AGENDA ITEM #5A
April 16, 2013
Introduction
MEMORANDUM
April 12,2013
TO:
FROM:
SUBJECT:
County Council
Amanda Mihill, Legislative
Attorne~JQO
Action: Bill 40-12, Economic Development - Green Organization Supplement
Planning, Housing, and Economic Development Committee recommendation (3-0): enact
with amendments.
Bill 40-12, Economic Development - Green Organization Supplement, sponsored by then­
Council President Berliner and Councilmember Leventhal, was introduced on December 4,2012.
A public hearing was held on January 22 at which a representative of the Executive supported
Bill 40-12 (©20). Planning, Housing and Economic Development Committee worksessions
were held on January 28, February 11, and April 1.
Bill 40-12 would authorize the County to provide qualified applicants a Green Organization
Supplement. The County would supplement 50% of the recipient's investment in a qualified
green organization, or a lower percentage set in the annual operating budget resolution, up to
$25,000. This bill would implement one of the recommendations from the Green Economy Task
Force (see report excerpts on ©9). The Executive submitted a letter in support of Bill 40-12 and
included $500,000 in his FY14 recommend operating budget for this initiative (©34).
This program would be structured similarly to the County's Biotechnology Investment Incentive
Tax Credit Supplement (§20-76A). To provide some context, in 2012, the County provided
$500,000 in supplement funds. According to data provided by the Department of Economic
Development, there were 66 eligible transactions. The range of awards provided was $2,117.75
to $42,354.93 with the average award being $7,575.76.
Committee worksessions/recommendation
The Department of Economic Development recommended several amendments to Bill 40-12.
These amendments would:
• Redefine "green product or service" as "a product or service that measures, prevents,
limits, minimizes or corrects environmental damage to water, air and soil, as well as
problems related to waste, ecosystems, biodiversity, habitat or natural resource depletion.
All claims related to environmental attributes, as applicable, for a product or service,
shall conform to current or future guidelines published by the Federal Trade Commission
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or other appropriate entities designated by the Director of the Department of
Environmental Protection" (©2, lines 5-20).
Add a definition of "investment" to mean "the contribution of money in cash or cash
equivalents expressed in United States dollars, at a risk of loss, to a qualified green
company in exchange for stock, a partnership or membership interest, or other ownership
interest in the equity of the qualified green company, title to which ownership interest
shall vest in the qualified investor but does not include debt" (©2, lines 21-26).
Increase the minimum investment in a qualified green company from $5,000 to $25,000
and clarify that an investor should have limited ownership interest in the company and
should not derive financial benefit from the company (©3-4, lines 39, 47-54).
Establish an annual limit (rather than one-time supplement) that is the lesser of 50% of
the investment made by the investor, 15% of the total appropriation for the Incentive
Program, or $50,000 (©5-6, lines 93-109).
Provide for a formula-based allocation process where each qualified investment would be
divided by the total amount of investments during the calendar year to derive the
percentage of the annual appropriation that is paid (©6, lines 110-119).
Change the name of the supplement to "Green Investor Incentive Program".
Eligibility
At its February 11 worksession, Committee members expressed concerns regarding
the scope of companies that would be eligible for the incentive. Councilmember Berliner,
Executive staff, and Council staff discussed the issue and recommended the following
amendment to the definition of "qualified green company" (©3, lines 27-37):
Qualified green [[organization]] company
means any [[business, cooperative, or non­
profit]] entity of any form duly organized and existing under the laws of any jurisdiction
for the purpose of conducting business for profit.
exclu~ing
a sole proprietorship, that:
ill
Hprovides
~
green product or service]] develops an innovative, new to the
market. technology, or a unique combination of technologi{!s, available
only from that compaJ1Y. which adds significant value to a green product
or service or is engaged in research or development of a such technology
or technologies; and
ill
implements
~
sustainable operation as verified
Qy
~
third
~
This original language would allow any company that "provides a green product or service" to
be eligible for an incentive payment.
I
The revised language would limit the incentive to those
companies that either: (1) develop an innovative technology that adds significant value to a green
product or service; or (2) is engaged in research or development of a technology.
The
Committee supported this language and recommended this amendment (3-0).
Applicability to renewable energy
As introduced, Bill 40-12 would prohibit an investor from
receiving a payment for a geothermal or solar photovoltaic system or a green or energy
efficiency improvement.
Committee members recommended amending
Bill
40-12 to clarify
that an investor could not receive an incentive payment for the installation of geothermal
or solar photovoltaic systems
(©5, line 90).
The Committee recommended (3-0) enacting
Bill
40-12 with the above amendments.
1
If the company implements a sustainable operation.
2
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This packet contains:
Committee
Bill
40-12
Legislative Request Report
Excerpts from the Green Economy Task Force Report
Fiscal
and
Economic Impact Statement
Silverman testimony
Silverman memorandum
Executive budget memorandum
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#
1
8
9
15
20
25
34
3
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Expedited Bill No.
40-12
Concerning: Economic Development ­
Green [[Organization Supplement]]
Investor Incentive Program
Revised:
4/3/2013
Draft No. _3_
Introduced:
December 4, 2012
Enacted:
June 4, 2014
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: ----'-'!.No><.!n..:..>:e'--_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmembers Berliner and Leventhal
AN
ACT to:
(1)
(2)
authorize the County to provide qualified applicants a Green [[Organization
Supplement]] Investor Incentive Pavment; and
generally amend the law governing County financial incentives for investment in
certain businesses.
By adding
Montgomery County Code
Chapter 20, Finance
Section 20-76C
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law
by
original
bill.
Added by amendment.
Deletedfrom existing law or the bill
by
amendment.
Existing law unafficted by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No.
40-12
Sec.
1.
Section 20-76C is inserted as follows:
2
3
4
20-76C. Green [[Organization Supplement]] Investor Incentive Program.
(ill
Definitions.
In
this Section, the following words have the meanings
indicated:
Green product or service
means [[the delivery of
f!
product or service in
5
6
7
the following areas:
8
ill
ill
renewable, clean, or distributed energy;
energy efficiency products or services;
sustainable farming and food distribution;
water quality and conservation;
pollution reduction and remediation;
recycling, reuse, and resource recovery; or
biodiversity and natural resource conservation.]]
9
10
11
ill
G1
ill
®
ill
12
13
14
a product or service that measures, prevents. limits. mInImIZeS, or
corrects environmental damage to
water~
air. or soil. as well as problems
related to waste, ecosystems, biodiversity, habitat or natural resource
depletion. All claims related to environmental atj:ributes, as applicable,
for a product or service. must conform to guidelines published by the
Federal Trade Comnlission or other appropriate entity designated by the
Director of Environmental Protection.
Investment
means the contribution of money in cash or
ca~h
eguivalents
15
16
17
18
19
20
21
22
23
24
25
expressed in United States dollars. at a risk of loss. to a gualified green
company in exchange for stock, a partnership or membership
inter~st.
or
other ownership interest in the eguity of the gualified green company,
title to which ownership interest vests in the gualified investor but does
not include debt.
26
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BILL No. 40-12
27
28
Qualified green [[organization]] company
means any [[business,
cooperative, or non-profit]] entity of any form duly organized and
existing under the laws of any jurisdiction for the purpose of conducting
business for pr()fit. excluding a sole proprietorship, that:
29
30
31
ill
[[provides
~
green product or service]] develops an innovative,
32
33
34
35
new to the marl<,et. technology, or a unique combination of
technologies, available only from that company. which adds
significant value to a green product or service or is engaged in
research or development of a such technology or technologies;
and
36
37
ill
implements
~
sustainable operation as verified by
~
third party.
38
39
40
Qualified investor
means any individual or entity that invests at least
[[$5,000]] $25.000 in
~
qualified [[Montgomery Countyl1 green
[[organization]] company and that is required to file an income tax
return in any jurisdiction.
Qualified investor
does not include:
41
42
ill
~
qualified pension plan, individual retirement account, or other
43
44
45
46
qualified retirement plan under the Employee Retirement Income
Security Act of 1974, as amended, or fiduciaries or custodians
under such plans, or similar tax-favored plans or entities under
the laws of other countries;
47
48
49
50
ill
an individual or entity that has an ownership interest in the
qualified green company other than from a previous investmcm1
which previous investment by itself or with the additional
investment does not create a 25% or greater equity holding by the
qualified investor in the qualified green company; or
51
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BILL
No. 40-12
52
53
54
OJ
an individual or entity deriving any financial benefit. incllJfiing
salary or other compensation. from the qualified green company
in which the qualified investor makes an investment.
55
56
57
58
Sustainable operation
means an organization validated
Qy
~
third
12ill1Y
under one of the following:
ill
Montgomery County [[Certified]] Green Business Certification
Program, as certified
Qy
the Department of Environmental
Protection;
59
60
61
62
ill
ill
ill
[[Certified]] B Corp Certification from BLab;
Green America Gold Certification;
Green Seal Certification;
International Organization for Standardization ISO 14001
[[certified])
Certification~
63
64
65
66
67
68
69
ill
@
or
any other third
12ill1Y
validation approved
Qy
the Department of
Environmental Protection.
{Q}
Incentive Payment
[[Q{
supplement]]:.
The Director of Finance must
~
subject to the amount of the annual appropriation in that fiscal year:!
~!!
[[~
Green Organization Supplement]]
incentive payment to each
70
[[applicant]] qualified investor who meets certain eligibility standards.
71
72
73
ill
Eligibility standards.
[[An
applicant]] A qualified investor, who need
not be
~
County resident, is eligible to receive the [[Supplement]]
incentive payment if the [[applicant]] qualified investor:
74
75
76
[[ill
ill]]
is
~
qualified investor; and
invests in
~
qualified green [[organization]] company that:
[[(A)]]
ill
has its headquarters and base of operations in the County; or
o
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BILL
No. 40-12
77
78
[[(B)]]
ill
has
signed
~
lease for at least 5 years to open
~
[[facility]]
qualified green company with its headquarters and base of
operations in the County; and
79
80
81
82
83
84
85
ill
has been in business for less than
lQ
years and employs less than
50 people and does not have its securities publicly traded on any
exchange.
@
Additional eligibility standards.
The County Executive,
Qy
Method
2.
regulation, may impose other eligibility standards.
However, those
standards must not make any person ineligible to receive the
[[Supplement]] incentive payment who would be eligible under
subsection
~
86
87
88
ill
Ineligible investments.
[[A qualified]]
An
investor must not receive
[[any]]~
[~
89
90
91
supplement for capital] an incentive payment [[used]] for
ill
ill
ill
the installation of any geothennal, or solar photovoltaic, or
similar system; or
any building green or energy efficiency improvement.
Amount
gf
[[supplement]] incentive payment.
The [[Supplement
92
93
94
95
paid]] incentive payment made, subiect to the amount of the annual
appropriation in that fiscal year, to each [[recipient is
~
~
one-time
~
96
97
98
99
100
101
102
Supplement and must equal 50% of the recipient's investment in
qualified green organization, or
operating budget resolution,
1!Q
lower percentage set in the annual
to $25,000.]] qualified investor must
equal the amount of the investment made by the qualified investor,
divided by the total amount of investments made by all qualified
investors in the same calendar year, multiplied by the total amount of
funds appropriated for the green investor incentive prQg!M1 in that year.
