Many skeptical about tax districts


A plan floated recently in Annapolis by County Executive James M. Harkins to add Harford to the short list of counties that have taxing authority to offset development costs has been met with skepticism by the community and lawmakers who say Harkins has not presented a clear picture of why he wants this new power.

Harkins is seeking to create special taxing districts in the county, primarily in the Perryman area, which the county has designated for growth, but which has roads woefully ill-equipped to handle more traffic.

The area to be developed is owned largely by the Mitchell family, and both Harkins and Frederick Mitchell acknowledge that they have discussed the districts as a means to help Mitchell offset expenses if his 1,000 acres were to be developed.

Tax districts are a complicated area of state law. Some officials say they are needed tools to help address big-ticket needs in communities. But others say often the biggest benefits go to developers, not the community.

Special taxing districts is a general name that covers several kinds of assessments.

One, often referred to as a community benefits district, allows residents in a community to ask to be taxed to pay for improvements within their community. Every Maryland county has the authority to create these districts, and Harford County has used this mechanism several times, Harkins said, including in the Rolling Green community, where residents asked the county to repair a failing sediment pond and then tax residents to pay the bill.

But Harkins is seeking a separate kind of district, one that only eight jurisdictions in the state have General Assembly authority to establish. It is a district created primarily in developing areas, and the county issues bonds to pay for development of infrastructure. New residents coming into the area repay the debt through an assessment.

"The press [for such districts] comes from private interests; it comes from developers," said Timothy L. Firestine, finance director for Montgomery County. "I'm not a big fan of them. It's not growth paying for itself. I just don't think they achieve the purpose they're intended to."

The districts were created to offer relief to homebuyers who were saddled with high infrastructure costs - the idea being that if those expenses were financed through public bonds, then the prices of the houses could be lower, Firestine said.

"It all sounds good in theory, but price is driven by supply and demand," he said.

If the homes sell for the higher price, then "somebody's making out," he said.

Firestine said that even with "huge disclosure requirements, I'm not sure everybody understands. You'd have to be a very sophisticated homebuyer to understand the nuances."

Robert McCord, an attorney in Harford County's legal department, said the county's legislation would include a requirement for clear disclosure of the district to potential homebuyers.

In Perryman, the state has estimated that $100 million in road improvements are needed to accommodate current needs and growth. Tractor-trailers used by warehousing businesses have damaged some of the existing roads to the point of failure, Harkins said.

The special taxing district would put some of the burden of paying the $100 million in road upgrades on new residents and businesses, Harkins said.

Perryman, a peninsular sliver of land bounded by the Bush River and Aberdeen Proving Ground, is home to residential, agricultural and industrial interests and also has some of the county's prime waterfront.

Much of the land that could be developed, about 1,000 acres, is owned by Mitchell and his sister, Elizabeth Pearce. They are descendants of the Mitchell family, owners of a corn-canning business that thrived on the peninsula for about 80 years.

Harkins said he met with Mitchell on creating a special taxing district in Perryman to help offset development costs, adding that the state assessment of the roads had been the impetus for those meetings.

"Fred Mitchell sat down with [the State Highway Administration] and the county," he said. "We've had meetings."

Mitchell concurred. "It's been suggested all along," he said, adding that he had discussed such a district years ago with officials in the administration of County Executive Eileen M. Rehrmann.

Harkins said the question is who should pay for these new roads in Perryman: "Should it be the residents who live there [now]? The answer is no."

Robert R. Neall, a former Anne Arundel County executive and state lawmaker, said the districts "generally have to do with shrinking county capital budgets and a limit on what the homeowner can bear in the way of infrastructure."

These districts are a much-needed tool, and executives need as much flexibility as possible to pay for growth, Neall said. He said having new residents pay for roads, sidewalks, curbs and other infrastructure needs for their community makes sense - especially to older residents who watch new areas get these amenities while theirs might be in disrepair.

In other counties, these districts are used primarily in development areas, and the developer is spared the expense of paying for roads, gutters, sidewalks and other infrastructure. Instead, the expense is covered by a county-issued bond, and the principal and interest are repaid by homeowners who buy in the community.

However, Harkins is marketing the districts locally as a way to help fund some of the costs of schools, libraries and roads, as well as other projects. "These things aren't going to fund a school, but they could be utilized for that purpose," he said.

"This is not the end-all answer," Harkins said. "It's a tool in the toolbox."

But Friends of Harford, a grass-roots group concerned with quality-of-life issues in the county, believes that these districts will only encourage growth, not manage it. President Judy Blomquist sent a letter recently to each member of the state delegation outlining the group's concerns.

"Please consider whether this is enabling legislation that will work to place more of the costs of development on the developer, limit development and serve smart growth by funding schools, parks-recreation facilities and open space, or if it will likely encourage more development by paying for roads to bring more development to new areas - something Harford County does not need," Blomquist wrote.

Harkins has been under fire for his handling of the matter. For example, although the executive met with state legislators in December to present his legislative "wish list," he failed to bring this proposal to them until several weeks into the session, creating confusion and friction between the delegation and the executive's staff.

Harkins said he and his staff began working on the plan shortly after the election, talking to business leaders, residents and County Council members. When he joined Gov. Robert L. Ehrlich Jr.'s transition team, Harkins said, he got behind in his meetings and, through a miscommunication, the legislation was introduced before he had briefed all lawmakers.

Del. Barry Glassman, the delegation chairman, said he recalls this sort of late request a few years ago, when Harkins came to Annapolis seeking an excise tax, which the delegation did not support. He said it is tough to be faced with the same situation again.

"The timing is difficult - he's come pretty late with the request," he said.

Del. Mary-Dulany James, a Democrat representing southern Harford, agreed. "This may be a good idea, but no one has made the case yet," she said.

When constituents are being asked to part with money, especially in the form of taxes, she said, everyone involved needs to understand the aims of the plan and how it would work.

"We're not anywhere near that point," James said.

The executive's staff has left many questions unanswered, delegation members say. And, they say, the presentations have been confusing. For example, the county staff's has included a 40-plus-page statute covering Anne Arundel's use of community benefits districts, though Harford has authority to use such districts.

The Harkins bill addresses "an entirely different concept than the ones I deal with," said Carolyn Kirby, budget and management analyst with Anne Arundel County, who has been special taxing district coordinator since 1987.

McCord said the broad-brush presentation was meant to show lawmakers the range that such districts have, "whether you pay as you go [as in a community benefits district] or issue bonds.

"We weren't trying to be evasive or pull anything over their eyes," he said. "There's value in looking at how one county's is set up."

The Senate hearing on Harford's special tax district legislation is scheduled for 1 p.m. Wednesday before the Budget and Taxation Committee.

Information: the Harford delegation office in Annapolis, 410- 841-3289.

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