Waterfront community restarts annexation move Deal seeks tax break for merger with city

September 28, 1998|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

The residents of Villages of Chesapeake Harbour, a waterfront condominium community on Annapolis' southeastern border, are trying again to be annexed by the city, much to the chagrin of aldermen who thought the controversial plan had died a year ago.

"I can't believe this is back," said Alderman Louise Hammond, a Ward 1 Democrat who opposed the proposal when it came before the city council last year.

The annexation would come at a price. Under the proposal, the city would suspend the residents' property taxes for 10 years and cut their water bills in half. And because the property would be inside city limits, the residents would get a break on their county property tax bills, too.

"I certainly don't support the idea of somebody going for 10 years without paying city taxes," Hammond said. "It's not fair to the other residents."

Supporters of the annexation say the city would benefit in the long run through increased tax revenues.

"All [people] hear is that these residents are getting a city tax break," said Sara H. Arthur, a lawyer for Chesapeake Harbour residents. "But what we're trying to tell them is that the city

benefits almost immediately, and dramatically in the long run."

The city would begin receiving a share of the residents' state income taxes and other taxes as soon as the community came within city limits. And condominiums that have been sold this year would be liable for city property taxes, as would those sold subsequently, she said.

In the city's never-ending quest to create more tax revenue -- about 40 percent of its property is tax-exempt government buildings, churches and schools -- Chesapeake Harbour is a tempting addition.

Plans to annex it date to 1984, when developer Jerome J. Parks was building the gated community comprising 450 homes, a marina and restaurant off Edgewood Road.

Water service provided

Under the original agreement, the city provided Chesapeake Harbour with water service so the developers would not have to build a separate treatment plant. But Harbour residents were to pay twice the normal city rate for water and $100 each a year into an escrow account. Parks seeded the account with $250,000.

Harbour residents were given 10 years -- a deadline the city has extended twice -- to decide whether they wanted to be annexed. If annexation were approved, Harbour residents would get back the money in the escrow account. If they rejected annexation, the city would receive the money.

The residents' application for annexation was delayed several times, then got lost in the shuffle of last year's city elections. It was to have come up for a hearing tonight, but was withdrawn for residents to revise it to include the marina and a fourth section of property that was developed this year with more condominiums.

Meanwhile, the escrow account has grown to $1.2 million.

"Why doesn't the city take the money and run? In the short term, it's better for the city to do that," said F. Joseph Thomas, 69, a retired Navy surface warfare officer who lives in the complex and is pushing for annexation.

But in the long term, he said, it would be better for the city to annex his community.

After five years, the city would receive as much in taxes as is in the escrow account because as condos are sold, new owners would pay full taxes for the city and county. And at the end of 10 years, all Harbour property owners would be paying city taxes.

"We see a benefit for ourselves in that we are almost surrounded by city property," Thomas said. "This gives us an opportunity to have a voice in the way things are run in the city.

"And it would cut our water bill and tax bill."

Charter amended

The property has the potential to provide so much revenue -- about $800,000 annually, according to city financial officials -- that in 1995 the city council amended the charter to allow the 10-year delay in levying taxes.

While both sides agree the annexation proposal is attractive, they also say it will be difficult for it to gain approval because several council members have reservations.

A city law prohibits the annexation of property unless revenues will be high enough to offset the cost of service to the area, said Alderman Sheila M. Tolliver, a Ward 2 Democrat who wondered whether giving Harbour residents a tax break would run afoul of state constitutional requirements of uniform taxation.

Mayor Dean L. Johnson, a Republican, said that while annexing the community may increase revenues, it also could cost more to provide police and fire protection and other municipal services.

Annexation proponents probably are "facing an uphill battle," he said.

At least 25 percent of property owners and registered voters in the area under consideration must approve the revised proposal before it can be presented to city council. The city planning commission and city council must hold hearings before a vote on approval.

"This is not an easy process," said Arthur, the residents' lawyer.

Pub Date: 9/28/98

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