PHED ITEM 1
July 12, 2010
Worksession
MEMORANDUM
TO:
FROM:
Planning, Housing and Economic Development Committee
~MiChael
Faden, Senior Legislative Attorney
Worksession:
Expedited Bill 38-10, Buildings- Adequate Public Facilities ­
Definitions
SUBJECT:
Expedited Bill 38-10, Buildings- Adequate Public Facilities - Definitions, sponsored by
Council President Floreen, was introduced on June 15,2010. A public hearing was held on June
22 (see testimony, ©12-18).
Bill 38-10 would redefine the term "existing building" for purposes of implementing the
County's adequate public facilities requirement. The amendment would not require an existing
building to have been occupied during the preceding 12 months in order to have the building's
previous capacity count in a new adequate public facilities test.
For the rationale for this change in the law, see the letter from attorneys William
Kominers and Cindy Bar on ©6-9 and the similar testimony of Mr. Kominers on © 12-16 and
Lee Development Group on ©17-18. For the Planning Board's recommendation, see the letter
on ©19-20, the Board's proposed amendment on ©21, and the Planning staff memo on ©22-24.
Issues
1) How long ago should a building have been occupied in order to have its capacity
count against a new adequate public facilities test?
This is the primary issue presented by Bill 38-10. The options include:
Under the current law, the building must have been
"substantially occupied during the 12 months before an application for a building permit for
renovation or reconstruction is filed." We interpret this language to mean occupied at
some point
during that 12 months, rather than for the
entire
12 months. Proponents of this Bill, the Planning
Board, and Council staff all agree that this period is much too short and hinders the reuse of
existing property.
Current law
(12
months)
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No limit
Bill 38-10 as introduced would repeal the 12-month requirement and allow
credit of existing capacity if the building is substantially intact when the permit application is
filed. Both speakers who testified at the hearing supported Bill 38-10 as introduced.
Past
5
years
The Planning Board (see letter, ©19-20) agreed with the intent of this Bill
but proposed to extend the occupancy requirement to 5 years, rather than repeal it altogether (see
Board amendment, ©21). The Board's rationale was that some incentive to reoccupy or
redevelop a building is advisable.
Council staff recommendation: 7 years. We agree with the Planning Board that some
time limit on prior occupancy is advisable but, since the validity period for an adequate public
facilities approval normally ranges from 5-12 years and has been temporarily extended to 7-12
years, a requirement that the property have been occupied at some time during the previous 7
years is more suitable. This can be done by endorsing the Board's amendment on ©21 but
replacing 60 with 84.
2) Should a building that replaces an existing building receive APF credit for the
previous building's capacity?
Bill 38-10, on ©2, line 21, would insert replacement along ""ith renovation and
reconstruction. The eflect of this amendment is to allow APF trip and student credits for a
building that was tom down. The Planning Board did not object to this broadening of the credit
provision. Council staff recommendation: insert replacement as shown on line 21.
3)
How should trip and student generation be measured?
The Planning Board endorsed its staff s recommendation that the law be clarified to
measure trip and student generation from the number of trips and students generated by the
building when it was fully occupied, not when it was vacant. This amendment is shown on ©21,
lines 15-16 and 18-20. Council staff recommendation: concur in this amendment, but replace
with students on line 19.
This packet contains:
Bill 38-10
Legislative Request Report
Fiscal impact statement
Letter from attorneys Kominers and Bar
Kominers testimony
Lee Development Group testimony
Planning Board letter
Planning Board amendments
Planning staff memo
F:\LAW\B1LLS\1 038 APF Definitions\PHED Memo.Doc
Circle
1
4
5
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12
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Expedited Bill No.
38-10
Concerning: Buildings - Adequate Public
Facilities - Definitions
Revised: 5-12-10
Draft No. 1
Introduced:
June 15, 2010
Expires:
December 15.2011
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
-!...!:No~n!!:::e
_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President Floreen
AN EXPEDITED ACT
to:
(1)
redefine certain terms for purposes of the adequate public facilities
requirement in the building permit law; and
(2)
generally amend the law governing the determination of adequate public
facilities before a building permit is issued.
By amending
Montgomery County Code
Chapter 8,
Section 8-30
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface bracketsD
* * *
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. 38-10
1
2
3
4
5
6
7
8
9
10
11
Sec.
1.
Section 8-30 is amended as follows:
8-30.
Purpose; definitions.
*
(b)
*
*
Definitions.
In this Article, the following words and phrases have the
meanings stated unless the context clearly indicates otherwise.
(1)
Development
means proposed work to construct, enlarge, or alter
a building for which a building permit is required.
Development
does not include an addition to, or renovation or replacement of,
an existing building if, as measured under guidelines adopted by
the Planning Board for calculating numbers of vehicle trips and
students:
(A) occupants of the building would generate fewer than 30
total peak hour vehicle trips; or, if they would generate
more than 30 trips, the total number of trips would not
increase by more than 5; and
(B) the number of public school students who will live in the
building would not increase by more than 5.
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
*
(3)
*
*
Existing building
means a building that [was standing and]
substantially [occupied during the 12 months before] intact when
an application for a building permit for renovation.,. replacement,
or reconstruction is filed.
