From John P. Mallamo:
DO THE TAXPAYERS BENEFIT FROM THE HARFORD COUNTY OFFICE OF ECONOMIC DEVELOPMENT PROMOTION TO DEVELOP THE JAMES RUN CORPORATE CAMPUS
On October 16, 2012 at 6 PM the County Council will hold a public hearing on a proposal by the Harford County Office of Economic Development to establish a Special Taxing District and a Tax Increment Financing (TIF) at the James Run Corporate Campus.
The purpose of the legislation is to provide County Special Obligation Bonds and County Real Property Taxes to the requestors to fund $15 million of infrastructure improvements and approximately four years of interest payments $8 million at the James Run Corporate Campus, located at Route 543 and I-95. This project is required to meet a “need” in Harford County for additional housing units, retail and office space, as stated in the bill. Presumably the requestors cannot get financing to undertake the necessary improvements, and since Harford County has established that a project like this is greatly “needed”, the County will use its resources to access capital in the bond market for the benefit of the requestors. There is no study or analysis provided to establish the great “need” for the project, however, if such a “need’ cannot be developed, then the Special Taxing District and the Tax Increment Financing would be highly suspicious. At a total projected cost of approximately $200 million dollars, it is hard to imagine that the requestors are so desperate for capital that they must depend on financing from Harford County. It would be interesting to know where the majority of financing will come from and on what terms.
The project itself is described as a mixed office complex which would include office space, retail space and lodging facilities. The Harford County Council has created a new term called Lodging House for the 386 apartments. A separate building on another parcel will consist of a 250 room hotel. There is no start date for the hotel. Interestingly, at a community input meeting held on April 9 2012, Mr. Kevin Carney, resident agent of JR Lodging llc, along with other individuals associated or hired to represent that company, indicated that office space was no longer an economical enterprise, nor was retail, and therefore additional housing would be added. Six months later, the project includes both office space and retail space. Has the Economic outlook in Harford County improved that much in the last six months? If so, perhaps we should conduct seminars for other struggling Federal, State and Municipal governments so that they can improve their own economies.
As vague as the financing and scope of the project are the participants are even more obscure. From the various documents available it appears that some of the parties involved are Cushman Wakefield one of, if not, the largest privately held real estate developers in the world. Cushman Wakefield also has a capital markets division which provides a broad range of services including investment management and access to capital markets. The other participants include 95-543 LLC, Bren-Mar LLC, JR Lodging llc, perhaps James Run Development LLC and maybe others. Who knows the individuals involved with these companies. Those individuals are not named in the articles of incorporation on the Maryland State Department of Assessments and Taxation data base.
Are the names of the individuals participating important? The resident agent for 95-543 llc, Bren-Mar llc and James Run Development LLC is Mr. Robert B. Schulman a prominent attorney from Baltimore. There is a Robert Schulman identified as a contributor to some of Harford County’s elected officials. Could be a coincidence, but the address listed on the 2012 campaign finance records for a Mr. Robert Schulman indicates that a Mr. Robert B. Schulman resides at the address. Maybe not the same person. Still why would an attorney from Baltimore County have an interest in Harford County politics?
Another participant is JR Lodging llc. Mr. T. Kevin Carney is the resident agent for the company. The company was formed at the request of Michelle DiDonato, an attorney in the firm of Carney, Kelehan, Bresler, Bennet and Scherr LLP. Ms. DiDonato’s expertise according to the Carney, et al LLP web site is among other real estate related legal areas, HUD and Section 8 Housing.
So Yes, it is important to know who is involved in a project that concerns the future of Harford County.
The fiscal projections for the project are another interesting part of the Bill. They appear to be based on moonbeams, fairy tales, and pixie dust. The impact of the project is based on full success, without any discussion of risk. The fallacy of this assumption is obvious. All lodging units are fully occupied when they are built and “transient” occupants are paying Maryland State income tax at resident rates. All office space is fully occupied when it is built. Retail space is fully occupied and has a steady clientele spending money on consumer items. Not only are the lodging units full, but the salary for occupants is $60,000, and the project will add 4,157 new direct and indirect jobs to Harford County. No risk to the County. Tax revenues abound. In reality there is no viable business plan beyond the loss leading lodging house because the need is so suspect. The lodging house itself does not have a viable business plan. Including an interest reserve for four years further demonstrates that the promotion to develop James Run is a fallacy. The project has no beginning or end in sight.
A similar no risk can’t miss project, a product of a Harford county TIF, Beechtree estates is currently under development. Many of the same optimistic projections were made, all based on full success. According to the Maryland State Department of Assessments and Taxation real property data base, fewer than 50 houses have been sold in the Beechtree estates since it was established in 2010. Harford County’s Office of Economic Development seems to have a penchant for projects that just don’t meet their advertised potential. Moonbeams, fairy tales, and pixie dust.
What does Harford County have to contribute to the project? Other than selling special bonds, there is some discussion of providing an unidentified portion of the real property taxes levied against the project for principal and interest payments on the bond. How much is not provided. And there is no substantive discussion of the rate and assessed value of the property.
Can Harford County afford another no risk, sure thing from Economic Development? Probably not. Perhaps rather than spending time on this venture, it is time to review all of the activities of the Office of Economic Development and the Economic Development Advisory Board. The Harford County Council as our fiscal watchdog should begin a review of their countless and varied pursuits as well as a review of all the other magicians, rainmakers, developers, and fellow travelers involved in Harford County’s economic development to determine just what is going on in this area.
Bill 12-35 and Resolution 25-12 are a must read for anyone concerned about the future of the County, and how it will be operated for the next few years. Both the Bill and the Resolution have been crafted to be very specific in some areas and deliberately vague, ambiguous, and evasive in others. Similar to a carnival magic show, attention must be diverted away from the main characters for the magic to work. Moonbeams, fairy tales and pixie dust won’t improve a bad situation.