Our County Commissioners have received a request for Tax Incremental Financing (TIF) from The Swan Point Development Company. This application affects all Charles County taxpayers because if approved, our tax dollars will be used to subsidize a private corporation.
Before approval, we must insist that appropriate economic studies are conducted and the results made available to the public, to determine if this development really qualifies for a TIF, and that our tax dollars are being invested wisely.
The County should perform an independent “but for” analysis that tests US Steel’s rate of return so we know if they need taxpayer dollars to subsidize this development.
A simplified analysis of US Steel’s TIF request boils down to this: Charles County estimates the pre development value of US Steel’s 900 acres at $12 million; we taxpayers spend $26 million so US Steel can build a $10 million dollar bridge, fix their private beaches, plumb the property and build a driveway. After this infrastructure is in place, US Steel will sell the property at a profit of approximately $100 million dollars.
Has there been a measurable Economic Impact Analysis for the luxury Hotel? An authentic Economic Impact Analysis will examine the positive effect on jobs and growth in revenue against the cost of increased public services (schools, fire, police, the potential widening of route 257 etc.).
US Steel claims that the proposed Hotel will generate approximately 245 fulltime new jobs with salaries ranging from $16,000-$150,000. They do not assign numbers of employees to those wage ranges, but clearly those on the low end of the pay scale will not be able to afford to live in the villages where they work.
Before becoming an investor in the private market, the County must perform a Market Study to determine the impact of this development on existing commercial business. Will this tax subsidy for the new commercial business result in an unfair advantage over the current marinas and restaurants and draw customers away from them? If so, is it fair that the current business owners will have their tax dollars used to this effect?
The applicant has made the additional justification for this TIF with the claim that, without the TIF, financing for the infrastructure necessary for the hotel would be provided in approximately 5 to10 years.
This is not credible. The applicant has been trying for over a year to secure the MDE wetlands permits needed to build the Weir Creek Bridge and other infrastructure identified in the TIF. If the applicant receives MDE approval, the term limit on the permits is a maximum of three years. It is not believable that, failing the approval of this TIF, US Steel/Brookfield Homes will let this three year window close without building this bridge themselves. Once the bridge is built, the County will be able realize the full benefit of the increased tax revenues described in the TIF application.
It is equally difficult to believe that a wholly owned subsidiary of US Steel that, in 2006, generated income from operations of over $1.5 billion dollars might not be able to secure a loan independent of the County’s help .
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