At next week’s meeting, the City Council will review some suggestions to modify City’s existing tax credit program.

Background:

In response to the Route One Sector Plan published by M-NCPPC in 2010, Mayor and Council sought to create revitalization tax credit districts. This required a change to the state law, which was adopted.

The state law enables the City to adopt a redevelopment tax credit with very few limitations as to amount and applicable length of time. The Tax Credit program adopted for the City establishes two revitalization districts, encompassing all of the City’s commercial, mixed-use and industrial districts (see map attachments). To be considered for a tax credit, projects must be located within one of the two districts and can receive a Level One Tax Credit or a Level Two Tax Credit.

For a Level One Tax Credit, a property may receive a five-year tax credit on City real property taxes based on the increased assessment attributed to the taxable improvements upon project completion as determined by the Supervisor of Assessments. The standard tax credit is in an amount equal to 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 but can be adjusted by the Mayor and Council.

For a Level Two Tax Credit, an eligible property may receive up-to-60% tax credit on City real property taxes determined on the same basis for up to 15 years.

Since the original adoption of the Revitalization Tax Credit, several amendments have been made to clarify and define the areas of Eligibility, Terms and Amounts, the timing of the Application Process and Waiver.

All except one of the tax credits authorized by the City have been of the Level One variety. Project eligibility for this level is described in the Code and requires that a minimum number of criteria be met.

Current market conditions show that the City may have reached its goal of addressing and fulfilling the stock of student housing. Our Planning Departments’ Development Review records indicate that since 2005, College Park residential market has gained 6,000 new units. 2,000 of these units have been placed on the market since 2018. Currently, there are several multifamily developments for additional units in the Planning Phase. Most completed projects are either in or near downtown College Park.

Recommendations:

The Office of Economic Development is recommending that additional criteria be developed and added. These could include:
1. Tangible information from owners and developers in a similar fashion of applications from other jurisdictions (see links for example) for a better understanding of the business plan and financial underpinning for the project as part of the submission to promote their case for the allocation of tax credits.
2. Implementation of a But-For Test, demonstrating the actual need for City tax credits to complete the project can be considered when developers are applying for Level 2 Credits and in some instances Level 1.
3. Requirement that certain commitments by the developer, such as the LEED certification, be a condition of continued tax credits.
4. Commitment to goals the City wants to achieve in each tax credit transaction, such as a specific number of affordable units, Senior Housing units, should student units be available for tax credit
incentives.
5. Other incentives will the developer receive from other government and/or other sources such as Amazon Housing Equity Fund
6. Timely Disclosure of Property Tax Assessment Appeals by project owner(s).

Our Original Authorization in Ordinance 12-O-10 gives the council and staff great flexibility to change the parameters of the Revitalization Tax Credit Program. Please see Attachments and Links for program information and tax credit application comparisons.

[City of College Park]