BERLIN — The high cost of equivalent dwelling units (EDUs) within the Riddle Farm water and sewer services expansion could be turning off new businesses looking to start in the growing area.
The Worcester County Commission could step back and hope the market adjusts, but Bill Badger, director of Economic Development, suggested Tuesday that they instead seek a “creative financing approach.”
EDUs in that new Riddle Farm service expansion area, which is located in West Ocean City along US Route 50 near Route 589, cost roughly double what they do in the nearby town of Berlin. This makes businesses, especially restaurants which may need to purchase several EDUs, hesitant to move in, according to Badger.
“Because of the path the County Commissioners have chosen to take, [an avoidance of county capital expenses by utilizing a public-private partnership and exchanging the opportunity for a private entity to sell equivalent dwelling units] the cost of the EDUs for the end user total approximately $30,000 each, which is considered expensive,” Badger wrote in a memo. “Many developers and retailers have indicated to me that this additional expense affects their lease rates and our ability to attract restaurants and quality retailers in and around the Super Wal-Mart.”
A tax increment financing (TIF) district was one potential solution that Badger suggested the commission consider.
“I have personally been involved in four tax increment financing districts in Anne Arundel County (for example, the Arundel Mills project),” wrote Badger, “that have changed the face of Anne Arundel County and the City of Annapolis for the better.”
It’s worth noting that a TIF district would not be pledging to increase property tax rates, only borrowing against the anticipated revenue increase that could be expected with a surge of new business opening in an area. The expansion area has been flagged by the county as a spot where they want to see significant growth. Water and sewer service was extended from Riddle Farms with the intention of attracting business.
Badger warned that if the county chooses to assume the retail market will happen even with the expensive EDUs then Worcester runs the risk of missing out on national restaurants and retail.
To avoid that risk it was Badger’s recommendation that the commission hire MuniCap Inc., to perform a financial options study. It would be broken up in three phases, with Phase I moving forward at this time at a cost not to exceed $2,500.
“I want to be armed, and I want you to be armed, with all of the facts,” Badger explained.
The commission was in favor of the study though Commissioner Virgil Shockley pointed out that there are some other factors besides EDU cost that will need to be considered when looking at that growth area around the Super Wal-Mart.
“It’s not the EDUs alone that are holding this up,” he said.
County design guidelines for the Route 50 corridor might also be scaring off restaurant and retail chains, according to Shockley. Commissioner Jim Bunting agreed, suggesting that the guidelines need to be examined in the future.
The county is also still waiting to hear back from the state on the matter of the Riddle Farm service area expansion. The Maryland Department of the Environment (MDE) has signaled that it will need another 90 days to review, though the expectation is that it will not require the full three months for a decision.
The commission voted unanimously to approve the MuniCap study starting with Phase I. Early estimates for Phases II and III have a combined cost of between $9,000 and $12,000.