associates Inc. Professional and Business Services 5,136
Exelon Energy 5,100
Mercy Health Partners Education and Health Services 5,062
Southwest Airlines Transportation 4,835
Amazon Retail Trade 4,500
GBMC Healthcare Inc. Education and Health Services 4,442
Community College of Baltimore County Education and Health Services 4,185
Source:Baltimore Business Journal and Cushman & Wakefield Valuation & Advisory - 2019
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY BALTIMORE REGIONAL OVERVIEW
The Baltimore region is home to approximately 70,791 businesses, of which about 1,794 employs 100 or more
workers. The following reflects a summary of the total number of businesses by jurisdiction in the Baltimore region:
Employment Trends
Employment trends in the Baltimore region are reflected in the following table (most recent data available):
The Bureau of Labor Statistics (BLS) produces monthly estimates of total employment and unemployment of
residents of a given area, commonly known as the Local Area Unemployment Statistics (LAUS). The overall number
of employed residents in the Baltimore CBSA increased by 32,763 in 2019, which exceeded the 28,343-person
increase in the labor force. This consequently drove down the average annual unemployment rate from 3.98% for
2018 to 3.62% for 2019. Through March 2020, the unemployment rate was 3.55% and total labor force has a total
of approximately 1.53 million in total labor force for the Baltimore CBSA. The unemployment statistics do not reflect
subsequent unemployment increases due to the impact of the COVID-19 pandemic, as will be discussed, as the
“stay-in-place” order by the governor of Maryland occurred on March 30, 2020, with a phased re-opening plan that
began on May 15, 2020.
Another employment measure from the BLS is the Current Employment Statistics (CES) program, which surveys
businesses and government agencies to provide detailed data on the number of jobs in a given area. The total
number of jobs created annually in the Baltimore CBSA has increased annually since 2011.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY BALTIMORE REGIONAL OVERVIEW
Rail: CSX Transportation, Conrail, Norfolk Southern Railroad and the Canton Railroad Company provide freight
service throughout the Baltimore region. AMTRAK provides high-speed commuter rail transportation service along
the Northeast corridor between Washington, D.C. and Boston. Two commuter lines operated by MARC/CSX
connect Baltimore's Camden Yard and Pennsylvania Station to Union Station in Washington, D.C. A 14-mile
commuter subway system links downtown Baltimore City to Owings Mills in northwest Baltimore County. In addition,
a 27-mile Light-Rail system connects Hunt Valley in northern Baltimore County through downtown Baltimore to
Glen Burnie in Anne Arundel County to the south, with a spur connecting to the Baltimore-Washington Thurgood
Marshall International Airport. Rail stations along the commuter rail lines have spurred transit-oriented development.
Amtrak plans to invest $50 million in station and track improvements, as part of a $90 million redevelopment of the
historic Penn Station located in the Station North and Mount Vernon communities in downtown Baltimore. Amtrak,
in partnership with a local development team, plan to create a transit-oriented hub with apartments, and retail and
office space. Despite the recent impact of the COVID-19 pandemic, Amtrak plans to begin work in 2020 on adding
a high-speed rail platform, along with the other planned upgrades to the station. Baltimore Penn Station plans to
unveil its next generation Acela Express trains along Amtrak’s Northeast Corridor by 2021.
Air: The Baltimore/Washington International Thurgood Marshall Airport (“BWI”), located about ten miles south of
downtown Baltimore, provides domestic and international air transportation to the region. BWI is one of the fastest
growing airports in the country. Recent investments included $125 million connector between Concourses D and E
and a $60 million upgrade to Concourse A to better serve the airport’s largest carrier, Southwest Airlines. BWI has
helped increase development of business parks close to the airport with improved office, flex and industrial
buildings. Approximately 26.99 million-passengers traveled through BWI in 2019, a slight decrease of 0.6 percent
from the record set in 2018 of 27.15 million passengers. Air travel is expected to be significantly reduced for 2020
due to the impact of the COVID-19 pandemic. The BWI Airport employees approximately 9,700 workers. The
statewide economic impact of BWI last estimated by the State of Maryland in 2018 totaled $9.3 billion, including
106,000 jobs. BWI is also a major resource for national and international cargo, freight and mail distribution.
Water: The Port of Baltimore stretches over 45 miles of developed waterfront and is one of only four Eastern U.S.
ports with a channel depth of 50 feet. The Port of Baltimore’s container traffic grew 6% in 2018. The Port utilizes
nineteen terminals, over six million square feet of warehouse space and five million square feet of cold storage.
These extensive facilities mostly accommodate ships carrying general, container, bulk and break-bulk cargo,
making it the second busiest containerized cargo port in the Mid-Atlantic and Gulf coast regions. The Port is the
national leader in handling cars, farm and construction machinery, as well as imported forest products, sugar, and
aluminum. A $22 million auto berth opened in late 2014 to better position the port to accommodate rising automobile
shipments. The Port of Baltimore is one of only three East Coast Ports that can accommodate larger cargo ships
that utilize the recently expanded Panama Canal. The port’s economic impact is vital to the Baltimore region.
According to the Maryland Port Authority, in 2018 the Port generated about 15,330 direct jobs, a payroll of nearly
$3.3 billion, and roughly $395 million in state and local taxes. The Port also features a cruise passenger terminal,
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY BALTIMORE REGIONAL OVERVIEW
which accommodates three cruise lines with about one hundred cruises annually. The Howard Street Tunnel
received $125 million in federal grant funding to reconstruct the tunnel and improve the Port’s container business
by approximately 100,000 containers annually. Additionally, construction of a new 50-foot deep berth that will allow
the port to serve two supersized ships at the same time is expected to be completed for 2021.
Governmental Influences
Government forces that affect real estate values include tax structure, zoning authority, public services and fiscal
and regulatory policies that affect development. Maryland levies an 8.25% corporate income tax on net income
attributable to business transacted within the state. The state sales and use tax is 6% on tangible personal property
sold at retail outlets. This tax does not apply to a manufacturer's purchase of raw materials, or to the purchases of
machinery and equipment. Local jurisdictions offer complete or partial exemptions on machinery, equipment and
inventories. All jurisdictions exempt inventory at warehouse facilities. The state also has a graduated personal
income tax of 2.00% to 5.75% on federal adjusted gross income. Real estate taxes in the state are based on
triennial state assessments. Local property taxes fund public education. Zoning authority is vested in the local
jurisdictions, which regulate land use and the density of development. The Baltimore region is adequately served
by necessary public utilities including electricity, natural gas, water, storm water and sanitary sewers,
telecommunication and cable services. As the region has expanded from the urban core, outlying municipalities
continue to expand public facilities to meet growing demand.
COVID-19 Impact
As the crisis began to unfold in March 2020, much of the data available may not accurately reflect the true impact
of the crisis on the Baltimore region. As data often lags, we will find out more as the crisis unfolds. In other sections
of the report we will discuss the effects of the COVID-19 crisis on the market and subject property in as much detail
as possible. With that said, it is important to note the following points:
On Monday, March 30, 2020, the leaders of Maryland, Virginia and District of Columbia issued shelter-in-
place orders for all residents. Recently, some government restrictions have been revised as a phased re-
opening of business is on-going as of the effective date of this appraisal.
The COVID-19 pandemic has resulted in shutdowns of non-essential business, and as a result many other
businesses have been significantly disrupted. This has resulted in a sharp and drastic unemployment spike
that is expected to negatively impact households and businesses in the near term.
Pertaining to real estate specifically, tenant income losses (business or personal) are expected to translate
into near term cash flow disruption to properties. The severity of these impacts is anticipated to be property
specific with some property types impacted more than others.
The full effects of these impacts are unknown at this time, but most market participants are reporting a
pause/hold with regards to transactions and have expectations for 3 to 6 months of acute challenges and
a 4th Quarter 2020/1st Quarter 2021 rebound.
As of the effective date of this appraisal, most economists agree we are in a U-shaped recovery, and that
the economy will continue to improve. A vaccine is expected in the first half of 2021, and a full recovery is
expected by the end of next year, or by early 2022.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY BALTIMORE REGIONAL OVERVIEW
Regional Weaknesses: Although the Federal government provides a stable economic base and a steady supply of
employment, its presence makes the Baltimore CBSA vulnerable to the risks associated with federal budget cuts.
The effects of Sequestration in 2013 underscore these risks as consumer services within the region are also
susceptible to budget cuts, as government employees and government funding generate a significant portion of
demand. The region’s moderate population and household growth could pressure economic growth over the long-
term.
Summary: Baltimore’s mature economy continued its expansion path as strong port activity, coupled with healthy
wage gains, continue to spark economic growth through early 2020, prior to the impact of the COVID-19 pandemic.
The region’s Gross Metro Product grew 1.4% in 2019, driving an overall nonfarm employment growth rate of 1.2%.
Overall, the Baltimore CBSA’s Gross Metro Product is projected to increase at a compound annual growth rate of
2.7% over the next five years, adjusted for near-term economic impacts of the COVID-19 global pandemic. Rising
industries like cyber-security, medical research and distribution have shown success in economic and private sector
growth recently. The historically strong industries like financial activities, professional and business services,
transportation and warehousing, and education and health services continue to drive long-term growth in the private
sector.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY LOCAL AREA ANALYSIS
NEIGHBORHOOD MAP
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Subject
PORT COVINGTON
Subject
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Location Overview
The subject property is part of the master-planned, mixed-use development known as the Port Covington
Development District, situated on about 235 acres of land on a peninsula between Interstate 95 to the North and
the Middle Branch of the Patapsco River to the South in Baltimore City. Port Covington is located just south of
Interstate 95 at the interchange of South Hanover Street in South Baltimore, about 1.5 miles south of Baltimore’s
Inner Harbor and Downtown districts. South Baltimore includes the neighborhoods of Port Covington, Federal Hill,
Locust Point, Riverside and Westport. South Baltimore is situated between the Northwest Harbor to the north, and
the Middle Branch of the Patapsco River, a tributary of the Chesapeake Bay, to the south. This well-established
urban area has historically been an industrial employment center improved with a mix of manufacturing and
distribution facilities, large waterfront port marine terminals and densely-developed historic townhouse and garden
apartment residential development. Local area boundaries are generally the Inner Harbor to the north, the Patapsco
River to the east, the communities of Locust Point, Riverside and Port Covington to the south, and the Interstate
395 overpass to the west.
UA Port Covington Holdings Parcels: The UA Port Covington Holdings Parcels (Undeveloped Parcels) consists of
about 40.39 acres of land area (31.6 acres of fast land), which are part of the proposed Under Armour (UA) global
headquarters campus site. The site was a former rail yard that was redeveloped as a power center anchored by
Walmart and Sam’s Club in 2002. Sam’s Club vacated the property in 2008 for a new location in Glen Burnie, and
Walmart vacated in 2016. Under Armour acquired the 67 acre site (58.2 acres +/- of fast land) in 2014 to be utilized
as their global headquarters. At the time of the acquisition, Under Armour was a fast growing sports apparel
company that had nearly reached its capacity at their existing headquarters known as Tide Point located in the
nearby community of Locust Point in South Baltimore. After acquiring the site, Under Armour converted the former
Sam’s Club and Walmart stores for office and research and development space as interim uses pending future
development of its global headquarters. For analysis purposes, these buildings are listed as Redevelopment
Parcels and Developed Parcels as will be discussed later this report.
The Port Covington Development District includes the Under Armour global headquarters site proposed for about
3.9 million square feet of development. Under Armour submitted plans for its Port Covington global headquarters
to Baltimore City planners in 2016, which included 2,928,500 gross square feet of office space, 529,000 square
feet of amenity space, 100,000 square feet of manufacturing space, 331,875 square feet of service space and a
5,000-space parking garage. The proposed office space included three “tall and slender” office towers with a height
up to 450 feet each. The proposed amenity space included two large recreational facilities, including an athletic
field house with indoor practice facilities, located adjacent to a manmade lake, and a 5,000-seat outdoor stadium
at the southern tip of the property, with a capacity to grow to 12,000 seats (see renderings presented on the following
page.
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The proposed Under Armour Global Headquarters site benefits from superior waterfront views, as well as a greater
zoning classification (PC-4) as compared to other areas of the Port Covington Development District, which allows
for greater flexibility and project density. The Zoning classification and approved Planned Unit Development (PUD)
ordinance does specify density limits, but provides a master plan and conceptual density. Under Armour submitted
plans for Phase 1 of the project in 2016, which included a 1,500-space parking garage, with capacity to expand to
5,000 spaces in the future, and a 506,000 square foot office tower referred to as the Headquarters Building. The
project had been approved by Baltimore City’s Urban Design and Architectural Advisory Panel, but had not been
approved by Planning Commission at the time the project was put on hold.
The proposed Under Armour global headquarters project has been on hold as Under Armour’s growth and space
requirements have slowed, and the company has undergone reorganization. In addition, the recent COVID-19
global pandemic has negatively impacted Under Armour, as it has the entire retail industry, as will be discussed.
Under Armour has not indicated a timetable for the proposed headquarters development. Based on our analysis,
we have assumed the project will remain on hold in the near-term, and not begin until after Chapter 1B is completed
and stabilized. We have valued the Undeveloped Parcels within the proposed Under Armour’s global headquarters
campus assuming prospective future development of the site as a corporate office campus over the next 20 years.
Under Armour reported that the proposed development would support up to 10,000 employees at full buildout
should the project come to fruition, which would be a primary demand generator for apartments and retail uses
within the adjacent Port Covington Development. Based on review of the Under Armour Master Plan and
discussions market participants, we have assumed the subject’s Undeveloped Parcels could accommodate up to
2,000,000 gross square feet of office space and supporting parking, with additional office and other proposed uses
improved on the remaining parcels. In addition, a parcel located at the northeastern section of the site (STV Map
26G) is proposed for development of two small 8,000 square foot retail buildings fronting East Cromwell Street
(E10A-E10B) as reflected on the Port Covington Master Development Plan, which we included in the analysis.
The Sagamore Spirit Distillery, located at 301 East Cromwell Street, is the first new building in
the Port Covington development. The developer broke ground on the 22,000 square foot
distillery building in 2015 on a five acre site fronting the Patapsco River waterfront. The facility
opened in April 2017 and offers public tours and two tasting rooms. The distillery has capacity
to produce up to 1.5 million bottles per year. The facility is expected to draw 100,000 visitors a year for tours. The
following pictures includes an overhead rendering of the facility and an up close picture of the completed tasting
room and welcome building.
Adjacent to the distillery is a 13,800 square foot restaurant known as Rye Street Tavern, which opened in
September 2017.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY LOCAL AREA ANALYSIS
The Baltimore Sun occupies a ±402,000 square foot printing and distribution facility centrally located
within Port Covington located at 300 East Cromwell Street, directly adjacent to Chapter 1B of the
project. The building was completed in 1990 and is considered an interim use pending
redevelopment as part of the Port Covington development. The following aerial view shows The
Baltimore Sun Facility and a portion of the subject site currently under construction.
