AGENDA ITEMS 10-11
November 23, 2010
Worksession
Councilmembers should save this packet for use on November 30 if needed.
MEMORANDUM
TO:
FROM:
County Council
t'Michael Faden, Senior Legislative Attorney
Glenn Orlin, Deputy Council Staff Director
Marlene Michaelson, Senior Legislative Analyst
Worksession: Bill 50-10, Special Taxing District- White Flint Creation
Resolution to approve White Flint Development Tax District
transportation infrastructure improvements
SUBJECT:
The Planning, Housing, and Economic Development (PHED) and Management and Fiscal Policy (MFP)
Committees met on October 28 and November 16 to discuss the financing plan to implement the
recommendations of the White Flint Sector Plan (Bill
50-10
and the associated infrastructure list/tax
policy resolution). The Council earlier held a hearing on both items on October 26. The joint
Committees recommended enacting the Bill and approving the resolution with the amendments
discussed in this memorandum. Their recommendations are summarized below and are provided in
more detail on the following pages.
The only amendments needed to Bill
50-10
are those noted in this memo. Executive staff is revising the
accompanying resolution, which will include a number of amendments. Council staff did not receive a
revised draft before this packet went to print. We will circulate an addendum when we receive it.
Council action on both items is scheduled for November 30.
Summary of Committee Recommendations
Support the Special Taxing District as the appropriate new financing vehicle for White Flint.
Approve a policy to cap the District
tax
rate, but do not set a cap in legislation.
Create a Capital Improvement Program (CIP) amendment to allow all critical projects needed
in the short term to proceed.
Use forward funding by the County, to be repaid by the District, to address short-term
revenue shortages for critical projects.
Retain the transportation impact tax in the White Flint area, but set the rate at zero pending
further information regarding potential lost impact
tax
revenue.
Revise the infrastructure bucket lists to refine cost estimates, shift or eliminate certain
projects, and better reflect master plan staging recommendations.
 PDF to HTML - Convert PDF files to HTML files
Background
Executive package:
On October 5, the Council President introduced, on behalf of the County
Executive, a package of legislation and appropriations to finance the infrastructure necessary for the
development authorized in the adopted White Flint Sector Plan. This White Flint infrastructure
financing program consists of:
Bill 50-10, Special Taxing District White Flint Creation (see ©8-17);
a Capital Improvements Program amendment and appropriation request (see Item 12 on this
Agenda); and
a resolution accompanying Bill 50-10 (see © 18-19) to approve a list of transportation
infrastructure improvements to be funded by a White Flint Special Taxing District. This
resolution also would articulate non-binding County goals regarding the tax rates to be
applied in the District.
Bill 50-10 would establish a White Flint Special Taxing District. The Bill would also authorize the levy
of an additional ad valorem property tax to fund transportation infrastructure improvements that are
specified in an implementing resolution and authorize the issuance of a certain type of bond to finance
those transportation infrastructure improvements. Council Staff added more general language to the
Bill's long title (purpose clause) to give the Council added leeway to restructure the financing
mechanism or otherwise amend the Bill as it sees necessary. The Executive's detailed memo on ©1-7
explains the background of and reasons for the proposals in this Bill and the related resolution and
appropriation request.
On November 16, the Executive transmitted a revised proposal. The key changes in this new proposal
are as follows:
Transportation Impact Taxes will not be collected in White Flint.
The County will forward fund the design and construction of 3 specific projects and up to
$15 million in unspecified Stage 1 and Stage 2 projects. In paying the County back for the 3
specific projects, the District will not pay any interest, but payback of the $15 million would
carry interest.
The Executive will put certain projects in his recommended amendments to the Capital
Improvements Program.
Two projects will be funded by the County instead of the District (the second entrance to
Metro and the Nebel Street bike lane).
The County Executive will request that the Maryland Department of Transportation (MDOT)
designate the White Flint Sector Plan Area as a Transit Oriented Development (TOD).
Overall, the Executive's revised proposal significantly increases costs to the County because the County
will absorb the cost of two additional projects and cover the interest costs for repayment of the cash
advance. The revised proposal will also reduce revenues from the transportation impact tax. The
Executive estimated the cost of the two projects to now be paid for by the County at $44.2 million and
the interest cost to be absorbed by the County at $8.25 million (assuming $30 million in costs, 5%
interest and repayment in 10 years).
1
He did not estimate the lost revenue from transportation impact
taxes.
No repayment period was specified in the Executive proposal, and a longer repayment period would mean greater interest
costs.
1
2
 PDF to HTML - Convert PDF files to HTML files
State legislation:
Bill
50-10
is based on recent state law amendments
(2010
Maryland Laws, Chapter
617, reprinted on
©20-24).
County bond counsel had questioned whether added state authority was
needed to assure that the County can use special obligation bonds, which don't count against County
debt capacity, to pay debt service other than in a development District created under County Code
Chapter 14. This new state law answers that question, at least with respect to transportation facilities. It
also exempts any tax used to fund a Special Taxing District created to pay for certain transportation
improvements from the County Charter's limit on property tax revenue.
Major Policy Issues
Overview
The challenge: balancing the risks
Broadly defined, the challenge facing the County in
adopting a White Flint financing plan is how to balance the costs and risks among the various
stakeholders: County government and its taxpayers; property owners in the White Flint area, including
those who expect to redevelop their property and those who may not do so; and residents of the area.
The costs and risks that will need to be balanced are:
the
overall share of costs
assumed by each "bucket";
the extent of
cost overruns
in each bucket;
the
projected funding gap
in the Special Taxing District "bucket" between the estimates of
infrastructure costs and property tax add-on revenues; and
the risk that one or more taxes will not produce the
expected level of revenues.
Property owners have asked for certainty, but providing complete certainty to any one group of
stakeholders means an increased risk for another group. For example, guaranteeing certainty regarding
the cost of infrastructure to District participants means the cost of any overruns would be borne by
County taxpayers. Guaranteeing County resources for White Flint means they may not be available to
meet needs elsewhere in the County. Staff believes that the Council has created greater certainty for
property owners in White Flint than in any other area of the County:
The Commercial-Residential (CR) zone provides property owners with greater certainty
regarding the cost of the requirements to obtain full density than any other high density mixed-
use zone (and provides them with a choice of how to obtain that density).
There is no public facilities test that a proposed development must pass. Properties are exempt
from local area transportation review (LATR) and policy area mobility review (P AMR).
Property owners no longer face risks associated with whether and how they will meet facilities
tests, the unknown cost of needed transportation improvements, and the time delay associated
with reviews and approvals.
The payments to the Special Taxing District will be spread over time, increasing as the value of
the property increases, as compared to unknown costs for infrastructure that must be paid upfront
before the redeveloped property generates greater revenues.
Development has inherent uncertainties, many of which are not within the County's control (the market
and the unpredictability of when demand or supply for a certain type of development will change).
Council Staff believes it is appropriate for the County to provide greater certainty to ensure the success
of White Flint, but the County should not be expected to provide complete certainty or absorb all the
risks for the total build out of all infrastructure.
3
 PDF to HTML - Convert PDF files to HTML files
The increased net County revenue attributable to White Flint is one of many reasons why the Council
supported a new higher density, mixed-use vision for White Flint, but increased revenues should not be
the sole (or even primary) basis for making policy decisions. For example, if the Council needed to
choose between building a critical public facility that would produce no new revenue (e.g., rebuilding a
school or police station destroyed by fire) or a road that would allow new development that would
generate net positive revenues, it may decide to build the public facility and defer funding the road.
The major policy issues discussed by the Committees include the following:
1) Should the primary financing mechanism to fund the selected infrastructure items be a
property tax-based Special Taxing District?
Committees' Recommendation: create the Special Taxing District.
The Executive proposed in Bill 50-10 to create a Special Taxing District, as authorized in the 2010 state
law amendments on ©20-24, to be the primary financing vehicle for those infrastructure items listed in
the District "bucket". The District would impose a supplementary property tax, proposed to be an
additional l 0% above the otherwise applicable property tax on each taxable property in the District. The
District boundaries (see ©12, lines 81-94) were drawn to cover the White Flint Sector Plan area but
exclude existing single-family houses and residential condominium buildings in the Plan area.
This property tax supplement is the Executive's preferred funding tool. Under the state enabling law, all
this revenue is excluded from the County's Charter property tax limit.
2
This supplement has the benefits
of being easy to apply (simply add the supplementary rate to the applicable property tax on each
property located in the District), predictable, and bondable (this tax yield can be relied on to pay off
County-issued bonds). Its yield will grow as property tax assessments rise as the District redevelops.
However, its flexibility is limited by the state Constitution's "uniformity" rule for property taxes; that is,
each property must be taxed according to its current assessed value, not (for example) its current use,
potential value, zoning category, or any other measure of current or future development.
Most of the funds to be raised from this District will be needed before the yield ramps up; i.e., the
infrastructure to be paid for should be put in place before the developments that create higher tax
assessments are built.
Since the initial District tax rate
will
not legally be set until May 2011 (to
take effect July 1, 2011), the Council
will
have time to analyze more detailed financial projections
before setting that rate.
However, it will be useful to have some idea of the relative orders of
magnitude of each "bucket" when the Council makes the basic policy decisions on which financing
mechanisms the County will use (at least initially).
Some persons who testified before the Council argued that the Special District Tax was created to take
the place of the transportation impact tax. As indicated in the Executive memorandum on ©3, the
Special District Tax is meant to provide funding for infrastructure that would otherwise be built by the
private sector (e.g., infrastructure required for LATR). The District approach offers numerous benefits
to developers, including lower interest rates, financing linked to the value of the property, and the
2
See Maryland Code, Article 24, §9-1302(b), shown on ©22. Because Council Staff believes that the Special Taxing District
proposed in Bill 50-10 would not meet the requirements for a "development district" under state law or County Code Chapter
14,
it
is not already exempt from the property tax limit in Charter §305.
4
 PDF to HTML - Convert PDF files to HTML files
opportunity to have property owners in White Flint who are not redeveloping but will benefit from
redevelopment subsidize costs that might otherwise have to be paid solely by those redeveloping.
2) Should the rate of the supplementary property tax in the Special Taxing District be capped?
Committees' Recommendation: Agree with the Executive and Council Staff to set a goal for the
maximum tax rate in the resolution, rather than a binding limit in the law, to ensure that the
district has the flexibility to address revenue shortfalls or cost overruns. Each revenue source
should be responsible for paying for any cost overruns on its assigned projects.
The White Flint Partnership in its testimony, and other speakers at the hearing, proposed that the law
should require the maximum rate of the supplementary property tax in the White Flint Special Taxing
District to be set in the implementation resolution, preferably at 10%, the rate proposed by the County
Executive. While doing so would enhance the certainty sought by developers in this area (at least with
respect to the add-on property tax), it would have the possibly unintended consequence of shifting the
burden of any cost overrun on any infrastructure item in the District "bucket" to someone else, most
likely County taxpayers. Some speakers at the hearing asserted that 10% is the maximum contribution
that would not jeopardize the viability of redevelopment projects, but no data has been provided to
support this conclusion, and
it
is possible that a larger tax would be more than offset by the increase in
value resulting from the change in zoning created by the Sector Plan.
3
A Planning staff memorandum on ©25-29 provides a rough analysis of the cost of the District compared
to likely costs that would otherwise be assumed by developers.
The Planning staff found that the
District costs were comparable to the estimated per square foot mitigation costs that would
otherwise be paid.
Assuming that all LATR costs would be creditable toward impact tax payments, the
cost per square foot of the District (approximately $7) is comparable to the cost per square foot of traffic
mitigation measures for which property owners would otherwise be responsible (approximately $6.5).
(If
not all LATR costs are creditable, the mitigation costs would likely be higher than the District costs.)
The mitigation costs would have to be paid upfront, but District costs would be spread over time. The
cost per square foot does not reflect the added value to property owners of comprehensive and
coordinated construction of needed infrastructure, compared to the piecemeal approach of having
multiple property owners build necessary infrastructure. The Planning staff analysis also shows that
property owners who redevelop are subsidized by those who do not redevelop, with an approximate
reduction in District costs of $5 per square foot.
One principle that Council Staff recommends should be assumed in setting policy, and which we believe
all parties share, is that
each "bucket" should be prepared to cover its own cost overruns.
That is,
if
the cost of any infrastructure item in that "bucket" turns out to materially exceed the current estimate,
the funders of that "bucket" should continue to bear the cost of that item, rather than shifting the excess
cost to another "bucket" or set of stakeholders.
The infrastructure list/tax policy resolution submitted by the Executive (see ©18-19) would set as "the
County's goal...that the White Flint Special Taxing District special tax rate must not exceed 10% of the
total tax rate for the District, except that the rate must
be
sufficient to pay debt service on any bonds that
are already outstanding". A practical result of applying the assumption in the preceding paragraph is
3
Planning staff note that one property increased in value from $2 million in 2007 to over $15 million after the Sector Plan
rezoning (see ©29).
5
 PDF to HTML - Convert PDF files to HTML files
that
this goal would not become a binding restriction on the tax rate
the Council will set each year for
the Special Taxing District. This goal has been referred to as a "policy cap", as distinct from the firm
legislative cap" that the Partnership and others proposed.
The resolution submitted by the Executive reflects this principle.
It
goes on to say:
If
the revenues from the special
tax
at the level in the preceding paragraph are not sufficient
... the County Executive, before recommending any increase to the tax rate above the ( 10%)
level ... , must consider alternative approaches, including the timing and scope of each
infrastructure item and the structure of the financing plan to pay for it, and alternative
revenue sources.
In other words, before raising the Special Taxing District rate above 10%, the Executive must consider
certain alternatives (as he no doubt would in most circumstances), but he is not prohibited from raising
the rate as ultimately needed to cover the District "bucket's" costs. A firm legislative cap could impact
the bond rating and lead to a higher interest rate. The Committees agree that the Council should adopt
this "policy cap" but not a firm "legislative cap" on the Special Taxing District tax rate.
3) Is it necessary to identify the specific source of funds for any gap between the total cost of all
infrastructure needed for complete build-out of master planned development allocated
to
the
Special Taxing District and funds that can be raised by the District?
Committees' Recommendation: The Executive's revised proposal for White Flint sufficiently
addresses any long term gap in funding for the District.
The Council received testimony suggesting that it must identify the specific funding that would be used
to close the potential gap between the revenue likely to be raised by the Special Taxing District
(assumed at $150 million) and the total cost of infrastructure assigned to the District ($218 million based
on the Council Staff cost estimate on ©32). The Committees believed that the Executive's revised
proposal sufficiently addresses District gaps and, therefore, it was unnecessary to address the question
raised by Council Staff.
While Council Staff did not object to most of the Executive's revised proposal (except his
recommendation to set impact taxes at zero and not charge interest for forward funding), Staff disagreed
for several reasons that it is necessary to identify funding for the district gap. First, estimates of the
revenue to be generated by the Special Taxing District and the cost of infrastructure are both likely to
change. The revenue will depend on the timing of development, the value of the properties once
improved, and the discount rate.
