Agenda Item 6B
June 30,2015
Action
MEMORANDUM
June 26, 2015
TO:
FROM:
County Council
Robert H. Drwnmer, Senior Legislative
Jacob Sesker, Senior Legislative Analyst (/'
";'.fl.=1W
Committee
,r
SUBJECT:
Action:
Bill 25-15, Economic Development - Reorganization - Montgomery
County Economic Development Corporation
The Planning, Housing
&
Economic Development
recommendation (3-0):
enact the Bill with amendments.
Bill 25-15, Economic Development Reorganization - Montgomery County Economic
Development Corporation, sponsored by Lead Sponsor Council President at the request of the
County Executive, was introduced on May 21,2015. A public hearing was held on June 9. PHED
worksessions were held on June 18 and June 22.
Bill 25-15 would:
(1)
eliminate the Department of Economic Development as a principal department of
the Executive Branch;
(2)
create an Office of Agriculture;
(3)
transfer certain duties of the Department of Economic Development to other
County agencies;
(4)
provide for the designation of a non-profit corporation as the Montgomery County
Economic Development Corporation;
(5)
assign certain duties to the Montgomery County Economic Development
Corporation and exempt this assignment from a certain procurement law;
(6)
provide a certain notice under the collective bargaining law;
(7)
remove the designation of the County's Business Development Corporation; and
(8)
generally amend County laws, regulations, and certain contracts governing
economic development and agricultural preservation.
Background
The Bill would privatize some of the functions currently performed by the Department of
Economic Development (DED). These duties would be delegated to a non-profit corporation
designated as the Montgomery County Economic Development Corporation (MCEDC) by the
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Council. Each ofthe 11 members ofthe Board ofDirectors ofthe Corporation would be appointed
by the Executive and confirmed by the Council, but the Corporation would not be an agency of
the County government. Certain duties now performed by DED would be transferred to the
Department of Finance and a new Office of Agriculture. The Executive briefly explained why he
is recommending the privatization of some of the duties now performed by DED in his transmittal
memo at ©31 and the Frequently Asked Questions at ©32-35. On June 22
nd,
the County Executive
transmitted an organizational chart (at ©106-10S) to illustrate the proposed changes to the service
delivery system.
Economic Development Service Delivery Structures
Many jurisdictions, like Montgomery County, have complex economic development
service delivery systems that involve multiple economic development organizations (EDOs).
While most communities have a clear "lead EDO" (such as Montgomery County's Department of
Economic Development), they may also have other EDOs such as regional marketing entities,
workforce investment boards, university-affiliated technology programs, chambers of commerce,
small business development organizations, community development organizations, and
redevelopment/real estate authorities. The one thing that all such systems have in common is that
they are structurally unique. System structures vary as a result ofnumerous factors including local
and state laws, policies, politics, history, and the relevance ofspecific functions to the development
of the community's economy.
Montgomery County's Economic Development Service Delivery Structure
In 2012, the Council required the County Executive to analyze the County's economic
development structure and compare that structure to peer jurisdictions. The report,
Organizational
Assessment and Comparative Analysis Report,
was prepared by the International Economic
Development Council (lEDC), the trade group representing professional economic developers and
economic development organizations.
1
The portion of that report that reviews Montgomery
County's structure is attached at ©S4-94.
Montgomery County's economic development service delivery structure includes not only
DED (the lead EDO) but also Montgomery Business Development Corporation (a private
organization that receives public funding
to
execute a marketing program as well as to supplement
the County's business retention and expansion programs), the County's Workforce Investment
Board (staffed by DED), and many other entities performing economic development functions and
funded, at least in part, by the County.
2
Montgomery County's DED performs several functions, including the following:
Business retention and expansion
I
The full report can be found at the following address:
http://www6.montgomerycountymd.gov/content/council/pdf/REPORTS/org assessment.pdf
At the time the IEDC report was written, Montgomery Business Development Corporation did not yet employ any
staff. As a result, the service delivery system involved less overlap than it does currently, with both DED and
MBDC performing marketing and attraction functions as well as business retention and expansion functions.
2
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Marketing and attraction
Financing
Agricultural services and preservation
Small business and minority business development
Technology-led development and entrepreneurship
Workforce investment/development
The diversity of functions performed by DED
has
led to confusion within the business community
regarding DED's core mission, and perhaps has made it difficult for DED to respond to both
fluctuations in the resources available to fund economic development, and the community's
evolving economic development needs. For example, the real estate footprint of the incubator
programs was one of several factors that made it difficult for the department to maintain a robust
business retention and expansion program during the Great Recession. On the other hand, the
breadth of DED's functions and legal authorities represent a potential strength ofthe organization,
though that potential strength has not been converted into general support or acknowledgement of
successes from the business community.
In contrast to DED, Fairfax County's Economic Development Authority (FCEDA), which
is regionally and nationally considered to be a top-performing EDO, performs a much narrower
set offunctions-marketing and attraction, and business retention and expansion. Other functions
that are performed by Montgomery County's DED are not performed by the FCEDA. For
example, technology led development is a function performed by Virginia's Center for Innovative
Technologies and also by the Northern Virginia Tech Council; SkillSource, a nonprofit
organization, leads workforce development efforts; and small and minority business development
and finance efforts are led by the Mason Enterprise Center at George Mason University.
Private Sector Economic Development Organizations
Economic deVelopment organizations can be public (like DED) or private. Among private
EDOs, some rely on a mix of public and private financing while others rely almost entirely on
public funding.
In
its
Organizational Assessment,
IEDC observed that "Economic development
organizations can operate effectively as public, public/private or private organizations. Success is
based on strong leadership, a clear, well-communicated mission and the relationships, resources
and staff skills to carry out the mission."
Factors affecting whether or not a function is privatized include the nature of the function,
regional assets, and resources available for public and private funding. Some functions are
generally considered to be governmental in nature or are the sort of function that requires
significant government involvement (e.g. real estate redevelopment, financing/incentives). Some
functions may be aligned with regional assets like universities (e.g. technology-led development).
Other functions may be more likely to attract private funding (e.g. regional marketing and
attraction for businesses).
One common type of private EDO is the regional marketing entity. Examples include the
Greater Baltimore Committee, the Charlotte Regional Partnership, the Greater Phoenix Economic
Council, and the
st.
Louis Regional Chamber and Growth Association. While many private sector
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economic development organizations rely mostly on public funding, regional marketing entities
sometimes receive a majority of their funding from the private sector (e.g. Greater Baltimore
Committee). Miami-Dade County's Beacon Council, a private 501(c)(6), is an example of a lead
economic development organization that also markets the region and receives private support for
its regional marketing efforts.
The Anne Arundel Economic Development Corporation (AAEDC) is the lead economic
development organization for Anne Arundel County. AAEDC performs the following functions:
• Marketing and attraction
• Business retention and expansion
• Financing (limited to small loans)
• Technology-led development (incubator)
• Agricultural business development
AAEDC partners with Anne Arundel Workforce Development Corporation and jointly meet with
businesses as part of AAEDC' s business retention efforts.
Public Hearing
Tim Firestine, testifying on behalf ofthe Executive, supported the Bill. (©41) Each of the
business representatives, except Alian Briancon of Kitchology, also supported the Bill. Herman
Taylor, representing the Minority Owned and Local Small Business Task Force, (©51-53) and Jim
Golden, representing the Minority Business Economic Council, were concerned that the new
Economic Development Corporation wouid not provide enough support for minority owned
businesses. Each of the union representatives opposed the Bill. James Moody, representing the
MCGEO employees of the current Department of Economic Development (©42-43), MCGEO
President Gino Renne (©46-48), Rick Powell, Metropolitan Washington Council, AFL-CIO
(©54), and Victoria Leonard, LIUNA (©71), urged the Council not to privatize the economic
development function.
Robert Brewer, MBDC (©44-45), David Weitzer, Montgomery County Agricultural
Advisory Committee (©49-50), Gigi Godwin, Montgomery County Chamber of Commerce (©55­
65), Marilyn Balcombe, Gaithersburg-Germantown Chamber of Commerce (©69-70), Barry
Bogage, MarylandlIsrael Development Center (©72-73), Jennifer Russel, Bethesda-ChevY Chase
Chamber of Commerce (©74-75), Joan Fidler, Montgomery County Taxpayers League (©76),
Marjorie Nemes, Latino Economic Development Center (©77-78), Richard Bendis, BioHealth
Innovation, (©66-68), and Veronique Marier, Bethesda Green (©79-81), each supported the Bill.
Several of the business representatives recommended changes to the appointment process for
members ofthe Board of Directors for the Economic Development Corporation. We also received
a letter from George Lechlider, Montgomery Soil Conservation District (©82-83) supporting the
Bill's creation of a new Office of Agriculture.
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PRED Worksession 1
Councilmember EIrich attended the worksession in addition to the Committee members.
Tim Firestine, CAO, Marc Hansen, County Attorney, Jennifer Hughes, OMB Director, Lily Qi,
Executive's Office, Sally Sternbach, Acting DED Director, and Shawn Stokes, ORR Director
represented the Executive Branch. Jacob Sesker, Senior Legislative Analyst, and Robert
Drummer, Senior Legislative Attorney, represented the Council staff
The Committee revieweq the Bill without voting on any amendments. The Committee
discussed the Board composition and appointment, the role of the Office of Agriculture, EDF
Incentives, ensuring that Board members avoid conflicts of interest, who should develop the
strategic plan for economic development, the placement of the small business navigator, and a
possible creation of an Office of Business Services. The Committee asked the County Attorney
to make recommendations on avoiding conflicts of interest and asked the CAO to provide
information on the Executive's proposed plan for workforce development for the next
worksession.
PHED Worksession 2
Councilmember Berliner attended the worksession in addition to the Committee members.
Tim Firestine, CAO, Marc Hansen, County Attorney, Jennifer Hughes,
ONIB
Director, Lily Qi,
Executive's Office, Sally Sternbach, Acting DED Director, and Tom Street, Assistant CAO
represented the Executive Branch. Jacob Sesker, Senior Legislative Analyst, and Robert
Drummer, Senior Legislative Attorney, represented the Council staff.
The Committee reviewed the Bill and voted on several amendments. The Committee made no
change to the Board composition and appointment. The Committee approved the following
amendments:
1.
keep agricultural economic development with the new Office ofAgriculture instead
of the MCEDC;
add the language suggested by the County Attorney on ethics;
change the effective date for the new Office of Agriculture to 90 days after the Bill
becomes law;
correct the name ofthe
ex~officio
member to the Maryland Secretary ofCommerce;
change the effective date for the end of DED to 180 days after the Council
designates the MCEDC; and
change the location in the Bill of the strategic plan development by the MCEDC as
per the staff amendment.
