COLLEGE PARK – The College Park City Council reached an impasse with Gilbane Development Company last week over a proposed tax credit for a new mixed-use development next to the College Park Metro Station.
During the June 11 meeting, city councilmembers conditionally approved the detailed site plan for the proposed College Park Metro Apartments (The Atworth), a new 451-unit project with about 5,000 square feet of retail space currently used as a parking lot for Metro commuters. The land is owned by the Washington Metropolitan Area Transit Authority (WMATA).
However, the council opted not to vote on a revitalization tax credit estimated at more than $580,000 over five years for the project due to a disagreement about a condition that would protect the city in the event the property is later sold to a non-taxable entity, such as the University of Maryland.
The city’s condition states that the purchaser of the property would be required to make an annual payment equal to the amount being paid to the city by the developer pursuant to any tax abatements or, if no tax abatements are in effect, the annual city real property taxes on the property and any improvements, based on assessed value of the property.
“The consideration of a city revitalization tax credit requires the city and the developer to be on the same page with regards to conditions, and we are not on the same page with regards to conditions, so I’m not willing to consider it at this time,” said John Rigg, a District 3 councilmember.
Under the terms of the current proposed tax credit, the developer would receive a 75% credit in year one and a 15% decrease in each subsequent year until the fifth year. The developer is only agreeable to the condition if a 60% tax credit is offered over 15 years, according to agenda documents.
Tom Haller, legal representation for the developer, said the developer needs all the value it can get in the property to secure financing for the project and such an agreement would reduce the long-term value in the property.
“While we appreciate the city’s concern, we don’t think it’s one that is certainly not realistic at this point in time, so we don’t think there’s any threat from the city’s perspective, but we do think there is an impact on us,” he said.
Haller said the developer is looking to take a property that is not currently paying taxes to the city and put it on the city’s tax rolls and that the project would have a significant economic impact.
“There is no intention of selling the property to a tax-exempt entity and, as a market-rate multi-family housing as opposed to a student housing. The chances of that happening aren’t even very good,” he added.
City officials pointed out that the city’s condition is consistent with other past development projects in the city.
College Park City Attorney Suellen Ferguson pointed out how the city had burned in a previous instance by not including the language. In that case, a piece of land designated for use as a parking garage for student housing was later sold to the University of Maryland and is no longer taxable.
“It’s something that developers in the city have been familiar with, and the council has required on numerous occasions,” Ferguson said.
The city has used its revitalization tax credit to help attract new development within the city. In September, the council approved a $4 million tax credit for the Bozzuto Development Company over 15 years for the redevelopment of the former Quality Inn and Plato’s Diner site on Route 1.
While the council expressed its excitement about the Atworth project, College Park Mayor Patrick Wojahn said the city feels “uncomfortable moving forward” without the agreement.
“It does come as a bit of a surprise to us to hear this resistance to what we see as a pretty standard term in our agreements in the city and a pretty standard effort to protect ourselves and protect the city’s interests from the potential for property to be turned over to non-taxable entities,” Wojahn said.