SUN
Chapter 1B
The former City of Baltimore Central Automotive Repair Garage located at 101 West
Dickman Street, at the northwest quadrant of South Hanover Street and Clarkson
Street, was acquired by Weller Development in 2013 and adapted for use as an
incubator for manufacturing, research and development for start-up companies. The
133,000 square foot building was originally built in 1965 and subsequently used as a vehicle repair shop until it was
vacated in 2009. The adaptive re-use of the building was completed in October 2015. The building referred to as
City Garage is now an innovation hub for entrepreneurs to develop new products. The building is equipped with a
20,000 square foot light-product manufacturing space referred to as The Foundry that provides the community
access to state-of-the-art industrial-grade tools, education and workforce development.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY LOCAL AREA ANALYSIS
Locust Point: The subject property is located just west of the Locust Point neighborhood, which is centered along
Key Highway in South Baltimore. Primary land uses within Locus Point include the North Locust Point Marine
Terminal (90 acres) and South Locust Point Marine Terminal (80 acres) that are owned and managed by the
Maryland Port Administration. Both marine terminals have been renovated and expanded over the past 15 years.
Locust Point is a densely developed urban community that is within the redevelopment phase of its life cycle, with
functionally obsolete facilities being redeveloped for alternative uses. Until the 1980s, major employers in the local
area were large manufacturing industries and port-related enterprises. In the 1980s, the composition of businesses
in the area began to change with the decline of manufacturing and agricultural industries in the region. Industrial
and manufacturing facilities closed and properties became available for purchase. Industrial closures in local area
since 1980 include the former Coca-Cola facility, the Fort McHenry Shipyard, a Bethlehem Steel plant, the
Chesapeake Paperboard recycling facility, the Procter & Gamble detergent plant, Southern States Agricultural
Cooperative facility, Carr-Lowrey glass factory and Archer Daniel Midland pier and grain elevator. A few industrial
facilities remain in the local area near the Locust Point Marine Terminals and waterfront including Domino Sugar,
West Terminal Company and C. Steinweg, Inc. Additional light-manufacturing and distribution facilities remaining
in Locust Point include Maryland Nautical Sales, Davis Shipping Services and Pfefferkorn’s Coffee.
Tide Point: The Under Armour Headquarters is currently located at Tide Point. Tide Point is the former Proctor &
Gamble soap factory converted into a mixed-use complex in 2001 by Struever Bros. Eccles & Rouse. The developer
spent about $53 million on renovation and adaptive reuse of the factory, which was converted into an office, retail
and residential complex. The original P & G site contained five buildings with about 391,000 square feet. The
development includes a corporate campus, a waterfront promenade, a restaurant and +/- 1,000 parking spaces. In
2011, Under Armour acquired the complex for about $60.5 million for use as their corporate headquarters. The
owner-user subsequently received approval from Baltimore City as part of a PUD to expand the facility by 400,000
square feet including adding a retail store, additional office space, athletic fields and a parking garage. Under
Armour currently employs about 1,500 people at their Tide Point headquarters, many of which are young
professionals and demand generators for apartments within the local area. Under Armour is nearing capacity at
this site and has proposed a new campus within Port Covington as discussed.
McHenry Row: McHenry Row is a mixed-use project that was the former site of the Chesapeake Paperboard
recycling facility and is one of the largest development projects in the Locus Point area. The original project contains
two six-story apartment buildings containing 250 market rate units, an office building and street-level retail space,
a freestanding Harris Teeter grocery store and two parking garages. The apartment buildings opened in October
2011. More recently, the project expanded to the adjacent former Phillips Food processing facility, which was
partially adapted for re-use as a two-building office complex containing 216,000 square feet +/-. The warehouse
section of the former seafood processing facility was demolished and developed with a 600-space, 4-level parking
garage and the subject’s 223-unit apartment building known as Porter Street Apartments, which delivered in
September 2017 and achieved stabilization in February 2019. In addition, a 76,612 square foot office building and
126-key Courtyard by Marriott were recently completed.
Additional information regarding the highlighted Porter Street Apartments (Phase 2 Apartments is presented in the
Market Analysis section of this report).
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY LOCAL AREA ANALYSIS
Westport Waterfront: About ±50 acres of contiguous land area fronting the western shore of the Middle Branch
Basin had been proposed to be developed as a $1.2 billion mixed-use commercial and residential development by
Turner Development Group. The project was proposed to contain ±2.0 million square feet of office space, 500 hotel
rooms, 300,000 square feet of retail space, 2,000 residential units (townhouse and apartment units) and 10,000
parking spaces. The project also benefits from its location adjacent to a Light-Rail Station. The developer assembled
the parcels and razed the former Carr-Lowrey glass factory and BGE facility. The property was sold at foreclosure,
and was purchased by Westport Property Investments, a special purpose entity held by Sagamore Development
Holdings.
Silo Point: Local developer Henrietta Development Corp. (Turner Development) redeveloped this former 15-acre
Archer Daniels Midland Company grain terminal facility located in the Locust Point for mixed use. Construction
started in November 2004 for development of 121 townhouses and 228 condominium units. The site is also
approved for 130,000 square feet of office space and 50,000 square feet of retail space. Pulte Homes developed
the townhouses with an initial base price of $450,000 per unit. The site may also be improved with recreational
facilities. The condominium tower opened in mid-2008 and was completed in 2009.
Anthem House/ Anthem House II: Anthem House is a 292-unit apartment complex located at 900 E. Fort Avenue,
at the northwest quadrant of Key Highway and E. Fort Avenue. This $80 million complex was completed in January
2017. A $10 million expansion of this project with 54 units known as Anthem House II was completed in 2018.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY LOCAL AREA ANALYSIS
Fort McHenry: A notable land use within South Baltimore is the historic Fort McHenry, which is located at the eastern
terminus of Locust Point and draws about 700,000 tourists per year.
Federal Hill/ Riverside/ South Baltimore: These neighborhoods are located just north of the subject. Federal Hill
is densely developed with a mix of historic rowhouses, garden-style apartments and condominium buildings.
Federal Hill’s commercial district is primarily improved along Light Street, which includes a mix of street-level retail
stores, office, restaurants and other related uses. Pubs, restaurants, galleries, antique shops, salons and boutiques
line the streets of Federal Hill. Centrally located within the neighborhood is Cross Street Market, a 19th century
marketplace that still serves the neighborhood as a commercial and social hub. There are also many recreational
and public facilities improved within the immediate neighborhood. Federal Hill Park is a picturesque public park
overlooking the Baltimore Harbor and skyline. Having been used as a key “look-out” destination during the Civil
War, Federal Hill Park maintains a large U.S. flag, cannons and a monument honoring its history. Other attractions
include the American Visionary Arts Museum located along Key Highway, which is a national museum and
education center showcasing original works of art. A majority of the existing housing stock has undergone
renovation or redevelopment over the past 20 years. The most recent development has been improved along the
Key Highway Corridor fronting the Inner Harbor. A few notable developments within Federal Hill are as follows:
Ritz-Carlton Residences: The Ritz-Carlton Residences condominium development located along Key Highway is a
prominent development within area. This former Bethlehem Steel Propeller Yard has been developed with a six-
building, 191-unit condominium project. Pricing for the project set the top of the market for luxury condominiums in
Baltimore City when it opened in 2008. The project includes a spa and salon, marina and restaurant space.
HarborView: The HarborView project includes 20 acres located along Key Highway fronting the Inner Harbor
waterfront. HarborView currently includes of a 249-unit, 22-story luxury condominium tower; Pierside at
HarborView, a 5-story, 164-unit condominium building; Pier Homes at HarborView, an $87 million development
containing 88 luxury townhouses; The Townes at HarborView- a $50 million project including 77 luxury townhouses,
a 288-slip marina and yacht club, a health club and 1,000-space underground garage. The project includes a $15
million, 17-story condominium development located above a parking garage containing 47-units. Three vacant
parcels along the southern end of the site are in the planning phases for future condominium or apartment
development of up to 700 units.
Bainbridge Federal Hill: This apartment project is located at 1100 Key Highway, which contains 224 units, including
townhouses, plus seven stories of apartments and three levels of underground parking. The $66.5 million project
broke ground in January 2018 and was completed in September 2019. The project includes 112 studio units
averaging 570 square feet and 112 two-bedroom units averaging 1,041 square feet.
Stadium Square: Located just west of M&T Bank Stadium along Ostend Street in South Baltimore a $250 million
mixed-use redevelopment project that known as Stadium Square. The project will include a 650-unit mid-rise
apartment complex, 300,000 square feet of Class A office space, 70,000 square feet of street-level retail space and
a parking garage for 2,000 cars upon completion. Phase I of the development includes Hanover Cross Street, which
is a 299-unit apartment complex with 13,000 square feet of retail space and 480 space parking garage. The project
was completed in September 2017. The project includes a 6-story, 75,000 square foot office building at 145 W.
Ostend Street, which was completed in 2017. The building is about 50 percent leased. An adjacent lot is proposed
for an 180,000 square foot office building with ground floor retail.
Wheelhouse: A 5-story co-living apartment facility known as the Wheelhouse was completed in April 2019 by 28
Walker Development. The project is located at the southwest corner of S. Charles Street and Cross Street, directly
across from The Cross Street Market. The project includes three street-level retail spaces and 39 apartment units
with 90 beds. The project is operated as a co-living and short-term rental apartment facility.
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The urban core of Baltimore City, including the City Center District, the Inner Harbor, Harbor East and Harbor Point,
are located about 1.5 miles north of the subject. Baltimore’s downtown area has undergone continuous renewal
efforts since the early 1960s mainly in four phases, which are briefly discussed as follows:
Charles Center: The first major urban renewal project was the Charles Center development, a 33-acre unified
complex of new buildings connected by a pedestrian plaza and walkways lined with a variety of specialty shops.
The Charles Center development is bounded by Saratoga Street to the north, Charles Street to the east, Lombard
Street to the south, and Hopkins Place and Liberty Street to the west. The project includes ±2.0 million square feet
of office space, 430,000 square feet of retail and related services, 650 apartment units, 700 hotel rooms, a 1,600-
seat theater, and 4,000 parking spaces. The former Mechanic Theatre is located within the original Charles Center
complex at One West Baltimore Street. The site is proposed for mixed-use development by developer David S.
Brown Enterprises, LTD. The proposed development includes a two apartment towers containing 404 apartment
units, 188,075 square feet of retail space and a four-level parking garage containing 456 spaces. The project has
been delayed since 2014 due in part due to litigation from the owner of the DownUnder Garage resulting from the
demolition of Mechanic Theatre, which included demolition of an access ramp providing access to the garage from
South Charles Street. The former theatre has since been cleared and a new driveway ramp was installed reopening
the DownUnder Garage’s ingress access from South Charles Street. This project remains on hold.
Inner Harbor: The second phase of Baltimore City’s urban renewal involved the development of ±250 acres that
surround the Inner Harbor basin. Redevelopment of the Inner Harbor began in earnest in the early 1980s, following
the opening of Harborplace, a festival style market with restaurants, fast food vendors, and arts, crafts and
boutiques. Concurrent with the development of Harborplace was the construction of the Maryland Science Center
and the National Aquarium. Several national retail chains subsequently opened along the Inner Harbor waterfront,
as well as additional tourist attractions including the Port Discovery Children’s Museum and Power Plant Live. Each
project has spurred increased tourism and visitors to Baltimore, and subsequent employment, retail sales and hotel
occupancies. Baltimore City’s urban renewal has accelerated since the opening of Harborplace in 1980, and is now
considered a major travel destination welcoming over 11 million business and leisure visitors each year. New
development has continued south along the Inner Harbor Basin and the Key Highway Corridor to the communities
of Federal Hill and Locust Point. Additionally, two sports stadiums were constructed in the 1990s, Oriole Park at
Camden Yards and Ravens NFL Football M&T Bank Stadium, which have helped to revitalize the western edge of
the Inner Harbor area. New development along the Inner Harbor has more recently continued east with the
developments of Harbor East and Harbor Point, and the adjacent historic communities of Fells Point and Canton.
Harbor East: The Harbor East project was the third major development project in downtown Baltimore. Harbor east
is a 70-acre, $1.67 billion master-planned mixed-use waterfront project located along the east side of the Inner
Harbor. The site was acquired in the mid-1980s by John Paterakis of H & S Bakery Company that was located
adjacent the site on Central Avenue. This mixed-use project encompasses eight city blocks and has been approved
for 3.0 million square feet of development. The 12-building project features 50 shops, five hotels, 10 restaurants,
428 apartments, five office buildings, 3,300 parking spaces, an 18-screen movie complex, a supermarket, a public
promenade along the waterfront and a 200-boatslip marina. The project includes the Marriott Waterfront Hotel, a
$132 million, 31-story, 750-room hotel was also completed in Harbor East in 2001. The project was the first major
hotel completed in more than a decade in Baltimore City. In 2005, a high-rise luxury apartment/condominium
complex know as Spinnaker Bay was completed, which contains 315 units. The Harbor East project was more
recently improved with a 24-story office tower anchored by Legg Mason in 2009 and the adjacent 256-room Four
Seasons high-rise hotel in 2011. The success of Harbor East promoted additional development of sites located
proximate to the project including an 8-story Hyatt Place hotel that opened in 2015 at 511 S. Central Avenue.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY LOCAL AREA ANALYSIS
Liberty Harbor East is a $170 million mixed-use development located at the southeast corner of South Central
Avenue and Aliceanna Street in Harbor East. This project was completed in August 2019 and includes 282
apartment units including 35 condominium units and a 70,000-square foot Whole Foods store. Directly north of this
project, H&S Properties is planning to replace its existing one-story H&S Bakery distribution center located at 601
S. Eden Street with a mid-rise office and retail complex that could include a large home goods store. Two other
notable development projects underway in Harbor East include Avalon Harbor East and 900 Fleet Street. Monument
Realty has proposed developing the adjacent site in the 900 block of Fleet Street, which is currently improved with
a Verizon switching station, with a 400-unit apartment tower. Avalon Harbor East is located at the southeast corner
of Eastern Avenue and President Street at 801 Eastern Avenue. The former home of the Della Notte restaurant is
being developed with a 16-story project that will contain 380 apartment units and 10,000 square feet of retail space.
The project is scheduled for delivery in August 2020.