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BILL
No. 40-12
103
104
105
106
107
The incentive payment made to any qualified investor in any single
fiscal year must not exceed the lesser of:
ill
(2J
50% of the investment made by the qualified investor in that
fiscal year;
150/0 of the total annual and supplement appropriation for the
green investor incentive program in that fiscal
y~ar;
or
108
109
110
111
112
113
114
ill
$50,000.
W
In order to calculate the amount of the incentive payment to be made to
a qualified investor under Subsection
(fl,
the Dire<;tor of the Department
of Economic Development must. by JanuaryJ5 of each calendar year,
compile a list of each qualified investor making an investment in a
qualified green company and the amount of that investment during the
preceding calendar year. This list must be determined using the
applications and any supporting documents qualified investors submit,
The Director may take any other action . necessary to administer the
incentive payment. The Executive may issue regulations under Method
(2) to implement this Section.
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
[[{g)ll
flU
Application required
The Director of the Department of Economic
Development must require each [[eligible person]] qualified investor to
submit an application for the [[Supplement]] incentive payment and
may take any other action necessary to administer the [[Supplementll
incentive payment. The Executive may issue regulations under Method
ill
[[{h}]]
to specify an application process and otherwise implement this
Section.
ill
Fraudulent applications.
A person who submits
£1
false or fraudulent
application, or withholds material information, to obtain
[[£1]]
an
incentive payment under this Section has committed
£1
Class A
~
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BILL
No. 40-12
130
131
132
133
134
135
136
137
138
139
140
Approved:
violation. In addition, the person must repay the County for all amounts
improperly paid and all accrued interest and penalties that would
mmlY
to those amounts as if they were overdue taxes. A person who violates
this Section is liable for all court costs and expenses and reasonable
attorney's fees of the County incurred in any civil action brought by the
County to recover any payment, interest, or penalty. The County may
collect any amount due, and otherwise enforce this Section, by any
other appropriate legal action.
Nancy Navarro, President, County Council
141
Approved:
Date
142
143
Isiah Leggett, County Executive
144
This is a correct copy ofCouncil action.
Date
145
146
Linda M. Lauer, Clerk ofthe Council
Date
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LEGISLATIVE REQUEST REPORT
Bill 40-12
Economic Development
-
Green Organization Supplement
DESCRIPTION:
Authorizes the County to provide qualified applicants a Green
Organization Supplement. .The County supplement 50% of the
recipient's investment in a qualified green organization, or a lower
percentage set in the annual operating budget resolution, up to
$25,000.
Need for further incentives to invest in local green technology
companies
To promote investment in local green technology companies
Finance Department, Department of Economic Development
To be requested.
To be requested.
To be requested.
To be researched.
Amanda Mihill, Legislative Attorney, 240-777-7815
Applies to companies anywhere in the County.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENAL TIES:
Not applicable
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(j)
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Green Economy Task Force
Final
Report
9
Overview ofthe green economy in Montgomery County, MD
Montgomery County is laying the foundation for a new green economy. which will create, expand
and attract businesses that provide environmentally sustainable products, green technologies and
services. With its history of progressive policies, engaged residents and innovative entrepreneurs,
Montgomery County can nurture its nascent green industries and transform its entire economy inco
one of the greenest and most successful in the region-and beyond.
This report documents the Montgomery County Green Economy Task Force's recommendations
for growing a sustainable economy in the 21st century.
It
covers a variety of topics, including raising
substantial capital for new green technologies, spurring innovation through competition, simplifying
bureaucracy for green businesses and building a vibrant, local food system.
TIlese are not small recommendations that can be done qUickly by one department or agency. They
involve new partnerships, substantial private investments, advocacy at multiple levels of government
and a county-wide commitment
to
a new way of doing business. In some cases, the inspiration for
these recommendations comes from other jurisdictions like Silicon Valley, Austin and Toronto who
are leaders in sustainable development. The Task Force has examined these programs and tailored
some of them
to
fit Montgomery County's strategic advantages.
Other jurisdictions have set ambitious goals for green job growdl, including Vancouver, BC, which
hopes to add 20,000 by 2020 and Silicon Valley, which aims to add 25,000 clean-tech jobs within
15
years.] TIle Task force hopes and expects that if the recommendations are implemented, something of
a similar nature might be achievable in Montgomery County.
But, in addition to new jobs, the Task Force recommends that the success of the green economy
should not be determined by usual measures like tax receipts or new construction starts. Instead,
leaders should analyze the County's triple bottom line. Evaluating success using a "triple bottom line"
approach means that we no longer look only at financial health, but we are now obligated to consider
economic prosperity, environmental quality and social justice equally, with each policy decision we
make.
By implementing dle recommendations outlined in this report, and committing to a triple bottom
line approach for evaluation, the potentia.1 for Montgomery County's green economy is only limited
by our researchers' and entrepreneurs' imaginations. The Task Force is confident that Montgomery
COll1lty will become a green economic engine that supports profitable business ventures while
contributing to a sustainable society.
Charge to the G1't!en Economy Task Force
In early 2009, the County Executive commissioned the 29-member Green Economy Task Force
for the purpose of charting "a bold new course for Montgomery County focused on creating
opportunities for new and existing 'green' businesses, spurrilig innovation, increasing employment,
and developing next generation technologies."
"Vancouver
2020
A Bright Green Furure". David
R.
Boyd
&
The Greenest
City
Action Team. 2009
1
(f)
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10
Montgomery County, Maryland
The Task Force was asked
to
build upon several strengths inherent in Momgomery County:
1)
a successful track record in promoting the growIh of
die
local biotech industry;
2)
progressive
environmental policies; and 3) existing environmental and economic development initiatives.
Examples of key policies include green building legislation, which requires both privately-construcIed
buildings and new County-owned buildings to achieve certain LEED2 standards, and the Home
Energy Loan Program, a new financing mechanism that allows residents
to
make energy efficient
home improvements that are repaid through property assessments.
In
addition
to
these policies, key
initiatives like the Sustainability Working Group,' and important partnerships with organizations like
the Maryland Clean Energy Center;l informed the Task Force's work.
The County Executive appointed Dick Wegman, an environmental attorney with broad experience in
federal, state and local environmental issues, as the Task Force chairman. 1he Task Force deliberated
for ten months to develop the recommendations outlined in this report. The schedule included six
full Task force meetings and dozens of smaller subcommittee meetings. 1he subcommittees were
created to target broad categories of the green economy, including: Agriculture, Finance, Innovation,
Land Use, Policy/Regulation, Promotion and \'Vorkforce. The Task Force's consultants, Sustainable
Design Group, provided the subcommittees with topical background information including
relevant green initiatives in other jurisdictions. Several of these programs are referenced in the final
recommendations.
'The purpose of this report is
[0
provide the Leggett Admin.istration with expert guidance and input
regarding the investments, policies and strategic partnerships that will nurture Montgomery County's
nascent green economy. The ultimate goal is
to
increase Montgomery County's triple bottom line by
generating e(;onomic, environmental and social value for
1001
businesses, residents and the region.
Lessonsfrom our biotech history
Beginning a quarter of a century ago, Montgomery County embarked on a major biotechnology
initiative designed
to
stimulate the local economy by taking advantage of its proximity to major
national medical research facilities, including the National Institutes of Health, U.S. Army \l{;'alter
Reed lvledical Center, Bethesda Naval Medical Center and related entities such as the Food and
Drug
Administration. To convert these r.::search assets into commercial opportunities; Nfontgomery
County pursued the following initiatives:
Purchased close to
300
acres for the world-renowned Shady Gro:.re
Lite
Sciences Center, whose
land value today approximates
$150
million;
'HIe Leadership in Energy and Environmental Design (LEEO) rating system is a third party certification
program and the nationally accepted benchmark tor high performance green buildings.
3
In January 2009. Montgomery County issued a ground-breaking Climate Protection Plan, prepared
by
the
legislatively created Sustaillability Working Group. The Susrainability Working Group's recommendations
will
create a demand for green companies, through green building laws, greenhouse gas reduction mandates and
other quality of/ife recommendations .
.\ The Maryland Clean Energy Center, headquartered at the Universities at Shady Grove, was created by the
State legislamre and the governor
ill
2008 to develop dean technology development and dean tech jobs in the
state. The Center's mission
is
to provide a coordinated approach to building a strong, clean ellergy economy
in Maryland through n:chnolob'Y commercialization, business incubation and workforce development and
1
training.
@
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Green Economy
Ta.sk
Force
I~inal
Report
11
Coordinated the donation of 85 acres of private land to the University of Maryland and The
Johns Hopkins University for their academic campuses and for the Center for Advanced
Research in Biotechnology (CARB);
Infused over
$17
million in infrastructure for the Life Sciences Center and for Hopkins'
Bdward Campus;
Constructed Hopkins' first academic building (a
$12
million capital outlay), and financed the
construction of CARB;
Developed a life sciences business incubation strategy, which began with the $10 million
Maryland Technology Development Center, and now includes a total of five incubators; and
• Advocated at the State level for major capital investments in the University of Maryland, Johns
Hopkins and CARE by continually highlighting these assets in the County's state legislative
priorities.
The deeper pockets of the state, through financing agencies like MEDCO and TEDCO, and
the Sunny Day Fund, and the attraction of out of state venture capital, were
also
needed to grow
companies such as Medlmmune and Human Genome Sciences.
As
a result of this 25 year effort, Montgomery County's biosciences industry now generates combined
annual revenues of
$2.36
billion, employs more than 9,200 private sector employees, and is often
ranked as one of the top ten biotechnology clusters in the nation.
5
Strategic advantages for growing
the
green economy
The Green Economy Task Force believes that even though there are significant differences between
the biotech industry and the green technology industry, by implementing certain strategies outlined
in this report, the probability of growing a robust green economy in Montgomery County is quite
high.
'lhe COWlty'S innate strengths, which promoted the growth ofbiorech,
will
again be the bedrock for
the new, green economy. These strengths include an engaged private sector, bold po
Ii
tica1 leadership,
proximity
to
federal agencies, partnerships with academia and a highly-educated workforce. For
example, the local government has a history of progressive leadership, which has already made
significant strides in terms of green policies and sustainability. A recent study by the National
Association of Counties, entitled "Local Leaders in Sustainability," described Montgomery County
as "a progressive leader on green building and sustainabiUty. Montgomery County will certainly be
a county to watch as recent legislation takes effect and local policymakers go to new and innovative
lengths to promote green buildings in their communities."6
Additionally, Montgomery County has a highly engaged professional community.
It
has experience
building public-private partnerships and facilitating communication and collaboration between
citizens, government, industry, researchers and academia. These professionals include employees
at several federal installations related to energy, climate change and other green economy issues,
5
6
Maryland-National Capital Park and Planning Commission (r...'l·NCPPC).
NACO - Local Leaders in SlIstainabUity Green Counties. Brooks Rainwater
&
Cooper Martine.
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12
Montgomery County, Maryland
including the National Institute of Standards and Technology, the National Oceanic and Atmospheric
Administration, and the Department of Energy. Because of these federal partners, Montgomery
County is particularly well positioned to take advantage of the new federal and state suppOrt for
strategies that utilize sustainability as a driver of economic development. And, unlike the biotech
experience, there are existing large corporations in the County that can provide sources of technology
as well as generate demand for green
good~
and services. Local sustainability strategies
will
also serve
as demand generators.
Presently, Montgomery County's companies and businesses benefit from access to a well-educated
and highly skilled workforce of 500,000 people. Nearly 60 percent of the county's labor force holds a
bachelor's degree and 34 percent have earned a graduate or professional degree, making Montgomery
County an
advantageou.~
location for new and expa.nding green businesses.
