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.)
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.
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.
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.”
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