PHEDITEM#l
January 28, 2013
Worksession
MEMORANDUM
January 24, 2013
TO:
FROM:
SUBJECT:
Planning, Housing and Economic Development Committee
Amanda Mihill, Legislative
AttometAfaJti.
Lf
Green Organization
Worksession: Bill 40-12, Economic Development
Supplement
Bill 40-12, Economic Development - Green Organization Supplement, sponsored by Council
President Berliner, 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 (© 17).
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 implements one of the recommendations from the Green Economy Task
Force (see report excerpts on ©6).
Issues for Committee Discussion
Steve Silverman, Director of the Department of Economic Development, supported Bill 40-12
and recommended the criteria be tiered to reflect the magnitude of investments or the desires of
investors and to use a formula-based process to allocate funds to recipients. Council staff
suggests the Committee discuss these proposals with Executive staff to further understand how
these suggestions would be implemented.
Director Silverman also suggested several specific amendments, most just technical, that begin
on ©20; Council staff recommends the Committee incorporate those amendments.
This packet contains:
Bill 40-12
Legislative Request Report
Excerpts from the Green Economy Task Force Report
Fiscal and Economic Impact Statements
Silverman testimony
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12
17
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Expedited Bill No.
40-12
Concerning: Economic Development ­
Green Organization Supplement
Revised:
11/27/2012
Draft No.
~
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: Council President Roger Berliner
AN
ACT to:
(1)
(2)
authorize the County to provide qualified applicants a Green Organization
Supplement; 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 unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No. 40-12
1
Sec.
1.
Section 20-76C is inserted as follows:
20-76C. Green Organization Supplement.
{ill
2
3
4
Definitions.
In this Section, the following words have the meanings
indicated:
Green product or service
means the delivery of
~
product or service in
5
6
the following areas:
7
8
9
10
11
12
13
ill
ill
ill
ill
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.
14
15
16
Qualified green organization
means any business, cooperative, or non­
profit that:
17
18
19
20
21
ill
ill
provides
~
green product or service; and
implements
~
sustainable operation as verified
by
~
third party.
Qualified investor
means any individual or entity that invests at least
$5,000 in
~
qualified Montgomery County green organization and that is
required to file an income tax return in any jurisdiction.
Qualified
investor
does not include
~
qualified pension plan, individual retirement
account, or other 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.
Sustainable operation
means an organization validated
by
~
third
under one ofthe following:
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22
23
24
25
26
mrr!Y
27
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BILL
No. 40-12
28
29
30
31
ill
ill
ill
ill
ill
®
Montgomery County Certified Green Business, as certified
Qy
the
Department of Environmental Protection;
Certified B Corp;
Green America Certification;
Green Seal;
International Organization for Standardization ISO
certified; or
any other third party validation approved
Qy
the Department.
14001
32
33
34
35
36
37
38
!hl
Payment
Q[
supplement.
The Director of Finance must
~
subject to
appropriation,
~
Green Organization Supplement to each applicant who
meets certain eligibility standards.
39
40
41
42
43
44
45
ill
Eligibility standards.
An
applicant, who need not be
~
County resident,
is eligible to receive the Supplement ifthe applicant:
ill
ill
is
~
qualified investor; and
invests in
~
qualified green organization that:
(A)
has its headquarters and base of operations in the County;
or
CID
has signed
~
lease to open
~
facility in the County and has
46
47
48
49
50
been in business for less than
10
years and employs less
than 50 people.
@
Additional eligibility standards.
The County Executive,
Qy
Method
regulation, may impose other eligibility standards.
~
However, those
standards must not make any person ineligible to receIve the
Supplement who would be eligible under subsection
(£1
51
52
53
54
ill
Ineligible investments.
A qualified investor must not receIve
supplement for capital used for any:
~
ill
geothermal, or solar photovoltaic, or similar system; or
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\V\B
ILLS\I240 Green Organization Supplement\BiIl2Doc
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BILL
No. 40-12
55
56
57
58
59
60
61
ill
ill
any building green or energy efficiency improvement,
~
Amount
g[
supplement.
The Supplement paid to each recipient is
one­
time Supplement and must equal 50% of the recipient's investment in
~
qualified green organization, or
~
lower percentage set in the annual
operating budget resolution,
!ill
to $25,000.
(g)
Application required.
The Director must require each eligible person to
submit an application for the Supplement and may take any other action
necessary to administer the Supplement.
regulations under Method
The Executive may issue
62
63
64
65
66
67
68
ill
to specify an application process and
otherwise implement this Section.
®
Fraudulent applications.
A person who submits
~
false or fraudulent
~
application, or withholds material information, to obtain
under this Section has committed
~
payment
Class A violation. In addition, the
person must repay the County for all amounts improperly paid and all
accrued interest and penalties that would
69
70
illmlY
to those amounts as
if
they were overdue taxes. A person who violates this Section is liable
for all court costs and expenses ofthe County 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
appropriate legal action.
71
72
73
74
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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
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOlVlIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
-
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.
Not applicable
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de
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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 into
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.
