Smithsburg’s Cloverly Developer Proposes $14 Million Special Tax Assessment District to Fund Infrastructure

The Smithsburg Town Council is reviewing a proposal to create a Special Assessment Taxing District that would finance more than $14 million in roads, utilities and environmental controls for the forthcoming Cloverly community by issuing Public Improvement Bonds repaid through extra property taxes on those specific parcels—meaning taxpayers not living in the special district would not bear the cost, and reducing the upfront costs for the developer.

Under the proposal, developer Cloverly Hill, LLC would cover design, engineering, inspection and bonding costs for state-mandated upgrades along Smithsburg Pike (MD 64) and Foxville Road (MD 77) budgeted at $1.94 million; construction of a $1.67 million water boost pump station to supply potable and fire-protection water; and nearly $2 million for stormwater facilities meeting Maryland Department of the Environment and county requirements. Town-specified roads, curbs, sidewalks, utilities, streetlights and open-space amenities in three phases total roughly $6.98 million.

To form the district, a majority of property owners within the 75-acre area—currently held by the developer who submitted the proposal—must agree to an additional real-property tax layered atop existing state, county and town levies. That revenue stream would service an estimated $14.02 million in bonds. The town would not guarantee repayment; instead, initial responsibility rests with the developer and later shifts to future property owners and businesses in the district.

Cloverly Hill, LLC owns the parcel at the northeast corner of Smithsburg Pike (MD 64) and Foxville Road (MD 77), acquired in 2004, and plans to develop it in accordance with the 2011 Smithsburg Comprehensive Plan as a mixed-use, intergenerational community called Cloverly. The proposal includes single-family homes, townhomes, Active Adult Cottages, duplexes and suites, and Assisted Living and Memory Care units, along with a learning center, child day care, a new headquarters for Smithsburg Emergency Medical Services, a neighborhood and community center with meeting and work spaces, and potentially a locally owned restaurant or tavern. Discussions are also underway to provide space for the Smithsburg Community Volunteer Fire Department’s equipment on the site.

According to the developer, Smithsburg stands to collect significant one-time fees—about $1.08 million in water benefit fees, $1.04 million in water connection fees and $1.25 million in sewer connection fees—and gain an estimated $350,000 in annual new property tax revenue once assessed values exceed $100 million. The developer projects it will deliver 166 single-family homes, more than 200 senior-living and multi-family units, and roughly 120 new jobs, bolstering economic growth without tapping the town’s general fund.

By financing the $14 million infrastructure package through a special‐assessment district instead of paying cash or taking a conventional construction loan, the developer lowers their own upfront costs for building the development, while shifting the long‐term repayment obligation onto future homeowners via an annual assessment.

Homebuyers in Cloverly would see their property tax bills include not only the regular Town, County and State levies but also a special‐assessment surcharge dedicated to repaying the $14 million in Public Improvement Bonds financing roads, utilities and stormwater facilities. That extra levy would appear on each year’s tax notice until the bonds mature and is restricted solely to owners within the roughly 75-acre district — so anyone who buys a home, cottage or suite there will automatically assume its share of the debt service. Over time, as the neighborhood’s assessed value climbs beyond $100 million, the annual special-assessment revenues (estimated at roughly $350,000) will cover bond payments — but those payments will be reflected as higher property taxes for every owner in Cloverly until the bonds are paid off.

Article by multiple contributors, based upon information from Cross & Company, LLC and Cloverly Hill, LLC

---