The Baltimore County Council is expected to create the largest tax credit in its history next week, one that would save Tradepoint Atlantic and the world’s largest shipping company hundreds of millions of dollars.

For years, Tradepoint Atlantic, owned by private investors, has been planning a massive, one-of-a-kind shipping terminal at its Sparrows Point logistics center as it seeks to resurrect the economic legacy of the old Bethlehem Steel mill once located there.

Two weeks ago, and with the groundbreaking fast approaching, county officials revealed that the company developing Sparrows Point Container Terminal wants a 50-year property tax break. That would deprive residents of a lucrative new stream of county government money. Given the length of the agreement, the amount of forgone tax revenue is impossible to pinpoint.

That number is irrelevant because the project would be “highly unlikely” to proceed without the tax incentive, said Dakarai Turner, a spokesperson for County Executive Kathy Klausmeier. Tradepoint Atlantic officials also have stressed the credit’s importance to the project’s viability.

When asked what would happen if the Baltimore County Council rejected the tax credit, Tradepoint spokesperson Aaron Tomarchio said it would give the development team “pause.” He did not, however, say it would doom the project.

The credit has been under consideration since 2022, officials said, but it wasn’t publicly discussed until a Baltimore County Council meeting in late November. The seven-person council voiced support for the measure, which is expected to have its final vote on Monday.

Several members asked to be considered sponsors of the bill. Councilman Julian Jones called it a “no-brainer.”

The container terminal is a joint venture between Tradepoint and TiL, or Terminal Investment Limited. MSC, the world’s largest shipping company, is the majority owner of TiL.

Officials highlight the jobs, economic benefits and other taxes that the $1.1 billion project is expected to generate.

The county did not independently analyze how much revenue it would forgo because of the tax credit. Instead, Tradepoint hired a consultant to produce a report that was then reviewed by the county.

Greg LeRoy, executive director of the advocacy group Good Jobs First, likened this to playing poker while blindfolded. Scott Pappas, a vocal county resident, called it a giveaway to local and international billionaires.

Still, every living former county executive signed a letter to the council endorsing the plan. Former County Executive Donald Hutchinson said he rarely used tax credits when he was in office from 1978 to 1986, but he said creating jobs for generations made this one worth it.

“To my knowledge, it would be the longest existing tax credit with the greatest financial impact on the county ever,” Hutchinson said.

Competition brewing on the Patapsco

Over the past decade, Tradepoint Atlantic transformed a polluted former industrial area into a sprawling, 3,300-acre economic hub, positioned next to rail lines and interstate highways.

Cargo ships already unload there, but Tradepoint wants to build a container terminal on its southern tip — the kind that handles the world’s biggest ships, capable of carrying more than 100,000 tons.

The company is owned by Redwood Holdings, which was created by billionaire entrepreneur Jim Davis and his cousin, Ravens owner Steve Bisciotti.

Entities tied to Davis or to Tradepoint Atlantic have donated at least $85,000 over the past decade to members of the Baltimore County Council, as well as to funds supporting Klausmeier and former County Executive Johnny Olszewski Jr., now a U.S. representative, campaign finance records show.

MSC’s decision to invest in Sparrows Point came during the COVID-19 pandemic, when consumer spending fueled record-breaking shipping profits.

The project would create the first totally private container terminal in the country. All 84 existing terminals across the U.S. are located on public land and therefore do not pay property taxes.

Paying full property tax would put the terminal at a competitive disadvantage, Tradepoint and county officials said.

Right now, most of MSC’s cargo goes to the Port of Baltimore’s only container terminal with Panamax cranes: Seagirt Marine Terminal. Those cranes handle the biggest, most profitable ships.

Ports America Chesapeake, a private company, pays a few million dollars each year to the state of Maryland, giving it almost total control of every 20-foot metal box moving in and out of the Patapsco River.

Public records show that over the past decade, Ports America Chesapeake has made $441 million in profit while posting an 18% profit margin. Much of that money can be attributed to MSC.

The company has delivered and picked up at least 1 million containers at Seagirt over that time — more than any other ocean carrier — and accounts for a quarter of Ports America Chesapeake’s revenue.

