Mall backers to ask $300 million from Md. Silver Spring project 3 times more costly than state expected

September 16, 1996|By C. Fraser Smith | C. Fraser Smith,SUN STAFF

Developers of the proposed $585 million American Dream Mall in Silver Spring will ask for nearly $300 million in Maryland taxpayer support -- about three times more than officials had anticipated.

That projected public cost, disclosed for the first time in a letter from a lobbyist to Montgomery County legislators, surprised the project's supporters and appeared to confirm fears of opponents who predicted a high subsidy.

"The idea that this developer needs $300 million to do this project means Maryland citizens become the stakeholders, not the company," said Bobbie Faul-Zeitler, president of Citizens for Sensible Development.

A supporter of the mall, Del. Dana Lee Dembrow, a Silver Spring Democrat, worried that the company's request could damage the project's chances of approval. But he cautioned that its merits cannot be properly evaluated until the developer, Triple Five Group of Edmonton, Alberta, Canada, submits its formal proposal in November.

For months, supporters of a substantial state contribution have been comparing the public cost of the Silver Spring mall proposal to the $270 million the state committed earlier this year to construction of stadiums for the Baltimore Ravens and the Washington Redskins football teams.

Neither of those projects -- very unpopular in Montgomery County -- will produce anything like the jobs and revenue projected by the developer for the American Dream Mall, supporters have said. And, echoing arguments made for the stadiums, promoters say taxpayers would be helping with a project of "statewide" significance, a resource for all of Maryland -- just like the stadiums.

Dembrow said he learned of the developers' desires in a letter from Laurence Levitan, a former Montgomery County senator who is a lobbyist representing, among other clients, Triple Five Group.

Levitan said yesterday that he had written to the county's senators and delegates in an effort to bring them up to date on the company's work. In the letter, he says the company would request that up to half the total cost of the mall come from the county, the state and a share of mall revenue. Levitan said he also met recently with newspaper editorial boards and with Baltimore Mayor Kurt L. Schmoke, to allay fears that the Montgomery project might cut into funds that would otherwise flow to Baltimore.

"And very little state money would be needed up front," Levitan said. About $20 million would be needed during initial stages of the project to help pay for a "people mover," some other transportation or traffic-related costs and for some historic preservation costs.

House speaker cautious

"It could be a valuable economic engine. But we have to do an awful lot of homework before we could make a commitment of that magnitude," said House Speaker Casper R. Taylor Jr., a Cumberland Democrat.

The American Dream Mall would open in the year 2000 if the developer's plan proceeds on schedule.

Levitan said a substantial public contribution was warranted because the mall would generate 12,900 new jobs, directly and indirectly related to the development, and up to $79 million per year in new revenues.

About $55 million of that would go to the state each year, with most of the rest to Montgomery County, Levitan said. A portion of the mall's revenues, he said, would be "trapped" and diverted to paying off bonds floated to finance the project.

The 2-million-square-foot mall would provide a mix of restaurants, entertainment attractions and hotels. An indoor wave pool and a full-size ice rink are included.

In a sense, the project is under way already. Montgomery County has signed a formal development agreement giving Triple Five Group exclusive rights to the project.

While the developer looks for private financing, the county has spent $15 million on land acquisition and the state has spent another $38 million for land.

But opposition to the project has been vigorous. Signs sprouting around Silver Spring say, "Development Yes -- Megamall No."

Support for 'big bang'

Dembrow said he has given the project qualified support because Silver Spring needs the kind of "big bang economic stimulus" the mall promises. He said he thinks the firm might be shooting high with its $300 million opening request, expecting to settle for a lower amount. Dembrow said yesterday that he thought the public costs associated with the American Dream Mall might be rising because it promises to be a far stronger engine of economic development than the stadiums.

Said Faul-Zeitler, "For $600 million you should be able to revitalize all of Silver Spring. We don't know if this project can ever bring back the kind of financial return that would have merited putting $300 million of taxpayers' money into it."

Pub Date: 9/16/96

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