2.
3.
4.
5.
6.
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The Committee recommended (3-0) approval of the Bill with amendments.
Discussion
1.
What is the fiscal and economic impact of the Bill?
OMB estimated that there will be no net fiscal impact due to the implementation of the
legislation. This estimate assumes that current resources allocated to DED will be reallocated
either to other County departments, to the new workforce development entity, or to the new
economic development entity.
Based on the fiscal impact statement, annualized personnel costs of approximately $2.4
million are expected to shift to the new economic development organization, as well as $3.8
million in operating expenditures. The estimated $3.8 million in operating expenditures includes
$869,000 for incubator program operations, as well as some lease expenditures that should be
allocated to other budgets (Conference and Visitors Bureau; new workforce entity).
If the new organization is to achieve substantially better results than DED, additional
resources may be necessary. A useful point ofreference would be the annual budget of the Fairfax
County Economic Development Authority (FCEDA). The annual personnel costs for the FCEDA
are approximately $3.4 million for a personnel complement of 35 FTEs, with operating
expenditures of $3.9 million (with $0 for incubator program operations, and including office rent
for the organization).
I
I
I
Personnel
!
Operating
$3.9 million
Total
$7.3 million
Fairfax County Economic Dev. Auth.
Transfor to Montgomery County EDC
I
$3.4 million
$2.4
million
*
$3.8 million!
2 3
$6.2 million
Represents amount estImated to be transferred. Actual allocatIon between PC and OE wIll be made by MCEDC.
z
Includes $869,000 incubator program operating expenditures.
3
Includes all of current DED lease,
with
no allocation to the new workforce entity or to the CVB.
OMB has assumed that approximately $6.2 million would be reallocated from county
budgets to the budget of the new MCEDC. This number is below the funding level for FCEDA
($7.3 million). In order
to
compare apples to apples, the portion of the assumed allocation to
MCEDC that is attributable to incubator operations ($869,000) should be subtracted-FCEDA's
budget does not include incubator funding (incubator programming is funded in the budgets of the
Mason Enterprise Center and the Greater Reston Chamber of Commerce). Furthermore, OMB
assumed that the entire amount expended on the current DED lease would available to be
reallocated, however, both the Conference and Visitors Bureau (currently paying DED
approximately $25,000 annually) and any future workforce development entity will also need
space. These adjustments would reduce the budget available for the new MCEDC by
approximately $900,000. As a result, the MCEDC budget for research, marketing/attraction, and
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business retention and expansion functions would be approximately $2 million below the budget
for FCEDA. Closing the performance gap will likely require additional resources, not just a
change in structure.
One-time costs associated with the reorganization will include any severance payment for
County employees who are not placed in another vacant County position after a reduction-in-force,
as well as furniture and equipment costs, legal and accounting costs, insurance, business cards,
letterhead, and website development. Whether or not those one-time costs require additional
appropriation would depend upon the pace of the ramp down in FY16 DEDexpenditures.
Finance assumed that the reorganization of the economic development service delivery
system will have a positive impact on the County's economy because the new non-profit will be
able to "forge a better partnership with the County's business communities." Finance assumed no
economic impact associated with transferring some responsibilities from DED to other County
agencies. Finance stated that the establishment of the new entity would have a positive impact on
the County's economy, but "no economic impact on employment, private spending, savings,
investment, incomes, and property values in the County."
2. What are the potential benefits of reorganizing economic development functions?
In Organizational Assessment, IEDC observed that "Most of the other [peer] counties and
regions in this report have greater private sector engagement, especially in marketing and business
recruitment. IEDC recommends Montgomery County further its efforts to involve· the private
sector through a separate, private led organization or through MCDED." Richard Bendis, CEO of
BioHealth Innovation (BHI), echoed this sentiment in his public hearing testimony-that the
private sector is not as engaged as it needs to be in Montgomery County's economic development
efforts. In the experience ofBHI, being able to engage with entrepreneurs in a business to business
manner is vital to the success of the mission. See ©66-68.
Indeed, a private sector EDO that is led by a board of people with successful careers in
business, operates like a business, employs individuals with business experience, and is managed
on a day-to-day basis by a
CEO with
a business perspective and technical expertise in economic
development would be a significant departure from the status quo. A change from the current
model (long-time public sector employees, political leadership) will be welcomed by many in the
business community, presumably resulting in a "honeymoon" effect related to the creation of the
new entity.
Among the other potential advantages of reorganizing economic development functions
are the following:
• A private sector EDO may be more capable of responding to changes in the economy.
• A private sector EDO may have greater staffing flexibility or be more capable of ensuring
that its staffhas current, mission critical skill sets.
• The board of a private sector EDO may be more likely to select leadership with technical
expertise in economic development.
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• A private sector EDO will be less affected by election cycles, leading to additional
management continuity.
• A private sector EDO may be more capable at some point of raising private capital to
support certain functions (such as marketing and attraction efforts).
• The shift to a private sector EDO may lead to a temporary increase in private sector
engagement or support for economic development programs.
• Procurement and human resources requirements that apply to public sector organizations
would not apply to a private sector EDO.
• Agriculture and workforce development functions may gain some prominence through
autonomy.
3. What are the potential drawbacks of reorganizing economic development functions?
As a governmental entity, DED has access to state and county resources that may be
unavailable at least initially - to a private sector entity with a limited track record or relationships.
The access that DED has to those resources is particularly helpful in resolving issues (for example,
pennitting issues) on behalf of businesses that are trying to navigate complex government
processes. That access may also help when it comes to seeking legislative or regulatory relief for
businesses or helping businesses access or understand government programs.
Among the other potential disadvantages ofreorganizing economic development functions
are the following:
• Disruption or temporary interruption of service delivery during a transition period.
• Disruption to current DED employees.
• Disruption to other departments and offices, especially those that will be taking on current
DED staff or inheriting additional programs/responsibilities.
• Loss of institutional knowledge and as well as relationships between DED staff and the
businesses/industries with which they work.
• Regulatory agencies may be less responsive to the entreaties of a private sector
organization.
• Fiscal impacts and one-time costs related to the change in structure.
4. What are some potential alternatives to the proposed reorganizing economic development
functions?
The proposed reorganization is not the only possible change to the status quo. Potential
alternatives include the following:
• Conduct a national search for a new economic development director.
3
• Shift certain functions (e.g. marketing and attraction; business retention and expansion) to
the existing Montgomery County Business Development Corporation).
• Shift resources from partner organizations (e.g. MBDC) back to DED.
3
The Executive Director of Good Jobs First, non-partisan, non-profit research organization sent us a letter opposing
the privatization of the economic development function and outlining some problems with private EDOs
in
other
States. See ©97-99.
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• Request state legislation in order to create an economic development authority under state
law (similar to the Howard County Economic Development Authority).
The alternatives above each have distinct advantages and disadvantages. For example, the
state legislature is not in session until January and therefore the state legislation approach would
extend the implementation timeline.
Issues
1.
Who should appoint the Board members?
The Bill, as introduced, mandates an 11 member Board for the MCEDC appointed by the
Executive and confinned by the Council. This has the advantage of giving the County maximum
control over the MCEDC. This method establishes a Board composed completely of members
appointed by the same elected officials who currently appoint the Director of the Department of
Economic Development. One of the advantages of a private corporation as EDO lead is the
expectation that they will select leadership with technical expertise in economic development and
De less susceptibre to election cycles. Mandatirig that the Executive aiid CoUncil retain tolarcontrol
over the appointment of the Board would lessen some of these advantages of a private EDO.
If acceptance by the business community is one of the major goals of the Bill, then the
Committee may want to consider reducing the County's control over the appointment of Board
members. The Montgomery County Chamber of Commerce (MCCC) asked that the number of
Board members appointed by the County be reduced to 6. The Bethesda-Chevy Chase Chamber
of Commerce (BCCC) suggested an initial 4-6 voting member Board appointed by the Executive
and confinned by the Council from the business community, including 2 current members of the
Montgomery Business Development Corporation. Thereafter, the BCCC suggested that Board
members should nominate slates for approval by the Executive and CounciL The Gaithersburg­
Gennantown Chamber of Commerce suggested that the Executive and Council appoint the initial
Board members, and the Board members nominate future members for approval by the Executive
and Council.
In order to get started, the Executive can either appoint all ofthe Board members or just an
executive committee of 3 to 5 members who can set up the corporation and appoint additional
members. Since the Board's primary source of funding would be from the County, the Executive
would have to contract with the MCEDC to perfonn the lead EDO function for the County. Even
if the County does not retain control over the appointment of Board members, the MCEDC would
be required to complete the
tasks
required in the contract. Therefore, the County could control the
work product ofthe MCEDC without retaining control over the corporation.
Here are several reasonable alternatives to the appointment of all members by the
Executive that would increase the acceptance of the MCEDC by the business community:
(a)
the Executive and Council appoints a 3-member executive committee to set up the
corporation and appoint all Board members;
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(b)
same as above, except all future Board members are nominated by the executive
committee or Board subject to confmnation by the Council.
the Executive and Council appoint 6 members and the other 5 members are
appointed by the Board;
the Executive and Council appoint less than a majority of the Board and the Board
members appoint the remaining members.
(c)
(d)
There are other possible combinations for the appointment process, but each of these would give
the MCEDC more autonomy and ability to function as a truly private business. Committee
recommendation (2-1, Riemer opposed): no change to the BilL
2. Should the Bill mandate certain stakeholder representatives on the Board?
The Bill, as introduced, requires the Executive to appoint I member of the Workforce
Development Board as a voting member and 3 ex-officio non-voting members
(1
appointed by the
Executive, 1 appointedoy the CoUncil,
and-l
appointed by the Secretary of the Maryland
Department of Business and Economic Development). The Minority Owned and Local Small
Business Task Force suggested that the Board members represent the County's diversity.
Similarly, the MCCC suggested that the Board represent diversity in terms ofgeography, company
size, and target industries and asked that the requirement to appoint a member of the workforce
development board be eliminated.
Workforce Development Board member
Members of the Workforce Investment Board are appointed by the County Executive. The
majority ofthe members are business members. Other members are specified in law and executive
order and include members representing community-based organizations, educational institutions,
and other specific programs.
