The Economic Case for the Lakefront Library
Examining how a Lakefront Library Can Increase County Revenue to help Fund School Renovations
Hello Readers! So, remember how two weeks ago, I posted The “Last” The Merriweather Post, where I said this blog might be over and that it would take an irresistible local story to draw me back to the keyboard.
Well, that didn’t take too long. Thank you to everybody who shared kind words about my writing!
Buckle up for 2,000 words about the Lakefront Library, because I just can’t help myself from sharing my thoughts after reading so many social media comments criticizing the wastefulness of spending upwards of $144 million on a Lakefront Library following the passage of legislation via a 4-11 vote on December 1 that will move the project forward (by pursuing land acquisition and beginning design work using state grant money). Note that while these steps are necessary to advance the project, no Howard County funds have yet been committed. That won’t happen until next spring when the Council considers the FY27 Capital Budget.
What I’d like to contribute to the discussion is some high-level background on how capital projects are funded and how Downtown Columbia’s TIF fund works, which I hope will help inform the discussion.
First, it must be stated that the County is not sitting on $144 million (the original estimated cost of this Library) of extra cash just waiting to be spent. That’s not the case. We don’t have that money.
Capital Funding
Instead, when the County undertakes a new capital project, it is financed through borrowing money, most commonly by issuing general obligation bonds, which must be repaid over a long period (typically 20 years). Very much like a mortgage. Principal and Interest. And each year, as tax revenue comes in, the County uses a portion of it to make those debt service payments.
The catch is that the County can afford to use only so much of its annual budget on debt payments. And this limits how much the County can borrow. County policy targets keeping debt payments under 10% of our budget. In FY26, local general fund revenue is projected at approximately $1.62 billion, meaning debt service should be less than $162 million to keep it below the 10% threshold. Currently, for FY26, we are spending approximately $150 million on debt (to repay bonds issued for Guilford Park High School, a portion of the Circuit Court building, Ellicott City Safe and Sound stormwater projects, and other recent capital outlays). Accordingly, we don’t have much headroom to borrow more at the moment, and this is the limiting factor preventing the County from addressing its backlog of school capital projects as quickly as many, myself included, would like.
The reason for sticking so strictly to 10% is that Howard County is one of the few counties in the country with a perfect AAA bond rating, which enables us to borrow at a lower interest rate than counties with a less-perfect rating. We don’t want to lose our perfect score, so we strive to keep the ratio below 10%. This means that if we want more capital investment - for example, for schools - we need to increase revenue.
Tax-Incremental Financing
And that’s where Tax Incremental Financing (TIF) comes in. TIF is a separate public financing mechanism that allows the County to borrow money WITHOUT it counting toward our debt service ratio, and that’s the financing mechanism being used to build the County-funded amenities in Downtown Columbia. It allows the county to invest in “nice-to-have” amenities within a specified geographic area, provided those amenities help generate new tax revenue by increasing the assessed value of surrounding properties.
It works by:
Step 1: Freeze: The county designates a specified area as a TIF district and “freezes” the tax revenue the general fund receives from it at the current level (the “base”).
Step 2: Borrow: The county issues TIF bonds to build infrastructure and/or amenities (e.g., roads, sewage, library, cultural center) to support that area.
Step 3: Capture: As the amenity makes the area more desirable, private sector redevelopment occurs, and nearby property values rise (since property assessments for commercial properties are based on the income a property generates). The new tax revenue generated by this increase (the “increment”) is allocated to repay the TIF bonds over 20–25 years, with any remaining available for additional TIF loans and/or returned to the general fund. In Downtown Columbia, a waterfall table depicts exactly how this flow of money works.
Generally speaking, proponents of TIF financing would argue that if it weren’t for the public investment, the surrounding properties would not be redeveloped or otherwise appreciate, and thus, there would not be any new tax revenue created. This is known as the “but for” catalyst. The new revenue only comes but for the public amenity. Accordingly, it’s illogical to state you would rather see this new tax revenue used for something else if the tax revenue wouldn’t otherwise exist.
Rather, opponents of TIF financing would make a logical counterpoint if they argued that private development would happen anyway, even without the public amenity, and therefore, all this extra tax revenue is being “wasted” on a discretionary amenity when it could instead go to the general fund to be used for other county priorities, like schools.
Downtown Columbia TIF Funding
In Downtown Columbia, TIF is the approved financing mechanism for the agreed-upon public amenities that will help anchor the transformation of the areas around Merriweather Post Pavilion, The Mall in Columbia, and the Lakefront into a dense, walkable, urban core with upwards of 14 million square feet of new taxable development, of which roughly only 20-25% has been built to date. The Columbia Downtown Plan is still in its early to mid stages.
So far, TIF bonds have been used for the roads, sewage, and public utilities around the Merriweather District. And this investment is delivering returns. The plan is working! In the Merriweather District, both Juniper and Marlow are near-fully leased, and the assessed values of these two properties alone have risen from next to nothing (when it was undeveloped land used sporadically for concert parking) to ~$250 million today. The new tax revenue is covering the debt service on the TIF bonds issued to date, and then some. In fact, the excess revenue is estimated to support an additional $80 million in new borrowing.
Now, you could argue that we should just stop. Let’s renege on the County commitment to provide public amenities that will anchor and support the rest of the private development. Let’s renege on the commitment to deliver 900 units of affordable housing so that folks earning 60% of the median area income can also live in Downtown Columbia alongside their neighbors paying market rate for the other 5,500 planned units. And let’s take this access revenue from the Merriweather District and let it flow into the General Fund. That is indeed an option.
