Some Columbia Council members say a deal with the Rouse Co. to develop a $1.4 million recreational vehicle storage park is such a bargain that it would be profitable even if the Columbia Association (CA) bought the land and let it sit idle.
To back that claim, the council -- CA's board of directors -- has ordered an independent cost-benefit analysis of the deal.
But other council members and critics say the audit won't shed light on a more subjective and troubling aspect of the proposed transaction: control by the Rouse Co., Columbia's developer, over the association's future cash flow.
This control is evidenced by Rouse's refusal to make a lucrative new Columbia retail center and a nearby planned residential development pay CA's annual property levy without the $1 million RV park deal.
"I'm troubled that we're purchasing an option on future income, that [Rouse] is in the business of doing that, and we're participating," said Councilwoman Norma Rose of Wilde Lake village. "It's not illegal, but I wonder about the ethics. The developer ought not to be in the business of selling lien rights to CA."
But Alton J. Scavo, a Rouse senior vice president, argues that Columbia's developer has no obligation to put all its Howard County properties under CA's levy or "lien."
He also notes that throughout Columbia's 30-year history, the association and the developer have negotiated frequently over which properties would be subject to the levy -- a legal designation affecting not only the association's revenue, but its expenses for providing services to new developments.
"That's a double-edged sword," Mr. Scavo said. "Clearly when land comes under the lien, you expect some services for lien dollars."
In a narrow sense, the recreational vehicle park deal would be unprecedented for Columbia. The association -- established by Rouse in 1965 to provide Columbia's recreational amenities -- has never bought land from Rouse in exchange for the right to extend its taxlike levy to new properties. Mr. Scavo said he doesn't foresee any similar deals in the future.
But there have been several instances in which some properties have been eliminated from CA's assessment rolls and replaced by others -- to the "mutual benefit" of Columbia's two premier institutions, Mr. Scavo emphasized.
"There's a pattern to all these transactions," he said. "They all have a significant positive impact to CA."
The association imposes an annual levy on Columbia property owners to help pay for the planned city's recreational facilities, community programs and parkland maintenance. CA also enforces Columbia's property maintenance guidelines.
CA's $6 million, proposed 1995-1996 capital budget includes $1 million to buy about 5 acres from Rouse in a former General Electric industrial park off Snowden River Parkway to develop a storage area for campers and boats. The council and CA officials say the storage park would help residents comply with rules that restrict parking recreational vehicles on residential lots.
As part of the deal, Rouse would place under CA's annual levy two properties now excluded from the charge -- the 500,000-square-foot Snowden Square retail center and a nearby 54-acre parcel planned for about 650 townhouses or condominiums.
By 1998, those properties -- both on the abandoned General Electric site -- are expected to generate $350,000 annually for CA in assessment revenue, according to a CA financial analysis.
Even the deal's proponents say the $200,000-per-acre land price is inflated. Also, CA officials admit the deal calls for buying twice as much land as needed to meet demand for vehicle parking.
The 5 acres are part of a 168-acre parcel appraised by state tax assessors at $28,000 per acre, a value diminished by environmental contamination and other factors. Mr. Scavo contends, however, that the state valuation doesn't reflect the actual market value of the 5-acre site, which is graded and has other improvements.
Regardless of the land price, proponents argue, the benefits of the additional assessment revenue will outweigh over time costs associated with the project. Council members have compared the deal to overpaying for the exclusive right to drill for oil or buying a house with a guarantee of mortgage reimbursements and cash bonuses.
But the deal "goes way beyond dollars and cents," said Alex Hekimian, president of a watchdog group, Alliance for a Better Columbia. "Why is the Rouse Co. getting off without paying taxes when General Electric came and went long ago?"
The answer, said Mr. Scavo, is that Rouse is under no obligation to do so, nor does the publicly held company give away things free.
To attract General Electric to Columbia in the late 1960s, Rouse assembled a 1,100-acre undeveloped parcel, 370 acres of which originally was under CA's levy. The entire manufacturing park was excluded from the levy under General Electric's demands.
To make up for excluding those 370 acres, Rouse placed other properties totaling about 1,100 acres under the levy, including the 700-acre Dorsey Hall neighborhood. Those lands had not been included in Rouse's original plans for Columbia in the early 1960s.
"Our requirement was that we wouldn't leave CA in worse shape in its revenue stream," Mr. Scavo said. ". . .It's not our business to make tough deals with CA. CA's health from day one has been fundamental to Columbia's growth and the health of the community."
When General Electric abandoned its park in the 1980s, Rouse reacquired the land. It has redeveloped parts, including Snowden Square and Gateway office park. Rouse placed Gateway under the levy, but only in exchange for excluding a 700-acre undeveloped parcel at Route 216 and Interstate 95 near Scaggsville.
Mr. Scavo said the Rouse Co., in agreement in with CA officials, determines what properties will be subject to CA's levy, depending on proximity to established Columbia villages and CA's costs of providing services to the new areas. For example, the Scaggsville-area property is not contiguous with --- and is fairly isolated from -- Columbia, he said.
In land-sales agreements for Snowden Square, Rouse included a provision allowing it to place each of the shopping center's businesses, such as Hechinger and BJ's Wholesale Club, under CA's levy within five years, Mr. Scavo said.
The Snowden Square option gave Rouse more leverage in later asking CA to accept responsibility for serving new residential developments, such as the townhouses that are part of the RV park deal.
Rouse prefers to put such residential projects within Columbia's structure because it attracts buyers. But residential areas cost more to provide with services and generate less revenue than commercial projects, Mr. Scavo said, so CA needs incentives such as lien revenue from Snowden Square to accept them.