Frostburg OKs funds for Pritchard Farms infrastructure

Jul. 3--FROSTBURG -- The mayor and city council held a special meeting Tuesday to discuss and approve two resolutions regarding prior Real Estate Tax Set-Aside agreements involving the Pritchard Farms housing development.

The tax set-aside agreements are used to incentivize developers to develop land that might otherwise not make financial sense to buy and build on.

"In the mid-2000s, when Pritchard Farms was proposed to the city, the developers at the time requested the city to look at some sort of tax incentive for that development," said Frostburg City Administrator Elizabeth Stahlman. "Unlike communities to our east, especially, the land value here, even when developed, is much lower and the cost of infrastructure and the construction of that is still the same cost."

RETSA works by examining vacant land tax values and tax values post home construction and setting aside a percentage of the taxes between those two values, later reimbursing the developer for infrastructure cost once they provide proper documentation, she said.

On the initial RETSA, however, following the economic turmoil of the mid- to late-2000s, the developer at the time never filed reports and the city never issued any of the reimbursements, leaving the funds to sit unusable in city accounts until the program expired in 2016.

"Last year, we started the proceedings to have a declaratory judgment saying that the city and county could use those funds as we saw fit, that there was no encumbrances upon the funds," said Stahlman. "But because those funds were collected from tax dollars of current residents of Pritchard Farms, the consensus was that it made the most sense to invest those tax dollars collected back into the community of Pritchard Farms."

The funds amount to $166,543 from the city and $152,674 from Allegany County. How the funds are to be used on improvements was determined by Chris Hovatter, the city's director of public works, and work is supposed to start before April 15 of next year.

Improvements include water taps and storm water inlet repairs ($23,250); traffic circle modifications ($4,930); street, sidewalk and curb repair ($211,585); and streetscaping ($26,000-39,000).

"The majority of those funds will go to infrastructure in the community," said Stahlman. "There's other provisions in the agreement, as well, to reimburse the city for our legal expenses in coming to this agreement. It also addresses reestablishing the homeowners association and purchasing a year's worth of dues for the existing residents."

Due to Evergreen Associates LLC's continued interest in developing the land in the Pritchard Farms development, the mayor and council agreed to a new RETSA program, which will run for 15 years.

"Part of the need for the RESTA agreement, when it comes back to it, how do you attract a developer to put in new lots when the cost of the new lots pretty much exceeds the selling price for the area?" said Brandon Reece, of Evergreen Associates LLC.

The price of the next phase of development comes to over $400,000, he said, and the selling point of a finished lot is around $40,000.

"The cost that's involved in developing the land doesn't justify the purchasing price, so what makes it happen and makes it financial to a bank and to a developer like myself is the annuity that comes with the RETSA," said Reece. "Really what a RETSA means to a developer like myself is it makes you feasible."

Follow staff writer Brandon Glass on Twitter @Bglass13.

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