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Univ. pushing E. Campus tax deal
Brady Holt
Issue date: 4/17/08 Section: News
University administrators are urging College Park officials to enter a finance agreement in which the city would forgo millions of dollars in tax revenue to help pay for the East Campus development. In exchange, developers would help fund a new city hall.
Representatives of East Campus developer Foulger-Pratt/Argo Investment said the city's participation in the complicated financing model is essential to the success of the 38-acre, $900 million project, because without the money construction cannot begin on time.
"This project does not work without the city and the county," FP-Argo bond lawyer Richard Newman said. "And if the project doesn't progress, there's zero tax revenue."
Under the developer's "tax increment financing" plan, the city would provide an average of $1million a year over 30 years to help pay off $180 million in bonds used to finance the project. In return, the FP-Argo developing company would funnel $6 million of the money it raises through selling bonds to move city hall to a new location, and College Park has the incentive of getting the project built as soon as possible so it can start raking in tax money.
The East Campus development, as currently planned, will bring in an average of $4 million a year over 30 years to the city, whose budget is now only about $13 million a year. The city will also benefit from additional stores that will open in the area, and the university plans to put graduate student housing in the center as well.
Both sides have much at stake in seeing this project progress quickly, but city officials are still not sure whether they will accept FP-Argo's proposal.
District 3 Councilwoman Stephanie Stullich said she expects the city to use its financial leverage to ensure that its East Campus requirements are met.
"Approval of the [financial model] really is contingent on the whole package being one that we can feel comfortable with," Stullich said. "No, it's not a done deal. Yes, we do need resolution on a lot of issues that have been raised."
Representatives of East Campus developer Foulger-Pratt/Argo Investment said the city's participation in the complicated financing model is essential to the success of the 38-acre, $900 million project, because without the money construction cannot begin on time.
"This project does not work without the city and the county," FP-Argo bond lawyer Richard Newman said. "And if the project doesn't progress, there's zero tax revenue."
Under the developer's "tax increment financing" plan, the city would provide an average of $1million a year over 30 years to help pay off $180 million in bonds used to finance the project. In return, the FP-Argo developing company would funnel $6 million of the money it raises through selling bonds to move city hall to a new location, and College Park has the incentive of getting the project built as soon as possible so it can start raking in tax money.
The East Campus development, as currently planned, will bring in an average of $4 million a year over 30 years to the city, whose budget is now only about $13 million a year. The city will also benefit from additional stores that will open in the area, and the university plans to put graduate student housing in the center as well.
Both sides have much at stake in seeing this project progress quickly, but city officials are still not sure whether they will accept FP-Argo's proposal.
District 3 Councilwoman Stephanie Stullich said she expects the city to use its financial leverage to ensure that its East Campus requirements are met.
"Approval of the [financial model] really is contingent on the whole package being one that we can feel comfortable with," Stullich said. "No, it's not a done deal. Yes, we do need resolution on a lot of issues that have been raised."
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John Popodopolus
posted 4/17/08 @ 10:53 AM EST
I would urge College Park to be very, very careful about this deal.
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