Finally, Montgomery County has over 93,000 acres of viable farmland, which includes 577 farms and
350 horticulture enterprises, producing $251 million annually and employing 10,000 people.
Combined, these strategic advantages give us an opportunity
to
become a leading jurisdiction in the
green economy.
Defining the green economy
The green economy means different things to different people. With respect
to
many of the
recommendations contained in this report, regulators or county officials in carrying out their
responsibilities may find the Governor's Workforce Investment Board (G\VIB) definition helpful.
The GW1B treats a company as "green" if it is "directly engaged in the development, manufacture,
sale and distribution, installation, and application of products and services that promote energy
security and!or protects our environment."s However, this approach would not be appropriate
for some of the other recommendations in this report. For example, the Task Force ['ecommends
encouraging the consumption of locally produced products and food; dearly, in this area, a different
metric would be needed. In other instances, the construction or operation of a LEED-certified
building may qualif}T as "green," and the GWIB test would not fit here either.
\'(;'hat is the same are the basic principles that underlie all of the recommendations in this
report: (1) dependence on carbon-based sources of energy is rapidly becoming economica.lly and
environmentally
unsu.~tainable
and
(1)
Montgomery County can playa major leadership role in
finding new ways
to
meet these challenges. Thus, after considering whether a single definition of the
green economy should be adopted, in the end the Task F6rce decided that a one-size-fits-all approach
would not be useful.
Research
&
Technology Center - Montgomery County Planning Department.
S
www.mdworkforce.com
7
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Green
Economy
Task Force
Final Report
13
Benchmarks
At this time, there is no national definition of what constitutes the "green economy," so it is difficult
to benchmark and monitor Montgomery County's progress against other jurisdictions. For example,
a contractor may build green homes, an HVAC contractor may specialize in energy efficient
equipment, or an architect may design only LEED-rated buildings. However, common data sources
like NAICS Codes are of limited use, because they don't have a special green designation-every
architect would fall under the same code. Similarly, there
is
no single source of data on the green
industry within Montgomery County. For this report, the consultants used. a variety of data sources,
including industry associations serving specific technology sectors and consumer guides.
According to the consultant,' preliminary estimates, there are over 200 businesses in Montgomery
County that contribute to the green economy. Montgomery County's green industry can be divided
into several categories: Energy Companies, Products and Services, Federal Installations, Finance and
Venture Capital, and. Private Green Technology R&D. Additionally, the Task Force acknowledges
the importance of existing companies that are implementing sustainable business practices, regardless
of their industry, because they create significant demand for local green products. The following are
some examples of existing businesses and organizations already impacting Montgomery County's
green economy:
Energy Companies:
Preliminary research shows 11 companies that provide energy-related products
and services in Montgomery County (not counting energy auditors). One of the most successful
companies is Standard Solar, Inc., which was started in 2004, and currently employs more than 60
people. Not only was Standard. Solar involved in one of the east coast's largest solar electric system
installations for the US Department of Energy, the company was recently part of the region's largest
Power Purchase Agreements in Upper Marlboro, MD.
Green Products and Services:
The available data indicates that the largest sector of green business
in Montgomery County is green products/services. These services include everything from green
cleaning companies to energy auditors and consultants. Additionally, there are an estimated 410
LEED Accredited Professionals working in Montgomery County. An example of a green product
provider is Amicus Green Building Center, in Kensington, MD, which offers a range of green
building products and supplies. In addition to providing green products, Amicus follows triple
bottom line principles in its operations.
Federal Installations:
There are three federal installations in Montgomery County whose work
supports the advancement of green technology. For example, the National Institute of Standards
and Technology (NIST), in Gaithersburg, is committed
to
studying and solving issues associated
with a variety of green technology standards, including high performance buildings and sustainable
infrastructure materials.
Finance and J..'enture Capital:
Investors are an important component to a healthy green industry,
because they help companies bring their technologies to market. Calvert Investments, an
environmentally and socially responsible investment firm in Bethesda, manages $14 billion in assets.
Private Green Technology R&D:
Montgomery
County
is horne
to
several large corporations that
are diversifying their businesses
to
include green technology. One example is Lockheed Martin, the
country's largest defense contractor, which is now investing in smart grid R&D.
@
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Green Economy
Task
Force
Final
Report
33
B~3)
Encourage private investment in green technology through tax incentives
In order to promote investments in local green technology companies, Montgomery County should
establish a local tax credit (against income, real or personal property taxes) for investors who invest in
Montgomery County-based green tech companies.
Model Program:
The Maryland Biotechnology Investment Tax Credit provides income
tax
credits for investors in
qualified Maryland biotechnology companies to offer incentives for investment in seed and early
stage, privately held biotech companies. The value of the credit is equal
to
50% of an eligible
investment made in a qualified Maryland biotechnology company during the taxable year. lbe
maximum amount of the credit cannot exceed $250,000 for investors.
Strategic Advantages:
1he State of Maryland has a proven track record of using investment tax credits to leverage private
investment in early stage biotech companies. Montgomery County is currently developing its
own biotechnology investment tax credit program, which will provide a model for a parallel green
technology local tax credit program. Alternatively, a single biotech/dean tech investment tax credit
program could be established through one piece of legis lationl program.
Implementation:
L \Vork with the Office of the County Executive, Department of Finance, Office of
Management and Budget and Office of the County Attorney to draft legislation and a fiscal
impact statement.
2. Enlist local biotech companies that have benefited from the MD biotech investment tax
credit to educate decision makers on the potential direct and indirect benefits of the tax for
the green sector.
3. Coordinate funding for the
taX
credit in appropriate fiscal year budget, and develop the
necessary administrative procedures.
Resources and Financial Impacts:
Funds will need
to
be included in the County budget for the tax credit program (as a point of
reference,
FYIO
funding for the MD Biotech Investment Tax Credit is $6 million). Staff resources
will be needed to develop the legislation and regulatory/administrative procedures, and to certifY
eligible investments and administer the ta.'I:: credit program.
Partnerships:
State Comptroller
Tech Council of Maryland and chambers of commerce (for outreach on the program)
Angel investors and VC funds
®
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\3; \
L
L.
Y
0-
l-:J..
~c
Stf
LL
ROCKVILLE, MARYLAND
071377
MEMORAND.UM
January 18,2013
TO:
Nancy NavllI:1'l,), President,
County Council
Office ofManagement and BudgetkUt-
Jennifer
A.
Hughes.
Joseph F. Beach, Director, Department
ofFin~
FROM:
Dire~tor,
if '"
SUBJECf:
Council Bill 40-12,
Economic
Development
Jbr~~n
Organization Supplements
Please find
attached
the fiscal and economic impact
statements for
the above-referenced
legislation.
JAH:a2a
c: Kathleen Boucher, Assistant Chief Administrative
Officer
Lisa Austin,
Offices
of the County
Executive
Joy
Nurmi,
Special Assistant to
the
County
Executive
Patrick Lacefield, Director, Public Information Office
Joseph F. Beach,
Director, Department
of Finance
Micbael Coveyou, Department of Finance
Steve
Silvennan.
Director.
Department of Economic
Development
Peter Bang. Department ofEconomic Development
Helen Vallone, Office
of Management
and
Budget
Blaise Defazio, Office ofManagement and Budget
Ayo ApoUon, Office of Management and Budget
)
,
~.-,
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Fiscal Impact Statement
BU140-12,
Economic Development -
Green Organization
SupplementS
1. Legislative Summary.
Bil140-12 would authorize the County to provide qualified applicants a Green
Organization Supplement. The supplement must equal 50% ofthe recipients' investment
in a qualified green organization, or a lower percentage set in the annual operating budget
resolution. up to $25,000.
2. An estimate
of
changes in County revenues and expenditures regardless ofwhether
the
revenues or expenditures are assumed. in the recommended or approved budget.
Includes souree of information, assumptions, aud methodologies
used.
The changes
in
the County revenue and expenditures cannot be detennined at this time
due to the unknown number of green organizations in the County, and the uncertainty of
bow many ofthose organizations have, and will
be
pursuing outside investment.
Assuming that most of the green organizations are willing and able to receive outside
funding, the following factors need to be evaluated to detetmine the expenditure:
• Bill
40-12 acknowledges the validation of organization as a green organization
from five entity/institutions, the County DEP) Green America Certification, Green
Seal, State of Maryland (B-Co-rps), and the ISO. Based on the preliminary
internet search, the County has approximately 180 organizations designated as
green organization by the first three entities, and unknown number of certified
organizations from the Jast two entities.· Since some organizations receive
certification from multiple certifying entities, it is believed that the CoUnty has
over 150 green organizations that meet the
Bill's
definition.
• The County administered the Biotech Tax Credit Supplement Program during
FY12. Sixty-six investment transactions were awarded supplement payments
totaling $500,000. The mean (average) investment siZe was $89,500 and the
mode (most frequent) of the investment was $50,000. The proposed Green
Organization Supplement will
be
a similarly structured program, with the
Supplement
amount proposed to be
50%
of the actual investment made to a
qualified green organization, or a lower percentage set in the annual operating
budget resolution
up
to $25,000. Based on the Department ofEconornic
Development's experience of administering the EDF program and the Biotech
Tax Credit Supplement program, it is believed that $50,000 is the minimum
investment
size
deemed "worthy of investing" by individual investors and the
smaller institutional investors. As such. if the Green Organization Supplement
pays 50% of the actual investment, an assumption can be made that most of the
Supplement payments will
be
for investments at or above $50,000. Therefore, the
typical. Supplement payment will be $25,000 (or at the maximum Supplement
amount) per transaction; unless a lower percentage is set in the budget resolution.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
Not available at this time due to the unknown variables listed
in
question 2.
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4. An actuarial analysis through the entire amortization period for each regulation
that would aBeet retiree pension or group insurance costs.
Not applicable.
5.
Later aetions that Dlay
affect futore
revenue and expenditures
if
the regulation
authorizes future spending.
Unknown at this
time.
6.
An
estimate of the stafftime needed to implement the regulation.
Since the qualification of green organizations
is
done
by
a third party, the Department of
Economic Development believes we can use
its
existing
staff
members to market the
program and receive
applications,
with
assistance from. the Department of Finance for the
Supplement
payment
processing.
7.
An
explanation of how the addition of new statTresponsibilities would aff'eet otber
duties.
Not applicable.
8.
An
estimate of costs when an additional appropriation is needed.
Not applicable.
9. A
deseription
of
any variable that eould affect revenue and east estimates.
It
is believed
that
the macro market condition such as federal government's policy and
incentive programs related
to
the
alternative
energy industry, and the
public~s
Willingness
to embrace new green products/services
will
influence the overall number ofgreen
organizations and
the
investment
activities to those organizations.
10.
RaDges
of revenue or expenditures that are uncertain or difficult to project.
All
revenue
or expenditures are difficult
to
project at this time due
to
the variables
described
in
question 2.
11. H
a
bill
is
likely
to have no fiseaI impact, why that
is
the ease.
Not applicable.
12. Other fiscal
impacts
or
comments.
None.
ll. The foRowing eantributed to and concurred with tbis analysis.
