A major development project could be headed for an October groundbreaking after a jump-start from Frederick County officials.
Four commissioners Thursday voted to approve a plan to sell up to $40 million of county-issued bonds to fund road improvements and off-site sewer construction for the Jefferson Technology Park. Property owners in the development will pay off the bonds, with its new residents shouldering hundreds of dollars per year in special taxes. Owners of commercial properties could pay even more.
The two resolutions and ordinance solidifying the financial arrangement represent a creative way to stimulate a stalled project and draw major employers to the area, Commissioners President Blaine Young said.
"All I hear about is jobs, jobs, jobs. This is the opportunity that sits in front of us," Young said at the meeting. "Do you want to talk the talk or do you want to walk the walk?"
Young said the tech park could replicate past successes, such as when Banner Life Insurance Co. set up shop in the county in 2010 or when the U.S. Social Security Administration decided to build a center in Urbana.
But Commissioner David Gray, the only board member to vote against the plan, said he didn't think officials had examined the deal with enough caution. Though Young and others insisted the agreement did not pose a risk to taxpayers, Gray said he believes it could undermine the county's standing in the bond market.
Preliminary estimates from a consultant indicate that the debt service on the county-issued bonds could total $100.8 million by 2042.
The county plans to use two funding sources to handle the debt. As tech park property values rise, the accompanying tax revenue increases will help pay off bonds instead of fueling county coffers. A special tax on tech park property holders will also cover some of the debt.
This tax will vary, but for fiscal 2013, it is calculated to be at least $724 for homes smaller than 1,500 square feet and at least $861 for more sizable residences.
The development will not be the first in the county to rely on a special tax; Young pointed out that residents of Lake Linganore and Urbana pay them.
Because the county is not backing the bonds, taxpayers are not on the hook for them, said James Cumbie, bond counsel for the county. If the tech park project collapses and property owners cannot make their payments, the bondholders lose their money; the county does not have to provide a bailout.
Cumbie said the proposal will not jeopardize the county's bond rating because it rests on the reliability of tech park property owners and not on the county.
But John L. Thompson Jr., a former commissioner who also dealt with the tech park project, said the county is missing out on future property tax revenue, estimated to total more than $64.5 million over 30 years.
Thompson views the decision as a double standard, he said, as commissioners who tout smaller government decide to get involved in a building project.
Developers should seek support in the private sector, not from the government, he argued.
"If it's economically viable, it will be built. If it's not economically viable, it won't be built," he said.
Though the plan will not shut off any current revenue streams, Thompson said, failing to tap into new sources will lead to trouble.
The county must grapple with the cost of providing public services to residents in the 825 new housing units planned for the tech park. Officials will find it a formidable task if they forgo some of the development's property tax revenue, Thompson said.
However, Young pointed to estimates that, when completed, the park could bring up to 7,108 jobs to the area.
Across 30 years, it could generate $185.2 million in new revenue from income taxes, recordation taxes and other sources.
Thompson said these numbers depend on whether major employers take up quarters in the roughly 800,000 square feet of office space included in the tech park proposal and whether the county offers them tax incentives.