Friday, Sept 18–Berlin Gives Tax Abatement To Senior Housing Project

BERLIN – A low-income senior housing project will enjoy a modified tax abatement from Berlin, the Mayor and Council decided Monday night, despite citizen worries over reducing tax revenue and adding more consumers to a stressed water system.

The senior housing project, proposed as part of the unbuilt Purnell Crossing development, would offer 40 apartments to low-income seniors. John Triandafilou, who would partner with John Schuster, Inc. to build this type of project, presented the idea to the Berlin Mayor and Council in late August.

Triandafilou explained in August that their projects receive low-interest state loans, which require town financial participation in some way, all of which allows the projects to offer low rents.

There is no point in making the developers go through the entire planning process before getting an answer on the crucial question of tax abatements, Berlin Mayor Gee Williams said.

“It kind of has to start here, if we make certain concessions,” said Williams.

The town’s contribution is crucial to the partnership’s application for state funds, Triandafilou said, which many firms are competing for.

At the August meeting, Triandafilou outlined a request for a 10-year reducing scale tax abatement, starting with 90 percent in the first year and going down 10 percent each subsequent year. The tax abatement under this request would disappear in the 11th year.

The town council was not comfortable with that kind of abatement schedule.

“I’ve made a counter proposal for the council to consider,” Williams said.

Under this proposal, the tax abatement would be a five-year schedule with full payment by the fifth year.

The amount abated under this scheme is about $14,000, not the $31,000 abatement resulting from Triandafilou’s original request.

Williams also proposed that the normal impact fee of $1 per square foot of building be reduced to 40 cents per square foot.

The abatement and the reduced impact fee together would save Triandafilou and his partner the same amount as their original request.

“That would be a $31,000 financial consideration the town would be making to make this project financially feasible,” Williams said.

Councilwoman Lisa Hall was not in favor of the impact fee reduction. She said the town has several big purchases and initiatives to pay for, such as a new spray irrigation site, she said.

“There’s a very, very large amount of money to be spent and a long road ahead of us to get there,” said Hall.

Councilwoman Paula Lynch said, “I have a problem with the impact fee abatement. That’s upfront money for us.”

Impact fees are used to address additional services required by growth.

“In the future, water and sewer and trash pick-up are going to be like crude oil, very expensive … everyone needs to pay their freight,” Hall said.

The 10-year tax abatement is five years too long, Lynch said. Lynch suggested a flat $5,000-a-year reduction for six years.

“Then we know what we’re talking about. I think there’s enough leverage there, I don’t foresee the tax rate going down,” Lynch said.

A larger reduction early on is better for the partners’ bottom line than later on, so the operation can grow into its budget as apartments are rented out, Triandafilou said.

“You have to realize we can do what we can do,” Williams said. “You have to do what you have to do.”

Williams opened the floor to the public, although there was no official public hearing scheduled.

Mary Moore, who lives in the Broad St. neighborhood where the project is proposed, said she still has concerns over water and sewer.

Water pressure on the west side of town is notoriously weak.

“My main concern is infrastructure, getting that water there,” said resident Jim Hoppa.

There has been talk of a water tower for the west side of town, but that has not happened, he pointed out.

“I know in my house when somebody’s in the shower you can’t touch the water anywhere else,” said Hall, who lives in the neighborhood.

If the infrastructure is in place, the senior housing and Purnell Crossing would be a “tremendous project,” Hoppa said.

The Berlin water model created by URS Engineering shows that the water pressure will see little effects if any from the 12 EDUs of water assigned to the senior living facility, said Water and Wastewater Superintendent Jane Kreiter.

Upscale homes at Purnell Crossing would use more water than the senior housing rental units proposed, Lynch pointed out.

The town has to deal with the wastewater needs of the town before anything else.

“’Till we solve that, all the rest of this was purely hypothetical,” said Williams.

The location of the senior housing units on Broad St. raised red flags for some.

“I’m concerned where it is in town,” Moore said.

The facility would generate more traffic on Broad St., Moore said, which is used by walkers and cyclists, though it has no sidewalks or shoulder.

“I think that’s a bad location,” said Ernest Gerardi, who wondered why the facility was not closer to or on Old Ocean City Blvd., which would provide more direct access to services. The streets in the Broad St. neighborhood are also narrow and difficult to drive in traffic, he said.

There is a road planned directly through the Purnell Crossing site, leading from Broad Street to Old Ocean City Blvd., said Councilman Troy Purnell, developer of Purnell Crossing. Purnell recused himself from the council on this matter.

Moore also said she was disturbed that the project seems to have arisen out of the blue, giving the people of Berlin little chance to comment.

“People should have had a chance to weigh in on this,” she said. “The huge issues aren’t even going to be discussed…I don’t think it’s really been thought out.”

The Purnell Crossing development, which this facility would be a part of, was approved in 2004, Williams said. Issues of traffic and utilities were discussed then.

The senior housing project will still have to go through the planning and permitting process, he pointed out, where these issues are more properly addressed.

“Some of these arguments … you need to be talking to the Planning and Zoning Commission,” said Williams.

The developer could make some concessions to the town to give back, Moore said, such as donating $500 per unit to the Berlin Fire Department to compensate for the increase in 911 calls from the senior facility.

“I wish to object to the tax abatement request and the reduction of impact fees for senior housing…the residents of Berlin are once again being asked to pick up the tab for the project,” said resident Richard Graham.

Graham added that Berlin citizens are already subsidizing the project through Maryland tax revenues.

“Where is the developer and builder contribution?” Graham wondered.

Moore said she also had doubts over the assertion from Triandafilou in August that Berliners would be given some kind of priority in renting his project’s low-income senior housing units.

Triandafilou said that qualified Berlin residents would be given first chance to rent an apartment when the facility opened.

After extensive discussions, the town council voted to grant the low-income senior housing project a modified tax abatement.

Councilman Dean Burrell made a motion to grant the project a tax abatement of a flat $5,200 per year for six years, equaling $31,200. The impact fee would remain the same.

The town council voted 4-0 to grant the abatement. Purnell recused himself and sat out the vote.