College Park city officials mistakenly granted a tax cut to a development, in part, because city staff used an out-of-date checklist when reviewing the proposal. This insight into the inciting incident behind the mistakenly-granted tax cut comes from emails discussing the gaffe sent since last summer between city staffers, elected officials, and developers. The emails were obtained through a Public Information Act request made by a College Park resident and provided to Route 1 Reporter.
In one of the emails, former College Park City Manager Scott Somers lamented the circumstances surrounding the mistake.
“I’m not only embarrassed but mortified that such a big mistake happened on my watch. The Mayor and Council rely on us to provide them with accurate information. In this case, we failed,” wrote Somers. “I get that mistakes happen, but this one could have easily been avoided had the appropriate questions been simply listed on an updated form.”
The matter focuses on Gilbane Development Co.’s Tempo student-housing project already under construction near the intersection of Berwyn Road and Baltimore Avenue in College Park. In January 2020, College Park City Council unanimously approved a measure that reduced the city taxes on the property for the next five years, worth an estimated $571,000.
But that approval, which required both city staff and elected officials to sign off, was found in June 2020 to be null and void because “multi-family student housing” projects have since 2015 been ineligible for the tax cut program, dubbed the Revitalization Tax Credit. In November 2020, officials with Gilbane requested the city modify the rules for the Revitalization Tax Credit so that the Tempo project could be eligible.
College Park City Council is now moving ahead with plans to grant Gilbane a tax credit anyway. 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.
The error was discovered by city staff after an attorney representing another developer, Matthew Tedesco, sent an email on June 12, 2020, to College Park’s Director of Planning, Community and Economic Development Terry Schum. In that message, Tedesco asked if city still had rules prohibiting student-housing developers from applying for the tax cut.
Schum forwarded the email to Somers shortly afterward, suggesting the idea of granting a waiver to the Tempo project.
“Matt is right. The City Council did make student housing ineligible for a revitalization tax credit,” wrote Schum. “I think we all, including City Council, forgot about this…Maybe we could consider a waiver of this requirement…”
City officials further detailed how the tax cut was mistakenly granted in an email thread dating from June 20, 2020. In one email, Somers said he reviewed of the ordinance governing the tax cut, called the Revitalization Tax Credit, with then-assistant City Manager Bill Gardiner and could not find a provision excluding student housing from the program.
City attorney Suellen Ferguson replied later in the day, highlighting the language that prohibited student housing projects from receiving Revitalization Tax Credits, and provided a copy of a memo sent to City Council members outlining the 2015 change in the law. Ferguson suggested the lapse was partly due to a lack of student-housing development projects proposed for College Park in the immediate years afterward.
“The intention was to exclude student housing,” wrote Ferguson in her reply to Somers. “After the law was amended, there were only a few projects that were developed, and they were all commercial, except for [Terrapin Row], which did not receive a credit.”
Later on June 20, 2020, Ferguson outlined College Park’s options. There were two. One called for the city to honor the tax credit “based on Gilbane’s reliance on it, but not issue any others,” a move which would have required City Council to pass an ordinance granting such a waiver. The other called for the city to withdraw the tax credit because it did not comply with city laws.
“Gilbane cannot force the city to go through with the tax credit if it is not properly granted,” wrote Ferguson.
Later that night, Somers sent another email to Schum, Gardiner, and Ferguson outlining how the gaffe occurred. It singled out a check list used by former College Park Economic Development Coordinator Ryan Chelton to evaluate applications for Revitalization Tax Credits. Somers said the check list did not indicate that student housing is ineligible for the tax incentive. Somers asked if the check list had been updated since 2015, when the rules for the Revitalization Tax Credit changed.
“We relied on that form to be accurate and complete when recommending approval to Council,” wrote Somers. “We neglected to question or to double check that the information was accurate, complete, and compliant with Chapter 175 of the code. It’s not.”
“Ryan missed it. Terry missed it. Suellen Missed it. Scott missed it,” wrote Somers. “And now we need to tell the Mayor and Council that we made a big mistake. We need to be upfront and own that this is our mistake and inform the Mayor and Council about what preventative measures will be implemented to warrant against mistakes like this in the future – Updating the form to reflect the actual law would be a good start.”