(4)
Renovation
means an interior or exterior alteration that does not
affect a building's footprint.
(5)
Replacement
means demolition or partial demolition of an
existing building and rebuilding that building. A replacement
building may exceed the footprint ofthe previous building.
o
F:\LAW\BILLS\1038 APF Definitions\I038 BilI.Doc
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EXPEDITED BILL No.
38-10
28
29
30
*
Sec. 2.
*
*
Expedited Effective Date.
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.
Approved:
31
32
33
34
Nancy Floreen, President, County Council
35
36
37
Date
Approved:
Isiah Leggett, County Executive
38
39
40
Date
This is a correct copy ofCouncil action.
Linda M. Lauer, Clerk ofthe Council
Date
F:\LAW\BILLS\1038 APF
Definitions\
1038 Bill.Doc
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LEGISLATIVE REQUEST REPORT
Expedited Bill 38-10
Buildings
-
Adequate Public Facilities
-
Definitions
DESCRIPTION:
Redefines "existing building" in the adequate public facilities
implementation law so that the building need not have been
occupied during the previous 12 months in order to be exempt
from a new adequate public facilities test.
Current law makes reuse of existing spaces more difficult
because it requires a new adequate public facilities test unless
the existing building was actually occupied during the previous
12 months.
To allow existing buildings to be reused without a new
adequate public facilities test if the number of trips generated
or students housed would not substantially increase.
Planning Board, Department of Permitting Services
To be requested
To be requested
To be requested
To be researched
Michael Faden, Senior Legislative Attorney, 240-777-7905
Applies where County subdivision regulations apply.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICA TION
WITHIN
MUNICIPALITIES:
PENALTIES:
Not applicable.
F:\LAw\BILLS\1038 APF Definitions\1038 LrLDoc
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31LJ-
'SB
-10
057761
OffICE
OF
MANAGEMENT AND BUDGET
lsiah Leggett
Joseph
F.
Beach
Director
COw!(}' Executive
MEMORANDUM
June 22. 10
to
TO:
FROM:
SU SlECT:
neil
Expedited Bill 38-1 0,
B,~ildjngs-Adequatc
Public Facilities- De!initions
\
i"
The purpose of this memorandum is to transmit a fiscal and economic impact statemcii£ to
{he Counj.:il on the subject legislation.
LEGISLATION SUMMARY
The bill redefines the term "existing building" for purposes of implementing the County's
adequate public
facilities requirement. The amendment would
not
require an
existing building
to have
been occupied during the previous 12 months in order to be exempt from a new adequate public facilities
test
if
the number of trips generated
or
students housed would not substantially
increase.
FISCAL
AND
ECONOMIC SUMMARY
The Planning Division of the Maryland-National Caprtal Park and Planning Commission
(M-NCPPC)
and the Counry's
Department ofPennitting Services (DPS) have indicated that the
proposed
bill,
as drafted, would have no liscal impact to the County as
it
onty revises the definition of "existing
buildings" and does not require additional County
resourCCi;
or processes.
Finance
has indicated that the bill
would
have
no
economic impact to
the County, but could have a positive economic impact for those property owners which this bill applies
to. However, the impact is indeterminate as there is no way to know how many buildings
it
alTe"is.
(li'
The f);;:partm<:n!
The following contributed to and
concurred
with this analYSIS: Amy Wilson,
Office
of
l\hnagcment
and Budget;
Alicia
Thomas,
DPS~
Alison Davis, M-NCPPC; and Mike Coveyoll,
Department of Finance.
JFB:aw
c: Kat.hleen Boucher, Assistant Chief Administrative Officer
Dee Gonzalez, OHices of the County Executive
Carla Reid, Director, Department of
Pem1itting
Services
Royce Hanson, Chainnan, M-NCPPC
Mike Coveyoll, Department of Finanee
Amy \Nilson, Office of Management and Budget
John
cure
Offke
of Management and Budget
0/11.:'.: of the Director
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Holland
&
Knight
3 Bethesda Metro Center, Suite 800
I
Bethesda, MD 20814
Holland
&
Knight LLP
I
www.hklaw.com
I
T 301.654.7800
I
F 301.656.3978
William Kominers
3012156610
wjlliam,kominers@hklaw·com
Cynthia M. Bar
3016647606
cindy.bar@hklaw.com
March 4, 20 I 0
VIA HAND DELIVERY
The Honorable Nancy Floreen
Montgomery County Council
100 Maryland Avenue
Rockville, MD 20850
Dear Councilmember Floreen:
This letter follows up our conversations about provisions of the Montgomery
County Code that are of concern because of what we believe were unintended
consequences of changes to the PAMRJLATR process in 2007. As expressed when we
spoke, certain provisions of the policy as applied, have serious unintended effects on
businesses and property owners in the County. Specifically, certain provisions of
Chapter 8 of the Code, that require an adequate public facilities review prior to issuance
of a building permit, have a logical disconnect and negative economic impact with
respect to existing buildings in the County. This disconnect will likely result in more and
more serious negative impacts during the current economic downturn, because the
downturn will cause increased vacancies for properties in the County. We hope that you
agree that the application of the current LATRJPAMR policies to vacancies
in
existing
office buildings and shopping centers needs to be changed by the County Council.
