East Campus delays will likely impact city projects

Delays to the university's planned East Campus development have put the brakes on a city plan to redevelop its downtown City Hall property into a luxury hotel.

The city was counting on extra tax revenue brought in by East Campus to help pay for a new city hall outside of the downtown area. Once it was built, the existing city hall and the storefronts along the east side of Route 1 between Knox and Lehigh roads would be demolished and the property would be turned into a luxury hotel.

The tax revenue would have come from a deal with Prince George's County in which tax-increment financing would help pay for East Campus, a $900 million 38-acre mixed-use project on Route 1 between Fraternity Row and Paint Branch Parkway. Tax-increment financing uses future projected tax revenues to pay for the developments that will create those revenues.

Without the additional funding, city officials said, their plans will have difficulty moving forward. Officials are hoping for a full-service Hilton or a comparable competitor, which they say could house dignitaries visiting the university and help spruce up downtown.

"A lot our work in downtown development has to do with East Campus," College Park Planning Director Terry Schum said. "They've slowed down, so we've slowed down."

The developers of the East Campus project, Folger-Pratt Argo, have been unable to get loans in the current economic downturn, preventing them from starting construction. And until construction is ready to begin, they won't be able to apply for tax-increment financing, said Ann Wylie, university interim Vice President for Administrative Affairs.

Wylie emphasized East Campus would be built as soon as financing was available - though she said she didn't know when that would be - and that her office and the private developers are actively pursuing funding and studying details.

"We have a lot of minds working on it, and no one has said it's not possible" to get East Campus built, Wylie said.

Wylie said the best-case scenario for breaking ground on East Campus would be fall of next year, and the actual date could be years away if the developers can't get loans. She added East Campus's proximity to the university, a Metro station and the proposed Purple Line transitway make it one of the best candidates for financing once lenders are willing and able to start lending again.

City officials are also hopeful their planned hotel project will survive the economic downturn. They still have two developers, Urgo Hotels and the Peebles Corporation, competing for the opportunity to build on the city hall site, Schum said.

However, despite earlier urgency, the city's pace toward a decision has slackened. The city is past its original deadline for choosing between the two developers and continues to struggle in selecting a new site for city hall.

The council had voted to go ahead with its relocation and redevelopment project last summer and selected its two finalist developers in October, but has done little since.

"East Campus was going quickly at that point," Schum said. "All that has changed."

The city's delays may make it more difficult to buy the storefronts that sit between the city hall property and Route 1, officials said, and may lead to additional competition from another hotel planned within the East Campus development just a few blocks away on Route 1.

"It's a problem of some magnitude, certainly," said District 2 Councilman Bob Catlin. "By not moving quickly, we're creating additional problems."

Wylie - and Doug Duncan, her predecessor at administrative affairs - have both said they support the city's hotel plan, and don't see East Campus as a competitor against downtown College Park.

"We just want a hotel with a conference center. There's no question about that," Wylie said. "We don't want two hotels if they're going to kill each other."

Despite all its hurdles, city officials said they are confident they will be able to redevelop the downtown city hall site as soon as East Campus is ready to apply for its county tax increment financing.

"We have no reason to believe [East Campus] is not going to move forward," Schum said. "Just like our project."

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