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Economists eye land deal with Orioles; state says it will ‘reinvigorate’ Camden Yards – Twin Cities

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In its memorandum of understanding with the Orioles, the state of Maryland agreed to receive less revenue from state-owned land near Camden Yards, providing potentially lucrative benefits for the team.

Revenue that could reach millions of dollars a year from land and real estate development, including the Camden Yards warehouse, would go to the ball club. That would be in addition to at least $600 million in state money for Oriole Park improvements already approved by the General Assembly, and would be in addition to another state fund proposed in the memorandum.

“That’s a lot of money,” said JC Bradbury, an economist at Kennesaw State University, “and it’s unlikely to be of any return to the public.”

In the memorandum announced Sept. 28, the state agreed to lease land near the ballpark to the Orioles for varying annual amounts, totaling $94 million over 99 years. But the sticker price is less valuable than it seems when you consider factors such as inflation over nearly a century.

In today’s dollars, the Orioles will pay the state an average of between $129,000 and $208,000 per year for development and potentially profit rights on land surrounding the stadium, according to an analysis by University professor Geoffrey Propheter from Colorado to Denver, who wrote a 2022 book called “Major League Sports and the Property Tax.”

Compared to alternatives, such as the state itself continuing to lease the warehouse to tenants or selling the land to a developer and returning it to the state and city tax rolls, the lease Land brings in “an insignificant amount of revenue,” Propheter said.

“It’s a pitiful amount of money,” said Dennis Coates, an economist at the University of Maryland, Baltimore County.

The former B&O Railroad warehouse at Camden Yards is the crown jewel of the land lease, and like Oriole Park and M&T Bank Stadium, it is owned and leased by the Maryland Stadium Authority. The warehouse, whose tenants include law, advertising and medical firms, made $638,000 in profit last fiscal year, authorities said.

With redevelopment, this could be much more lucrative.

The stadium authority retained Crossroads Consulting and Entreken Associates Inc. in 2019 to provide economic consulting services regarding the historic 430,000-square-foot building. The consultants’ report, obtained by the Baltimore Sun, states that if the warehouse is converted into a hybrid retail, hotel, apartment and/or office space – at a cost of between $16 million and $36 million dollars – it could produce net operating income. an annual income of $4.6 million to $7.1 million.

Under the new memorandum, which is non-binding but which both sides view as a precursor to a lease, the Orioles, not the state, would be responsible for financing the development and collecting potential profits.

“It’s basically giving the field to the Orioles,” said Bradbury, who is often a critic of stadium subsidies.

The flip side for the state is that — as part of the yet-to-be-finalized lease deal — the Orioles would commit to staying in Baltimore for another 30 years. Additionally, land around Camden Yards, currently largely idle, would be used more efficiently. Both the stadium authority and the Orioles envision a year-round entertainment destination with varied attractions that would energize downtown Baltimore.

The land has been underutilized for years. Camden Station, which previously housed the Sports Legends Museum and Geppi’s Entertainment Museum, has been without tenants since 2018. Only about half the square footage of the neighboring warehouse is in use, primarily as office space. This “limits activity to weekday working hours,” the stadium authority said in a statement.

“Private investment in the warehouse as well as the vacant Camden Station building and surrounding area will help reinvigorate and reimagine the space, attracting visitors not only on game days but year-round,” the Gate wrote -speaker Rachelina Bonacci.

Democratic Gov. Wes Moore defended the memorandum of understanding, saying it will shape “the economic future of the city.”

David Turner, Moore’s senior advisor and communications director, cited the economic impact of entertainment districts around the MLB homes of the Atlanta Braves, St. Louis Cardinals, Colorado Rockies and Texas Rangers.

In a statement released Thursday, he described the memorandum as a “paradigm shift for the Camden Yards complex” and said the development would lead to increased foot traffic in the area and tax revenue for the state.