"These are not small rel;ommendations that can be done quickly by one department or agency: 'TIley
involve nC'>v 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
fir Montgomery County's strategic advantages.
Other jurisdictions have set ambitious goals for green job growth, including Vancouver,
Be
which
hopes to add 20,000 by 2020 and Silicon VaHey, which aims to add 25,000 clean-tech jobs within 15
years.
t
'TIle 1ask Force hopes and expects that if the recommendations are implememed, something of
a similar nature might be achievable in Montgomery County.
But, in addition to new jobs, the lask 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 the recommendations outlined in this report, and committing to a triple bottom
line approach for evaluation, the potential for Montgomery County's green economy is only limited
by our researchers' and entrepreneurs' imaginations. Ihe Task Force is confident that Montgomery
County will become a green economic engine that supports profirable business ventures while
contributing to a sustainable society.
Charge to the G'l'een Economy Task Force
In early 2009, the County Executive commissioned the 29-member Green Economy lask Force
for the purpose of charting "a bold new course for Montgomery County focused on creating
opportunities for new and existing <green' businesses, spurrirlg innovation, increasing employment,
and developing next generation technologies."
\ "Vancouver 2020 - A Bright Green Future". David R. Boyd
&
The Greenest City Acrion Team. 2009
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10
Montgomery County, Maryland
The Task Force was asked
to
build upon several strengths inherent in Montgomery COUnty:
1)
a successful track record in promoting the growth of the 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-constructed
buildings and new County-owned buildings to achieve certain LEE1)2 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 \l{'orking Group,3 and important partnerships with organizations like
the Maryland Clean Energy Center," informed the Task Force's work.
The County Executive appointed Dick \l{Tegman, an environmental attorney with broad experience in
federal, state and local environmental issues, as the lask Force chairman. The Task Force deliberated
for ren months
to
develop the recommendations outlined in this report. "The schedule included six
full Task Force meetings and dozens of smaller subcommittee meetings. The subcommittees were
created to target broad categories of the green economy, including: Agriculture, Finance, Innovation,
Land Use, Policy/Regulation, Promotion and Workforce. 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 to provide the Leggett Administration with expert guidance and input
regarding the investments, policies and strategic partnerships that will nutture Montgomery County's
nascent green economy. The ultimate goal is to increase Montgomery County's triple bottom line by
generating economic, environmental and social value for local 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 Walter
Reed Medical Center, Bethesda Naval Medical Center and related entities such as the Food and
Drug Administration. To convert these research assets into commercial opportunities, Montgomery
County pursued the following initiatives:
Purchased close to
300
acres for the world-renowned Shady Grove Life Sciences Center, whose
land value today approximates
$150
million;
The Leadership in Energy and Envi ron memal Design (LEED) rating system is a third party certification
program and the nationally accepted benchmark for high performance green buildings.
} In January 2009, Montgomery County issued a ground-breaking Climate Protection Plan, prepared by the
legislatively created Sustainability \XTorking Group. The Sustainability Working Group's recommendations
will
create a demand for green companies, through green building laws, greenhouse gas reduction mandates and
other quality of life recommendations.
"' The Maryland Clean Energy Center, headquarrered at the Universities at Shady Grove, was created by the
State legislature and the governor in 2008
to
develop clean technology development and clean tech
jobs
in the
state. The Center's mission is
to
provide a coordinared approach
to
building a strong, clean energy economy
in Ma.ryland rhrough rechnolo!,'y commercializarion, business incubation and workfi)rce development and
training"
1
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Green Economy Task Force Fi.nal 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 no\v includes a total of five incubators; and
Advocated at the State level for major capital investments in the University of Maryland, Johns
Hopkins and CARB by continually highlighting these assets in the County's state legislative
priorities.
The deeper pockets of the state, through financing agencies like MEDCa and TEDea, and
the Sunny Day Fund, and the attraction of our 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
TIle 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.
The County's innate strengths, which promoted the growth of biotech, will again be the bedrock for
the new, green economy. These strengths include an engaged private sector, bold political 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 Sustainabilit),," described Montgomery County
as "a progressive leader on green building and sustainability. 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."G
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,
1
Maryland-National Capital Park and Planning Commission (M-NCPPC).
(, NACO - Local Leaders in Sustainability - Green Counties. Brooks Rainwater
&
Cooper Marcine.
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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
strategie.~
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 goods 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 advantageous location for new and expanding 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
"Ibe 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 (GWIB) definition helpful.
The GWIB treats a company as "green" if it is "directly engaged in the development, manufacture,
sale and distribution, installation, and application of products and
service.~
that promote energy
security andlor protects our environIl1ent."H However, this approach would not be appropriate
for some of the other recommendations in this report. For example, the 1-ask Force recommends
encouraging the consumption of locally produced products and food; clearly, in
this
area, a different
metric would be needed. In other instances, the construction or operation of a LEED-certified
building may qualif)r as "green," and the GWIB teSt would not
fit
here either.
