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County residents vow to fight taxpayer grants for Towson Row

Site of the planned Towson Row at York Road and Towsontown Blvd.

The reaction was fast and fierce when Baltimore County announced it planned to give more than $40 million in grants to the developers behind the long-stalled Towson Row mixed-use project. As a few online commenters put it:

“If they need a loan, why can’t they go to a bank like anyone else?”

“Privatize the profit but make the public share in the risk of financing it. No thanks.”

“How can Baltimore County afford to give away so much money to Caves Valley when it doesn’t have enough money to build new schools for Dulaney and Landsdowne? Our streets and sewers and storm water infrastructure are in terrible shape. We taxpayers aren’t getting a good value. No more sweetheart deals for developers, like Caves Valley. We should not be bailing them out.”

Experts who have studied the details of the plan have raised their own questions: Is taxpayers’ money protected if the entities declare bankruptcy? Why is the county in effect gifting three parcels of land to the developer? Why is there a gag order forbidding the developers to publicize the funding agreement without explicit permission from the county? Are these grants even legal under county law?

The question of whether to approve the grants will be discussed Tuesday, Dec. 12, at the County Council’s 2:00 work session. Many county residents have pledged to attend and speak in opposition to the plan.

In proposing the grants, County Executive Kevin Kamenetz’ office said that Greenberg Gibbons — the new developer behind the planned as a 5-acre mix of apartments, student housing, hotel, and retail space — will forego the Commercial Revitalization tax credits it’s entitled to and will instead get $26.5 million up front from the county. Greenberg Gibbons has taken the lead on the project, which was started by Caves Valley Partners.

Caves Valley, which has given generous campaign donations to Kamenetz and who is behind the controversial plan for a Royal Farms gas station at York Road and Bosley Avenue, now has a minor role in the Towson Row development.

Additionally, the county will give the developer a $16.4 million grant that will be paid back through the hotel occupancy tax, which is paid by guests of the hotel. (Without the grant, that $16.4 million would go into county coffers instead of balancing out to zero revenue.)

Rendering of Towson Row at York and Towsontown

Brian Gibbons, head of Greenberg Gibbons, told The Baltimore Sun that the county’s help was “essential” and that the project was “not economically feasible as designed.”

But many are skeptical.

Brenda Bodian, a Towson resident who works in the commercial real-estate industry, said she’s confident the developers could complete the project without taxpayer money.

“If a developer is not able to make the numbers work, typically there are different ways to address it. They could adjust the project. Or they could do it in stages and start with the low-risk portion — in this case student housing — to get the cash flow for the next step,” Bodian said.

[County Council should deny bailout for Towson Row]

It’s not unusual for a developer to get tax credits, but those generally come after a project is completed and is actually generating revenue. The current proposal reverses that and puts taxpayer money on the line instead of the developer’s money or a lender’s money.

Another unusual part of the funding agreement, critics say, is the fact that the county is “selling” Towson Row three parcels of county land for about $2.5 million, but the developer doesn’t actually have to front the money. Instead, the $2.5 million will be deducted from the amount of the county’s grant.

One of those parcels was already a source of controversy after the county bypassed bids for the land and instead decided to lease it to Caves Valley.

Also interesting is a portion of the agreement titled “Press Releases” that forbids the developer from referencing the county’s funding in any press releases without the county’s consent.

“This provision is not intended to prevent Recipient, Developer, or a Sub-Developer from issuing press releases generally relating to the Project, so long as such press releases do not directly or specifically reference the County funding,” the agreement says. (The agreements were put online after the county received pressure from The Baltimore Sun.) 

Baltimore County resident David A. Plymyer — who retired in 2014 as Anne Arundel County attorney, and served for five years as an assistant state’s attorney for Anne Arundel County —wrote a letter to the County Council this week questioning whether the grants were even legal.

