Council approves tax break for $12.3 million senior housing project in Edgewater

Officials working to create more affordable residences

July 24, 2005|By Phillip McGowan | Phillip McGowan,SUN STAFF

As housing prices continue to rise across the Baltimore-Washington region, the need for affordable homes has become a growing worry among leaders in Anne Arundel County.

So when the County Council had the opportunity to alleviate that strain, if just a little, the members were all smiles. They unanimously approved a tax cut for a $12.3 million senior housing project in Edgewater last week, the final financial piece to get the 102 apartment units under construction.

County Executive Janet S. Owens and council members have differed on requiring new developments to include affordable "work-force" housing. The council deadlocked on a vote last year to encourage developers to set aside 10 percent of new subdivisions as work-force housing. They reached agreement over the budget season to float $50 million in bonds to help county employees with family incomes of $60,000 to $80,000 a year buy homes.

In regard to affordable senior housing, county leaders have generally supported offering property tax breaks to get such projects off the ground, a savings that developers pass on to residents through reduced rent. These reduced taxes are also referred to as a payment in lieu of taxes, or PILOT.

The project in Edgewater, named Victoria Park at Edgewater, will be required to make a PILOT of $15,300 - a savings of nearly $52,000 in fiscal 2006 - with a 4 percent increase each year over the 40-year commitment, according to the county budget department.

"Many of these projects don't make sense unless you have a PILOT," said Bruce Innes, vice president at The Shelter Group, a nonprofit group that oversaw the construction of a 101-unit affordable-living apartment complex in Glen Burnie that opened in 2003.

In many cases, use of the PILOT puts money back into the pockets of counties, said Marilynn Duker, president of the Shelter Development LLC, which oversees the development and management of affordable housing throughout the East Coast.

The housing boom is putting a premium on getting land for any housing project, let alone ones that offer affordable housing. The demand is forcing developers to seek out defunct commercial and industrial sites that otherwise generate no tax revenue, Duker said.

"In recent years, land is so scarce, and the counties have imposed caps [on new development because schools are over capacity]. It makes it much more difficult to compete," Duker said.

Another challenge for developers is finding the right location. The state plays a key role by handing out tax credits based on a system that rates a project's proximity to stores, transportation and other public amenities.

Competition for the state funding is fierce. Victoria Park received that funding on the second try. It has taken at least 2 1/2 years to get to this point, according to Kathleen M. Koch, executive director of the Arundel Community Development Services Inc., a nonprofit organization that oversees affordable housing project in the county. Construction on the four-story complex is expected to begin next month and finish within 18 months.

Victoria Park will be near South River Colony on Solomons Island Road, and is accessible by Annapolis Transit's South County bus route and within walking distance of major retail stores, restaurants and a post office.

The Victoria Park developer, Annapolis-based Osprey Properties Inc., said the project will serve residents 62 and older who have household incomes that are 30 percent to 60 percent of the county's median of $61,000.

The waiting list to get into government-subsidized housing in the county numbers in the thousands, but for privately developed affordable housing projects, such as in Edgewater, the market dictates how fast the units go.

Osprey "will market it; it's first come, first served," Koch said "The only difference is that [potential residents] will have to meet the income test."

Many other funding components go into making these housing projects a reality: a combination of state tax credits, discounted federal loans, county loans and deferred fees. The process of securing the necessary dollars takes years, said people familiar these developments.

"It's like building blocks," Koch said. "Pull one out and it all falls apart."

People familiar with affordable housing said that with a greater share of people reaching retirement age, the demand will increase.

"With the federal government not providing as much assistance as it did 15, 20 years ago, we have to be much more creative in seeking funding," Koch said.

Shelter Development's Duker said that the PILOT incentive will help counties such as Anne Arundel to more readily provide affordable elderly housing and will help maintain continuity of communities.

Said County Councilwoman Barbara D. Samorajczyk, an Annapolis-area Democrat, "We have an aging population that we must help, and we have to retain a diverse population."

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