Harbor Point: Harbor Point is located along the waterfront between Harbor East and Fells Point, which was the
fourth major downtown renewal project. This 27-acre site was the former AlliedSignal Baltimore Chromium Works,
a processing plant that has since been razed. The site is planned for development of office buildings, a hotel, retail
space, residential and an 9.5-acre waterfront park and promenade. A new bridge was completed in July 2018
connecting Central Avenue to the project over an Inner Harbor canal, which links Harbor Point to the adjacent
Harbor East. The $750 million Harbor Point project is being developed by Beatty Development. The approved
Harbor Point PUD allows for development of up to 3,020,000 square feet of floor area, including 1,650,502 square
feet of office space, 913,650 square feet of residential space (914 units), and 183,847 square feet of retail space
and 272,000 square feet of hotel space. Phase 1 of the development included an 8-story, 277,035 square foot office
building completed in 2010. The second building is the 21-story Exelon Tower at Harbor Point. The Exelon
Corporation, the Chicago-based energy giant, relocated its Baltimore regional headquarters and 1,500 workers to
Harbor Point and leased 443,820 square feet of the 560,134 square foot mixed-use tower. The Exelon Tower was
completed in 2016. The building also includes 38,497 square feet of retail space and 103 apartment units totaling
77,817 square feet. The third building completed the project is referred to as 1405 Point, which is a 17-story
apartment building that contains 289 apartment units, 17,717 square feet of street-level retail space. A portion of
the project opened for tenant occupancy on March 18, 2018 and was subsequently completed in June 2018.
The fourth building is currently under construction known as Wills Wharf, which is a $117 million, 330,000 square
foot mixed-use project with completion scheduled for July 2020. The project will include a 234,000 square foot office
building and a 156-key hotel operated by Canopy by Hilton. Office tenant WeWork has leased for two floors
containing about 60,000 square feet within the 12-story building that will accommodate 1,100 workers. London-
based marketing agency Jellyfish will take another floor totaling 34,500 square feet.
The rendering on the following page reflects existing and planned phasing of the remaining project components to
be built within Harbor Point, which will include additional office and apartment buildings with ground level retail
space, as well as a hotel. Publicly supported TIF improvements in this final phase will include completion of the
waterfront promenade, the planned transit pier and park space including West Park, Waterfront Park and Point
Park.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY LOCAL AREA ANALYSIS
City Center/CBD: The City Center district is considered the central business district (CBD) of Baltimore City. The
CBD is improved with multi-story office buildings, parking garages, hotels, and other commercial oriented uses.
Baltimore’s CBD is located along the northern edge of the Inner Harbor waterfront district. Baltimore’s CBD contains
over twelve million square feet of competitive, multi-tenanted office space of divergent ages and building classes.
The most recent major development in the City Center district is One Light Street. This 28-story, $210 million mixed-
use tower includes nine levels office space totaling about 236,000 square feet, street-level retail space, 280
apartment units and a 646-space parking garage improved on two lower levels and eight parking levels above
grade. The project was completed during the second quarter of 2019. The project was spurred by tenant M&T Bank,
which pre-leased 155,106 square feet of office space (six floors), in addition to a 2,500-square foot +/- retail space
on the ground floor for a retail branch bank. This was the first major mixed-use commercial development project
inclusive of an office component within CBD since the 750 E. Pratt Street project was completed in 2002. Primary
office generators within the CBD market include the Fallon Federal Office Building and the Federal Courthouse,
and the Baltimore City Courthouse and Baltimore City Hall. These government facilities have attracted law firms,
federal and local government agencies and government contractors to lease office space within the CBD market.
The CBD is also home to financial service firms, regional bank headquarters and professional service firms.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY LOCAL AREA ANALYSIS
Pratt Street Corridor: The Pratt Street Corridor is the primary west-east thoroughfare that fronts the north side of
the Inner Harbor. Office buildings and hotels are improved along this thoroughfare. Office space and hotel rooms
along the Pratt Street Corridor with visibility of the Inner Harbor generate higher rental rates. Baltimore City planners
have promoted improvement of the Pratt Street Corridor with additional street-level retail space. The most recent
retail expansion along the Pratt Street Corridor was the expansion of +/- 21,000 square feet fronting the 400 E.
Pratt Street office building, which is occupied by a CVS store, branch bank and restaurant space.
Convention Center: The Baltimore City convention center is located along West Pratt Street, proximate to the
Camden Yard stadium complex. A 20-story, 756-room convention headquarters hotel operated by Hilton was
completed in 2008 and is connected to the Baltimore Convention Center via a skywalk. The convention center was
expanded with the development of the hotel with 62,000 square feet of new space and a 550-space public parking
facility. Events held at the convention center are a demand generator for hotels, retail space and parking facilities
in the market.
Baltimore Arena: The Royal Farms Arena (formerly 1st Mariner Arena) is located in the Westside District. The arena
opened in 1962 as the Baltimore Civic Center. It became the Baltimore Arena in 1986, then the 1st Mariner Arena
in 2003. The arena holds a variety of events such as concerts, sports events and shows, with a capacity of about
14,000 seats. The Baltimore Development Corporation has proposed redevelopment of the Arena site for
alternative use and relocating the Arena; however, redevelopment is not anticipated in the foreseeable future. This
facility is a primary demand generator for special events parking within the immediate market.
Commercial/ Retail: The City Center district houses a variety of retail tenants including restaurants, bars, branch
banks, specialty food and clothing shops, and convenience stores geared toward downtown employees. Tourist-
related retail tenants are located within Harborplace and other facilities along the Inner Harbor. Retail tenants are
located at street level within office buildings and hotels along primary roadways in the City Center district including
Pratt Street and Lombard Street and within the Power Plant Live! complex. Other street level retail/office tenants
located within the City Center district include architects, engineers, graphic designers and other professional
services.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY LOCAL AREA ANALYSIS
Institutional Facilities: There are five educational facilities within the local area with more than 35,000 students and
employees including Johns Hopkins University in located in northern Baltimore City, the University of Maryland,
Baltimore located along the western fringe of the CBD, and the University of Baltimore in Midtown. The University
of Baltimore located within the Mount Vernon district just north the City Center district has an enrollment of 6,138
students with ±900 employees. The UB enrollment includes 3,207 undergraduate students, 1,899 graduate
students and 1,042 law students. College students are a primary demand generator for apartment housing and
retail customers in the immediate market.
Baltimore City is also improved with several medical facilities including Johns Hopkins Hospital Bayview Campus
located about one mile northeast downtown Baltimore. This well-known teaching hospital has 426 beds and 45
neonatal beds, and is a primary demand generator of medical office users and apartment housing for its employees,
including over 700 attending physicians. Other notable medical facilities in the Baltimore City includes the Mercy
Medical Center, which is a 196-bed hospital located at 345 St. Paul Place within the City Center District. The Mercy
Medical Center completed a $400 million expansion in 2010, which included an 18-story, 688,000 square foot
hospital facility located in the 300 block of St. Paul Place, adjacent to Mercy’s current campus. The University of
Maryland Medical Center (UMMC) is located in the Westside District in Downtown Baltimore, which is a primary
employer and demand generator of medical and healthcare-related office tenants, as well as apartments by medical
staff. The University of Maryland at Baltimore (UMB) college campus is located along the western periphery of the
Downtown- Westside district. The UMB campus has expanded west of Martin Luther King Jr. Boulevard with the
on-going development of the planned ten-acre UMB BioPark. This life-sciences development project is in the 800
to 1000 block of W. Baltimore Street. This large development project encompasses 12 lab/office buildings totaling
1.8 million square feet. The City Center district also houses the Baltimore City Hall/Courthouse complex. Each of
these institutional facilities provides a stable employment base and are significant demand generators for office
space and apartments by employees and professional service tenants and workers of law firms and title companies.
Port of Baltimore: The local area is heavily influenced by its location adjacent to the Port of Baltimore along the
Patapsco River. The Port of Baltimore stretches over 45 miles of developed waterfront and reaches a channel depth
of 50 feet. With its six million square feet of warehouse and five million square feet of cold storage, the port serves
2,200 vessels yearly. These extensive facilities can accommodate general, container, bulk and break-bulk cargoes,
making it the second busiest containerized cargo port in the Mid-Atlantic and Gulf coast regions. The port generates
$1.4 billion annually and employs 126,700 people. The Port of Baltimore benefits from its central location, as the
closest Atlantic port to the American Midwest and closest in proximity to two-thirds of the U.S. population with an
overnight drive. The port also offers excellent accessibility via interstate highways and direct rail access. The
Maryland Port Administration (MPA) owns and operates a majority of the primary marine terminals within the Port
of Baltimore. The MPA’s marine terminal port facilities have expanded over the past fifty years to include five primary
container and commodities marine terminals, an auto terminal and recreational cruise ship facilities at Locust Point.
The MPA also owns individual ship terminal facilities, which are leased for commercial and government ship
berthing. MPA’s two largest marine terminals include the Dundalk Marine Terminal (570 acres) and the Seagirt
Marine Terminal (275 acres). The Port of Baltimore is a major, well-established marine port that successfully
competes with other major marine ports along the East Coast. The Port of Baltimore is able to compete with these
ports in offering the range of destinations and frequency of ship calls that most import/export companies of general
cargo and commodities demand. The Maryland Port Authority has indicated a desire to expand their real estate
holdings along the Port of Baltimore due to the continued growth of the port; however, there is limited available land
for future prospective development of similar marine terminal facilities.
The exhibit on the following page reflects the Port of Baltimore marine terminals including both privately-owned and
publicly-owned (MPA) facilities, which are located proximate to the subject property.
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY LOCAL AREA ANALYSIS
SUBJECT
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PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY LOCAL AREA ANALYSIS
Access
Regional Access: The local area is easily accessible from regional markets by major thoroughfares including
Interstate 95, which has interchanges with Hanover Street (Maryland Route 2), and Key
Highway just north of the subject. Both Hanover Street and Key Highway are primary
gateways from Interstate 95 to the South Baltimore area. Access to I-95 is located directly
north of the subject via interchanges with S. Hanover Street and Key Highway.
Local Area Access: South Hanover Street is the primary north-south roadway connecting the immediate area to
downtown Baltimore City approximately one-mile north of the subject site. Key Highway is
the primary thoroughfare providing linkage from Port Covington to downtown Baltimore. Key
Highway runs along the west side of the Inner Harbor providing direct access from Locust
Point and Federal Hill to downtown Baltimore and I-95 to the south. Key Highway is also the
last northbound interchange of I-95 before the Fort McHenry Tunnel. Direct access to the
subject site is provided by curb cuts along multiple secondary roadways including West
Dickman Street, Clarkson Street and Cromwell Street. New public roadways will be improved
throughout the Port Covington development upon completion, providing direct roadway
linkage to each of the subject’s parcels.
Public Transportation: The Metro Transit Authority (MTA) buses provide public transportation throughout the local
area. The MTA’s Light Rail system has a stop at Camden Yards is located about 1.5 miles
northwest of the subject, which also provides connections to the Marc Train service for
regional commuters. The Marc Train provides area commuters a 35-minute commute to
Downtown Washington, D.C. This Light Rail station also provides direct access to the
Thurgood Marshall BWI Airport located about seven miles south of the neighborhood. CSX
rail lines also provide access Locust Point marine terminals. The Light Rail line is proposed
to be extended into the Port Covington Project from the existing railway currently improved
just west of the Project in Westport.
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Market Study
The Port Covington Development District is proposed for mixed-use development that includes apartment, including
short-term/ extended stay apartments, office, retail, hotel and garage components. In this section, we provide a
market overview and analysis of each proposed project component. An overview of national, regional and local
market data is presented for each project component. In addition, we include a demographic analysis of the
subject’s trade area at the end of this section. Additional market data is presented in the Addenda, including recent
Cushman & Wakefield Research reports on the short-term apartment rental market and Opportunity Zones.
The expansion of jobs and wages, as well as the availability of comparably cheap mortgages and increases in
residential construction, have led to a growing number of home purchases and all-time high home prices. New U.S.
single-family home sales in March 2020, at a seasonally adjusted annual rate of 627,000, dropped 9.5% year-over-
year, according to the Department of Housing and Urban Development. As of January 2020, prices as measured
by the S&P/Case-Shiller National Home Price Index climbed 3.9% year-over-year. The expansion of employment
and wages, mixed with the price growth in the housing market and lower residential sales, will offer an opportunity
for growth in the apartment sector over the near term.
According to the Census Bureau for Housing Data, more households are headed by renters than at any other point
since 1965. House prices continue to climb forcing individuals and families, especially young adults, into the
apartment market. In February 2020, 84% of those surveyed by Freddie Mac say renting is more affordable than
homeownership, up 17 percentage points from February 2018. With mortgage rates near historic lows, both renters
and homeowners are interested in taking advantage of low rates in the next several months. In fact, 40% of renters
plan to purchase a home given current interest rates. The biggest concern for the industry is supply, as completions
have outpaced demand in each of the past five years and the industry is expected to see more supply over
absorption through the five years to 2024, according to estimates from Reis, Inc. Despite this worry, favorable
demographic trends and an improving economy continues to largely benefit the rental sector. Strong demand for
the apartment market will maintain its recent gains for the foreseeable future and the apartment sector still remains
as the most heavily transacted sector in the U.S. Even still, apartment property prices are rising and outpacing all
other property types in terms of price growth during the year.
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In fourth quarter 2019, 23,49 units were absorbed, behind the 56,272 units that were completed during the previous
quarter. During 2019, overall net absorption was 22.9% below absorption in 2018, according to data from Reis, Inc.
Reis, Inc. forecasts positive net absorption will further in 2020 to approximately 259,218 units. Net absorption is
then projected to observe a general slowdown through 2024. The five-year average from 2015 through 2019 saw
approximately 204,615 units being absorbed annually, while the five-year annual absorption average from 2020
through 2024 is projected at 138,330 units per year.
At the end of 2019, the market’s average asking rents, at $1,498 per unit, have continued to climb. Going forward,
Reis, Inc. anticipates that the apartments market’s vacancy rate will climb over the next five years, due to high
levels of supply. Despite this, Reis, Inc. projects that the average asking rent will reach to $1,746 per unit by the
end of 2024, representing an increase of 16.6% from 2019.
The following graph displays historical and projected vacancy and asking rent between 2009 and 2024:
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The PwC Real Estate Investor Survey and NCREIF data demonstrates how capitalization rates (OAR) soar during
an economic downturn. The risk associated with apartment buildings in 2009 pushed the OAR to 8%, according to
PwC. OAR has dropped as the economy has stabilized, at the end of second quarter 2019, the average
capitalization rate dropped slightly from a year ago to 5.1%. Roughly 60% of the surveyed investors noted that
current market conditions do not specifically favor buyers or sellers. However, given the historically low average
capitalization rates, the other 40% of those surveyed claimed it remained a seller’s market.