“The Baltimore County Council has no inherent power to make grants to private for-profit businesses on an ad hoc basis; grants of public money for private purposes must be explicitly authorized by state statutes or county ordinances.  The Baltimore County Code does have provisions for economic development grants set forth in Title 10 of Article 10, which establishes the Economic Development Revolving Financing Fund,” he said in the letter, which can be read in full here. “Was that process followed? If not, under what legal authority are these grants being made to TR Development Corporation?”

The question is important, he noted, because of the “widespread and vehement opposition to the proposed grants. Unless the County Attorney can render a persuasive opinion that there is sound legal authority for the grants – and that the required process for approving such grants was followed — a taxpayer’s suit challenging the grants is almost inevitable. 

“A successful suit would all but guarantee that Towson Row remains nothing more than a hole in the ground for the foreseeable future,” he wrote.

[Groundbreaking for development at York and Joppa]

When it announced the grants, the county said it had hired Sage Policy Group to conduct a study of Towson Row and the results showed that the development would create 2,000 permanent jobs, and would support more than $3.2 million in annual Baltimore County tax revenues by fiscal year 2022 and grow to more than $4.7 million a year by fiscal year 2040.

So far the proposed grants have received a mixed reaction from the council.

“I’ve met several times with Brian Gibbons, whose firm is the new master developer. He did not disclose the financial incentives in any of our conversations,” Councilman David Marks, who represents downtown Towson, said in an email. “I am going to reserve judgment until I know more details, but I want the project to break ground and believe Towson Row will have significant economic impacts over the long run.”

Councilmen Tom Quirk and Julian Jones have voiced support for the grants, while Councilwoman Vicki Almond, who is running for County Executive, said she has concerns about taking hotel taxes away from tourism-boosting efforts.

And what of the argument that the grants are necessary so that Towson no longer has a gaping construction hole in the middle of town?

“The hole in the ground doesn’t worry me at all,” said Bodian. “These are two seasoned, well-off developers who don’t do small projects. They can do the least-risky pieces first, then the hole will be less visible.”

The site could also be graded and filled in with grass and made to look more attractive in the interim, she said.

“I do believe this is a valuable site,” Bodian said, “and if this developer does not do a project there, some other developer will want it.”

-Kris Henry,
The Towson Flyer

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9 Comments on "County residents vow to fight taxpayer grants for Towson Row"

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Karl

Habitually, Governors, County Executives, mayors and other executive politicians saddle the following administration with debt. The money is spent in their last year in office so they can reward large donations and encourage more campaign contribution for any subsequent office they may be seeking. Jim Smith did it. Most of his predisors did it too. Jim Smith didn’t run for subsequent office , but he used his campaign donations to gift other democrats who were runnining for office, Including Martin O’Malley. That’s why Smith was rewarded Secretary of Transportation. There he raised more contributions because he was influential in deciding which contractors got the state Roads, and other contracts. When the real work was to be done, Smith stepped down and another Secretary, whose name escapes me was appointed. What a surprise for the Leiutenant when he lost the Gubanatorial election. He could’nt benefit from these developer/campaign contributors him self. And Hogan was left without adequate funding to do much of anything else because the state was obligated to fund O’Malley’s spending spree.

That’s politics. And it’s been that way in Maryland for hundreds of years.

Joanne C. S.

With a vote on Towson Row taxpayer-funded grants set for today, here also are two recent stories that indicate that the primary Towson Row developer has given large amounts of donations to the county executive and a few council members — which also appear to violate state campaign finance laws.

A previous story, see below, also shows the county unexpectedly issued bonds to expand borrowing by $100 million just three weeks prior to the announcement of grants to the two local developers.

This all clearly bears a closer look.

Grants to campaign donors and Towson Row developers

http://thebaltimorepost.com/county-council-consider-43-million-grants-large-campaign-donors

And the previous piece on cash-strapped county expanding bond-borrowing

http://thebaltimorepost.com/baltimore-county-headed-financial-hard-times-amid-towson-row-grant-discussions

I would like to see development at this site in Towson and support well-thought out tax credits in theory, but this $43 million in forward-funding, including a more than $16 million grant for hotel taxes that are not guaranteed — when our schools, roads, and parks need so many funds — is very suspect.