(If
the value of property increases faster and at a greater rate than
assumed or the discount rate is less than the 6% assumed, revenues could be significantly higher; the
reverse events would lead to the opposite outcome.) Cost estimates for the infrastructure projects are of
limited value until the preliminary planning and engineering has been completed.
In short, it is
impossible to project the magnitude of any gap with any degree of confidence now.
Second, infrastructure needs in a planning area almost always change over the course of build-out,
particularly because not all property owners build out at their full zoning capacity and County policy or
practice regarding specific facilities changes.
It
is
very typical to not build all infrastructure
recommended in a master plan.
Moreover, the master plan will most likely be revised long before full
build-out occurs.
6
 PDF to HTML - Convert PDF files to HTML files
Since no other master plan in the County identified how the needed infrastructure will be funded, every
master plan has a "gap". In most planning areas, the gap is the equivalent of the total cost of needed
infrastructure. The question for the Council to consider is whether it needs to identify at this time how
to fund all of the proposed infrastructure in White Flint while not having even begun to address this
question for every other planning area.
Rather than attempt to define or fund a long-term gap now,
Council Staff recommended, and the Committees agreed, that the Council instead commit to
funding all immediate needs, identifying viable strategies for longer-term needs, and refining those
longer-term strategies as development progresses.
While Council Staff does not believe it is necessary now to determine how the full build-out of White
Flint will be funded (particularly since much of the infrastructure is not likely to be needed for many
years), it is critical for the Council to determine the immediate funding needed to allow Stage 1
development to proceed without delay. A similar assessment should be undertaken before each stage
proceeds,
with a Council commitment to identify all funding necessary to allow development to
proceed.
The Council Staff recommended changes to the bucket lists indicate that Stafe 1 infrastructure
costs can be easily covered by the Special District with no need for additional funding.
Council Staff recommended that the Council undertake an amendment to the Capital Improvements
Program (CIP) to fund all Stage 1 trigger infrastructure projects that are the responsibility of the County
or the District and ensure that there will be no delays for projects ready to proceed. This is consistent
with the revised proposal submitted by the County Executive.
4) What other revenue-raising or cost-shifting options are worth further consideration to address
longer term funding needs?
Committees' Recommendation: The Committees support the Executive's proposal to shift two
infrastructure items from District funding to County funding and to use County forward funding
(to be repaid by the District) to address gaps in funding.
Potential options to close potential funding gaps include the following:
a higher Special Taxing District tax rate, so that the District can fund more items assigned to it;
the County forward-funding some infrastructure items, with the District repaying the County
when its tax base is adequate;
shifting some infrastructure items from the District to the County "bucket" i.e., adding to the
costs paid by all County taxpayers; or
a "complementary source of financing", which could include tax increment financing (TIF)
which diverts District property taxes from the General Fund, or another tax entirely (e.g.,
transportation impact tax, parking excise) paid from the District or certain elements of the
District.
Some of these options would effectively keep the costs where the Executive originally assigned them ---
i.e., White Flint property owners continue to pay for the items in their "bucket". Others shift costs or
risks, directly or indirectly, to others, mainly County taxpayers. The Executive recommended shifting
4
Assuming revenues that
will
be generated over the life of the bonds, not during the build-out of Stage 1.
7
 PDF to HTML - Convert PDF files to HTML files
two projects from the District bucket to the County bucket and forward funding to address other gaps in
funding.
Projects to be moved from District Funding to County Funding
The Executive recommended that the County take responsibility for two projects that he originally listed
as District responsibilities. These projects are:
Pro.iect
Estimated Cost
Second Metro entrance
$35,000,000
Nebel Street Bike Lane
I
$9,200,000
I
I
i
Given questions about the scope, timing, and need for these projects,
the Committees supported
removing them from the District.
Like every other capital project recommended in a master plan, the
capital budget process is the appropriate place to debate the specific merits of each project; that is not
likely to occur in the near term. As Council Staff suggested earlier in this memo, it is neither necessary
nor advisable to determine how to fund all infrastructure identified in a master plan so far in advance of
full build out of master planned zoning capacity.
Advancing Funding
As an additional means of addressing any gap, both Council Staff and the Executive recommended that
the Council agree to
fonvard fund
infrastructure that will not be covered by the District special tax,
with the costs of those improvements
to be repaid by the District at a later time.
Forward funding
using traditional County financing vehicles such as general obligation bonds will be less expensive than,
for example, tax increment financing. Forward funding may require collecting the special district tax for
a longer time or increasing its rate. While Council Staff estimated that the revenue generated by the
Special Taxing District should be more than enough to cover the debt service on the $39 million in
infrastructure needed in Stage 1, the White Flint Partnership projected that the revenues may not be
consistently high enough in the District's first years to cover debt service
every year
on bonds for
critical projects needed in the short term.
The Committees supported the concept of advance funding with the following conditions:
County advance funding should only be used to the extent necessary to cover the gap between
debt service on critical projects and projected revenue from the Special Taxing District. The
need for this will depend on the estimated cost of the projects, the pace of development (and the
rate at which assessed values in the District grow), and the timing of the design and construction
of new infrastructure. At this point, the Council need only approve the concept of advance
funding and make sure that Bill 50-10 allows it on the terms needed to protect the County's
interest (e.g., including ensuring that any advance payment will be repaid by the District).
Council signoff on details about specific infrastructure items will occur when the Council
approves an amendment to the Capital Improvements Program (CIP).
The Executive's intent is to structure the advance funding so as to not compete with other
County projects that receive general obligation bonds. This requires the firm commitment that
the funding will be repaid by the District in a timely manner. The details of how this will be
done are not yet clear, and the Council should request further information on this before final
approval of a CIP project.
8
 PDF to HTML - Convert PDF files to HTML files
There will need to be a finite time for the repayment period, and the Executive's package does
not include any information on this (other than an assumed 10-year payback in the estimate of
interest costs). Repayment of advanced funds is likely to lengthen the life of the District, but the
period of repayment and life of the District should not be unlimited or indefinite.
The Council will need to consider outstanding bonds/funds for forward funding before making a
determination to fund additional new infrastructure. This consideration should be part of the
review of any CIP project.
To implement these conditions, Bill 50-10 should be amended by inserting on ©13, after line 131:
ill
;Before the County loans or advances aJ:lY funds to the District that the District is
re~
to repay to the County, the Council must adopt a financing plan in a resolution uncier this
Section. or as part o( an . . approved Capital Improvements Program resolution.Jhat
specifies:
ill
~
transportation infrastructure improvement for which funds would be
advanced;
the amount of funds advanced which the District must repay;
ill
the amount of interest. if any. the District must repay;
ill
the time period during which the districtmust repay the amount due;
ill
:th.e__ruunber and timing of installment payments. if any: and
(GJ
any other principal term of repayment.
Any financjng plan adopted lJ.Uder this subsection is binding on the. District and the
Cgunty. except as later modified in a Council resolution.
Interest on Forward Funding
Committees' Recommendation: Exempt the district from repaying interest for the first 10 years
of repayment of forward funding on the 3 specific projects designated by the Executive, but
charge interest after 10 years. This will provide an incentive to minimize the repayment period.
Charge interest on the $15 million that may be spent on yet unspecified projects.
Councilmember
Floreen would not charge the District any interest on forward funding of the 3 designated projects.
The Executive's revised proposal exempts the District from paying interest on forward funding for the
specified 3 projects, while requiring that interest be repaid on the $15 million to be advanced for
unspecified projects. Council Staff remains unclear why the Executive believes it is necessary to
exclude interest charges and to treat the three specific projects different from the $15 million that may
be spent on yet unspecified projects. The Executive's proposal does not specify a term of repayment,
and with no interest charged District property owners will have the incentive to lobby for a longer
repayment period. The Committees accepted an alternative to provide an incentive to minimize the
period of repayment (and thereby the cost to County taxpayers of absorbing the interest cost) by not
charging the District interest only for the first 10 years of the repayment period.
Tax Increment Financing
Committees' Recommendation: Do not use tax increment financing in the White Flint area.
Some developers suggested that tax increment financing (TIF) be used to fund the difference between
the costs in the District bucket and the revenue raised by the Special Taxing District. A TIF diverts
revenues otherwise available for the general fund for capital improvements in a specific area.
It
does not
9
 PDF to HTML - Convert PDF files to HTML files
create additional revenues, but does ensure that some portion of revenues associated with increased
property values will be used for the infrastructure needs in a specific area.
Council and Executive Staff did not support the use of a TIF for several reasons summarized below.
TIF s divert revenue that would be otherwise available to the entire County for the operating or
capital budget and instead limit its use to capital projects only in White Flint. This shifts the
responsibility for some portion of District funding from the District to the County taxpayer.
TIFs limit the Council's flexibility to shift resources when necessary (e.g., if development stalls
in White Flint, delaying the need for infrastructure at the same time that there is a critical need
elsewhere in the County) and can have a negative impact on areas outside the TIF District.
5
TIF revenue is unreliable, since it is based on the rate of growth in property values, which is not
certain. TIFs are usually backed up by another funding source.
The designation of an area for TIF financing usually requires a finding that development would
not take place "but for" the creation of the TIF. TIFs are more commonly used in blighted areas
where there appears to be no alternatives. Given the alternatives available in White Flint, Staff
does not believe that White Flint passes the "but for" test.
TIFs are more expensive than other financing mechanisms available to the County.
5) Should LCOR's North Bethesda Center development be part of the special taxing district?
If
so, should its development approval be revised?
The North Bethesda Center development by LCOR Inc. was zoned under the TSM zone before the
White Flint Sector Plan was revised, and was approved by the Planning Board under the then-County
Growth Policy's Alternative Review Procedure (ARP) for Metro Station Policy Areas. Under the ARP,
LCOR must pay the transportation impact tax at 150% of the normal Metro Station Policy Area rates
(75% of the rates that apply in the rest of the County outside the MSPA's), must not claim any
applicable impact tax credit, and must meet significantly higher trip mitigation goals. Under Bill 50-10,
this property would be in the proposed White Flint Special Taxing District. LCOR argues, with some
justification, that it should not be required to pay both the transportation impact tax (at either its
enhanced level or the normal rates) and the District supplementary property tax. In addition to the
development already approved under the previous zone, LCOR in the future may further develop some
of the parcels on this property under the CR zone. As far as Council staff knows, no other property in
the proposed special taxing district faces similar issues.
In return for participating in the District, LCOR asked that the District absorb the cost of two
infrastructure items they would otherwise fund (Market Street east of Route 355 and the 3-lane bridge
over the White Flint Metro Station) and relief from impact tax payments, similar to the Executive's
recommendation for other District properties. LCOR estimates the total cost of the two projects at $12.5
million and the total cost of its impact tax payments at $8. 7 million (not including $2.66 million paid for
the NRVC building now under construction). In materials provided to Council staff on ©42-45, LCOR
estimates its District special property tax payments at $21 million over 20 years, $39 million over 30
years, and $63 million over 40years.
5
A 2006 study by the Lincoln Institute of Land Policy (one of the top research organizations on land use and taxations
issues) found that "the non-TIF areas of municipalities that use TIF grow no more rapidly, and perhaps more slowly, than
similar municipalities that do not use TIF'' and "evidence shows that commercial TIF districts reduce commercial property
value groMh in the non-TIF part of the same municipality".
10
 PDF to HTML - Convert PDF files to HTML files
In evaluating whether and how to achieve greater equity for LCOR, the Council should consider two
issues:
1) How do LCOR's costs and benefits of participation in the District compare to the costs it already
committed to for mitigation and impact taxes? Should the value of its contribution remain
relatively comparable to what it already committed to, or does any factor justify an increased
contribution? Since LCOR already has all necessary land use approvals, it is unclear how it will
directly benefit from participating in the District.
2) Should the County treat LCOR similar to other District property owners, with a goal of a similar
financial burden? The Executive recommended that the County subsidize development for other
White Flint properties owners by absorbing certain costs they otherwise would pay (impact taxes
and interest). Is it equitable for the County to subsidize some White Flint property owners, while
requiring others to bear a higher financial burden, creating a potential market disadvantage?
Council Staff is waiting for specific financial data from LCOR, which we expect to discuss with
Executive staff, and hope to have a more specific recommendation at the Council session on Tuesday.
6) Should transportation impact taxes be collected in the White Flint Special Taxing District?
How much revenue would be lost if they are not collected?
Committees' Recommendation: The Committees recommended the Executive's revised proposal
to set the transportation impact tax rates in White Flint at zero, but Councilmembers Knapp and
Eirich were not prepared to make a final decision until receiving an estimate of the potential lost
impact tax revenue.
Revising the impact tax districts and rates will require introduction and enactment
of another Bill; doing so is beyond the scope of Bill 5 0-10.
Transportation impact taxes have been levied on new development in White Flint since 2001. The rates
differ by size and land use category, roughly in proportion to the relative amount of traffic generated.
By policy, the rates in Metro Station Policy Areas (including White Flint) are set half as high as they are
levied elsewhere. Affordable housing units do not pay the tax.
The purpose of transportation impact taxes (like school impact taxes, which were first levied in 2004) is
for the development to provide its fair share of the cost of new infrastructure that adds capacity. When
the Council last revised the
tax
rates in 2007, it set them so that development would pay for roughly
90% of the cost of added transportation capacity which is needed to serve development generally. With
few exceptions, there is no geographic nexus between the location of the development that pays the tax
and where the proceeds are used. The same is true for the school impact tax, but it has no geographic
exceptions.
The Executive's original memo (see ©2, 6) noted that he expected to propose another Bill for Council
consideration that would maintain the transportation impact tax in the White Flint area at 50% of the
County-wide rate, but require the proceeds to
be
used only to benefit the White Flint area and allow
taxpayers to pay the tax due over 10 years, instead of before the building permit is issued, as is now
required.
6
His revised proposal would set the transportation impact tax rates at zero in White Flint.
6
All parties acknowledge that the school impact tax would continue to apply to residential developments in White Flint.
11
 PDF to HTML - Convert PDF files to HTML files
Many who testified at the hearing urged the Council not to "add" the impact tax on top of a Special
District Tax. (This is, of course, incorrect: what they meant is that the existing transportation impact tax
should be eliminated.) One reason the Executive originally proposed to retain the impact tax is because
it would generate more revenue to pay for projects in the County "bucket". In the past decade, impact
taxes contributed about $17 .6 million to the cost of Montrose Parkway West; in the next six years, the
Council has programmed about $21.2 million of impact tax revenue for
Montrose Parkway East,
Chapman Avenue Extended,
and
Nebel Street Extended,
all of which serve White Flint.
It
is clear that
White Flint has received impact tax revenues, with more spent on improvements there than has
been generated by development there.
The other main reason to retain the impact tax is that it provides more equity between developers
and non-developers in White Flint.
