Building Downtown Columbia: The TIF

The Downtown Columbia Plan was adopted in 2010, sketching out a vision to fulfill the Rousian promise of “a real, comprehensive, balanced city.” The plan said, with perhaps a tinge of optimism, “Downtown Columbia will be a diverse, mixed-use, livable, physically distinctive and human-scaled place with a range of housing choices and recreational, civic, cultural and educational amenities.”

But who could actually accomplish this daunting checklist of adjectives? The plan pointed confidently to one company: General Growth Properties, who would do great things for the benefit of our community, things like completing bicycle and pedestrian routes, form and fund the Downtown Columbia Community Housing Foundation, and, well, build Downtown Columbia as the Plan envisioned.

General Growth Properties had, of course, filed for bankruptcy ten months prior to the plan adoption, “in one of the biggest commercial real estate collapses in United States history.”

All of which to say: all the urban Utopianism in the world won’t get you anywhere unless you have a partner willing and risk a massive amount of money. In Downtown Columbia, a partner has stepped forward: the Howard Hughes Corporation, with a 2.17 BILLION dollar investment in the future of Columbia.

Although some work has started, downtown development has not yet begun in earnest. Instead, the current question (doubtfully the last) is whether or not Howard County should use Tax Increment Financing (TIF) to fund public projects in the Downtown district. Essentially, the County finances $127.7 million in costs, including the cost of a municipal parking garage, to be paid back with the new, future tax revenues generated by the development.

Recently, the Council hired a consultant to review the previous three economic analyses done, particularly the fiscal impact analysis of the TIF done by MuniCap. Conducted by a company called TischlerBise, these new consultants determined:

· “The Columbia Town Center project represents a key redevelopment opportunity for Howard County”

· “the project will likely have a net positive fiscal impact on the County”

· “the Proposal Includes Appropriate Use of Tax Increment Finance Bonds”

and

· “The need for structured parking is likely”

Despite this fourth expensive opinion, the critics of the TIF remain unconvinced. Perhaps, though, the best assessment on the TIF is a “but for” approach. Per the Government Finance Officers Association:

Seventeen states require governments to establish that economic development would not occur within a designated area, but for the establishment of the TIF district. Stated another way, if the government does not provide subsidies to the district, then economic activity will remain stagnant and hoped-for outcomes (such as increasing assessed value) will not occur.

Applied to Downtown Columbia, the arguments for the TIF are both economic — it will help finance an increased economic center and tax base and cultural — to be the place we want it to be, Downtown Columbia needs the TIF.

But for the TIF…

The Downtown Plan, as envisioned, fails. Howard Hughes dramatically scales back its investment, focusing instead on completing the in-progress buildings and redirecting investment to other projects. Other developers complete some residences at a much lower density. Economic activity remains stagnant; there remains no urban economic core in Columbia or Howard County. We revert to our suburbanism, and continue our trend towards obsolescence. Downtown, at best, ends as a new Gateway with a few more residents. (Something the Downtown Plan specifically warned against.) Tax revenue may rise, but not as much as with the TIF. Certainly we fail in our goal of “a diverse, mixed-use, livable, physically distinctive and human-scaled place with a range of housing choices and recreational, civic, cultural and educational amenities.”

But for the TIF…

The Downtown Columbia Arts and Cultural Commission fails, as Merriweather withers from lack of parking.

But for the TIF…

The stock of affordable housing in Columbia and Howard County continues to decline as a percentage of total residences. The are no affordable single-family homes popping up in Clarksville or Fulton, after all.

In short, if we want an urban, walkable downtown core that can serve as the economic engine of the future while preserving the affordable and diverse community that Columbia is known for, we must pass the TIF.

There are three main arguments against this.

The most prevalent pushback is “there is not enough information” and “not enough time”. But despite 6 years of planning since the Plan was adopted, and four separate studies pertaining to the TIF, no one seems to know exactly what information is still needed. This is the “show me a rock” argument.

Questioner: Show me a rock.
Supplicant: What kind?
Questioner: I don’t know; you’re the expert! A rock!
Supplicant [arrives with rock]: Here you go.
Questioner: No, not that rock! A different one!
Supplicant: Could you give me more of a descrip…
Questioner: YOU’RE THE EXPERT. SHOW ME A ROCK.
[Continues forever]

Council asks for non-specific information; HHC and Council consultants give information; the Council says, “no, not that; something else.” Ad infitinitum. There is a lot of talk around what is called the “pro forma”, and is essentially the developer’s expectations of the project’s financial performance. Of course, a pro forma was provided to TischlerBise; their complaint was it was “too high level”. However, a pro forma, is, at best, prediction of the future and, correspondingly, any attempt to get too detailed is subject to uncertainty; and, more importantly, the most important information needed by the County- the expected tax revenue growth and overall economic impact from the development supported by the TIF- can be found in the three analyses already conducted. MuniCap’s fiscal impact analysis, RCLCO’s market analysis, and CohnReznick’s economic impact analysis provide independent, third-party analysis of far more relevance than any projections the developer themselves would provide. What’s more, the TischlerBase report calls these analyses “sound,” “thorough and well-reasoned,” and “comprehensive.” TischlerBase occasionally quibbles with some details of methodology, with their offered solution being to hire TischlerBase to conduct more analysis. Somehow, it seems doubtful that any rock the Council could pay TischlerBase to find will provide any new or novel insights. The relevant information is here; the time for a decision is now. Further delay only increase the likelihood of the scaled-back suburban development the Downtown Plan sought to avoid.

The second objection is that tax revenue resulting from downtown development would go to General Fund if not for the TIF. This is the reductio ad absurdum argument, for without the TIF, there would be no additional tax revenue. At best, the County could accept a much lower increase in revenue alongside a much lower density of development. But this also forecloses the main reason for the Downtown Plan in the first place- to achieve an urban core that can create the economic engine of the future for Howard County. Even if you ignore the economic impact, the TIF provides the vehicle, via the Merriweather parking garage, for the cultural impact the Downtown Plan sought. What’s more, when the TIF is repaid, that additional tax revenue doesn’t disappear; it goes to the General Fund! In other words, by investing now, Howard County will see a rise in tax revenues thanks to the project.

The third objection is that the county will have to spend additional tax money to maintain what the TIF is paying for. This is the BANANA argument- Build Absolutely Nothing Anywhere Near Anything. Yes, there will be an infrastructure maintenance cost of developing Downtown Columbia. But, unlike typical suburban residential development, a business-rich urban core can generate more revenue than it takes to maintain. Without a true, dense, business-friendly economic center, Howard County residents can look forward to future of skyrocketing property taxes to support the level of service we now enjoy- an outcome far more likely to push out poorer residents. The efficiency of a dense core allows it to support the suburban development of Howard County. Right now, our bedroom communities send tax dollars to Baltimore and D.C.; wouldn’t we prefer to have the chance to work here?

In Downtown Columbia, Howard County has a partner willing to invest over 2 billion dollars. They’re willing to follow the plan our community developed six years ago. These are not conditions to be taken for granted; there is not a long line of companies willing to take that kind of risk under those kinds of conditions. Our side of the deal, as taxpayers, is to provide a financing mechanism that will, among other things, also allow us to take over one of the best concert venues in the country, preserve the future of our community, and create a city center other suburbs would kill for. If you believe in the future of Columbia, if you want to continue our trajectory of growth, and you want to build a center that will keep our children living and working here, the TIF is a great deal.

If you prefer the status quo, if you want to bet on malls and cul-de-sacs to define the next thirty years of economic growth, well…ask for another rock.