At the end of first quarter 2020, the PwC Investor Survey reported the average capitalization rate for apartment
properties, at 5.1%, dropped one basis point above the average cap rate recorded in the previous quarter, after
falling 11 basis points from first quarter 2019. According to NCREIF, the overall capitalization rate, at 4.3% in fourth
quarter 2019, remaining at the same level as the previous quarter and the year prior. Despite displaying distinct
rates, similar trends are usually evident in both the PwC Real Estate Investor Survey and NCREIF data. Even with
the difference in the quarterly data, both surveys suggest that capitalization rates are well below what they were
nine years ago. This emphasizes investors’ positive sentiment toward the apartment market.
The following graph reflects historical trends for national apartment market OARs, per PwC:
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The following graph reflects national historical cap rate trends as reported by NCREIF:
Sales Volume
Through April 2020 sales volume in the apartment sector totaled $43.3 billion, falling 15% in a year-over-year sales
comparison. According to Real Capital Analytics, investors’ appetite for garden style communities has started to
drag recently. Garden-style apartment communities transactions are down 13% in a year-over-year comparison,
while mid/high-rise apartment deals are down 18% during the same period.
Total apartment sales volume returned to prerecession levels in 2013 and grew through 2016, when sales volume
set a new high. In 2017, sales volume for the national apartment market declined on an annual basis for the first
time since the economic expansion began. A total of roughly 8,000 properties transferred for $153.9 billion,
representing a 3.5% drop on an annual basis. Investors were mindful of the recent interest rate increases and aware
that further potential hikes were on the horizon.
During April 2020, apartment volume fell 71% in a year-over-year comparison as COVID-19’s impact on travel has
hurt the apartment sector. Deal volume for the month totaled $3.5 billion and deal volume is falling faster in the
apartment sector than any other property type. Prices in the apartment sector have risen by 10.8% and the non-
major metros have outperformed the major metros for the year.
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The following graph reflects national apartment historical sales volume for both garden and mid/high-rise properties
from 2009 through April 2020, as surveyed by RCA:
Through April 2020, the price per unit for garden properties was $141,658 and the mid/high-rise price per unit, at a
weighted average of $291,333 per unit during the same time period. At the end of April 220, the average price per
unit for all apartments, at $173,940. The average price per unit in the six major metro markets sits at $304,328 per
unit while the non-major metro markets average price per unit comes in at $146,077per unit.
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The following graph reflects the national apartment’s weighted historical averages for price per unit as surveyed by
RCA:
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The following graph displays the Commercial Property Price Index from 2010 through April 2020:
The CPPI value for apartment properties in major markets reached its previous cyclical peak, at 112.5, in December
of 2007, and only declined 19.5% to its trough of 90.6 in December 2009. Since then, the CPPI value for major
market apartment buildings has not only recovered, but significantly surpassed the value lost during the economic
recession. As of first quarter 2020, the CPPI value for apartment buildings in major markets reached 198.2
representing a 76.2% increase over its previous cyclical peak.
The CPPI value for non-major apartment complexes reached its peak of 103.2 in June 2007, only to decline 37.9%
to a trough of 64.1 in early 2010. Naturally, price appreciation started off slow in non-major markets as investors
focused on the aforementioned gateway markets. However, apartment properties in non-major markets have
surpassed their previous high value by 80.8%, with an index value at 186.6 as of first quarter 2020.
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The following graph displays the Commercial Property Price Index for major and non-major markets over the last
decade:
COVID-19:
The reader should note the forthcoming market information heavily relies on the most recent available published
data sources. As the crisis began in the last month of the first quarter, the data may not be entirely representative
of the current market conditions, nor may it take into account various potential market impacts with regards to the
COVID-19 global pandemic. The analysis component focusing on historical data is important to illustrate the market
trends that were occurring up to the point of disruption. We will include more detailed trends and analyses of the
COVID-19 impacts as they become available. In the meantime, here are a few important points to consider:
The current COVID-19 pandemic has resulted in shutdowns of non-essential business, and as a result many
other businesses have been significantly disrupted. This has resulted in a sharp and drastic unemployment
spike that is expected to negatively impact most businesses in the near term.
The global pandemic has affected the national apartment market and landlords and renters are wondering
where the rent will be coming from over the next several months. Through April 19, 89% of rental households
paid either full or partial rental payments, according to the National Multifamily Housing Council (NMHC).
Renters were creative to pay rent in April while several landlords offered deferments and payment plans to
ease the stress of future rental payments. The NMHC believes that rent collection rates could drop in response
to the shutdown of the U.S. economy.
The Federal Housing Finance Agency moved to protect multifamily owners and tenants in response to the novel
coronavirus. Apartment landlords with government-backed mortgages can avoid foreclosure if they don’t evict
tenants, and the order applies to Fannie Mae and Freddie Mac mortgage companies, which will extend
mortgage forbearance to any landlord negatively affected by the coronavirus national emergency. Several
states and local governments have put temporary eviction moratoriums in place during the pandemic.
The United States’ coronavirus multifamily loan forbearance programs has seen the number of borrowers
looking for support continue to increase. Through April 30, 30 loans sponsored by Fannie Mae were in
forbearance and Freddie Mac had 327 loans in forbearance, totaling more than $2 billion.
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The commercial real estate sector is not the stock market. It’s slower moving and the leasing fundamentals
don’t swing wildly from day to day. If the virus has a sustained and material impact on the broader economy, it
will have feed through impacts on property as well.
The outbreak has also prompted a flight to quality, driving investors into the bond markets, where lower rates
are creating more attractive debt/refinance options.
Most market participants are forecasting a strong rebound in apartment markets in the second half of the year
assuming the COVID-19 pandemic is contained.
Further, household debt burdens continue to decline, effectively increasing after-tax income. This will benefit the
apartment market as an increase in income and employment will allow more people to “uncouple,” or live
independently. This, tied with the continued shift of the millennial generation’s preference for living in a walkable,
urban area as well as other groups seeking convenience or see rent as their only financial option, will continue to
drive the demand for apartments, especially in urban areas.
Following are notes regarding the outlook for the U.S. national apartment market:
Construction levels poses localized risk in several markets that have ramped up development. The number of
new developments breaking ground and coming to market will increase in the next year and likely surpass the
rate at which units can be absorbed, particularly in metros with a high concentration of new, expensive infill
product.
Home ownership levels are at lows only matched in the 1960s and it is anticipated that will be the case for the
foreseeable future. Concerns could arise if the millennial generation start to trend toward houses in the suburbs
rather than walkable urban areas. It is worth noting that this generation grew up in the middle of the housing
bust which may have affected a general view of home ownership.
Mortgage rates have hit historic lows and it is worth noting that renters and homeowners could take advantage
of the low rates over the next several months. 40% of renters plan to purchase a home given current interest
rates, according to Freddie Mac.
With the shutdowns of non-essential businesses, construction has slowed across the United States and in some
metro areas construction has come to a full stop. Expect apartment deliveries to be pushed back until
construction can resume. At this time it is too difficult to speculate how long the delays will last.
Major cities in the United States plan to utilize rent controls in order to combat the problem of affordable housing
in 2020. Rent controls have been established in New York, California and Oregon already and other major
markets are pondering the idea to ease rising rental costs. The National Apartment Association believes that
the solution should not be rent controls as they have devastating effects on the current stock available.
The overall capitalization rates have remained steady over the last five years and the market has experienced
a positive response to the recent interest rate hikes. Accordingly, investors’ appetite for value-add opportunities
and properties in secondary and tertiary markets should escalate, as they continue to search for higher yields.
Overall, the national apartment market remains healthy, underscored by steady absorption and stabilized rent
growth. Oversupply could result in slower rent growth over the next five years; however, demand will continue
and rent is expected to increase 3.1% on an annual basis from 2020 through 2024, according to Reis, Inc. To
summarize, the apartment market should remain one of the top choices for investors.
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Subject
Submarket Snapshot
As of first quarter 2020 (most recent data available as of the effective date of this appraisal) the Baltimore Apartment
market contains 163,957 rental units in 663 buildings, located in ten submarkets. Pikesville/Randallstown/Owings
Mills is the largest submarket, with 16.0 percent of the region’s total inventory. Annapolis/Crofton is the smallest
submarket, comprising 4.1 percent of total inventory.
The following table presents the geographic distribution of inventory in the area, along with other statistical
information for the most recent quarter. The subject is located within the Central Baltimore City submarket as
highlighted.
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As of first quarter 2020, the overall vacancy rate for the region was 4.3 percent. The subject’s Central Baltimore
City has the highest vacancy rate of 11.1 percent, while Parkville/Carney/White Marsh has the lowest vacancy rate
of 1.5 percent. The subject’s Central Baltimore City submarket has a current vacancy rate of 11.1 percent.
The average quoted rental rate for all types of space within the region is $1,309 per month. Annapolis/Crofton has
the highest average rent of $1,758 per month. Conversely, the lowest rents are achieved in
Dundalk/Essex/Rosedale at $979 per month. The subject’s Central Baltimore City submarket has an average
asking rental rate of $1,541 per month. In addition, free rent concessions are prevalent within the market for recently
delivered projects and range from 0.2 to 0.9 months.
Supply Analysis
Apartment Vacancy Rates
The vacancy rate for the Baltimore region currently stands at 4.3 percent for first quarter 2020, which is up from
year-end 2019 when vacancy was 4.2 percent. Reis projects that vacancy rates will increase over the near term
from an average of 5.3 percent in 2020 to 5.7 percent in 2024.
The subject submarket is underperforming the market as a whole, with a current vacancy rate of 11.1 percent.
Vacancy rates are projected to decrease over the next few years from 11.2 percent in 2020 to 9.1 percent in 2024.
The vacancy rate within Baltimore City is reflective of recent deliveries of new projects, which are undergoing lease
up as will be discussed.
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The following table presents historical and projected vacancy for the region and subject submarket.
As shown, Class A properties within the region are experiencing higher vacancies than the market as a whole at
6.1 percent, and Class B/C properties are experiencing lower vacancies of 2.6 percent. Within the Central Baltimore
City submarket, Class A properties are experiencing higher vacancies than Class B/C properties.
The Baltimore Apartment market experienced an annual average of 12,196 units completed between 2015 and
2019 or an average of 2,439 units per year. Over the next five years, Reis projects that an additional 6,973 units
will be added to the Baltimore market. Between 2015 and 2019, the Central Baltimore City submarket experienced
new construction of 5,587 units, or an average of 1,117 units per year. This accounts for approximately 45.8 percent
of the region’s total completions. Over the next five years, Reis projects that an additional 1,562 units will be added
to the Baltimore submarket.
The following table presents historical and forecast inventory for the region and subject’s submarket.
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Demand Analysis
Apartment Rental Rates
As shown in the following chart, average asking rents for the region have been trending upward, from an average
of $1,165 per month in 2015 to an average of $1,310 per month in 2019, indicating a compound average growth
rate (CAGR) of 3.0 percent. As of first quarter 2020, average asking rents dropped to $1,309 per month. Over the
past few years, concessions have been rising and currently stand at 4.0 percent of face rents. Over the next five
years, average asking rents are expected to increase from $1,289 per month in 2020 to $1,370 per month in 2024.
Average asking rental rates in the Central Baltimore City submarket ranged from an average of $1,370 per month
in 2015 to an average of $1,573 per month in 2019, demonstrating a CAGR of 3.5 percent. As of first quarter 2020,
average rents dropped to $1,541 per month. Over the next five years, average asking rents are projected to
increase from $1,505 per month in 2020 to $1,567 per month in 2024. Concessions currently stand at 7.5 percent
of face rents.
The following table presents historical and projected average asking rental rates for the region and submarket.
Apartment Absorption
Absorption measures change in the level of occupied space in a geographic region over a specific period of time.
Absorption is not a measure of leasing activity. It reflects increasing, stable or decreasing demand for space. If the
level of occupied space increases from one period to the next, demand has increased. If no change has occurred,
demand is stable. If the level of occupied space is lower, demand has decreased. All things being equal, positive
absorption lowers vacancy rates and negative absorption increases vacancy rates. A newly constructed building
that enters the marketplace vacant will adversely affect the vacancy rate but have no bearing on absorption since
it has not altered the level of occupancy.
Over the past few years, new construction within the region has outpaced absorption levels. As shown in the
following table, an annual average of 12,196 new units were completed in the Baltimore region between 2015 and
2019, while 11,797 new units were absorbed. Regionally, there was a rise in vacancy from 4.2 percent in 2019 to
the current vacancy rate of 4.3 percent, reflected continued demand for apartments. Over the next five years, Reis
projects that construction figures will outpace absorption (new construction will total 6,973 units, and absorption will
total 4,108 units).
New construction within the Central Baltimore City submarket has outpaced absorption levels, resulting in increased
vacancy rates. Between 2015 and 2019, a total of 5,587 new units were completed, while 4,730 new units were
absorbed. Over the next five years, Reis projects that 1,562 units will be added to the market, while 1,803 will be
absorbed, resulting in a stabilization of vacancy in the market.
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According to survey data, the average monthly lease-up pace for new market-rate apartment projects throughout
the Baltimore region over the past year has ranged from 10-to-25 units per month. Absorption ranged based on the
property location, unit pricing and project amenities. Over the past five years, the net average lease-up pace for
new construction has averaged 15 units per month for garden and mid-rise style projects and 10 units per month
for high-rise projects within the Baltimore region. Recent absorption rates have averaged 15 to 25 units per month
for new projects in downtown Baltimore City.
The following table presents historical and projected absorption levels for the region and subject submarket.
According to Reis, 1,974 units were completed within the Baltimore region over the past few years in a total of 19
projects. There are currently 4,391 units under construction within 23 projects. An additional 18,112 units are
planned within 95 projects for potential delivery in the next few years, along with 19 proposed buildings which would
add another 2,538 units.
The following tables present new and proposed construction activity for the region.
Apartment New Construction Activity - Complete
No.
