The College Park City Council voted 4-2 on June 18 to award a $500,000 city tax credit to the developers of a student housing complex, but some council members objected, arguing that the city should not devote so much funding to a finished building project.
The Varsity at College Park, a 901-bed student facility on 8150 Baltimore Ave., opened in 2011 and is also home to a few restaurants.
Council members said the developers deserved the tax credit because they brought upscale facilities to the city, improved local infrastructure and increased development in a neighborhood that needed additional investment.
Councilman Patrick Wojahn (Dist. 1) said the city was “giving away too much” and argued that large tax breaks for construction projects should be reserved for those developers who need a financial incentive to begin building.
But Councilman Robert Catlin (Dist. 2) said developers at Bethesda-based Potomac Holdings deserve more than $500,000 from the city, because they built high-quality student apartments for University of Maryland, College Park, students.
Catlin said the $121.5 million complex has benefited everyone in the city by replacing old buildings that he described as “eyesores.”
Catlin said revitalization tax credits were specifically designed to reward developers like those at The Varsity.
“We will have a number of people in the future who will be applying for these tax breaks, but I suspect none of them will do as much for the city as The Varsity did,” he said.
Catlin said The Varsity’s developers fulfilled the requests of the City Council by providing residents with shuttle service and using brick facades even though they had no legal obligation to do so, and he argued that it was important to reward the developers for their cooperation.
Matthew Tedesco, the developer’s attorney and spokesman, said his clients brought new restaurants and retailers to College Park by providing space for shops and other amenities in its apartment complex.
“We’ve discussed this ad nauseam, but we believe the project speaks for itself,” he said. Tedesco said the developers needed additional revenue to help cover the costs of construction, which totaled $45 million.
Councilwoman Stephanie Stullich (Dist. 3) said while The Varsity improved the business climate on Baltimore Avenue and the developers should get a tax break, she argued that $500,000 was excessive.
Stullich said The Varsity was built before the revitalization tax credit was available and suggested that this meant that its developers did not require a substantial government subsidy.
“I think it’s important to note that tax credits are not free,” she said. “In the end, somebody pays. If we grant this tax cut, then we reduce our government revenue, and revenue is the lifeblood of a legislative body.”
Wojahn offered an amendment that lowers the tax credit by $140,000, but his amendment was rejected in a 4-3 vote.
Mayor Andrew Fellows was the deciding vote and said the tax credit was already $250,000 less than the $750,000 the developer requested.
“I think it’s fair, what we did,” he said. “There was a feeling among us at the time [when The Varsity was built] that if we had the power to give them a tax credit, we would have, but we didn’t have the power. So although there was no promise given and no binding commitment made, our vote today was in keeping with the spirit of that time.”