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Stung by having a veritable tax-free zone sitting right on its border, the Aberdeen City Council is hoping to lure more major companies into the town and away from Aberdeen Proving Ground by offering certain businesses a five-year property tax break.

The council introduced an ordinance Monday night that would establish a tax subclass for office buildings with at least 50,000 square feet and a LEED, or energy efficiency, certification. Qualifying businesses would be able to get waivers of city property taxes.

Mayor Mike Bennett said after the meeting that the bill is in response to Aberdeen’s prospective office parks trying to fight for the enhanced-use lease option offered at APG, where Harford County has already waived its property taxes on a major development, called The GATE.

“They have quite an advantage,” he said about the proving ground’s offices.

Bennett said he is worried about whether the city can stay competitive with APG, and said he heard from a couple of builders that they are not sure they can move into the city as opposed to APG.

“It is a little concerning,” he said.

Under the legislation, qualifying office buildings would only pay 25 percent of the property tax rate for the first three years, 50 percent for the fourth year and 75 percent for the fifth year, Bennett said.

Those buildings would not be eligible for an enterprise zone tax credit, and they must have been granted a use and occupancy permit this year.

The major user of the enhanced-use lease is The GATE project, which is attracting prominent defense contractors like Raytheon, SAIC and Boeing.

Bennett noted at the meeting Monday that Wyle, an aerospace company, also just moved into The GATE.

The GATE is being developed on federally owned property by a private company, St. John Properties.

In 2009, Harford County agreed to waive its property taxes on the buildings at The GATE, in exchange for the developer signing what is known as a payment in lieu of taxes, or PILOT, agreement under which the developer makes several million dollars in specified payments to the county.

At the time that deal was reached with the original developer of the project, who soon sold out to St. John, county officials said they had no choice because the Army was mandating the arrangement. The county officials also conceded the money the county will get under the PILOT will be considerably less than what it would have collected in property tax revenue.

Aberdeen has several office park developments under way inside the city limits, including the Corporate Office Properties, or COPT, park near the Route 22 gate, and another recently approved project on Route 22.

The city also agreed last month to annex property near the HEAT Center for an office park called Aberdeen Technology Campus.

Jim Richardson, director of the county’s economic development office, said he thought it was actually a little more expensive for companies to locate on post, but he is happy Aberdeen is moving forward with its tax initiative.

“I am glad that the city is responding to some of the things they are hearing from their constituents. That’s very interesting,” Richardson said Tuesday.
“I helped negotiate the PILOT on the EUL, and it’s very clear there’s a lot of costs [for offices] on post.”

Richardson said the results of the proposed city tax break will be positive for Harford County either way.

“The good news for the county is, whether it’s on post or in Aberdeen, it’s a win-win all the way,” he said. “We are very excited to see those corporations, either in Aberdeen or on post.”

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