Perhaps the single most important factor affecting business investment decisions is the availability
of a pool of workers with relevant skills. As such, coordination between economic development
and workforce development functions is important. A representative of the workforce
development board would serve on the board of the MCEDC to facilitate coordination between
the two boards.
3 ex-officio non-voting members
If the Executive and Council retain control over the appointment of each Board member, the need
for the non-voting members appointed by the Executive and Council is lessened.
As
long as the
Executive and Council retain control over the appointment of several members ofthe Board, there
is little need for the ex-officio non-voting members.
Members representing the diversity ofthe County's popUlation or its businesses by geography,
company size, or target industries
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The MCEDC must, as the County's lead EDO, work for improving the County's economy for all
types of businesses - small, large, minority and women owned, non-minority owned, located all
over the County. Appointing members who come from different types of businesses is important.
However, appointing members as a representative of a specific type of business can sometimes
prevent the Board from focusing on its overall mission. Mandating such representatives in the law
encourages divided loyalty and can inhibit the ability of the MCEDC to act quickly and with a
unified purpose.
Committee recommendation
(3-0): No change to the membership of the Board.
3. Agricultural Business Development.
Much of Bill 25-15 addresses issues related to agriculture. The bill would place the
agricultural business development function in the new organization along with other business
development functions. This approach would be similar to the approach taken in Anne Arundel
County. In testimony the agricultural community expressed concerns regarding the proposal to
- s11m agriciiltlinil business deveTopment fifucfions to tlie new organiiatIon,
atid~
requestea Instead
that the function shoUld be housed in the proposed Office ofAgricUlture. See June 22 Letter from
Leaders of the Montgomery County Agricultural Community at ©100-1O1. See also Testimony
of Agricultural Advisory Committee at ©49-50; Testimony of the Soil Conservation District at
©82-83. The Gaithersburg Germantown Chamber of Commerce also submitted testimony in
support of the agricultural community's position at ©69-70.
The agricultural community is a small community with unique issues. Familiarity with
rural stakeholders and agricultural issues will be important to success ofthe business development
function. The agricUltural community's reasonable concern that the function will be ineffective or
under-prioritized can be addressed by simply keeping that function within the Office of
Agriculture. The function could be performed using the vacant Ag Navigator position in the
Agricultural Services Division.
Committee recommendation
(3-0): Amend the bill to move
agricultural business deVelopment into the Office of Agriculture.
See lines 100-107 at
©6.
See lines
217-218
at ©1l.4
See lines 505-520 at ©21-22.
4. Incentives.
The MCCC suggested giving the MCEDC authority to spend up to $500,000 for specific
and predetermined incentives without County approval (©55-65) and the BCCC suggested similar
authority for the MCEDC without specifying a dollar amount. (©74-75)
4
See also June 22 Letter from County Executive to Council President at ©102-103 recommending an amendment to
delete the requirement that the Agricultural Advisory Committee confer with the Montgomery County Economic
Development Corporation before rendering advice to the Executive and Council.
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All economic development organizations work with other organizations when providing
financing for economic development grants and loans.
Local economic development
organizations routinely partner with state governments on grants and loans to local businesses. In
addition, local economic development organizations work with authorities that issue revenue
bonds or industrial development bonds, the U.S. Small Business Administration, community
lending institutions, and other financing partners. The effectiveness of any incentive program in
part depends on the working knowledge of the relevant staff and the working relationships of the
relevant financing partners.
Many private EDOs do not have funds available for incentives. Economic developers
within those organizations do maintain familiarity with financing programs in order to make
referrals. For example, MBDC
has
a webpage explaining financing programs in Montgomery
County. (©95-96) Some private EDOs do have funds available to make small grants or loans.
For example, Anne Arundel Economic Development Corporation manages funds that make small
loans (low interest or delayed repayment) to small businesses or technology businesses, and also
makes small 0% interest loans to certain types of businesses in areas targeted for commercial
revitalization or reinvestment.
Given the inherent need for accountability with taxpayer-funded incentives and the
controversial nature of many incentives, the incentive process should continue to operate through
the Department of Finance. If a change to the incentive process becomes necessary, the best time
to initiate such a program would be after MCEDC develops legal and accounting practices,
establishes a track record of performance, and following a review of the County and MCEDC
experience operating under the law as proposed. Committee recommendation (3-0): Do not
amend the bill as requested by MCCC.
Staff recommends a minor technical amendment (not discussed by the Committee) to the
Economic Development Fund law. Currently, Section 20-76A (a) ofthe code requires the Finance
Director to pay a Biotechnology Investment Incentive Tax Credit to eligible applicants by January
31. This language is different from the language in other tax credit programs which do not specify
a date (e.g. Cybersecurity Investment Incentive Tax Credit Supplement).
In
recent years, the
County has not received the State certification of eligibility before January 31
st,
and even when
the State certification is received before the end of January, the County must still register each
eligible applicant as a vendor and issue a 1099. Staff recommendation: Amend Section 20-76A
(a) to eliminate reference to January
3pt,
consistent with Section 20-76D (a), Cybersecurity
Investment Incentive Tax Creditas follows:
Add
after line
236:
20-76A. Investment Incentive Tax Credit Supplement.
(a)
The Director of Finance must pay, [[by January 31 each year,]] subject to
appropriation, a Biotechnology Investment Incentive Tax Credit Supplement to
each applicant who meets certain eligibility standards.
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5. Strategic plan.
Bill 25-15 requires MCEDC to adopt an economic development strategic plan every 4 years
beginning October 1, 2019. Section 20-76 (a) currently requires the County Executive to submit
a strategic plan to the Council by method 1 regulation on or before October 1,2015. The proposed
amendment to this section is awkward because the rest ofthis section deals with the administration
ofthe Economic Development Fund (EDF), and because Section 20-75 requires that any incentives
proposed be consistent with the strategic plan. If the proposed language on lines 229-232 were to
be adopted, MCEDC would be preparing a strategic plan with which all proposed EDF transactions
must be consistent. Alternatively, without the proposed language on lines 229-232 the economic
development strategic plan process would be directed by the County Executive rather than
MCEDC. Charging the lead EDO with developing a strategic plan for economic development is
reasonable, but that would not rescind the method 1 regulation adopted by the Executive and
approved by the Council. After the MCEDC adopts a new strategic plan in 2019, the Executive
and Council would be free to amend the regulation to be consistent with the MCEDC plan.
Committee recommendation (3-0):
Remove the requirement that the MCEDC adopt a strategic
pian in Section 20;.16(a)
30B-S.
and~insert
it into the tasks to be performed by the MCEBC in Section
See lines
227-236
at ©ll.
See lines
544-545
at
©23.
6. Small Business Navigator.
Section 2-25B requires the Executive to designate an employee as the small business
navigator. This position is currently in the Department of Economic Development. It is our
understanding that the Executive is proposing to move this position to the Office of Procurement.
While assisting a small business with securing a County contract is part of the mission of this
position, the navigator must also assist a small business to understand County regulations and
procedures so the business can grow without securing County contracts. Placing this position in
the Office of Procurement would unnecessarily focus the position on only part of the economic
development of small businesses. For example, the new Developer Ombudsman
will
work out of
the County Executive's Office.
Committee recommendation
(3-0):
no change to the Bill after
CAO Firestine agreed to move the position into his office.
7. Ethics.
Under Bill 25-15, MCEDC would be subject to the Open Meetings Act and the Maryland
Public Information Act. However, a member of the Board would not be subject to Montgomery
County's ethics law (Chapter 19A) because of serving on the Board. Rather, the Bill states that
the Corporation's bylaws must include provisions defining and regulating conflicts of interest by
Board members and staff.
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The County Attorney noted several factors (see ©104-105) that the Council can rely on to
ensure compliance with ethical conduct by Board members and staff, including:
• The Council must designate the Corporation, and in order to qualify for designation the
articles of incorporation and bylaws must comply with Chapter 30B.
• The Bill contemplates a Board in which all members are appointed by the County.
• The Bill requires the Board to provide to the County an annual report and an audited
financial statement.
• The County and the Corporation will have a contract. County contracts also give the
County rights to audit a contractor's records to verify compliance. Furthermore, County
contracts require contractors to comply with certain ethical provisions of Chapters lIB
(Procurement) and 19A (Ethics).
• IRS Form 990, Part
VI,
requires tax-exempt organizations to disclose whether the
organization has conflict of interest and whistleblower policies.
The County Attorney thinks that these factors are sufficient to assure that the Board and
staff will comply with appropriate ethical standards. However, he suggested that the Bill be
amended to provide additional guidance regarding specific issues such as self-dealing, collusion,
and whistleblower protection. Committee recommendation
(3-0):
amend the Bill to add the
ethics provisions to the bylaws suggested by the County Attorney.
See lines
463-476
o/the Bill at ©20.
8.
Office of Business Services
DED works with Montgomery County businesses to help them understand and navigate
County processes. Staff support from DED for business services is not limited to the Small
Business Navigator Position. The following divisions provide business service support: Marketing
and Business Development; Business Empowerment; and Special Projects. To the extent that
these business services depend on knowledge of government processes or access to government
resources, the services may be more effectively provided by a public sector economic development
organization. During the Committee's review of Bill 25-15, Councilmember Berliner sent a letter
to his colleagues outlining his proposal to consolidate those functions in a single "Office of
Business Services" rather than dispersing those functions to multiple existing offices or
departments. See Berliner letter at ©109-110. Committee recommendation
(2-1,
Riemer
opposed): no change to the Bill.
Councilmember Berliner may introduce an amendment to establish an office of business services
in the Office of the County Executive.
9. Amendments requested by the County Executive.
On June 22, the Executive sent the Council a memorandum with suggested amendments.
See ©102-103. The Executive proposed 4 amendments.
(a)
The
Bill
would delay the creation of the Office of Agriculture until 90 days after
the Council designates the MCEDC. The Executive suggested moving this to 90
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days after the Act takes effect.
Committee recommendation (3-0):
amend the
bill as requested.
See lines
688-689
at
©28.
(b)
The Bill lists the Secretary of the Maryland Department of Business and Economic
Development as an
ex officio
member of the Board. The Executive requested that
the Bill
be
amended to reflect the current title as the Maryland Secretary of
Commerce.
Committee recommendation (3-0):
approve the change.
See lines
431-433
at
©19.
(c)
The Bill would eliminate the Department of Economic Development 90 days after
the Council designates the MCEDC. The Executive requested that the Bill be
amended to delay that until
180
days after the Council designates the MCEDC.