The County's adequate public facilities ("APF") process works in conjunction with
Section 8-31 of the Montgomery County Code. Section 8-31 requires that the Director
of the Department of Permitting Services may issue a building permit only if the Planning
Board has made a timely determination that public facilities are adequate to serve the
"development" encompassed in the permit.
Section 8-30(b)(1) defmes "development" as:
Proposed work to construct, enlarge, or alter a building for which a
building permit is required. Development does not include an
addition to, or renovation or replacement of,
an existing building
if,
as measured under guidelines adopted by the Planning Board for
calculating numbers of vehicle trips and students:
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The Honorable Nancy Floreen
March 4,2010
Page 2
(A) occupants of the building would generate fewer than 30 total
peak hour vehicle trips; or, if they would generate more than 30
trips. the total number of trips would not increase by more than 5;
and
(B) the number of public school students who will live in the
building will not increase by more than 5. (Emphasis added.)
"Existing building" is then defined in Section 8-30(b)(3) as "a building that was standing
and substantially occupied during the 12 months before an application for a building
permit for renovation or reconstruction is filed.
II
Given this defInition language, the issue of concern is what the Planning Board
Staff considers to be an "existing building," and the application of the interpretation of
this provision to real world situations. Our understanding is that the Planning Board
(flMCPD") Staff is applying this provision to individual tenants in shopping centers and
to office buildings. For example, where a building permit is required to undertake tenant
fIt-out (retail or office) or reconstruct and replace a pad site building (retail) that has been
vacant for over 12 months, the MCPB Staff requires an APF analysis that does not credit
the trips generated by either the specifIc prior use or by any allowed use.
If not considered an "existing building" by the reviewer, the applicant for a
building permit is required to undergo a full APF review, (1) without credit for the use
that vacated the space and (2) without credit for the possible allowable uses for the space
and upon which the original APF analysis must have been predicated. This is the case
even though such building(s) are counted in "background traffic" under the current
system -- which means that other applicants for new projects must take into account the
existing traffic from these existing (and approved) developments (vacant or not).
This interpretation leads to absurd results.
I.
A tenant moves out of a pad site in a shopping center. The owner and new
tenant wants to demolish the building and replace it with a new building of the same size.
However. fmding the tenant, negotiating the lease, and preparing plans for permits takes
more than 12 months. Before the building permit can be issued. MCPB Staff will require
an APF analysis (P AMR and LATR), without crediting the trips associated with the
earlier use.
2.
In a newly constructed, single tenant office building, the tenant's lease
expires six months before the end of the APF validity period. Finding a new tenant or
tenants (including lease negotiation and plans for fIt-out) takes the owner more than 12
months. The building permit for the new fit-out for the entire building now must go
through APF analysis (PAMR and LATR) again -- without credit for the earlier use -­
notwithstanding having just done APF for the original construction.
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The Honorable Nancy Floreen
March 4,2010
Page 3
Building permits for tenant fit-out in office buildings and shopping centers should
not be subject to the 12-month occupancy limitation contained in the Code. If individual
office building or shopping center tenants were required to undergo an APF review and
be subject to PAMR for individual vacancies of more than 12 months, this would have a
very chilling effect on leasing in these properties.
We submit that these longer vacancy situations are very possible in the current
economic climate and that these results are not what the Council intended in the
application of the APF and PAMR provisions to existing properties and businesses. This
application of the APF Ordinance to existing County businesses would be devastating.
Needless to say, the costs in time and dollars that result from undertaking and then
fulfilling the APF requirements, especially PAMR, has a deleterious effect on filling the
vacated spaces. More importantly, we do not believe that the Council intended to
essentially devalue property in the County by stripping it of a component of its "vested"
value after construction when the Council revised the PAMRJLATR process in 2007.
This is certainly a very anti-business measure at a time when the County should instead
be acting to encourage business.
The County Council needs to address this issue. Given the unfair application of
this provision and the current economic climate, it would be appropriate to delete the
requirement that an existing building must
be
substantially occupied during the preceding
12 months prior to filing a building permit request or undergo a full APF review. Instead,
existing buildings should be treated as exactly that -- existing -- and be able to be used for
any authorized uses without a new APF analysis, even if to do so requires a building
permit. So long as the building area is not expanded, there should be no APF
consequence or impact per se.
We know you remember the Loophole Bill. As passed and applied, it recognized
that re-occupancy or replacement of existing structures made sense. So long as the floor
area did not increase by more than 5000 square feet, a Loophole Property could secure
permits or be totally replaced without new APF study or APF consequences. This
approach was taken in recognition that an owner's expectation of value in property for
which their rights had been "vested" included the ability to re-lease the property without a
re-approval process. (The definition of "development" cited above from Section 8-30,
originally came into the Code, albeit in a different form, as part of the Loophole Bill in
1989. See excerpt of Bill No. 25-89, attached.)
We submit that the current law should recognize that an owner's vested rights in a
building, once constructed, includes an "inchoate" right to the traffic expected to be
generated (and that has been analyzed), based on its size and use. Only modification of
either element (size or intensification of use) should give rise to the need to consider a
new APF review. So long as those elements do not change, building permits should be
issued for the existing space or for a replace.ment building of equal or lesser size.
