Four developers with projects in Howard County are challenging the county's authority to use tax increment financing to help Howard Hughes Corp., Columbia's master developer, to finance a $51 million garage for public and private use.
In a complaint filed in Howard County Circuit Court Tuesday, the coalition argues the deal is an "improper give-away of county tax dollars" to a developer to the "detriment" of local developers and county taxpayers.
The Howard County Council approved the publicly funded garage as part of a $90 million deal in November. Tax increment financing is a financing tool that earmarks future tax revenue from the development to pay back bonds and other costs linked to the deal.
Corporate Office Properties Trust, Merritt Properties, Greenebaum Enterprises and St. John Properties — which have real estate projects in Howard County — argue the deal relieves the Dallas-based developer from its obligation to find parking for private corporate tenants, who will use the publicly funded garage.
The 2,545-space proposed parking garage will be used by patrons of Merriweather Post Pavilion outdoor amphitheater and primarily by tenants of surrounding commercial buildings. The county will own and pay maintenance costs for the garage.
"The $51 million allotted for the parking garage amounts to approximately $20,100 per space — an exorbitant sum placed on the backs of the Howard County taxpayers," according to the suit.
A spokesman for Howard County Executive Allan Kittleman said Tuesday the administration was unaware of the complaint, which is against Howard County and Kittleman; the county executive proposed the TIF deal last year. Alessandra Moscucci, an account executive with Nevins & Associates who is handling public information inquiries about the complaint, said the county will receive a courtesy copy of the complaint today.
Howard Hughes Corp. did not immediately return requests for comment.
The suit alleges the county violated the state constitution and the intention of the state's Tax Increment Financing Act, which regulates how the deals are struck, by failing to provide evidence the development will boost the community's tax base.
In the suit, the developers said they supported other aspects of the deal, which includes funding for public infrastructure like roads, water, sewer lines and stormwater management.
But financing the garage puts other developers at a "competitive disadvantage" because they have to pay for the construction, operation and maintenance of similar facilities, according to the suit.
This advantage could allow Howard Hughes to lease office and retail space at lower rates, ultimately pushing other tenants to relocate from existing spaces in the county at a "faster rate" than a normal competitive market, according to the complaint.
The coalition of developers argues the TIF is already harming local developers. The complaint notes Pearson, an international publishing and education company, terminated its lease from Merritt, one of the developers pushing for the suit, to move to a new office building in Columbia.
Developers also questioned the need for a publicly funded garage given that the developer built a 1,127-space garage near a new office building in Columbia called One Merriweather.
The council, the complaint alleges, disregarded "real concerns raised by many corporate and individual citizens" before adopting the legislation.
The developers are seeking a declaratory judgment that the TIF-funded garage violates the state constitution and violates the state's TIF Act.
Councilwoman Jen Terrasa was the only council member to vote against the tax increment financing deal, which is the largest TIF deal in the county's history.
Terrasa said Tuesday she was "unsurprised" by the complaint, and that it echoed some of her concerns about the TIF, which she called a "gift" to Howard Hughes.
The concerns cited in the suit was also in line with concerns raised at a meeting before the council's vote on the deal.
In an Oct. 4 letter responding to the concerns, John DeWolf III, senior vice president of Howard Hughes Corp., rejected the group's assertion the developer would charge lower rents that would drive up vacancies in other parts of the county.
Viewing the parking garage in complete isolation of the company's private investment of $2.2 billion in the overall development effort was "simply inaccurate," DeWolf wrote in the letter.
Howard Hughes says it plans to invest roughly $618 million in the Crescent, a 60-acre parcel of land between Merriweather Post Pavilion and Broken Land Parkway, to build high-density development. In its request for the TIF, the developer said it also plans to seek public funding for additional garages.
The overall plan for downtown Columbia, around 10 percent of which is complete or underway, calls for 14 million square feet of mixed-use development, including 6,250 residential units and 640 hotel rooms.
Columbia is celebrating its 50th anniversary as a planned community this year.
Kittleman is proposing multiple rounds of bonds, totaling up to $170 million, over three to four years to finance more infrastructure in the area.