A Tax Revolt Against Corporate Subsidies

Many thanks to the WASHINGTON POST for publishing on June 7th my latest take on the Takoma Junction Redevelopment Project.

I argued that Takoma Park is now the proverbial canary in the coal mine. The era of communities giving huge subsidies to developers may be ending, and progressive revulsion at the practice may turn out to be as powerful as the conservative tax revolt ushered in by Proposition 13 in California in the 1970s.

Takoma Park is prepared to give away $5 million over the next 50 years at a time when it’s telling its citizens that their property taxes, already among the highest in the country, must be raised further. No wonder so many residents are up in arms.

You can read the whole thing here.

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8 Comments to “A Tax Revolt Against Corporate Subsidies”
  • David
    June 10, 2018 - Reply

    The city abandoned its proposal to (slightly) raise taxes In May:
    http://www.thesentinel.com/mont/news/local/item/6865-takoma-park-passes-new-fiscal-year-budget

    • DJ
      June 14, 2018 - Reply

      David, over the last 5 years, Personal property taxes are up 27%, # of FTE Gov Personnel are up 9%, Inflation up 7%, and the population is up 2.6%. Many many people are concerned with this unsustainable path that will in fact drive people on fixed incomes out of TP. Also, 78% of this unsustainable tax and government growth is born by single family homes which magnifies the pain. Not sure why you are defending behavior that hurts so many.

  • Michael Shuman
    June 11, 2018 - Reply

    David, you misread the article you cite. The City raised taxes but less than originally proposed.

    And guess what was cut? A full-time economic development position. So the City will get $10,000 from NDC next year instead of $158,000 (a loss of $148,000). That’s roughly what it would have cost to support a full-time economic development professional.

    Bottom line: Rather than offer economic-development services to all businesses in Takoma Park, the City gave away everything it had to NDC, an outside developer. What poor priorities.

  • David
    June 12, 2018 - Reply

    It sounds as if you have misread, Michael. The city did not lower the tax rate as much as they typically would in order to counteract rising assessments. The net effect is so minuscule that no one will see the difference in their tax bill. No tax revolt here as far as I can tell!

    The $158k figure you keep presenting a) has no basis in the actual value of the Takoma Junction property b) ignores the most basic principles of real estate development, and c) is inconsequential when compared to $32M in tax revenue the city collects each year and the complex array of services it delivers. The city is executing several infrastructure projects this year which will hopefully drive more private investment.

    It’s interesting and notable that you keep referring to NDC as an “outside developer”. I’m not aware that Takoma Park has any developers located within its 2.4 square square miles or among its 18,000 residents… nor do I see why it matters. NDC is a small, local, minority-owned development company that has a great reputation. This is precisely the type of firm I would like to see working on this project. The city conducted a rigorous RFP process with 5 developers and this is the firm they selected….

    • Michael Shuman
      June 12, 2018 - Reply

      David, you wrote that the City abandoned its proposal to raise taxes. That’s not true–it just slowed down its tax raising plans. And if you want to understand why so many of your neighbors are up in arms about taxes, you should look at a chart prepared by another David — David Navari — that shows that between 2014 and 2019, while the population of Takoma Park has grown 2.6%, taxes have grown 20.6%.

      I won’t repeat the arguments I made for why $158,000 represents the best estimate for the ground lease value (readers should read the two previous blogs). I’ll just point out that I invited you to share your estimate and rationale for that estimate–and you still haven’t done so. It’s also worth pointing out that NDC and the City argue the “average” lease it is charging NDC is $200,000 per year, so my estimate actually is conservative.

      You then suggest that even if the City is undercharging NDC (i.e., subsidizing it), it’s “inconsequential” given the size of the City’s budget. This is exactly that the kind of logic that infuriates taxpayers. A $5 million subsidy is “inconsequential”? Sorry, but even in Takoma Park, a commitment of $5 million is still real money.

      There are economic consequences to using a developer that is not based in Takoma Park. Its profits and business expenditures will generate great multiplier benefits in another tax jurisdiction. Local ownership matters.

      NDC may have been the best developer the City could find with its RFP, but the RFP was the essential problem. Rather than pursue public purpose projects on public land, the City invited and encouraged proposals to build a glorified private office and retail center.

    • Byrne H. Keley
      June 15, 2018 - Reply

      David, there ARE developers who reside in Takoma Park who could have delivered this project, and who would have included the Coop all along the way. I’m a Takoma Park based Maryland Licensed Landscape Architect, and a Qualified Environmental Planner,
      with an education in both Architecture and Environmental & Urban Planning, from 1974 to the present.

      After working for Dewberry & Davis and Ben Dyer Associates, I became well versed in both Commercial and Residential Land Development, as well as Low Impact Environmental Design for Storm Water Management.

      Since 2003, I have also become a DEVELOPER. I have successfully sub-divided acreage for large Residential Lots in the Chesapeake Critical Area on Ragged Point in Dorchester County. In the City of Cambridge I am a partner in Development for 12 Townhomes fashioned as a Mews. Currently, I am involved with two sub-divisions within the City of Takoma Park. I also perform Feasibility Studies for my clients interested in purchasing, subdividing, and developing or redeveloping land. Presently, I have two clients engaged in that type of work for acreage inside the Beltway.

      I am also the Site Planner and Building Designer for the Takoma Junction: Alternative Site Plan referred to as “Community 1s alternative Site Plan”, for finding Common Ground at Takoma Junction. I am not being paid for that work, I do it because I live here and I listen to and engage with all of the Stakeholders in this process because the NDC and Street Sense have not.

      Carl Ellefante, the current President of the AIA and also a Takoma Park resident architect who works with Quinn Evans on Commercial Developments reviewed an earlier version of my” Forms follow Functions at the Takoma Junction” Plan with only one word “Brilliant”

      Dig a little deeper, and I know one can find other Takoma Park Designers and Builders and Realtors, who are either Developers themselves, or work with Developers.

      It’s be naive to suggest that we here in the People’s Republic, do not recognize or embrace Capitalism and democracy.

      • David
        July 2, 2018 - Reply

        Wonderful Byrne. Did you respond to the city’s RFP?

        Takoma Park is not a walled, medieval Italian City. It’s part of a dynamic and complex regional economy that depends on external expertise and capital. You are welcome to take issue with NDC’s proposal, but limiting the RFP to a handful of local stakeholders makes no sense.

        There is a large contingency of activists that would only like to see non-profit and/or publicly funded development on the site. I wonder how many of these folks pushed back on the original city plans to release an RFP?

  • Jessica Landman
    June 13, 2018 - Reply

    On top of all of its other flaws, the current NDC proposal would be built on two adjacent parcels, owned by two different owners: the City of Takoma Park, and NDC. It’s questionable whether a building permit could even be granted for such an irregular arrangement. So far, the Mayor and City Council have not responded to my inquiry about how this can be done when County building regulations say that ‘Construction of a new principal building may only occur on a lot or parcel shown on a plat recorded in the County Land Records.’ This is TWO lots, not one. Who’s going to loan money to such a risky venture?

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