What
is
the
same
are the basic principles that underlie
aU
of the recommendations in this
report:
(1)
dependence on carbon-based sources of energy is rapidly becoming economically and
environmentally unsustainable and (2) Montgomery County can playa major leadership role in
finding new ways
to
meet these challenges. Ihus, after considering whether
a
single defini.tion of the
green economy should be adopted, in the end the Task Force decided that a one-size-fits-all approach
would not be useful.
Research
&
Technology Center
;, www.mdworki:orce.com
~
Montgomery County Planning Department.
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Green Economy Task Force Pinal 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 lVlontgomery 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. 111e 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 productslservices. These services include everything from green
cleaning companies to energy auditors and consultants. Additionally, there are an estimated
410
LEED Accredited Professionals working ill 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 linc principles in its operations.
Federallmtallatiom:
'lbere 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
Vellture
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 home to several large corporations that
are diversifYing their businesses to include green technology. One example is Lockheed Martin, the
country's largest defense contra.ctor, 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 il'l 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. 'The
maximum amount of the credit cannot exceed $250,000 for investors.
Strategic Advantttges:
The 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. Alternative/y, a single biotech/clean tech investment tax credit
program could be established through one piece oflegislation/program.
Implementation:
1. \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, FY10 funding for the MD Biotech Investment
'lax
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 tax 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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ROCKVILLE,
MARYLAND
071377
MEMORANDUM
January 18,2013
TO:
Nancy Navarro, President. County Council
Jennifer
A.
Hughes,
Dire~tor,
Office
ofManagement and Budget
Joseph F. Beach, Director, Department
ofFin~
FROM: -
if '"
11M­
sUBrncr:
Council Bil140-12,
Economic
Development
Jbre~n
Organization Supplements
Please
find attached the fiscal and
economic
~act
statements
fot'
the
above-referenced
legislation.
JAH:a2a
c:
Kathleen Boucher,
Assistant
Chief Administrative
Officer
Lisa Austin, Offices of the County
Executive
Joy
Nunni,
Special
Assistant to the
County
Executive
Patrick Lacefield,
Director,
Public
Information
Office
Joseph F.
Beach.
Director, Department of Finance
Michael Coveyoll, Department of Finance
Steve Silverman,
Director,
Department
of
Economic Development
Peter
Bang. Deparbnent
ofEconomic Development
Helen Vallone, Office
ofManagement
and Budget
B1aise Defazio, Office of
Management and Budget
Ayo
Apollon,
Office
ofManagement
and
Budget
",
}
@
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Fiscal Impact Statement
Bill 40-12, Economic Development - Green Organization Supplements
1. Legislative Summary.
Bill
40~
12 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.
2. An
estimate
of changes
in County revenues
and
expenditures regardless of whether
the revenues or expenditures are assumed
in
the recommended or approved budget.
Includes source
of
information, assumptions, and 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
how 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 determine 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-Corps), and the ISO. Based on the preliminary
internet search, the County has approximately 180 organizations designated
as
green organization by the frrst 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
ISO
green organizations that meet the Bill's definition.
• The County administered the Biotech Tax Credit Supplement Program during
FY
12.
Sixty-six investment transaction..<; 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
50010 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 ofEconomic
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 r.seal
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 affect retiree pension or group insurance costs.
Not applicable.
5.
Later actions that may affed future revenue and expenditures
if
the
regulation
authorizes future spending.
Unknown at this time.
6.
An
estimate of
the
staff
time
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 ofFinance for the
Supplement payment
processing.
7. AD
explanation of how the addition of new staft'responsibilities would affeet otber
duties.
Not
applicable.
8.
An
estimate of costs when an additional appropriation
is
needed.
Not applicable.
9. A
description of any variable that could affect revenue and cost 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 of green
organizations and the investment activities
to
those orga.ni.2mions.
10.
RaBies
of
reveBue or expenditures that are uncertain or diffieult to
project.
All revenue or expenditures are difficult
to
project at this time due
to
the variables
described
in
question 2.
11.
If
a bill is likely to have no fistal
impad~
why that
is
the case.
Not applicable.
12. Other fiscal
impacts
or
commeots.
None.
13. The foDowing contributed to and concurred
with
tbis aoalysis.
Peter Bang, Chief Operating Officer, Department of Economic Development
Helen Vallone, Office ofManagement and Budget
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Economic Impact Statement
Bill 40-12, 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 information,
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 supplemento; 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
snpplement
imd
other sources of
capital would
be
necessary to
initiate
or support the expansion of
these
organizations.
3. The Bill'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;
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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 ofbus.inesses 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:
'
Entities
County
Funding
Existiog Eligible Entities
With Expanded Bminess Formation
RtUiYingthe Assumw Maximum
TotalADDual
Supplemmt
Investment
InvESlment
150
$
50,(0)
$
7,500,000
$
300
$
50,000
$
15,000 000
$
Requir«l
3,750,000
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-
a
h F. B
ch, Director
Department of Finance
Page 2 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
b~half
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
cnsls.
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
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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:
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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 qualified individual investment would be divided by the total amount
of investments during that calendar year to derive the percentage of the annual
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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.
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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
(D
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.
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