Name Location Ctiy Submarket Units Status Completion
The Darcy On Light Street 1708 Light Street Baltimore Central Baltimore City 10 Complete March 2019
Center West Ph 1 101 & 201 N Schroeder St Baltimore Central Baltimore City 262 Complete April 2019
Greenbrier Hills Nancy Crt @ Knollcrest Dr Bel Air Harford County 71 Complete April 2019
Bristol Green 5401 Bristol Green Way Baltimore Woodlawn/Catonsville 60 Complete April 2019
The Courtland 415 St Paul Pl Baltimore Central Baltimore City 15 Complete May 2019
The Flats At Eutaw Place 1517 Eutaw Pl Baltimore Central Baltimore City 62 Complete May 2019
Woodfall Greens Apartments 90 Hammonds Ln Brooklyn Glen Burnie/Harundale/Odenton 230 Complete June 2019
Eastport Sail Loft 400 Chesapeake Ave Annapolis Annapolis/Crofton 11 Complete July 2019
Bainbridge Federal Hill 1100 Key Hwy Baltimore Central Baltimore City 224 Complete July 2019
Waverly Grove 10501 Maryland 99 Woodstock Columbia/Howard County 30 Complete July 2019
Monarch 2614 Smooth Alder Street Odenton Annapolis/Crofton 246 Complete August 2019
Wheelhouse South Street 7 W Cross St Baltimore Central Baltimore City 29 Complete August 2019
9 East Mount Royal Ave 9 E Mt Royal Ave Baltimore Central Baltimore City 64 Complete August 2019
Howard Row Ph 1 407-415 N Howard St Baltimore Central Baltimore City 41 Complete August 2019
Morris Place 7804 Taggart Ct Elkridge Columbia/Howard County 166 Complete September 2019
Liberty Harbor East 1301 Aliceanna St Baltimore Central Baltimore City 315 Complete November 2019
The Wilkes 1719 Eastern Ave Baltimore Central Baltimore City 10 Complete November 2019
Brewers Green 3401 South Highland Avenue Baltimore Central Baltimore City 12 Complete December 2019
The Met At Metro Centre 10500 Grand Central Avenue Owings Mills Pikesville/Randallstown/Owings Mills 116 Complete February 2020
Total Complete 1,974
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6.0%
5,000
5.0%
4,000
4.0%
3,000
3.0%
2,000
2.0%
1,000
1.0%
0 0.0%
2015 2016 2017 2018 2019 1Q20 2020 2021 2022 2023 2024
Source: Reis, Inc.
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These properties will be more fully discussed in the Income Approach section of this report. To summarize, the
apartment comparable projects were constructed between 2011 and 2018 and number of units range from 153 to
346 units. Individual unit sizes range from 705 to 901 square feet. The comparable apartment projects revealed
occupancy levels ranging from 88.0 percent to 99.0 percent, with an average of 92.8 percent. Most of the
competitive projects reflect stabilized occupancy. The table below is a summary of rental rates by unit type:
A comparison of the subject’s (Chapter 1B apartments) proposed asking rents to the comparables is presented in
the Income Capitalization Approach. Minimal rent concessions are being offered at competitive stabilized projects.
Concessions are typical for newer projects undergoing initial lease-up. Most comparable properties require tenants
to pay for metered utilities and the owner pays for trash removal. Despite the increase in inventory over the past
three years, the market reflects stabilized occupancy, moderate rent concessions and continued demand by young
workers, empty nesters and college students.
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The US Travel industry is among the hardest hit economy sectors from the Coronavirus (COVID-19). Stay-at-home
orders issued by the majority of states in the US and a constraint of economic activity to only essential workers
have effectively reduced travel, particularly air travel. As a result, large hotels in most major urban areas saw a
significant decline in business, group, and leisure guests, while some converted their rooms for quarantine-related
guests, first responders, and medical personnel. In an unprecedented response, hotel owners and operators
shuttered hundreds of thousands of hotel rooms across the country. As of mid-April 2020, approximately 25.0
percent of Marriott hotel rooms were temporarily closed and STR Global reported that 750,000 out of 5.4 million
hotel rooms (or 16.0 percent) of the US hotel inventory is not operating.
At this time, most of these closures are expected to be temporary. Phased “re-opening” plans for states and local
jurisdictions are being prepared; some with dates in May and June 2020. Logistics for safe hotel and travel
behaviors are being developed. Nevertheless, there is currently more uncertainty than confidence about the next
few months. Government and corporate rules about social distancing and masks and personal concerns about
safety and wellness are likely to persist for some time, particularly until therapeutics and/or a vaccine for COVID-
19 are available on a mass scale.
Concerns about the length of the stay-at-home measures and the potential for an ensuing downturn in the economy
are top of mind for industry participants. Federal economic incentive programs that have been put in place to provide
financial compensation for business losses due to the virus are expected to provide some stopgap. However,
anxiety remains about the depth and longevity of the federal programs’ positive benefits relative to the longevity of
the Coronavirus’ negative effects.
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The following chart shows the historical national US hotel market statistics annually through 2019, as well as first
quarter trends for 2019 and 2020, along with monthly details for 2020.
1995 1,296,206,105 3,551,250 --- 840,198,343 --- --- 64.8 --- $66.51 --- $43.11 ---
1996 1,327,378,229 3,636,653 2.4 % 857,953,667 2.1 % (0.3) 64.6 (0.3) % 70.77 6.4 % 45.74 6.1 %
1997 1,373,655,064 3,763,439 3.5 880,383,612 2.6 (0.9) 64.1 (0.8) 74.75 5.6 47.91 4.7
1998 1,428,239,890 3,912,986 4.0 904,625,348 2.8 (1.2) 63.3 (1.2) 78.12 4.5 49.48 3.3
1999 1,482,967,994 4,062,926 3.8 931,878,372 3.0 (0.8) 62.8 (0.8) 80.84 3.5 50.80 2.7
2000 1,525,108,531 4,178,380 2.8 965,098,664 3.6 0.7 63.3 0.7 85.19 5.4 53.91 6.1
2001 1,561,252,452 4,277,404 2.4 932,657,287 (3.4) (5.7) 59.7 (5.6) 83.96 (1.4) 50.16 (7.0)
2002 1,585,818,384 4,344,708 1.6 935,753,763 0.3 (1.2) 59.0 (1.2) 82.71 (1.5) 48.80 (2.7)
2003 1,602,339,641 4,389,972 1.0 948,463,191 1.4 0.3 59.2 0.3 82.83 0.1 49.03 0.5
2004 1,609,856,123 4,410,565 0.5 987,155,136 4.1 3.6 61.3 3.6 86.26 4.1 52.90 7.9
2005 1,611,095,859 4,413,961 0.1 1,016,609,518 3.0 2.9 63.1 2.9 90.95 5.4 57.39 8.5
2006 1,620,521,609 4,439,785 0.6 1,027,327,729 1.1 0.5 63.4 0.5 97.31 7.0 61.69 7.5
2007 1,630,881,234 4,468,168 0.6 1,030,858,746 0.3 (0.3) 63.2 (0.3) 103.55 6.4 65.46 6.1
2008 1,673,991,040 4,586,277 2.6 1,011,561,443 (1.9) (4.5) 60.4 (4.4) 106.48 2.8 64.34 (1.7)
2009 1,728,062,260 4,734,417 3.2 952,266,656 (5.9) (9.1) 55.1 (8.8) 97.47 (8.5) 53.71 (16.5)
2010 1,762,020,903 4,827,455 2.0 1,014,568,881 6.5 4.6 57.6 4.5 97.95 0.5 56.40 5.0
2011 1,767,355,160 4,842,069 0.3 1,062,135,606 4.7 4.4 60.1 4.4 101.57 3.7 61.04 8.2
2012 1,769,610,554 4,848,248 0.1 1,087,435,148 2.4 2.3 61.5 2.3 106.05 4.4 65.17 6.8
2013 1,783,137,587 4,885,308 0.8 1,110,527,243 2.1 1.4 62.3 1.3 110.31 4.0 68.70 5.4
2014 1,796,907,059 4,923,033 0.8 1,157,230,900 4.2 3.4 64.4 3.4 115.39 4.6 74.32 8.2
2015 1,814,674,194 4,971,710 1.0 1,189,614,896 2.8 1.8 65.6 1.8 119.97 4.0 78.65 5.8
2016 1,839,582,345 5,039,952 1.4 1,205,133,146 1.3 (0.1) 65.5 (0.1) 123.90 3.3 81.17 3.2
2017 1,869,428,066 5,121,721 1.6 1,233,203,792 2.3 0.7 66.0 0.7 126.69 2.3 83.57 3.0
2018 1,903,840,133 5,216,000 1.8 1,260,586,980 2.2 0.4 66.2 0.4 129.70 2.4 85.88 2.8
2019 1,938,507,913 5,310,981 1.8 1,282,326,605 1.7 (0.1) 66.2 (0.1) 131.21 1.2 86.79 1.1
Avg Annual
% Change 1.7 % 1.8 % 0.1 % 0.1 % 2.9 % 3.0 %
TTM March 2019 1,911,582,112 5,237,211 --- 1,266,116,885 --- --- 66.2 % --- $130.07 --- $86.15 ---
TTM March 2020 1,948,544,587 5,338,478 1.9 % 1,240,780,282 (2.0) % (3.9) % 63.7 (3.9) % 130.22 0.1 % 82.92 (3.7) %
Jan-20 165,322,318 5,332,978 2.6 % 91,048,142 2.8 % 0.3 55.1 % 0.7 % $126.00 1.4 % $69.39 2.2 %
Feb-20 149,563,008 5,341,536 2.1 92,858,892 2.1 (0.1) 62.1 (0.1) 130.79 1.5 81.20 1.5
Mar-20 165,965,196 5,353,716 2.1 65,307,757 (41.3) (43.4) 39.4 (42.5) 110.66 (16.5) 43.54 (51.9)
1Q - 2019 470,813,848 5,231,265 --- 290,761,114 --- --- 61.8 % --- $129.02 --- $79.68 ---
1Q - 2020 480,850,522 5,342,784 2.1 % 249,214,791 (14.3) % (16.4) % 51.8 (16.1) % 123.76 (4.1) % 64.14 (19.5) %
Hotel supply is anticipated to be flux for some months. Most hotels are expected to reopen when economically
viable to do so; though some properties may not. Some developers of hotels that are under construction in areas
where construction is still allowed, are trying to keep the projects going while others are seeking to delay opening
until adequate demand returns. Proposed hotel projects that have not started construction are likely to be delayed
or cancelled.
Whether open or closed, the majority of hotel owners across the US are financially impacted and the ability to
service debt has become a challenge. Conventional lenders are actively working with owners on debt restructuring.
As mortgage payments are missed, the response of other debt holders may result in unfavorable circumstances.
To the advantage of owners and lenders, debt remains favorably priced and many hotels are structured with lower
leverage than in prior downturns.
At the same time, private equity is reportedly being amassed by individuals and in opportunity funds to take
advantage of opportunities for distressed hotel acquisitions. In prior downcycles, transaction activity was relatively
muted for the first two years as the cycle bottomed out. The volume and type of transactions in this cycle remains
uncertain. As of mid-April 2020, very few hotel sales are closing; mainly those that were well into the transaction.
Brokers and buyers are reporting that the hotel investment market and lending is generally at a standstill until there
is greater clarity about future performance. In the last cycle, when the market did return, the initial buyers of hotels
negotiated all cash purchases and subsequently financed their acquisition when lenders returned. This practice
may be the case when the market becomes more active.
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In 2019, the performance of the top 25 markets was evenly split. Roughly half of the top 25 markets had positive
RevPAR growth, while the remaining 12 markets declined from 2018. For Q1 2020, the top 25 markets showed a
mix of the dramatic declines in March tempered by more positive performance in January and February. Almost all
markets are experiencing new hotel room openings; some still in high numbers, but the declines in overall
performance was not always proportional to the changes in supply as shown in the following chart.
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By March 2020, every top 25 market in US experienced RevPAR declines, though there was still a broad range of
results. Occupancy declines for these markets ranged from a decline of 35.1 percent to 62.2 percent, with an
average of 48.0 percent. Average rate drops were from 4.8 percent to 26.6 percent, with an average of 16.6 percent.
As a result, RevPAR decreased from 44.2 percent to 72.3 percent, with an average of 56.5 percent. Below are the
changes in the monthly occupancy, average rate, and RevPAR in March 2020 compared to March 2019.
Geography has not been the only factor influencing the range of hotel performance. Locational attributes have also
played a part as has market positioning. According to STR, economy rate properties have shown the greatest
resilience with the lowest performance declines. Essential workers are still providing services that require travel.
Truck drivers, infrastructure and construction crews are still working and using economy, extended-stay, and
highway lodging. Other users include those in quarantine, first responders and medical personnel. Luxury hotels
and large group/convention properties are bearing the brunt of the current downturn, as constraints on business
travel and group gatherings have a direct impact on larger properties reliant on these hotel demand drivers. These
hotel property types are expected to be impacted the longest depending on governmental and corporate rules on
corporate travel and group gatherings.
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Operating Factors
With the decline in room revenues comes the inevitable reduction in profitability. Almost all of the open hotels in the
US have reduced staffing. Closed hotels are operating with a skeletal staff, although hotel expenses are a
combination of fixed and variable factors.
To combat the declines in revenues, hotel owners are pursuing various avenues to increase cash reserves
including:
Working with the property manager, lender and/or brand to access the reserve for replacement for expense
and payroll obligations.
Negotiating with hotel franchise companies for short-term reductions in fee payments and renegotiating
upcoming property improvement plan (PIP) projects in exchange for franchise and management agreement
extensions and repayment programs. Some franchise companies are providing temporary licensing
suspensions to allow hotels to work with local counties and cities to accommodate populations most affected
by the pandemic.
Requesting lender forbearance from interest expense and principal repayment.
Applying for SBA and other government sponsored payroll protection and lending programs.
Working with property tax assessors in an attempt to defer payments during the crisis.
Leveraging federal assistance through loans and grants that are expected to benefit all product levels of the
hospitality industry.
Utilizing programs such as the CARES Act and the Families First Coronavirus Response Act that aim to help
hotels through payroll programs, tax benefits, and family leave policies.
Prior to constraints poised in the first quarter by the Coronavirus, operating forecasts for many hotels for the next
few years were already expected to show stagnant and/or declining income.
Net income for the next few months, if not the remainder of 2020, is expected to be negatively impacted. Hotels are
essentially cash businesses. Seasonal properties that rely on cash flow for a few monthly peak periods a year, such
as Florida and other coastal resorts, ski properties, or those that rely on group business, are expected to have the
greatest challenges. In the recovery from the prior downturn, drive-to destinations were the first to benefit from
leisure travelers that are finically able to travel. Depending on state and local travel restrictions, it is anticipated that
this trend could occur again once travel is permitted to recommence in select markets across the US.
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Transaction volume since the recovery from the financial crisis in 2010 had been inconsistent. Higher volumes in
some quarters were influenced by portfolio sales and company and REIT mergers. In the most recent four quarters
ending with March 2020, portfolio transactions accounted for 36.0 percent of the total volume.
Preliminary hotel sales volume results for Q1 2020 as reported by RCA, was $3.94 billion, a decline of 51.0 percent
over the volume for Q1 2019. In Q1 2020, the transactions included 320 properties with 38,173 rooms, representing
declines of 25.4 percent and 26.4 percent of each category, respectively.
Sales transactions that are aggregated for Q1 2020 represent, for the most part, transactions that were negotiated
earlier in 2019. Based on our discussions with brokers and buyers, the hotel transaction market has effectively
paused as of March 2020, as participants wait for more clarity about the uncertainty of the short- and long-term
impact of the COVID-19 pandemic.