Alternatively, we could continue to the next phase of Downtown Columbia Plan and make public investments that will enable additional revenue growth in the Lakefront area.
Lakefront Library Considerations
The big question now should be how much potential the Lakefront Library has in increasing the value of adjacent properties in the Lakefront area. In that area, the adjacent properties with the greatest potential to appreciate are the large surface parking lot behind the Exxon station, owned by Howard Hughes, and the dilapidated, vacant inn owned by IMH (Constello Construction). Both entities have expressed a desire and submitted plans to transform these parcels into a massive new mixed-use developments that, once built and leased, should be quite profitable for these companies while also, as with the Merriweather buildout, contributing millions of additional tax dollars each year to the County. Would this development happen without the presence of the Library? Would this redevelopment happen sooner? Would the Library increase the assessed values of these properties? These are the questions that the Council should be considering as they approach the FY27 Capital Budget.
Certainly, the proximity of a new Lakefront Library will be a significant marketing draw for Howard Hughes, helping attract new residents and businesses to rent or lease space in these future developments. The Lakefront area has long been a challenging location for business tenants, so it’s easy to see how a world-class library can help spark economic activity and increase the profitability of nearby properties. This is why I think it’s important to “go big” with stunning architecture and captivating programming that wows people and makes them say “I want to live right next to that!” A run-of-the-mill library is uninspiring. I suspect that Howard Hughes is weary about their ability to lease 675 new residential units and supporting retail in Lakefront North without the draw a premier library. Make no mistake, Howard Hughes wants this bad.
I believe that the County is in a position of leverage, and they should exercise this leverage to the greatest extent possible when negotiating the acquisition of the Lakefront property, as well as with other sticky issues, like parking requirements.
The primary concern I have about approving TIF funding for the library is that redevelopment of these properties north of the Lakefront is currently stalled due to the ongoing legal dispute between Howard Hughes and Costello Construction over the development of these parcels. The outcome of this lawsuit remains uncertain, as the court decision is still in the appeal process, preventing development of either the Howard Hughes or Costello properties for the time being. I don’t think the County should commit to the Library until this dispute is settled and there is greater confidence that both parcels will be redeveloped. I’d personally go as far as to condition TIF funding on Howard Hughes and Costello resolving their legal dispute and reaching a mutually agreed-upon design plan that enables both properties to proceed in a way that maximizes their value. After all, the logic behind TIF is that the investment will bring new tax revenue. The County should not make any commitment until there is more certainty about this revenue.
Conclusion
I see the investment in the Lakefront Library as a solution that can help drive economic activity, increase County revenue, and expand the tax base so we can have more money available for other capital projects. As I wrote in my last post, attracting future residents to Howard County is critical to our County's financial sustainability, and I believe a world-class library would help do that.
This is not a decision about whether we should invest in this library or in something else, such as school capital improvements. That’s not how this funding works. This is not an either-or. Instead, the Library project should be evaluated as an investment that can ultimately increase county revenue, rather than being viewed as an expenditure that would reduce funding for other projects. If the Lakefront library yields a positive return on investment, county revenues increase, and so too could the capital spending. I see the vision in how the Library will do that, and whether or not you agree with me, I hope my insights at least help you consider the project in a new light. Kudos to our County Executive and the 4 Council members who are approaching this decision with vision for the County’s future.
Councilmembers Walsh (D1), Jones (D2), Rigby (D3), and Yungmann (D5) voted in support. Councilmember Jung (D4), representing the district that includes Downtown Columbia, opposed. Oh, BTW, who is this councilmember from D1, and what have they done with the one who has consistently voted against any and all Downtown Columbia projects?
TIF is, indeed, widely used by local governments. At the same time, it has long since been discredited as a responsible form of public expenditure. After nearly 60 years of widespread use, California recently banned the use of TIF in the state. A simple search on the internet will reveal any number of studies debunking TIF.
As this article makes clear, the "advantages" of TIF are that it disguises local government borrowing and allows pet projects to jump the queue. Local governments borrow more than they should and projects that would not survive a careful comparison with other possible projects are funded. (Does anyone think that a new library is the county's highest priority?)
TIF has also been prone to wishful thinking and overly optimistic revenue projections. Again, who really thinks that a new library will spur new development?
If you are interested in library services rather than a vanity project, you would focus on what goes on inside the library and not the building itself. Every dollar spent on ornate architecture and prime real estate is a dollar not spent on library services. If the county needs a new, bigger library, it could be located in a functional structure in dozens of locations, all of them no less convenient than the lakefront and many of them with cheaper land.
"Downtown" Columbia is unlikely to grow much in the near future because it is in a peripheral suburb with no public transportation, especially no links to either Baltimore or Washington (or even the airport). It is not a coincidence that the Silver LIne brought both Tysons and Reston considerable new development. Columbia, on the other hand, might as well be in West Virginia. No amount of county subsidy is going to rescue Howard Hughes' investment unless it includes real public transportation.
Seems like the new Cultural Arts Center would be a better "draw" for the Lakefront area than a new central library stocked with digital tools, devices, and empty meeting spaces. Maybe the prospect of lower-income artists enjoying the amenities of Lake Kittamaqundi among well-heeled residents is not attractive, or maybe the point is just to make an architectural statement and relegate lower-income residents to more-discrete locations. Re. "architectural statements", how often do residents of Howard County or neighboring areas visit the Chrysalis just to appreciate its aesthetic qualities (as promised by the developers)?