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Howard Council gambles on cultural center funds

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Photo credit Design Collective/Orchard Development

Even though financing has been secured for construction of a signature home for the arts in Columbia, a cautious Howard County Council has moved the funding out of the budget to give itself more time to understand the project.

Costing approximately $137 million, the New Cultural Center’s financing relies on $63 million in general obligation bonds, $10 million in Tax Increment Financing (TIF) bonds from a proposed public parking garage, and $64 million in secured tax credits for an affordable housing component that will be owned by the Howard County Housing Corp. (HCHC).

According to Peter Engel, HCHC’s executive director, delay could prevent the county from meeting federal Department of Housing and Community Development (DHCD) deadlines for the tax credits.

“We do not know how DHCD would view an extension request and we do not think it is wise to ask them unless we absolutely must,” he said.

Carl DeLorenzo, director of policy and programs for Howard County, said the project needs to be completed by the end of 2024 to avoid the possibility of forfeiting the tax credits, meaning the county must break ground by spring 2021.

Comfort Level

Deb Jung, the council’s chair, said she would like to see the project pushed back a year and reexamined because of the county’s shrinking revenue stream and the negative economic impact of the COVID-19.

“That’s a lot of debt to take on in a year when there’s so much financial uncertainty,” she said, adding that the design has also changed.

The Department of Recreation and Parks (DRP) and the Department of Public Works would also share an annual cost of about $3.3 million for facility management.

“I don’t think most people realize the full financial picture of what it will take to ultimately get this center built and managed,” she said. “Maybe it will be a more affordable project if it does get pushed back. I still don’t see the uptick in the economy that makes me comfortable moving forward.”

What’s also missing, in Jung’s view, is a business and governance plan for the facility, a private fundraising plan, refinement of the revenue, construction, operating and financing cost estimates and an analysis of how the project impacts the entire operating budget including overall bonding capacity.

Jung also questioned the propriety and legality of advancing a project that was not competitively bid.

DeLorenzo acknowledged that the project began as a private endeavor undertaken by Toby and Hal Orenstein, owners of Toby’s Dinner Theater, in partnership with Orchard Development of Ellicott City.

When they failed to raise the required capital, the county took over and hired Arcadis Design & Consultancy to perform an independent analysis of construction costs.

“That’s how we determined the fairness of the construction costs,” DeLorenzo said. “Our consultants came in with a higher estimate than the development team’s estimate. We’re going to use that information to move forward with a sole-source request [for proposal].”

Understudy Tenant

Scott Armiger, president of Orchard Development, characterized design changes as tweaks to the performing arts space and changes to make the center user-friendlier for tenants.

“The housing has fewer units, 174, but we added more three-bedroom units for the Housing Commission to qualify for the tax credits,” he said.

Armiger said he understands the council’s concern about funding during the pandemic but noted that bond servicing won’t start for another three years.

“We’ll be past all of this when the building is finally constructed,” he said.

Original plans for the Howard County Arts Council (HCAC) to relocate to the center proved financially unfeasible.

“Our income projections could not cover both the programming and staffing costs as well as the debt service,” said Colleen West, HCAC’s executive director.

Instead, county administration arranged to have the Department of Recreation and Parks consolidate its arts programming in the cultural center.

“[T]hey have the infrastructure in place to generate the type of revenue we need to make the project financially feasible,” DeLorenzo said.

Tight Schedule

Among the offerings DRP could provide at the center are music lessons and classes in culinary arts, introductory theater, sewing and costume making.

DRP would share the second floor with the Columbia Center for Theatrical Arts run by Toby Orenstein, whose Helen Hayes Award-winning dinner theater would occupy the first floor.

“Year-round programming space doesn’t exist in the county [for either tenant] right now,” DeLorenzo said.

The administration’s goal is to work with the council to address its concerns with the hope of breaking ground by next spring to maintain the timeline, he added.

Understandably, the delay is taking a toll on Orenstein, who originally suggested the idea of incorporating a housing component to make the cultural center a truly public amenity and address the county’s lack of affordable housing.

“I promised Jim Rouse I would always follow the ideals of bringing people together, and that’s what this cultural center will do,” she said. “We are very lucky in the funding we got, and if we lose it, it’s going to be a horrible loss for Columbia.”

By George Berkheimer | Senior Writer | The Business Monthly | July Issue

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