Editor’s note: Route 1 Reporter is a subscriber-supported local news website. In the interest of the public discourse, articles about government policy are available for free. If you like the reporting, please support Route 1 Reporter on Patreon.
College Park City Council appears to have the votes to give a student-housing developer a tax cut it was once ineligible for, however the tax cut will be smaller than what developers sought.
The measure goes back to an erroneously granted tax cut, also called a tax credit, unanimously granted by College Park City Council at a January 2020 meeting to Gilbane Development Co., the developers behind the Tempo student housing apartment complex. But the already under-construction project, which is located near the intersection of Baltimore Avenue and Berwyn Road, was never eligible for the tax cut. A 2015 revision to the regulations governing the tax cut program, called the College Park Revitalization Tax Credit, prohibited student housing projects from applying to the program. The error was not caught until June 2020, six months later. The program is designed to reduce city property taxes for development projects over a five year term. The total value of original, erroneously granted tax credit came to an estimated $571,000 over the five-year term of the Revitalization Tax Credit program.
At its March 16, 2021 worksession, a straw poll conducted by Mayor Patrick Wojahn revealed five City Council members – Wojahn plus Councilors Katie Kennedy, Jon Rigg, Robert Day and Monroe Dennis, supported granting a tax cut for the project at 75 percent of the value of the erroneously granted incentive, roughly $428,300 over five years. Councilors Llatetra Esters and Maria Mackie supported granting the tax cut at 50 percent of the original value, while Councilors Fall Kabir and Denise Mitchell said they would not support granting any tax cut.
Dennis said the project deserved a tax cut because it was redeveloping hard-to-develop lots into properties that, in the long-term, would dramatically increase property tax revenue generated on site. He noted the final project would be worth an estimated $80 million compared to its current-day value of $2.8 million.
“Hopefully when all is said and done this is going to be a development we are all proud of,” said Dennis.
During discussion, Christian Cerria, Gilbane Development’s director of development, said financing for the project was secured partially based on the city’s prior commitment to grant a tax cut for the project. He also emphasized challenges posed by the development, such as more-rigorous building requirements needed for the site, which sits on the outer-edge of a cliff overlooking Paint Branch. According to Cerria, the project’s construction costs have increased by more than $4 million as a result, making a tax break all-the-more needed.
“We always have put forward our best foot and relied on our commitments and the things we were told,” said Cerria. “As costs were incurred, our hand wasn’t always out. We eat it. But the costs continue to this date beyond what was budgeted for or agreed to.”
Mackie, who has been a vocal critic of developer tax credits in general, pushed for City Council to consider a smaller tax credit.
“I hope we will be conservative because we are still not through with coronavirus,” said Mackie, noting the city’s latest budget proposal for next year includes cuts in many areas.
College Park City Council is expected to vote on this matter at its March 24, 2021, meeting.
At its previous City Council meeting, College Park City Council separately approved an amendment to the Revitalization Tax Credit that allows projects previously granted a tax credit in error to re-apply for the tax credit. That move paved the way for the City Council to specifically consider Gilbane’s request for a tax credit.