From the Editor: Enticement or entitlement? Whatever you call it, Safeway subsidy makes sense

October 9, 2013

- ROSANNA LANDIS WEAVER -

BY ROSANNA LANDIS WEAVER — Our September 2013 cover story on a 52,000-square-foot “lifestyle Safeway” replacing what is essentially a vacant lot at University Town Center is good news for Hyattsville residents.

The news that the deal is contingent upon the developer receiving tax relief from both the county and the city is less exciting.

ECHO Realty, which will build and lease the store to Safeway, has requested $3.5 million in public incentives to offset infrastructure costs related to the project. The vast majority of the incentives come from the county, which has agreed to its part of the package.

However,as part of that package, the developer and the county are requesting the City of Hyattsville provide $400,000 in tax relief.  Here’s how it would work: the owners would pay no property tax on the increased value of the site in 2015 and 2016.  Taxes will be paid at the 20 percent level in 2017 and 2018, and the 60 percent level for 2019 and 2020, and in full beginning 2021, by which time the property will likely have a much higher assessed value.

In general, I’m not a fan of such tax offsets. Call me cynical, but I’ve read too many articles about sports complexes that are built on the backs of taxpayers who rarely benefit, or about companies that stage bidding wars between states and localitiesfor high-profile corporate headquarters.

 I have a lot of respect for an organization known as Good Jobs First, which bills itself as the leading resource for grassroots groups and public officials seeking to make economic development subsidies more accountable and effective. Most recently Good Jobs First has been in the news for its study criticizing Texas Gov. Rick Perry’s “job-piracy trips” into states, including Maryland, led by Democratic governors.

Good Jobs First distinguishes between incentives and subsidies, noting that, “An incentive motivates someone to do something they would not have done otherwise. A mountain of evidence suggests that development subsidies are often abused by companies that would have done exactly what they did anyway.”

 Despite this, I’ve been persuaded by a fair amount of reading and discussion that in this case it is the right thing to do because of specific circumstances.

 The University Town Center has simply not lived up to its potential.  What should have been a smart-growth Xanadu opened at just the wrong time, and despite easy access to Metro and some wonderful restaurants it remains something of a hidden treasure.  Without an anchor store and a suitable entryway it is hardly compelling.

 There was originally intended to be a Safeway, but the plan “fell through” in 2010 along with the economy. Since that time the county officials have been particularly active in reaching out to developers regarding the site.  There is every reason to take Safeway at its word when it says that without the offset it would not build the store.

 In addition,  I find subsidies most  problematic when the company receiving them is a highly profitable entity that pays poverty-level wages. Safeway, however, has a fairly thin profit margin and is a unionized employer, and the jobs created will be reasonably well paying.

 This is what positive economic development looks like. Council Member Shani Warner believes that the deal represents a “compromise on both sides,” and notes that the deal has been in the works for a long time.

 The first reading of the Revitalization Tax Credit District Ordinance will be on October 7, with a second reading on October 21. This ordinance, similar to one recently adopted in College Park, could serve as a tool for future development.

 Tension between various facets of government will always exist, and certainly has here. But unlike what we’ve seen at the federal government lately, in Hyattsville problems don’t equal paralysis, as there are issues where all work together for the good of all citizens of Hyattsville. Our neighbors in the big city a few miles away could take a lesson.