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Howard County weighs public financing to boost vision of Columbia as urban district

Developer Howard Hughes Corp. is building the headquarter building for MedStar Health System in downtown Columbia as county officials are deciding whether to approve a tax-increment financing deal to help with the future development of the downtown area.
Developer Howard Hughes Corp. is building the headquarter building for MedStar Health System in downtown Columbia as county officials are deciding whether to approve a tax-increment financing deal to help with the future development of the downtown area. (Kenneth K. Lam / Baltimore Sun)

In the future, downtown Columbia could include soaring office towers, thousands of new homes, a hotel and more shopping — completing what boosters say was the vision of the late James W. Rouse to create a "real city" at the heart of the suburban town he launched 50 years ago.

To get there, Howard County is considering the same type of public financing approved last month by the Baltimore City Council for Under Armour CEO Kevin Plank's massive Port Covington development— a move now being studied by some county officials.

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"I think what we really need to ensure is — would this development move forward in a way that would make us proud of the next chapter that we're writing for Columbia?" asked Howard County Council Chairman Calvin Ball.

Ball, a Democrat, is guiding the County Council through the thorny question of whether to approve a $90 million public financing deal for downtown Columbia.

The development firm Howard Hughes Corp., the successor to the Rouse Co., is asking the county for the tax increment financing to help pay the front-end costs of road improvements, water and sewer lines, stormwater management and a parking garage for projects to fill in the prime, mostly undeveloped parcel nicknamed "the Crescent."

The 60-acre arc, nestled between the Merriweather Post Pavilion concert venue and Broken Land Parkway, would be filled with high-density, urban-style development. The first section of development would cover 22 acres of the parcel.

Under tax increment financing, the county would borrow money for the work by issuing bonds. Howard Hughes, founded more than a century ago by the father of the late billionaire, would pay the bonds back with the property taxes it pays once the land is developed.

Howard County Executive Allan Kittleman, a Republican, is proposing multiple bond issues, totaling up to $170 million, over three to four years.

The County Council is scheduled to discuss the first, $90 million round during a work session Tuesday. A vote could come next month.

Greg Fitchitt, Howard Hughes' vice president of development, said the public financing is needed to transform Columbia's downtown "from a suburban-style town center dominated by a mall to an urban, walkable, vibrant, 21st-century village."

He said urban developments need infrastructure such as parking garages, not massive flat parking lots, and Howard Hughes needs help paying for that. The garage envisioned for the crescent would also serve patrons of Merriweather Post Pavilion.

The company has already done work in Columbia's core, converting the old Rouse Co. building near Lake Kittamaqundi into a Whole Foods grocery, building an apartment high-rise called The Metropolitan and beginning construction on an office building to be the new headquarters for the MedStar hospital system.

But it now needs help, Fitchitt said, to "keep the momentum going."

Debate over public financing in Columbia has echoed the discussion in Baltimore, where Plank's Sagamore Development sought $660 million in tax increment financing to build roads, utilities and other infrastructure around Port Covington.

Plank's $5.5 billion project includes offices, homes, shops and restaurants to go with a new headquarters for Under Armour.

As with Port Covington, the proposal for the Crescent has both supporters and critics. Detractors have questions about the vision for Columbia, affordable housing, and the wisdom of relying on future tax revenue to pay off the bonds.

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Kittleman said the financing is necessary to carry out the long-term vision for downtown Columbia. In 2010, the county called for intense development in the area, and considered public financing to make it happen.

"We have a developer … who has a plan to invest over $2 billion in downtown Columbia," Kittleman said. "To encourage that development to happen more quickly, the TIF makes a lot of sense."

He compared the financing to other concessions the county makes to help developers, such as changing zoning. He said helping to shoulder infrastructure costs will ensure the Crescent is developed quickly.

"It was part of the downtown Columbia plan and we're trying to make sure things continue to go as smoothly as possible," he said.

Not everyone is convinced. Ball, whose district includes part of Columbia, said he's not comfortable with the financing deal as it's currently structured, and isn't sure it has the votes on the County Council to pass.

"Feelings on the TIF run a spectrum, from those who are very comfortable with it as it's been configured, to those who do not believe fundamentally that a TIF should even be considered for Columbia, to those who think it could be considered, but it's not quite right," Ball said.

Councilwoman Jen Terrasa, a Democrat who also represents part of Columbia, said she was initially "alarmed" about the size of the TIF proposal, and questions whether the package is necessary to get quality development.

She said in her mind, TIFs are better suited to revitalizing "downtrodden" areas — not a desirable area like downtown Columbia.

"Is a TIF necessary for this project to move forward?" Terrasa said. "That threshold hasn't been adequately analyzed."

Councilman Greg Fox, the lone Republican on the council, said he, too, needs more information about whether the TIF is necessary for the development to succeed.

Two consultants have analyzed the tax financing proposal. MuniCap, hired by the Kittleman administration, concluded the deal is justified. TischlerBise, a firm hired by the County Council, said the project would be an appropriate use for tax-increment financing, but expressed caution that more information about economic benefits would be needed to determine the amount and structure of such a deal.

Howard Hughes officials say they need help with roads, the garage and other projects to make the project financially viable. Fitchitt suggested recently that without public financing, the company would instead likely build a "Walmart and garden apartments" — a comment he later said was not meant to be derogatory, but simply to describe typical suburban development.

"Without a TIF you can still do development," he said. "It just would not be the vision of the downtown plan. We really need this legislation to pass in order to fulfill the vision."

When the project is fully built out, Fitchitt said, it will generate more than enough tax revenue to pay back the TIF bonds and help fund other county projects, such as school improvements, a new library and redeveloping a nearby fire station.

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After paying back the bonds, he said, the development is projected to put more than $400 million in additional taxes into county coffers over 35 years.

If the project didn't generate sufficient tax revenue, the county could levy a special tax against the developer to cover the shortfall.

Also wrapped into the discussion of development in downtown Columbia is a debate over affordable housing. Currently, developers pay money into an affordable housing fund for each residential unit they build.

But that money hasn't yet translated into more affordable units downtown. Howard Hughes, working with the administration and housing groups, has proposed a plan that would require affordable units to be built in exchange for allowing more total units and relaxing parking requirements.

Terrasa has proposed a plan that would require downtown developers to set aside 15 percent of their housing units for affordable housing.

While the housing bills and TIF bills are separate, the affordable housing requirements will factor into Howard Hughes' plans for its project.

Fitchitt said he's "working closely" with council members to get them comfortable with both the affordable housing plan and the tax financing.

NOTE: An earlier version of this story was unclear on the total size of the cresent property and the specific findings of the TischlerBise report. Both have been clarified here.

Baltimore Sun Media Group reporter Fatimah Waseem contributed to this article.

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