Consider two White Flint office buildings with the same size and
same locational advantage (e.g., distance to the Metro Station), but one was built in the last few years
and the other has yet to be built. Under the Executive's original scenario, the latter will pay the impact
tax, just as the former did. But both will also have to pay virtually the same Special District Tax since
their assessed values will be almost identical, even though the first building does not need the
infrastructure the Special District Tax would fund. The owner of the first building would have a valid
complaint, but the Executive's response is that it will also benefit from the new infrastructure because
the type of denser development planned will likely raise the value of existing property. But if the new
development does not pay the impact tax, the existing building owner is put at a further competitive
disadvantage.
Several property owners who testified argued that the combination of the Special Taxing District and
impact taxes would create too great a financial burden on property owners and would deter
development. Council Staff has not seen any data from property owners to provide evidence of this
assertion, and notes that some projects have already been approved in White Flint with traffic mitigation
and impact tax costs that appear to be comparable to those projected for the District.
Planning staff prepared a rough analysis of the cost of the District (see ©25-29). Their preliminary
conclusion is that the cost of the Special District Tax and impact taxes combined would be within the
range of costs of other mixed-use developments in the County, even before considering the offsetting
impact of impact tax credits.
As the Executive noted, many projects will receive significant
credits
that will reduce or eliminate their
impact taxes. Although District payments would not be creditable, several projects in the Developer
"bucket" would be creditable against impact tax. For example, the $33.9 million project 41 and the $9.5
million project 36 (if it remains a public street, and perhaps even as a private street with the Sector
Plan's conditions) are on White Flint Mall's property and presumably would be built by the developer;
Council Staff thinks both would be impact tax-creditable. Therefore, if the impact tax in this District
were retained, it would be reduced by a $43.4 million credit. For Federal Realty, projects 43 and 53
would be creditable, reducing its impact tax payment by $25.5 million. So not only is there a disparate
effect between developers and non-developers, there is also a disparate effect among developers. If,
as
the Executive argues, the credits will reduce the impact taxes to an insignificant amount, there is
no reason to set them at zero in White Flint.
If
they will generate a measurable amount of income,
the Council must consider how it will replace that income to fund infrastructure needs in and
around White Flint.
Councilmembers Knapp and Eirich believe it is important for the Council to understand the magnitude
of the lost revenue before changing the tax rate.
Council and Planning staffs estimate the lost impact
12
 PDF to HTML - Convert PDF files to HTML files
tax revenue at about $40 million.
After the Committee worksession, Planning staff, working with
Council and Executive staff, estimated the impact tax revenue that the district would produce after
applicable credits are deducted. Planning staff concluded that in the District,
about $67 million in
transportation impact taxes would be due.
Although the district would contain about
$121
million in
impact tax creditable projects (as defined by Council staff with general concurrence from Executive
staff), however, based on the location of the creditable projects, only
about $27 million in developers
costs would be creditable against impact taxes, so about $40 million of impact tax revenue would
still be realized from the District.
This result flows from the fact that the
$121
million in creditable projects are all concentrated in
6
"blocks" of the Sector Plan area, for which the development would generate
$44
million in impact tax
revenue. For these 6 blocks, $16 million in impact taxes would be retained after all credit. For the
remaining
14
blocks, no creditable projects exist and
$24
million in impact taxes could be collected.
In concurring with this methodology, Finance Department staff explained that: "you have to tie the
specific impact taxes for private development to those infrastructure projects that are creditable, and you
have done that with this analysis. In other words, it really doesn't matter how much impact tax credits
total, it matters how much in impact tax credits Developer A will get for building infrastructure, relative
to the amount of impact taxes Developer A will get billed for his development".
In deciding whether developers in the White Flint area would be overtaxed, as some claim, if they
remain subject to transportation impact taxes, the Council should not forget that under the Sector Plan
and its implementing Subdivision Staging Policy
7
amendments, once the Council adopts a White Flint
Sector financing mechanism, the normal policy and local area transportation requirements (P AMR and
LATR) do not apply.
Relieving developers of those requirements will, of course, reduce their
development costs, often by large amounts, and perhaps more important, reduce the time needed
to bring projects to full development.
Absent more concrete information to show that the combination of the two taxes would have a
detrimental impact on development, Council Staff believes the impact tax should continue to be applied
in White Flint.
If
the Council later finds that the combined costs of both taxes are negatively impacting
development, it will be far easier to reduce or eliminate the impact tax.
If
the Council eliminates the tax
and later determines it does not have sufficient County resources to fund necessary infrastructure, it may
be too late to recover lost revenue.
As a way of softening the blow, the Executive originally recommended allowing developers to stretch
out the impact tax payment over 10 years, with a small adjustment for the time value of money and a
lien placed on the property.
Council Staff would go as far as scheduling the payment over 20 years,
with the same type of adjustment.
If
the Council believes that some relief from the transportation impact tax is warranted, Staff
recommends reducing the rate rather than eliminating all impact tax payments.
If
the Council agrees
with the Executive that impact tax payments in White Flint should be eliminated, we concur with the
recommendation to set a $0 impact tax rate in the White Flint District (as the Council did several years
ago for bioscience developments), rather than permanently repeal the County's authority to collect the
impact tax
in
this area. This approach would preserve the Council's flexibility to meet changing needs.
7
Formerly County Growth Policy.
13
 PDF to HTML - Convert PDF files to HTML files
A side issue recently arose as to whether a developer could claim a credit against its transportation
impact tax for the amount of supplementary property
tax
paid to the district on the ground that payment
of this property tax is "contributing to an improvement" as that phrase is used in the impact tax credits
law. In Council Staffs view, that would never be the case, but to avoid any possible interpretation of
this kind,
Council staff recommends
a technical amendment to Bill 55-10 to clarify that the property
tax paid to the district cannot result in an impact tax credit
7) Are all infrastructure items properly allocated to the correct bucket and correct stage of
development?
Committees' Recommendation: concur with the Council Staff recommended changes to the
bucket lists and Council and Planning Board staff interpretations of conflicting staging provisions
in the White Flint Sector Plan.
The most recent list of proposed infrastructure items in the White Flint Sector Plan area, to be funded,
respectively, by the White Flint Special Taxing District, the County itself, and the developers as
necessary to move their projects forward, as proposed by the County Executive and modified by Council
Staff, are shown on ©32-34. These lists are commonly called the White Flint "buckets". The numbers
in these tables are highly preliminary cost estimates and cannot be relied on for anything more than
order-of-magnitude projections. These tables do not include the changes proposed by the Executive in
his most recent submission.
Council Staff reviewed the three "buckets" of projects proposed by the Executive and recommend
revising them as shown on ©32-34. Many changes are minor and technical, such as more accurately
describing the names and scope of projects, and some are formatting, such as assuring that the aggregate
costs of the three stages equals the total cost. In summary, the Council Staff revisions do not
significantly change the allocation of costs among the County, the District, and developers (44.5%
County, 29.8% developer and 25.8% District), but significantly increase the County contribution and
decrease the District contribution
for Stage
1.
At this point, all the cost estimates are extremely soft;
because these projects have not been designed, the real costs-in constant dollars--could be as much as
50% higher. All costs displayed in the bucket lists are in 2010 dollars.
The substantive revisions made to the bucket lists are:
District Bucket:
Add $10,000,000 to the right-of-way cost for Project
7. This is the estimated cost of acquiring
land and a building from the VOB parcel to build Executive Boulevard Extended between East
Jefferson Street Extended and Marinelli Road. The road cannot be built without this acquisition.
Shift 80% of the costs of the western and eastern workaround projects from Stage 1 to
Stage
2;
the
20%
retained in Stage 1 would be for design and permitting costs.
This
recommendation stems from a discrepancy in the Sector Plan approval resolution. On page 23 of
that resolution, under Phase 1: "Work around road projects west of Rockville Pike, including the
streets for the civic core, should be contracted for construction during Phase 1 and completed
before commencement of Phase 2." This language is inconsistent with the bullets underneath
("contract for construction") and the bullets in Phase 2 ("complete ... "). Council Staff believes
what makes the most sense is what is contained in the bullets: that the workaround is under
contract before Phase 2 commences, and that it be completed during Phase 2.
If
it is contracted
14
 PDF to HTML - Convert PDF files to HTML files
before Phase 2 starts, that means the project will be under construction at the same time the
Planning Board could approve preliminary plans in Phase 2. Construction for the western
workaround would take no more than 2-3 years (since rights-of-way would already have to be
clear before a construction contract is granted), which is probably the minimum amount of time
for a Phase 2 development to proceed from preliminary plan approval to construction and
occupancy. In other words, Phase 2 development would not be realized until the western
workaround is completed.
These revisions bring the total cost of the District Bucket to about $218 million.
County Bucket:
Delete the $130,500,000 associated with the bus depot (Project 24).
A new upcounty depot is
programmed and will provide capacity for expanding bus service throughout the County.
It
is
not solely or mainly needed to serve White Flint.
Show an estimate of $90,000,000 for the CLATR intersections outside the Sector Plan area
(Project
28).
As soft as the estimates in these lists are, this is by far the softest. This estimate is
the midpoint of costs that could range from as low as $45 million to as high as $135 million.
The $45 million low estimate is based on three assumptions: an average cost/intersection
improvement of $20 million (the lower end of the BRAC intersection average); 3 intersections to
be improved (the bare minimum noted by Planning staff); and 75% of the need for the
improvements associated with White Flint (rather than the need generated by other neighboring
developments, such as at Rock Spring Park).
The $135 million high estimate is based on: an average cost/intersection improvement of $25
million (the higher end of the BRAC intersection average); 6 intersections to be improved; and
90% of the need for the improvements associated with White Flint.
Lacking better information, we assumed that the $90 million will be split evenly between Stages
2 and 3.
Delete the
$2,031,348
land cost associated with the County portion of the streetscaping
project on Nicholson Lane (Project 30).
The land along County agency property should be
assumed as having no cost.
Increase the estimate for the elementary school to
$25
million.
The Executive's $20 million
estimate was based on modernizing and reopening the Rocking Horse Center as an elementary
school. The Sector Plan calls for a new school south of the current White Flint Mall. The
$25 million does not include the cost of land, so it assumes the land would be dedicated.
If
the
land must be purchased, the cost would be higher, of course.
These revisions reduce the County Bucket from about $414 million to about $3 76 million.
15
 PDF to HTML - Convert PDF files to HTML files
Developer Bucket:
Delete all the right-of-way costs (about $145 million) from the total.
These are assumed to be
dedications that will not require acquisition. They will not affect the build-ability or profitability
of the developments.
Delete the $5.9 million construction cost for Project 46.
Project 46 would be done as part of
Project 13 in the District Bucket.
These revisions reduce the Developer bucket from about $403 million to about $252 million.
With these revisions, the District Bucket proportion of White Flint's infrastructure cost would be 25.8%,
while the County/State Bucket proportion would be 44.5% and the Developer Bucket share would be
29.8%. However, a change in one assumption would change these ratios. The Executive assumed that
some development on Rockville Pike will proceed earlier than when the District can fund the Rockville
Pike improvement; his assumption is that 25% of the improvement's cost will be covered by exactions.
While this is certainly a guesstimate, we have no rationale to assume a different share.
If,
however,
assuming that development proceeds even faster (or the District slower), then perhaps 50% of the cost
might be funded through exactions, which would shift about $20 million from the District Bucket to the
Developer Bucket.
In
Stage 1, there would be a much lighter contribution from both the District and Development Buckets.
The District Budget projects require about $39 million of funding in Stage 1, about 16.7% of the Stage 1
total (compared to 25.8% across the entire buildout). Such a reduced funding requirement, plus the fact
that most of the costs are for design (which are much more reliable than construction costs) strongly
suggests that there will be no funding gap in Stage 1. The Developer projects require about $52 million
in Stage 1, about 21.9% of the total (compared to 29.8% across the entire buildout).
On the other hand, the County/State Bucket funding needs are much more frontloaded: County/State
Bucket projects require about $145 million in Stage 1, about 61.5% of the Stage 1 total (compared to
44.5% across the entire buildout). Therefore, the need for significant resources will have to come in the
form of general obligation bonds, impact taxes, and other such sources.
As noted earlier, the Committees concurred with the Executive's recommendation to have the County
take responsibility for two projects that he originally listed as District responsibilities. This is not yet
reflected in the bucket lists on ©32-34.
8) Should the White Flint area be designated a Transit Oriented Development (TOD) area?
Committees' Recommendation: Support the designation of White Flint as a Transit Oriented
Development, recognizing that this does not mean that all projects in White Flint will be a top
priority for the Council at any given time (e.g., the second Metro Station should not take
precedence over other previously designated priority projects).
The purpose of a Transit Oriented Development (TOD) designation is to signal to the State where to
concentrate its efforts to promote development. White Flint certainly merits TOD status, and this should
be so noted in the next joint Council/Executive State transportation priority letter, which will be sent
early in 2011. However, the letter should also clearly state that granting White Flint TOD status does
16
 PDF to HTML - Convert PDF files to HTML files
not mean that White Flint projects should supersede any others in the priority letter. The current letter
includes a backlog of unfunded projects - each with its own merits and constituency totaling more
than $5 billion.
Speaking directly to the point: granting TOD status, without the caveat in the preceding paragraph,
might imply a high priority to the planned second (northern) entrance to the White Flint Metro Station.
But this entrance, which the Executive recommended removing from the District bucket, should be a
very low priority. Virtually all of the White Flint Sector Plan area is within a half-mile of the current
entrance, so the area is already transit serviceable without it. The benefit of a new northern entrance is
very localized and would only serve a few properties.
9) Should existing apartment building be drawn out of the White Flint special taxing district?
No Committee recommendation.
As proposed in Bill 50-10, the White Flint special taxing district was drawn to exclude 6 existing
condominium buildings, on the theory that those residents did not ask or expect to pay an additional tax
and did not receive any zoning benefit from the revised sector plan. Residents and owners of the 4
apartment buildings in the proposed District (see map, ©39, and Planning staff data, ©40) questioned
whether they should be included in the district, as Bill 50-10 would do. According to Planning staff, the
3030 attached dwelling units (including 2 new developments, North Bethesda Market and Wentworth
House) in White Flint include about 1368 (or 45%) rental units.
Rental data supplied by Planning staff (see ©40) and LCOR for its Wentworth House building (see ©41,
43) show that monthly rents in this area range from roughly $1300 to $2500 in the existing buildings,
with rents in the new North Bethesda Market across from White Flint Mall somewhat higher. LCOR
estimated that the added district property tax would result in a $25/month increase in Wentworth House
tenants' rents. (About 15% of the units are MPDU's; their rents are controlled and should not be
affected by the tax.)
The Council has at least 3 options with respect to these 4 apartment buildings:
1) Keep them in the special taxing district.
2) Remove them permanently from the district.
3) Put them in the district on a delayed basis. Revise the district boundary now, effective in, say, 5
years, to allow a transition for current renters and maintain the buildings' short-term
competitiveness with other nearby buildings.
