AGENDA ITEM 7
February 15,2011
Action
MEMORANDUM
TO:
FROM:
County Council
~Michael
Faden, Senior Legislative Attorney
f:JJ
Glenn Orlin, Deputy Council Staff Director
Action: Expedited Bill 59-10, Transportation Impact Tax - Amendments ­
White Flint Impact Tax District
SUBJECT:
Government Operations and Fiscal Policy Committee recommendation: enact with
amendments.
Expedited Bill 59-10, Transportation Impact Tax - Amendments - White Flint Impact
Tax District, sponsored by the Council President at the request of the County Executive, was
introduced on December 14,2010. A public hearing was held on January 18, at which the only
speakers, representing the County Executive and LCOR Inc., endorsed the Bill (see LCOR
testimony, ©7-8). A Government Operations and Fiscal Policy Committee worksession was
held on January 31, at which the Committee recommended that Bill 59-10 be enacted with
technical amendments.
Bill 59-10 would:
• create a White Flint impact tax district;
• define the boundaries of the district, coterminous with the White Flint special taxing
district created by Bill 50-10;
• set the rate of impact taxes for the district at $0, as the Council tentatively decided when
it reviewed the White Flint financing plan; and
• apply the $0 tax rate for any development for which an application for a building permit
is filed on or after December 1, 201 0.
Fiscal and economic impact OMB's fiscal impact statement (see ©6) estimated the 40­
year revenue loss at $72 million. OMB also estimated the "fiscal impact" of full buildout of the
development authorized in the White Flint Sector Plan at $6.8 billion in County revenues.
Issues/Committee amendments
1)
Revenue loss While it considered the financing package for the infrastructure needed
to build out the development authorized in the White Flint Sector Plan, the Council in November
conceptually approved creating a new White Flint impact tax district and setting the tax rate in
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that district at $0. The effect would be to waive the transportation impact
tax
for any new
development that pays the supplemental property tax in the White Flint special taxing district,
created by Bill 50-10. Neither Bill 50-10 nor the accompanying infrastructure resolution
implemented that decision because it must be done with a follow-up Bill to amend the impact tax
law. This Bill is the vehicle to implement that decision, assuming that the Council still intends to
do so. As noted above, the 40-year revenue loss from waiving the otherwise applicable
transportation impact tax in this area was estimated at $72 million.
Committee recommendation:
create a White Flint impact tax district and set the tax rate
at $0.
2) Effective date
When reviewing Bill 50-10, the Council also tentatively decided that
the transportation impact tax rate for the remaining buildings in LCOR Inc.' s North Bethesda
Center development should be $0. This development had been approved under the former
County Growth Policy's Alternative Review Procedure for Metro Station Policy Areas, under
which its impact
tax
rate is 75% of the County-wide rate. In its subdivision approval, LCOR had
committed to pay double the then-prevailing transportation impact tax rates without accepting
any applicable impact tax credits.
As introduced, this Bill would waive the transportation impact tax for any development
for which an application for a building permit is filed on or after December 1,2010. As LCOR's
testimony (see ©7-8) notes, as part of its North Bethesda Center development it filed a building
permit application for a new Nuclear Regulatory Commission office building well before that
date. LCOR asked for an amendment applying the Bill to any development for which a building
permit is issued on or after December 14. The County Executive supported that amendment. If
the Council concurs that buildings in the White Flint special taxing district with permits issued
before this Bill is enacted should be exempt from the transportation impact
tax,
the Committee
inserted an amendment to do so on ©3, lines 33-37.
Committee recommendation:
revise the law's effective date to cover any development
in the White Flint impact
tax
district with a building permit issued on or after December 1,2010.
The Committee also clarified that the County must refund any tax already paid for such a
development (see ©3, lines 37-40),
This packet contains:
Expedited Bill 59-10 with Committee amendments
Legislative Request Report
Memo from County Executive
Fiscal Impact Statement
LCOR testimony
Circle
#
1
4
5
6
7
F:\LAw\BfLLS\l 059 Trans Impact Tax-White Flint Impact Dist\Action Memo.Doc
2
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Expedited Bill No.
