Incubator loses bid for tax break

County commissioners reject exemption

Commissioners David P. Gray (R), Charles A. Jenkins (R) and John ‘‘Lennie” Thompson Jr. (R) said they did not want taxpayers to subsidize the incubator. Commission President Jan H. Gardner (D), the board’s liaison to Fitci, and Kai J. Hagen (D) said they were willing to continue the discussion at a public hearing.

Fitci director Michael Dailey said the group pays property taxes through its monthly rent on its Metropolitan Court facility, which opened in April. Fitci’s Hood College incubator, which opened in 2004, is exempt because Hood College itself is exempt.

‘‘I’m obviously disappointed in the results, but we understand the commissioners’ decision,” Dailey said. ‘‘It’s ‘no’ — for now.”

Fitci may request an exemption in the future, perhaps when it establishes its own location, Dailey said.

Fitci began in 2004 as a ‘‘priority initiative” of the Frederick County Office of Economic Development to create more high-paying jobs and accelerate the growth of startups, said Executive Director Laurie Boyer.

Between its two locations, Fitci has served 34 startups, mainly biotechs. Its current tenants and two graduates employ 106 people in Frederick County, according to Dailey.

Both incubators use leased space, but plans are in progress for a permanent building to handle more growth.

Many of the tenants have science and technology-transfer agreements with Fort Detrick and federal government agencies.

Thompson at one point left the meeting room, saying, ‘‘Let me know when you’re going to do something constructive for the taxpayers.” He later argued that among Fitci’s tenants were several that were incorporated in Delaware and did not pay Maryland income taxes.

Dailey said all businesses with locations in Maryland pay state income taxes.

‘‘A lot of people believe that out-of-state corporations avoid paying Maryland income taxes,” Dailey said. ‘‘The state where a company is incorporated is irrelevant.”

Gardner said the tax exemption would have required a complex administrative process and suggested Fitci pursue alternative funds. ‘‘It may be easier to do it in a different manner,” she said.

Besides the county’s economic development agency, several organizations are partnered with Fitci: Hood College, the city of Frederick’s Department of Economic Development, the Maryland Technology Development Corp. and the state Department of Business and Economic Development.

Fitci receives a $100,000 annual incentive from the county for five years so that it can collect $1.2 million in state funding contingent on county contributions. This is the third year the county is providing the money.

The incentive was increased for fiscal 2008 from $100,000 to $150,000. The county’s fiscal 2008 operating budget is $472 million.