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Sierra Nevada office tower adjacent to Hagerstown-Washington County Regional Airport. (By Kevin G. Gilbert/Staff Photographer / February 14, 2013) |
Ten years ago, Washington County government signed the first of five agreements to lease land at Hagerstown Regional Airport to developer David Rider.
At his own expense, Rider erected four aircraft hangars and a three-story office building he now leases for profit to other businesses, all while thinking the county had pledged in its land lease agreements it would never tax the properties.
But it appears nobody ever told the Maryland Department of Assessments and Taxation that the buildings on county land were being used for profit. When the state agency discovered the for-profit arrangement on its own years later, it made the properties taxable.
Suddenly, Rider was faced with tax bills that some county officials feared might have jeopardized his long-term leases with businesses as large as Sierra Nevada Corp., a defense contractor with more than 470 employees here.
Six weeks ago, in action that might be the first of its kind here, the County Commissioners voted 4-1 twice in a two-step action to take immediate ownership of all five buildings and to exempt them from the county’s property tax.
State property tax still must be paid.
In their two-part, two-vote decision Jan. 29, Commissioners William B. McKinley, Ruth Anne Callaham, John F. Barr and Jeffrey A. Cline voted:
• In favor of a motion by Cline to change the leases to say that the county government now owns the five buildings.
• In favor of a motion by Callaham to make the buildings exempt from the county’s property tax for as long as Rider’s leases last.
In voting against both motions, Commissioner President Terry L. Baker told the other commissioners he did so because he did not know whether the action would have any financial impact on the community.
Impact: A blank line
The impact is hard to gauge.
The county’s own written “Agenda Report,” used to guide the commissioners on Jan. 29 in their decision about the properties, isn’t clear on that. After the words “Fiscal Impact (If Applicable):” the line is blank.
Based on the $154,570 county tax bill looming on all five properties this year, making them exempt will cost the county millions of dollars in lost property taxes over the three decades of Rider’s remaining leases.
But county officials said in interviews that the values the county gains completely make up for the loss.
McKinley, Callaham and Barr said it was important to them to honor and uphold the no-tax commitment they believe a former board of county commissioners made to Rider in 2003.
McKinley said that was his only reason for voting for the tax exemption.
“The commissioners before us put in writing that there would be no expectation of taxes on those buildings,” McKinley said. “I’m not sure why they did that ... but Dave Rider apparently built his business plans on that expectation. To me, it’s only fair that we continue what had been in place all those years.”
Important also, Callaham and Barr said, is that the county now owns the four hangars and the office building. Rather than waiting 30 or 40 years to take ownership as his original leases specified, Rider gave the buildings up now to make the tax-exemption possible, but will continue to maintain the buildings and lease them out for profit.
At his own expense, Rider erected four aircraft hangars and a three-story office building he now leases for profit to other businesses, all while thinking the county had pledged in its land lease agreements it would never tax the properties.
But it appears nobody ever told the Maryland Department of Assessments and Taxation that the buildings on county land were being used for profit. When the state agency discovered the for-profit arrangement on its own years later, it made the properties taxable.
Suddenly, Rider was faced with tax bills that some county officials feared might have jeopardized his long-term leases with businesses as large as Sierra Nevada Corp., a defense contractor with more than 470 employees here.
Six weeks ago, in action that might be the first of its kind here, the County Commissioners voted 4-1 twice in a two-step action to take immediate ownership of all five buildings and to exempt them from the county’s property tax.
State property tax still must be paid.
In their two-part, two-vote decision Jan. 29, Commissioners William B. McKinley, Ruth Anne Callaham, John F. Barr and Jeffrey A. Cline voted:
• In favor of a motion by Cline to change the leases to say that the county government now owns the five buildings.
• In favor of a motion by Callaham to make the buildings exempt from the county’s property tax for as long as Rider’s leases last.
In voting against both motions, Commissioner President Terry L. Baker told the other commissioners he did so because he did not know whether the action would have any financial impact on the community.
Impact: A blank line
The impact is hard to gauge.
The county’s own written “Agenda Report,” used to guide the commissioners on Jan. 29 in their decision about the properties, isn’t clear on that. After the words “Fiscal Impact (If Applicable):” the line is blank.
Based on the $154,570 county tax bill looming on all five properties this year, making them exempt will cost the county millions of dollars in lost property taxes over the three decades of Rider’s remaining leases.
But county officials said in interviews that the values the county gains completely make up for the loss.
McKinley, Callaham and Barr said it was important to them to honor and uphold the no-tax commitment they believe a former board of county commissioners made to Rider in 2003.
McKinley said that was his only reason for voting for the tax exemption.
“The commissioners before us put in writing that there would be no expectation of taxes on those buildings,” McKinley said. “I’m not sure why they did that ... but Dave Rider apparently built his business plans on that expectation. To me, it’s only fair that we continue what had been in place all those years.”
Important also, Callaham and Barr said, is that the county now owns the four hangars and the office building. Rather than waiting 30 or 40 years to take ownership as his original leases specified, Rider gave the buildings up now to make the tax-exemption possible, but will continue to maintain the buildings and lease them out for profit.