59-10
Concerning: Transportation Impact Tax
- Amendments - White Flint Impact
Tax District
Revised: 2-11-11
Draft No. 2
Introduced:
December 14,2010
Expires:
June 14, 2012
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _
--:---:--::-::~-_
Effective:
December 1, 2010
Sunset Date: ....:N..:.:o::.:.;n:.=,e_--::_ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request of the County Executive
AN EXPEDITED ACT to:
(1)
create a White Flint impact tax district;
(2)
define the boundaries of the White Flint impact tax district;
(3)
set the rates of the transportation impact tax for the district; and
(4)
generally amending the law governing the transportation impact tax.
By amending
Montgomery County Code
Chapter 52, Taxation
Sections 52-49 and 52-57
Boldface
Underlining
[Single boldface brackets]
OQ..uble~nderlining
[[Double boldface brackets]]
*
*
*
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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EXPEDITED
Bill No. 59-10
1
Sec. 1. Sections 52-49 and 52-57 are amended as follows:
52-49.
Imposition and applicability of development impact taxes.
2
3
*
(C)
*
*
4
5
6
The following impact tax districts are established[, consisting of the
listed Policy Areas as defined in the Growth Policy]:
(1)
Metro Station:
Friendship Heights, Bethesda CBD, Grosvenor,
7
8
White Flint, Twinbrook, Rockville Town Center, Shady Grove
Metro, Silver Spring CBD, Wheaton CBD, and Glenmont
Metro station policy areas,. as defined in the most recent
Subdivision Staging Policy, except as modified
!2y
paragraph
9
10
11
[[ill]]
ill
for the White Flint policy area;
(2)
Clarksburg:
Clarksburg policy area,. as defined in the most
12
13
recent Subdivision Staging Policy;
(3)
White Flint:
The [[area]] part of the White Flint Metro Station
14
15
Policy Area included in the White Flint Special Taxing District
in Section 68C-2; and
16
17
18
ill
General:
Any part of the County, including any municipality,
not located in [a listed policy area] an area listed in paragraphs
(1)-(3).
19
20
21
22
*
52-57.
T~x
rates.
(a)
*
*
In
The tax rates for each impact tax district,. except as provided
subsection
(Q1
are:
23
24
25
26
*
(hl
tax rates are:
-----
*
*
For any development located in the White Flint Impact Tax District, the
Tax per Dwelling Unit or per Square Foot ofGross Floor Area (GFA)
Building Type
White Flint
-2
F:\lAW\BlllS\1059 Trans Impact Tax-White Flint Impact Dist\BiII2 GO Amends.Doc
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ExPEDITED BILL
No. 59-10
!
High-rise residential (per dwelling unit)
$0
$0
$0
$0
$0
$0
$0
$0
i
I
I
I
Multifamily-senior residential (per dwelling unit)
Office (per sq. ft. GF A)
r----
Industrial (per sq.ft. GF A)
Bioscience facility (per sq.ft. GFA)
I
Retail (per sq.ft. GFA)
, Place of worship (per sq.ft. GF A)
Private elementary and secondary school (per sq.ft. GF A)
Hospital (per sq.ft. GF A)
Other nonresidential (per sq.ft. GF A)
I
1
$0
$0
27
28
29
[(b)J!£}
[(c)]@
[(d)]W
30
31
32
33
34
[(e)]ill
[(f)]{g)
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
Sec. 2.
Expedited Effective Date; Applicability; Refunds.
The Council declares that this Act is necessary for the immediate protection
of the public interest. This Act takes effect on the date when it becomes law, and
applies to any development located in the White Flint impact
tax
district for which
[[an application for]]
~
35
36
37
38
39
building permit is [[filed]] issued on or after December 1,
2010. If any development impact tax was collected under Article VII of County
Code Chapter 52 before this Act took effect for any qevelopment to which this Act
applies, the Director of Finance must promptly refund that tax as if a refund were due
and claimed under County Code Section 52-54.
40
-3­
F:\LAW\BILLS\\ 059 Trans Impact Tax-White Flint Impact Dist\Bill 2 GO Amends.Doc
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LEGISLATIVE REQUEST REPORT
Expedited Bill 59-10
Transportation Impact Tax
-
Amendments
-
White Flint Impact Tax District
DESCRIPTION:
The requested legislation establishes a new White Flint Impact Tax
District, defines the boundaries of the District, and sets the tax rate in
the District.
Implementation of the White Flint Sector Plan.
