Council Defers Action On Plan To Administer Development Loan Members Not Convinced Town Should Take Part

December 16, 1990|By Daniel P. Clemens Jr. | Daniel P. Clemens Jr.,Contributing writer

It's been proposed as a great idea, but a wary Sykesville Town Council remains to be sold on it.

The Howard County developer of a 32-acre industrial-retail park is requesting this South Carroll County town take part in administering a $1.5 million package of state and county loans that would finance about half the project.

To hear it from state and Carroll County officials who briefed the council at its regular meeting last week, the package offers the town -- which straddles the two counties -- a potentially significant gain while posing little risk.

The project, called Raincliffe Center, stands to increase the town's tax base and create new jobs, said James R. Gatto, loan program director from the state Department of Economic and Employment Development.

Of course, the town would become responsible for $1.5 million. But even in the event of a default, the town would take possession of a piece of property expected to be worth $4.7 million once completed.

But some council members said they have yet to be convinced that Sykesville should get involved in administering the loan package.

"We would become real estate brokers and I don't think that's a legitimate function for a municipal government," said Councilwoman Maxine Wooleyhand. "If it's so good, why isn't the state willing to stand by it on its own?"

Gatto replied that local control of the money allows a municipality to "direct investment where the town wants it to go."

Wooleyhand said she opposes the town completing applications for the state loans.

The project's developer -- Security Enterprises Inc. of Ellicott City -- is asking the council to create a special tax district at the site, which is required for the town to receive two loans from the state and one from Carroll County.

"It would get half the project financed at below-market rates in a very, very tough market to get financing," project manager David W. Moxley said of the loan arrangement. "The project would probably not get developed at all without a program like this."

The package is composed of $750,000 from the Maryland Industrial Commercial Redevelopment Fund and $500,000 from the Maryland Industrial Land Act.

The remaining $250,000 would come from the Carroll County Department of Economic and Community Development.

Town Manager James L. Schumacher asked the council Monday to consider creating the tax district, a procedural step that would not obligate the town to the loan program.

After more than an hour of discussion with Gatto, Moxley, and James C.

Threatte, director of the Carroll County economic development department, the council delayed action on the proposal, saying it needed more information.

Construction of Raincliffe Center is scheduled to begin this spring, with completion set for the end of 1991, Moxley said.

The planned seven lots on the site would include 200,000 square feet of industrial space and 100,000 square feet for commercial use, he said.

Councilman Charles "Tim" Ferguson questioned officials as to how the loan arrangement was any different from the town simply borrowing the money from a bank.

Gatto replied that the state would work to be less rigid than a bank in drafting loan terms and executing the loan.

"We'll try to make this as painless as possible," he said.

The programs have been used successfully in other parts of the states, Gatto said, by small municipalities looking for ways to finance industrial development projects. Examples he offered Monday included Denton in Caroline County, and Princess Anne's in Somerset County.

"There has never been a default in either program in any county," he said.

The Maryland Industrial Commercial Redevelopment Fund was set up in the early 1970s, and the Maryland Industrial Land Act began in the early 1980s, Gatto said.

The annual tax bill for the property currently is $1,576, said Moxley.

Once the park is built, that figure would rise to about $73,000, or almost one-quarter of the town's industrial tax base.

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