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Hagerstown officials hope grant program will help redevelopment of downtown

June 09, 2013|By C.J. LOVELACE | cj.lovelace@herald-mail.com

Talking about the current state of downtown, Hagerstown City Councilman Donald F. Munson recently said the future looks “black, bleak, terrible” if something isn’t done to jump-start new investment and development.

City officials hope a new grant program will help spur the desired private-sector investment needed to remove blight and redevelop the downtown and surrounding areas.

The program is called Invest Hagerstown, and under preliminary plans, $1.5 million in excess reserve funding has been earmarked for commercial and residential grants in the city.

Invest Hagerstown was designed to create new alliances with the private sector as well as to boost property values, add jobs and bring visible change to both the downtown core and aging neighborhoods, according to a memorandum from staff members to city Administrator Bruce Zimmerman and elected officials.

“This is a program of some hope, and hopefully will energize developers to come in here and buy some buildings and refurbish them,” Munson said. “And they will serve as examples to other developers of what can be done in downtown Hagerstown to maybe lift the curtain of bleakness a little bit.”

City staff members went before the five-member city council on June 4 to provide an update and to seek direction about a funding source for the proposed program, money that might come from the city’s general fund reserves.

“We could potentially use our reserve funding to fund the $1.5 million in fiscal year 2014, and we would still maintain our 20 percent of reserves,” said Jonathan Kerns, the city’s community development manager.

Under current plans, the program would allow the city to partner with private developers and provide “first-third” grants for major commercial renovations, with a total of $1 million allocated for approved City Center projects and another $200,000 for projects outside the urban core.

The City Center commercial grants require a 2-to-1 match on investment, with grant amounts ranging from $150,000 to $250,000, city officials said. For example, a $150,000 grant would require an developer to contribute at least $300,000 to a project.

For commercial grants outside City Center, the grants would be available in the same 2-to-1 matching process, with amounts ranging from $25,000 to $50,000. Developers could receive $25,000 from the city if they put in a private investment of $50,000, for example.

As for the residential side, city staff members propose allocating $300,000 for homeowner grants to help pay for renovations to pre-1960 homes, according to the memo.

There would be no income restrictions on grants of up to $10,000, and they would require a 20 percent match from homeowners, meaning the city would pay the other 80 percent of funding to pay for work such as roof and window replacements; HVAC and electrical upgrades; and bathroom, kitchen and exterior work.

Council members commended city staff for their work in developing the commercial grant aspect of the program, but concerns were raised on the residential side.

Several council members questioned using the $300,000 for owner-occupied residential work, saying they would rather see the money used to promote “neighborhood stability” and to help vacant homes become reoccupied rather than offering free money to a select portion of the population that could afford to do work on their homes.


Private-sector feedback

Kerns, Downtown Manager Andrew Sargent and John Lestitian, the city’s director of community and economic development, told council members that feedback solicited from four private developers, area bankers and numerous local homeowners about the program has been positive.

“Private developers and bankers both agree that this type of grant program will make large projects more economically feasible,” Sargent said.

Sargent said part of the challenge in getting private developers to invest in downtown Hagerstown is having access to adequate capital. This new grant program would make acquiring that funding easier because a large commitment through the city already would be secured, he said.

Another positive of Invest Hagerstown, Sargent said, would come in the form of positive exposure for the city that could create momentum in the development community, according to feedback.

“This is certainly going to attract regional, if not a larger” area of investor interest, he said.

The program also was presented to the city’s Neighborhoods 1st leaders and a local official with the Maryland Department of Taxation and Assessments, Kerns said.

Home renovations would be geared toward improving marketability and curb appeal of properties as well as increasing the city’s assessable tax base, a big positive for the city’s economic future, according to city officials.

Kerns said many homeowners have expressed a desire to do some needed work, but don’t have access to the needed financing.

“This type of program, I think, would really help fill that void for something that we really need,” he said.


Residential grants questioned

While council members gave staff members the go-ahead to finalize the commercial aspect of the program, the use of taxpayer money for individual residential upgrades drew questions.

“When did taxpayer dollars start being handed out essentially at random? Because you’re right ... my kitchen certainly needs updated. It’s 1950s,” Councilman Lewis C. Metzner said.

“I need a new roof,” Mayor David S. Gysberts quickly quipped.

Metzner emphasized that without income limitations on the grant funding, it makes it available to only one group of people — those who can afford a 20 percent match. Many others cannot afford that type of investment right now, he said.

“I just have a great deal of difficulty understanding how this is the best use of $300,000,” Metzner said.

Councilman Kristin B. Aleshire suggested a solution that was supported by several other council members. He said the city instead could use the $300,000 to work with Realtors and mortgage lenders who own vacant homes in an effort to get them reoccupied.

“I think that the bigger interest is the neighbor that’s already there that sees the home next to them that’s been vacant for the last 11 months,” he said. “... To me, I think that creates an air of neighborhood stabilization much more quickly and much more visible” as compared to residents upgrading their current homes at taxpayer expense.

Councilman Martin E. Brubaker cautioned that the city would need to be assured that bankers who own foreclosures would cooperate and work to get the properties back on the market. Aleshire said he believed that assurance would be solidified during the settlement process on properties with outstanding bills or liens from the city.

Brubaker also stressed that other large city projects that would need funding still hang in the balance, pointing to the demolition of the former Municipal Electric Light Plant and the possible construction of a new stadium for the Hagerstown Suns.

Another possible use for the residential money could be to bolster the city’s rent assistance program to help increase occupancy in vacant downtown apartments, Metzner suggested.

“I see how that could be something that would enhance our downtown,” he said.


Next steps

After the 25-minute conversation, Lestitian said he would come back before the council Tuesday to seek preliminary approval for the commercial grants and present an updated residential program to reflect the council’s requests.

City officials want to get the grant program in place for the 2013-14 fiscal year, which begins July 1.

Pending further changes, a vote to formally approve the program could take place June 18, Lestitian said.

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