Hotel lending is also in a state of flux. Most traditional lenders are occupied with current obligations and are not
actively placing new money. Sourcing for capital strategies include:
Borrowers actively working with their lenders to amend bank credit facilities to provide extension options for the
next 6-12 months, waive or modify certain covenants and establish interest reserves for near-term debt service.
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Alternative financing may be available for some properties including PACE financing, a debt on the property in
which the payment is made via a voluntary tax assessment. Some PACE loans can be prepaid while others
cannot.
Some private groups offering ground lease financing; converting the land held in fee to a ground lease.
Other non-traditional lenders providing more expansive short-term bridge financing. Hotels under construction
which were actively seeking additional capital are the most vulnerable in the current market.
Because of the slowdown in hotel market performance, the universe of hotel buyers has also lessened. The
pandemic has affected hotel markets and investments globally. Off-shore entities, particularly from Asia, and
institutional investors were already retreating from the hotel investment market in 2019. However, recent reports of
some family offices, sovereigns and international equity funds seeking acquisitions may bring overseas buyers back
to the market. Many of the REITs are still limited by their stock market positions. Private equity funds dominated
the buyer profile in Q1 2020 as shown below.
As noted previously, motivated investors are poised to pursue hotel properties which may become available during
the downturn. The volume and type of properties that transact as part of the fall out of the pandemic is still
speculative at this time. In the last rebound, RCA data indicates that the total number of hotel transactions declined
by 86.0 percent in 2008 and an additional 72.0 percent in 2009. When hotel performance bottomed out in the Q2
2010 and began to show clear recovery trends, hotel transaction surged 320.0 percent that year.
Nevertheless, hotel market participants are poised to take advantage of investment opportunities as trends in this
part of the cycle shift.
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RCA reports that the overall capitalization rate for hotels in Q1 2020 was 8.6 percent, in line with the overall
capitalization rates of 8.6 percent and 8.7 percent for the prior four quarters. As during that period, debt when
available, is still expected to be reasonably priced and supportive of a strong investment market at recovery.
The decline in hotel revenue has also had exponential impacts on other business and public agencies that rely on
hotel guests. Restaurants, entertainment, sporting venues, and public and private attractions are suffering from lack
of local use and visitors. The loss of occupancy taxes is particularly challenging for jurisdictions and venues
depending on these revenues. The lower budgets of cities, counties, and convention centers that rely on transient
occupancy tax for a portion of their revenue will most likely mean adjustments to future services and programs.
The spread of Coronavirus has constrained travel behavior for all demand segments. While the duration of the long-
term impact is still unknown, hotel industry participants are looking to the current trends in China post-quarantine
and to the historical US recoveries in prior cycles. Local, state, regional, and federal officials are offering plans for
“re-opening.” The plans vary area-to-area and industry-to-industry, all with the concern that the Coronavirus is kept
under control while the economy rebounds. Government rules and company regulations are being developed to
support the wellness of employees and the public while returning to normal economic activities. The logistics and
pace of re-opening is expected to extend through at least the beginning of 2021.
Opinions from various lodging industry experts are currently estimating the US hotel market to recover over a three-
to five-year period. Despite the negative current environment, hotel market participants are taking note from
previous lessons in prior cycles, that recovery often presents the best opportunity for exponential net income growth
and investment returns.
Johns Hopkins Bayview Medical Center (formerly Francis Scott Key Medical Center and Baltimore City
Hospitals), is a hospital and medical office center within the Johns Hopkins Health System situated on 130 acres.
The complex is located about three miles northeast of the subject. The hospital is part of the Johns Hopkins Health
System, and includes the famous Hopkins Burn Center, which is the only adult burn trauma and surgical facility in
the Baltimore area. Founded in 1773, the Johns Hopkins Bayview Medical Center has a long, distinguished history
of service and medical excellence. It is one of the oldest, continuous health care institutions on the East Coast. In
1984, the City of Baltimore transferred ownership of the long-established Baltimore City Hospitals to The Johns
Hopkins Hospital and The Johns Hopkins University, who renamed it, the "Francis Scott Key Medical Center", which
name it carried for a decade. Johns Hopkins Bayview has 426 licensed beds and 45 neonatal beds and is home to
one of Maryland's most comprehensive neonatal intensive care units, a sleep disorders center, a comprehensive
neurosurgery center/neurocritical care unit, an area-wide trauma center, the state's only regional burn center and
a wide variety of nationally recognized post-acute care and geriatrics programs.
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Since Johns Hopkins acquired Baltimore City Hospitals in 1984, more than $600 million has been invested to
transform and modernize the campus. This development has been coupled with an investment in the faculty, staff
and culture that puts the patient, family and community first. The hospital campus creates significant demand for
hotel rooms. With limited hotels in the immediate area, lodging demand is typically shifted north toward White
Marsh, or more likely downtown Baltimore. The Best Western is the only nearby hotel, and provides shuttle service
to and from the hospital. Bayview has experienced recent growth and new investment, including an announcement
in March 2015 of a $40.1 million expansion to the North Pavilion. The $26.0 million, 28,000 square foot Sidney
Kimmel Comprehensive Cancer Center was also recently completed.
The Johns Hopkins Hospital is widely regarded as one of the world's greatest hospitals. It was ranked by U.S. News
& World Report as the best overall hospital in America for 21 consecutive years (1991–2011). In 2016-2017, the
hospital ranked in 15 adult and 10 children's specialties, coming in 1st in Maryland and 4th nationally behind the
Mayo Clinic, the Cleveland Clinic, and Massachusetts General Hospital. The hospital system is a massive room
night producer for the Baltimore market, and the subject stands to benefit significantly from the nearby location.
University of Maryland Shock Trauma has been re-built and opened in 2013 as a nine-story trauma center.
Included is a National Training Center to instruct other trauma center medical providers on both a national and
international level. The facility includes training for both doctors and nurses, and also has medical trauma
training for the U.S. Military.
Gaming: Caesar’s (d/b/a Harrah’s Baltimore) opened in August 2014. 3,750 slot machines; full table game
gambling with live dealers; new restaurants, etc.
Included in the new Biotech center is a new Proton Treatment Center. Opened in 2013; specialized cancer
treatment with proton radiation. Patients must be on site daily for multi-week/month treatments. Only eleven
such centers in the U.S.
The Johns Hopkins Hospital and Health System, Baltimore’s largest employer and one of the nation’s premier
healthcare institutions, includes specialized facilities such as the Brady Urological Institute, the Wilmer Eye
Institute, the Sidney Kimmel Comprehensive Cancer Center, and the John Hopkins Children’s Center. A $1.1-
billion cardiovascular and critical-care tower and the Charlotte R. Bloomberg Children’s Center were added in
2012. The not-for-profit University of Maryland Medical System provides a complete range of medical services
to more than 300,000 patients each year and generates an economic impact of nearly $3.5 billion. Estimates
project that the overall Johns Hopkins medical facilities contribute over 100,000 room nights annually for area
hotels, including the nearby Bayview project.
The Port of Baltimore – “Cruise Maryland” offers year-round passenger cruising to the Bahamas, Bermuda,
Canada/ New England and the Caribbean by two cruise lines including the Royal Caribbean and Carnival
Cruise Lines. The Cruise Maryland complex and piers are located directly northeast of Port Covington.
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The following table summarizes competitive hotels within the subject’s market as surveyed by STR. The survey
includes seven hotels containing 1,123 rooms. The accompanying map shows the location of the competitive hotels
in relation to the subject site. The tables on the following pages produced by STR provides summary statistics for
the surveyed competitive set of properties summarized below, including average daily rates (ADR), average daily
occupancy and other RevPar and other economic data.
Zip
Name of Establishment City & State Code Class Aff Date Open Date Rooms
Kimpton Hotel Monaco Baltimore Baltimore, MD 21201 Upper Upscale Class Jul 2009 Jul 2009 202
Four Seasons Baltimore Baltimore, MD 21202 Luxury Class Nov 2011 Nov 2011 256
Hilton Garden Inn Baltimore Inner Harbor Baltimore, MD 21202 Upscale Class Nov 2007 Nov 2007 183
Residence Inn Baltimore Downtown Inner Harbor Baltimore, MD 21202 Upscale Class Aug 2005 Aug 2005 189
Homewood Suites by Hilton Baltimore Baltimore, MD 21202 Upscale Class Sep 2007 Sep 2007 165
Sagamore Pendry Baltimore Baltimore, MD 21231 Luxury Class Mar 2017 Mar 2017 128
Total Properties: 6 1,123
COMPETITION MAP
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Based on current and forecast hotel market fundamentals in downtown Baltimore, it is unlikely that new hotel
development will be completed in the near-term until Chapter 1B is fully stabilized, and additional proposed
development comes to fruition within the Port Covington Development District.
Date Occupancy ADR RevPar Supply Demand Revenue Census & Sample %
% Rooms STAR
This Year % Chg This Year % Chg This Year % Chg This Year % Chg This Year % Chg This Year % Chg Census Props Census Rooms Participants
Jan 15 58.7 -4.0 207.25 10.3 121.64 5.8 30,814 0.0 18,086 -4.0 3,748,271 5.8 5 994 100.0
Feb 15 69.1 5.7 189.33 -3.1 130.91 2.4 27,832 0.0 19,244 5.7 3,643,486 2.4 5 994 100.0
Mar 15 69.0 -5.0 211.34 -7.9 145.84 -12.5 30,814 0.0 21,263 -5.0 4,493,800 -12.5 5 994 100.0
Apr 15 76.5 -4.8 225.75 -13.6 172.67 -17.7 29,820 0.0 22,808 -4.8 5,149,007 -17.7 5 994 100.0
May 15 71.9 -12.9 244.37 -11.5 175.78 -22.9 30,814 0.0 22,165 -12.9 5,416,354 -22.9 5 994 100.0
Jun 15 78.4 -6.6 240.94 0.5 188.95 -6.1 29,820 0.0 23,386 -6.6 5,634,535 -6.1 5 994 100.0
Jul 15 77.7 -2.9 231.64 0.8 180.09 -2.2 30,814 0.0 23,957 -2.9 5,549,384 -2.2 5 994 100.0
Aug 15 82.1 0.6 221.53 -7.4 181.82 -6.9 30,814 0.0 25,290 0.6 5,602,522 -6.9 5 994 100.0
Sep 15 77.7 -6.6 246.49 3.9 191.62 -3.0 29,820 0.0 23,182 -6.6 5,714,196 -3.0 5 994 100.0
Oct 15 81.9 -1.1 246.82 3.8 202.24 2.7 30,814 0.0 25,248 -1.1 6,231,670 2.7 5 994 100.0