“The new Camden Yards will bring visitors from across the city and beyond to spend time downtown, whether there is a game or not,” Turner said.

Kerry Watson, the Orioles’ executive vice president of public affairs, agreed in a statement Friday, saying the club was “excited about providing Baltimoreans with the opportunity to access fully realized and activated, open every day.”

“The state would enjoy the benefits of robust, best-in-class development facilitated by private dollars to provide Maryland with the sales tax, job expectations numbering in the thousands, and community opportunities that the MSA does not not exploited before,” he said. said.

Many economists believe, however, that the subsidies given to stadium districts do not benefit the average citizen.

Earlier this year, Orioles CEO and Chairman John Angelos and Moore toured the Braves’ suburban stadium and entertainment district, The Battery, which was developed by commercial real estate firm JLL into residential, retail and offices, as well as bars and restaurants. In a January letter to Moore, Angelos noted that the Orioles had hired JLL “to help us maximize our creative vision for Oriole Park.”

The Baltimore club would continue the trend of professional teams developing the areas around their stadiums. When asked why it is increasingly common for sports teams to get involved in land development, Propheter responded, “Why is a company doing something? This is because they expect a profit.

The ground lease is part of the eight-page memorandum of understanding signed by Angelos and Stadium Authority Chairman Craig Thompson.

Jesse Saginor, a professor in the University of Maryland’s real estate development program, said leasing land to professional teams at a low rate is not atypical.

“This reduction is basically a sweetener, ideally for the team to want to stay,” he said.

The club’s lease for Oriole Park – which binds it to the city and the public stadium – expires on December 31.

Angelos promised to keep the team in Baltimore and the state committed in April 2022 to at least $600 million to improve the stadium to bolster prospects of signing a long-term lease with the Orioles. The recent memorandum indicates the Orioles would remain in the city for another 30 years.

But fans’ fears of an Orioles sale leading to a move were stoked last year when an internal dispute over his ailing father’s assets became public, revealing acrimonious statements about possible preparations to put the team on the market after the death of Peter Angelos. .

The MoU further details additional financial arrangements. The Orioles will pay for the operation and maintenance of the stadium, but will stop paying rent on the stadium itself. This will save the state millions of dollars annually and is similar to the deal it struck with the Ravens for M&T Bank Stadium.

However, the Orioles, in addition to the ground lease, would receive $3.3 million per year for a repair fund that would total $100 million over 30 years. These are advantages that the Ravens do not enjoy. Due to parity clauses in team leases, the state may be required to provide the equivalent to the NFL team.

The fund would require approval from the General Assembly and it is unclear whether the Legislature would pass such a bill. The Legislature isn’t expected to reconvene until January, but that doesn’t necessarily mean the lease can’t be signed before then.

“It is common for signed contracts to include terms covering future events, conditions or approvals,” said Turner, Moore’s communications director.

The memorandum was also criticized by former stadium authority leaders for giving the Orioles authority to construct and operate the stadium.

Asked whether the Orioles would have the authority to determine how public money is spent, Bonacci, the authority’s spokesman, said in a statement: “The team should play a greater role in contractor selection and project administration, following models of other stadiums and subject to significant oversight and approvals from the Maryland Stadium Authority.

Christopher Ryon, a Baltimore-based procurement attorney, noted that the stadium authority has experience with procurement, unlike the Orioles, and questioned what procurement guidelines the club should follow .

“These are important details that still need to be worked out between the parties,” Ryon said.

Economists who study stadium subsidies have long warned that public funding of venues for private sports teams is a bad deal for taxpayers. Coates, the UMBC professor, criticized the decision-making process of the General Assembly and then-Gov. Larry Hogan for approving at least $1.2 billion for Orioles and Ravens stadiums in 2022.

On Wednesday, he further denounced the recent memorandum granting the Orioles additional resources in the form of land and public funds.

“I would like to see a discussion about what can be done with that money,” he said, “besides giving it to a sports team for their own benefit.”

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