Business growth in Bowie eases tax burden

City officials not proposing a property tax rate increase for next fiscal year due to unexpected commercial surge

Personal property taxes account for only 4 percent of the city’s total revenue stream. But as more companies begin to call Bowie home, more money will flow into the city, which could mean residents will see some relief in their tax bills.

‘‘The more commercial revenue you generate, the more the city is able to hold down residential rates,” said Kelly Pierce, director of the Greater Bowie Chamber of Commerce. ‘‘It’s certainly a positive thing from a resident’s standpoint.”

Bowie is not proposing a property tax rate increase for the next fiscal year due to unexpected surges in revenue, and one of those are taxes gained from businesses. The state assessment value went up and Bowie saw it’s assessed personal property value go up over $10 million dollars, though it only generated an additional $100,000.

The city has long pushed business growth to not only promote Bowie as a destination, but to reduce the burden placed on residential taxpayers. While businesses do pay real property tax for their buildings and property, the average citizens of Bowie are the biggest taxpayers, accounting for $17 million or roughly half of this year’s revenue.

That is due to Bowie being a largely residential city, said Byron Matthews, Bowie’s assistant finance director. He said because the city has long been a bedroom community to the Washington region, complete parity between business and residential taxes will be difficult, if not impossible, to achieve.

‘‘I really don’t see it panning out that way,” Matthews said. ‘‘Businesses pay their portion of the tax burden. But it always nice to have more businesses.”

City officials and business leaders say Bowie saw its biggest business growth at the Melford property, formerly known as the Maryland Science and Technology Center.

According to Ramon Benitez, Melford’s principal for developer St. John Properties, the property is about 90 percent leased, including its four-story, 150,000 square-foot office building and flex buildings.

Benitez said St. John Properties plans to build an identical four-story building next to the current structure, as well as another 150,000 square feet in flex space in the next three years. The plan originally called for a six-story building, but the legal battle with the city over housing at the site has caused too much of a delay Benitez said.

‘‘Hidden in all the rhetoric is that it is a successful project, especially if its leasing history holds true,” said John Henry King, the city’s economic development director.

While Benitez agrees that Melford has helped the business expansion in Bowie, he said it should not be viewed as a barometer for commercial success. Benitez said St. John Properties has aggressively marketed Melford despite Bowie not being a top commercial destination.

And while he plans to expand the property, the entire 466-acre site cannot be developed for commercial-retail use because demand will eventually end, Benitez said.

‘‘Our concern is with the depth of the market in Bowie,” he said. ‘‘If all keeps going well, at some point you’re going to reach a saturation point. If vacancies start to climb, then taxes and revenues start to fall. We try to bring buildings online to service demand.”

But the city has seen growth elsewhere. The Shoppes at Highbridge came online this year, which added a bank, a pharmacy, a steakhouse and a gas station to under-developed west Bowie, with more stores on the way.

Retail vacancies are considered low, though the city has little real-time data to back up that claim, King said.

And more growth is on the horizon, officials say. King pointed to developments along Route 301, which will include high-end retail and office space and the redevelopment of the under-used Marketplace, as well as the Karrington community, a proposed 361-acre mixed-use development just south of the city that will include over 1,000 houses, 343,000 square feet of retail and 650,000 square feet of office.

The city’s hotel tax, which has been stagnant in recent years, will likely see a boost when Marriott builds three new hotels at the Melford property in the next two years.

But as the city looks to increase it’s commercial and retail base, there is one glaring limitation – Bowie is almost built-out, with little vacant land left for considerable development. City officials say it will take approaches unique to Bowie to continue to up its business tax base.

‘‘We have to provide more space for businesses to locate,” King said. ‘‘Our only limiter is space. We have to consider redevelopment and annexation.”

E-mail Jason Flanagan at jflanagan@gazette.net.