Council staff recommendation: Keep these units in the district. The estimated rent increases are not
excessive or unbearable in a competitive rental environment.
If
some transition period is desired, 5
years would be sufficient.
10) should Bill 50-10 be converted to a generic law, with the White Flint special taxing district
created in the implementing resolution?
The Council staff memo for the November 9 joint MPF/PHED worksession on White Flint financing,
reprinted for the November 16 worksession, included this sentence under the heading Reserved issues:
17
 PDF to HTML - Convert PDF files to HTML files
We also expect to discuss whether Bill 50-10 should be converted to a general enabling law to authorize
this type of Special Taxing District, with each specific District to be created by Council resolution, with
the implementation resolution proposed by the Executive being converted to create the District as well
as list the infrastructure items the District will fund.
Because of lack of time (2 full worksessions merged into one), Council staff did not bring this issue up
at the November 16 worksession. Nonetheless, we would be remiss if we did not take this opportunity
to save time and trouble later by converting this Bill now. The advantages of doing so include not
having to readopt identical or similar language if another special taxing district is needed.
It
was
relatively easy to convert the introduced district-specific bill into a general enabling law with only a few
amendments; those are shown in the draft on ©46-56 with double brackets and double underlines. The
Bill title and hearing notice were set up to give the Council this option.
Council staff recommendation:
convert this bill to an enabling law, and create the White Flint special
taxing district in the accompanying resolution.
This packet contains
Circle
Memo from County Executive
1
Bill 50-10
8
Infrastructure list/tax policy resolution
18
New state Special Taxing District enabling law (2010 SB 828)
20
Planning Staff Analysis of Fiscal Impact
25
30
County Special Taxing District
tax
rates
Map of White Flint special taxing district
31
Revised Infrastructure Lists
District "bucket"
32
County/State "bucket"
33
Developer "bucket"
34
Executive's revised proposal
35
Map of multi-unit buildings in White Flint area
39
40
Rental data
LCOR rental data
41
42
LCOR cost data
Bill 50-10 redraft as authorizing law
46
F:\LAW\BILLS\1050 White Flint- Creation\COUNCIL 11-23-10 Ver 2.Doc
18
 PDF to HTML - Convert PDF files to HTML files
OFFICE OF THE COUNTY EXECUTIVE
Isiah Leggett
ROCKVU.LE, MARYLAND 20850
County Executive
MEMORANDUM
September 27, 2010
TO:
FROM:
SUBJECT:
Nancy Floreen, President, County Council
Isiah
Leggett,
County fuecutiv.__p
~
White Flint Development Tax District:
Legislation; Legislative Report Form; Fiscal Impact Analysis
Amendment ($9.835
M)
to the FYl 1-16 Capital Improvements Program and
Special Appropriation #4-El l-CMCG-3 to the FYl l Capital Budget
Montgomery County Government
Department of Transportation
White Flint District West: Transportation (No. 501116), $385,000
I am pleased to transmit for introduction a package oflegislative items necessary
for the County to commence implementation of the transformational White Flint Sector Plan.
This sector plan, a model for smart growth, will be a platform for exciting new redevelopments
that will make the White Flint area more pedestrian and bicycle friendly as well as inviting for
residents and businesses.
Enclosed for introduction is legislation creating the new White Flint Development
Tax District which will implement the financing vehicle envisioned by the recently adopted
White Flint Sector Plan.
If
implemented this district will help fund some of the extensive public
infrastructure called for in the Sector Plan. A resolution accompanies the draft legislation. The
resolution identifies the specific list of transportation infrastructure to be funded by the White
Flint Development Tax District and includes a district funding and rate setting policy statement.
With the legislation and the resolution, I am transmitting an amendment to the
FYl 1-16 Capital Improvements Program and a supplemental appropriation in the amount of
$385,000 to the FY 11 Capital Budget for the new White Flint District West: Transportation
project (No. 501116) to enable design to begin on infrastructure to be paid for from White Flint
Development Tax District funds. This work is critically important to refine the assumptions
relative to the district for roadway improvements in the first stage of the recently approved White
Flint Sector Plan. This project is needed to accelerate the preliminary engineering for one new,
one relocated and three existing roads, and one new bikeway, so that more accurate designs and
cost estimates can be established. Funds to pay for analysis and studies necessary to implement
 PDF to HTML - Convert PDF files to HTML files
Nancy Floreen, Council President
September 27, 2010
Page2
the district are also included. The recommended amendment is consistent with the criteria for
amending the CIP in that this project supports significant economic development initiatives,
which in
tum
will strengthen the long term fiscal capacity of the County government. The new
growth planned for the White Flint area in accordance with the recently approved Sector Plan
will revitalize the region and strengthen the County as a whole. These road and bikeway
improvements will greatly aid and expedite the planned development for the area.
Other specific Capital Improvements Projects for development district
infrastructure will be transmitted with the FY12 amendments in
January.
To address
transportation impact taxes in White Flint, I intend to send a second bill to the Council that will
modify the transportation impact tax as it relates to the White Flint Sector Plan Area. The
modifications that I will be recommending are to retain the 50 percent metro station policy area
rate that applies throughout the district, but require that the tax be applied only for infrastructure
within or related to the development within the White Flint Sector Plan. This would include
intersections identified through the comprehensive local area transportation review that require
improvement due to development within the district. I believe that the opportunity to pay this
tax
over time rather than as a lump sum payment up front should be available provided that
property owners who are benefitting provide a :first lien to the County.
The packet that is transmitted with this memorandum reflects many months of
meeting with stakeholders
and
interested parties. Executive staff
has
held a series of meetings
with developer and resident stakeholders, along with Planning Board and County Council staff,
to develop the list of improvements that will be funded by the special district tax and the key
elements of the district enabling legislation. While the attached draft legislation does not
necessarily reflect a consensus of the stakeholders, it does reflect significant input from
all
of the
interests represented.
To assist the Council in its deliberations and to facilitate the public discussion
regarding this package, I am providing the Council with some of the key considerations that went
into the funding plan that is reflected in the attached package.
The Special Tax District
One of the underpinnings of the White Flint Sector Plan is that there be a new funding
mechanism to pay for some of the significant transportation infrastructure that is called for in the
plan, including the creation ofwoikarounds, street grids, streetscaping and bike lanes. With the
limitations of Charter Section 305, it is important that the new
tax
be structured so that it does
not use up fiscal capacity within that limitation and thus preclude the availability of these funds
for other important projects in the County.
The development tax. district is simple, straightforward and can be easily implemented
- all important considerations for the timely realization of the redevelopment of White Flint.
The development tax district also pro\rides for certainty of revenues and spreads the burden
equally over the entire plan area except for existing residential which is to be outside of the
 PDF to HTML - Convert PDF files to HTML files
Nancy Floreen, Council President
September 27, 2010
· Page3
district. The legislation, which is to be adopted under recently enacted Senate Bill 828, gives
bond counsel, and the bond market greater certainty in the County's authority to implement the
district and impose an ad valorem tax on all properties except for existing developed residential.
In
addition, under this special authority, the bonds can be issued as special obligation bonds, the
debt service of which will not compete for capacity with other County debt. The development
district tax is intended to be implemented in time for the FY12 tax bill.
The development district tax provides substantial benefits to property owners within
the plan area while protecting the County taxpayer from the greater fiscal burden. The County
has historically required that development pay for itself. With development density doubling
throughout the sector plan area, the special tax district provides a means of assessing properties
to ensure the government's lower rate of financing for infrastructure that would historically have
been required of developers to meet transportation capacity requirements. The County's
financing rates are less than rates that the private sector could obtain.
In
addition to the near
doubling of development density, the
quid pro quo
for this additional tax is that properties that
are being redeveloped will not be required to
go
through the transportation capacity reviews that
are generally required to satisfy adequate public facilities review. With the steady flow of tax
revenues, there is better certainty that the district roads will be built rather than relying on
piecemeal development to drive the delivery of needed improvements and capacity. This
certainty benefits the property owners as well as the residents and businesses of Montgomery
County who must navigate the area Another benefit of the special district tax is that it is simply
fairer. The entire sector plan area picks
up
the expenses rather than those that are first-in with a
development application being charged disproportionately.
Other tax mechanisms were considered but all in all, for the certainty, reliability, ease
of implementation and fairness, the special tax district
is
the better way to go for the White Flint
Sector Plan area. Some of the other revenue raising mechanisms that were evaluated but rejected
in favor of the recommended funding plan included:
Tax Increment Financing (I'IF).
Tiris was an approach that had been initially
suggested by some
in
the development community and was discussed by Planning Board staff
Tiris mechanism has been rejected for a number of reasons.
As
a funding source it has issues of
reliability, constraints on fiscal management and equity concerns. Tax increment financing
pledges increases in tax revenues to pay for infrastructure. As evidenced by recent history, the
development cycle and reliability of projections can be difficult to predict and sometimes wrong.
TIFs are dependent upon development moving forward on a predictable schedule.
If
redevelopment does not occur, the remainder of the County- and in this case the general fund-
would have to pick up the fiscal obligations of the debt. Tiris particular funding approach is
more typically used in blighted areas and
is
better suited to large tracts ofland that will be
redeveloped rather than piecemeal property ownerships reflected in the White Flint Sector Plan
area. The lack of assurance of a critical mass of redevelopment occurring is challenging for the
issuance of debt, particularly in the context of the sector plan where improvements and capacity
are critical to the implementation and staging of the plan.
 PDF to HTML - Convert PDF files to HTML files
Nancy Floreen, Council President
September 27, 2010
Page4
It
is also worth pointing out that a TIF would use tax revenues that are subject to
Charter Section 305 limits and would therefore force the funding for these roads to compete with
schools, libraries, fire stations, community centers, etc. throughout the County. A TIF also raises
fundamental equity issues. Developers would be paying increased taxes based on increases in
assessments if they redevelop. They would not be paying for infrastructure as has been
historically and is currently required throughout the County. Tiris would be a departure from the
general and longstanding policy that development must pay for itself. While the rest of the
county would bear the overall total expenses from redevelopment and the risk of carrying up to
the full load of that funding if development did not take place as represented, there would be
little risk to the development community and their revenues would be pledged to bettering White
Flint only, rather than other areas of the County. Further, the County would lose significant
flexibility as it manages through difficult fiscal years. Pledging revenues right off the top, while
retaining the burden of providing the infrastructure is ill-advised, particularly given recent
experiences with our economy.
Some within the development community have proposed
both
a TIF and a special tax
district with the special tax district being a back up only if the taxable base for the TIF fails to
increase as projected when the debt is issued. For a number of reasons, such an approach is
unworkable and impractical and will create financial uncertainty. hnplicit in the suggestion is
the fact that the TIF is in itself risky. The district tax would by necessity have to be higher up
front because it would be bailing out a failed TIF pursuant to which debt had already been
incurred. Tiris would be a significant hardship for the residents and businesses that moved to
White Flint under the expectation of a TIF only and then find themselves facing a district tax that
would need to be set high enough to bail out the failed TIF. The simplicity of the straight
development district tax that I am recommending is a far better approach as it can be set at the
outset before new development proceeds in White Flint and revenues can begin to be generated
before any debt is issued. It provides greater stability and certainty to the County taxpayer, the
residents and property owners.
Special Assessments:
This was rejected because under current law it is based upon
front footage and would be an extremely inequitable way of funding the needed infrastructure.
Chapter 14 Development District:
Tiris form of district funding is more cumbersome
and requires multiple council actions.
It
inherently has points following creation where
controversy can arise and create uncertainty.
It
is dependent upon the votes of participants and
by design would capture less than the entire district, reducing the equity of the district and
increasing the likelihood of the rate increasing to ensure the revenues to be generated.
In
sum, it
would be more difficult to put in place, and is better suited to large tracts ofland that will be
redeveloped rather than piecemeal property ownerships reflected in the White Flint Sector Plan
area.
It
will also be sigillficantly more time consuming to implement, calling into question
timelines that are assumed or necessary to begin implementation of the White Flint Sector Plan.
History calls into question whether the district would ever be realized.
 PDF to HTML - Convert PDF files to HTML files
Nancy Floreen, Council President
September 27, 2010
Page5
Excise Tax:
Excise taxes were also evaluated. It was concluded that an excise tax
would be more difficult to implement as the targeted stakeholders may have concerns about
fairness of taxation and the bond markets would need to understand the nuances of a newly
developed excise tax. Additionally, the taxing of an activity that would occur in other locations
within the County could generate interest and concerns on the part of similar enterprises. The
County's recent experience with a proposed tax on surface parking lots illustrates the concern.
Issues Discussed
Seven primary areas of concerns were raised by the stakeholders in worksessions:
1)
the tax is to be spent only in the White Flint Sector Plan area;
2)
the tax is to be for a defined list
of infrastructure;
3)
the period of time during which the tax is to be collected is to be finite;
4)
the tax should not exceed
10
percent of the current rate; 5) existing residential should not be
charged;
6)
the tax should replace transportation impact taxes; and
7)
if the tax is insufficient to
fund all of the infrastructure in the list during any stage of the plan, the County should commit to
funding the difference.
I am not recommending everything that was raised by all of the stakeholders; I am
however recommending much of what was raised. I very much appreciate the commitment,
level of effort,
and
forthright and informed discussions and support provided by developers,
residents,
and
staffs of the Planning Board, the Council and the Executive Branch throughout the
stakeholder worksessions over the spring and summer. These efforts have resulted in
a
funding
plan that can be readily implemented and have helped to focus the issues that will likely be
raised for discussion at the County Council.
The bill that I am sending to you requires that the tax be spent only in the White Flint
Sector Plan
and
only for the list of infrastructure in the accompanying resolution.
It
is also for a
finite period of time and will expire when sufficient revenues have been raised to pay for all of
the infrastructure items on the list. The boundaries of the district have been set to exclude
existing residential properties. I am not recommending a cap on the tax rate in the bill, but I
have recommended a stated policy
in
the resolution that the tax rate should not exceed
10
percent
of the total tax rate not including the development tax. The reason I have not included a cap in
the legislation is that I am concerned that doing so will result in a less favorable rating on any
bonds that are issued, which in turn would result in a higher interest rate on the bonds. This
would make the infrastructure more expensive to the tax payers. I believe that concerns over the
level of the tax rate can be addressed through the implementation process and adherence to a 10
percent policy goal.
The two areas I am not prepared to recommend at this time are that the transportation
impact tax not apply and that the County commit to fund any gap ifthe district revenues are not
adequate to cover the projected costs for the development tax district infrastructure. The cost
projections that are identified for the district infrastructure are estimates. The County's estimates
and the White Flint Partnership's (a group of White Flint developers) are fairly consistent,
and
both include many assumptions which if not borne out will result in changes to the projected
 PDF to HTML - Convert PDF files to HTML files
Nancy Floreen, Council President
September 27, 2010
Page6
costs for the infrastructure. One key area where this can occur is in the area of the costs of right-
of-way for the many roads provided for in the plan. These roads carve through properties and
the White Flint Sector Plan is predicated on an optimistic assumption that the grid of roads as
they cut through properties will result in new blocks of properties that can serve as the basis for
exchanges of lands.