Committee recommendation (3-0):
amend the Bill as requested.
See lines
692-~94at©29:
(d)
The Executive requested the Bill
be
amended to remove the requirement that the
Agricultural Advisory Committee confer with the MCEDC as requested by the
Leaders of the Montgomery County Agricultural Community.
Committee
recommendation (3-0):
amend the Bill as requested by the Agricultural Advisory
Committee and other members of the agriculture industry. See the amendments
described in Issue
3
above.
This packet contains:
Bill 25-15
Legislative Request Report
Executive Memo
Frequently Asked Questions
Fiscal and Economic Impact statement
Circle
#
1
30
31
32
36
41
Public Hearing Testimony
County Executive
James Moody
Robert Brewer, MBDC
Gino Renne, MCGEO President
David Weitzer, MC Agricultural Advisory Committee
Herman Taylor, Minority Owned and Local Small Business TF
Rick Powell, Metropolitan Washington Council, AFL-CIO
Montgomery County Chamber of Commerce
Richard Bendis, BioHealth Innovation
Gaithersburg-Germantown Chamber of Commerce
Victoria Leonard, LIUNA
Barry Bogage, MarylandlIsrael Development Center
15
42
44
46
49
51
54
55
66
69
71
72
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The Greater Bethesda-Chevy Chase Chamber of Commerce
Joan Fidler, Montgomery County Taxpayers League
Marjorie Nemes, Latino Economic Development Center
Veronique Marier, Bethesda Green
George Lechlider, Soil Conservation District
International Economic Development Council Report Excerpt
MBDC Webpage Excerpt
Good Jobs First letter
June 22 Letter - Montgomery County Agricultural Community
June 22 Letter from the Executive
County Attorney email
DED Organizational Chart
Berliner Memo
74
76
77
79
82
84
95
97
100
102
104
106
109
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Bill No.
25-15
Concerning: Economic Development ­
Reorganization
Montgomery
County Economic Development
Corporation
Revised: June 25, 2015 Draft No. 4
Introduced:
May 21,2015
Expires:
November 21,2016
Enacted: _ _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
-.!.:N~o:..;ne"'_
_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
AN
ACT to:
(I)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
eliminate the Department of Economic Development as a principal department of the
Executive Branch;
create an Office of Agriculture;
transfer certain duties of the Department of Economic Development to other County
agencies;
provide for the designation of a non-profit corporation as the Montgomery County
Economic Development Corporation;
assign certain duties to the Montgomery County Economic Development Corporation and
exempt this assignment from a certain procurement law;
provide a certain notice under the collective bargaining law;
remove the designation of the County's Business Development Corporation; and
generally amend County laws, regulations, and certain contracts governing economic
development and agricultural preservation.
By amending
Montgomery County Code
Chapter lA, Structure of County Government
Sections lA-201 and IA-203
Chapter 2, Administration
Sections 2-27 and 2-64L
Chapter 2B, Agricultural Land Preservation
Sections 2B-I, 2B-3, 2B-7, 2B-] 0, 2B-] 4, 2B-17, 2B-19, 2B-20, and 2B-2]
Chapter 20, Finance
Sections 20-76, 20-76B, 20-76C, and 20-76D
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BILL
No.
25-15
Chapter 27, Human Rights and Civil Liberties
Section 27-26B
Chapter 30B, Business Development Corporation
Sections 30B-I, 30B-2, 30B-3, 30B-4, 30B-S, 30B-6, and 30B-7
Chapter 40, Real Property
Section 40-I2B
Chapter 44, Schools and Camps
Section 44-47
By
adding
Chapter 2B, Agricultural Land Preservation
Section 2B-IA
Boldface
Underlining
-[SingJ~boldfacabr:acketsl­
Heading or defined term.
Added to existing law by original bill.
~~Deletedftom-existingJawJJ-y.originaLbill~
Double underlining
[[Double boldface brackets]]
* * *
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. 25-15
Sec. 1. Section 2B-1A is added and Sections 1A-201, 1A-203, 2-27, 2-64L,
2
2B-1, 2B-3, 2B-7, 2B-10, 2B-14, 2B-17, 2B-19, 2B-20, 2B-21, 20-76, 20-76B, 2­
076C, 20-76D, 27-26B, 30B-1, 30B-2, 30B-3, 30B-4, 30B-5, 30B-6, 30B-7, 40-12B,
and 44-47 are amended as follows:
1A-201. Establishing departments and principal offices.
(
a)
3
4
5
6
Executive Branch.
(1)
These are the departments and principal offices of the Executive
Branch.
County Executive [Charter,
§
201 et seq.]
Chief Administrative Officer [Charter,
§
210 et seq.]
Consumer Protection (Section 11-2)
Correction and Rehabilitation [Section 2-28]
County Attorney [Charter
§
213]
[Economic Development [Section 2-64L]]
Environmental Protection [Section 2-29]
Finance [Charter
§
214; Section 20-38 et seq.]
Fire and Rescue Services [Section 2-39A]
General Services [Section 2-30]
Health and Human Services [Section 2-42A]
Housing and Community Affairs [Section 2-27 et seq.]
Human Resources [Section 2-641; ch. 33]
Intergovernmental Relations [Section 2-64J]
Liquor Control
Management and Budget [Section 2-64K]
Permitting Services [Section 2-42B]
Police [Section 2-43; ch. 35]
Public Information
f:\law\bills\1525 dad reorg\bill 4.docx
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
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No. 25-15
28
29
30
31
32
Public Libraries [Section 2-45 et seq.]
Recreation [Section 2-58]
Technology Services [Section 2-58D]
Transportation [Section 2-55 et seq.]
(2)
The County Executive determines whether an entity
department or a principal office.
IS
a
33
34
35
[a]
®
[b]
Entities
departments.
that directly
serve the public
are
36
37
tID
Entities that provide internal support to other parts
-
of County government are principal offices.
-
-
-.
-
..
-
­
38
39
40
*
*
lA-203.
Establishing other offices.
(a)
Executive Branch. These are the offices ofthe Executive Branch that
are not part of a department or principal office:
Office of Agriculture [section 2B-IA]
Office of the Commission for Women [section 27-28 et seq.]
Office of Community Use of Public Facilities [section 44-4]
Office of Emergency Management and Homeland Security [section 2­
41
42
43
44
45
46
47
48
640]
Office of Human Rights [section 27-4]
*
*
*
49
50
51
52
53
54
2-27.
Functions and organization.
The Department of Housing and Community Affairs has the following
functions:
(1)
(2)
Affordable housing programs.
Community development programs.
(A)
Urban renewal and community development projects.
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BILL
No. 25-15
55
56
(B)
Relocation services for families and businesses displaced
by governmental actions.
57
(3)
(4)
(5)
(6)
Housing standards enforcement, and related activities.
Landlord-tenant relations.
Common ownership community relations.
[Technical
assistance
to
the Department
of Economic
58
59
60
61
62
63
64
65
Development and the Department of Environmental Protection
in the area of human resources, budget, technology, and
procurement.
(7)]
Other functions designated by law.
Division 18. [Department of Economic Development] Reserved.
2-64L. [Functions and organization] Reserved.
66
67
68
[(a)
The Department of Economic Development is responsible for
promoting and supporting:
(1)
industrial and commercial development in the County, including
the technology and hospitality industries;
(2)
agricultural preservation and enhancement
ill
69
70
71
72
the County,
including programs associated with the Soil Conservation
District and the Cooperative Extension Service;
(3)
other economic development in the County,
including
73
74
75
coordination of employment and work force training; and
(4)
services to resident businesses in the County, including business
retention, counseling, business planning, and other services to
maintain the existing economic base.
(b)
In addition to the Director, the Department of Economic Development
has two non-merit system positions for a marketing and business
development manager and minority business affairs manager.]
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No. 25-15
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83
84
85
86
87
88
2B-1. Definitions.
*
meanings indicated:
*
*
[(a)] In this Chapter, the following words and phrases shall have the
*
Economic Development.]
*
*
[Department
means, unless otherwise specified, the Department of
89
*
*
*
90
91
Landowner
means a fee simple owner of land located in the County on
which a landowner proposes to sell or has sold an agricultural easement
-
-
92
93
to the State or the County.
Office
means the Office of Agriculture.
94
95
96
97
*
*
*
or
Significant Agricultural Resource
Significant Agricultural
Capability
means land which, if properly agronomically managed and
under normal growing conditions, the [Department] Office, after
consulting local agricultural support agencies, finds can sustain a
profitable farm enterprise.
2B-IA. Office of Agriculture.
98
99
100
101
102
103
104
105
106
107
The Office must:
ill
{hl
administer this Chapter and the regulations issued under
it.
foster agricultural preservation;
administer programs associated with the Soil Conservation District and
the Cooperative Extension Service;
[[and]]
ill
@
develop the agricultural economy; and
perform other duties as assigned
.!2y
the County Executive.
W
108
2B-3. State Easement Application and Purchase.
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No. 25-15
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110
*
(d)
*
*
If either the APAB or the Planning Board recommends approval, the
County Council must hold a public hearing on the proposed easement.
The [Department] Office must give adequate notice of the hearing to
the owner of any land adjacent to the proposed agricultural easement.
III
112
113
114
115
116
117
118
119
120
*
(i)
*
*
The [Department] Office must work with the State to record each State
agricultural easement in the County land records. The recordation of a
State agricultural easement is not subject to any County recordation or
transfer tax.
2B-7. County Easement Application and Purchase.
(a)
A landowner seeking to place land under an agricultural easement must
submit an easement sales application to the [Department of Economic
Development] Office. The application must include a completed
property description and specify the landowner's asking price.
121
122
123
124
125
*
(e)
*
*
If any land does not meet all requirements of subsection (d), the County
must not buy a County agricultural easement on that land unless:
(A)
the [Department] Office finds that placing an agricultural
easement on that land is in the public interest; and
(B)
the [Department] Office concludes, after consulting local
agricultural support agencies, that the land has significant
agricultural resources.
126
127
128
129
130
l31
132
*
(a)
*
*
133
134
135
2B-IO. Termination and repurchase of agricultural easements.
Process to Terminate and Repurchase an Easement.
*
*
*
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No. 25-15
136
137
138
139
(4)
The APAB must determine if profitable farming is feasible on
the land and issue a written recommendation to the [Department]
Office. In determining whether farming is profitable, the APAB
must consider:
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
*
(5)
*
*
After the APAB issues its recommendation, the [Department]
Office must advise the landowner that the [Department] Office
must order an appraisal of the land at the landowner's expense.
