Howard weighs fi­nanc­ing op­tion for Columbia plan

TIF, bonds pro­posed for down­town devel­op­ment

Baltimore Sun - - FRONT PAGE - By Pamela Wood

In the fu­ture, down­town Columbia could in­clude soar­ing of­fice tow­ers, thou­sands of new homes, a ho­tel and more shop­ping — com­plet­ing what boost­ers say was the vi­sion of the late James W. Rouse to cre­ate a “real city” at the heart of the sub­ur­ban town he launched 50 years ago.

To get there, Howard County is con­sid­er­ing the same type of pub­lic fi­nanc­ing ap­proved last month by the Bal­ti­more City Coun­cil for Un­der Ar­mour CEO Kevin Plank’s mas­sive Port Cov­ing­ton devel­op­ment — a move now be­ing stud­ied by some county of­fi­cials.

“I think what we re­ally need to en­sure is — would this devel­op­ment move for­ward in a way that would make us proud of the next chap­ter that we’re writ­ing for Columbia?” asked Howard County Coun­cil Chair­man Calvin Ball.

Ball, a Demo­crat, is guid­ing the County Coun­cil through the thorny ques­tion of whether to ap­prove a $90 mil­lion pub­lic fi­nanc­ing deal for down­town Columbia.

The devel­op­ment firm Howard Hughes Corp., the suc­ces­sor to the Rouse Co., is ask­ing the county for the tax in­cre­ment fi­nanc­ing to help pay the front-end costs of road im­prove­ments, wa­ter and sewer lines, stormwa­ter man­age­ment and a park­ing garage for projects to fill in the prime, mostly un­de­vel­oped

par­cel nick­named “the Cres­cent.”

The 22-acre arc, nes­tled be­tween the Mer­ri­weather Post Pavil­ion con­cert venue and Bro­ken Land Park­way, would be filled with high-den­sity, ur­ban-style devel­op­ment.

Un­der tax in­cre­ment fi­nanc­ing, the county would bor­row money for the work by is­su­ing bonds. Howard Hughes, founded more than a cen­tury ago by the fa­ther of the late bil­lion­aire, would pay the bonds back with the prop­erty taxes it pays once the land is de­vel­oped.

Howard County Ex­ec­u­tive Al­lan Kit­tle­man, a Repub­li­can, is propos­ing mul­ti­ple bond is­sues, to­tal­ing up to $170 mil­lion, over three to four years.

The County Coun­cil is sched­uled to dis­cuss the first, $90 mil­lion round dur­ing a work ses­sion today. A vote could come next month.

Greg Fitchitt, Howard Hughes’ vice pres­i­dent of devel­op­ment, said the pub­lic fi­nanc­ing is needed to trans­form Columbia’s down­town “from a sub­ur­ban-style town cen­ter dom­i­nated by a mall to an ur­ban, walk­a­ble, vi­brant, 21st-cen­tury vil­lage.”

He said ur­ban de­vel­op­ments need in­fra­struc­ture such as park­ing garages, not mas­sive flat park­ing lots, and Howard Hughes needs help pay­ing for that. The garage en­vi­sioned for the cres­cent would also serve pa­trons of Mer­ri­weather Post Pavil­ion.

The com­pany has al­ready done work in Columbia’s core, con­vert­ing the old Rouse Co. build­ing near Lake Kit­ta­maqundi into a Whole Foods gro­cery, build­ing an apart- ment high-rise called The Metropoli­tan and be­gin­ning con­struc­tion on an of­fice build­ing to be the new headquarters for the MedS­tar hos­pi­tal sys­tem.

But it now needs help, Fitchitt said, to “keep the mo­men­tum go­ing.”

De­bate over pub­lic fi­nanc­ing in Columbia has echoed the dis­cus­sion in Bal­ti­more, where Plank’s Sag­amore Devel­op­ment sought $660 mil­lion in tax in­cre­ment fi­nanc­ing to build roads, util­i­ties and other in­fra­struc­ture around Port Cov­ing­ton.

Plank’s $5.5 bil­lion project in­cludes of­fices, homes, shops and restau­rants to go with a new headquarters for Un­der Ar­mour.

As with Port Cov­ing­ton, the pro­posal for the Cres­cent has both sup­port­ers and crit­ics. De­trac­tors have ques­tions about the vi­sion for Columbia, af­ford­able hous­ing, and the wis­dom of re­ly­ing on fu­ture tax rev­enue to pay off the bonds.

Kit­tle­man said the fi­nanc­ing is nec­es­sary to carry out the long-term vi­sion for down­town Columbia. In 2010, the county called for in­tense devel­op­ment in the area, and con­sid­ered pub­lic fi­nanc­ing to make it hap­pen.

“We have a de­vel­oper … who has a plan to in­vest over $2 bil­lion in down­town Columbia,” Kit­tle­man said. “To en­cour­age that devel­op­ment to hap­pen more quickly, the TIF makes a lot of sense.”

