SYKESVILLE - It's been proposed as a great idea, but a wary Town Council remains to be sold on it.

The developer of a 32-acre industrial-retail park is requesting that the town take part in administering a $1.5 million package of state and county loans that would finance about half the project.

To hear it from state and county officials who briefed the council at its regular meeting Monday night, the package offers the town a potentially significant gain while posing little risk.

The project, Raincliffe Center, stands to increase the town's tax base and create new jobs, said James R. Gatto, loan program director from the state Department of Economic and Employment Development.

Of course, the town would become liable for repayment of the $1.5 million. But even in the event of default, the town would take possession of a piece of property expected to be worth $4.7 million once completed.

But some council members said they have yet to be convinced that Sykesville should get involved in administering the loan package.

"We would become real estate brokers and I don't think that's a legitimate function for a municipal government," said Councilwoman Maxine Wooleyhand. "If it's so good, why isn't the state willing to stand by it on its own?"

Gatto replied that local control of the money allows a municipality to "direct investment where the town wants it to go."

Wooleyhand said she opposes the town completing applications for the state loans.

The project's developer, Security Enterprises Inc. of Ellicott City, Howard County, is asking the council to create a special tax district at the site, which is required for the town to receive two loans from the state and one from the county.

"It would get half the project financed at below-market rates in a very, very tough market to get financing," project manager David W. Moxley said of the loan arrangement. "The project would probably not get developed at all without a program like this."

The package consists of $750,000 from the Maryland Industrial Commercial Redevelopment Fund and $500,000 from the Maryland Industrial Land Act.

The remaining $250,000 would come from the County Department of Economic and Community Development.

Although the town would be liable for repaying the loan, revenue generated by the tax district and the park would finance the loan payments, under the proposal.

Town Manager James L. Schumacher asked the council Monday to consider creating the tax district, a procedural step that would not obligate the town to the loan program.

After more than an hour of discussion with Gatto, Moxley, and James C.

Threatte, director of the county Economic Development Department, the council delayed action on the proposal, saying it needed more information.

Construction of Raincliffe Center is scheduled to begin this spring, with completion set for the end of 1991, Moxley said.

The planned seven lots on the site would include 200,000 square feet of industrial space and 100,000 square feet for commercial use, he said.

Councilman Charles "Tim" Ferguson questioned the officials as to how the loan arrangement was any different from the town simply borrowing the money from a bank.

Gatto replied that the state would work to be less rigid than a bank in drafting loan terms and the execution of the loan.

"We'll try to make this as painless as possible," he said.

The programs have been used successfully in other parts of the states, Gatto said, by small municipalities looking for ways to finance industrial development projects. Examples he offered Monday included Denton in Caroline County, and Princess Anne's in Somerset County.

"There has never been a default in either program in any county," he said.

The Maryland Industrial Commercial Redevelopment Fund was set up in the early 1970s, and the Maryland Industrial Land Act in the early 1980s, Gatto said.

The annual tax bill for the property currently is $1,576, said Moxley.

Once the park is built, that figure would rise to about $73,000, or almost one-quarter of the town's industrial tax base.

Also, an estimated 200 jobs would be created by the park.

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