The appraisal must consider the current fair market value of land
and the current fair market value of the land encumbered by an
agricultural easement. The difference between these values must
represent the present value ofthe agricultural easement.
(6)
The landowner must pay the [Department] Office for the cost of
an appraisal. The [Department] Office must order the appraisal
after receiving the funds from the landowner.
(7)
After receIVtng
the
completed
appraisal
and
APAB' s
recommendation, the County Council must hold a public hearing
on the request to terminate the agricultural easement. The
[Department] Office must notify each [owenr] owner of land
adjacent to the land where the easement is located of the public
hearing.
*
*
*
(10) The landowner must pay the required payment to the County
within 180 days after the Executive agrees to terminate the
easement.
After
receiving
the
required
payment,
the
[Department] Office must prepare, execute, and deliver to the
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No. 25-15
162
163
landowner for recording, a Deed of Tennination and Release
from Easement.
164
165
166
167
168
169
170
*
2B-14. Recordation.
*
*
(a)
The County Attorney must record each agricultural easement in the
County land records. The recordation ofan agricultural easement is not
subject to any County transfer or recordation tax.
(b)
Each agricultural easement must:
(1)
(2)
be recorded in the fonn required by the [Department] Office;
run with the land and bind the landowner and each assignee,
-"
~
171
172
173
--­
transferee, mortgagee, and any other party who obtains title to
the property; and
(3)
be recorded so that the easement is senior in priority to all liens,
including any instrument securing pennanentfinancing.
174
175
176
177
*
2B-17. BLT Account.
*
*
178
179
180
181
(a)
The [Department] Office must create a separate account under the
Fund, entitled the BLT Account.
(b)
The BLT Account must contain payments made to comply with
conditions of approval which the Planning Board has imposed for
certain development plans, and may also contain funds received
through donation, appropriation, bond proceeds, or any other source.
182
183
184
185
(c)
Funds in the BLT Account must be spent only on BLT easements.
Funds in the BLT Account may be used in conjunction with other funds
to buy BLT easements.
186
187
2B-19. Administration.
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No. 25-15
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189
190
191
192
193
194
195
196
197
(a)
The costs of any agricultural land preservation program, including the
purchase of any agricultural easement, may be paid from the Fund and
any other appropriated funds.
(b)
[The Department must administer this Chapter and the regulations
issued under it.
(c)]
The [Department] Office must issue an annual report that identifies the:
(1)
(2)
(3)
number and types of agricultural easements bought;
number of acres preserved by those easements; and
price of each easement.
-
..
- . - - -
......
- . - - - -
....
-~--~
2B-20. Enforcement
of State
and County Agricultural Easements.
.....
~----
...
­
198
199
(a)
Any violation ofthis Chapter or regulations issued under it is a Class A
violation. The Department of Pennitting Services may issue a citation
for any violation of this Chapter or the tenns of any agricultural
easement.
200
201
202
203
204
(b)
The [Director of Economic Development] Office may take legal action,
including seeking injunctive or declaratory relief, to prevent any:
(1)
subdivision of land under an agricultural easement that violates
this Chapter or an agricultural easement;. or
205
206
(2)
transfer of land, including the transfer of lots to or for the
landowner or the landowner's children, that violates this Chapter
or an agricultural easement.
207
208
209
210
(c)
The [Director] Office may also take legal action to recover any funds
obtained from any subdivision or land transfer that violates this Chapter
or an agricultural easement, plus costs and a reasonable attorney's fee
211
212
213
*
*
*
*
*
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2B-21. Agricultural Advisory Committee.
214
*
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BILL No. 25-15
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216
217
218
219
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222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
(e)
Duties.
(1)
The Committee must:
(A)
after conferring with the [[Montgomery County Economic
Development Corporation]] Office of Agriculture, advise
the Executive and Council on all matters affecting
agriculture in the County;
(B)
bring matters of particular importance to the attention of
the Executive and Council; and
(C)
comment on matters referred to it by the Executive and
Council.
*
(a)
*
*
20-76. Economic Development Strategic Plan, Administration.
The Executive must submit, by method 1 regulation, an economic
development strategic plan for the County to the Council for approval
on or before October 1, 2015. [[The Montgomery County Economic
Development Corporation must adopt an economic development
strategic plan beginning]] Beginning no later than October
.L.
2019 and
each fourth year
thereafter~
the Executive may amend the strategic plan,
by Method I regulation. to be consistent with the strategic plan adopted
by the Montgomerv County Economic Development Cox:poration. The
success or progress of the strategic plan must be measurable and the
plan must include measures to address:
*
*
*
20-76B. Small Business Assistance Program.
(a)
Definitions.
As used in this Section:
Adverse impact
means a loss ofrevenue resulting from a redevelopment
241
project.
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No. 25-15
242
243
244
245
246
247
248
249
250
251
252
253
254
255
256
257
258
259
260
261
262
263
264
265
266
267
268
Director
means the Director of the Department of [Economic
Development] Finance.
Enterprise zone
means an area designated under Maryland Code,
Economic Development
Article, Section 5-704 or any successor
prOVISIOn.
Fund
means the Economic Development Fund established in Section
20-73.
Program
means the Small Business Assistance Program.
Redevelopment project
means any construction, alteration, or
improvement in an urban renewal area or enterprise zone where the
existing land use is commercial or industrial and is:
(1 )
located on property owned by the County; or
fmanced in whole or part by the County.
(2)
Small business
means a privately owned business that meets the
requirements of Section IIB-65( a).
Technical assistance
means training directly related to operating a
small business provided by an educational institution or a non-profit
organization approved by the Director.
Urban renewal area
means an area ofthe County as defined in Section
56-9(f).
*
*
(c)
*
*
*
20-76C. Green Investor Incentive Program.
*
Eligibility standards.
A qualified investor, who need not be a County
resident, is eligible to receive the incentive payment if the qualified
investor[:] invests in a qualified green company that:
(1)
has its headquarters and base of operations in the County; or
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272
(2)
has signed a lease for at least 5 years to open a qualified green
company with its headquarters and base of operations in the
County; and
(3)
has been in business for less than 10 years and employs less than
50 people and does not have its securities publicly traded on any
exchange.
273
274
275
276
277
*
(g)
*
*
In order to calculate the amount ofthe incentive payment to be made to
a qualified investor under Subsection (f), the Director of the
Department of [Economic Development] Finance must, by January 15
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.
278
279
280
281
282
283
284
285
286
287
288
289
290
291
292
293
(h)
Application required.
The Director of the Department of [Economic
Development] Finance must require each qualified investor to submit
an application for the incentive payment and may take any other action
necessary to administer the incentive payment. The Executive may
issue regulations under Method (2) to specify an application process
and otherwise implement this Section.
*
*
*
20-76D. Cybersecurity Investment Incentive Tax Credit Supplement.
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No. 25-15
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297
298
299
(a)
The Director of Finance must pay, subject to appropriation, a
Cybersecurity Investment Incentive Tax Credit Supplement to each
Cybersecurity Company who meets certain eligibility standards.
*
(
e)
*
*
The Director of [Economic Development] Finance must request from
the Comptroller of the Treasury and Department of Business and
Economic Development, by April 30 of each year, a list of each
Cybersecurity Company, headquartered and based in Montgomery
County that was issued a final credit certificate by the State during the
preceding calendar year. The Executive may issue regulations under
Method
(1)
to implement this Section.
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301
302
303
304
305
306
*
(a)
*
*
27-26B. Interagency fair housing coordinating group.
307
308
The County Executive must designate an interagency fair housing
coordinating group. The purpose of the coordinating group is to
facilitate and promote the County's efforts to prevent discrimination in
housing.
309
310
311
312
(b)
The County Executive appoints the members ofthe coordinating group,
subject to confirmation by the County Council. The coordinating group
consists of one or more employees of each ofthe following agencies:
(1)
Office of Community Outreach in the Office of the Chief
Administrative Officer;
(2)
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315
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Human Rights Commission;
Housing Opportunities Commission;
[Department of Economic Development;
Department of Housing and Community Affairs;
Community service centers;
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(3)
(4)
(5)]
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®
[(8)]
ill
[(9)]
00
[(7)]
Department of Health and Human Services;
Commission for Women; and
Commission on People with Disabilities.
(c)
The Executive also may designate, subject to confirmation by the
County Council, one or more members of the Executive's staff, and
employees of any other County department or office, to serve on the
coordinating group. The Executive must also invite the County
Council, the Montgomery County public
schools~
the Montgomery
County Economic Development COIporation, and the Maryland­
National Capital Park and Planning Commission to designate one or
more staff members to serve as full members of the group.
(d)
The Executive must designate a chair ofthe coordinating group, subject
to confirmation by the County Council. The chair or the Executive may
call meetings. The group may form its own subcommittees.
(e)
Meetings of the coordinating group and its subcommittees are [open]
subject to [the public under] the [State] Maryland
~
Meetings law
[on public meetings]. In order to create a public forum and encourage
diverse participation, the Executive must invite representatives of the
housing industry and active community groups to participate in
meetings. The group [is] must not be governed by Chapter 2 or Chapter
2A.
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(f)
With staff support from the Fair Housing Coordinator, the coordinating
group must submit to the County Council and County Executive an
annual report on housing discrimination in the County. This report
must:
(1)
assess County, State and Federal laws prohibiting discrimination
in housing, and evaluate their enforcement in the County;
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(2)
recommend changes in law, policy, programs or priorities needed
to reduce discrimination in housing;
(3)
(4)
include a work program for the coming year;
include a progress report on the previous year's work program;
and
(5)
include the views of the Fair Housing Coordinator and any
member whose views differ from those of the report.
Chapter 30B [Business] Economic Development Corporation.
30B-1. Policy objectives.
W
[Recognizing that
(1)
the] The future success of Montgomery County
related to education, infrastructure, public safety, public welfare, and
quality of life is:
(1)
(2)
built on a vibrant and growing economy[,];
successful businesses [are the key to] creating this economy[,];
and
(3)
government [must foster] fostering a legislative and regulatory
environment which encourages business successJ, to]
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371
(Q)
To achieve these goals.1 the County Government [must] may designate
a nonprofit corporation as the [County's Business] Montgomery
County Economic Development Corporation (Corporation) to [enhance
and supplement] implement. the County's economic development
programs and activities.
[The mission of the Business Development Corporation is to develop the
vision for the County's economic future and to recommend and advocate for
legislative and regulatory changes that move the culture and regulatory
environment so that business success can create that vibrant and growing
economy.