Otherwise, a building could continually be at risk of being divested of some or all of its
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The Honorable Nancy Floreen
March 4, 2010
Page 4
previous APF approval, simply by being vacant for some period, or even by leasing to a
use that generates less traffic than originally expected.
Our understanding is -that you have been considering language to modify the
current adequate public facilities requirement. One option which has been submitted for
your consideration is to adopt the following language:
(3) Existing building
means a building that was standing and
substantially intact before an application for a building pennit for
renovation or reconstruction is filed.
We endorse this language, as we believe it would address the issues and the
unintended consequences which we have described herein. We do, however, suggest
that the language be revised as follows to clearly allow a building to be replaced and
appropriately receive credit in the APF review by the County for square footage that is
already counted in background development:
(3) Existing building
means a building that was standing and
substantially intact before an application for a building pennit for
renovation, replacement or reconstruction is filed.
We would like to have an opportunity to discuss this more fully at your earliest
convenience. Please contact us to set up a time to meet.
Very truly yours,
tJ~~(~)
William Kominers
HOLLAND
&
KNIGHT LLP
Cynthia
M.
Bar
Enclosures
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Holland
&Knight
3 Bethesda Metro Genter, Suite 800
I
Bethesda, MD 20814
Holland
&
Knight LLP
I
www.hklaw.com
7
I
T 301.654.7800
I
F 301.656.3978
Expedited Bill 38-10 (Buildings - Adequate Public Facilities - Defmitions)
Testimony of William Kominers
(June 22, 2010)
Good Afternoon President Floreen and members of the Council. My name is Bill
Kominers, an attorney with Holland
&
Knight in Bethesda, and I am here today on behalf
of a number of clients to testify in support of Expedited Bill No. 38-10.
Bill No. 38-10 tries to bring a small measure of logic and reality to the Adequate
Public Facilities Ordinance ("APFO") review process. The Bill simply proposes to treat a
building that exists as if it actually exists. This will mean, that for APFO purposes, when
a building permit is needed to reuse, renovate, or replace the building, credit will be given
for the trips that are allowable from that existing building. Under Section 8-30(b) today,
a building that has been vacant for more than 12 months, and is old enough that its
original APFO validity period is over, is treated as non-existent for APFO purposes when
seeking a permit. This means that no trips from the existing building are credited for
purposes of the APFO analysis.
Bill No. 38-10 addresses provisions of the Montgomery County Code that are of
concern to many businesses and property owners in the County. Changes made in 2006
to the APFO review process, as applied to existing structures in the County, have serious
effects on businesses and property owners that we do not believe were intended when the
Council established them.
Right now, a building permit triggers APFO review if a building does not have a
"currently valid" APFO approval. (Almost any building with expiring leases is likely to
meet that criterion, just by virtue of age). But, this requirement is not applied to existing
buildings that don't generate over 30 new· trips or that don't increase existing traffic
impact by more than five trips. The logic is very simple: renovating or replacing with the
same size should not result in an increase in the trips by more than five .trips. But the
illogic of the current law is that you can get the credit to make that swap if the building
has been occupied during the prior 12 months. Bill No. 38-10 corrects this problem.
Background
The County's APFO process works in conjunction with portions of Chapter 8 of the
Montgomery County Code. Section 8-31 provides that the Director of the Department of
Permitting Services may issue a building permit only if the Planning Board has made a
timely determination that public facilities are adequate to serve the "development"
encompassed in the permit. Section 8-30(b)(1) of the Code excludes from the definition
@
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of such "development," the renovation, addition, or replacement of an existing building,
if the renovation/replacement does not produce more than 30 peak hour trips or an
increase of 5 additional trips over the existing condition. The traffic generation of the
existing building essentially offsets the trips for the new construction in making the
determination of whether the threshold number of trips is exceeded. But the problem is
the criterion to be considered as an "existing building" for this purpose. Because
"existing building" is defmed in Section 8-30(b)(3) as "a building that was standing and
substantially occupied during the 12 months before an application for a building permit
for renovation or reconstruction is filed."
The origin of this provision was in the Loophole Bill legislation in 1989. That Bill
required new APFO analysis for pre-1982 subdivision approvals. But, at the same time,
it excluded from that requirement the renovation, reuse, or replacement of buildings, so
long as the new work did not exceed the size of the existing building or increase by more
than 5,000 square feet. Since 1989, particularly with the amendments in 2006, the
provision has morphed into the situation that today needs desperately to be corrected.
Impact in a Challenging Economy
This provision has particular impact in these economic times. More tenants are
vacating space.
It
is taking longer to find new tenants.
It
is taking longer to negotiate the
lease, prepare the permit plans, file for and receive building permits. As a result, many
properties will get caught in this trap. For what is effectively a reuse of an existing
building, the result will be new and unexpected costs, as well as added time for Planning
Board review, that may result in killing any possible business deal. Remember, all of this
is being required for an existing building that either: (I) went through APFO originally
and made whatever improvements were needed for its impact, or (2) is an older building
that has always been treated as part of existing traffic conditions. Why bother? Where is
the
harm?