It
is also assumed that there will be extensive dedications of rights-of-way for these
roads.
If
these assumptions are wrong, the risk of potential gaps in cost versus revenue
generation will be greatly increase and the County could be at risk for a substantial sum of
money. Likewise, these assumptions reflect current construction prices, which may be more
favorable than in a recovered economy. Another area that impacts costs is how the Planning
Board views the state of some of the existing roads.
As
part of the stakeholder worksessions
Planning Board staff, a representative of the White Flint Partnership and representatives from the
Department of Transportation and the Department of General Services walked some of the
existing Sector Plan roads to get a sense of what is needed to complete streetscaping along these
roads for purposes of authorizing moving from one stage of the plan to the next. This
collaborative effort resulted in conclusions that some roads are satisfactorily completed for that
purpose and the costs could therefore be removed from the development tax district.
Significant staff and stakeholder effort was spent developing an understanding of the
above described assumptions and any potential gap between the costs of the infrastructure and
the revenues projected to be generated by the district.
It
has been suggested that the County
commit up front to cover any "gap." Among other problems, this request is for an as yet
undefined amount of money in an as yet undefined
CIP
budget.
I
cannot commit an undisclosed
amount of money for future years, nor can the Council.
I
also believe that it would be
ill
advised
to commit to fund an amount of money that may or may not be needed-particularly given the
many important needs throughout the County that must compete for that same money.
As
for the transportation impact tax,
I
weigh the fact that development density in the
White Flint Sector Plan area was just doubled or nearly doubled for a majority of properties; that
development
is
relieved of the need for transportation capacity review;
and
that the entire
plan
area is a Metro station policy area which translates into an already reduced rate of 50 percent of
the transportation impact
tax
rate. I believe that, at least at this point in time, it would be
imprudent to recommend elimination of the tax. However, I am recommending that those tax
revenues be committed to being spent within the White Flint Sector Plan area or for
improvements needed due to the increased development recently authorized for this area. I
recognize that we are in the throes of - and hopefully emerging from - a significant recession
and that the private :financing reahn will be different - particularly at the outset. Therefore, I do
think
that it makes sense to allow developers the opportunity to pay the
tax
over a period of time
(perhaps 10 years to get to project stabilization)
if
they are able to provide the County with a first
lien to assure the payment of the deferred transportation impact tax.
I recommend that the County Council approve the legislation, resolution and
amendment to the FYl l-16 Capital Improvements Program and special appropriation in the
 PDF to HTML - Convert PDF files to HTML files
Nancy Floreen, Council President
September 27, 2010
Page7
amount of $385,000 and specify the source of funds as Current Revenue General with repayment
in FY12 from White Flint Development District tax funds. These efforts will allow
us
to
implement the White Flint Sector Plan which,
as
I mentioned at the outset, will be
transformational, smart growth of which we can all be extremely proud.
I
appreciate your prompt consideration of these actions.
IL:ad
Attachments: Legislation to create the White Flint Development Tax; Infrastructure and Policy
Resolution; Amendment to the FYl
1-16
Capital Improvements Program and
Special Appropriation
#4-El
1-CMCG-3; Fiscal Impact Analysis
cc:
Jennifer Barrett, Director, Department of Finance
Joe Beach, Director, Department of Management and Budget
Kathleen Boucher, Assistant Chief Administrative Officer
Mike Faden, Senior Legislative Attorney, County Council
Marc Hansen, Acting County Attorney
Ken Hartman, Director, BCC Regional Service Center
Art
Holmes, Director, Department of Transportation
Diane Schwartz Jones, Assistant Chief Administrative Officer
 PDF to HTML - Convert PDF files to HTML files
Bill No.
50-10
Concerning: Special Taxino District -
White Flint - Creation
Draft No. 2
Revised: 10-1-1
O
Introduced:
October 5. 2010
Expires:
April 5, 2012
Enacted: - - - - - - - - -
Executive: - - - - - - - - -
Effective: - - - - - - - - -
Sunset Date: -'-'-No=n=e_ _ _ _ __
Ch. _ _ , Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request of the County Executive
AN ACT
to:
(1)
(2)
(3)
(4)
(5)
establish a White Flint Special Taxing District;
authorize the levy of an
ad valorem
property tax to fund certain
transportation infrastructure improvements;
authorize the issuance of a certain type of bond to finance certain
transportation infrastructure improvements;
generally authorize a White Flint Special Taxing District; and
generally amend or supplement the laws governing the use of
infrastructure financing districts and similar funding mechanisms.
By adding
Montgomery County Code
Chapter 68C, White Flint Special Taxing District
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
*
*
*
Heading or defined term.
Added to existing law by original bill.
Deleted.from 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:
 PDF to HTML - Convert PDF files to HTML files
BILL NO.
50-10
1
Sec 1. Chapter 68C is added as follows:
Chapter 68C. White Flint Special Taxine District.
68C-1.
Definitions.
2
3
4
For purposes of this Chapter, the following terms have the meanings indicated:
Bond
means a special obligation or revenue bond, note or other similar
5
6
7
8
9
instrument issued by the County that will be repaid from revenue
generated by ad valorem taxes levied under this Chapter.
Cost
means the cost of:
ill
the
construction,
reconstruction,
and
renovation
of any
the
10
11
12
13
14
15
16
17
18
19
transportation
infrastructure
improvement,
including
acquisition of any land, structure, real or personal property, right,
right-of-way, franchise, or easement, to provide
infrastructure improvement for the District;
~
transportation
ill
ill
all machinery and equipment needed to expand or enhance
transportation infrastructure improvement for the District;
~
financing charges and debt service related to
f!
transportation
infrastructure improvement for the District, whether the charge or
debt service is incurred before, during, or after construction of the
transportation infrastructure improvement, including the cost of
issuance, redemption premium
20
21
ill
fillY1
and replenishment of
debt service reserve funds for any bond that finances
f!
transportation infrastructure improvement for the District;
22
23
24
ill
reserves for principal and interest, the cost of bond insurance, and
any other
~
of financial guarantee, including any credit or
~
25
liquidity enhancement, related to
improvement for the District;
transportation infrastructure
26
-2-
F:\LA W\BILLS\1050 \\lhite Flint· Creation\1050 Bill 2 Intro.DOC
 PDF to HTML - Convert PDF files to HTML files
BILL No. 50-10
27
28
ill
architectural, engineering, financial, and legal services related to
providing g transportation infrastructure improvement for the
District;
29
30
31
®
any plan, specification, study, survey, or estimate of costs and
revenues related to providing g transportation infrastructure
improvement for the District;
32
33
34
ill
any administrative expense incurred
.hy
the County necessary or
incident to determining whether to finance or implement a
transportation infrastructure improvement for the District; and
35
36
37
.(fil
any other expense incurred
Qy
the County necessary or incident
to building, acquiring, or financing g transportation infrastructure
improvement for the District.
38
39
District
means the White Flint Special Taxing District created under
40
41
42
43
44
45
46
47
Section 68C-2.
Transportation infrastructure improvement
means:
ill
the construction, rehabilitation, or reconstruction of g road, street,
or highway that serves the District, including any:
(A)
right-of-way;
roadway surface;
roadway subgrade or shoulder;
median divider;
drainage facility or structure, including any related
stormwater management facility or structure;
an
.(g
(D)
.{fil
48
49
50
51
52
ru
.(Q)
(H)
roadway cut or fill;
guardrail;
bridge;
highway grade separation structure;
-3-
F:\LA W\BILLS\I 050 White Flint - Creation\! 050 Bill 2 lntro.DOC
53
ill
 PDF to HTML - Convert PDF files to HTML files
BILL No. 50-10
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
68C-2.
ill
.(Kl
tunnel;
overpass, underpass, or interchange;
entrance plaza, approach, or other structure that is an
integral part
of~
street, road, or highway;
aJ.
iliD
bicycle or walking path;
ili}
designated bus lane;
sidewalk or pedestrian plaza;
streetscaping and related infrastructure; including placing
utilities underground; and
(Q)
®
{Q2
other property acquired to construct, operate, or use
£!
road,
street, or highway; and
ill
£!
transit facility that serves the needs of the District, including
any:
.{A}
track;
right-of-way;
bridge;
tunnel;
subway;
rolling stock;
station or terminal;
parking area;
related equipment, fixture, building, structure, or other real
or personal property; and
all
.(Q
(Q}
®
(E)
(G)
(H)
ill
ill
service intended for use in connection with the operation
of~
transit facility, including rail, bus, motor vehicle, or
other mode of transportation.
Creation; Boundaries.
-4-
F:\LA W\BILLS\1050 'vVhite Flint - Creation\! 050 Bill 2 intro.DOC
 PDF to HTML - Convert PDF files to HTML files
BILL
No. 50-10
81
.(fil
The White Flint Special Taxing District is coterminous with the
approved and adopted White Flint Sector Plan area.
82
83
84
.{hl
The following properties, identified
by
street address, are not included
in the District: 11700 Old Georgetown Road, 11701 Old Georgetown
Road, 11750 Old Georgetown Road, 11800 Old Georgetown Road,
11801 Rockville Pike, 5800 Nicholson Lane, 5802 Nicholson Lane,
5809 Nicholson Lane, 5440 Marinelli Road, 5503 Edson Lane, 5505
Edson Lane, 5507 Edson Lane, 5509 Edson Lane, 11201 Woodglen
Drive, 11203 Woodglen Drive, 11205 Woodglen Drive, 11207
Woodglen Drive, 11209 Woodglen Drive, 11200-11219 Edson Park
Place, 11222 Edson Park Place, 11224 Edson Park Place, 11226 Edson
Park Place, 11228 Edson Park Place, 11230 Edson Park Place, 11232
Edson Park Place, 11234 Edson Park Place, 11236 Edson Park Place,
11238 Edson Park Place, and 11240 Edson Park Place.
85
86
87
88
89
90
91
92
93
94
95
68C-3.
.(fil
Levy of Tax; Limits.
96
Each tax year the County Council may
~
against all the assessable
~
97
98
99
100
101
102
103
104
105
106
real and personal property in the District
sum on each $100 of
assessable property that does not exceed an amount sufficient to cover
the costs of transportation infrastructure improvements that have been
identified
in~
Council resolution approved under Section 68C-4.
.{Q)
Under Section 9-1302 of Article 24, Maryland Code, the limit in
Charter Section 305 on levies of ad valorem taxes on real property to
finance County budgets does not
filmly
to revenue from any tax imposed
under this Chapter.
(£}
The tax imposed under this Chapter must be levied and collected as
other County property taxes are levied and collected.
-5-
F:\LAW\BILLS\1050 White Flint-Creation\1050 Bill 2 lntro.DOC
 PDF to HTML - Convert PDF files to HTML files
BILL
No.
50-10
107
108
109
110
@
The tax imposed under this Chapter has the same priority, bears the
same interest and penalties, and in every respect must be treated the
same as other County property taxes.
68C-4.
Transportation Infrastructure Improvement Resolution.
111
112
113
114
(fil
After holding
~
public hearing, the Council may approve
~
resolution
that lists each transportation infrastructure improvement that would be
entirely or partly paid for
.Qy
~tax
imposed under Section 68C-3.
®
.{£)
@
The resolution must indicate the estimated cost, including
~
contingency
amount, for each listed improvement.
The Council may amend the resolution after
holding~
public hearing.
The Council must present the resolution and each amended resolution to
the Executive for approval or disapproval.
If
the Executive disapproves
~
115
116
117
118
119
120
121
122
123
124
resolution within 10 days after
it
is transmitted to the Executive and
the Council readopts the resolution
.Qy
~
vote of§ Councilmembers, or if
the Executive does not act within 10 days after the resolution is
transmitted, the resolution takes effect.
ill
Before the Council holds g public hearing under subsection
(fil
or
(£1
the Executive should transmit to the Council:
125
126
ill
g
list of recommended transportation infrastructure improvements
to be entirely or partly paid for
.Qy
g tax imposed under Section
68C-3;
127
128
ill
ill
the estimated cost, including g contingency amount, for each
listed improvement; and
an estimated tax rate for each tax to be imposed under Section
68C-3.
129
130
131
-6-
F:ILA\V\BlLLS\1050 White Flint-Creation\1050 Bill 2 Intro.DOC
@
 PDF to HTML - Convert PDF files to HTML files
SILL
No.
50-10
132
133
134
135
136
13 7
138
139
68C-5.
(fil
District Fund.
The Director of Finance must
establish~
separate fund for the proceeds
collected from any tax imposed under this Chapter. The proceeds of
any tax imposed under this Chapter must be pledged to and paid into
this fund.
The Director of Finance must use this fund only to
oo
the cost of any
transportation infrastructure improvement related to the District.
(£)
.{hl
If
in any fiscal year
~
balance remains in the fund, the Director of
140
141
142
Finance may use the balance to:
ill
ill
ill
(1)
oo
the cost of any transportation infrastructure improvement for
the District;
create
~
143
144
reserve to
oo
the future costs of any transportation
infrastructure improvement for the District;
145
146
147
148
149
150
oo
bond-related obligations or retire bonds then outstanding; or
oo
into
~
sinking fund required
.Qy
the terms of bonds which
finance the cost of any transportation infrastructure improvement
for the District that may be incurred or accrue
in
later years.
68C-6.
Issuing Bonds.
Before the County issues any bond payable from ad valorem taxes
levied under Section 68C-3, the Council must adopt
!!
resolution
authorizing the issuance of bonds that meets the requirements of this
Section.
w
151
152
153
154
.{hl
Each resolution under this Section must:
155
156
157
ill
ill
describe the
~
of transportation infrastructure improvements
and related costs to be financed; and
specify the maximum principal amount of bonds to be issued.
-7-
F:\LAW\BILLS\1050 White Flint-Creation\1050 Bill 2 Intro.DOC
@
 PDF to HTML - Convert PDF files to HTML files
BILL
No. 50-10
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
.(£)
Each resolution may specify, or authorize the Executive
!2y
executive
order to specify:
ill
ill
the actual principal amount of bonds to be issued;
the actual rate or rates of interest for the bonds;
how and on what terms the bonds must be sold;
how, when, and where principal
Qf',_
and interest on, the bonds
must be paid;
ill
!±}
ill
{fil
when the bonds may be executed, issued, and delivered;
the form and tenor of the bonds, and the denominations in which
the bonds may be issued;
ill
{fil
how any or all of the bonds may be called for redemption before
their stated maturity dates;
the nature and size of any debt service reserve fund;
the pledge of other assets in and revenues from the District to
I2fil:
the principal of and interest on the bonds;
(2)
(lQ}
any bond insurance or any other financial guaranty or credit or
liquidity enhancement of the bonds; and
UD
any other provision consistent with law that is necessary or
desirable
to
finance
any
transportation
infrastructure
improvement that has been identified in
f!
