The Baltimore County Revenue Authority is likely to delay a vote on extending a deal with the prospective builders of the Towson Circle III project after an independent analyst raised questions about the terms, officials said.
Authority Chairman Donald P. Hutchinson said the "new information" could jeopardize current plans to build the $75 million complex, which is to include a movie theater, stores, restaurants and offices along Joppa Road across from Towson Town Center.
Financial analyst Peter G. Kessenich has told the authority that several factors could make it difficult to sell the bonds and cover the debt service on its $12 million contribution to building the underground parking garage that the developers say is needed for the project.
In a report commissioned by the quasi-public authority, which operates parking garages, golf courses and an indoor recreational center, Kessenich points to a rise in the bond interest rate since the fall and the terms under which the authority would take ownership of the garage once it was built.
Under those terms, the developers would put up the money for the garage, and the authority would take it over and reimburse the developers for the construction cost once the space in the complex was 55 percent occupied.
That was raised from 25 percent in a previous pact, but Kessenich's report said it still might not be enough to generate the revenue the authority would need, authority board member Leslie M. Pittler said.
The authority was due to vote on the agreement Thursday, but Hutchinson said that's likely to be postponed.
"It would be very difficult for us to extend this agreement with a lot of these questions up in the air," he said.
Pittler said he agreed with Hutchinson, adding that the report "raises very serious questions that would have to be answered before any decision to amend the agreement."
Pittler said he did not believe any agreement is now in effect, because the developers — Heritage Properties Inc. of Towson and the Baltimore-based Cordish Cos. — did not meet their Dec. 31, 2009, deadline to start construction. The draft agreement would extend the deadline to Dec. 31, 2012.
A county economic development official said in November that the economy was apparently making it difficult for the developers to complete leases with a movie theater company and other prospective tenants, which they want to do before construction starts.
The developers declined to comment on the Kessenich report. Asked about the progress of signing leases for the space, a spokeswoman for Cordish said in an e-mail this week that "we are fortunate to have more tenants than we have space."
Spokeswoman Danielle Babcock declined to answer specific questions about whether leases have been signed.
"We continue to have tremendous interest in the theater, retail, restaurant and office components," she wrote.
Jack Cannella, Heritage Properties' vice president for design and construction, said in November that most of the major county approvals were completed, and he was waiting for word from Cordish on the anchor tenant, the 12-to-14-screen movie theater. Once that lease was settled, he said, he expected he could have building permits ready in about two months.
Kessenich, who was scheduled to speak with the board by conference call Thursday morning, was asked to look at the particulars of the authority's plan to issue 30-year bonds to cover its $12 million contribution toward the $18 million cost of the four-deck underground garage.
The other $6 million is being put up by the county in lieu of a tax break to which the developers would have been entitled, because the project is in a revitalization district.
Kessenich said in his report that a key condition, the interest rate, had "risen fairly dramatically" since October, to 6.15 percent. The previous agreement had assumed rate of 5.65 percent.
Kesseinch wrote that the change in the interest rate and the occupancy requirements for the parking garage cast doubt on whether the authority would be able to attract the investment needed to cover the debt service on the bond.
As he considered the arrangement based on the revenues of the new garage alone a "difficult financing to conclude," he suggested a plan to combine revenues from all authority garages to back the bonds. His four alternatives also included asking the county to contribute money to help pay the debt service.