At last night’s meeting, the City Council voted to grant a City Revitalization Tax Credit to the Gilbane Development Company for College Park Metro Apartments (The Atworth).

Over 5 years period, the developer will be getting a total of $701,542 in tax credit from the City. The amount equals 75% of the increased assessment of City tax imposed in the first year, 60% in the second year, 45% in the third year, 30% in the fourth year, and 15% in the fifth year.

The tax credit program was established in 2012 to provide financial incentives to encourage economic development and redevelopment through a five-year tax credit on the increased valuation of the property after redevelopment. You can find more about the program and the eligibility criteria here in the City Code.

Though I supported tax credits to a few other developments in the past, I struggled to support this proposal, mainly because of my concerns with the uncertain economic future ahead of us. The development is expected to be completed in 2022 when we’ll have our next triennial property assessment. We may see a hit in our property tax revenue due to a possible softening of the housing market.

I wish we could wait a few more months to see if the economic situation improves and consider the tax credit at that time.  There are precedents in giving tax credits after the development is completed, as we have seen in the case of the student housing “The View”. Though the circumstances could be different, the precedence is there.

City Code 175-11C also allows the City Council to reduce or eliminate tax credits in case of possible economic hardship.

175-11C: If a tax credit approved under this article is not financially feasible based on City budget constraints, the Council may reduce or eliminate the amount and/or duration, and/or alter the sequence, of the tax credit. The tax credit is transferable to subsequent property owners within the term of the original agreement.

On a good note, the applicant agreed to execute a Declaration of Covenants with the City that includes this provision and has requested approval of their application for a City tax credit. Last year, the City Council declined to approve the requested City Revitalization Tax Credit because the Applicant declined to execute a Declaration of Covenants with the City that included a payment in lieu of taxes (PILOT) provision if the property were sold to a tax-exempt entity (such as the University of Maryland) in the future.

Last night’s vote was 5-3. Council members Mitchell, Mackie, and Kabir voted in opposition.