Nov 15 71.8 -3.8 219.48 -7.1 157.60 -10.7 29,820 0.0 21,413 -3.8 4,699,651 -10.7 5 994 100.0
Dec 15 55.1 -5.1 202.90 -6.3 111.88 -11.1 30,814 0.0 16,990 -5.1 3,447,327 -11.1 5 994 100.0
Jan YTD 2015 58.7 -4.0 207.25 10.3 121.64 5.8 30,814 0.0 18,086 -4.0 3,748,271 5.8
Total 2015 72.5 -4.1 225.56 -3.8 163.53 -7.7 362,810 0.0 263,032 -4.1 59,330,203 -7.7
Jan 16 56.6 -3.5 198.89 -4.0 112.66 -7.4 30,814 0.0 17,455 -3.5 3,471,617 -7.4 5 994 100.0
Feb 16 61.2 -11.4 193.70 2.3 118.60 -9.4 27,832 0.0 17,041 -11.4 3,300,820 -9.4 5 994 100.0
Mar 16 70.8 2.6 207.68 -1.7 147.05 0.8 30,814 0.0 21,818 2.6 4,531,158 0.8 5 994 100.0
Apr 16 78.0 2.0 232.65 3.1 181.45 5.1 29,820 0.0 23,257 2.0 5,410,703 5.1 5 994 100.0
May 16 78.9 9.6 256.92 5.1 202.58 15.3 30,814 0.0 24,297 9.6 6,242,373 15.3 5 994 100.0
Jun 16 78.9 0.6 235.31 -2.3 185.71 -1.7 29,820 0.0 23,535 0.6 5,537,941 -1.7 5 994 100.0
Jul 16 70.5 -9.4 211.08 -8.9 148.74 -17.4 30,814 0.0 21,714 -9.4 4,583,377 -17.4 5 994 100.0
Aug 16 81.8 -0.3 231.30 4.4 189.24 4.1 30,814 0.0 25,211 -0.3 5,831,335 4.1 5 994 100.0
Sep 16 80.5 3.6 247.43 0.4 199.20 4.0 29,820 0.0 24,007 3.6 5,940,109 4.0 5 994 100.0
Oct 16 77.3 -5.6 232.39 -5.8 179.71 -11.1 30,814 0.0 23,829 -5.6 5,537,536 -11.1 5 994 100.0
Nov 16 64.4 -10.3 210.28 -4.2 135.48 -14.0 29,820 0.0 19,213 -10.3 4,040,073 -14.0 5 994 100.0
Dec 16 55.2 0.1 217.32 7.1 119.97 7.2 30,814 0.0 17,011 0.1 3,696,794 7.2 5 994 100.0
Jan YTD 2016 56.6 -3.5 198.89 -4.0 112.66 -7.4 30,814 0.0 17,455 -3.5 3,471,617 -7.4
Total 2016 71.2 -1.8 224.95 -0.3 160.20 -2.0 362,810 0.0 258,388 -1.8 58,123,836 -2.0
Jan 17 51.8 -8.5 184.01 -7.5 95.40 -15.3 30,814 0.0 15,975 -8.5 2,939,560 -15.3 5 994 100.0
Feb 17 64.9 6.0 181.32 -6.4 117.66 -0.8 27,832 0.0 18,061 6.0 3,274,772 -0.8 5 994 100.0
Mar 17 76.6 8.2 197.09 -5.1 150.97 2.7 34,782 12.9 26,643 22.1 5,251,199 15.9 6 1,122 88.6
Apr 17 72.2 -7.5 216.21 -7.1 156.04 -14.0 33,660 12.9 24,292 4.5 5,252,215 -2.9 6 1,122 100.0
May 17 74.5 -5.5 257.27 0.1 191.63 -5.4 34,782 12.9 25,908 6.6 6,665,264 6.8 6 1,122 100.0
Jun 17 77.2 -2.2 231.01 -1.8 178.24 -4.0 33,660 12.9 25,970 10.3 5,999,408 8.3 6 1,122 100.0
Jul 17 74.3 5.5 224.47 6.3 166.84 12.2 34,782 12.9 25,853 19.1 5,803,163 26.6 6 1,122 100.0
Aug 17 78.0 -4.7 226.03 -2.3 176.24 -6.9 34,782 12.9 27,120 7.6 6,129,947 5.1 6 1,122 100.0
Sep 17 74.8 -7.1 251.42 1.6 188.02 -5.6 33,660 12.9 25,173 4.9 6,328,892 6.5 6 1,122 100.0
Oct 17 74.8 -3.3 233.61 0.5 174.78 -2.7 34,782 12.9 26,023 9.2 6,079,360 9.8 6 1,122 100.0
Nov 17 64.4 0.0 206.29 -1.9 132.94 -1.9 33,660 12.9 21,691 12.9 4,474,659 10.8 6 1,122 100.0
Dec 17 52.9 -4.2 194.58 -10.5 102.93 -14.2 34,782 12.9 18,399 8.2 3,580,051 -3.2 6 1,122 100.0
Jan YTD 2017 51.8 -8.5 184.01 -7.5 95.40 -15.3 30,814 0.0 15,975 -8.5 2,939,560 -15.3
Total 2017 69.9 -1.8 219.77 -2.3 153.69 -4.1 401,978 10.8 281,108 8.8 61,778,490 6.3
Jan 18 46.4 -10.5 190.39 3.5 88.35 -7.4 34,782 12.9 16,141 1.0 3,073,080 4.5 6 1,122 100.0
Feb 18 62.5 -3.7 191.61 5.7 119.77 1.8 31,416 12.9 19,638 8.7 3,762,751 14.9 6 1,122 100.0
Mar 18 68.2 -11.0 203.40 3.2 138.68 -8.1 34,782 0.0 23,716 -11.0 4,823,725 -8.1 6 1,122 100.0
Apr 18 69.3 -3.9 222.47 2.9 154.26 -1.1 33,660 0.0 23,340 -3.9 5,192,445 -1.1 6 1,122 100.0
May 18 73.9 -0.7 243.50 -5.4 180.02 -6.1 34,782 0.0 25,714 -0.7 6,261,427 -6.1 6 1,122 100.0
Jun 18 76.4 -1.0 242.98 5.2 185.57 4.1 33,660 0.0 25,706 -1.0 6,246,169 4.1 6 1,122 100.0
Jul 18 74.5 0.2 211.37 -5.8 157.46 -5.6 34,782 0.0 25,910 0.2 5,476,623 -5.6 6 1,122 100.0
Aug 18 79.9 2.4 219.84 -2.7 175.59 -0.4 34,813 0.1 27,805 2.5 6,112,789 -0.3 6 1,123 100.0
Sep 18 76.7 2.6 257.26 2.3 197.39 5.0 33,690 0.1 25,850 2.7 6,650,061 5.1 6 1,123 100.0
Oct 18 78.3 4.6 226.84 -2.9 177.51 1.6 34,813 0.1 27,242 4.7 6,179,580 1.6 6 1,123 100.0
Nov 18 65.6 1.7 213.41 3.5 139.89 5.2 33,690 0.1 22,084 1.8 4,713,018 5.3 6 1,123 100.0
Dec 18 54.3 2.6 200.97 3.3 109.13 6.0 34,813 0.1 18,903 2.7 3,799,009 6.1 6 1,123 100.0
Jan YTD 2018 46.4 -10.5 190.39 3.5 88.35 -7.4 34,782 12.9 16,141 1.0 3,073,080 4.5
Total 2018 68.8 -1.6 220.85 0.5 152.05 -1.1 409,683 1.9 282,049 0.3 62,290,677 0.8
Jan 19 55.2 18.9 182.64 -4.1 100.80 14.1 34,813 0.1 19,214 19.0 3,509,273 14.2 6 1,123 100.0
Feb 19 64.2 2.7 188.20 -1.8 120.85 0.9 31,444 0.1 20,191 2.8 3,799,924 1.0 6 1,123 100.0
Mar 19 70.6 3.5 221.20 8.8 156.06 12.5 34,813 0.1 24,561 3.6 5,432,908 12.6 6 1,123 100.0
Apr 19 79.6 14.8 233.11 4.8 185.54 20.3 33,690 0.1 26,815 14.9 6,250,718 20.4 6 1,123 100.0
May 19 80.6 9.1 262.55 7.8 211.69 17.6 34,813 0.1 28,069 9.2 7,369,593 17.7 6 1,123 100.0
Jun 19 77.2 1.1 239.43 -1.5 184.78 -0.4 33,690 0.1 26,000 1.1 6,225,276 -0.3 6 1,123 100.0
Jul 19 75.0 0.7 232.83 10.2 174.60 10.9 34,813 0.1 26,107 0.8 6,078,388 11.0 6 1,123 100.0
Aug 19 78.1 -2.2 228.42 3.9 178.51 1.7 34,813 0.0 27,206 -2.2 6,214,504 1.7 6 1,123 100.0
Sep 19 76.8 0.0 258.89 0.6 198.72 0.7 33,690 0.0 25,859 0.0 6,694,732 0.7 6 1,123 100.0
Oct 19 74.9 -4.3 236.85 4.4 177.31 -0.1 34,813 0.0 26,061 -4.3 6,172,574 -0.1 6 1,123 100.0
Nov 19 72.4 10.4 210.91 -1.2 152.66 9.1 33,690 0.0 24,384 10.4 5,142,947 9.1 6 1,123 100.0
Dec 19 55.6 2.5 198.04 -1.5 110.19 1.0 34,813 0.0 19,371 2.5 3,836,185 1.0 6 1,123 100.0
Jan YTD 2019 55.2 18.9 182.64 -4.1 100.80 14.1 34,813 0.1 19,214 19.0 3,509,273 14.2
Total 2019 71.7 4.1 227.09 2.8 162.79 7.1 409,895 0.1 293,838 4.2 66,727,022 7.1
Jan 20 54.2 -1.7 187.97 2.9 101.94 1.1 34,813 0.0 18,879 -1.7 3,548,751 1.1 6 1,123 100.0
Jan YTD 2020 54.2 -1.7 187.97 2.9 101.94 1.1 34,813 0.0 18,879 -1.7 3,548,751 1.1
A-110
PORT COVINGTON SPECIAL TAXING DISTRICT- PRIVATE PROPERTY MARKET STUDY
Data by Measure
Baltimore Selected Comparable Properties
Occupancy (%)
January February March April May June July August September October November December Total Year Jan YTD
2014 61.2 65.4 72.6 80.3 82.6 84.0 80.1 81.6 83.2 82.8 74.6 58.1 75.6 61.2
2015 58.7 69.1 69.0 76.5 71.9 78.4 77.7 82.1 77.7 81.9 71.8 55.1 72.5 58.7
2016 56.6 61.2 70.8 78.0 78.9 78.9 70.5 81.8 80.5 77.3 64.4 55.2 71.2 56.6
2017 51.8 64.9 76.6 72.2 74.5 77.2 74.3 78.0 74.8 74.8 64.4 52.9 69.9 51.8
2018 46.4 62.5 68.2 69.3 73.9 76.4 74.5 79.9 76.7 78.3 65.6 54.3 68.8 46.4
2019 55.2 64.2 70.6 79.6 80.6 77.2 75.0 78.1 76.8 74.9 72.4 55.6 71.7 55.2
2020 54.2 54.2
Avg 54.7 64.5 71.3 75.8 77.0 78.6 75.3 80.1 78.2 78.2 68.8 55.2 71.5 54.7
ADR ($)
January February March April May June July August September October November December Total Year Jan YTD
2014 187.97 195.44 229.47 261.31 276.18 239.63 229.89 239.31 237.33 237.86 236.35 216.48 234.55 187.97
2015 207.25 189.33 211.34 225.75 244.37 240.94 231.64 221.53 246.49 246.82 219.48 202.90 225.56 207.25
2016 198.89 193.70 207.68 232.65 256.92 235.31 211.08 231.30 247.43 232.39 210.28 217.32 224.95 198.89
2017 184.01 181.32 197.09 216.21 257.27 231.01 224.47 226.03 251.42 233.61 206.29 194.58 219.77 184.01
2018 190.39 191.61 203.40 222.47 243.50 242.98 211.37 219.84 257.26 226.84 213.41 200.97 220.85 190.39
2019 182.64 188.20 221.20 233.11 262.55 239.43 232.83 228.42 258.89 236.85 210.91 198.04 227.09 182.64
2020 187.97 187.97
Avg 191.28 189.89 211.34 231.99 257.14 238.20 223.75 227.59 249.97 235.64 216.20 204.79 225.44 191.28
RevPAR ($)
January February March April May June July August September October November December Total Year Jan YTD
2014 114.98 127.80 166.65 209.92 228.08 201.20 184.16 195.20 197.51 196.97 176.39 125.84 177.25 114.98
2015 121.64 130.91 145.84 172.67 175.78 188.95 180.09 181.82 191.62 202.24 157.60 111.88 163.53 121.64
2016 112.66 118.60 147.05 181.45 202.58 185.71 148.74 189.24 199.20 179.71 135.48 119.97 160.20 112.66
2017 95.40 117.66 150.97 156.04 191.63 178.24 166.84 176.24 188.02 174.78 132.94 102.93 153.69 95.40
2018 88.35 119.77 138.68 154.26 180.02 185.57 157.46 175.59 197.39 177.51 139.89 109.13 152.05 88.35
2019 100.80 120.85 156.06 185.54 211.69 184.78 174.60 178.51 198.72 177.31 152.66 110.19 162.79 100.80
2020 101.94 101.94
A-111
Avg 104.69 122.50 150.74 175.96 198.07 187.13 168.51 182.40 195.37 184.25 148.72 112.96 161.28 104.69
Supply
January February March April May June July August September October November December Total Year Jan YTD
2014 30,814 27,832 30,814 29,820 30,814 29,820 30,814 30,814 29,820 30,814 29,820 30,814 362,810 30,814
2015 30,814 27,832 30,814 29,820 30,814 29,820 30,814 30,814 29,820 30,814 29,820 30,814 362,810 30,814
2016 30,814 27,832 30,814 29,820 30,814 29,820 30,814 30,814 29,820 30,814 29,820 30,814 362,810 30,814
2017 30,814 27,832 34,782 33,660 34,782 33,660 34,782 34,782 33,660 34,782 33,660 34,782 401,978 30,814
2018 34,782 31,416 34,782 33,660 34,782 33,660 34,782 34,813 33,690 34,813 33,690 34,813 409,683 34,782
2019 34,813 31,444 34,813 33,690 34,813 33,690 34,813 34,813 33,690 34,813 33,690 34,813 409,895 34,813
2020 34,813 34,813
Avg 32,523 29,031 32,803 31,745 32,803 31,745 32,803 32,808 31,750 32,808 31,750 32,808 384,998 32,523
Demand
January February March April May June July August September October November December Total Year Jan YTD
2014 18,849 18,200 22,379 23,956 25,448 25,037 24,684 25,134 24,817 25,517 22,255 17,912 274,188 18,849
2015 18,086 19,244 21,263 22,808 22,165 23,386 23,957 25,290 23,182 25,248 21,413 16,990 263,032 18,086
2016 17,455 17,041 21,818 23,257 24,297 23,535 21,714 25,211 24,007 23,829 19,213 17,011 258,388 17,455
2017 15,975 18,061 26,643 24,292 25,908 25,970 25,853 27,120 25,173 26,023 21,691 18,399 281,108 15,975
2018 16,141 19,638 23,716 23,340 25,714 25,706 25,910 27,805 25,850 27,242 22,084 18,903 282,049 16,141
2019 19,214 20,191 24,561 26,815 28,069 26,000 26,107 27,206 25,859 26,061 24,384 19,371 293,838 19,214
2020 18,879 18,879
Avg 17,800 18,729 23,397 24,078 25,267 24,939 24,704 26,294 24,815 25,653 21,840 18,098 275,434 17,800
Revenue ($)
January February March April May June July August September October November December Total Year Jan YTD
2014 3,543,076 3,556,990 5,135,226 6,259,926 7,028,176 5,999,652 5,674,704 6,014,910 5,889,896 6,069,582 5,259,865 3,877,585 64,309,588 3,543,076
2015 3,748,271 3,643,486 4,493,800 5,149,007 5,416,354 5,634,535 5,549,384 5,602,522 5,714,196 6,231,670 4,699,651 3,447,327 59,330,203 3,748,271
2016 3,471,617 3,300,820 4,531,158 5,410,703 6,242,373 5,537,941 4,583,377 5,831,335 5,940,109 5,537,536 4,040,073 3,696,794 58,123,836 3,471,617
2017 2,939,560 3,274,772 5,251,199 5,252,215 6,665,264 5,999,408 5,803,163 6,129,947 6,328,892 6,079,360 4,474,659 3,580,051 61,778,490 2,939,560
2018 3,073,080 3,762,751 4,823,725 5,192,445 6,261,427 6,246,169 5,476,623 6,112,789 6,650,061 6,179,580 4,713,018 3,799,009 62,290,677 3,073,080
2019 3,509,273 3,799,924 5,432,908 6,250,718 7,369,593 6,225,276 6,078,388 6,214,504 6,694,732 6,172,574 5,142,947 3,836,185 66,727,022 3,509,273
2020 3,548,751 3,548,751
Avg 3,404,804 3,556,457 4,944,669 5,585,836 6,497,198 5,940,497 5,527,607 5,984,335 6,202,981 6,045,050 4,721,702 3,706,159 62,093,303 3,404,804
Occupancy
January February March April May June July August September October November December Total Year Jan YTD
2015 -4.0 5.7 -5.0 -4.8 -12.9 -6.6 -2.9 0.6 -6.6 -1.1 -3.8 -5.1 -4.1 -4.0
2016 -3.5 -11.4 2.6 2.0 9.6 0.6 -9.4 -0.3 3.6 -5.6 -10.3 0.1 -1.8 -3.5
2017 -8.5 6.0 8.2 -7.5 -5.5 -2.2 5.5 -4.7 -7.1 -3.3 0.0 -4.2 -1.8 -8.5
2018 -10.5 -3.7 -11.0 -3.9 -0.7 -1.0 0.2 2.4 2.6 4.6 1.7 2.6 -1.6 -10.5
2019 18.9 2.7 3.5 14.8 9.1 1.1 0.7 -2.2 0.0 -4.3 10.4 2.5 4.1 18.9
2020 -1.7 -1.7
Avg -1.6 -0.1 -0.3 0.1 -0.1 -1.6 -1.2 -0.8 -1.5 -1.9 -0.4 -0.8 -1.0 -1.6
ADR
January February March April May June July August September October November December Total Year Jan YTD
2015 10.3 -3.1 -7.9 -13.6 -11.5 0.5 0.8 -7.4 3.9 3.8 -7.1 -6.3 -3.8 10.3
2016 -4.0 2.3 -1.7 3.1 5.1 -2.3 -8.9 4.4 0.4 -5.8 -4.2 7.1 -0.3 -4.0
