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Business, Rouse Taxes Won't Change

County Delegation Rejects Proposals

By Miranda S. Spivack
Washington Post Staff Writer
Thursday, February 10, 2005; Page HO02

Measures that would have increased taxes on Howard County businesses and lifted two special exemptions Rouse Co. enjoyed for years were rejected last week by the county's legislative delegation.

One proposed bill would have required companies to pay a transfer tax when properties valued at more than $500,000 changed hands through the sale of a company's assets. A similar statewide measure has failed in recent legislative sessions but is being pushed again by House Speaker Michael E. Busch (D-Anne Arundel) as a way to help pay for school construction.

Two other proposed measures would have eliminated property tax breaks that Rouse, which General Growth Properties Inc. of Chicago bought this year, has enjoyed for nearly 40 years.

Dels. Elizabeth Bobo and Neil F. Quinter, both Democrats, had introduced the three proposals. Bobo said the bills had offered a reasonable way to bridge Maryland's revenue gap that stems in part from tax breaks for corporations.

The two bills specifically affecting General Growth would have ended in 2006 a lower tax rate on undeveloped land and would have revamped a deferred tax on developed land that allowed Rouse to pay lower taxes based on a different formula from that applied to other Howard developers. The special tax treatment was devised originally for "planned communities" such as Columbia, which Rouse developed.

In December, General Growth, a developer that specializes in shopping malls, acquired Rouse for $7.2 billion in cash and $5.4 billion in assumed debt.

"General Growth is not in the business of building planned communities and never has been," Bobo said last week. "They never experienced putting out this initial big investment, and that is what the whole intent of this was."

Columbia was essentially completed in 1980, she said, "but we are still giving these big tax breaks."

Dennis W. Miller, a company vice president who oversees General Growth's Columbia operations, said during a hearing late last year that he was "somewhat baffled" about the rationale for legislation that would end one of the tax breaks by next year, instead of 2009, as the delegation had agreed during last year's session.

"This communicates . . . vacillation of the legislative process," Miller said at that time. "This sends a message that bills will be modified as a new company comes in."

He declined to comment further this week on the delegation's votes.

State Sen. Allan H. Kittleman (R), whose late father had brokered a compromise last year that included the 2009 sunset date for the bill, said this week that he was pleased the measures had been defeated.

"It isn't fair to say we are going to change the rules now. It sends the wrong message to business and makes business less trusting of government," Kittleman said.

Last week, the delegation also killed a proposal by the county's public school system to charge sports groups for using school fields. The lawmakers said they feared that some clubs would be shut out by fees they couldn't afford.

Yesterday the delegation was expected to vote on a proposal by County Executive James N. Robey (D) to create a revenue authority that could sell bonds to support capital projects such a parking garage in Ellicott City or the purchase of Merriweather Post Pavilion in Columbia, which is being considered.

Bobo said she was working on amendments that would ensure that the authority would be subject to open meetings laws and would clarify issues about long-term ownership of property the revenue authority might help build.

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