Mixed use due along U.S. 1

First retail-residential development is planned for the corridor

March 17, 2006|BY A SUN REPORTER

The revitalization of U.S. 1, long sought but years away from being realized, will receive a major boost this summer with the first retail-residential development along the historic corridor.

The multimillion-dollar project will address two critical needs: Infusing U.S. 1 with small retail shops and providing housing for workers in relatively modest-paying jobs.

As part of the joint venture with the county, Orchard Development Corp. will build an L-shaped, five-story complex in North Laurel.

The 3 1/2 -acre site contains an old home and an abandoned and decaying motel. Those will be replaced with retail shops on the first floor and 80 one-and-two bedroom apartments on the upper levels.

The property is at 9902 Washington Blvd., about a mile south of the sprawling CarMax dealership and within walking distance of the Dreyer's Grand Ice Cream manufacturing and distribution plant.

To jumpstart the project, the county is expected to issue up to $6.5 million in tax-exempt development bonds.

The County Council is scheduled to conduct a public hearing Monday on legislation that would authorize the bonds. Because the county is committed to invigorating the economy along U.S. 1, passage of the legislation is widely expected.

The Howard County Housing Commission acquired the site for $2.15 million. Orchard will develop, build and manage the project, but after 20 years, the county will have the option of purchasing the residential units, and in 65 years, the entire project will revert to the county, said Leonard S. Vaughan, director of the Department of Housing and Community Development.

The development is groundbreaking on several fronts:

The project is the first to take advantage of new zoning approved to help revitalize U.S. 1 - corridor activity center - that permits greater density, or housing units per acre, on parcels along the corridor, although others are in various stages of planning.

The Housing Commission has never before combined retail with housing.

It is the first time Orchard has developed a mixed-use project in a single structure.

And it represents the first time in more than two decades that the county will have issued bonds for housing.

"I am optimistic. It's going to happen," Vaughan said. "It's going to be a very successful project because there is a strong market there for the [housing] units and a strong market for retail. ... It will also show how the new zoning district works. It will make for a much more attractive and marketable area."

Groundbreaking for the development is expected within three months, or "certainly by late summer," said L. Scott Armiger, vice president of Orchard.

The project will take about 12 months to construct, and Armiger said he expects the first residents and retail tenants to move in by "late spring or early summer" of next year.

"It's a pioneering project," he said. "... It will trigger other developments along Route 1 without a doubt. Route 1 has so much traffic, so much exposure. It's almost a no-brainer for a retailer."

He said the company has a long list of retailers interested in locating at the site, several of whom have signed letters of intent, although those are not binding commitments.

The keys to the project are the new zoning regulations, ownership of the land by the Housing Commission and the bonds.

Without the financing mechanism it is unlikely the project would get off the ground, at least as envisioned, Armiger said.

The bonds permit Orchard to borrow money for the project at below-market rates. The deal includes a payment-in-lieu-of-taxes provision and Orchard will receive tax credits through the state. The purchasers of the bonds, typically financial institutions and mutual funds, are not subject to taxation on the interest they earn.

Although the county will issue the bonds, it will "have no financial liability. The county is never on the hook," said Robert L. Doory Jr., a principal at the Baltimore law firm of Miles & Stockbridge P.C., the county's bond counsel.

"All of that keeps the project affordable," Armiger said. "If it weren't for all of those, it would be a much higher rent, market rate."

Richard W. Story, chief executive officer of the county's Economic Development Authority, said the hope of providing "affordable housing" in the county is unrealistic without subsidies because of soaring land costs and market demand for higher-end units.

"It can't happen unsubsidized, that's for sure," Story said. "The market is up here, and that's the demand. Without public intervention, it's probably not going to happen."

The housing units, Vaughan said, will serve workers in the $20,000 to $40,000-a-year income brackets.

Officials acknowledge that fewer than seven dozen units will not solve the scarcity of affordable housing, but Story said: "It's 80 units that we don't have. It's a start."

And Armiger noted, "All of our residents will be working and contributing to the economy."

Armiger's father, L. Earl Armiger, founded Orchard in 1979. The company has developed more than 5,000 lots and owns and manages about 1,500 apartment units.

He said the company has been impressed with how the project has evolved. "The Housing Commission's mission is to do projects like this," he said. "We would venture with them again."

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