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The Corporation must be able to:
(a)
establish a vision of the economic future of the County founded on
sound financial and economic condition and policies;
(b)
develop and articulate strategies designed to achieve that
VIS
lOn,
advocate for legislative and regulatory changes necessary to
accomplish that vision, set measurements, and regularly report on the
County's success in meeting its objectives and goals;
(c)
provide leadership on economic issues at both the County and State
levels;
(d)
engage business leaders and other key stakeholders in developing and
implementing economic development strategies;
(e)
maintain close liaison with government agencies and elected
representatives at both the County and State levels to achieve the goals
of the Corporation; and
(f)
undertake any other activities deemed by the Board of Directors to
support the mission of the Corporation.]
30B-2. Designation.
(a)
[In this Chapter "Corporation" means the Business Development
Corporation that the County has designated to study, evaluate, enhance,
and supplement the County's economic development programs and
activities.
(b)]
The County Council must designate, by resolution approved by the
County Executive, a single nonprofit corporation which complies with
all requirements and criteria ofthis Chapter as the [County's Business]
Montgomery County Economic Development Corporation. If the
Executive disapproves the resolution within 10 days after receiving it,
the Council may readopt the resolution with at least 6 affinnative votes.
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No. 25-15
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[(c)
(1 )
Any designation under this Section expires at the end of the fifth
full fiscal year after the resolution is adopted unless the Council
extends the designation by adopting another resolution under this
Section.
(2)
However, if the Council President does not notify the Chair of
the designated Corporation's Board of Directors, not later than
June 30 of the fourth full fiscal year ofthe designation tenn, that
the Council may allow the current designation to expire, the
designation is automatically extended for another 5-year tenn.
(d)
The Council at any time may suspend or revoke the designation of a
corporation as the County's Business Development Corporation by
resolution, adopted after at least 15 days public notice, that is approved
by the Executive, or, ifthe Executive disapproves the resolution within
10 days after receiving it, is readopted by a vote of at least 6
Councilmembers. ]
[(e)]
®
To continue to qualify as the County's [Business] Economic
DeVelopment Corporation, [a corporation's] the Corporation's articles
of incorporation and bylaws must comply with all requirements of this
Chapter.
30B-3. Board of Directors.
(a)
To qualify as the [County's Business] Montgomery County Economic
Development Corporation, [a corporation's] the Corporation's Board
of Directors must have [no more than] 11 voting members appointed
by the County Executive and con finned
by
the County Council. The
County Executive should appoint
~
member of the Workforce
Development Board as one of the members of the Corporation's Board
of Directors. The Corporation's Board of Directors must also include
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BILL
No.
25-15
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one officio non-voting member appointed
Qy
the County Executive;
and one non-voting member appointed
Qy
the County Council; and
should have one non-voting member appointed
Qy
the Maryland
Secretary of Commerce [[the Maryland Department of Business and
Economic Development]].:. [The corporation's bylaws should also allow
the Director of the Department of Economic Development, the
Superintendent of the County Public Schools, the President of
Montgomery College, and the chair of the County Planning Board or
the Planning Director, to serve as ex-officio,non-voting members along
with any other nonvoting members authorized under the bylaws.]
(hl
Each voting member serves
~
3-year tenn. The individual terms of the
voting members must be staggered. Of the voting members first
appointed, four must be appointed for !! I-year term, four must be
appointed for
~
2-year term, and three must be appointed for
~
3-year
term. A voting member appointed to fill!! vacancy serves the rest ofthe
unexpired term. A voting member continues in office until his or her
successor is appointed and confirmed.
[(b)] (£)
Each voting member must be either a resident of the County or
~
[employed in the senior management of a company which]
senior
manager in !! for-profit or nonprofit entity that has a significant presence
in the County [The voting members of the Board of Directors should
include:
(1)
one volunteer representative of a Chamber of Commerce in the
County who is recommended by the Chamber of Commerce;
(2)
(3)
one owner ofa small business in the County;
one owner or officer of the senior management of a medium­
sized business located in the County; and
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(4)
up to 8 officers from the senior management ofmajor companies
which have a significant presence in the County].
[(c)]
@
A member must not
be
paid for service on the Board but may be
reimbursed for necessary travel expenses.
[(d)]
ill
A member is not subject to Chapter 19A because of serving on
the Board. The Corporation's bylaws must [[include provisions
defining and regulating conflicts of interest by Board members and
Corporation staff]] protect against any conflict of interest or similar
impropriety by members of the Board of Directors or the Executive
Director or any other employees. The bylaws must include:
ill
ill
a prohibition against self-dealing and collusive practices;
a provision for the disclosure of a financial or similar interest of
any person in any matter before the corporation that would create
a conflict of interest;
ill
a provision establishing conditions under which a person is
disqualified from participating in decisions or other actions in
which there is a conflict between the person's official duties and
private interests;
appropriate remedies for a violation of the bylaws. including
removal or termination: and
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[(e)]
ill
a policy to protect whistleblowers ..
Notwithstanding any inconsistent provision of County Code
Section 19A-21, a member ofthe Board ofDirectors or
~
staff member
of the Corporation who engages in legislative.,. [or] administrative.,. or
executive advocacy as part of that [member's] person's duties [on the
Board] is not required to register as a lobbyist under Article V of
Chapter 19A because of that advocacy.
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No. 25-15
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[(f)]
(g)
The Board must direct the program, management, and finances
of the [corporation] Corporation.
30B-4. Status; incorporation; bylaws.
(a)
To qualify as the County's Economic [Business] Development
Corporation,
[a corporation's]
the
Corporation's
articles
of
incorporation must provide for the appointment of the members of its
board of directors as set forth in this Chapter. The articles of
incorporation must also provide that the [corporation] Corporation is:
(1)
a [tax-exempt] Maryland nonprofit:!. non-stock corporation the
purposes and activities of which are limited to those that are
permitted to be promoted or performed
Qy
~
corporation that is
recognized as exempt from federal income tax under 26 U.S.C.
§.
501;
(2)
(3)
not an instrumentality of the County; [ and]
incorporated for the [sole] purpose of serving as the County's
[Business]
Economic
Development
Corporation
and
implementing the County's economic development strategic
plan, adopted under Section 20-76, and related programs. These
programs must include:
CA)
attracting and retaining businesses;
500
501
502
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504
aD
facilitating economIC, industrial, and commercial
development in the County;
505
506
.cg
[[enhancing the agricultural economy;
CD)]] encouraging investment in commerce, industries, and
businesses in the County;
507
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Blll
No. 25-15
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[[@]]
(D) promoting job growth and talent attraction, in
coordination with the Montgomery County Workforce
Development Board;
[[(E)]]
(ID
[[(Q}]]
(El
advising and informing County officials on
economic development matters;
providing services to resident businesses in the
514
515
516
County, including business retention, counseling, business
planning, and other services to maintain and grow the
existing economic base;
~
...__
~17
___....__._._.___.__.__
._~[[.~=(H)~]]~,(=G:-=-)------=s::ti=m=u=la=t=in=:-g
.
.ill:!4
nurturing
~
development
ill
~
5.. _
518
business; and
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526
[[ill]]
(H)
promoting the development of
~
vital and balanced
economy.
ill
ill
(b)
organized and operated under the laws of the State of Maryland;
and
headquartered in the County.
The Corporation's bylaws may contain any provision [, not inconsistent
with law or the articles of incorporation,] necessary to govern and
manage the Corporation that does not conflict with this Chapter. The
Corporation may exercise all powers and is subject to all requirements
which apply to non-stock corporations under the Corporations and
Associations Article of the Maryland Code.
527
528
529
530
.(c)
[The Board must adopt and may amend the Corporation's bylaws,
subject to approval by the Council. The public must be given at least 15
days to comment on the proposed bylaws, or any amendment to the
bylaws, before the Council approves them.
531
532
533
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No. 25-15
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(d)]
The bylaws must require the Corporation to comply with the [state]
Maryland [open meetings]
~
Meetings law and [provide that all
meetings of the Board of Directors must be open to the public except
when closed on a recorded vote of the Board for a reason expressly
listed in the state law or the bylaws] the Maryland Public Information
Act.
30B-S. [Work] Economic development program.
(a)
The Board of Directors must [adopt a work] recommend economic
development [program] programs to the Executive and Council each
year to advance the policy objectives and perfow the activities listed
in Section 30B-I. including revisions to the County's strategic plan for
economic development established by Section 20-76(a).
(b)
In its [work] economic development [program] programs, the
Corporation should collaborate with [complement the strategic
economic development activities of] the [Department of Economic
Development] Montgomery County Workforce Development Board to
advance the County's economic development strategic plan adopted
under Section 20-76.
(c)
The Corporation's [work] economic development [program] programs
may include a plan for sponsorship of private investment, marketing,
and advocacy initiatives.
553
554
555
556
557
558
(d)
The Board must meet with the Executive and the Council at least [semi­
]
annually.
[The Board must advise the Executive and Council on
economic development and related matters.]
30B-6. Staff; support from County Government.
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BILL No.
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(a)
[The Department of Economic Development should, if the Board of
Directors requests, provide administrative support for the Corporation,
including contracts, grants, or services in kind, subject to appropriation.
(b)]
The Office ofManagement and Budget, the Department ofFinance, and
other departments of County government and County-funded agencies,
if the Board of Directors requests, should provide relevant economic
data to the Corporation. The research division of the Planning Board
must provide research support to the Corporation to the extent assigned
by the Planning Board's work program, as approved by the Council.
[(c)]
(hl
The Corporation may also raise public
~
private funds and may
accept services from any source consistent with its purposes.
30B-7. Report.
The Board of Directors must report annually on the activities of the
Corporation and [fmances] provide an audited financial statement ofthe Corporation
to the Executive and Counci112y November
1
of each year.
40-12B. Real property sold in Agricultural Zones.
(a)
If any real property is located in, adjoins, or confronts an area zoned
agricultural, as defined in Section 59-C-9.1, the seller must disclose to
each prospective buyer, before the buyer signs a contract for the sale of
the property, that existing County and State law is intended to
discourage owners of real property adjacent to agricultural-zoned land
from filing certain lawsuits against an owner or operator of an
agricultural use in those areas. The following text must be substantially
included in the disclosure:
As required under Montgomery County Code
§
40-12B, you are hereby
notified that the state of Maryland and Montgomery County have
enacted laws that establish agriculture as the preferred use on land
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No. 25-15
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zoned Rural Density Transfer and as a permitted use in other
agricultural zones, as defined in Section 59-C-9.1 of the County Code.
