New Tax Breaks for Owners of Subsidized Housing Bought with County Bond Guarantees

from the Baltimore Sun

Owners of two Harford County rental housing communities for primarily low-income residents could be allowed to make payments to the county that would substitute for conventional property taxes, according to proposals under consideration by the county council.

The so-called payment in lieu of taxes, or PILOT, is a standard agreement developers of such projects make with local government as a means of being able to charge more affordable rents, officials involved in the approval process say.

At this point, however, nobody who is reviewing the proposals is able to provide a comparison of the amount of property taxes either development might generate, as opposed to what the county will receive from the PILOT.

County spokeswoman Sherrie Johnson says the pending agreements for Riverwoods, a new apartment project in Abingdon, and the existing Windsor Valley Apartments in Edgewood, should boost revenue for Harford and potentially help reduce crime around Windsor Valley.

The county's chief auditor says she is unable to make such comparisons at this point, however.

Johnson said no tax revenue would be lost through the PILOT agreements, which would require an annual payment of $250 per unit from Windsor Valley's owner and at least $400 per unit from Riverwoods' owner.

Those amounts would also increase by 3 percent per unit annually starting in the second year of payment. Riverwoods' agreement would run for 10 years, while Windsor Valley's is set to end after 40 years.

"The tax benefit to the county will be significant – in the millions of dollars over the life of the two PILOTs," Johnson said. "Even after approved PILOTs are taken into consideration, revenue is increased compared to what would be collected without the enhancements."

Both projects will have some market-rate units, but will mostly be aimed at households earning 60 percent or less of the area median income, she said.

According to the U.S. Census Bureau, the median household income for Harford County for the latest available period, 2008-12, is $80,441.

Riverwoods, in the Constant Friendship Boulevard area near Walmart, Target, BJ's and Regal Cinemas, is planned as an 84-unit apartment complex for low- and moderate-income residents in the 400 block of Arundel Court.

Based on the PILOT, which was submitted to the Harford County Council as a resolution on Sept. 2, the first annual payment to the county would be $33,600. The council will hold a public hearing on the resolution Oct.7.

Windsor Valley's owner's PILOT request is part of an attempt to revitalize 291 apartments on Edgewood's Meadowood Drive, according to a resolution introduced to the council on Sept. 9. A public hearing will be held Oct. 14.

"We are recommending this PILOT be approved for the new contract purchaser because, once the PILOT is approved and the purchase of the property is finalized, the purchaser will undertake extensive renovation and rehabilitation of a property that severely needs it," Johnson said.

"The result will be a community that is much nicer and safer, which will benefit not only the residents of the surrounding area, but the county at-large through increased revenue," she added.
The development's prior owner did not have a PILOT agreement with the county, Johnson said.

The county auditor's office could not predict how much Windsor Valley's owner might pay in future taxes if there were no PILOT, as redevelopment is likely to change the project's value, according to a fiscal impact note from the county auditor's office.

"Accordingly, we cannot estimate the taxes that Windsor's payment would be in lieu of," County Auditor Chrystal Brooks wrote in her analysis. Brooks said she has not completed the fiscal analysis on the Riverwoods PILOT.

Windsor Valley's four parcels of land were last assessed for property taxes at $4,145,900 and the owner is paying $43,200 annually in taxes, according to the fiscal impact note.

If the PILOT is approved, the owner, Windsor Housing Associates LLC, would pay $72,750 to the county in the first year of the agreement and $230,401 by the 40th year.

The Maine-based Wishrock Housing Partners & Investment Group plans to spend $15.9 million, or $54,527 per unit, on renovations to Windsor Valley I and II, according to the Maryland Department of Housing and Community Development.

Wishrock took over the complex, formerly known as Meadowood, this spring and got a $1.5 million bridge loan from the state to buy and repair 283 units of Windsor Valley III, DHCD spokeswoman Erlene Wilson said.

The company, which is based in Maine, plans to buy the 291 additional units, using $16.5 million in short-term, tax-exempt state bonds, Wilson said.

The state loans are not contingent on the county's approval of the PILOT, Wilson said.

Neither representatives of the partnership developing Riverwoods, which has an office in Bel Air, nor those of Wishrock replied to requests for comment for this story.

Johnson said Harford County Executive David Craig's administration supports the PILOT requests for both projects and is not concerned about possible negative reaction.

"If we did not believe these projects were good for all of the citizens of Harford County, we would not be supporting them," she said.

Windsor Valley, which is more than 40 years old, is in the Hanson Road corridor between Routes 24 and 152, long considered a high crime area by the Sheriff's Office, which had a meeting in the neighborhood earlier this summer following several non-fatal shooting and a fatal shooting over three days.

"We believe the crime will be significantly reduced, if the proposed developments are completed," Johnson said. "The rehabilitation of Windsor Valley involves a number of safety and security enhancements, including additional lighting and security cameras in coordination with the Sheriff's Office."

It must be nice not having to invest any of your own money in real estate projects that let the tax payers take all of financial risks. It's also interesting that no one in the county seems willing to compare how much money this project would cost the citizens of Harford County over NOT granting the tax subsidies. If the numbers were actually to the typical county citizens advantage, they would be trumpeting them to high heaven.

I sure wish that I could pay $250 in annual real estate tax instead of the over 10x tax figure that I am required to pay.