Peter Bang,
Chief
Operating Officer, Department ofEcooomic Development
Helen Vallone, Office of
Management
and
Budget
Date
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Economic Impact Statement
BUl4()..12, Economic Development - Green Organization Supplements
Background:
This legislation would authorize the County to provide qualified applicants a Green
Organization Supplement. The supplement must equal
50%
of the recipients' investment
in
a
qualified green organization, or a lower percentage
set
in the annual operating budget
resolution. up to
$25,000.
1. The
sources of infonnation,
assumptions~
and
methodologies
used.
The Department of Economic Development researched the number of existing eligible
businesses based on the certifications/validations pennitted under the proposed
legislation.
Based
on
this
research the County
has
approximately
180
organizations
designated as green organization by the first three entities, and an indeterminate number
of certified organizations from the last two entities. Since some organizations receive
certification from
a
multiple certifying entities.
it
is
estimated that the County has over
150
green organizations
as
defined in the subject legislation.
2. A description of any variable that could affect the economic impact estimates.
• The total amount of funding available each year for the supplements. While
the legislation permits the supplements to
be
awarded to
a
potentially large
number of businesses. the total amount that could be awarded is subject to
annual budget appropriations.
• The number of businesses receiving the supplement each year.
• The availability of other investment, loan, or support programs at the federal
or state level or
the
availability of private capital. The amount of the County
support for
the
Green Organizations is only
a
supplement and other sources
pf
capital would
be
necessary to initiate or support the expansion of these
organizations.
3. The BiD's positive
or
negative effect, if
any
on employment,
spending, saving,
investment, incomes, and property values
in
the County.
At
an
appropriate funding level, the subject legislation could potentially have a
positive impact on the County's economic indicators. However,
as
mentioned
in
#2
above, there
are
some key variables that
limit
our ability
to
quantify
with
any
certainty the impact on
employment~
spending, saving, investment. incomes, or
property
values.
These variables include:
• the total amount appropriated for the Green Organization supplement each
year;
Page
1
of2
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Economic Impact Statement
Bill
40~
12, Economic Development - Green Organization Supplements
• the type of businesses that receive the supplement (e.g. retail, service,
manufacturing, etc). Investment in different types ofbusmesses would have
varying impacts on employment, spending, investment, and wages; and
• the extent to which the County's supplement would be critical to an
enterprise's decision
to
initiate or expand its operations including hiring,
leasing, purchasing, construction and other related activities.
Based
on
the number of existing eligible businesses and assumptions of available
funding the potential increased investment in Green Organizations is shown in the
table below:
f
Entities
Recei'Ying the Assumed Maximum
Existing Eligible Entities
With Expanded Business Formation
Supplement
150
$
300
$
Total Annual
Investment
Inveslment
50,000
$
7,500,000
$
50,000
$
15,000,000
$
County
Funding
Requir~
3,7.50,000
7,500,000
4.
If
a
Bill
is
likely to have no economic impact, why is
that
the case?
Not Applicable.
See
#2
and
#3.
5. The following contributed to and concurred with this analysis: David Platt and Mike
Coveyou, Finance; Peter Bang, Department of Economic Development
.
@~0{LA-
o
h F. B
ch.
Director
Department of Finance
PageZ of2
®
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Bill 40-12
Economic Development - Green Organization Supplement
Testimony of Steve Silverman, Director, Department of Economic
Development
Good afternoon. For the record, I am Steve Silverman, Director of
Montgomery County's Department of Economic Development, and I am here,
today, on behalf of County Executive Isiah Leggett, to testify in support of this
legislation to support the growth of green businesses in Montgomery County.
In 2010, the County Executive received the Green Economy Task Force's
report, which presented 19 recommendations to support the growth of the green
industry cluster in our County.
Developed at the depth of the recession, the Task Force's mission was to
uncover the local economic value embedded in solving the global environmental
crisis.
In the Task Force's report, Recommendation 8-3 states, "In order to
promote investments in local green technology companies, Montgomery County
should establish a local tax credit (against income, real or personal property
1
@
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taxes) for investors who invest in Montgomery County-based green tech
companies."
We applaud Councilmember Berliner for proposing legislation that will
encourage private capital investment in local green companies. We absolutely
value local businesses that improve the sustainability of our everyday lives with
environmentally sensitive products and services. We are similarly proud of
companies that are committed to operating in a sustainable manner.
Behind their seemingly simple recommendation are hours of discussion
about whether to advocate for investments in green businesses, generally, or to
guide investors to our green technology companies. The phrase "green
technology companies" was ultimately chosen because growing new companies
that will create disruptive innovations and reshape the global market place
should be our goal-both from an economic point of view and out of
environmental necessity.
In light of this intent to be bold in our commitment to combating climate
change while strengthening our economy, we recommend the following items for
your consideration:
2
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1) The proposed criteria could be tiered to reflect the magnitude of investments
or the desires of investors. For example, it might make sense to increase the
minimum amount of a qualified investment for green technology companies, or
modify the percentage of investment that will be credited back to investors, or
even to increase the maximum dollar amount that could be received. My office
would be happy to work with you to determine dollar amounts that would have
the most impact for our green economy. We suggest deploying this tiered
approach as a pilot during the first few years, so that the results can be tracked·
and the criteria easily refined to meet the realities of investors' appetites..
2) To address the uncertainty surrounding the amount of money available for the
Supplement each year, we propose a formula-based allocation process. To
begin, an investor making a qualified investment during a calendar year would
submit an application by January 31 of the following calendar year. (For
example, if an investor invests in a local company in August of 2013, she would
need to submit an application to the County payment by January 31,2014.)
Then, each quali'fled individual investment would be divided by the total amount
of investments during that calendar year to derive the percentage of the annual
3
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appropriation that is paid out. For example, if Investor A invests $50,000 in a
local green business, and qualified green business investments across the
County totaled $1 M, then Investor A would get 5% of the appropriated
Supplement fund.
The County would make payments to all qualified investors by August 31
of each calendar year. By working from a definitive number of investors and
investment amount, the County can make more informed appropriations
decisions.
In terms of the legislation, as it is written, today, we also recommend a
number of clarifying amendments that we will submit to Council staff.
Circle 3:
Line 35(6) Clarify the "Department" as the Department of Environmental
Protection.
4
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Line 48-51 (d): Additional eligibility standards. We recommend rewording
these lines to say, "The County Executive may adopt Method 2
regulations to implement this section."
Circle 4:
Line 55-59
(f)
Amount of supplement. Replace the language with 'The
Supplement paid to each qualified investor is a one-time payment for up to
50% of the investment made to a Green Organization, or a lower
percentage set in the annual budget resolution, up to a maximum of
$25,000."
Line 60 (9) Application required: Recommend defining the Director as the
Director of the Department of Economic Development.
In early-stage investing, we sometimes hear that being 'first looks a lot like being
wrong. We hope that incentive programs like the one, here,today will encourage
investors to take the first step and become leaders in the growth of our green
technology cluster. Thank you for the opportunity to testify today. We look
forward to working with Council as it considers this bill.
5
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MEMORDANDUM
February 6, 2013
To:
N~lUCy
Floreeu
i
Chair, PHED Committee
Montgomety
County
Council
1
From:
Subject:.
Steve
Silverman~Directot
Department of EC('illomic Development
Recollll'l1cnded amendments to Bill
40~
12, Economic Developmertt - Green
Organization Supplement
1 wanlto thank
Coul1cilman
Berliner for intrIXhicingBiIl 40·12, Eco.nomic
Development -
Green Organization
Supplem~nt
on De<;cmbef 4,20
t
t
and holding a
public
hearing
011
~he
bill
on January
22.2013. Based
on testimony
providedatthe
public
hearing
and
feedback
I
have received from
my
departinents and green business
OW(lers,
1
am
recommending
<1ilinnber
of
amendments
to clarity the
in
tent ofthe
bill
and the manner in which It would be
iIriplemented.
The
substa}ltive
changes
are.
discussed
belm'i'.
Name of tbe l'rogram
I
l'ccommendthat
the name ofthe program be
changed.
to
ItGreen
Investor
Irtcentive Program to
clarifY
thepurptl:~e
of
this initiative;
which is to
encourag~
investments in local green
companies
lt
(Line
2),
Defmition
of "Green
Product
or Service'f
I recomme.od that we use a more deliberate dctinitiQf1.
0
fgreen
products
and services. The
amended
language is derived from the international "Otganisatioll for
EcOnt')ljlic
Co-operation
and Developmellt".
The
OEGD
definition
is the fpundation for
many llationaland
intemational.
green
product
and service related
efforts
(Lines 5-12);
D~finiHol1
of
tfQt,I.alificd
G re£nCompany"
I rec()mmend that' the name "Green·
Organization"
bech.l.!lg~d
to i!Green Coulpany"
(Line
21 ).
I FAX.
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Farther, I
l'ccommend that the definition
of
"Qualified Greetl
Company'l
be
ch.1.nged to
mean any
for-proiit company
that provides a green product
Or
service and is verifled
as
a
sustainahle
operation
by
a third
party
(Lines21-29)~
.
The legislation's original inclu$i.onof non-profits and co-ops
conflicted
with
the
ihtentof
the
Green
Economy
Task
.Fotce~
whose
goal was to <;nlarge
the
base of
wealth-creating
businesses
while
addressing
environmental challenges.
Donating
to
a
non-profit or participating
in
it
co-op
is very
different
from invcsthlg in a for-profit
enterprise,in
which an Investor assumes
risk
TIiel'eforc
1
aJ~o
recommend amended
language, wllicll claritIes that an
investnient
is
In return
for stock or sotneothertype ofownership interest (Lines 30-35).
..
HeJinitiQn of "Qualified Investor"
.
r
recommend
increm~ing
the
minimum.inv-estmentfrom
$5,(JOO to $25,000.
We
k110W
from the
existing EDF and Blotechprograms
that
$50,000
is the
most
frequently
invested
ru:tiount
Base(\
on conversatiol1S vvith
local
green
entrepreneurs,
the administrativccostsofreviewmgverysmaU
investment
applications
will
outweigh the
benefits
to ourcompanies.
(Lines
36..
39).
Additionally,
I
recommend
clarifying tl1at a
qualified
investorhavelimHed
ownt;rship intcrL"$t
in
the company and not derive financial
benefit
froni the company.
TIlis
"'111~
for example,
limit a
business
o,"vuer
fron} receiving an incentive
payment
for iIwesting in
her o\vn company
(tines
39~~.
.
.
Atrtountof incen.tivepaYflltllt ii)creased to$SO,OOQ
Based
011
both conversations with
entrepreneurs
and
our o\vn
data
from the EDF and Biotech
progr!;lllls1
the
average
investment
in
local companies
is
approx:im.ately$9Q,OQO, As such,
we
should increase
the
maximum supplement
amount
to $50,000
(Line
100).
Additionally,ifwe want to
grow
the
humber
ofiilvestors
who $upportlocal greell('\ompan:ies,
we
should not
Hmit
investors toa
"one~time."
supplement
(or
'':tncentive
paymenfl as
proposed
in the
amendment). Instead, we should
implement
anuntluaI linliUhat e.nc.ourages iruiividualsto keep
investing in local companies in subsequent years (Lines 97.. 103).
Payment of Incentive
&
Appropriations
\Ve propose a
formula~based
allocation
p.rocess,
where each
qualified
investment vV'ould be
divided
by tile
total amount of
qualit1ed
investments
during
that
calendar
year
to derive the
percentage of the annual
appropriation
that is
paid
out
(Lines &.9-103).