He com­pared the fi­nanc­ing to other con­ces­sions the county makes to help devel­op­ers, such as chang­ing zon­ing. He said help­ing to shoul­der in­fra­struc­ture costs will en­sure the Cres­cent is de­vel­oped quickly.

“It was part of the down­town Columbia plan and we’re try­ing to make sure things con­tinue to go as smoothly as pos­si­ble,” he said.

Not ev­ery­one is con­vinced. Ball, whose district in­cludes part of Columbia, said he’s not com­fort­able with the fi­nanc­ing deal as it’s cur­rently struc­tured, and isn’t sure it has the votes on the County Coun­cil to pass.

“Feel­ings on the TIF run a spec­trum, from those whoare very com­fort­able with it as it’s been con­fig­ured, to those who do not be­lieve fun­da­men­tally that a TIF should even be con­sid­ered for Columbia, to those who think it could be con­sid­ered, but it’s not quite right,” Ball said.

Coun­cil­woman Jen Ter­rasa, a Demo­crat who also rep­re­sents part of Columbia, said she was ini­tially “alarmed” about the size of the TIF pro­posal, and ques­tions whether the pack­age is nec­es­sary to get qual­ity devel­op­ment.

She said in her mind, TIFs are bet­ter suited to re­vi­tal­iz­ing “down­trod­den” ar­eas — not a de­sir­able area like down­town Columbia.

“Is a TIF nec­es­sary for this project to move for­ward?” Ter­rasa said. “That thresh­old hasn’t been ad­e­quately an­a­lyzed.”

Coun­cil­man Greg Fox, the lone Repub- li­can on the coun­cil, said he, too, needs more in­for­ma­tion about whether the TIF is nec­es­sary for the devel­op­ment to suc­ceed.

Two con­sul­tants who an­a­lyzed the tax fi­nanc­ing pro­posal —Mu­niCap, which stud­ied it on be­half of the Kit­tle­man ad­min­is­tra­tion, and Tis­chlerBise, a firm hired by the County Coun­cil — con­cluded the deal is jus­ti­fied.

But Tis­chlerBise ex­pressed cau­tion that the de­vel­oper and ad­min­is­tra­tion have over­stated some of the eco­nomic ben­e­fits of the project.

Howard Hughes of­fi­cials say they need help with roads, the garage and other projects to make the project fi­nan­cially vi­able. Fitchitt sug­gested re­cently that with­out pub­lic fi­nanc­ing, the com­pany would in­stead likely build a “Wal­mart and gar­den apart­ments” — a com­ment he later said was not meant to be deroga­tory, but sim­ply to de­scribe typ­i­cal sub­ur­ban devel­op­ment.

“With­out a TIF you can still do devel­op­ment,” he said. “It just would not be the vi­sion of the down­town plan. We re­ally need this leg­is­la­tion to pass in or­der to ful­fill the vi­sion.”

When the project is fully built out, Fitchitt said, it will gen­er­ate more than enough tax rev­enue to pay back the TIF bonds and help fund other county projects, such as school im­prove­ments, a new li­brary and re­de­vel­op­ing a nearby fire sta­tion.

Af­ter pay­ing back the bonds, he said, the devel­op­ment is pro­jected to put more than $400 mil­lion in ad­di­tional taxes into county cof­fers over 35 years.

If the project didn’t gen­er­ate suf­fi­cient tax rev­enue, the county could levy a spe­cial tax against the de­vel­oper to cover the short­fall.

Also wrapped into the dis­cus­sion of devel­op­ment in down­town Columbia is a de­bate over af­ford­able hous­ing. Cur­rently, devel­op­ers pay money into an af­ford­able hous­ing fund for each res­i­den­tial unit they build.

But that money hasn’t yet trans­lated into more af­ford­able units down­town. Howard Hughes, work­ing with the ad­min­is­tra­tion and hous­ing groups, has pro­posed a plan that would re­quire af­ford­able units to be built in ex­change for al­low­ing more to­tal units and re­lax­ing park­ing re­quire­ments.

Ter­rasa has pro­posed a plan that would re­quire down­town devel­op­ers to set aside15 per­cent of their hous­ing units for af­ford­able hous­ing. While the hous­ing bills and TIF bills are sep­a­rate, the af­ford­able hous­ing re­quire­ments will fac­tor into Howard Hughes’ plans for its project.

Fitchitt said he’s “work­ing closely” with coun­cil mem­bers to get them com­fort­able with both the af­ford­able hous­ing plan and the tax fi­nanc­ing.

“Is a TIF nec­es­sary for this project to move for­ward?”

KEN­NETH K. LAM/BAL­TI­MORE SUN

Build­ing the new headquarters for the MedS­tar hos­pi­tal sys­tem is part of the work that de­vel­oper Howard Hughes Corp. is un­der­tak­ing in Columbia’s down­town.

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