Council resolution
approved under Section 68C-4.
@
ill
The County covenants to
Im
ad valorem taxes against all
assessable real and personal property in the District at
f!
rate and
amount sufficient in each year when any bonds are outstanding
to:
(A)
provide for the payment of the principal
Qf',_
interest on, and
redemption premium if any, on the bonds;
- 8-
F:\LAW\BILLS\1050 White Flint- Creation\1050 Bill 2 Intro.DOC
@
 PDF to HTML - Convert PDF files to HTML files
BILL
No. 50-10
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
®
~
replenish any debt service reserve fund established with
respect to the bonds; and
provide for any other purpose related to the ongomg
expenses of and security for the bonds.
ill
The County further covenants, when any bond is outstanding, to
enforce the collection of all ad valorem taxes under this Chapter
as provided
Qy
applicable law.
.CSU
All proceeds received from any issuance of bonds must be applied
solely towards costs of the transportation infrastructure improvements
listed in the resolution adopted under Section 68C-4, including the cost
of issuing bonds and payment of the principal
Qt
interest on, and
redemption premium if any, on the bonds.
ill
The bonds issued under this Chapter:
ill
are special obligations of the County and do not constitute
~
general obligation debt of the County or
S!
pledge of the County's
full faith and credit or the County's general taxing power;
ill
ill
ii}
may be sold in any manner, either at public or private sale, and on
terms as the Executive approves;
are not subject to Sections 10 and
Code; and
must be treated as securities to the same extent as bonds issued
under Section 9-1301 of Article 24, Maryland Code.
11
of Article
1L.
Maryland
(g)
To the extent provided
Qy
law, the bonds, their transfer, the interest
payable on them, and any income derived from them, including any
profit realized on their sale or exchange, must be exempt at all times
from every kind and nature of taxation
Qy
the State of Maryland and any
county or municipality in Maryland.
-9-
F:ILA \.V\BILLS\1050 White Flint-Creation\1050 Bill 2 Intro.DOC
@
 PDF to HTML - Convert PDF files to HTML files
BILL
No.
50-10
212
213
214
215
.{h)
The bonds must be payable from the fund required under Section 68C-5
and any other asset or revenue of the District pledged toward their
payment. When any bond is outstanding, the monies in the fund are
pledged to
mY
the costs of any transportation infrastructure
improvement funded entirely or partly
.Qy
the proceeds of the bonds,
including the costs of issuing the bonds and payment of the principal .Qb
interest on, and redemption premium if any, on the bonds. In addition
to ad valorem taxes, the bonds may be secured
.Qy
any other asset in or
revenue generated in the District.
216
217
218
219
220
221
222
223
ill
68C-7.
Any ad valorem tax imposed under this Chapter must not be accelerated
because of any bond default.
Expiration of district.
224
225
Any special taxing district created under this Chapter expires
.Qy
operation of
law 30 days after the cost of all transportation infrastructure improvements identified
in
~
226
227
228
Council resolution approved under Section 68C-4, including all outstanding
bonds and cash advances made
.Qy
the County, have been paid.
Approved:
229
Nancy Floreen, President, County Council
230
Date
Approved:
231
Isiah Leggett, County Executive
Date
- 10 -
F:\LA W\BILLS\1050 White Flint- Creation\!050 Bill 2 Intro.DOC
(fj)
 PDF to HTML - Convert PDF files to HTML files
Resolution No. _ _ __
Introduced: October 5, 2010
Adopted: _ _ _ _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the request of the County Executive
SUBJECT:
White Flint Development Tax District Transportation Infrastructure
Improvements
Background
I. County Code Chapter 68C establishes the White Flint Special Taxing District, authorizes the
levy of an ad valorem tax to fund transportation infrastructure improvements in the District,
and authorizes the issuance of bonds to finance the transportation infrastructure
improvements.
2. Chapter 68C-4 requires a resolution that lists each transportation infrastructure improvement
that is to be paid for by the District special tax, and the estimated costs of each improvement,
which must include a contingency amount.
Action
The County Council/or Montgomery County, Maryland approves the following resolution:
I.
The County's goal is that the White Flint Special Taxing District special tax rate must not
exceed l 0% of the total tax rate for the District, except that the rate must be sufficient to
pay debt service on any bonds that are already outstanding.
2.
If
the revenues from the special tax at the level in the preceding paragraph are not sufficient
to afford additional infrastructure improvements as are necessary and ready for
implementation to execute the White Flint Sector Plan, the County Executive, before
recommending any increase to the tax rate above the level in the preceding paragraph, must
consider alternative approaches, including the timing and scope of each infrastructure item
and the structure of the financing plan to pay for it, and alternative revenue sources.
For the tax year that began on July I, 2010, the total base real property tax rate in the White
Flint Special Taxing District is $1.027 per $100 of assessed value.
For the tax year that begins on July 1, 2011, the rate of the White Flint Special Taxing
District special tax is estimated to be $0.103 per $100 of assessed value.
3.
4.
®
 PDF to HTML - Convert PDF files to HTML files
5.
The specific transportation infrastructure improvements that will be financed by the White
Flint Special Taxing District are listed in Exhibit A, along with an estimated cost for each
improvement, including a contingency amount.
This is a correct copy of Council action.
Linda M. Lauer, Clerk of the Council
EXHIBIT A
WHITE FLINT SPECIAL TAXING DISTRICT
DISTRICT-FUNDED IMPROVEMENTS
Improvement
Desc:ri~p--ti_o_n
_ _ _ _ _ _ _ _ _ _ _
E_st_im_a_t_e_d_C_o_st_
Old Georgetown Road (MD 187): Nicholson La./Tilden La. to Executive Blvd.
Old Georgetown Road (MD 187): Hoya St. to Rockville Pike (MD 355)
Hoya Street (formerly Old Old Georgetown Rd.): Executive Blvd. to Montrose
Pkwy.
Rockville Pike (MD 355): Flanders Ave. to Hubbard Drive
Nicholson Lane: Old Georgetown Rd. (MD 187) to CSX tracks
Nebel Street: Nicholson La. To Randolph Rd.
Executive Blvd. Ext.: Marinelli Rd. to Old Georgetown Rd (MD 187)
Second Entrance to Metro
Main St/Market St.: Old Georgetown Rd. (MD 187) to Executive Blvd.
Extended (Bikeway)
Main St/Market St.: Old Georgetown Rd. (MD 187) to Executive Blvd. Ext.
Main St/Market St.: Executive Blvd. to Rockville Pike (MD 355)
Main Street Bridge
Executive Blvd. Ext. (East): Rockville Pike (MD 355) to Nebel St. Ext. (South)
Nebel St. Ext. (South): Nicholson La. to Executive Blvd. Ext. (East)
TOTAL
F:\LA W\BILLS\l 050 White Flint - Creation\White Flint Sector Plan Infrastructure Resolution - 09-27-1 O (2).Doc
$17,774,000
1,789,000
,
,
15 344 000
64,261,000
12,942,000
9,200,000
13,500,000
35,000,000
1, 713,000
4,933,000
4,661,000
2,000,000
16,700,000
8,200,000
208,017,000
2
 PDF to HTML - Convert PDF files to HTML files
Martin O'Malley, Governor
Ch.617
Chapter 617
(Senate Bill 828)
AN ACT concerning
Special Taxing Districts - Transportation Improvements - Exemption from
County Tax Limitations
FOR the purpose of exempting certain taxes imposed only within a special taxing
district for the purpose of financing the cost of transportation improvements
from county tax limitations; authorizing a county to issue, by law, certain bonds
for certain infrastructure improvements: authorizing a county to sell certain
bonds secured by certain revenues; providing that certain bonds may not be
secured by the full faith and credit or taxing authority of a county; providing for
the construction of certain provisions of this Act; defining certain terms; and
generally relating to special taxing districts and county tax limitations.
BY adding to
Article 24 - Political Subdivisions - Miscellaneous Provisions
Section 9-1302 and 9-1303
Annotated Code of Maryland
(2005 Replacement Volume and 2009 Supplement)
SECTION
1.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:
Article 24 - Political Subdivisions - Miscellaneous Provisions
9-1302.
(A)
(1)
IN THIS
MEANINGS INDICATED.
SECTION THE
FOLLOWING WORDS
HAVE
THE
"COST" HAS THE MEANING STATED IN§
8 UH(D)
§
9-1301
OF
TRANSJ?OR/.PJiTIO'P'f 2\RTI€Is:El THIS SUBTITLE.
(2)
"COUNTY TAX LIMITATION" MEANS A PROVISION OF A
COUNTY CHARTER THAT LIMITS:
(I)
MAY IMPOSE; OR
THE MAXIMUM PROPERTY TAX RATE THAT A COUNTY
(3)
 PDF to HTML - Convert PDF files to HTML files
Ch. 617
(II)
REVENUES.
2010 LAWS OF MARYLAND
THE RATE OF GROWI'H OF COUNTY PROPERTY TAX
"HIGHWAY FACILITY" HAS THE MEANING STATED IN §
3-lOl(F) OF THE TRANSPORTATION ARTICLE.
"SPECIAL TAXING DISTRICT" MEANS A DEFINED GEOGRAPHIC
AREA DESIGNATED BY A COUNTY WITHIN WHICH AD VALOREM OR SPECIAL
TAXES ARE IMPOSED FOR THE PURPOSE OF FINANCING THE COST OF
INFRASTRUCTURE IMPROVEMENTS.
"TRANSIT FACILITY'' HAS THE MEANING STATED IN§ 3-lOl(K)
OF THE TRANSPORTATION ARTICLE.
"TRANSPOB'iPl1'iPION
TRANSPORTATION
STATE
IMPROVEMENTS" INCLUDES HIGHWAY FACILITIES, TRANSIT FACILITIES, AND
RELATED INFRASTRUCTURE.
(4)
(5)
(6)
(7)
{fil
"COUNTY TRANSPORTATION IMPROVEMENTS" INCLUDES:
fil
FOR COUNTY ROADS AND HIGHWAYS:
COUNTY RIGHTS-OF-WAY, ROADWAY SURFACES,
ROADWAY SUBGRADES, SHOULDERS, MEDIAN DIVIDERS, DRAINAGE FACILITIES
AND STRUCTURES, RELATED STORMWATER MANAGEMENT FACILITIES AND
STRUCTURES, ROADWAY CUTS, ROADWAY FILLS, GUARDRAILS. BRIDGES,
HIGHWAY GRADE SEPARATION STRUCTURES, TUNNELS, OVERPASSES,
UNDERPASSES, INTERCHANGES, ENTRANCE PLAZAS, APPROACHES, AND OTHER
STRUCTURES FORMING AN INTEGRAL PART OF A STREET, ROAD, OR HIGHWAY,
INCLUDING BICYCLE AND WALKING PATHS, DESIGNATED BUS LANES,
SIDEWALKS,
PEDESTRIAN
PLAZAS,
STREETSCAPING,
AND
RELATED
INFRASTRUCTURE; AND
L.
2.
ANY
OTHER PROPERTY ACQUIRED FOR THE
CONSTRUCTION, OPERATION, OR USE OF THE HIGHWAY; AND
FOR COUNTY TRANSIT FACILITIES, ANY ONE OR MORE
OR COMBINATION OF TRACKS, RIGHTS-OF-WAY, BRIDGES, TUNNELS, SUBWAYS,
ROLLING STOCK, STATIONS, TERMINALS, PORTS, PARKING AREAS, EQUIPMENT,
FIXTURES, BUILDING STRUCTURES, OTHER REAL OR PERSONAL PROPERTY, AND
SERVICES INCIDENTAL TO OR USEFUL OR DESIGNED FOR USE IN CONNECTION
WITH THE RENDERING OF TRANSIT SERVICE BY ANY MEANS, INCLUDING RAIL,
@
 PDF to HTML - Convert PDF files to HTML files
Martin O'Malley, Governor
Ch.617
BUS, MOTOR VEHICLE, OR OTHER MODE OF TRANSPORTATION BUT DOES NOT
INCLUDE ANY RAILROAD FACILITY.
(B)
A
COUNTY TAX LIMITATION
'QQE~
l\TQ'J'
THAT WOULD OTHERWISE
APPLY TO AD VALOREM OR SPECIAL TAXES IMPOSED ONLY WITHIN A SPECIAL
TAXING DISTRICT DOES NOT APPLY FOR THE PURPOSE OF FINANCING THE COST
OF STATE TRANSPORTATION IMPROVEMENTS AND COUNTY TRANSPORTATION
IMPROVEMENTS.
9-1303 .
IN THIS
MEANINGS INDICATED.
.{Af
ill
SECTION THE
FOLLOWING WORDS
HAVE
THE
"BOND" MEANS A SPECIAL OBLIGATION BOND, NOTE, OR
OTHER SIMILAR INSTRUMENT ISSUED BY A COUNTY UNDER THIS SECTION•
"COSTS" MEANS ANY EXPENSE NECESSARY OR INCIDENT TO
ACQUIRING, BUILDING, OR FINANCING ANY TRANSPORTATION IMPROVEMENT
AS MAY BE PROVIDED BY THE LOCAL LAW AUTHORIZED UNDER SUBSECTION (B)
OF THIS SECTION.
"SPECIAL TAX" MEANS AN AD VALO REM OR SPECIAL
TAX, ASSESSMENT, FEE, OR CHARGE IMPOSED BY A COUNTY WITHIN A SPECIAL
TAXING DISTRICT.
"SPECIAL TAX" DOES NOT INCLUDE AN AD VALOREM OR
SPECIAL TAX, ASSESSMENT, FEE, OR CHARGE LEVIED UNDER CHAPTER
20A
OF
THE MONTGOMERY COUNTY CODE •
"SPECIAL TAXING DISTRICT" MEANS A SPECIAL TAXING
DISTRICT,
SPECIAL
ASSESSMENT
DISTRICT,
OR
SIMILAR
DEFINED
GEOGRAPHICAL AREA WITHIN A COUNTY IN WHICH THE COUNTY IS AUTHORIZED
TO IMPOSE A SPECIAL TAX.
"SPECIAL TAXING DISTRICT" DOES NOT INCLUDE A
DEVELOPMENT DISTRICT CREATED UNDER
CHAPTER
20A
OF THE
MONTGOMERY COUNTY CODE.