Trips Attributed to Existing Buildings Should be Credited
If
a building is past its APFO validity, then when a building permit is needed to
renovate or replace the building, do tenant fit-up work, or otherwise reoccupy the
building, a new APFO approval is required. In that APFOanalysis, if the building has
been vacant for the prior 12 months, then the new trip generation is compared against
zero existing trips -- as if the building being renovated does not exist. Instead, the
comparison for the new proposal should be against the trips allowed for the existing
building, irrespective of occupancy.
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Even if the use of the property is changing, the same logic applies. If an existing
office building is to be converted to residential, in evaluating the APFO for residential,
there should be a credit for the number of trips that could be generated by the office
building.
An interesting aside is that if the vacant building can be reoccupied, (without
needing a building permit), the Planning Board Staff will then credit all the trips from
that use. But, if a building permit is needed in order to reoccupy (for example because of
reconfiguring the space), they will not. In other words, you are encouraged to do
something without getting a building permit that you cannot do if you try to get a
building permit. That is bad policy.
This current application of Section 8-30(b) leads to absurd results.
1.
Worst Case Scenario: In a newly constructed, single tenant office building,
assume that the tenant's lease expires six months before the end of the APFO validity
period or just afterwards. Finding a new tenant (including lease negotiation and plans for
fit-out) takes the owner more than 12 months. Since the building no longer has a
"currently valid" APFO approval, the building permit for the new fit-out for the whole
building now must go through an entirely new APFO review (PAMR and LA TR) -­
without credit for the earlier use -- notwithstanding having just passed APFO analysis for
the original construction.
2.
Rehabilitation/renovation of old buildings. To renovate or rehabilitate
older buildings that become vacant, a new APFO test will be needed. This could vastly
increase the cost of the project, or prevent it altogether. Consider the situations of the
Grammex Building or the Galaxy Project, each in south Silver Spring, that sought
conversion of office buildings to residential use after long vacancy. The differential in
trips should be evaluated, but always with a credit for the allowance of those trips that
could be generated by the existing buildings as office use.
3.
Shopping Center. A tenant moves out of a pad site in a shopping center.
The owner and new tenant want to demolish the building and replace it with a new
building of the same size. However, finding the tenant, negotiating the lease, and
preparing plans for permits took more than 12 months. Before the building permit can be
issued, a new APFO analysis (PAMR and LATR) will be required, but without crediting
the trips associated with the earlier use.
Whether a shopping center is being tom down and used for another purpose, or a
pad site is being re-tenanted or replaced, the trips that could be generated by the existing
structures, should be credited against trips generated by the reuse, in order to determine
whether the project increases by five trips. In addition, in conducting the analysis for a
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retail center, there should be no need to evaluate the comparative trips of one retail use
against another. The expectation in a retail center is that the different amounts of trips
among different kinds of retail uses were all accounted for in the basic trip generation
rate for the retail center as a whole.
4.
Removal of an existing building for redevelopment. In preparation for
redevelopment, the owner does not renew tenant leases as they expire, so that the
building becomes vacant to coordinate with redevelopment. If the owner doesn't time it
right, or the market does not support redevelopment at the planned time, and more than
12 months go by, a new APFO approval would be required. That APFO analysis could
end up excluding trip credits from some of or all of the original uses. This problem may
occur extensively in those areas where the CR Zone seeks to encourage redevelopment of
old, obsolete properties.
5.
Moratorium. If an area is in moratorium (such as the conditions in the
Route 29 corridor a few years ago), an existing building that becomes vacant could be
precluded from re-tenanting, if a building permit is required. Without credit for the trips
allowed by the existing building, the moratorium would prevent meeting APFO approval
and thereby prevent reuse or re-tenanting of the building.
Current Law Devalues Properties and Discourages Upgrading
.
Building permits for tenant fit-out or renovation in office buildings and shopping
centers, or wholesale replacement with the same square footage, should not be subject to
the 12-month occupancy limitation currently contained in Section 8-30(b) of the Code. If
individual office building or shopping center tenants were required to undergo an APFO
review and be subject to PAMR for individual vacancies of more than 12 months, this
would have a very chilling effect on leasing, rehabilitating, or upgrading these properties.
Application of the APFO to existing County buildings in this way will be
devastating. Longer vacancy periods are very possible in the current economic climate.
Needless to say, the costs in time and dollars that result from undertaking and then
fulfilling the APFO requirements, especially PAMR, has a deleterious effect on filling the
vacated spaces. More importantly, the Council probably did not intend to massively
devalue properties in the County by stripping away an entitlement value that should have
"vested" with construction pursuant to that entitlement. When the Council revised the
LA
TRIP
AMR process in 2006, we do not believe you intended this consequence :..­
essentially applying the APFO (LATRIPAMR) provisions to existing properties and
businesses. This is certainly a very anti-business measure at a time when the County
should instead be seeking to encourage business.
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Correction Through Bill No. 38-10
The Council can address this problem by passing Expedited Bill No. 38-10. This
will appropriately delete the requirement that an existing building must be substantially
"occupied" during the preceding 12 months to avoid losing credit for its existence when
being subjected to APFO review for a new building permit. Instead, the language of Bill
No. 38-10 will ensure that existing buildings are treated as exactly that -'- existing. So
long as the building area is not expanded, there will be no APFO consequence or impact
per se.
