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Council debates Cloverly special taxing district fee agreement, tables item indefinitely
Summary
Bond counsel explained a developer-paid fee agreement to begin exploring a Cloverly special taxing district; council members raised litigation and liability concerns, motions to stop or proceed failed for lack of a second and the matter was tabled indefinitely pending more information.
Bond counsel Lindsay Raider told the Smithsburg Mayor and Council on April 7 that a proposed fee agreement for the Cloverly Special Taxing District would require Cloverly LLC to deposit an initial $20,000 escrow to pay bond-counsel fees and to replenish the account if it fell to $12,000 or below. Raider said the agreement is designed to ensure the developer bears legal and advisory costs and that ‘‘even though with every step that might be taken for the proposed transaction, the town is not on the hook to issue any bonds,’’ nor to fund infrastructure unless and until the town formally authorizes it.
The matter drew pointed questions from council members worried about exposure to litigation and the developer’s past behavior. A council member who identified himself only by his seat urged the council to ‘‘kill it now,’’ saying the developer ‘‘has a history of suing everyone that he works with’’ and warning the town could face costly litigation if the project proceeded without caution.
Town legal counsel on the record said at this stage the town would not be exposing itself: ‘‘At this point, at this level, you’re not exposing yourself,’’ the attorney said, adding that any final financing or tax assessments would only apply to property inside the district once bonds were issued. Raider agreed, describing the process as a ‘‘chicken-and-egg’’ sequence and stressing that the agreement was a procedural step to allow the developer to fund legal review rather than to obligate the town.
Councilman Dan’s motion to halt further work was made but received no second and therefore died. A separate motion to move forward likewise received no second. With no majority to either advance or stop the process, the council voted to table the fee agreement and related RFP consideration indefinitely and asked staff to tell Cloverly what specific information the council would need to see to reconsider the matter.
Next steps: the council requested more written information from Cloverly before taking further action; no bonds, no district boundaries and no tax assessments were authorized at the April 7 meeting.
