SALISBURY – Following a lengthy discussion, officials in Wicomico County this week agreed to move forward with a proposed tax incentive program for hotel and residential development.
In a work session on Tuesday, the Wicomico County Council agreed to introduce legislation for a tax incentive program at its next meeting. Officials say the program would offer tax credits to hotel and residential developers over the course of 10 years.
“It will at least move the process forward,” Councilman Bill McCain said. “There can still be discussion.”
Earlier this year, the Maryland General Assembly passed enabling legislation to give all municipalities in Wicomico County – and Wicomico County as a whole – the ability to establish a property tax credit for hotel and residential development projects. And last week, the City of Salisbury passed its HORIZON (Hotel and Residential Incentive Zone) program, which is expected to incentivize large-scale hotel and multi-family residential development in the downtown area through reduced property taxes on improved lots.
On Tuesday, however, city officials came before the Wicomico County Council requesting they adopt a similar program to enable further development of downtown Salisbury. Mayor Jake Day argued a countywide program would promote the development of seven vacant parcels in downtown Salisbury and increase tax revenues.
“If all this development was realized, once they came into being, it would result in $25 million of new city taxes over 25 years and $23 million in new county taxes over 25 years,” he said. “But the truth is, as everyone in this room knows, that’s monopoly money. That’s not real money. It hasn’t happened without this incentive, it isn’t going to happen without this incentive.”
The county’s proposed incentive program would offer residential and hotel developers reduced property taxes on improved lots. Those taxes would then gradually increase over the course of 10 years.
“This is not a tax giveaway,” Councilman John Cannon said. “We’re not giving away one dollar of current taxes Wicomico County currently collects. What we’re doing is trying to give relief only to the improved investment value of those properties.”
Several residents, developers and business owners came before county leaders this week seeking their support for the county’s proposed incentive program.
Officials from Salisbury University, including President Charles Wright and finance professor Leonard Arvi, argued the program would promote economic prosperity and provide incentives to expand commercial and residential activity in the downtown area.
“You are creating infrastructure that adds value,” Arvi said. “And if value goes up, the tax base goes up and your tax revenue will increase over the long term.”
Downtown business owners added residential development would put heads in beds and feet on the street.
“Nothing would make us happier than to see more people downtown,” said Lilac Clothing Company owner Jennifer LeCates, “and that does include people who actually live here and have a sense of community.”
Opponents, however, argued the incentive program would create an unfair advantage for new residential developers.
“One effect we know that’s going to be immediate is any development project that gets this tax exemption is going to automatically have a competitive advantage against any competing facility,” resident Robert Taylor said.
Others argued the tax credit would generate less property tax revenue for county services.
“I’m all for economic development, but more people and more buildings does mean more upgrading infrastructure,” one resident said. “Who’s paying for the increase in the roads, sewers, water systems, etcetera? More expenses with less taxes.”
Wicomico County Education Association President Joan Smith agreed. She argued the county already offered incentives to developers wishing to build in Wicomico.
“There is reliable data, evidence that shows tax abatements are detrimental to school districts and continuing local services like fire and police departments, which receive a large portion of their funding from local property taxes,” she said.
Councilman Joe Holloway said he opposed the proposed program, arguing he would rather see tax incentives for county residents.
“At some point in time, somebody’s going to have to pay the bills,” he added. “The county doesn’t run on air.”
Cannon, however, said the proposed program would benefit both developers and residents.
“When these property values skyrocket, the county council is forced to reduce the tax rate, and everybody in Wicomico County benefits from that,” he said. “That’s the focus of economic development. You increase the tax base so you don’t have to increase your tax rate.”
After further discussion, the council reached a consensus to introduce legislation for the proposed tax incentive program at its next meeting.
“What the county is doing is very much a watered-down version is what the city is doing,” McCain said. “It’s half the term, and the county actually collects money in year one, right from the start.”
