Beechtree development touches off multimillion-dollar debate

Tax revenue increase would 'pay back' TIF loan, a first of its kind in Harford

March 16, 2010|By Jonathan Pitts | Baltimore Sun reporter

Harford County would front a multimillion-dollar loan to a real estate developer so it can complete a private residential project near Aberdeen, if the County Council approves a controversial measure backed by County Executive David R. Craig at its legislative session tonight.

County residents will first have a chance to comment on the legislation, which would set up a special taxing district for the future residents of Beechtree Estates, a 768-unit project whose progress had stalled in a difficult economic landscape.

Officials are expecting a lively, overflow crowd.

"People are definitely talking about this issue," said County Council administrator Barbara O'Connor, who said her office has received a high volume of e-mails on the subject, the majority of them critical.

If the council passes the measure, the county would issue up to $14 million in special obligation bonds on behalf of the developer, Clark Turner of Havre de Grace. The company would use that money to finance the roads, streetlights and water and sewer lines for Beechtree Estates - public infrastructure for which local government traditionally pays.

The developer would later "pay back" the loans from the revenue stream created by the subsequent jump in property taxes.

If it's built, Beechtree Estates would occupy 300 acres just north of Old Philadelphia Road, about a mile west of downtown Aberdeen. The land was previously home to Beechtree Golf Club, which ceased operations for financial reasons in 2008.

The proposed arrangement is an example of tax increment financing, or TIF, a procedure by which governments use the promise of increased tax revenue to facilitate private developments it would like to see built.

"It promotes economic development," said Nathan S. Betnun, managing director for public finance at Stone and Youngberg, an Annapolis-based firm that specializes in TIF bonds.

Though TIF has been in use for several decades across the country, Betnun said, it has only been used about 10 times in Maryland - to fund the public infrastructure for Arundel Mills mall, National Business Park near Fort Meade and National Harbor in Prince George's County, among other developments.

It would be the first time Harford County has entered into a TIF arrangement.

Craig originated the legislation, which was introduced at a council meeting last month.

He did not respond to requests for comment, but other proponents, including Jim Richardson, Harford County's director of economic development, said the measure would benefit the county in several ways.

First, he said, with the financial markets still in turmoil, banks are less willing to lend for projects such as Beechtree Estates, which he said would boost the hard-hit local construction industry and help Harford County offer new homes for the thousands of residents already flooding the area as a result of the military base realignment known as BRAC.

The TIF approach, he added, would mean long-needed new roads will be built within three or four years, not the 10 or more years it would have taken county and state governments to do the same work.

But the bill has drawn fire from critics who see it as an example of government creating special conditions for favored developers.

"This government, and all [levels of] government, are getting much too involved in people's lives," said Joan Ryder, a Bel Air Realtor who plans to attend the hearing. "To do all this for one developer, one builder - I don't think it's right."

She added there are already plenty of unsold new homes in nearby subdivisions. "[The bill's supporters] are saying, 'If you build it, they will come.' Well, they've built. Why haven't people come?" she said.

Others called the bill premature. "With this land being just a mile from [ Aberdeen Proving Ground], it's a prime area to be developed," said Dave Pridgeon of Bel Air. "Eventually, if the need for the houses is really there, a loan could be obtained for the site."

Pridgeon, a member of Campaign for Liberty, an activist group that favors smaller government, also worried about government getting too involved in private commerce.

"I don't think it should be the province of Harford County to back [a private developer]," Pridgeon said. "Is the county going to become our local version of Fannie Mae?"

County Councilman Dion F. Guthrie said the bill struck him as a "win-win proposition," but that he would not decide which way to vote until after he hears speakers from both sides.

"Everyone does seem to be in a tiff about it," he said with a laugh.

The public hearing portion will begin at 6 p.m. tonight in the County Council's chambers on Bond Street in Bel Air. The legislative session starts at 7:30 p.m. The council could vote on the measure, Bill No. 10-10, during the session.

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