The property subject to this contract is located in, adjoins, or confronts
an area zoned agricultural. Residents and other occupants of property
near land in agricultural zones should be prepared to accept effects of
usual and customary agricultural operations, facilities, and practices,
including noise, odors, dust, smoke, insects, operation of machinery,
storage and disposal of manure, unusual hours of operation, and other
agricultural activities.
Under Maryland law, an agricultural operation is not a nuisance, and a
--~-~~~-~-~~---~--~~~~~-~
lawsuit may not be successful alleging that an agricultural operation
interferes with the use or enjoyment of other property, ifthe agricultural
operation:
(1)
(2)
has continued for at least 1 year;
complies with applicable health, environmental, zonmg, and
permit requirements; and .
(3)
is not conducted negligently.
County law may provide additional protections for agricultural uses on
agricultural-zoned land.
For further information,
contact the
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Montgomery County [Department of Economic Development] Office
of Agriculture.
(b)
A prospective buyer must indicate, by signing an addendum to the
contract or a separate section of the contract printed in boldface type in
a clearly demarcated box, that:
(1)
the seller has provided the information required by subsection
(a); and
(2)
the buyer understands that:
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No. 25-15
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(A)
adjacent property may be the source ofagricultural-related
nuisances; and
(B)
the buyer may obtain more information about these
nuisances from the Montgomery County [Department of
Economic Development] Office of Agriculture.
*
(
a)
*
*
44-47. Workforce Investment Scholarship Program.
Definitions.
Board
means the Workforce Investment Scholarship Board created in
622
623
Section 44-48.
Director
means the Director of the Department of [Economic
624
625
626
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628
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630
631
Development] Finance or the Director's designee.
*
*
*
Sec. 2. Applicability of Chapter
lIB,
Article XVI ("Service Contracts").
Any service contract, grant, or other agreement between the County and
another person that encompasses any function that was performed by the Department
of Economic Development is exempt from Chapter lIB, Article XVI ("Service
Contracts") under Section 11B-72(d)( 1).
Sec. 3. Collective bargaining notice.
This Act serves as any notice required under Section 33-107(c)(17).
Sec. 4. 2003 L.M.C., ch. 12,
§
3 is repealed.
The following law (2003 L.M.C., ch. 12, § 3) is repealed: "Marketing
Assistance. The Department of Economic Development must establish and
administer a fund, subject to appropriation, to provide marketing assistance to
County restaurants affected by the provisions of this law. The Department must
develop criteria for use of these funds and report to the Council quarterly on
expenditures from the fund."
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No. 25-15
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-
..•.
- -
..
~--.~--~
Sec. 5. Montgomery Business Development Corporation.
This Act revokes the designation of the Montgomery Business Development
Corporation as the County's business development corporation.
Sec. 6. References to the Department of Economic Development in
regulation.
Reference to the Department of Economic Development in COMCOR
02.64L.01 (Silver Spring Enterprise Zone), COMCOR 02.64L.02 (Wheaton
Enterprise Zone), and COMCOR 02.64L.03 (Long Branch/Takoma Park Enterprise
Zone) is a reference to the Department of Finance.
Reference to the Department of Economic Development in COMCOR
..
-
..
-
..
---~
..
-
..
-
..
- . -
..
--~-
..
-~
..
-~.-
..
- . - , -
..
- . - . - . -
..
-~
..
-
. -
..
-
..
-~
..
-.~
..
-.~
..
-~
..
- . -
..
_
..
-
..
_ . -
..
_ . _ . -
. .
650
651
652
653
654
655
656
657
658
02B.00.01 (Agricultural Land Preservation Districts and Easement Purch.ases) is a
reference to the Office of Agriculture.
Reference to the Department of Economic Development in COMCOR
lS.12.01 (Fee Schedule for Food Service Facilities) is a reference to the Office of
Agriculture.
Reference to the Department of Economic Development in COMCOR
20.73.01.0S(g) (Economic Development Fund - Award Process) is a reference to the
Montgomery County Economic Development Corporation and reference to the
Department of Economic Development in COMCOR 20.73.01.0S(k) (Economic
Development Fund - Award Process) is a reference to the Department of Finance.
Reference to the Department of Economic Development in COMCOR
20.73.02 (Technology Growth Program) is a reference to the Department ofFinance.
Section 20.73.02.0S.b.S (Program Operations) is amended as follows: "The Director
of the Department of Finance [must, upon request from the Director of the
Department of Economic Development,] may fund eligible projects with monies
from the Economic Development Fund designated for the Program."
659
660
661
662
663
664
665
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No. 25-15
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Reference to the Department of Economic Development in COMCOR
20.76.01 (Strategic Plan) is a reference to the Montgomery County Economic
Development Corporation except the reference to the small business navigator
position in the Department of Economic Development in Section 20.76.01.02
(Definitions - Small Business Navigator) is a reference to the small business
navigator position in the Office of Procurement.
Reference to the Department of Economic Development in COMCOR
52.14.01 (Fuel Energy Tax for Agricultural Producers) is a reference to the
Department of Finance except that reference to the Department of Economic
Development in Section 52.14.01.05.A (Verification that Agricultural Producers
Meet the Eligibility Criteria) is a reference to the Office of Agriculture.
Reference to the Department of Economic Development in COMCOR
56.0IA.OI (Financial Assistance to Demolish Commercial Properties) is deleted.
Reference to the Department of Economic Development in COMCOR Misc.
02 (Administration of the Glenmont Enterprise Zone) and COMCOR Misc. 03
(Burtonsville Enterprise Zone) is a reference to the Department of Finance.
Sec.7. References to the Department of Economic Development in
contracts.
All references to the Department of Economic Development in contracts,
deeds, licenses, easements, and leases are references to an agent of the County as
designated by the Chief Administrative Officer.
Sec. 8. Transition; effective dates.
Amendments to Section IA-203, Chapter 2B. Chapter 40. and Chapter 30B
made under Section I of this Act take effect as provided in Charter Section 112.
Section 5 of this act takes effect when the Montgomery County Economic
Development Corporation is designated under Section 30B-2.
678
679
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691
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Bill
No. 25-15
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All
other prOVISlOns of this Act take effect
[[90]]
180 days after the
Montgomery County Economic Development Corporation is designated under
Section 30B-2.
696
Approved:
697
George Leventhal, President, County Council
698
Date
Approved:
---~699-"'-"""---"-'-~~~-"---"---'.-~
. - -..
Isiah Leggett, County Executive
700
Date
This is a correct copy ofCouncil action.
701
Linda M. Lauer, Clerk of the Council
Date
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LEGISLATIVE REQUEST REPORT
Bill 25-15
Economic Development
-
Reorganization ­
Montgomery County Economic Development Corporation
DESCRIPTION:
This Bill privatizes the County's economic development functions by
(1)
removing the designation of the County's Business Development
Corporation and providing for the designation of a new non-profit
corporation as the Montgomery County Economic Development
Corporation; (2) eliminating the Department of Economic Development;
and (3) transferring its functions to a newly created Office of Agriculture,
the Department of Finance, and the Economic Development Corporation.
There is a need to ensure greater alignment of resources with community
needs and improve the County's competitiveness.
----C01tl.;S-AND-----------------.------.---------------------------------------.---------------.---­
PROBLEM:
OBJECTIVES:
Ensure greater alignment of resources with community needs and improve
the County's competitiveness.
COORDINATION:
Office of the County Executive, County Attorney.
FISCAL IMPACT:
Requested.
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
Requested.
Subject to the general oversight of the County Executive and the County
Council.
In the national capital region, there are many examples of privatized
economic development organizations acting as their jurisdictions' lead or
primary point of contact for businesses, including Fairfax County,
Washington, DC, Prince George's, Baltimore City, Howard County, and
Anne Arundel County.
SOURCES OF
INFORMATION:
Edward
B.
Lattner, Chief
Division of Government Operations
Office of the County Attorney
Lily Qi
Special Projects Director
Office of the County Executive
APPLICATION
nla
WITIDN
MUNICIPALITIES:
PENALTIES:
nla
F:\LAW\BILLS\1525 DED Reorg\LRR.Doc
®
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~~J...t-
6V
-.15
CL
10
OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE. MA RYLAND 201150
Isiah Leggett
County Executive
MEMORANDUM
May 15.2015
RECEIVED
MONTGOMEi\Y COUNTY
COUNCIL
TO:
George Leventhal. President
County Council
Isiah Leggett, County Executive
Economic Development Reorganization-Montgomery County Economic
Development Corporation
FROM:
SUBJECT:
I am attaching for Council introduction legislation to replace the Department of
Economic Development (DED) and the Montgomery Business Development Corporation with a
new nonprofit corporation. the Montgomery County Economic Development Corporation. The
legislation would also transfer certain duties ofDED to other County agencies, including a new
Office of Agriculture within the Executive branch.
I made a decision to privatize the Department of Economic Development based
on business community input, the neighboring jurisdictions' economic development
organizational models. and most importantly, the profound changes in our economy. This is part
of a larger effort to improve Montgomery County's economic competitiveness and better align
our resources with the market dynamics and community needs for job growth. Other efforts
underway include completion of a comprehensive economic strategy as a blueprint for future
economic success and restructuring workforce development to create a central coordinating
organization for all workforce strategies and programs for both employers and employees.
My staff stands ready
to
work with the Council on this important legislation.
which I urge the Council to enact in the near future,
Attachments
c:
Timothy L. Firestine, Chief Administrative Officer
Jennifer Hughes, Director, Office of Management and Budget
Bonnie Kirkland. Assistant Chief Administrative Officer
Lily Qi, Special Projects Director, Office of the County Executive
Sally Sternbach, Acting Director, Department of Economic Development
Marc Hansen, County Attorney
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FAQs on DED Restructuring, May 2015
Frequently Asked Questions on Restructuring
Economic Development in Montgomery County
County Executive Ike Leggett has decided to privatize the core functions of the Department of
Economic Development by establishing a nonprofit public-private partnership as Montgomery
County's lead economic development organization. Below are the most frequently asked
questions about this move.
1. Why
does
Montgomery County want to privatize economic development functions?
The County Executive made a decision to privatize the Department of Economic Development
-.~ ~~-~--based-on-community-tnput-theneighboring-jurisdictionsLmodels/andmost-importantIY/the~~-··­
profound changes in the region's economy and the competitive landscape. This is part of a
larger effort to increase Montgomery County's economic competitiveness. Other similar
moves include completion of a comprehensive economic strategy as a blueprint for future
economic success and restructuring workforce development to create a central coordinating
organization for all workforce strategies and programs for both employers and employees.
