Howard County officials are set to take the next step in the historic public financing deal for downtown Columbia today, when they sign on the closing of more than $48 million in bond sales.
The sale is the latest step in the process to enact a $90 million public financing deal and affordable housing plan, meant to revamp Columbia's core. The subsidy, called tax increment financing, or TIF, funds public infrastructure, including public roadways, stormwater management and other infrastructure in the Crescent, an undeveloped parcel between concert venue Merriweather Post Pavilion and Broken Land Parkway.
The closing on the bond sales comes a week after a bill attempting to repeal the tax increment financing deal was killed in the County Council. Council members Jen Terrasa and Calvin Ball introduced the repeal bill in September after it was announced that funds from the TIF would no longer be used to finance a $51 million public parking garage, which instead would be paid for and managed by Columbia's master developer, Howard Hughes Corp.
County Department of Finance director Stanley Milesky said Thursday's bond closing is akin to "settling on your house" in a home sale, and that the county can now "get the keys and move in" and begin using money from the bond sales.
The bonds are being purchased by Baltimore investment banks Piper Jaffray and Stifel Nicolaus as underwriters who will then sell the bonds to institutional investors such as pension funds and endowments, Mileksy said.
Howard County is seeking a $127 million tax increment financing deal - the largest in the county's history and one of the largest in the state - for the development of downtown Columbia.
Once the sale documents are signed, the $48 million will be wired to a trust for the county at M&T Bank, Milesky said. The county can then begin using the funds to reimburse itself for development costs already incurred, mostly road improvements.
Milesky said the county received a great deal of interest in the bonds, and had more parties looking to invest than it had bonds to sell, which helped drive up their price and the interest rate for the county down. The county was able to close with an interest rate of 4.4 percent, over an entire percent lower than the projected 5.5 percent, according to Milesky. The lower interest rate will save the county $14.4 million over a 30-year period, according to an analysis from Stifel Nicolaus.
There are four types of bonds, Milesky said, with different terms set to expire in 2028, 2034, 2039 and 2047. The sale has no bearing on the county's AAA bond rating, which is the highest possible rating given to an issuers' bonds by credit rating agencies, county officials said.
After the close of the sale, the next step is for the county to begin making monthly payments for the continued development in Columbia, Milesky said.
One piece of legislation is still pending in the County Council in relation to the TIF. Councilwoman Mary Kay Sigaty introduced a bill last month to expand the downtown Columbia designated development district to include the Toby's Dinner Theatre property, which has been proposed to be developed into a space for an arts center and affordable housing units as well as the theater.
The bill is currently tabled but possibly could be voted on at the council's meeting on Nov. 6. Terrasa, who has been the most vocal council critic of the TIF since it was first proposed last year, said while she supports the idea of the arts center, she does not support Sigaty's bill in its current form, because it only adds the property to Columbia's development district, not the special taxing district.
An area must be declared a development district before it can be included in a special taxing district, which then allows the area to utilize TIF financing.
The council doesn't have the power to add a property to the special taxing district; it must be requested by the property owners. Sigaty said she has talked with the property's stakeholders about the bill, who expressed interest in utilizing TIF financing as a way to help push the project forward.
A second piece of TIF-related legislation may also be headed to the council in the coming weeks. Council Chairman Jon Weinstein said he plans to introduce a bill that would authorize the council to revisit TIF deals if they are substantially altered after receiving the council's approval.