MEANS A
STATE
"TRANSPORTATION IMPROVEMENT"
TRANSPORTATION
TRANSPORTATION
IMPROVEMENT
OR
A
COUNTY
IMPROVEMENT AS DEFINED IN
§
9-1302
OF THIS SUBTITLE.
fil
.(fil
ill
fil
i!!l
.{fil
fil
i!!l
.{fil
 PDF to HTML - Convert PDF files to HTML files
Ch. 617
.(fil
2010 LAWS OF MARYLAND
IN ADDITION TO OTHER POWERS A COUNTY MAY HAVE, AND
NOTWITHSTANDING THE PROVISIONS OF ANY OTHER PUBLIC LOCAL LAW,
PUBLIC GENERAL LAW, OR THE COUNTY CHARTER OF A COUNTY THAT HAS
ADOPTED HOME RULE POWERS UNDER ARTICLE XI-A OF THE MARYLAND
CONSTITUTION, A COUNTY MAY ENACT A LAW TO PROVIDE FOR THE ISSUANCE
OF BONDS TO FINANCE THE COSTS OF TRANSPORTATION IMPROVEMENTS FOR
WHICH THE PRINCIPAL, INTEREST, AND ANY PREMIUM SHALL BE PAID FROM
AND SECURED BY SPECIAL TAXES COLLECTED BY THE COUNTY IN A SPECIAL
TAXING DISTRICT.
BONDS ISSUED UNDER THIS SECTION ARE SPECIAL
OBLIGATIONS OF THE COUNTY AND DO NOT CONSTITUTE A GENERAL
OBLIGATION DEBT OF THE COUNTY OR A PLEDGE OF THE COUNTY'S FULL FAITH
AND CREDIT OR GENERAL TAXING POWER.
BONDS ISSUED UNDER THIS SECTION MAY BE SOLD IN ANY
MANNER, EITHER AT PUBLIC OR PRIVATE SALE AND ON TERMS AS THE COUNTY
DEEMS BEST•
ill
ill
00
.{fil
BONDS ISSUED UNDER THIS SECTION ARE NOT SUBJECT TO
ARTICLE
31,
§§
10
AND
11
OF THE CODE.
BONDS ISSUED UNDER THIS SECTION, THEIR TRANSFER, THE
INTEREST PAYABLE ON THEM, AND ANY INCOME DERIVED FROM THEM,
INCLUDING ANY PROFIT REALIZED ON THEIR SALE OR EXCHANGE, SHALL BE
EXEMPT AT ALL TIMES FROM EVERY KIND AND NATURE OF TAXATION BY THE
STATE, A COUNTY, OR A MUNICIPAL CORPORATION.
BONDS ISSUED UNDER THIS SECTION SHALL BE TREATED AS
SECURITIES TO THE SAME EXTENT AS BONDS ISSUED UNDER§
9-1301
OF THIS
SUBTITLE.
IN ADDITION TO THE SPECIAL TAXES, BONDS ISSUED UNDER THIS
SECTION MAY BE SECURED BY OTHER REVENUES GENERATED WITHIN THE
SPECIAL TAXING DISTRICT •
THE POWERS GRANTED UNDER THIS SECTION SHALL BE REGARDED
AS SUPPLEMENTAL AND ADDITIONAL TO POWERS CONFERRED BY OTHER LAWS,
AND MAY NOT BE REGARDED AS IN DEROGATION OF ANY POWERS NOW
EXISTING, INCLUDING POWERS TO ISSUE SPECIAL OBLIGATION DEBT UNDER
THIS ARTICLE, ARTICLE 25, ARTICLE 25A, OR ARTICLE 25B OF THE CODE.
@
ill
illl
.{fil
 PDF to HTML - Convert PDF files to HTML files
Martin O'Malley, Governor
Ch. 617
THIS SECTION, BEING NECESSARY FOR THE WELFARE OF THE
STATE AND ITS RESIDENTS, SHALL BE LIBERALLY CONSTRUED TO EFFECT ITS
PURPOSES.
ID
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
October l, 2010.
Approved
by
the Governor,
May
20, 2010.
 PDF to HTML - Convert PDF files to HTML files
To: Marlene Michaelson
From: Jacob Sesker
Re.: White Flint Finance
November 4, 2010
Planning staff prepared the following initial responses to questions raised in the Council's public hearing
held on October
26th.
In order to provide a timely response, staff's used round numbers and several
simplifying assumptions-a reasonable approach given the long term time frame of master plan build
out and the magnitude of unknowns regarding the costs of transportation improvements and the future
of real estate values. Upon request, we would be happy to provide more detailed analysis for discussion
at subsequent work sessions.
1.
Compare (a) district bucket to (b) PAMR, LATR, Transportation Impact Taxes
Planning staff believes that the district concept represents the best approach to achieve the Sector Plan
vision. The "district" concept was intended to replace the PAMR/LATR process. The district concept has
advantages in White Flint because of the magnitude of several of the transportation projects involved,
the value of coordinating and aggregating the transportation improvements into buildable projects, and
the need to provide meaningful increments of capacity in the initial phase of the Sector Plan.
The cost of all projects designated as "district" projects is estimated to be $208 million. To compare the
cost of the district projects with an estimate of the total burden of PAMR, LATR, and transportation
impact taxes requires several assumptions.
The most significant assumption is that LATR costs would all be creditable against either PAMR or
transportation impact taxes. This effectively zeroes out LATR-using this assumption transportation
planners have estimated that the PAMR/LATR mitigation costs would be approximately $118 million
over the life of the Sector Plan (at $11,300 per trip with a 30% mitigation requirement).
A second assumption is that PAMR burdens would not be creditable against impact taxes. This has
generally been the case since PAMR was instituted in 2007; while recent PAMR projects have
significantly contributed to transportation infrastructure, they generally are not projects that add
capacity to major highways or arterial roads. Impact taxes for the three phases of White Flint are
estimated to be roughly $64 million (net of credits for MPDU and offsets for replacement of demolished
space).
When impact taxes are added to the mitigation cost the combined burden would be approximately $182
million. While lower than the district bucket amount, the figure is within the range of both error and
dispute. However, the County would probably use transportation impact tax revenues to fund
transportation projects other than those in the district bucket (e.g. CLATR projects).
 PDF to HTML - Convert PDF files to HTML files
White Flint District Bucket
$208
million
White Flint PAMR/LATR Costs
I
$118
million
I
White Flint PAMR/LATR Plus Impact Taxes
I
$182
million
2. Compare (a) costs of district infrastructure when costs are spread over all new development to
(b) the costs of district infrastructure spread over all improved space (new and existing)
A significant distinction between the district approach and the current PAMR/LATR approach is that the
district approach, as recommended by the Executive, spreads the costs of district projects over all
properties whether or not they redevelop. In contrast, the PAMR/LATR approach places the full burden
of these transportation improvements on new development.
In White Flint, the total cost of district projects divided by the total additional density allowed in the
Sector Plan results in an amount close to $12 per square foot ($208 million divided by 18 million square
feet). Spreading that same cost over all improved space (new, approved, existing) results in a cost of
roughly $7 per square foot ($208 million divided by 30 million square feet). So, for properties that do
not redevelop the cost of infrastructure increases from $0 to $7 per square foot (of course, their
property values increase as well). Properties that redevelop benefit from spreading the cost of
infrastructure-doing so results in a drop in their transportation costs from $12 per square foot to $7
per square foot.
For comparison, the costs of mitigation under PAMR/LATR would amount to approximately $6.50 per
square foot of new development ($118 million divided by 18 million square feet).
White Flint "district bucket" costs spread over
new development allowed under Sector Plan
White Flint "district bucket" costs spread over
new and existing development
White Flint estimated mitigation costs for new
development (does not include impact taxes)
$7 per square foot
1
$12
per square foot
$6.50
per square foot
 PDF to HTML - Convert PDF files to HTML files
3.
Compare (a) the combined cost of district bucket and transportation impact taxes to (b) the cost
of the district bucket with no impact taxes
The combined burden of PAMR, LATR and transportation impact taxes varies by policy area, land use
mix, and other factors. In past studies, including studies pertaining to the economics of the TMX and
LSC zones, planning staff has found that the combined mitigation and impact tax burden generally falls
in a range between $8 and $13 per square foot.
In White Flint, that combined burden would be an estimated $10 per square foot ($118 million for
mitigation plus $64 million for impact taxes equals $182 million, divided by 18 million square feet of new
development).
General transportation mitigation cost and impact
taxes per square feet
I Estimated White Flint transportation mitigation and
impact taxes
$8-$13 per square feet
$10 per square feet
If transportation impact taxes are paid by new development in the district and are not dedicated to
district projects then properties within the district (those developing and those that do not) would be
asked to bear both the cost of district projects ($208 million), while properties within the district would
bear an additional $62 million that the County could spend on non-district projects (including CLATR
intersections). Together this would create an overall burden of approximately $270 million for
properties within the district. However, that burden would not fall equally-all properties would pay a
special tax for district projects while only new development would pay the impact tax.
I District bucket
District bucket plus transportation impact taxes
$208 million
$270 million
Using our $7 per square foot number from above, existing development (approximately 8 million square
feet) will contribute approximately $56 million towards district infrastructure. New development would
pay approximately $10 per square foot ($270 million less $56 million equals $214 million, divided by 22
million square feet of new and approved development equals approximately $10 per square foot).
1
This
$10 per square foot is both within the range ($8 to $13 per square foot) of what Planning staff has found
in other Twinbrook and Great Seneca Science Corridor, and similar to the $10 per square foot cost that
1
Assumes all approved development pays MSPA rate-the burden for projects that went through Alternative
Review (e.g. LCOR) would be higher.
@
 PDF to HTML - Convert PDF files to HTML files
we would assume for the same projects if they went through the existing PAMR, LATR and
transportation impact tax process.
District bucket plus transportation impact taxes
Portion of cost borne by existing development
1
$270 million
I
8 million times $7=$56 million
$270 million less $56 million=$214 million
Remaining portion borne by new and approved
I
development
• Square feet of new and approved development
Cost per square foot of new and approved
development
122 million
$10 per square foot
It is critical to note, however, that the promise of the district is to deliver complete projects rather than
mere pieces of projects. Because it is assumed that many of the improvements necessary to achieve the
vision of the White Flint Sector Plan are beyond what could be delivered by individual developers
through the mitigation process, it is reasonable to assume that developers would assign some added
value (reflected in added cost) to the district alternative as compared to the piecemeal results ifthe
Sector Plan were implemented using PAMR and LATR.
4. School impact tax revenues
The theory of the school impact tax is that the impact tax captures the cost of each additional seat
necessary at every grade level, whether or not that additional seat causes capacity to reach a threshold
which requires the construction of a new school.
Assuming that all units built meet the definition of high rise units as established in the sector plan, the
total school impact taxes generated by both approved and new (staged) residential development would
be approximately $46 million.
New Dwelling Units
Approved Dwelling Units
School Impact Tax Per High Rise Unit
Total School Impact Tax Revenue (no school
impact taxes paid on MPDU)
9,800
2,220
$4,422
$46 million
@
 PDF to HTML - Convert PDF files to HTML files
Some development may qualify as low-rise and thus pay a substantially higher rate. However, the code
(52-87} defines high rise as any building that is either (a) more than 4 stories tall or (b) any one bedroom
unit. Based on those parameters, it is likely that the vast majority of units in White Flint will be high rise
units for purposes of the school impact tax.
5.
Cost of Bl Ts
Using the sketch plan submitted by Federal Realty for the redevelopment of Mid-Pike Plaza as an
example, the cost per square foot is $0.42 (assuming the cost per BLT is $200,000).
Total square feet (phases 1
&
2 plus future phases)
BLTs to be purchased
Assumed cost per BLT
BLT cost per square foot
3,442,888
7.28
$200,000
$0.42
6.
Land values in White Flint
A recent sale of land (11503 Rockville Pike} in White Flint from JBG to BF Saul provides a data point for
land values. The site is 69,612 square feet and is zoned for an FAR of 4.0. The land sold for $15,050,000.
This constitutes $54 per FAR square foot. The same property was purchased in 2007 for less than $2
million.
In September of 2009, consultants working for the Planning Department estimated the residual land
value of a parcel zoned CR with maximum density of 4.0 to be between $51 and $78 per FAR square
foot.
Cc:
Francoise Carrier
Rollin Stanley
Glenn Orlin
Mike Faden
Diane Schwartz Jones
Dan Hardy
Glenn Kreger
Piera Weiss
Nkosi Yearwood
 PDF to HTML - Convert PDF files to HTML files
FY 2011 Special District Tax Rates
per $100 of Assessed Value
Proposed White Flint Rate
$0.103
Parking Lot District Rates for Commercial Properties
Bethesda
Montgomery Hills
Silver Spring
Wheaton
$0.104
$0.240
$0.317
$0.240
Urban District Rates
Bethesda
Silver Spring
Wheaton
$0.024
$0.012
$0.030
Development District Rates
Kingsview Village
West Germantown
$0.079
$0.163
 PDF to HTML - Convert PDF files to HTML files
, WHITE FLINT DISTRICT WEST
TRANSPORTATION
CIP. NO. 501116
®
 PDF to HTML - Convert PDF files to HTML files
White Flint Sector Plan Project Buckets (Council staff recommendation)
DISTRICT BUCKET
November 9, 2010
Jefferson St
20%
in
Stage 1 for design and
permitting; 80% in Stage
2
for
construction
Old (01dfGeorgeiown
Road to Rockville Pike
25%
of
Total
permitting; 80°/o in Stage
2
for
$17,Tl<j.,064
$1,789,063
$15,344,000
$59831810
$12,941,676
$i:J,200 000
:ll.4.429, 100
$17,774,064
Jl1,7_(l9,063
.... $15,344,000
_$64,260,910
$12,941,676
$9,~00,000
~3.554,813
$14,219,251
$_1_,789,063
E-as-t-Jefferson
St Ext
to
20%
in
Stage 1 for design and
Old Old Georgetown Rd
Monlrose Pkwy
Flanders
Ave-to--
Hubbard Dnve
Old Georgetowrl-Road
to
CSX
tracks
Nicholson-Line io
Randolph Road
ction
1: Fund
&
Design
Rockville Pike (Md 355)
$3,068,800
$12,275,200
$56,035.-.279
75%
of
Total
35%
of
Total
Nicholson Lane
Nebel Street
8~15·
$9,200,000
Phase 1: Construction
(not B-7)
Executive flivd Ext (Norih)
1OmiillOn
in
tage
1
for ng
t-
of~way;
20%
of construction in
Stage 1 for design and
permitting;
80%
of constructio
in Stage 2 for actual
construction
Old Georgetown Rd to
Executive Blvd.
Bike way
Contract
Phase
2,
Complete
Realignment
1
LB-1
$1MOO,OOO
$1,712,500
$10,00Q,OOO
$23,500,()()0
11.712,500
$12,700,000_
$1,712,500
~10,800,000
8
Fund
Main Street
Second entrance to Metro
(includes planning and design)
9
$35,000,000
B-10
B-10
Main Street (B-10 Market St)
Main Street/Market Street
$35,000,000
$4,932Jl42
$4,93;?,9'12
$35,000,000
10
P'1ase
1:
Construction
Contracl.
