Elkton Senior Housing: Anatomy of a Deal

July 14, 2010

  When a private, profit-making developer proposed turning a series of dilapidated and vacant properties on High Street into a modern apartment building for senior citizens, Elkton town officials  were over-joyed.  Little did they know then that the project would bring them controversy, a court challenge, and a lot of headaches.

   The Elkton Alliance, whose executive director Mary Jo Jablonski was and is also a town commissioner, could barely contain its glee in 2009 when the Ingerman Group, of Cherry Hill, N.J., moved up in the state’s  priority list for federal housing assistance. (See link here:)    http://elktonalliance.blogspot.com/2009/03/high-street-senior-apartments.html

A majority of the town board has moved heaven and earth, as well as town ordinances, to accomodate the project, as documented in town meeting minutes ( see:  http://www.elkton.org/uploads/Meetings/Mayor%20and%20Commissioners%20Meetings/Minutes/MC12.16.09.pdf ) and Circuit Court proceedings brought by critics who questioned the way the town handled the project. (See also the excellent coverage of the town board on www.someonenoticed.wordpress.com as this issue wound its way through the town approval process.)

   The Ingerman Group has built senior housing and low income family housing projects along the East Coast for many years. Many of their projects have won design and environmental awards. (See homepage here: http://www.ingerman.com/index.php ) Indeed, the artist’s renderings of the Elkton project show a building that by any local standard would be a design asset to the community.

   But local residents have questioned why that location was selected for a residence for fragile seniors, in a dilapidated area known for crime and drug-dealing,  and the late-stage announcement of the developer’s decision to add a rather distant property on tiny Collins Street to the project. The Collins property was initially suggested by the developer as a “satellite parking” lot, raising questions about how many seniors or their visitors really would use a distant parking lot. Under questioning at town meetings and in court proceedings, the town eventually admitted that a parking lot could not legally be placed on the Collins property under town zoning law.

   So why continue to include the Collins street property in the project? David Holden, a self-described “development principal” for the project with the Ingerman Group, told The Cecil Times recently that a new decision had been made to use the Collins property as “open space and a garden for residents.”  The property is some distance from the proposed apartment building– estimated at 400 feet by some town commissioners at a December, 2009 meeting– but visually and physically seeming to be a much greater distance when walking the neighborhood.

   The Collins Street property is owned by Cecil Bank, which the developer has identified as providing partial private financing for the senior housing project. But most of the costs of the senior housing project are actually being borne by taxpayers through state and federal housing and economic stimulus programs.

   Apart from the local zoning and administrative issues that landed the project in court, the Elkton Senior Housing project has moved relatively quickly through the Maryland Department of Housing and Community Development (MDHCD) process for distributing both state and federal funds.  When the project met roadblocks– such as finishing  just out of the money on a competitive list of projects for a special federal economic stimulus program known as TCAP– the state found new ways to give the project other federal funds.

   State documents show that the Elkton Senior Housing project will receive $2 million in state Rental Housing Funds.  In addition, the state initially approved $1,068,551 in federal Low Income Housing Tax Credits (LIHTC) for the project. Furthermore, the project was trying to obtain, but failed to win a competition for, even more federal aid, passed through the state MDHCD, under the federal TCAP (Tax Credit Assistance Program), state documents show.

 But when the Elkton project finished just out of the money on the competitive TCAP list, the state came up with a new way to keep the project rolling.

   The state, using federal funds, came up with more money under the Section 1602 Tax Credit Exchange Program for the Elkton project just a few months ago, according to a  4/26/10 state spreadsheet document obtained by Cecil Times. Under the arrangement, the Ingerman Group gave back $480,316 of its previous allocation of federal L0w Income Tax Credits and in return got $4 million in federal Section 1602 aid.

(However, that money, provided under economic stimulus initiatives, mandated that aided projects were “shovel ready.” Court proceedings showed that the Elkton project is far from “shovel ready” and the developers did not even own the land. Furthermore, the court action will require the project to go through town planning, zoning and town board approval procedures all over again.)

 Apart from whether the project abides by federal “shovel ready” rules,  to simplify the math and the gobbledegook of state and federal housing bureaucracy, the Ingerman Group is approved for a total of  about $6.6 million in taxpayer-provided subsidies. ($2 million in state rental housing funds, $588,235 in federal Low Income Housing Tax Credits, and $4,013,873 in federal Sec. 1602 aid)  The taxpayer-provided aid covers the vast majority of the project’s costs, initially filed with the state as $10.8 million. However, in recent days, the developer has upped the total costs to at least $11.5 million, including the costs of acquiring the Collins street property that was not mentioned in previous filings with the state.

   The Collins street property is owned by Cecil Bank, according to state property records, after a previous sale arrangement fell through and the property reverted to the bank. Cecil Bank’s parent company, Cecil Bancshares, recently signed an agreement with federal and state regulators requiring  the company to adhere to a host of regulations and procedures designed to assure greater oversight and financial accountability for its operations and non-performing “assets,” such as vacant properties. (See federal regulatory document here:  http://www.federalreserve.gov/newsevents/press/enforcement/enf20100702a1.pdf

   As The Cecil Times previously reported here:  http://ceciltimes.wordpress.com/2010/07/13/update-1-elkton-sr-housing-loses-in-court-but-golden-parachute-firmly-in-place/  the county Circuit Court ruled Tuesday that the Town of Elkton did not have proper legal authority to grant fee waivers and concessions to the Collins Street property and the Ingerman Group project and the entire proposal must go through a “do-over” under town ordinances. But the town has been rapidly modifying a host of ordinances in recent weeks, which conveniently apply to the Elkton Senior Housing project, according to evidence presented in the court. So the do-over is expected to have the same outcome, in support of the project and the Collins Street property.

   One of the more interesting, and troubling, points raised during the court proceedings was the revelation by Keith Baynes, attorney for the winning plaintiffs against the town of Elkton, that the Ingerman Group had threatened his clients with lawsuits for daring to speak out and file their suit against the town. Such actions, known as “SLAPP” suits, (Strategic Lawsuit Against Public Participation) have been recognized under Maryland law for what they are: attempts to silence critics of public actions. State law sharply limits such lawsuits.


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