AGENDA ITEM #10

January 22, 2013

Public Hearing

MEMORANDUM

January 18,2013

TO:

FROM:

SUBJECT:

County Council

Amanda Mihill, Legislative A t t o m e ,

Public Hearing:

Bill 40-12, Economic Development - Green Organization

Supplement

Bill 40-12, Economic Development Green Organization Supplement, sponsored by Council

President Berliner, was introduced on December 4, 2012. A Planning, Housing and Economic

Development Committee worksession is tentatively scheduled for January 28, 2013 at 2:30 p.m.

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).

This packet contains:

Bill 40-12

Legislative Request Report

Excerpts from the Green Economy Task Force Report

Circle #

1

5

6

F:\LAW\BILLS\1240 Green Organization Supplement\PH Memo.Doc



Expedited Bill No.

40-12

Concerning: Economic Development ­

Green Organization Supplement

Revised: 11/27/2012

Draft No.

-.L

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:



BILL

No. 40-12

1

Sec. 1. Section 20-76C

is

inserted as follows:

20-76C. Green Organization Supplement.

2

3

4

W

Definitions.

In

this Section, the following words have the meanings

indicated:

Green product or service

means the delivery of

£!

product or service in

the following areas:

5

6

7

8

9

10

11

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.

ill

ill

ill

®

ill

12

13

14

Qualified green organization

means any business, cooperative, or non­

profit that:

15

16

17

18

19

ill

ill

provides

£!

green product or service; and

implements

£!

sustainable operation as verified

Qy

£!

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 iurisdiction.

Qualified

20

21

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

Qy

£!

third

lli!!1Y

under one of the following:

F:\LAW\BILLS\1240 Green Organization

Supplement\BiII2.Doe

22

23

24

25

26

27



BILL No. 40-12

28

29

30

ill

ill

ill

ill

ill

®

(Q)

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

00!1Y

validation approved

Qy

the Department.

14001

31

32

33

34

35

36

37

38

Payment

gf

supplement.

The Director of Finance must

PID::,.

subject to

appropriation,

~

Green Organization Supplement to each applicant who

meets certain eligibility standards.

39

40

41

W

Eligibility standards.

An

applicant, who need not be

~

County resident,

is eligible to receive the Supplement ifthe applicant:

42

43

44

45

ill

ill

is

~

qualified investor; and

invests in

~

qualified green organization that:

(A)

has its headquarters and base of operations in the County;

or

(ill

has signed

~

lease to open

~

facility in the County and has

been in business for less than 10 years and employs less

than 50 people.

46

47

48

49

50

@

Additional eligibility standards.

The County Executive,

Qy

Method

regulation, may impose other eligibility standards.

2:

However, those

standards must not make any person ineligible to receIve the

Supplement who would be eligible under subsection

1£1

~

51

52

53

54

Ineligible investments.

A qualified investor must not receIve a

supplement for capital used for any:

ill

geothermal, or solar photovoltaic, or similar system; or

F:\LAWIBILLS\1240 Green Organization Supplement\BiI12.Doc



BILL

No.

40-12

55

56

57

ill

ill

any building green or energy efficiency improvement,

~

Amount

gfsupplement.

The Supplement paid to each recipient is

one­

time Supplement and must equal 500/0 of the recipient's investment in

~

qualified green organization, or

~

58

59

60

61

lower percentage set in the annual

operating budget resolution,!JP 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

ill

to specify an application process and

otherwise implement this Section.

65

66

®

Fraudulent applications.

A person who submits

~

false or fraudulent

~

application, or withholds material information, to obtain

under this Section has committed

~

payment

67

68

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

mm1Y

to those

amounts as if

70

71

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

72

73

.hy

the County to recover any payment, interest, or penalty. The County

may collect any amount due, and otherwise enforce this Section,

.hy

any

appropriate legal action.

