University will compensate city for revenue loss

The university has made an offer to compensate the city for the hundreds of thousands of dollars of tax revenue it will lose if the university’s move to buy the Washington Post Company’s College Park plant goes through.

If approved, the university would use the now-closed plant to house facilities displaced by its planned $900 million East Campus development — a project that would bring graduate student housing, stores and a music hall to Route 1. But city officials want to make sure they don’t lose revenue from the plant, which Mayor Andy Fellows said was the largest single payer of property taxes last year.

Because the university is a state institution, it would not be responsible for paying property tax on the plot if the $12 million sale is finalized.

University administrators said city support is essential to gain approval by the state’s Board of Public Works and has therefore offered to pay College Park yearly compensation to make up for the loss of tax revenue.

Although details of the university’s offer to the city are unclear, Vice President for Administrative Affairs Ann Wylie indicated at Tuesday night’s city council meeting that the university would be willing to pay a fixed annual rate. Although Wylie did not offer many specifics, the compensation would amount to less than the $260,000 the Washington Post Company paid in property taxes last year but more than a landowner would pay for a typical $12 million property, she said.

Because the Washington Post Company paid taxes that included the estimated value of their printing press, the city stands to lose tax revenue no matter who buys the property because its value has decreased with the loss of the presses, Wylie said in an interview before the meeting.

At Tuesday’s meeting, members of city government said they generally supported the East Campus project but were leery of the university’s most recent move.

“The biggest issue is that we come up with a fair value to basically be made whole [in terms of tax revenue],” Fellows said. “I think the city has expressed a lot of support over the years for East Campus for many of the reasons that were expressed tonight.”

At the meeting, city officials questioned how the university would determine a final number for its yearly compensation. Fellows questioned whether the rate could be based on a different method of valuing the property, and District 3 Councilman Mark Cook suggested the payment should fluctuate with the property’s value as tax revenue would.

“I think that would be more fair because otherwise we’re being locked in,” Cook said.

Wylie said she didn’t know if that would be possible. She said the stores and private housing that would be built on East Campus could increase city tax revenue by as much as $4 million. Other developers would be attracted to the area after East Campus is completed, she added.

“This will trigger a very big change in the area of College Park, and I would hate to see this end because we can’t come to an agreement on something so small as this [payment],” Wylie said, addressing the city council Tuesday night. “So I think I’m just asking you to think of the long-term here.”

In addition to tax revenue, city council members were also concerned about increased traffic that could come with the move of university facilities — including mail service and maintenance shops — to the site.

“The Washington Post traffic was when everybody was asleep,” District 2 Councilman Jack Perry said. “We didn’t see those trucks.”

Although there would be traffic associated with the move, the majority of it would be early in the morning and before rush hour in the afternoon, Associate Vice President for Facilities Management Frank Brewer said.

Wylie said the university would like the city’s support for the project before the Board of Public Works’ Feb. 10 meeting to discuss the deal.

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