2017 -7.5 -6.4 -5.1 -7.1 0.1 -1.8 6.3 -2.3 1.6 0.5 -1.9 -10.5 -2.3 -7.5
2018 3.5 5.7 3.2 2.9 -5.4 5.2 -5.8 -2.7 2.3 -2.9 3.5 3.3 0.5 3.5
2019 -4.1 -1.8 8.8 4.8 7.8 -1.5 10.2 3.9 0.6 4.4 -1.2 -1.5 2.8 -4.1
2020 2.9 2.9
Avg 0.2 -0.7 -0.6 -2.0 -0.8 0.0 0.5 -0.8 1.8 -0.0 -2.2 -1.6 -0.6 0.2
RevPAR
January February March April May June July August September October November December Total Year Jan YTD
2015 5.8 2.4 -12.5 -17.7 -22.9 -6.1 -2.2 -6.9 -3.0 2.7 -10.7 -11.1 -7.7 5.8
2016 -7.4 -9.4 0.8 5.1 15.3 -1.7 -17.4 4.1 4.0 -11.1 -14.0 7.2 -2.0 -7.4
2017 -15.3 -0.8 2.7 -14.0 -5.4 -4.0 12.2 -6.9 -5.6 -2.7 -1.9 -14.2 -4.1 -15.3
2018 -7.4 1.8 -8.1 -1.1 -6.1 4.1 -5.6 -0.4 5.0 1.6 5.2 6.0 -1.1 -7.4
2019 14.1 0.9 12.5 20.3 17.6 -0.4 10.9 1.7 0.7 -0.1 9.1 1.0 7.1 14.1
2020 1.1 1.1
A-112
Avg -1.5 -1.0 -0.9 -1.5 -0.3 -1.6 -0.4 -1.7 0.2 -2.0 -2.4 -2.2 -1.6 -1.5
Supply
January February March April May June July August September October November December Total Year Jan YTD
2015 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
2016 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
2017 0.0 0.0 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 10.8 0.0
2018 12.9 12.9 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 1.9 12.9
2019 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.1
2020 0.0 0.0
Avg 2.2 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.2
Demand
January February March April May June July August September October November December Total Year Jan YTD
2015 -4.0 5.7 -5.0 -4.8 -12.9 -6.6 -2.9 0.6 -6.6 -1.1 -3.8 -5.1 -4.1 -4.0
2016 -3.5 -11.4 2.6 2.0 9.6 0.6 -9.4 -0.3 3.6 -5.6 -10.3 0.1 -1.8 -3.5
2017 -8.5 6.0 22.1 4.5 6.6 10.3 19.1 7.6 4.9 9.2 12.9 8.2 8.8 -8.5
2018 1.0 8.7 -11.0 -3.9 -0.7 -1.0 0.2 2.5 2.7 4.7 1.8 2.7 0.3 1.0
2019 19.0 2.8 3.6 14.9 9.2 1.1 0.8 -2.2 0.0 -4.3 10.4 2.5 4.2 19.0
2020 -1.7 -1.7
Avg 0.4 2.4 2.5 2.5 2.4 0.9 1.5 1.7 0.9 0.6 2.2 1.7 1.5 0.4
Revenue
January February March April May June July August September October November December Total Year Jan YTD
2015 5.8 2.4 -12.5 -17.7 -22.9 -6.1 -2.2 -6.9 -3.0 2.7 -10.7 -11.1 -7.7 5.8
2016 -7.4 -9.4 0.8 5.1 15.3 -1.7 -17.4 4.1 4.0 -11.1 -14.0 7.2 -2.0 -7.4
2017 -15.3 -0.8 15.9 -2.9 6.8 8.3 26.6 5.1 6.5 9.8 10.8 -3.2 6.3 -15.3
2018 4.5 14.9 -8.1 -1.1 -6.1 4.1 -5.6 -0.3 5.1 1.6 5.3 6.1 0.8 4.5
2019 14.2 1.0 12.6 20.4 17.7 -0.3 11.0 1.7 0.7 -0.1 9.1 1.0 7.1 14.2
2020 1.1 1.1
Avg 0.5 1.6 1.7 0.7 2.1 0.9 2.5 0.7 2.7 0.6 0.1 0.0 0.9 0.5
Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16 Total Year Jan YTD
Occ -3.5 -11.4 2.6 2.0 9.6 0.6 -9.4 -0.3 3.6 -5.6 -10.3 0.1 -1.8 -3.5
ADR -4.0 2.3 -1.7 3.1 5.1 -2.3 -8.9 4.4 0.4 -5.8 -4.2 7.1 -0.3 -4.0
RevPAR -7.4 -9.4 0.8 5.1 15.3 -1.7 -17.4 4.1 4.0 -11.1 -14.0 7.2 -2.0 -7.4
Supply 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Demand -3.5 -11.4 2.6 2.0 9.6 0.6 -9.4 -0.3 3.6 -5.6 -10.3 0.1 -1.8 -3.5
Revenue -7.4 -9.4 0.8 5.1 15.3 -1.7 -17.4 4.1 4.0 -11.1 -14.0 7.2 -2.0 -7.4
Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Total Year Jan YTD
Occ -8.5 6.0 8.2 -7.5 -5.5 -2.2 5.5 -4.7 -7.1 -3.3 0.0 -4.2 -1.8 -8.5
ADR -7.5 -6.4 -5.1 -7.1 0.1 -1.8 6.3 -2.3 1.6 0.5 -1.9 -10.5 -2.3 -7.5
RevPAR -15.3 -0.8 2.7 -14.0 -5.4 -4.0 12.2 -6.9 -5.6 -2.7 -1.9 -14.2 -4.1 -15.3
Supply 0.0 0.0 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 10.8 0.0
Demand -8.5 6.0 22.1 4.5 6.6 10.3 19.1 7.6 4.9 9.2 12.9 8.2 8.8 -8.5
Revenue -15.3 -0.8 15.9 -2.9 6.8 8.3 26.6 5.1 6.5 9.8 10.8 -3.2 6.3 -15.3
Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Sep 18 Oct 18 Nov 18 Dec 18 Total Year Jan YTD
Occ -10.5 -3.7 -11.0 -3.9 -0.7 -1.0 0.2 2.4 2.6 4.6 1.7 2.6 -1.6 -10.5
ADR 3.5 5.7 3.2 2.9 -5.4 5.2 -5.8 -2.7 2.3 -2.9 3.5 3.3 0.5 3.5
A-113
RevPAR -7.4 1.8 -8.1 -1.1 -6.1 4.1 -5.6 -0.4 5.0 1.6 5.2 6.0 -1.1 -7.4
Supply 12.9 12.9 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 1.9 12.9
Demand 1.0 8.7 -11.0 -3.9 -0.7 -1.0 0.2 2.5 2.7 4.7 1.8 2.7 0.3 1.0
Revenue 4.5 14.9 -8.1 -1.1 -6.1 4.1 -5.6 -0.3 5.1 1.6 5.3 6.1 0.8 4.5
Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Total Year Jan YTD
Occ 18.9 2.7 3.5 14.8 9.1 1.1 0.7 -2.2 0.0 -4.3 10.4 2.5 4.1 18.9
ADR -4.1 -1.8 8.8 4.8 7.8 -1.5 10.2 3.9 0.6 4.4 -1.2 -1.5 2.8 -4.1
RevPAR 14.1 0.9 12.5 20.3 17.6 -0.4 10.9 1.7 0.7 -0.1 9.1 1.0 7.1 14.1
Supply 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.1
Demand 19.0 2.8 3.6 14.9 9.2 1.1 0.8 -2.2 0.0 -4.3 10.4 2.5 4.2 19.0
Revenue 14.2 1.0 12.6 20.4 17.7 -0.3 11.0 1.7 0.7 -0.1 9.1 1.0 7.1 14.2
Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20 Total Year Jan YTD
Occ -1.7 -1.7
ADR 2.9 2.9
RevPAR 1.1 1.1
Supply 0.0 0.0
Demand -1.7 -1.7
Revenue 1.1 1.1
Occupancy (%)
January February March April May June July August September October November December
2015 75.4 75.7 75.3 75.0 74.1 73.7 73.5 73.5 73.1 73.0 72.8 72.5
2016 72.3 71.7 71.9 72.0 72.6 72.6 72.0 72.0 72.2 71.8 71.2 71.2
2017 70.8 71.1 71.6 71.2 70.9 70.8 71.1 70.9 70.5 70.3 70.3 69.9
2018 69.3 69.1 68.4 68.1 68.1 68.0 68.0 68.2 68.3 68.6 68.7 68.8
2019 69.6 69.7 69.9 70.8 71.3 71.4 71.4 71.3 71.3 71.0 71.6 71.7
2020 71.6
ADR ($)
January February March April May June July August September October November December
2015 235.95 235.37 233.98 230.89 227.71 227.75 227.90 226.23 226.96 227.80 226.40 225.56
2016 225.05 225.64 225.30 225.92 227.22 226.73 224.98 225.92 226.07 224.64 224.00 224.95
2017 224.17 223.19 221.83 220.36 220.61 220.33 221.46 221.01 221.48 221.69 221.28 219.77
2018 220.11 220.61 221.39 221.93 220.64 221.73 220.52 219.91 220.53 219.93 220.47 220.85
2019 220.00 219.70 221.18 222.18 224.18 223.89 225.79 226.60 226.75 227.64 227.32 227.09
2020 227.48
RevPAR ($)
January February March April May June July August September October November December
2015 177.82 178.06 176.29 173.23 168.79 167.78 167.43 166.30 165.81 166.26 164.72 163.53
2016 162.77 161.82 161.93 162.65 164.92 164.66 161.99 162.63 163.25 161.33 159.52 160.20
2017 158.74 158.67 158.91 156.84 156.31 155.94 157.51 156.67 156.12 155.92 155.51 153.69
2018 152.51 152.37 151.33 151.18 150.19 150.80 150.00 149.95 150.72 150.95 151.52 152.05
2019 153.10 153.18 154.65 157.23 159.92 159.85 161.31 161.56 161.67 161.65 162.70 162.79
A-114
2020 162.89
Supply
January February March April May June July August September October November December
2015 362,810 362,810 362,810 362,810 362,810 362,810 362,810 362,810 362,810 362,810 362,810 362,810
2016 362,810 362,810 362,810 362,810 362,810 362,810 362,810 362,810 362,810 362,810 362,810 362,810
2017 362,810 362,810 366,778 370,618 374,586 378,426 382,394 386,362 390,202 394,170 398,010 401,978
2018 405,946 409,530 409,530 409,530 409,530 409,530 409,530 409,561 409,591 409,622 409,652 409,683
2019 409,714 409,742 409,773 409,803 409,834 409,864 409,895 409,895 409,895 409,895 409,895 409,895
2020 409,895
Demand
January February March April May June July August September October November December
2015 273,425 274,469 273,353 272,205 268,922 267,271 266,544 266,700 265,065 264,796 263,954 263,032
2016 262,401 260,198 260,753 261,202 263,334 263,483 261,240 261,161 261,986 260,567 258,367 258,388
2017 256,908 257,928 262,753 263,788 265,399 267,834 271,973 273,882 275,048 277,242 279,720 281,108
2018 281,274 282,851 279,924 278,972 278,778 278,514 278,571 279,256 279,933 281,152 281,545 282,049
2019 285,122 285,675 286,520 289,995 292,350 292,644 292,841 292,242 292,251 291,070 293,370 293,838
2020 293,503
Revenue ($)
January February March April May June July August September October November December
2015 64,514,783 64,601,279 63,959,853 62,848,934 61,237,112 60,871,995 60,746,675 60,334,287 60,158,587 60,320,675 59,760,461 59,330,203
2016 59,053,549 58,710,883 58,748,241 59,009,937 59,835,956 59,739,362 58,773,355 59,002,168 59,228,081 58,533,947 57,874,369 58,123,836
2017 57,591,779 57,565,731 58,285,772 58,127,284 58,550,175 59,011,642 60,231,428 60,530,040 60,918,823 61,460,647 61,895,233 61,778,490
2018 61,912,010 62,399,989 61,972,515 61,912,745 61,508,908 61,755,669 61,429,129 61,411,971 61,733,140 61,833,360 62,071,719 62,290,677
2019 62,726,870 62,764,043 63,373,226 64,431,499 65,539,665 65,518,772 66,120,537 66,222,252 66,266,923 66,259,917 66,689,846 66,727,022
2020 66,766,500
Economists expect that the U.S. economy will return to growth during the second half of the year, however, the rate
of growth remains uncertain and will largely depend on the path of the coronavirus. If it burns out quickly, or a
treatment becomes available, the recovery is likely to be strong, but if it lingers and the risk of infection remains
high, then social distancing measures will continue to be implemented in various capacities. This will have a large
impact on activities such as dining out, going to the movies, travel and other leisure activities. In this scenario, the
recovery will be much more modest and the economy will take a longer time to fully recover.
While the speed of the recovery remains uncertain, most signs point to the recovery being underway by the third
quarter. As states and localities unwind restrictions on activities, all eyes remain on what happens with the infection
and hospitalizations. The key to how rapidly the economy recovers will be business and consumer confidence. If
businesses and households are confident that they can engage in normal activities without facing the threat of
infection, growth will accelerate. But if concerns remain elevated, it will take longer for the economy to fully recover.
Entering 2020 on a stable, if not strong economic footing, the novel coronavirus has clearly had a severe impact on
the economy. Keeping in mind that a majority of the information in this report contains the latest concrete data
available (typically as of 2Q 2020), events have been changing rapidly, and the latest statistical information available
has been provided, as available. The commercial real estate sector is not the stock market. It is slower moving and
leasing fundamentals do not swing wildly from day to day. That said, the economy is still struggling to gain its
footing, and this impacts the real property markets.
The following summarizes key points regarding employment, according to the Bureau of Labor Statistics:
Overall unemployment rates have risen as the global pandemic has forced over 30 million Americans into
unemployment. Through July 2020, the national unemployment rate, at 10.2% and had risen by 6.5 percentage
points from July 2019.
Total nonfarm payroll employment rose by 1.8 million in July 2020 in the U.S. The number of unemployed
persons fell by 1.4 million to 16.3 million in July. Despite declines over the past 3 months, these measures are
up by 6.7 percentage points and 10.6 million, respectively, since February 2020.
In the office-using industries, employment in the professional & business services sector increased in July 2020
by 170,000 jobs. The financial activities industry added 21,000 in July 2020, while the information industry lost
roughly 15,000 jobs in July 2020.
Job growth is a critical component of determining demand for office space. The national U.S. unemployment
rate has gradually declined since 2009, and office-using employment has been one of the biggest gainers
during this expansion period. The sharp decline in office employment earlier in the year is impacting the
commercial office markets, but participants are encouraged by the more recent gains noted above.
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The West office market registered the lowest overall vacancy rate during first quarter 2020, at 11.1%. The
overall vacancy rate is unchanged from first quarter 2019. The South office market ended first quarter 2020
with an overall vacancy rate of 14.7%, the hi