A new terminal at Tradepoint Atlantic would cannibalize some existing port business. About 500 ships are expected to visit it, but two-thirds would be taken from existing Baltimore terminals.

Tradepoint has said the expansion of its container capabilities only made sense because of the Howard Street Tunnel expansion, which will soon allow twice as much cargo to move beneath Baltimore and to the Midwest.

That roughly $500 million project was primarily financed by the state and federal governments. Maryland has also committed $38 million in grants to Tradepoint’s container terminal construction.

Reputation of success

Next up could be a record-breaking incentive from the county.

Under the proposal, the terminal would pay a property tax bill tied to the current assessed value of its land — an empty lot — for the next half-century. The first year of the credit, the tax bill is tripled, and then it rises 2-3% annually for the next 49 years.

Property taxes would not be tied to the value of the terminal after the $1.1 billion investment, and any machinery, including giant cranes, would also be exempt from personal property tax.

When Tradepoint presented council members with this plan, Tomarchio said they accepted it with little hesitation, which he said is a testament to the company’s track record of success and economic impact.

“They understood,” he said.

According to Tomarchio, Tradepoint and its partners estimated that Baltimore County would forgo $229 million in property tax collections as a result of the half-century tax credit. Still, he acknowledged the difficulty in calculating this figure, given that this will be the country’s first wholly private container terminal.

“Nobody knows,” Tomarchio said of the terminal’s future property value. “There’s no comp.”

In a fiscal note, Baltimore County estimated the project would directly pay $40 million over the 50-year period.

“Forgone revenue, in my opinion, doesn’t necessarily apply here,” said deputy county administrator Sameer Sidh, who authored that fiscal note. “This project wouldn’t happen without the tax credit.”

MSC, based in Switzerland and owned by an Italian family, does not share financial information like a publicly traded company. But in 2022, the Italian press reported MSC’s annual profit at about $40 billion. The company’s port development arm, TiL Group, has two other partners: BlackRock, the world’s biggest asset manager, and the sovereign wealth fund of Singapore, one of the richest countries per capita.

At the November council meeting, the only public pushback to the tax credit came from Pappas, a member of the Citizens Advisory Committee for the Maryland Port Administration, who unsuccessfully ran to be the Republican nominee for Baltimore County executive in 2022.

In a letter to the County Council, he called it a “sweetheart” deal.

Small business and homeowners will be left shouldering a bigger tax burden to make up for a tax credit that amounts to “loose change in the pockets of these titans of industry,” he said.

A deal spanning 50 years

Tradepoint hired a consultant to estimate the financial impact that Sparrows Point Container Terminal will have on the region. Its report said the terminal would create more than 8,000 direct and indirect jobs, pump $1.5 billion into the economy annually, and spur $57 million in new state and local taxes each year.

Jean-Paul Rodrigue, a logistics professor of maritime business administration at the University of Texas A&M at Galveston, said no politician would risk playing hardball when an investment this size is at stake.

“It’s a good deal,” Rodrigue said. “It’s the world’s largest shipping line, for God’s sake.”

But Geoffrey Propheter, a University of Colorado Denver professor who studies property tax, said the county probably has more leverage than it realizes. He doubts the tax would make or break the project. He also called Tradepoint Atlantic’s estimates dubious.

“Your goal is to overstate the benefits and understate the cost,” Propheter said. “And lawmakers love it.”

Absent the tax credit, Tradepoint said it might instead build a “ro-ro” terminal, used to handle wheeled cargo like automobiles. Such an investment would generate substantially less economic activity, the county said.

What makes a tax credit like this hard to judge is its 50-year length, said Christina DePasquale, an economics professor at the Johns Hopkins Carey Business School.

The benefit is that the county knows MSC will be here for generations, she said, and MSC knows the county is making a long-term commitment.

To LeRoy, of Good Jobs First, that’s exactly the problem. His organization researches economic development subsidies across the country. The least that Baltimore County could have done, he argued, is create a profit-sharing agreement as part of the tax credit.

That way, LeRoy said, if the new container terminal is as successful as promised, the county won’t miss out on a windfall.

Correction: Redwood Capital Investments changed its name to Redwood Holdings.