The law should recognize that an owner's vested rights in a building, once
constructed, includes an "inchoate" right to the traffic expected to be generated.
Only
modification of existing conditions by making the building larger or intensification of the
use, should give rise to the need to consider a new APFO review. So long as the basic
framework does not change, building permits should be issued for the existing space or
for a replacement building of equal or lesser size. Otherwise, a building could
continually be at risk of being divested of some or all of its previous approval simply by
being vacant for longer than a year.
Summary
The Council should endorse the new definition being proposed for an "existing
building" in Bill No. 38-10, as this will address the issues and the unintended
consequences described today.
Bill No. 38-10 would allow an existing building to have the benefit of its bargain,
by being credited with the traffic impact that it was expected to generate. Treat a
building as being the existing structure that it actually is.
By correcting this anomaly, Bill No. 38-10 makes the APFO process slightly more
understandable and logical (perish the thought).
If
a building is there, simply treat it as if
it is there.
Thank you for your consideration. I look forward to further discussions in your
worksessions.
5
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LEE DEVELOPMENT GROUP, INC.
Expedited Bill 38-10 (Buildings - Adequate Public Facilities - Definitions)
. Testimony of Bruce Lee
(June 22,2010)
Good Afternoon President Floreen and members of the Council. My name is Bruce Lee,
and I am here today on behalf of Lee Development Group to testify in support of this Bill.
I'm going to tell you a true story today. It's not riveting, I'll warn you. But it is an
illustration of why Montgomery County has the reputation of being anti-business and how this
Bill can help correct that image. I have heard many of your comments in various public forums
over the past few months, and many members of this Council are on record stating that they want
to change the reputation of the County as anti-business. Passing this bill would be a small step,
but an important one nonetheless.
As some of you know, Lee Development Group owns a number of properties in the
County, including the Northgate Shopping Center, which is located at the intersection of Georgia
Avenue and Aspen Hill Road. Three and a half years ago, one of the improved pad sites that had
been occupied by a Chinese restaurant was vacated when the restaurant went out of business.
We sought a new tenant for the space.
It was a different world three and a half years ago, and the new tenant we found for the
space was a bank in an expansion mode. The bank signed a lease in October 2006 and didn't
open for business in November 2009. The bank could not use the space as it was constructed,
and to tear down and rebuild they needed a building permit. That's when the "fun" started.
The Northgate Shopping Center was first built in 1958, and has operated with a wide
variety of tenants over the years. Since the restaurant pad site was already constructed and
drawing patrons, it was producing traffic. As an owner of other properties in the County, my
expectation was certainly that as to any buildings already existing, I not only had the right to re­
tenant them when there was a vacancy, but in the event of demolition/redevelopment, I also got
credit for the traffic the building could produce, since it was already constructed.
Imagine my surprise when I learned from the bank, who was taking the lead on getting
the required permits, that this was not necessarily the case. They had been held up in obtaining
the building permit, because there was a question from the County about when the restaurant had
closed. Not quite understanding why this was relevant, I called my attorney. After all, I was
certainly not going to read and try to understand the AGP. Next thing I know I might want to
understand PAMR.
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I was advised that back in 2006 a new provision was added to the AGP, that essentially
said, if an existing building in the County did not have a current APF approval, and sat vacant for
more than 12 months, and if a building permit to reconstruct or renovate the building was
needed, then the property would have to go through a new Adequate Public Facilities review for
traffic. To add insult to injury, the existing property would get no credit for the traffic the
building had produced when it was occupied. As explained to me, this was because the
provision added to the AGP said that a building or space which was vacant for more than 12
months was no longer considered "existing." And since my property was no longer considered
to be an "existing building," I lost any credit for the trips the building could have previously
produced.
Of course my response was "that's crazy." How can someone who owns and operates an
existing building in the County be subject to a rule that potentially takes away the right to put a
new occupant in the building and thus dramatically devalues the property? What would lenders
do if they were advised that retail and office buildings in the County that were vacant for over a
year could essentially lose the right to re-occupy the building until they go through and pass a
new Adequate Public Facilities review -- a review that could result in large new payments for
LATR and PAMR.
The story has a somewhat happy ending because the Chinese restaurant had not been
vacant for over a year. Therefore, we were able to at least get credit for the traffic that the
building would have generated as a Chinese restaurant. I'll save for another day the long, sad
tale of the many, many months
it
still took just to get through the review process, and the
exactions of thousands of dollars that were imposed because it was determined that the bank
would produce a net of 33 more trips in the afternoon rush hour than the Chinese restaurant
(though fewer in the morning rush hour). At that point, I was just happy that we were eligible,
had received the credits, and could thereby reconstruct and occupy the site at all.
Ever since this experience I have said the same thing -- something has to be done about
this. Montgomery County cannot operate in this manner and hope to continue to attract
businesses. Hopefully, the time has now come for something to be done. This Council must
pass Expedited Bill No. 38-10 and eliminate this provision. Let existing buildings be freely
reoccupied. What a concept for competitiveness!