Phase 2: Complete
Real!gnment
$_4,932,942
12
B-7
Main Street Bridge over Metro
Executive Blvd
Ext
(east)
$2,000,000
$2,000,000
$16 700,000
$2,000,000
$2,000,000
$14,700,000
ROckVl11e
Pike to new
Nebel Extended
Nicholson Lane south to 20% in Stage 1 for design and
Executive Blvd
permitting;
80%
in Stage 2 for
Extended (East)
construction
13
Easlern Work Around
B-5
$16,700,000
Nebel Street
14
 PDF to HTML - Convert PDF files to HTML files
White
Flint Sector Plan Project Buckets (Council staff recommendation)
November 9, 2010
COUNTY/STATE BUCKET
MP#
Circulator bus infrastructure
15
B-6
Marinelli Road
Citadel Ave
to
Wenlworth
Pl
Nebel
Street
to
!racks
DELETED BECAUSE THIS IS
AN OPERATING COST
16
A-90
17
A-Zlo·
Randolph Rd
Montrose Pkwy Phase 1
___(l'.ID 355 Interchange Phase I)
CSX
DELETED BECAUSE
PROJECT IS COMPLET
$2,200,000
$113,750
·-
$2,200,00Ct
$5,043,158
$2,;100,000
$0
$5,043,158
$0
oid
.Georgetown Rd ro
Chapman Ave
18
19
,4.:270-
Chapman Ave ro
Montrose Pkwy Phase 2
(MD 355 Interchange
Phase
Parklawn
Driw
2)
el Street Ext {North)
Randolph Road io
Pi9n--
Area Boundary
$72'
1!5()
000
$13,931,000
_j27,(174 919
$19, 104 227
(excludes
operating
and one
lime costs)
$7:! 156 000
$13
931 000
$27074 919
$19104 227
.
..
$2_9 960 000
$72,15§,000
$13,931,000
~7,0~4,919
$0
$0
~
$0
$0
$0
_§J9, 104 227
$0
B-5
Chapman Ave (Citadel Ave/ Maple Old Georgetown Road lo
Plan Ama Boundary
Ave)
22
23
24
25
26
27
Outside
Sector
Montgomery Aquatic Center
(MAC) EXl"'_nsi<m
Fire Station with Police SUbotafion
$0
$29,960,000
$0
$0
and Urban District Office
Bus
$29,~(),000
·---
DELETED BECAUSE IT !SA
COUNTY-WIDE NEED
Civic
Green
Elementary School (assumes
iand
is dedicated)
Recreation Center at Wall Park
1
acre
$11,3~0,000
$0
_$25,000 000
$37,420 000
$90 000 000
$135,938
__$1,925,001
$0
$0
$0
$11,390,000
$0
$37,420,000
$45,000000
$0
$0
$25,000,000
$0
$45,000,000
$1 925,001
$25,000000
$37,420,000
$90 000,000
Old (Old) GeorgelOwn
25%
of
Total
Road lo Rockville Pike
Old
Georgerown
Road to
CSX tracks
10%
of
Total
-----
ClATR Intersections outside
of
28
M-4
District
East Jefferson St Ext (Md 187)
l~°"
1 Fund
Sl••~•ca?N
Sidew.alks/Bikeways
Phase
2.
Construct S/SIB
---
29
A-69
$J,789,063
Nicholson Lane
30
31
Public Financing Mechanisms percent of Grand Total
 PDF to HTML - Convert PDF files to HTML files
White Flint Sector Plan Project Buckets (Council staff recommendation)
DEVELOPER BUCKET
November 9, 2010
MP#
32
Phase 1: Fund & Design
M-4
M:S
East Jefferson St Ext (Md 187)
Rocl<vlffe Pike (Md 355)
Nicholson Lane
Old (Old) Georgetown
Road
t~ R~'5Ville
Pike
Flanders Ave to Hubbard
50%
of
Total
----~--
!3,578 125
$19,943,937
$29220 774
$9,919 800
$9,538,720
$4,301 880
13,576125
$19,943 937
$29,220,774
$9,919,800
$9,!5:38, 720
$4,:301,880
$3,234 375
$6,928,650
__$5 636,250
$31,922 000
$0
$0
$0
$0
$0
$0
$0
$6 928650
$5,636 250
$0
$0
$0
$29,220,774
$9,919,800
$0
$3,578 125
$19,943 937
$0
$0
$9,538,720
33
34
--
35
;>.:69
B--3
B-4
B-4
Drive
25%
of
Total
55%ofTotal
Woodglen Drive
Huff Coort Ext
Huff Court
36
37
38
39
40
41
Phase 1: Fund:
Streetscape/
84
B·4
Citadet Avenue
Citadel Avenue Extended
9.5
B·5
B-13
Edson Lane
Nebel Street Ext- {South)
Nicholson Lane to
Marinelh Road
M~finem
Road
to
Old
Georgetown Rd
Woodglen Drive to
Rocl<ville Pike
Rockville Pike
to
ExecutiV6 Blvd Extended 3bldgs
Executive
Blvd
to Nebel
Street
$3,234 375
$6926650
$5,636,250
$33,922 000
$1234 375
$0
$0
$33,922 000
$0
$0
$0
$0
SidewalkslBikeways
Phase 2: Construct S/SIB
MarineRi
Road
42
43
44
--
46
B-i
B-7
8·7
Executive Blvd Ext (North)
Executive Btvd Ext
Executive Blvd Ext
Executive Blvd Ext (East}
8~6-to
East Jefferson
$26,408,448
O_ld Toys R US/ AC Moore Bldg
_____!?6 408 448
$19,094 290
$17,60~
$0
H9,094,290
---
$I6.408 448
$0
$17,605,632
$5,894 328
$0
$0
$0
$0
$0
$0
Street
Marinelli Road to
w
leoDrlve
Woodglon Drive
to
Rockville Pike
$19,094,290
j1/',605,632
- $5,894 328
632
$0
$0
$0
46
47
48
49
a:1
B-10
$5,894 328
Main Street (B-10 Market St)
B-10
B-11
B-12--
6-13
Rocl(;,i1ie Pike to Huff
Coort
E:x0CU-tive
Blvd
to
Rockville Pike
DELETED BECAUSE
INCLUDED IN #13
oeve&operS·-
amount
includes
numbers 2, 3 23, and 27 from
REF. column. Woodglen
to
MD355.
Rockville Pike
to
B-13
-~~--
$6_,_820 351
$10,582,367
$6,820,351
$10,582,367
$6,467 208
$6 086 784
$6,467208
$3,757,500
$6,<{(57,~08
$6 820,351
$0
$6,467,208
$6,086,784
$0
$0
$0
$0
_$225 000
Ji6,270,000
$1,060,000
$10 582,367
$0
$0
$0
$0
$6 467,208
$0
$0
$0
$0
$0
$0
$0
$6467,208
$3,757 500
$0
$2,521,750
$0
$0
Main Street (B-10 Market St)
Slalion Street
MarineliiRoad to Old
GeorgetO\\'fl Rd
Marinelfi Road to
Old
G60f!l"IQW11 Rd
Mi1finelli Road
to
Nebel
Street
Nebel Ext
-to
cul-de·sac
Existing Terminus to
B~
13
(approx
900'
Rockville Pike to
B·4
E:cecUtive
Btvd.
to
Rockville Pike
-~467
208
50
51
Chapman Avenue
Now Street
Reafigned Nicholson Court
Midpike Plaza Rung
Security Lane
Extended
Main Street
$6,086 784
~7,208
$~.757
52
53
S:14
6-18
500
_$6,467 208
$2,521_._750
Bikeway
one~tirne
54
55
56
57
B-18
LB-1
$2,521,750
$225,000
_$6,270 000
$225,000
capltaf costs
Fu[Ubrary
Satellite Regional Services Center
~270,000
Develo er Bucket percent of Grand Total
jGRAND~TOTAL
Cost Estimate
@
I
$826,801,124
-~~------
$846,141,087
$236,471,437
$370, 153,841
$239,515,809
 PDF to HTML - Convert PDF files to HTML files
OFFICES OF THE COUNTY EXECUTIVE
Isiah Leggett
County Executive
Timothy
L.
Firestine
ChiefAdministrative Officer
MEMORANDUM
November 15, 2010
To:
From:
Subject:
Nancy Floreen, Council President
-
,~
Timothy
L.
Firestine, Chief
~tive
Officer
White Flint Sector Plan Implementation Strategy
We have been working with the White Flint Partnership to develop
a
White Flint Implementation Strategy that would afford us the greatest assurance of the
implementation of the White Flint Sector Plan. Attached
to
this memorandum is
a
strategy
that
the County Executive
and
the White Flint Partnership have reached
agreement upon that will provide greater certainty to the success of the White Flint Sector
Plan. We will send by separate transmittal conforming amendments to the resolution that
is before the Council and will work with your staff to cover all steps required
to
carry out
the White Flint Implementation Strategy.
We recognize that the White Flint area
can
be a significant economic
engine and that the Special Tax District will help defray a portion of
the
costs
to
transform the White Flint area into a pedestrian friendly, exciting urban area. All believe
that, at least at the outset, the special tax district will not generate sufficient revenues
to
cover debt for the entire infrastructure that is called for to move through the stages of the
Sector Plan.
The White Flint Implementation Strategy has three elements. First, it
provides for a forward funding of certain projects until sufficient revenues from the
District can carry the projects. Second, it removes two projects in Stage 2 from the
District. Third, it provides for setting a rate of $0 for transportation impact taxes within
the White Flint Sector Plan area
While the White Flint Sector Plan
has
the potential to result in significant
economic development, it also has costly infrastructure. The Plan presents the circular
"chicken and egg" conundrum in which the development is µecessary to generate the
right level of special district taxes to pay for the transportation improvements and the
improvements are needed to get the development. For this reason, the forward funding or
advancement of some of the Special Tax District costs is critical to get development
within the Sector Plan moving.
101 Monroe Street • Rockville, Maryland 20850
240-777-2500 • 240-777-2544 TTY• 240-777-2518 FAX
www.montgomerycountymdgov
 PDF to HTML - Convert PDF files to HTML files
Nancy Floreen, Council President
November 15, 2010
Page
1
of2
Under the Strategy, the County will forward fund or advance the costs of
Rockville Pike design (County reference item
4
on p. circle
20
of the PHED/MFP
Committee packet dated November 9, 2010) and the costs of Market Street and the
realignment of Executive Boulevard (County reference items 7, 10 and 11 on p. circle 20
of the PHED/MFP Committee packet dated November
9, 2010).
The White Flint
Transportation Special Tax District would pay the County back for this forward funding
but would not be assessed interest for forward funding these projects. Additionally, if a
gap persists, the County will forward fund up to another $15 Million of District costs,
which would be repaid by the District along with all carrying costs.
Two projects that are currently reflected in Stage
2
of the District Bucket
are to be removed from the District list attached to the Resolution transmitted in
connection with Bill 50-10. Specifically, the second entrance to the Metro station will be
moved into the public funding bucket and we will look at other funding opportunities for
this entrance. Likewise, the bike lane on Nebel Street from Nicholson Lane to Randolph
Road will be moved to the County ledger.
To further incentivize the smart growth envisioned for the White Flint
Sector Plan area the County would set the rate for White Flint transportation impact taxes
at $0. Given the extent of credits that could be available for developer constructed
streets, the amount of impact taxes that would actually be generated in White Flint is
questionable.
In
connection with management of the issuance of District supported debt,
we will be providing a revised resolution for the Council that would clarify the County's
intent to manage debt issuance
so
that the special district tax rate will not exceed a 10%
policy goal except
as
may be necessary to assure adequacy of revenues to satisfy
outstanding bond obligations.
In
January we will also send the Council CIP amendments
that will provide for the above described projects.
With this strategy, we urge the Council to adopt
Bill 50-1 Oimmediately
so
that we can move forward with implementation of the White Flint Sector Plan.
 PDF to HTML - Convert PDF files to HTML files
Proposed White Flint Implementation Strategy
The White Flint Sector Plan has the potential to be an important economic engine for the
County and will be a model for smart growth and transit oriented development. To ensure
successful implementation of the White Flint Sector Plan, the County proposes the following
implementation strategy to maximize growth within the plan and to move from Stage 1 to
Stages 2 and 3.
1) The financing mechanism is to be a special tax district that is adopted under SB828
authority with a special tax that does not count against I} the County Charter limits, or II)
debt capacity.
2) The financing mechanism must not pledge any portion of the County's general tax base.
3) The special tax district shall be adopted with a resolution that states a rate setting policy
objective of not having a rate of more than 10% above existing tax rates (currently
$0.103/$100 of assessable base) but that can be set higher to assure adequacy of
revenues to satisfy outstanding bond obligations; The resolution shall also acknowledge
that debt issuance will be managed in a manner that plans for a rate that will not exceed
the 10% policy goal except as may arise to assure adequacy of revenues to satisfy
outstanding bond obligations.
4) Transportation Impact Taxes will not be assessed in White Flint Sector Plan area (e.g. a
rate of
O)
5) District Bucket
a) To manage a potential gap between district revenues and implementation of
transportation projects to be funded by district revenues, the County will forward
fund or advance funds for design and construction of:
i)
the portion of Market Street from Old Georgetown Road to Woodglen Road
(County reference numbers 10 and 11)
ii)
the realignment of Executive Boulevard from Marinelli Road to Md. 187 (County
Reference number 7)
iii)
the design of Rockville Pike (County reference number 4)
iv) up to $15 Million for district bucket projects in stages 1 and 2
b) Forward fund or advance Funds means
i)
For items (i), (ii), and
(iii}
above that the County will include these projects in the
County CIP and pay for them and the District will, on a dollar for dollar basis
exclusive of interest, repay the County as District funds are available
 PDF to HTML - Convert PDF files to HTML files
ii)
For item (iv) above that the County will coordinate with planned development and
include these projects in the County CIP and the District will reimburse the County
for all costs incurred in connection with any such advance including interest costs
c) Cost estimates
i) The realignment of Executive Boulevard and Market Street from Old Georgetown
Road to Woodglen Road are estimated to cost between $24.8 Million and $32.2
Million exclusive of ROW which is assumed to be dedicated.
ii) The design of MD355 is estimated to cost $5 Million
d) The County will include the projects noted above in section (4)(a)(i), (ii) and
(iii)
in its
January 2011 CIP Amendments with initial expenditures in FYs 15, 16 and beyond until
completed.
6) Two items will be removed from the District Bucket and move into the county/public
funds bucket
a) The second entrance to Metro which is estimated to cost $35 Million
b) The Nebel Street bike lane which is estimated to cost $9.2 Million
7) The County Executive confirms his intent that the joint County Transportation Priority
letter include a request to MOOT that the White Flint Sector Plan Area receive an MOOT
TOD Designation
 PDF to HTML - Convert PDF files to HTML files
Condos.
5. White Flint ·
Station··.
6; Gallery
7.
Sterling
··a.
Forum
. 9.
Wisconsin
0,
FaHswood ·
Apartments
1. · Strathmore
Court
2. The
Grand
3.
North Bethesda Market ···
4.
Wentworth House
 PDF to HTML - Convert PDF files to HTML files
Wentworth House
North Bethesda Center (LCOR) 312 apartments
Studios
• Cost: $1,349-$1,440
• Models: 3