Implementation of the White Flint Sector Plan through
(1)
this
legislation, (2) Bill 50-10, White Flint Special Taxing District, (3)
Resolution 16-1570, White Flint Sector Plan Implementation
Strategy and Infrastructure Improvement List, and (4) $385,000
Special Appropriation to the FYll Capital Budget and Amendment to
the FYII-16 Capital Improvements Program (CIP) for White Flint
District West: Transportation Project.
Department of Finance; Office of Management and Budget
To be requested.
To be requested.
N/A
N/A
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
Jennifer Barrett, Director, Department of Finance
Joseph Beach, Director, Office of Management and Budget
Kathleen Boucher, Assistant Chief Administrative Officer
Diane S. Jones, Assistant Chief Administrative Officer
N/A
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
N/A
f:\law\bills\1059 trans impact tax-white flint impact dist\lrr.doc
®
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-
OFFICE OF THE COUNTY EXECUTIVE
Isiah Leggett
County Executive
ROCKVILLE, MARYLAND 20850
(;:J
cc.
5f.;;F
I-e.....
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MEMORANDUM
-;9
.--
-..0
-i
December 9,2010
-<
TO.:
FRo.M:
SUBJECT:
Valerie Ervin, President, County Council")
Isiah Leggett, County
ExecUtiVe~~
Qr/-::f.
__
~
White Flint Impact Tax District
I am transmitting for Council introduction a bill to create a White Flint
Impact Tax District. This is a follow-up to the Council's action, on November 30,2010,
on Bill 50-10, White Flint Special Tax District and Resolution 16-1570, White Flint Sector
Plan Implementation Strategy and Infrastructure Improvement List.
Bill 50-10 created a special tax district for the White Flint area that is
intended to replace certain development transportation charges, including transportation
impact taxes. Resolution 16-1570 outlined an implementation strategy for the White Flint
Special Tax District which includes creation of a White Flint Impact Tax District, with tax
rates of $0, to replace the existing transportation impact tax in White Flint.
The attached legislation creates the White Flint Impact Tax District
envisioned in Resolution 16-1570. The boundaries of this distract are the same as the
boundaries for the White Flint Special Tax District. Within this area, the transportation
impact tax rate is to be set at $0.
Executive staff are available to assist the Council in any way as it considers
the attached legislation. Thank you for your consideration and assistance in moving the
White Flint Sector Plan forward towards realization.
cc:
Jennifer Barrett, Director, Department of Finance
Art
Holmes, Director, Department of Transportation
Carla Reid, Director, Department of Permitting Services
Diane Schwartz Jones, Assistant Chief Administrative o.fficer
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OFFICE OF MANAGEMENT
A..'ID
BUDGET
Isiah Leggett
County Executive
Joseph
F.
Beach
Director
MEMORA-NDUM
January 11,2011
TO:
FROM:
SUBJECT:
Varerie Ervin, President, County Council
Joseph F. Beach, Director
8.¥~I~
Council Expedited Bm 59-tO, Transportation Impact Tax - Amendments - White Flint Impact
Tax. District
The purpose of this memorandum is to transmit a fiscal and economic impact statement to the
Council on the subject legislation.
LEGISLATION SUMMARY
Bill 59-10 would:
• create a White Flint impact tax district;
• defme the boundaries of the district, coterminous with the White Flint special taxing
district created by Bill No. 50-10;
• set the rate of impact taxes for the district at $0; and
• apply the $0
tax
rate for any development for which an application for a building permit
is ftled on or after December 1, 2010.
FISCAL AND ECONOMIC SUMMARY
Bi1159-10 was designed to provide relief from a perceived and/or actual duplicate tax burden
on developers who will also be paying the White Flint special taxing district tax. The economic impact. of
the bill is anticipated to be the removal of any such duplicate taxation as a potential hindrance to
redevelopment proceeding; thus allowing significant
economic
development and
tax
base creation consistent
with the White Flint Sector Plan. The estimated fiscal impact/return from the entire White Flint Sector Plan,
assuming
full
build-out over the
40
year life of the Sector Plan, is over $6.8 billion. The estimated amount of
impact
tax
district taxes that would be foregone under Bill 59-lOis about
$72
million, also over the life of
the Sector Plan, and estimated at current impact
tax
rates.