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MONTGOMERY COUNTY PLANNING BOARD
THE MARYLAND-NATIONAL CAPITAL PARK AND PLANNING COMMISSION
OFFICE OF mE
CHAIRMAN
July 8, 2010
The Honorable Nancy Floreen
President
Montgomery County Council
100 Maryland A venue, 6
th
floor
Rockville, Maryland 20850
RE: Montgomery County Expedited Bill 38-10: Buildings, Adequate Public
Facilities-Defmition
Dear Ms. Floreen:
The Planning Board, at its regularly scheduled meeting on July I, 2010, reviewed and
unanimously approved staff recommendations to support the intent of Expedited Bil138-10
pertaining to the definition of "Existing Buildings" in Section 8-30 of the County Code, with
the following modifications:
1. The 12-month vacancy period in the current law should be extended to 60 months,
based on the preliminary plan APF validity period, in order to be exempt from the
APF test upon reuse of the building.
2. The bill should clarify the definition of occupancy as it relates to an increase in vehicle
trips or students. The increase of 5 trips or students should be measured against the
approved use on the site, not against the existing trip or student generation (which is
zero for a vacant building).
The Board also recommended changing a phrase in the staff modification to clarify that the
APF test is not required for any building that is substantially intact and has not been vacant
for more than 60 months before an application for a building permit is filed. Attachment A
contains the Board's proposed modifications to Expedited Bill 38-10 and Attachment B
contains the staff packet.
8787 Georgia Avenue. Silver Spring, Maryland
20910
Phone:
301.495.4605
Fax:
301.495.1320
www.MCParkandPlanning.org
E-Mail: mcp-chairman@mDcppc.org
@
100% recycled paper
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The Honorable Nancy Floreen
July 8,2010
Page Two
Expedited Bill 38-10 proposes to change the current law requiring that buildings vacant for
more than 12 months pass the APF test prior to the Department of Permitting Services issuing
a new building permit for reconstruction or renovation. The bill would also extend the same
procedure to replacement of an existing building.
The Board concurs that reinvestment in existing buildings is sound public policy that is not
well served by the current definition of a 12-month vacancy period as a time period for
expiration of APF rights. However. the Board believes that there should be a five-year limit
on extension of the vacancy period for owners to re-occupy a vacant building without a new
APF test. The Board found that retaining a reasonable time limit on building vacancy would
act as an incentive for property owners to invest in vacant buildings in a timely manner. The
need to generate revenues such as those from income and sales taxes are justification to place
a time limit on APF rights vested in vacant buildings.
Thank you so much for the opportunity to review and comment on this important legislation.
If
you have any questions, please call me at 301-495-4605, or
Mr.
Shahriar Etemadi at
301-495-2168.
Frant;oise M. Carrier
Chair
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EXPEDITED BILL
No. 38-10
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Sec. 1. Section 8-30 is amended as follows:
8-30.
Purpose; definitions.
*
(b)
*
*
Definitions.
In
this Article, the following words and phrases have the
meanings stated unless the context clearly indicates otherwise.
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(1)
Development
means proposed work to construct, enlarge, or alter
a building for which a building permit is required.
Development
does not include an addition to, or renovation or replacement of,
an existing building if, as measured under guidelines adopted by
the Planning Board for calculating numbers of vehicle trips and
students:
(A)
occupants of the building would generate fewer than 30
total peak hour vehicle trips; or,
if
they would generate
more than 30 trips, the total number of trips would not
increase by more than 5 over the number of trips generated
by the existing building
at
full occupancy; and
(B)
the number of public school students who will live in the
building would not increase by more than 5 over the
number of trips generated by the existing building at full
occupancy.
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10
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15
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*
(3)
*
*
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Existing building
means a building that [was standing and] is
substantially [occupied during the 12 months before] intact and
was substantially occupied for any part of the 60 months before
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I
when]
an application for a building permit for renovation:.
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replacement, or reconstruction is flIed.
@)
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MONTGOMERY COUNTY PLANNING DEPARTMENT
THE MARYLAND-NATIONAL CAPITAL PARK AND PLANNING COMMISSION
MCPB
Item #10
July 1,2010
June 23, 2010
MEMORANDUM
TO:
VIA:
Montgomery County Planning Board
Dan Hardy
Moveffransportation Planning Chief
Shahriar Etemadi (301-495-2168)
Moveffransportation Plannin
Montgomery County Bill No. 38-10, Buildings-Adequate Public Facilities­
Definition
y'ftt
FROM:
SUBJECT:
RECOMMENDATION
We have completed our review of the Proposed Montgomery County Council Bill 38-10 and
recommend that the Planning Board transmit the following comments to Montgomery County
Council:
1.
The 12-month vacancy period in the current law should be extended to 60 months, based
on the preliminary plan APF validity period, in order to be exempt from the APF test
upon reuse of the building.
2. The bill should clarify the definition of occupancy as it relates to an increase in vehicle
trips or students. The increase of 5 trips or students should be measured against the
approved use on the site, not against the existing trip or student generation (which is zero
for a vacant building).
BACKGROUND
Expedited Bill 38-10 called Buildings-Adequate Public Facilities (APF) Definition was
introduced on June 15,2010 proposing to redefine the "existing buildings" in Section 8-30 of
the County Code. The bill proposes to change the current law requiring buildings that are vacant
for more than 12 months pass the APF test prior to the Department of Permitting Services issuing
a new building permit for reconstruction or renovation. The bill would also expand the same
procedure for replacement of an existing building.
