Kamenetz proposes more than $40 million in county aid for Towson Row

Baltimore County Executive Kevin Kamenetz has proposed giving nearly $43 million to the developers behind the long-stalled Towson Row in downtown Towson to jump-start the project.

The county would give the money to developers Greenberg Gibbons and Caves Valley Partners over the next five years. The money would be repaid via the real estate and hotel taxes generated by the project over the next 20 years.

County officials say the assistance is necessary to get the project moving, and will be a good investment.

Caves Valley announced plans in 2013 for Towson Row — a mixed-use development of office buildings, a hotel, apartments, student housing and retail shops anchored by a Whole Foods grocery store. At 1.2 million square feet of developed space, it would be as large as the Towson Town Center mall.

Contractors for Caves Valley tore down the old buildings at the development site, between Towsontown Boulevard and Chesapeake Avenue along York Road, in 2015. But the project has stalled, leaving a barren site surrounded by construction fencing in the heart of downtown Towson.

The Kamenetz administration planned to introduce the financial assistance package Monday night to the Baltimore County Council. A vote is tentatively scheduled for Dec. 18.

The package would include two pieces: $26.5 million related to property taxes and $16.4 million related to hotel taxes, for a total of $42.9 million.

Under Kamenetz’s plan, the developers agreed to forego two tax breaks — a Commercial Revitalization Tax Credit and a High Performance Building Tax Credit that reduce property taxes as those taxes increase — for which the project normally would be eligible.

Instead the developers would pay the full amount of property taxes, an amount expected to add up over 10 to 12 years to $26.5 million, effectively repaying that portion of the up-front assistance, according to the Kamenetz administration.

The rest of the assistance — $16.4 million — would be tied to hotel taxes. Once the Towson Row hotel is up and running, the hotel taxes are expected to add up to $16.4 million within 20 years.

The Towson Row developers would not pay any additional hotel taxes under the plan. Hotel taxes — set at 8 percent of the nightly room rate — are paid by customers of the hotel.

Brian Gibbons, chairman and CEO of Greenberg Gibbons, said receiving the county's financial help is "essential” to making Towson Row work.

Gibbons said the county’s assistance is key to finalizing financing with a California pension fund that is investing in the project. The nearly $43 million in up-front help from the county represents “the minimum threshold we needed with our partners."

Greenberg Gibbons joined the Towson Row project as a co-developer with Caves Valley Partners in May. Gibbons said the project has significant costs for preliminary work such as utilities and infrastructure and is not economically viable without help.

"It was not economically feasible as designed," Gibbons said.

Kamenetz, a Democrat who also is running for governor, did not respond to a request for comment Monday. He previously praised the Towson Row project, calling it an “urban centerpiece” for the county seat.

To support its assistance plan, the Kamenetz administration is citing an economic report it commissioned from the Sage Policy Group that said that public assistance is necessary for a “transformative” redevelopment project such as Towson Row.

“This partnership is critical to the completion of Towson Row, which will serve as a catalyst for new jobs and business development in downtown Towson,” the Sage report said.

The report predicts that about 1,150 people will work at Towson Row once it’s built, earning salaries that total $53 million per year. More “indirect” jobs also will be created, and Baltimore County and Maryland will see an increase in sales taxes, income taxes and other fees, the report said.

Will Anderson, Baltimore County's director of economic development, called the financial packages “really essential” to help in Towson Row move forward.

“This is money that we can advance to jump-start the development,” Anderson said.

County Councilman David Marks, a Perry Hall Republican who represents Towson, said the county rarely offers this type of assistance to developers, and that this deal will pay off by supporting a major economic development project that will transform downtown Towson.

“My constituents are tired of looking at that space and not seeing any improvement,” he said.

Council Chairman Tom Quirk, a Catonsville Democrat, also offered support.

“I think long-term this will pay off, but short-term, it's clearly an investment for the county,” he said.

County Councilman Julian Jones, a Woodstock Democrat, said he supports assisting Towson Row, partly because the developers would have received “quite a few of these dollars” anyway.

“I would like to see this project be successful,” Jones said.

“I was told, basically, that if we did not do this, that there’s a chance that it would not be successful.”

Councilwoman Vicki Almond, however, expressed concerns about the portion of assistance tied to the hotel tax. She sponsored a law that designates a portion of the hotel tax to fund the county's tourism promotions and is concerned that the Towson Row package might violate the law.

“I want to make sure we don’t lose any of our money for tourism,” said Almond, a Reisterstown Democrat who is running for county executive.

This financial assistance package won’t be the first steps the Baltimore County government has taken to help Towson Row project.

The county leased a former county office building at 301 Washington Ave. to Towson Row for $85,750 per year. The no-bid lease was approved by the County Council in 2013 even though another company had bid to lease the property and had raised concerns.

The Baltimore County Council passed a zoning bill in 2015 that gives significant flexibility from normal rules for Towson Row, on features such as building height and signage.

The county council approved the sale in 2015 of an undeveloped, 0.625-acre parcel of land on Susquehanna Avenue to the developers for $820,000. The parcel is surrounded by Towson Row parcels, and a previous attempt to sell to another developer in 2008 for $1.955 million fell through after the developer backed out.

The Baltimore County Revenue Authority, an independent county agency that manages public parking garages and golf courses, has been discussing whether to partner with Towson Row on the development’s garage. Revenue Authority Director Ken Mills did not respond to a request for comment Monday.

Also, Caves Valley Partners voluntarily agreed to pay additional fees to compensate for the lack of open space within the development.

Under rules in place at the time the project was announced, Towson Row would have paid only $55,000 in open space fees. The developers later agreed to pay an additional $95,000 in open space fees, plus contribute $200,000 to artificial turf field projects in the area, including at Towson High School. The rules for open space fees in downtown Towson were later changed.

Caves Valley Partners blamed some of the Towson Row delays on hard rock below the surface that made the plans for an underground garage unworkable and forced a redesign of parts of the project.

Then in May of this year, Caves Valley brought in Greenberg Gibbons, another well-known local developer, as a partner and “co-developer” on the project.

Greenberg Gibbons brought an undisclosed amount of financing to the project and took the lead on all components of Towson Row except for the office building, which Caves Valley will handle.

pwood@baltsun.com

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