74

F:\lA w\BILLS\1240 Green Organization Supplement\BiII2.Doc



LEGISLATIVE REQUEST REPORT

Bil140-12

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

MUNICIP ALITIES:

PENALTIES:

Not applicable

F:\LA

W\BILLS\~2xx

Green Organization Supplement\Legislative Request Report.Doc

f:\law\bills\1240 green organization supplement\legislative request report.

de



Green Economy Task Force

l~inal

Repon

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 i11to

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 21 st 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. 1hey

involve nev>, 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 tor green job growth, including Vancouver, Be, which

hopes

ro

add 20,000 by 2020 and Silicon Valley, which aims

to

add 25,000 dean-tech jobs within

15

years.

l

TIle

Task

Force hopes and expects that

if

the recommendations are implemented, something of

a similar nature might be at'hievable 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 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. l11e Task Force is confidenr that Montgomery

County will become a green economic engine that supports profitable business ventures while

contributing to a sustainable society.

Charge to the G"een Economy Task Force

In early 2009, the County Executive commissioned the 29-member Green Economy l-ask 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 Greenesr

City

Action Team.

2009



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 LEED2 standards, and the Home

Energy Loan Program,

:l

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,J and important partnerships with organizations like

the Maryland Clean Energy Center; 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. The Task Force deliberated

for ten months to develop the recommendations outlined in this report. 'Ine 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 \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 arc referenced in the final

recommendations.

'Ihe purpose of this report is to provide the Leggett Administration 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 economic, environmental and social value for local businesses, residents and the region.

Lessons from our biotech history

Beginning a quarter of a century ago, Montgomery County embarked on a major biotechnoIogy

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 dose to 300 acres for the world-renowned Shady Gwve Life Sciences Center, whose

land value today approximates $150 million;

The Leadership in Energy and Environmental Design (LEED) ra.ting 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 Sustainability Working Group. The Sustainability Working Group's recommendations

will

create a demand for green companies, through green huilding laws, greenhouse gas reduction mandates and

other quality of life recommendations .

.\ The Maryland Clean Energy Center, headquartered 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 rhe

state. The Center's mission is to provide a coordinated approach to building a strong, clean energy economy

in Maryland through technology com rnercializatiotl, business incubation and workforce development and

[raining.

2



Green Economy Task Force

I~jnal

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'

Belward Campus;

Constructed Hopkins' first academic building (a

$12

million capital ouday), and financed the

construction of CARB;

Developed a life sciences business incubation

strateg}~

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 CARB 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 atrraction 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 nadon.'

Strategic advantages for growing the green economy

1he 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 ofbiorech, wiII 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 Sustainability," 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:'';

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,

Maryland.. National Capita.l Park a.nd Planning Commission (M-NCPPC).

,; NACO - Local Leaders in

Sustain

ability -

Green

Counties. Brooks Rainwater

&

Cooper

Martine.

S



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 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 of500,000 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 opportuniqf

to

become a leading jurisdiction in the

green economy.

Defining the green economy

1he 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 GWIB treats a company as "green" iEit 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 1ask 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 qualifY as "green," and the GWIB test would not fit here either.

What

is

the same are the basic principles that underlie all of the recommendations in this

report:

(I)

dependence on

carbon-ba.~ed

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. 'Thus, after considering whether a single definition of the

green economy should be adopted, in the end the Task Force decided that il.one-size-fits-all approach

would not be useful.

;' Research

&

Technology Center - Montgomery County Planning Deparnnent.

8

www.mdworkforce.com



Green Economy Ta.sk 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 NAtCS Codes are oflimited use, because they don't have a special green designacion--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 consultants' 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. lhe following are

some examples of existing businesses and organizations already impacting Montgomery County's

green economy:

Energy O:rmpanies:

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.

Grem Products and

Services:

The available data indicates that the largest sector of green business

in Montgomery County is green products/services. 111ese 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:

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 materiak

fl1lance and Vtmture Capiut!:

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 contractor, which is now investing in smart grid R&D.



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. lhe

maximum amount of the credit cannot exceed $250,000 for investors.

Strategic Advantages:

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. Alternatively, 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 alld Financial Impacts:

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

certity

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

I~unds

®