Public Hearing on City's Plans to Purchase Properties - Sunday, December 6, 2009

To Buy Or Not To Buy? - Come to the Public Hearing on Thursday Dec 10th on the City’s Plan to Purchase Properties -



On Thursdayat 7 PM there will be a public hearing and important vote on the City’s plan to purchase the Funeral Home building at the corner of Eastern and Rhode Island Avenues, and the Eastern Star building, which is located between the City Hall and the current library building.



These purchases will cost $1,050,000, which is a significant commitment of City’s resources.



I voted along with the rest of the Council to purchase these properties, and while it was a hard decision for me to make, I believe the positives outweighed the negatives in going ahead with the purchases.



The reasoning behind the decision to purchase the funeral home is to combine the property with the former Bass property that is already owned by the city. Combining the two parcels (33,000 square feet) will give the city control over what is done at this key location, which is the entryway into Mount Rainier and Prince Georges County.



The City does not have the resources to build something itself, but we hope to sell the property to a developer or partner with a developer in a way that would be consistent with the character of our city.



The City is buying the property for $650,000, which is way down from the $1 million asking price a couple of years ago. The City was concerned that a speculator might buy the Funeral Home and, knowing that we want to develop the whole area, hold the City hostage until we bought the property at an exorbitant price.



The Eastern Star property (being purchased for $400,000) adjoins both the City Hall and the library building, both of which are owned by the City. This purchase will allow the City in the future to expand the library building and possibly connect both buildings to the current City Hall. The upstairs room in the Eastern Star building also is a good space for large community meetings. It will mean we can downsize our plans for the library building. We won’t need a community room above the library building so can plan on a two story building instead of the four story building which was in the original plans.



There is no money to rehabilitate the Eastern Star property or expand the library at this time. The City will have to find funds if it wants to re-form these properties into a 21st Century Municipal/Community Complex .



Is There Money To Purchase These Properties?


Real estate values are at a low point and this is a good time to get site control of key properties in the downtown area, but does the City have money to purchase these properties and is it a worthwhile investment of resources?



The City has about $2 million in reserve funds. This reserve was built over the last four to five years through increased revenues resulting from the appreciation of property values in our City, and because we kept our expenses relatively stable. Over the last few years the city has received about $500,000 more in revenue than it has spent and it has put this money into its reserve.



We all know this will soon change. New property assessments are due later this month and we expect values to decrease sharply from the evaluations done in December 2006. We expect some reduction in real estate revenue but not necessarily a sharp decrease in revenue for the City? There will not be a sharp decrease because of the 10% cap in the increase in real estate taxes. Many long-time residents are still paying property taxes on assessments less than the current evaluation of their homes. (e.g. my home is currently appraised at $425,000. I expect it to go down to $350,000 when the new evaluation comes in. But in fact because of the homestead rebate I’m actually only paying city, county and state real estate taxes on $250,000 so even if my evaluation goes down, my city property taxes will not decrease). We are also expecting a reduction in money from the state. Our City Treasurer has suggested that we might see a decrease in revenue of $170,000 next year. We also have to account for pay increases for our employees and other price increases. We have to take all this into account.



My estimate is that the City will deplete its reserve funds in three to four years. It will be necessary to sell the Bass property and and the funeral home by that time. This is exactly what the City is planning on doing. We are moving ahead to find a developer who will build on those properties.



This is a serious move by the City. We could use the resources for improved city services or tax relief, but I think it is in the long-term best interest of the City (to stabilize our housing values) to do what we can to push ahead with development in our downtown area. We compete with other communities in our area for government grants and development monies and it is important that we do what we can to let people know that Mount Rainier is really a City on the move.



I have thought a lot about whether to move ahead with these purchases but feel that people in Mount Rainier have elected us to be prudent with the revenues that come from our residents but also to be leaders in doing what we can to improve our City. This is why I am supporting these purchases.



I hope people come to Thursday’s Public Hearing and let the Council know how you feel about this purchase.