This
method
w1l1ensure that
the County's appropriation amount. 'based
011
its unilateral
decision
and tiscal
condition,wHldrivethe
Program, as
opposed to
the
total
aroounfofqualified
investment dict<.lting
the appropriation
requirement and leaving
theCoullty exposed.
Under this
scenario, then,
ifan individual invests $50,000
in: alocal
green business; and qualified
green
business
investments across
the
county totaled
$lM?then·inv~stor
A woult;l
get
5% ofthe
Program's appropriated amount.
.
2
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Expedited Bill No.
40-12
Concerning: Economic Development ­
Green [Organization Supplement]
Investor Incentive Program
Revised:
11/27/2012
Draft No.l
Introduced:
December 4, 2012
Enacted:
June 4,2014
Executive: _ _ _ _ _ _ _ __
Effective: _---:--:--_ _ _ _ _ __
Sunset Date: _N'--'-o=n:'-"e'-:----:::--_ _ __
ChI _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmember Berliner
AN
ACT to:
(1)
(2)
authorize the County to provide qualified applicants a Green [Organization
Supplement] Investor Incentive Payment
generally amend the law governing County financial incentives for investment in
certain businesses.
By adding
Montgomery County Code
Chapter 20, Finance
Section 20-76C
., .,
.,
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No. 40-12
1
Sec. I. Section 20-76C is inserted as follows:
20-76C. Green [Organization Supplement] Investor Incentive Program.
{ill
Definitions.
In
this Section, the following words have the meanings
indicated:
2
3
4
5
6
7
Green product or service
means
~
product or service that measures,
prevents, limits, minimizes or corrects environmental damage to water,
air and soil, as well as problems related to waste, ecosystems,
biodiversity, habitat or natural resource depletion. All claims related to
environmental attributes, as applicable, for
~
8
9
product or service, shall
10
11
conform to current or future guidelines published
Qy
the Federal Trade
Commission or other appropriate entities designated
Qy
the Director of
the Department of Environmental Protection. [the delivery of
~
product
or service in the following areas:
12
13
14
15
ill
ill
renewable, clean, or distributed energy;
energy efficiency products or services;
sustainable farming and food distribution;
water quality and conservation;
pollution reduction and remediation;
recycling, reuse, and resource recovery; or
biodiversity and natural resource conservation.]
16
17
18
19
20
ill
ill
ill
ill
m
21
22
Qualified green [organization[ company
means any entity of any form
duly organized and existing under the laws of any jurisdiction for the
purpose of conducting business
for profit excluding
~
23
24
sole
proprietorship [any business, cooperative, or non-profit] that:
25
26
ill
provides
~
green product or service or uses
~
~
proprietary
technology which adds value to
green product or service
or is
-2­
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BILL
No.
40-12
27
28
engaged in research or development of g proprietary
green product or
service;
and
29
30
31
32
33
ill
implements
fI:
sustainable operation as verified
Qy
g third party.
Investment
means the contribution of money in cash or cash eguivalents
expressed in United States dollars, at g risk of loss, to g
qualified green
company
in exchange for stock, g partnership or membership interest,
or other ownership interest in the eguity of the
qualified green
company,
title to which ownership interest shall vest in the
qualified
investor
but does not include debt.
34
35
36
Qualified investor
means any individual or entity that [invests] makes
an investment of at least $25,000 in g
qualified
[Montgomery County]
green
[organization]
company
and that is reguired to file an income tax
37
38
39
return in any jurisdiction.
Qualified investor
does not include g
40
41
gualified pension plan, individual retirement account, or other gualified
retirement plan under the Employee Retirement Income Security Act of
1974, as amended, or fiduciaries or custodians under such plans, or
similar tax-favored plans or entities under the laws of other countries or
illlY
individual or entity that has an ownership interest in the
qualified
42
43
44
45
green .company
other than from
g
previous
investment,
which previous
investment
Qy
itself or with the additional
investment
does not create
fI:
46
47
48
49
50
51
52
25% or greater equity holding
Qy
the
qualified investor
in the
qualified
green company,
or any individual or entity deriving any financial
benefit, including salary or other compensation, from the
qualified
green company
in which the
qualified investor
makes an
investment.
Sustainable operation
means an organization validated
Qy
fI:
third
l2ill!Y
under one of the following:
-3­
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BILL
No. 40-12
53
54
55
56
57
ill
Montgomery County [Certified] Green Business Certification
Program, as certified
Qx
the Department of Environmental
Protection;
58
59
ill
ill·
ill
ill
®
(Q)
[Certified] BLab's B Corp Certification;
Green America Gold Certification;
Green Seal Certification;
International Organization for Standardization ISO 14001
[certified] Certification; or
,
60
61
any other third
illY!Y
validation approved
Qx
the Department of
62
63
Environmental Protection.
Incentive Payment
[gf
supplement!.
The Director of Finance must
~
64
65
66
subject to the amount of the annual appropriation in that fiscal year, an
[Green
Organization
Supplement]
incentive
payment
to
each
[applicantJq ualified investor who meets certain eligibility standards.
67
68
69 .
70
71
ill
Eligibility standards.
Aln applicantJgualified investor, who need not
be
~
County resident, is eligible to receive the [Supplement] incentive
payment ifthe [applicant] qualified investor:
ill)
@
is
~
qualified investor; and]
invests] makes an investment in!! qualified 2reen [organization]
company that:
72
73
74
75
([A]1)has its headquarters and base of operations
in
the County; or
(fB]2)has signed
~
lease for not less than five
ill
years to open
~
qualified green company [facility] constituting its headquarters
and base of operations in the County; and
76
77
78
ill
has been in business for less than 10 years and employs [less]
fewer than 50 people and does not have its securities publicly
traded on any exchange.
-4­
79
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BILL
No. 40-12
80
81
82
83
84
85
86
87
@
Additional eligibility standards.
The County Executive, hy Method
regulation, may impose other eligibility standards.
2
However, those
standards must not make any person ineligible to receive the
[Supplement) incentive payment who would be eligible under
subsection
@
W
Ineligible investments.
LA
qualified]
An
investor must not receive
ill
supplement for capital] an incentive payment [used] for any investments
m:
88
89
90
ill
ill
ill
geothermal, or solar photovoltaic, or similar system; or
any building green or energy efficiency improvement,
The [Supplement paid]
Amount
Q[
[supplement/incentive payment.
91
incentive payment made, subject to the amount of the annual
appropriation in that fiscal year, to each [recipient]
qualified investor
shall be equal to the amount of the
investment
made hy the
qualified
investor,
divided hy the total amount of
investments
made hy all
qualified investors
within the same calendar year, multiplied hy the
total amount of funds appropriated for the green investor incentive
program in that year. The incentive payment made to any
qualified
investor
in any single fiscal year shall not exceed the lesser of
ill
500/0
of the investment made hy the
qualified investor
in that fiscal year or
(ii) 15% of the total annual and supplement appropriation for the green
investor incentive program in that fiscal year or (iii) $50,000.
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
I
is
!!
one-time Supplement and must equal 500/0 of the recipient's
investment in
!!
qualified green organization, or
!!
lower percentage set
in the annual operating budget resolution,!U2 to $25,000.]
(g}
The Director of the Department of Economic Development shall hy
January 15
th
of each calendar year compile
!!
list of each
qualified
-5­
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BILL
No.
40-12
107
108
109
110
111
112
113
114
115
investor
making an
investment
in
£
Qualified green company
and the
amount of that
investment
during the preceding calendar year, based on
the applications and the supporting documents as submitted
Qy
Qualified investors,
in order to calculate the amount of the incentive
payment to be made to
£
Qualified investor
under Subsection
m
and
ill
to
may take any other action necessary to administer the incentive
payment. The Executive may issue regulations under Method
implement this Section.
([g]h)
Application required.
The Director of the Department of Economic
Development must require each [eligible person]
Qualified investor
to
submit an application for the [Supplement] incentive payment and may
take any other action necess£ry to administer the [Supplement]
incentive payment. The Executive may issue regulations under Method
116
117
118
119
120
121
122
123
124
125
126
127
128
129
ill
to specify an application process and otherwise implement this
Section.
.ill1ill
Fraudulent applications.
A person who submits
£
false or fraudulent
application, or withholds material information, to obtain an incentive
payment under this Section has committed
£
Class A violation.
In
addition, the person must repay the County for all amounts improperly
paid and all accrued interest and penalties that would
amounts as if they were overdue taxes.
rumlY
to those
LA
person who violates this
Section is liable for] Any unpaid amount shall constitute
£
lien on all
real and personal property owned
Qy
the investor in the County and
shall be subject to collection and lien as any other unpaid tax and the
County shall be entitled to recover as part of any such tax enforcement
action or lien enforcement action all court costs and expenses and
reasonable attorney's fees of the County incurred in any [civil] tax
-6-
130
131
132
133
@
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BILL
No.
40-12
134
135
136
137
138
139
140
141
enforcement or lien enforcement action brought
ill:
the County to
recover any payment, interest, or penalty. The County may in addition
or in the alternative collect any amount due, and otherwise enforce this
Section,
ill:
any other appropriate legal action and in any such action
shall likewise be entitled to recover in addition to the amount due all
court costs and expenses and reasonable attorney's fees of the County
incurred in any such action brought
Qy
the County to recover any
payment, interest, or penalty.
-7­
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OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE, MARYLAND 20850
Isiab Leggett
County Executive
MEMORANDUM
March 15,2013
TO:
FROM:
SUBJECT:
Roger Berliner, Councilmember
I,jab
Leggett, County Executive
~~
r;~
____­
FY14 Budget - Economic Development - Green Organization Supplement
Thank you for introducing Bill 40-12, Economic Development Green
Organization Supplement and for your ongoing leadership role in advocating for this program.
As you well know, Bill 40-12 implements one of the recommendations of the Green Economy
Task Force (Task Force) by creating a Green Organization Supplement that is similar to the
County's Biotechnology Investment Incentive Tax Credit Supplement.
I established the Task Force in 2009 with your strong support in the midst of the
recent recession. Its mission was to uncover the local economic value embedded in solving
global environmental issues. In order to promote investments in local green technology
companies, the final 2010 Task Force report recommended that the County establish a local tax
credit program for individuals and entities that invest in County-based green technology
companies. Bi1l40-12 responds directly to this recommendation and I am grateful for your
continued advocacy for creation of this program.
Given
its
significance to the local economy, I anticipate that Council will approve
Bill 40-12 in the near future. To ensure that there is no delay in implementing the program, I am
including $500,000 for this program in my FY14 recommended operating budget. Thank you
again for your strong leadership on this important issue. I look forward to working with you on
this issue and many others as Council considers my recommended FY 14 operating budget.
c:
All County Councilmembers
Joseph Beach, Director, Finance Department
Marc Hansen, County Attorney
Bob Hoyt, Director, Department of Environmental Protection
Jennifer Hughes, Director, Office of Management and Budget
Steve Silverman, Director, Department of Economic Development
montgomerycountymd.gov/311
'
240-773-3556 TTY
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AGENDA ITEM #5A
April 16, 2013
Introduction
MEMORANDUM
April 12,2013
TO:
FROM:
SUBJECT:
County Council
Amanda Mihill, Legislative
Attorne~JQO
Action: Bill 40-12, Economic Development - Green Organization Supplement
Planning, Housing, and Economic Development Committee recommendation (3-0): enact
with amendments.
