Annapolis mayor proposes financing part of Park Place project's garage

Plan to issue $25 million in bonds, repay with tax

April 23, 2001|By Amanda J. Crawford | Amanda J. Crawford,SUN STAFF

In a move the city hopes would help spur development on the Inner West Street Corridor, Annapolis Mayor Dean L. Johnson has proposed financing part of an underground garage at the much-anticipated $150 million Park Place development.

Under the plan, the first tax increment financing (TIF) plan ever proposed in Annapolis, the city would issue up to $25 million in bonds to fund a portion of the garage, then pay off the debt with city and county taxes collected from the improved development. The plan, which also requires Anne Arundel County Council approval, is up for public hearing before the city council today.

Johnson said he fears that without government support, the mammoth mixed-use development proposed at West Street and Taylor Avenue -- which the city hopes will serve as an anchor for redevelopment of the rest of the strip -- will fall through.

"We are trying to control our economic destiny," said Johnson, who is sponsoring the city legislation with finance committee chairman Alderman Joseph Sachs,

But Alderman Sheila M. Tolliver questioned the economic incentive for development on land "people were fighting to have."

"This is a particular benefit to a particular property that would otherwise be a cost to that developer," she said.

If the plan passes, the city would own 896 of 1,396 spaces in the underground garage at the project to be developed by Jerome J. Parks. The project is slated to include a 225-room hotel, two office buildings, a performing arts hall, 200 condominium apartments and nearly 50,000 square feet of retail space. Under city code, the development is required to have 1,396 spaces. More than 200 additional parking spaces will be elsewhere on the property.

For up to 30 years, the city and county would continue to collect the base property tax, which is the amount they pay on the unimproved property at the 11-acre site -- $26,000 a year for the city and $21,000 for the county, said Park Place spokesman Bob Kramer. All additional property taxes from the finished development -- anticipated at $660,000 for the city and $550,000 for the county when the project is complete, which could take more than seven years -- would go toward paying off the bonds.

If tax revenue is insufficient to meet bond payments, the city's net income from its part of the garage would go toward bond payments. Additional revenue to pay off the bonds would be from a tax that could be levied on property owners at that site -- not on other city businesses or residents, under the proposal.

The city and county would receive all other tax revenues from the project, such as hotel and income taxes. The developer pegs this revenue at more than $900,000 annually for the city and $1.7 million annually for the county, Kramer said. The city also would receive more than $2.6 million in one-time fees, such as permit and sewer fees during construction. The county would earn $350,000 in one-time fees, Kramer said.

If the city or county chooses not to approve the TIF plan, Kramer said Parks would not proceed with the project as it has been proposed.

"The numbers just don't work for private financing of this project if you have to include the cost of the parking structure," Kramer said. "To do an ambitious mixed-use project that involves using the site in a creative way ... is only possible to do with this TIF."

Tolliver, though, said such incentives should be reserved for properties that need them because they are otherwise too expensive or unattractive to develop.

"I would hate to see [Parks] pull out of the project, but I don't think it takes this extraordinary effort of the city to make sure that property is developed and developed well," she said.

If the city council passes the plan, the County Council has to agree for it to go forward.

County Executive Janet S. Owens said Friday that she had met with Parks and Johnson on the proposal. Her financial advisers are analyzing the project, but if the numbers work the way Parks has projected, Owens said she will "absolutely" support it.

The city council will hold a public hearing on this proposal and other issues at 7 p.m. today at City Hall on Duke of Gloucester Street.

Sun staff writer Scott Calvert contributed to this article.

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