The College Park City Council proposed an ordinance Tuesday that would give a $4 million property tax reduction to a development company to encourage the redevelopment of the former Quality Inn and Plato's Diner site on Route 1.
The site has been vacant for about a year, after a fire shuttered Plato's Diner in 2016 and the Quality Inn closed its doors last fall.
The city's plan would make development of the site more likely. In January, the Bozzuto Development Company was approved for the construction, which would bring both apartment and retail space to the site. Since then, Bozzuto and the city have been negotiating the tax reduction amount.
"We wouldn't lose any money from the deal, but it would limit the amount we would gain in terms of an increase from the development," Mayor Patrick Wojahn said.
Based upon the projected assessed value of the property, Bozzuto would receive more than $4 million in tax credit over the next 15 years. The city would receive the base property tax each year, but just 40 percent of the incremental property tax revenue.
Even with the tax abatement plan, the city would see a 227 percent increase in property tax revenue compared with what it would have made if Quality Inn and Plato's Diner were still in business, according to city estimates.
The council's ordinance would amend the city's Revitalization Tax Credit program going forward to permit greater property tax reductions for eligible projects.
College Park currently offers a tax abatement of up to 75 percent over five years, with a 15 percentage point decrease in each subsequent year. With the new ordinance, the council could offer up to a 60 percent tax abatement for up to 15 years. A similar tax abatement is in a similar stage in front of the Prince George's County Council, said Bozzuto Managing Director Jeff Kayce.
The proposal comes as the city strives to welcome new development, and to become a top 20 college town by 2020.
A public hearing will be held at the next city council meeting on Sept. 25 to discuss the tax abatement, after which the council will vote on the ordinance.
David Dorsch, a 45-year resident of College Park, said he is against the proposed tax abatement. He said the city should pass along profits to its constituent property owners, not to developers. He questioned why Bozzuto would have a difficult time obtaining funding for this redevelopment.
"If [they] cannot build a profitable development on this site without the city's tax money, then maybe they're not the right developer for this valuable, one-of-a-kind property," said Dorsch, who lives in District 3.
In September 2017, Bozzuto sought a 75 percent tax abatement from the city to secure equity investment to help fund the project.
The council proposed a 50 percent tax abatement in January, but the developer said they could not finance the development with that. Bozzuto is close to finalizing equity commitments for the project, and the 60 percent tax abatement has been "instrumental" to that progress, Kayce said. Bozzuto had previously said it was looking to secure about $50 million in equity funding.
After Bozzuto has funding approval, Kayce said, the developer hopes to break ground within a year. Demolition and site prep may begin sooner, and the project should be completed about 28 months from when construction begins, Kayce said.
The proposed development, which is estimated to cost between $140 million and $150 million, will include 393 residential units and between 60,000 and 70,000 square feet of retail space. Kayce said the company is focusing on attracting "life-enhancing retail" and has already had conversations with several retailers.
Currently, he said, Bozzuto is focusing on finding retailers to fill the development's larger spaces. Kayce said the developer hopes to bring a fitness-oriented business to the site.
The residential portion of the project hopes to attract permanent city residents, rather than students living in the city temporarily, Kayce said.
Kayce said the Quality Inn redevelopment will result in the "most upscale" apartment building in College Park. He pointed to similar projects, such as Monroe Street Market near the Catholic University of America in Washington, D.C., and Anthem House in the Locust Point neighborhood of Baltimore, as the kind of "aspirational" product city residents can expect.
"This development will be a game-changer for College Park," Kayce said.