Bill 40-12, Economic Development - Green Organization Supplement, sponsored by then­
Council President Berliner and Councilmember Leventhal, was introduced on December 4,2012.
A public hearing was held on January 22 at which a representative of the Executive supported
Bill 40-12 (©20). Planning, Housing and Economic Development Committee worksessions
were held on January 28, February 11, and April 1.
Bill 40-12 would authorize the County to provide qualified applicants a Green Organization
Supplement. The County would supplement 50% of the recipient's investment in a qualified
green organization, or a lower percentage set in the annual operating budget resolution, up to
$25,000. This bill would implement one of the recommendations from the Green Economy Task
Force (see report excerpts on ©9). The Executive submitted a letter in support of Bill 40-12 and
included $500,000 in his FY14 recommend operating budget for this initiative (©34).
This program would be structured similarly to the County's Biotechnology Investment Incentive
Tax Credit Supplement (§20-76A). To provide some context, in 2012, the County provided
$500,000 in supplement funds. According to data provided by the Department of Economic
Development, there were 66 eligible transactions. The range of awards provided was $2,117.75
to $42,354.93 with the average award being $7,575.76.
Committee worksessions/recommendation
The Department of Economic Development recommended several amendments to Bill 40-12.
These amendments would:
• Redefine "green product or service" as "a product or service that measures, prevents,
limits, minimizes or corrects environmental damage to water, air and soil, as well as
problems related to waste, ecosystems, biodiversity, habitat or natural resource depletion.
All claims related to environmental attributes, as applicable, for a product or service,
shall conform to current or future guidelines published by the Federal Trade Commission
 PDF to HTML - Convert PDF files to HTML files
or other appropriate entities designated by the Director of the Department of
Environmental Protection" (©2, lines 5-20).
Add a definition of "investment" to mean "the contribution of money in cash or cash
equivalents expressed in United States dollars, at a risk of loss, to a qualified green
company in exchange for stock, a partnership or membership interest, or other ownership
interest in the equity of the qualified green company, title to which ownership interest
shall vest in the qualified investor but does not include debt" (©2, lines 21-26).
Increase the minimum investment in a qualified green company from $5,000 to $25,000
and clarify that an investor should have limited ownership interest in the company and
should not derive financial benefit from the company (©3-4, lines 39, 47-54).
Establish an annual limit (rather than one-time supplement) that is the lesser of 50% of
the investment made by the investor, 15% of the total appropriation for the Incentive
Program, or $50,000 (©5-6, lines 93-109).
Provide for a formula-based allocation process where each qualified investment would be
divided by the total amount of investments during the calendar year to derive the
percentage of the annual appropriation that is paid (©6, lines 110-119).
Change the name of the supplement to "Green Investor Incentive Program".
Eligibility
At its February 11 worksession, Committee members expressed concerns regarding
the scope of companies that would be eligible for the incentive. Councilmember Berliner,
Executive staff, and Council staff discussed the issue and recommended the following
amendment to the definition of "qualified green company" (©3, lines 27-37):
Qualified green [[organization]] company
means any [[business, cooperative, or non­
profit]] entity of any form duly organized and existing under the laws of any jurisdiction
for the purpose of conducting business for profit.
exclu~ing
a sole proprietorship, that:
ill
Hprovides
~
green product or service]] develops an innovative, new to the
market. technology, or a unique combination of technologi{!s, available
only from that compaJ1Y. which adds significant value to a green product
or service or is engaged in research or development of a such technology
or technologies; and
ill
implements
~
sustainable operation as verified
Qy
~
third
~
This original language would allow any company that "provides a green product or service" to
be eligible for an incentive payment.
I
The revised language would limit the incentive to those
companies that either: (1) develop an innovative technology that adds significant value to a green
product or service; or (2) is engaged in research or development of a technology.
The
Committee supported this language and recommended this amendment (3-0).
Applicability to renewable energy
As introduced, Bill 40-12 would prohibit an investor from
receiving a payment for a geothermal or solar photovoltaic system or a green or energy
efficiency improvement.
Committee members recommended amending
Bill
40-12 to clarify
that an investor could not receive an incentive payment for the installation of geothermal
or solar photovoltaic systems
(©5, line 90).
The Committee recommended (3-0) enacting
Bill
40-12 with the above amendments.
1
If the company implements a sustainable operation.
2
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This packet contains:
Committee
Bill
40-12
Legislative Request Report
Excerpts from the Green Economy Task Force Report
Fiscal
and
Economic Impact Statement
Silverman testimony
Silverman memorandum
Executive budget memorandum
F:\LA w\BILLS\1240 Green Organization Supplement\ACTION Memo.Doc
Circle
#
1
8
9
15
20
25
34
3
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Expedited Bill No.
40-12
Concerning: Economic Development ­
Green [[Organization Supplement]]
Investor Incentive Program
Revised:
4/3/2013
Draft No. _3_
Introduced:
December 4, 2012
Enacted:
June 4, 2014
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: ----'-'!.No><.!n..:..>:e'--_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmembers Berliner and Leventhal
AN
ACT to:
(1)
(2)
authorize the County to provide qualified applicants a Green [[Organization
Supplement]] Investor Incentive Pavment; and
generally amend the law governing County financial incentives for investment in
certain businesses.
By adding
Montgomery County Code
Chapter 20, Finance
Section 20-76C
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law
by
original
bill.
Added by amendment.
Deletedfrom existing law or the bill
by
amendment.
Existing law unafficted by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No.
40-12
Sec.
1.
Section 20-76C is inserted as follows:
2
3
4
20-76C. Green [[Organization Supplement]] Investor Incentive Program.
(ill
Definitions.
In
this Section, the following words have the meanings
indicated:
Green product or service
means [[the delivery of
f!
product or service in
5
6
7
the following areas:
8
ill
ill
renewable, clean, or distributed energy;
energy efficiency products or services;
sustainable farming and food distribution;
water quality and conservation;
pollution reduction and remediation;
recycling, reuse, and resource recovery; or
biodiversity and natural resource conservation.]]
9
10
11
ill
G1
ill
®
ill
12
13
14
a product or service that measures, prevents. limits. mInImIZeS, or
corrects environmental damage to
water~
air. or soil. as well as problems
related to waste, ecosystems, biodiversity, habitat or natural resource
depletion. All claims related to environmental atj:ributes, as applicable,
for a product or service. must conform to guidelines published by the
Federal Trade Comnlission or other appropriate entity designated by the
Director of Environmental Protection.
Investment
means the contribution of money in cash or
ca~h
eguivalents
15
16
17
18
19
20
21
22
23
24
25
expressed in United States dollars. at a risk of loss. to a gualified green
company in exchange for stock, a partnership or membership
inter~st.
or
other ownership interest in the eguity of the gualified green company,
title to which ownership interest vests in the gualified investor but does
not include debt.
26
F:\LAW\BILLS\1240 Green Organization Supp\ement\BiIl3.Doc
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BILL No. 40-12
27
28
Qualified green [[organization]] company
means any [[business,
cooperative, or non-profit]] entity of any form duly organized and
existing under the laws of any jurisdiction for the purpose of conducting
business for pr()fit. excluding a sole proprietorship, that:
29
30
31
ill
[[provides
~
green product or service]] develops an innovative,
32
33
34
35
new to the marl<,et. technology, or a unique combination of
technologies, available only from that company. which adds
significant value to a green product or service or is engaged in
research or development of a such technology or technologies;
and
36
37
ill
implements
~
sustainable operation as verified by
~
third party.
38
39
40
Qualified investor
means any individual or entity that invests at least
[[$5,000]] $25.000 in
~
qualified [[Montgomery Countyl1 green
[[organization]] company and that is required to file an income tax
return in any jurisdiction.
Qualified investor
does not include:
41
42
ill
~
qualified pension plan, individual retirement account, or other
43
44
45
46
qualified retirement plan under the Employee Retirement Income
Security Act of 1974, as amended, or fiduciaries or custodians
under such plans, or similar tax-favored plans or entities under
the laws of other countries;
47
48
49
50
ill
an individual or entity that has an ownership interest in the
qualified green company other than from a previous investmcm1
which previous investment by itself or with the additional
investment does not create a 25% or greater equity holding by the
qualified investor in the qualified green company; or
51
F:\LAW\B1LLS\1240 Green Organization Supplement\Bi\l3.Doc
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BILL
No. 40-12
52
53
54
OJ
an individual or entity deriving any financial benefit. incllJfiing
salary or other compensation. from the qualified green company
in which the qualified investor makes an investment.
55
56
57
58
Sustainable operation
means an organization validated
Qy
~
third
12ill1Y
under one of the following:
ill
Montgomery County [[Certified]] Green Business Certification
Program, as certified
Qy
the Department of Environmental
Protection;
59
60
61
62
ill
ill
ill
[[Certified]] B Corp Certification from BLab;
Green America Gold Certification;
Green Seal Certification;
International Organization for Standardization ISO 14001
[[certified])
Certification~
63
64
65
66
67
68
69
ill
@
or
any other third
12ill1Y
validation approved
Qy
the Department of
Environmental Protection.
{Q}
Incentive Payment
[[Q{
supplement]]:.
The Director of Finance must
~
subject to the amount of the annual appropriation in that fiscal year:!
~!!
[[~
Green Organization Supplement]]
incentive payment to each
70
[[applicant]] qualified investor who meets certain eligibility standards.
71
72
73
ill
Eligibility standards.
[[An
applicant]] A qualified investor, who need
not be
~
County resident, is eligible to receive the [[Supplement]]
incentive payment if the [[applicant]] qualified investor:
74
75
76
[[ill
ill]]
is
~
qualified investor; and
invests in
~
qualified green [[organization]] company that:
[[(A)]]
ill
has its headquarters and base of operations in the County; or
o
F:\LAw\BILLS\1240 Green Organization Supplement\Bili 3.Doc
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BILL
No. 40-12
77
78
[[(B)]]
ill
has
signed
~
lease for at least 5 years to open
~
[[facility]]
qualified green company with its headquarters and base of
operations in the County; and
79
80
81
82
83
84
85
ill
has been in business for less than
lQ
years and employs less than
50 people and does not have its securities publicly traded on any
exchange.
@
Additional eligibility standards.
The County Executive,
Qy
Method
2.
regulation, may impose other eligibility standards.
However, those
standards must not make any person ineligible to receive the
[[Supplement]] incentive payment who would be eligible under
subsection
~
86
87
88
ill
Ineligible investments.
[[A qualified]]
An
investor must not receive
[[any]]~
[~
89
90
91
supplement for capital] an incentive payment [[used]] for
ill
ill
ill
the installation of any geothennal, or solar photovoltaic, or
similar system; or
any building green or energy efficiency improvement.
Amount
gf
[[supplement]] incentive payment.
The [[Supplement
92
93
94
95
paid]] incentive payment made, subiect to the amount of the annual
appropriation in that fiscal year, to each [[recipient is
~
~
one-time
~
96
97
98
99
100
101
102
Supplement and must equal 50% of the recipient's investment in
qualified green organization, or
operating budget resolution,
1!Q
lower percentage set in the annual
to $25,000.]] qualified investor must
equal the amount of the investment made by the qualified investor,
divided by the total amount of investments made by all qualified
investors in the same calendar year, multiplied by the total amount of
funds appropriated for the green investor incentive prQg!M1 in that year.
