The Baltimore County Revenue Authority is reopening negotiations on its agreement with developers of Towson Circle III and plans to talk with the new county administration about its commitment to the project after a financial analyst raised questions about the deal.
On Thursday, the authority postponed a vote on a pact covering its role in financing an underground parking garage for the movie theater, store, restaurant and office complex along East Joppa Road. Instead, the authority held a 15-minute closed-door session to consider new proposals from the developers, Heritage Properties Inc. and the Cordish Cos.
Donald P. Hutchinson, chairman of the authority, which runs parking garages, public golf courses and an indoor recreation center, would not discuss details of the developers' proposals. The developers declined to comment.
Hutchinson said he hopes questions about the authority's role in Towson Circle III can be resolved by March.
"I think we have an obligation to the developer to have a definite action taken on our part, so they have the comfort of knowing that the parking element of this is in place or not," Hutchinson said.
Hutchinson said he hopes to meet within 30 days with County Executive Kevin B. Kamenetz or members of his administration for what he called a "two-part conversation." He said he would be asking about the executive's vision for Towson and whether he is committed to the project and the county's $6 million contribution.
The $75 million to $80 million Towson Circle III project is considered a key part of a wider effort to redevelop Towson with apartments, condominiums, restaurants and entertainment spots. Under a lapsed agreement between the authority and developers, construction was supposed to have started by the end of 2009, but a county economic development official has said the developers have had difficulty finding tenants because of the slow economy.
The independent financial analyst, Peter G. Kessenich of Atlanta, gave the revenue authority a five-page report last week on the outlook for a municipal bond sale to finance the authority's proposed $12 million investment in a four-deck, 700-space parking garage that the developers say they need for the project. He considered the related questions of interest rates, attracting investors and covering the debt service for a 30-year bond.
Up to now, the plan has been for the developers to build the garage and for the revenue authority to buy it once a certain percentage of the space at the complex is occupied. In the first agreement, the threshold for the authority to buy the garage was 25 percent occupancy; that was raised to 55 percent in the amended pact.
The authority was to make back its investment and cover the debt service over time with proceeds from parking fees. The county government has also pledged $6 million for the garage in lieu of a tax break the developers would have been entitled to because the project is in a revitalization district.
In a conference call with authority members Thursday morning, Kessenich said that the bond issue based on parking proceeds from the Towson Circle garage alone would be "a difficult financing to undertake in the best circumstances. In the worst, it becomes almost impossible."
He said part of the problem is that the authority has assumed a 5.65 percent bond interest rate, but that has risen since October to 6.15 percent. With that rate, the authority would need more money to cover its debt service, meaning it would need more revenue from the garage or some other source to back the bond sale.
In his report, he covered different ways to lower the interest rate by boosting the bond rating, or raising more money to cover the debt service. He suggested the possibility of using revenue from the authority's other garages, or asking the county to contribute to the pool of money used to pay the debt service.