Port Deposit Charrette

Port Deposit, Cecil County
Maryland

Population: FY'93 Budget: Households: Assessable Base: Median Household Income:

685 $453,866 241 $6,492,220 $10,034

Town Background

The Town of Port Deposit is located on the banks of the Susquehanna River, just south of the fall line and not far from its convergence with the Chesapeake Bay. Historically, it is believed that Captain John Smith reached this point when he explored the Bay. In fact, in his 1608 description of Cecil County, he notes the spot, which he named Smith's Falls, beyond which his boats could not pass because of rocks.

Flanked by steep cliffs on one side and the river on the other, Port Deposit's location just below the fall line had important implications for its development. As early as 1783, a canal was begun just north of Port Deposit which would allow the unimpeded flow of goods from the Susquehanna valley to the ports of the Chesapeake and beyond. In 1812, the town's name was officially changed to Port Deposit because it was a "port of deposit" for lumber and other trade goods traveling down the canal. In 1860, it was noted that the town had 2,000 inhabitants and 74 places of business, including 18 dry goods and grocery stores and 6 lumber yards.

The completion of the railroad in 1877 ended the life of the canal and accelerated the population and economic decline of Port Deposit. Prospects brightened when, in 1942, the Jacob Tome Institute, a local private school, was sold to the government for the building of an 1,100-acre naval base. The Bainbridge Naval Training Station received more than 500,000 trainees, and employed over 1,000 local civilians before it was permanently closed in 1991.

Another major employer, Wiley Manufacturing Company, closed its doors in 1982. A manufacturer of heavy-duty cranes, hoisting engines, steel barges and derrick boats, Wiley owned a significant portion of the waterfront (17 acres). Its sales peaked during World War Two at $10 million, but in 1973 the company was sold to a subsidiary of United Dominion Ltd. (Canada), and its business was changed to that of nonresidential building operators. Just before Wiley changed hands, the population of Port Deposit stood at 900; today, after Bainbridge and Wiley have closed their doors, the population stands at 685.

Town officials hope to regain some of the former vitality of the town through the renovation of historic buildings and the development of the waterfront, but are faced with the challenge of a small and eroding tax base combined with an old and deteriorating infrastructure.

The Issue

United Dominion has begun the construction and sale of a $50 million, 177- unit condominium community on its 17 waterfront acres which will include a health and fitness club, retail space, restaurants, and a 400 slip marina. A major problem for the planned community and the town is that the waste water treatment plant is at capacity even without the new planned community. Sales of the 177 condominium units are currently stalled at 50 units because the Maryland Department of the Environment has only approved 50 hook-ups to the waste water system. MDE has refused further allocations until the waste water treatment plant is expanded and upgraded.

Part of the issue is that Port Deposit has been designated as an Intense Development Area (IDA) by the Critical Areas Plan for Cecil County, which means it is slated to receive a portion of new growth experienced by the county. With planned growth on the waterfront and along historic Main Street, the town does not have the infrastructure nor the means to expand their infrastructure to accommodate this directed growth. One of the problems is that although there may be government funds available to fix I&I and metering problems associated with health and environmental issues, funding is not easily available for planned growth that has not yet occurred. In addition, Port Deposit currently undercharges its residents for waste water, drinking water and solid waste removal services--the town is running a deficit in this area. With a median household income of $10,000/year, any rapid rate increases to cover the deficit and expand the facility would cause economic hardship for many.

There are political problems as well: the town does not have a capital budget and is reluctant to accept outside financial advice on what it perceives to be its own internal affairs. Finally, the town administrator for Port Deposit is only part-time--he can only spend 20 hours a week on the problems and issues of Port Deposit.

Environmental Context

In 1971, a major renovation was completed on the waste water treatment plant which upgraded the plant to 250,000 gallons per day (gpd). Shortly thereafter, tropical storm Agnes severely flooded and stressed the system. It is believed that damage to the collection system resulted. The system never fully recovered. Recently, I&I has been identified as a primary cause of excessive flows to the plant. During storms, transmission pumps fail, which cause sewer back-ups into residential basements and displacement of manhole covers. Most of the town is not metered, and as a result, conservation of water is limited. In addition, the system occasionally exceeds its fecal coliform limits. Finally, because of increases in flows from a lack of water conservation and from storm surges, there is increased sludge accumulation, with limited disposal options available to the town.

Project Financing

Recently, the Maryland Board of Public Works approved a $300,000 grant for engineering and remedial work on the town's waste water treatment facility. The grant will allow for stop-gap measures, but following this work, the system will still need a major upgrade to at least 500,000 gpd. The cost for this upgrade is estimated at $1.2 million. An application to the State Revolving Fund program is anticipated, although the debt service on a per household basis would be onerous.

Recommendations and Observations

1. Since it is believed that once the I&I and metering issues are resolved the current residents will have adequate capacity at the treatment facility, the question is whether new growth should pay for new capacity at the facility. It was suggested that the town persuade the private developer of the waterfront to contribute to this expansion-- perhaps the developer could pay all the hook-up fees for his development up-front, and recapture the fees plus interest with each condo sale.

2. Offer the developer short-term tax abatements--the condo-buyer will pay a little more up front to purchase the condo, but the town gives the buyer a reduced tax rate on some portion of his property for a set period of time, such as a reduced tax rate on ten percent of the property for ten years.

3. Use a demand-based or benefits-based cost allocation approach. There are very distinct differentials in the profiles of the users, especially the health club and the restaurant, which allows for a more accurate allocation of true costs based upon true demand.

4. Privatization--have the developer build a waste water treatment facility for the waterfront community. If he doesn't want to operate the facility, he can sell it back to the town when the development reaches build-out (since state grant money has been used, this option is not possible for this project because of public/private ownership requirements. The developer could build the facility for the town to own and operate, but the developer cannot own it as current law stands).

5. Issue a zero coupon bond for the amount needed and use the future tax base to pay the bond off at maturity.

6. Utilize all avenues open to the town, including the Farmers Home Administration. Having a part-time administrator and a small staff should not preclude the town from seeking assistance from all programs--help is available for filling out applications and other administrative work.