F:\LAW\BILLS\1240 Green Organization Supplement\BiIl3.Doc
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BILL
No. 40-12
103
104
105
106
107
The incentive payment made to any qualified investor in any single
fiscal year must not exceed the lesser of:
ill
(2J
50% of the investment made by the qualified investor in that
fiscal year;
150/0 of the total annual and supplement appropriation for the
green investor incentive program in that fiscal
y~ar;
or
108
109
110
111
112
113
114
ill
$50,000.
W
In order to calculate the amount of the incentive payment to be made to
a qualified investor under Subsection
(fl,
the Dire<;tor of the Department
of Economic Development must. by JanuaryJ5 of each calendar year,
compile a list of each qualified investor making an investment in a
qualified green company and the amount of that investment during the
preceding calendar year. This list must be determined using the
applications and any supporting documents qualified investors submit,
The Director may take any other action . necessary to administer the
incentive payment. The Executive may issue regulations under Method
(2) to implement this Section.
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
[[{g)ll
flU
Application required
The Director of the Department of Economic
Development must require each [[eligible person]] qualified investor to
submit an application for the [[Supplement]] incentive payment and
may take any other action necessary to administer the [[Supplementll
incentive payment. The Executive may issue regulations under Method
ill
[[{h}]]
to specify an application process and otherwise implement this
Section.
ill
Fraudulent applications.
A person who submits
£1
false or fraudulent
application, or withholds material information, to obtain
[[£1]]
an
incentive payment under this Section has committed
£1
Class A
~
F:\LA\V\BILLS\1240 Green Organization Supplement\Bill 3.Doc
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BILL
No. 40-12
130
131
132
133
134
135
136
137
138
139
140
Approved:
violation. In addition, the person must repay the County for all amounts
improperly paid and all accrued interest and penalties that would
mmlY
to those amounts as if they were overdue taxes. A person who violates
this Section is liable for all court costs and expenses and reasonable
attorney's fees of the County incurred in any civil action brought by the
County to recover any payment, interest, or penalty. The County may
collect any amount due, and otherwise enforce this Section, by any
other appropriate legal action.
Nancy Navarro, President, County Council
141
Approved:
Date
142
143
Isiah Leggett, County Executive
144
This is a correct copy ofCouncil action.
Date
145
146
Linda M. Lauer, Clerk ofthe Council
Date
F:\LA\V\BILLS\l240 Green Organization Supplement\BiII 3.Doc
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LEGISLATIVE REQUEST REPORT
Bill 40-12
Economic Development
-
Green Organization Supplement
DESCRIPTION:
Authorizes the County to provide qualified applicants a Green
Organization Supplement. .The County supplement 50% of the
recipient's investment in a qualified green organization, or a lower
percentage set in the annual operating budget resolution, up to
$25,000.
Need for further incentives to invest in local green technology
companies
To promote investment in local green technology companies
Finance Department, Department of Economic Development
To be requested.
To be requested.
To be requested.
To be researched.
Amanda Mihill, Legislative Attorney, 240-777-7815
Applies to companies anywhere in the County.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENAL TIES:
Not applicable
F:\LAW\BILLS\12xx Green Organization Suppiement\Legisiative Request Report.Doc
(j)
f:\law\bills\1240 green organization supplement\legislative request report.d<
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Green Economy Task Force
Final
Report
9
Overview ofthe green economy in Montgomery County, MD
Montgomery County is laying the foundation for a new green economy. which will create, expand
and attract businesses that provide environmentally sustainable products, green technologies and
services. With its history of progressive policies, engaged residents and innovative entrepreneurs,
Montgomery County can nurture its nascent green industries and transform its entire economy inco
one of the greenest and most successful in the region-and beyond.
This report documents the Montgomery County Green Economy Task Force's recommendations
for growing a sustainable economy in the 21st century.
It
covers a variety of topics, including raising
substantial capital for new green technologies, spurring innovation through competition, simplifying
bureaucracy for green businesses and building a vibrant, local food system.
TIlese are not small recommendations that can be done qUickly by one department or agency. They
involve new partnerships, substantial private investments, advocacy at multiple levels of government
and a county-wide commitment
to
a new way of doing business. In some cases, the inspiration for
these recommendations comes from other jurisdictions like Silicon Valley, Austin and Toronto who
are leaders in sustainable development. The Task Force has examined these programs and tailored
some of them
to
fit Montgomery County's strategic advantages.
Other jurisdictions have set ambitious goals for green job growdl, including Vancouver, BC, which
hopes to add 20,000 by 2020 and Silicon Valley, which aims to add 25,000 clean-tech jobs within
15
years.] TIle Task force hopes and expects that if the recommendations are implemented, something of
a similar nature might be achievable in Montgomery County.
But, in addition to new jobs, the Task Force recommends that the success of the green economy
should not be determined by usual measures like tax receipts or new construction starts. Instead,
leaders should analyze the County's triple bottom line. Evaluating success using a "triple bottom line"
approach means that we no longer look only at financial health, but we are now obligated to consider
economic prosperity, environmental quality and social justice equally, with each policy decision we
make.
By implementing dle recommendations outlined in this report, and committing to a triple bottom
line approach for evaluation, the potentia.1 for Montgomery County's green economy is only limited
by our researchers' and entrepreneurs' imaginations. The Task Force is confident that Montgomery
COll1lty will become a green economic engine that supports profitable business ventures while
contributing to a sustainable society.
Charge to the G1't!en Economy Task Force
In early 2009, the County Executive commissioned the 29-member Green Economy Task Force
for the purpose of charting "a bold new course for Montgomery County focused on creating
opportunities for new and existing 'green' businesses, spurrilig innovation, increasing employment,
and developing next generation technologies."
"Vancouver
2020
A Bright Green Furure". David
R.
Boyd
&
The Greenest
City
Action Team. 2009
1
(f)
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10
Montgomery County, Maryland
The Task Force was asked
to
build upon several strengths inherent in Momgomery County:
1)
a successful track record in promoting the growIh of
die
local biotech industry;
2)
progressive
environmental policies; and 3) existing environmental and economic development initiatives.
Examples of key policies include green building legislation, which requires both privately-construcIed
buildings and new County-owned buildings to achieve certain LEED2 standards, and the Home
Energy Loan Program, a new financing mechanism that allows residents
to
make energy efficient
home improvements that are repaid through property assessments.
In
addition
to
these policies, key
initiatives like the Sustainability Working Group,' and important partnerships with organizations like
the Maryland Clean Energy Center;l informed the Task Force's work.
The County Executive appointed Dick Wegman, an environmental attorney with broad experience in
federal, state and local environmental issues, as the Task Force chairman. 1he Task Force deliberated
for ten months to develop the recommendations outlined in this report. The schedule included six
full Task force meetings and dozens of smaller subcommittee meetings. 1he subcommittees were
created to target broad categories of the green economy, including: Agriculture, Finance, Innovation,
Land Use, Policy/Regulation, Promotion and \'Vorkforce. The Task Force's consultants, Sustainable
Design Group, provided the subcommittees with topical background information including
relevant green initiatives in other jurisdictions. Several of these programs are referenced in the final
recommendations.
'The purpose of this report is
[0
provide the Leggett Admin.istration with expert guidance and input
regarding the investments, policies and strategic partnerships that will nurture Montgomery County's
nascent green economy. The ultimate goal is
to
increase Montgomery County's triple bottom line by
generating e(;onomic, environmental and social value for
1001
businesses, residents and the region.
Lessonsfrom our biotech history
Beginning a quarter of a century ago, Montgomery County embarked on a major biotechnology
initiative designed
to
stimulate the local economy by taking advantage of its proximity to major
national medical research facilities, including the National Institutes of Health, U.S. Army \l{;'alter
Reed lvledical Center, Bethesda Naval Medical Center and related entities such as the Food and
Drug
Administration. To convert these r.::search assets into commercial opportunities; Nfontgomery
County pursued the following initiatives:
Purchased close to
300
acres for the world-renowned Shady Gro:.re
Lite
Sciences Center, whose
land value today approximates
$150
million;
'HIe Leadership in Energy and Environmental Design (LEEO) rating system is a third party certification
program and the nationally accepted benchmark tor high performance green buildings.
3
In January 2009. Montgomery County issued a ground-breaking Climate Protection Plan, prepared
by
the
legislatively created Sustaillability Working Group. The Susrainability Working Group's recommendations
will
create a demand for green companies, through green building laws, greenhouse gas reduction mandates and
other quality of/ife recommendations .
.\ The Maryland Clean Energy Center, headquartered at the Universities at Shady Grove, was created by the
State legislamre and the governor
ill
2008 to develop dean technology development and dean tech jobs in the
state. The Center's mission
is
to provide a coordinated approach to building a strong, clean ellergy economy
in Maryland through n:chnolob'Y commercialization, business incubation and workforce development and
1
training.
@
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Green Economy
Ta.sk
Force
I~inal
Report
11
Coordinated the donation of 85 acres of private land to the University of Maryland and The
Johns Hopkins University for their academic campuses and for the Center for Advanced
Research in Biotechnology (CARB);
Infused over
$17
million in infrastructure for the Life Sciences Center and for Hopkins'
Bdward Campus;
Constructed Hopkins' first academic building (a
$12
million capital outlay), and financed the
construction of CARB;
Developed a life sciences business incubation strategy, which began with the $10 million
Maryland Technology Development Center, and now includes a total of five incubators; and
• Advocated at the State level for major capital investments in the University of Maryland, Johns
Hopkins and CARE by continually highlighting these assets in the County's state legislative
priorities.
The deeper pockets of the state, through financing agencies like MEDCO and TEDCO, and
the Sunny Day Fund, and the attraction of out of state venture capital, were
also
needed to grow
companies such as Medlmmune and Human Genome Sciences.
As
a result of this 25 year effort, Montgomery County's biosciences industry now generates combined
annual revenues of
$2.36
billion, employs more than 9,200 private sector employees, and is often
ranked as one of the top ten biotechnology clusters in the nation.
5
Strategic advantages for growing
the
green economy
The Green Economy Task Force believes that even though there are significant differences between
the biotech industry and the green technology industry, by implementing certain strategies outlined
in this report, the probability of growing a robust green economy in Montgomery County is quite
high.
'lhe COWlty'S innate strengths, which promoted the growth ofbiorech,
will
again be the bedrock for
the new, green economy. These strengths include an engaged private sector, bold po
Ii
tica1 leadership,
proximity
to
federal agencies, partnerships with academia and a highly-educated workforce. For
example, the local government has a history of progressive leadership, which has already made
significant strides in terms of green policies and sustainability. A recent study by the National
Association of Counties, entitled "Local Leaders in Sustainability," described Montgomery County
as "a progressive leader on green building and sustainabiUty. Montgomery County will certainly be
a county to watch as recent legislation takes effect and local policymakers go to new and innovative
lengths to promote green buildings in their communities."6
Additionally, Montgomery County has a highly engaged professional community.
It
has experience
building public-private partnerships and facilitating communication and collaboration between
citizens, government, industry, researchers and academia. These professionals include employees
at several federal installations related to energy, climate change and other green economy issues,
5
6
Maryland-National Capital Park and Planning Commission (r...'l·NCPPC).
NACO - Local Leaders in SlIstainabUity Green Counties. Brooks Rainwater
&
Cooper Martine.