Towson Row, btw, according to the Sun will be the size of Towson Towson Center, at a corner of two traffic-jammed roads — Bosley and York — that is already an F-style intersection. Is this good planning and smart development? The council should delay this vote and reevaluate this financing proposal .

Jennifer P.

This is depressing. If the County doesn’t rebuild the schools then all of the property values in the surrounding areas will drop(including Towson Row) and the tax revenue will decrease. The reason Towson is a desirable area to live in is because of the public education around it. Rebuild the schools and watch the demand for property increase. Then, build more housing. It really seems that Kevin Kamenetz is being bribed when I read this story. He has been to Dulaney HS, Towson HS and Landsdowne HS. There are many stories where he is photographed with the HS principals and appears to be listening and concerned. Well, perhaps at least he is for the moment of the PR photo op.

I can’t possible understand how he doesn’t see the immediate and dire need for rebuilding. No one would ever let their homes get into such condemnable states. I invite Kamenetz to drink an entire bottle of brown Dulaney HS water daily and sit in a 100 degree classroom for a week with 1800 students if he needs a clearer picture. His behavior in constantly re-evaluating the situation has been deplorable and he cannot possibly be on the level. This is our money. Our government has to invest it into our schools for our future.

Karl

He doesn’t care. He’ll be gone along with his campaign contributions for Governor. And his successor will be left holding the debts.

Sam C
What is the annual lost revenue for this Towson Row, Towson Gateway, and Towson Triangle? While a few very-vocal, very-litigious people bemoan change and are for the most part anti-development, Towson needs revenue-generating properties if we want things like new schools, green space, better amenities, better shops and restaurants (competition is a good thing!). Unfortunately schools don’t raise revenue, and unless we want our property taxes to inch closer to the city’s, we need to start supporting the idea that Towson will change and development will improve the numerous blight zones. Maryland’s corporate welfare environment stinks. It truly does, but what are the alternatives? The holes and embarrassing pits of lost opportunity that litter Towson’s prime real estate? Lost revenue amounting to millions that could be pegged for later development of schools and public amenities? Investment will go elsewhere and Towson will be left with these eyesores. I think we’re getting perilously close to that outcome. Consider for a minute how a small business would not be able to face the lawsuit-wielding, anti-change few. There is a reason Towson lacks a higher percentage of small business owners. Only well-funded and represented corporations can exist in Towson small-minded climate. So very often the fight ends when developers go to court and land just declines for years with no plans offered. The litigious few easily influence David Marks, who despite intentions lacks conviction and vision, and start lawsuits but how do they help Towson in the long run? Every instance of change… Read more »
Concerned Towson resident
Concerned Towson resident

Sam – I agree 100%. A few very vocal naysayers threaten to ruin what should be a very nice project. It’s sad actually. In the end, Towson residents are the ones who will suffer.

Paige R.

I completely agree with you, Sam. My family is relatively new to Towson, and agree the current proposal does have some shady aspects. However, leaving this big blank space (in addition to many other vacant buildings) is also not helping the town. I am sure some of the new restaurants were counting on this development to make their businesses more successful.

Steve McIntire

2000 ‘permanent jobs created’ must include everyone in the office building. Wonder if they also consider leasing an apartment to a student, “creating a student” or maybe being a student counts as a job too?

And 3500 construction jobs will be quite a job site! (Actually, 700 for 5 years, but still)

Everyone should be highly skeptical of these sort of studies. This one doesn’t even pretend to answer whether a subsidy is necessary, which is a different question & more relevant to the decision. Every new developmentproject creates jobs and tax revenue, including especially better unsubsidized projects that get crowded out by this one and don’t get built.

WendyJ

Thank you Towson Flyer for another great piece of journalism, helping the citizens of Baltimore County better understand what is happening locally behind the scenes and among ourselves.