8787
Avenue. Silver Spring., Maryland 20<)10 Director's Office:
}O
!.495.4500
Fax:}O
1.49). U I
0
@
www.MontgomeryPlanning.org
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The County Council public hearing was set for June 22, 2010 and a PHED Committee
worksession is scheduled for July 12,2010. Staff briefed the Planning Board on June 17,2010
and with instruction from the Board, we are presenting the staff recommendations for
transmitting comments to the County Council prior to the PHED Committee worksession. The
following sections describes the issues related to proposed change in the law and staff response
to those issues. Attachment A contains the staff's (track change) draft of the proposed Bill edited
to reflect our two recommendations.
The proposed bill and our recommendations apply equally to the generation of vehicle trips and
students. However, the practical application of the law applies far more frequently to vehicle
trips than to students, as multifamily buildings are rarely found vacant in Montgomery County.
Therefore, the discussion below focuses on vehicle trips as the variable of interest.
ISSUES ADDRESSED BY BILL 38-10
The purpose of Bill 38- 10 is to ensure that the vacant buildings are not tested for APF twice,
once at the time of plan review by the Planning Board and once again after applying for a new
building permit for reconstruction or renovation after the building has been vacant more than 12
months. Attachment B contains the introduction package for the County Council proposed Bill
38-10 .
. The current law defines"
Existing building
means a building that was standing and substantially
occupied during the 12 months before an application for a building pennit for renovation or
reconstruction is filed." Currently if a building permit application is filed for a renovation,
replacement, or reconstruction of a building that was standing but vacant for more than 12
months, it must pass a new APF test prior to obtaining a new building permit. This could amount
to a building being "double-billed" for APF impact. This law has been applied to individual pad
sites within shopping centers and other large retail complex establishments. When this law
applies, there is no credit given for the amount of traffic being generated from the previous use
of the building.
It
is practically treated as a new application for APF test and if passed, the
building permit will be granted.
The main issue with the current law is that when a building becomes vacant especially in this
economic downturn, it may be difficult for the owner to find a new tenant, renovate the building
to suite the new tenant and re-occupy the building within 12 months. According to the current
law, the new use is subject to APF test even if it was tested several years ago during the plan
review process and met all the applicable APF conditions for approval. With the new APF rules
owners have an extra APF cost to re-occupy the building if they must improve intersections,
provide non-auto facilities, or make other payments as part ofLATR or PAMR mitigation
requirements.
The purpose of Bill 38-10 is to relieve the owners from being responsible for APF at building
permit if their buildings become vacant. Relieving the owner from the potential cost of
improvements for LATR and PAMR reduces the cost of re-occupying vacant buildings.
Proponents of the bill find it good public policy to encourage reinvestment in existing building
stock. Additional detail is provided in Attachment B, which includes
Mr.
William Kominers'
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letter dated March 4, 2010 to Councilwoman Nancy Floreen requesting the change in law.
STAFF'S RESPONSE
Staff concurs that reinvestment in existing buildings is sound public policy that is not well served
by the current definition of a 12-month vacancy period as a time period for expiration of APF
rights. Staff has listed below the reasoning for the definition of the "existing building" with a 12
months limit on vacancy and other intend of the current law.
A practical characteristic of the current 12-month limit for exemption of the APF test for new
use of a vacant building is that it is consistent with the period during which a traffic count is
considered va1id. The existing transportation condition in which all future traffic impact is based
on must have no more than a 12 months old traffic counts in order to evaluate a newly proposed
development. Therefore, the law reflects the effect of newly generated trips from reuse of a
vacant building and its associated impact on the areas transportation system.
In essence, the current law considers a vacant building to have the same lack of vested APF
rights as a building that was torn down decades ago.
If
those trips are not on the ground to be
counted, the current law presumes any prior APF rights to have been forfeited at the will of the
owner.
If an APF test is required to evaluate the expansion of a vacant building, the trips that would be
generated by the vacant space must be assumed in the traffic study to gauge system perfonnance
under total future traffic conditions. Currently, for a building recently vacated at the time traffic
counts were perfonned, these hypothetical trips are considered to be site-generated trips and are·
the responsibility of the applicant. This is because Section 8-30
(b) (1)
considers anincrease in
trips compared to the number of trips currently generated by the site; the law generally written to
cover expansions of occupied, rather than vacant, buildings.
Staff concurs with the bill proponents that the trips generated by recently vacated space should
be considered "background" traffic as opposed to site generated traffic (as the applicant is only
responsible for the impacts of the site generated traffic). Therefore, Section 8-30 (b)
(1)
should
be revised to clarify that the increase is measured against the fully occupied, rather than vacant,
building.
Staff finds, however, that the concept of a vacancy time limit should be extended, rather than
abandoned. We recommend that the limit should be 60 months; enough time for the owners to
find a suitabJe tenant. Just as a 12-month APF expiration period may deter reinvestment due to
costs, the lack of any APF expiration may deter reinvestment due to intertia. A longer APF
period may incentivize the owner to find a new use before the APF validity of 60 months is
expired. The 60 months is consistent with the validity period of a newly approved preliminary
plan. In this case, we arc treating the vacant building like any other approved plan.
3