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12
Montgomery County, Maryland
including the National Institute of Standards and Technology, the National Oceanic and Atmospheric
Administration, and the Department of Energy. Because of these federal partners, Montgomery
County is particularly well positioned to take advantage of the new federal and state suppOrt for
strategies that utilize sustainability as a driver of economic development. And, unlike the biotech
experience, there are existing large corporations in the County that can provide sources of technology
as well as generate demand for green
good~
and services. Local sustainability strategies
will
also serve
as demand generators.
Presently, Montgomery County's companies and businesses benefit from access to a well-educated
and highly skilled workforce of 500,000 people. Nearly 60 percent of the county's labor force holds a
bachelor's degree and 34 percent have earned a graduate or professional degree, making Montgomery
County an
advantageou.~
location for new and expa.nding green businesses.
Finally, Montgomery County has over 93,000 acres of viable farmland, which includes 577 farms and
350 horticulture enterprises, producing $251 million annually and employing 10,000 people.
Combined, these strategic advantages give us an opportunity
to
become a leading jurisdiction in the
green economy.
Defining the green economy
The green economy means different things to different people. With respect
to
many of the
recommendations contained in this report, regulators or county officials in carrying out their
responsibilities may find the Governor's Workforce Investment Board (G\VIB) definition helpful.
The GW1B treats a company as "green" if it is "directly engaged in the development, manufacture,
sale and distribution, installation, and application of products and services that promote energy
security and!or protects our environment."s However, this approach would not be appropriate
for some of the other recommendations in this report. For example, the Task Force ['ecommends
encouraging the consumption of locally produced products and food; dearly, in this area, a different
metric would be needed. In other instances, the construction or operation of a LEED-certified
building may qualif}T as "green," and the GWIB test would not fit here either.
\'(;'hat is the same are the basic principles that underlie all of the recommendations in this
report: (1) dependence on carbon-based sources of energy is rapidly becoming economica.lly and
environmentally
unsu.~tainable
and
(1)
Montgomery County can playa major leadership role in
finding new ways
to
meet these challenges. Thus, after considering whether a single definition of the
green economy should be adopted, in the end the Task F6rce decided that a one-size-fits-all approach
would not be useful.
Research
&
Technology Center - Montgomery County Planning Department.
S
www.mdworkforce.com
7
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Green
Economy
Task Force
Final Report
13
Benchmarks
At this time, there is no national definition of what constitutes the "green economy," so it is difficult
to benchmark and monitor Montgomery County's progress against other jurisdictions. For example,
a contractor may build green homes, an HVAC contractor may specialize in energy efficient
equipment, or an architect may design only LEED-rated buildings. However, common data sources
like NAICS Codes are of limited use, because they don't have a special green designation-every
architect would fall under the same code. Similarly, there
is
no single source of data on the green
industry within Montgomery County. For this report, the consultants used. a variety of data sources,
including industry associations serving specific technology sectors and consumer guides.
According to the consultant,' preliminary estimates, there are over 200 businesses in Montgomery
County that contribute to the green economy. Montgomery County's green industry can be divided
into several categories: Energy Companies, Products and Services, Federal Installations, Finance and
Venture Capital, and. Private Green Technology R&D. Additionally, the Task Force acknowledges
the importance of existing companies that are implementing sustainable business practices, regardless
of their industry, because they create significant demand for local green products. The following are
some examples of existing businesses and organizations already impacting Montgomery County's
green economy:
Energy Companies:
Preliminary research shows 11 companies that provide energy-related products
and services in Montgomery County (not counting energy auditors). One of the most successful
companies is Standard Solar, Inc., which was started in 2004, and currently employs more than 60
people. Not only was Standard. Solar involved in one of the east coast's largest solar electric system
installations for the US Department of Energy, the company was recently part of the region's largest
Power Purchase Agreements in Upper Marlboro, MD.
Green Products and Services:
The available data indicates that the largest sector of green business
in Montgomery County is green products/services. These services include everything from green
cleaning companies to energy auditors and consultants. Additionally, there are an estimated 410
LEED Accredited Professionals working in Montgomery County. An example of a green product
provider is Amicus Green Building Center, in Kensington, MD, which offers a range of green
building products and supplies. In addition to providing green products, Amicus follows triple
bottom line principles in its operations.
Federal Installations:
There are three federal installations in Montgomery County whose work
supports the advancement of green technology. For example, the National Institute of Standards
and Technology (NIST), in Gaithersburg, is committed
to
studying and solving issues associated
with a variety of green technology standards, including high performance buildings and sustainable
infrastructure materials.
Finance and J..'enture Capital:
Investors are an important component to a healthy green industry,
because they help companies bring their technologies to market. Calvert Investments, an
environmentally and socially responsible investment firm in Bethesda, manages $14 billion in assets.
Private Green Technology R&D:
Montgomery
County
is horne
to
several large corporations that
are diversifying their businesses
to
include green technology. One example is Lockheed Martin, the
country's largest defense contractor, which is now investing in smart grid R&D.
@
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Green Economy
Task
Force
Final
Report
33
B~3)
Encourage private investment in green technology through tax incentives
In order to promote investments in local green technology companies, Montgomery County should
establish a local tax credit (against income, real or personal property taxes) for investors who invest in
Montgomery County-based green tech companies.
Model Program:
The Maryland Biotechnology Investment Tax Credit provides income
tax
credits for investors in
qualified Maryland biotechnology companies to offer incentives for investment in seed and early
stage, privately held biotech companies. The value of the credit is equal
to
50% of an eligible
investment made in a qualified Maryland biotechnology company during the taxable year. lbe
maximum amount of the credit cannot exceed $250,000 for investors.
Strategic Advantages:
1he State of Maryland has a proven track record of using investment tax credits to leverage private
investment in early stage biotech companies. Montgomery County is currently developing its
own biotechnology investment tax credit program, which will provide a model for a parallel green
technology local tax credit program. Alternatively, a single biotech/dean tech investment tax credit
program could be established through one piece of legis lationl program.
Implementation:
L \Vork with the Office of the County Executive, Department of Finance, Office of
Management and Budget and Office of the County Attorney to draft legislation and a fiscal
impact statement.
2. Enlist local biotech companies that have benefited from the MD biotech investment tax
credit to educate decision makers on the potential direct and indirect benefits of the tax for
the green sector.
3. Coordinate funding for the
taX
credit in appropriate fiscal year budget, and develop the
necessary administrative procedures.
Resources and Financial Impacts:
Funds will need
to
be included in the County budget for the tax credit program (as a point of
reference,
FYIO
funding for the MD Biotech Investment Tax Credit is $6 million). Staff resources
will be needed to develop the legislation and regulatory/administrative procedures, and to certifY
eligible investments and administer the ta.'I:: credit program.
Partnerships:
State Comptroller
Tech Council of Maryland and chambers of commerce (for outreach on the program)
Angel investors and VC funds
®
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\3; \
L
L.
Y
0-
l-:J..
~c
Stf
LL
ROCKVILLE, MARYLAND
071377
MEMORAND.UM
January 18,2013
TO:
Nancy NavllI:1'l,), President,
County Council
Office ofManagement and BudgetkUt-
Jennifer
A.
Hughes.
Joseph F. Beach, Director, Department
ofFin~
FROM:
Dire~tor,
if '"
SUBJECf:
Council Bill 40-12,
Economic
Development
Jbr~~n
Organization Supplements
Please find
attached
the fiscal and economic impact
statements for
the above-referenced
legislation.
JAH:a2a
c: Kathleen Boucher, Assistant Chief Administrative
Officer
Lisa Austin,
Offices
of the County
Executive
Joy
Nurmi,
Special Assistant to
the
County
Executive
Patrick Lacefield, Director, Public Information Office
Joseph F. Beach,
Director, Department
of Finance
Micbael Coveyou, Department of Finance
Steve
Silvennan.
Director.
Department of Economic
Development
Peter Bang. Department ofEconomic Development
Helen Vallone, Office
of Management
and
Budget
Blaise Defazio, Office ofManagement and Budget
Ayo ApoUon, Office of Management and Budget
)
,
~.-,
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Fiscal Impact Statement
BU140-12,
Economic Development -
Green Organization
SupplementS
1. Legislative Summary.
Bil140-12 would authorize the County to provide qualified applicants a Green
Organization Supplement. The supplement must equal 50% ofthe recipients' investment
in a qualified green organization, or a lower percentage set in the annual operating budget
resolution. up to $25,000.
2. An estimate
of
changes in County revenues and expenditures regardless ofwhether
the
revenues or expenditures are assumed. in the recommended or approved budget.
Includes souree of information, assumptions, aud methodologies
used.
The changes
in
the County revenue and expenditures cannot be detennined at this time
due to the unknown number of green organizations in the County, and the uncertainty of
bow many ofthose organizations have, and will
be
pursuing outside investment.
Assuming that most of the green organizations are willing and able to receive outside
funding, the following factors need to be evaluated to detetmine the expenditure:
• Bill
40-12 acknowledges the validation of organization as a green organization
from five entity/institutions, the County DEP) Green America Certification, Green
Seal, State of Maryland (B-Co-rps), and the ISO. Based on the preliminary
internet search, the County has approximately 180 organizations designated as
green organization by the first three entities, and unknown number of certified
organizations from the Jast two entities.· Since some organizations receive
certification from multiple certifying entities, it is believed that the CoUnty has
over 150 green organizations that meet the
Bill's
definition.
• The County administered the Biotech Tax Credit Supplement Program during
FY12. Sixty-six investment transactions were awarded supplement payments
totaling $500,000. The mean (average) investment siZe was $89,500 and the
mode (most frequent) of the investment was $50,000. The proposed Green
Organization Supplement will
be
a similarly structured program, with the
Supplement
amount proposed to be
50%
of the actual investment made to a
qualified green organization, or a lower percentage set in the annual operating
budget resolution
up
to $25,000. Based on the Department ofEconornic
Development's experience of administering the EDF program and the Biotech
Tax Credit Supplement program, it is believed that $50,000 is the minimum
investment
size
deemed "worthy of investing" by individual investors and the
smaller institutional investors. As such. if the Green Organization Supplement
pays 50% of the actual investment, an assumption can be made that most of the
Supplement payments will
be
for investments at or above $50,000. Therefore, the
typical. Supplement payment will be $25,000 (or at the maximum Supplement
amount) per transaction; unless a lower percentage is set in the budget resolution.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
Not available at this time due to the unknown variables listed
in
question 2.
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4. An actuarial analysis through the entire amortization period for each regulation
that would aBeet retiree pension or group insurance costs.
Not applicable.
5.
Later aetions that Dlay
affect futore
revenue and expenditures
if
the regulation
authorizes future spending.
Unknown at this
time.
6.
An
estimate of the stafftime needed to implement the regulation.
Since the qualification of green organizations
is
done
by
a third party, the Department of
Economic Development believes we can use
its
existing
staff
members to market the
program and receive
applications,
with
assistance from. the Department of Finance for the
Supplement
payment
processing.
7.
An
explanation of how the addition of new statTresponsibilities would aff'eet otber
duties.
Not applicable.
8.
An
estimate of costs when an additional appropriation is needed.
Not applicable.
9. A
deseription
of
any variable that eould affect revenue and east estimates.
It
is believed
that
the macro market condition such as federal government's policy and
incentive programs related
to
the
alternative
energy industry, and the
public~s
Willingness
to embrace new green products/services
will
influence the overall number ofgreen
organizations and
the
investment
activities to those organizations.
10.
RaDges
of revenue or expenditures that are uncertain or difficult to project.
All
revenue
or expenditures are difficult
to
project at this time due
to
the variables
described
in