The following contributed to and concurred with this analysis: Jennifer Barrett and
Mike Coveyou, Department of Finance; and Bryan Hunt and John Cuff, Office ofManagement and Budget.
JFB:bh
c: Kathleen Boucher. Assistant ChiefAdministrative Officer
Dee Gonzalez, Offices of the County Executive
Jennifer Barrett, Director, Department of Finance
Mike Coveyou, Department of Finance
John Cuff, Office of Management and Budget
Bryan Hunt, Office ofManagement and Budget
Office ofthe
Dire,~ct~o:.r
_ _ _ _ _ _-:-:::-:-::-:-------­
101 Monroe Street, 14th Floor' Rockviiie, Maryland 20850 • 240-777-2800
www.montgomerycountymd,gov
.,
i
i
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LINOWESI
AND
BLOCHER
LLP
ATTORNEYS AT LAW
January 18, 2011
Stephen P. Elmendorf
301.961.5110
selmendorf@linowes-law.com
Council President Valerie Ervin
Montgomery County Council
100 Mary land Avenue
Rockville, MD 20814
Re:
Exp. Bill 59-10; White Flint Impact Tax District
Dear Council President Ervin and Members of the County Council:
This law firm represents LCOR, Inc., the developer of the White Flint Metro Station Property.
On behalf of LCOR, I am ""Titing to support the Council's adoption of Exp. Bill 59-10 with one
caveat. As explained below, because the County Council was not able to adopt this legislation
when
it
adopted the legislation establishing the White Flint Infrastructure Tax District, it is
critical that this legislation contain the following language addressing its effective date:
"This Act takes effect on December 14,2010 and applies to any
development for which a building permit is issued on or after that date."
LCOR is preparing to pull a building permit for a new NRC office building immediately adjacent
to the White Flint Metro Station within the next fourteen (14) days. Because of its contractual
obligations to GSA to deliver this building for NRC occupancy by a certain date, LCOR cannot
delay pulling their permit until this legislation is adopted by the Council and signed by the
Executive. Because this legislation is not likely to be effective before DPS issues this permit,
under the existing transportation impact tax ordinance, LCOR will be required to pay a
transportation impact tax when it receives this building permit.
Payment of this tax would be completely contrary to the decision the Council made, via its straw
votes, back in November, that new development within the White Flint Sector Plan should not
have to pay the transportation impact tax in addition to the new infrastructure tax district
assessment. As a large office building (over 360,000 square feet), the NRC development will
yield significant district tax revenue each year.
I understand that the County Executive is supportive of my proposed language for the effective
date of this legislation. This is basically a timing issue. The Executive's recommendation and
the Council's decision to create the White Flint Impact Tax District and to set its tax rate at $0
7200 Wisconsin Avenue I Suite 800 1 Bethesda, MD 20814-48421 301.654.05041 301.654.2801 Fax I www.linowes-Iawcom
(]J
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LlNOWESI
AND
BLOCHER
LLP
ATTORNEYS AT LAW
Council President Valerie Ervin
January 18,2011
Page 2
were made too late in the legislative process for the infrastructure tax district to allow final
legislative action on the White Flint Impact Tax District to be taken last November.
I hope you will support this needed language on the legislation's effective date, to avoid an
unfair and unintended consequence to LCOR.
If
this legislation becomes law with this proposed effective date, DPS will need to refund this
transportation impact tax payment to LCOR. There is a potential problem in that the current
ordinance on transportation impact taxes, at Section 52-54 ofthe County Code, does provide for
refunds under three circumstances. None of which covers LCOR's situation for this building
permit. To clarify for DPS that Exp. Bill 59-10 does intend that DPS refund LCOR's impact tax
payment, it may be necessary to amend Exp. Bill 59-10 to add additional language to Section 52­
54(a) of the Code to address this refund situation. I suggest language to read as follow:
"(4) the project is located within the White Flint Impact Tax District and
the building permit is issued on or after December 14,2010"
Thank you for your anticipated consideration and support of the issue raised in this
letter.
Very truly yours,
LINOWES AND BLOCHER
LLP
~A
___
Stephen P. Elmendorf
SPE:rmg
cc:
Ms. Diane Schwartz-Jones
Mr. Michael Smith
L&B 1486516v1/02395.0049