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Public Financing Assistance – Tax Incremental Financing

This article is the fifth in a series to ensure that Greenbelt residents are aware of the development and redevelopment proposals being considered for Greenbelt West. Greenbelt West is that area of the city west of Kenilworth Avenue, east of the Metrorail tracks and between the Capital Beltway and Greenbelt Road.

This week’s article is about the use of public financing assistance and in particular, tax increment financing.

In the discussions related to the proposed development at Greenbelt Station and the redevelopment of Springhill Lake, the city was asked whether it would be willing to provide financial assistance to make the proposals a reality. In both cases, the discussions have centered on the use of tax increment financing or TIF. Public financial assistance on large scale developments is not an uncommon practice nationwide and has been done before in Greenbelt. Sometimes, assistance is offered in exchange for concessions on a project. Other times, it serves as an incentive to generate interest in an area that needs redevelopment.

When Greenway Center and the Maryland Trade Center office park were proposed in the 1980s, the City of Greenbelt provided financial assistance for the construction of the public roads to serve the area – Hanover Parkway, Greenway Center Drive and Hanover Drive. The assistance took the form of bonds that were sold by the city and paid off by the property owners. This saved the property owners money because the bonds were municipal bonds making them tax_exempt and providing a lower interest rate than commercial bonds. In exchange, the property owners agreed to annex to the city along with other concessions.

In the early 1990s, the city was seeking to have the original buildings in Roosevelt Center upgraded and the parking lots improved. An agreement was reached with the buildings’ owner to again sell tax-exempt municipal bonds that would be paid off by the owner. The proceeds went to upgrading the buildings including the façades and roofs. In exchange, the owner gave the city a façade easement to protect the exterior of the buildings and used a portion of the proceeds to help pay for improving the parking lots which are city owned.

The developers of Greenbelt Station have sought and the city has agreed to provide public financial assistance to construct the public road which will run north and south through the entire property from Greenbelt Road to the Greenbelt Metro Station. As before, the city will sell municipal tax-exempt bonds, but instead of the bonds being paid off by the developer, they will be paid off by taxes generated by the increased value of the property in Greenbelt Station. The increased value, or tax increment, will occur as the property develops and buildings are built. If the increased value is not sufficient to pay the debt on the bonds, the property owners have agreed to allow the city to place a special tax on the property to make up the difference. Existing residents are not responsible for any of these costs. In exchange, the developers gave the city the right to approve the site plans for the Greenbelt Station development, agreed to petition annexation to the city of the South Core area (the old Smith sand and gravel operation) and made numerous other concessions including recreation amenities.

A similar public financial assistance arrangement has been raised by AIMCO, the owners of Springhill Lake, to pay for the rebuilding of the roadway network within Springhill Lake. Discussions are very preliminary at this time. No commitments have been made by the city.

If there are questions about this article, please forward them to the Planning Department at 301-345-5417 or email pcd@greenbeltmd.gov. The next article will describe the impact that these Greenbelt West developments may have on schools.