2. What does it mean to have a "private economic development organization?"
A new nonprofit
sOlc3
will be established as a public-private partnership to replace both the
Department of Economic Development and the Montgomery Business Development
Corporation (MBDe) as the lead economic development organization (EDO) for Montgomery
County. The organization will have its own board and is not part of the Montgomery County
government structure.
3.
What are other examples of privatized economic development organizations?
In the National Capital Region, there are many examples of privatized economic development
organizations acting as their jurisdictions' lead or primary point of contact for businesses,
including the Fairfax County Economic Development Authority, the Washington, DC Economic
Partnership, the Prince George's County Economic Development Corporation, the Baltimore
Development Corporation, the Howard County Economic Development Authority, and the
Anne Arundel Economic Development Corporation.
1
@
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FAQs on
OED
Restructuring, May
2015
4. What does Montgomery County hope to achieve through this new economic development
organization that it cannot achieve with the current structure?
By restructuring economic development functions, Montgomery County seeks to strengthen
private-sector involvement in economic development, to be more nimble and adaptive to
market changes and community needs, and to improve operational efficiency and
effectiveness. Business operates at a much faster pace than most government services and, in
order to be effective, the new organization needs to be responsive to businesses in their
timeframe.
S. What is the estimated timeline?
It is the goal of Montgomery County government to have the new nonprofit incorporated and
board members appointed and approved by January 2016. The organization is expected to be
operational by late spring of 2016.
6. Would Montgomery County fund this new organization?
Yes. The Montgomery County government intends to fund the core functions of the new EOO.
However, being a nonprofit corporation also enables the organization to raise or receive funds
through grants, gifts, donations, fee for services, and other revenue sources.
7. How much does the County intend to fund the organization?
The new organization will be funded according to its scope of responsibility and at a level
competitive to other comparable jurisdictions.
8. Would the new economic development organization have the exact same portfolio of
responsibilities of the Department of Economic Development?
A majority of the current OED responsibilities will be transferred to the new EOO, especially
those related to marketing, business attraction, business retention and growth,
entrepreneurship and innovation programs. The functions that will be kept within the County
government include Finance, Special Projects, Small Business Navigation, marketing of the
Local Small Business Reserve Program, and Agricultural Services.
9. What would happen to the employees of the Department of Economic Development?
OED employees have years or even decades of excellent service to Montgomery County and
the business community. We hope the new organization's leadership will recognize their value
so those who wish to work with the new organization will find employment there. However, it
will be a decision by the leadership of the new organization. As the transition unfolds, it is
2
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FAQs on DED Restructuring, May 2015
anticipated that many OED employees will continue their services within the County
government in different capacities, either because their functions will remain in the
government, or because they choose to stay on as a County employee. Montgomery County
government will make every effort to make the transition as smooth as possible.
10.
What kind of board will this organization have and who appoints the board members?
An ll-member board will be appOinted by the County Executive and approved by the County
Council. In addition, there will be non-voting ex-officio members representing the County
Executive, the County Council and the State's Office of the Secretary of Commerce. The board
will be made of primarily private sector representatives with consideration for various
industry sectors, geographical regions, company size, etc. Members will serve staggered terms
with a combination of i-year, 2-year and 3-year terms apPOintments to the initial board.
-_.. _ - --11:How canlneCoOnty government ensure acccHInta6ilit1jofapr'IVate-settor;lea
development organization?
Montgomery County government provides budgetary oversight through contractual
agreements with performance metrics with the EDO.
ec(momrc---~···-·-···­
12.
Who would manage the County's contractual relationship with this new organization?
There will be a designated senior staff person or function within the Office of the County
Executive that will oversee the County's contractual relationship with this new EDO and
facilitate its interaction with the rest of County government functions.
13.
Who makes personnel and compensation decisions in the new organization?
The board of directors makes hiring and firing decisions of the Chief Executive Officer, who
has the authority on all other personnel matters.
14.
Does the County still have an active role in economic development with a privatized
economic development organization?
Yes, economic development takes a village and there are many functions related to economic
development that a local government performs, including land use, community development,
transportation, etc. So creating this new EDO does not take away the County government's
need to be actively engaged in economic development or provide overall leadership and
vision on economic development.
3
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FAQs on
OED
Restructuring, May
2015
15. Is the new organization subject to open meeting laws?
Yes, the new EDO is subject to the Open Meeting Act and Maryland Public Information Act
similar to other County boards, committees and commissions. However, there are times when
the board and its committees may need to have closed-door sessions for sensitive discussions
related to certain businesses and prospects during negotiations, as is the case today.
16.
Would this new organization be the first point of contact for businesses about doing
business in Montgomery County?
Yes, as Montgomery County's lead economic development organization, the new EDO will be
the first point of contact for start-ups as well as resident and prospective businesses about
moving to, starting or growing a business in Montgomery County.
17. Would the new organization be responsible for implementing the comprehensive economic
-----··~-·~--stra~e-gyth-ans-onlieTdevelopment?-----~·---~·---------------------.
--_._-------------_.-----------­
The new EDO will playa major role in implementing the recommendations, but will not be
solely responsible for implementing the strategic plan, which is much broader in scope than
the new EDO's functions and will require active participation of both non-governmental and
governmental agencies. The Office of the County Executive, which has been leading the
development ofthe Comprehensive Economic Strategy, will continue to oversee the overall
implementation and reporting of the strategic plan. The new EDO will assume leadership
responsibility in developing a strategic plan beginning 2018 as required by County law.
18. How will this new EDO work with other economic development organizations?
As the County's lead EDO, the new organization is expected to take a leadership role in
coordinating and facilitating marketing and business development functions, and for
collaborating with partner organizations such as BioHealth Innovation, the new workforce
development organization, etc.
19. What do you call this new organization?
For the purpose of incorporation, the new organization is called the Montgomery County
Economic Development Corporation. The board of directors can decide on a new name later if
it so chooses.
20. Who is the point of contact if we have more questions or want to provide input?
Please contact Lily Oi, Office of the County Executive, at liIy.qi@montgomerycountymd.gov or
240-777 -2524.
4
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i
.. !
.1
Fiscal Impact Statement
Couneil Bill XX"XX
Economic Development Reorganization
1. Legislative Summary.
Bill XX-I5 will eliminate the Department of Economic Development ("DED") as a principal
department of the Executive Branch,
and
transfer certain duties of the Department of
Economic Development to other County agencies. The Bill will also provide for the
designation of a non-profit corporation as the Montgomery County Economic Development
Corporation ("MEDC") and assign certain duties to the new corporation. At the same time,
the Bill will remove the designation ofthe County's Montgomery Business Development
Corporation and generally amend the County law governing economic development.
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 current assumption is that there will
be
no net fiscal impact due to the implementation of
this legislation, since the current resources allocated to DED would be reallocated
to
either
other entities within County Government, the MEDC or the new entity managing the
County's workforce programs. The resources that are currently appropriated to DED would
follow the functions to their new entities.
While not impacting the overall dollars, the information below outlines how the County
Executive envisions the allocation of resources.
The proposed legislation would designate DED functions related to marketing, outreach,
business development and assistance to the new MEDC.
It
is estimated that approximately
$6.23M of personnel and operating costs associated with those functions would be
transferred to MEDC. For those existing DED functions remaining
in
County Government,
including agricultural services, special projects, some finance and administration services
related to the Economic Development Fund (EDF), and incentives funded through the EDF,
an estimate of $6.82M in personnel and operating budget will be transferred to other County
departments. The funds currently allocated to DED workforce services, approximately of
$835K in General Funds and $3.57M in grants, will be transferred
to
a new non-profit entity.
.~
..
-.~
..
~-
.....
- - -
...
­
Reallocation of
FY16
Approved OED and EDF Budgets to MEDC and Other County Agencies
FTEs
OED Budget
~
General Fund
DED Budget ­ Grants
EDF Budget
NDA-Lease for DED Office Rental
NDA-Conference Center
Total
Transfer to MEDC
19 DED positions and associated OE,
including incubator programming,
MBDC, and DED current lease.
32.4
1.0
1.0
34.4
PC
$4,214,975
$129,000
$118,314
$4,462,289
OE
$7,073,036
$3,572,311
$1,724,591
$622,462
Total
$11,288,011
$3,572,311
$1,853,591
$622,462
$118,314
$12,992,400 $17,454,689
19.0
$2,402,544
$3,822,522
$6,225,066
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·1
.. 1
1
. .:.1
Remain in other County departments
Remaining DED positions and
associated OE, including Agricultural
Services, Special Projects, some
Finance and Administration services,
Small Business Navigator, Incubator
financing, and the EDF operations.
i
12.4
$1,659,619
$5,162,487
$6,822,106
Transfer Workforce Services to a new entity
Workforce Services ­ General Funds
and Grants
3.0
$400,126
$4,007,391
$4,407,517/
A specific timeline for transferring existing DED functions to MEDC is currently being
developed. During the transitional period in FY16, the potential savings generated from the
ramp down ofDED functions
are
assumed to be sufficient to cover any potential costs
associated with the creation ofMEDC. Once the transition is complete and DED
is
_ .. -
. _-
--eliminated;-actua1-exp1mditure-ne~ds-f(frMEDe'S-<lperations-wilfDereasse~edmd-pl'esente-d-----------
to the Council for approval.
The impact of the proposed legislation on County revenue cannot be estimated as MEDC's
impact to the County's economy is unknown at this time.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
Revenues and expenditures for the following .five fiscal years will be re-evaluated once the
transition from DED to MEDC is complete.
4. An actuarial analysis through the entire amortization period for each bill that would
affect retiree pension or group insurance costs.
The retiree pension or group insurance costs are expected to be reduced because of the
reduced position count.
An
actuarial analysis will be performed later once the reduction of
position count is finalized.
5.
An
estimate of expenditures related to County's information technology
(IT)
systems,
including Enterprise Resource Planning (ERP) systems.
No anticipated increase in expenditures will be associated with
the
transition. IT and ERP
systems are already in place for those County agencies designated to absorb DED functions.
The new MEDC will be a non-profit corporation setting up its IT systems without any
connection to or support from the County's IT systems.
6. Later actions that may affect future revenue and expenditures
if
the bill authorizes
future spending.
The success ofMEDC in implementing the County's Economic Development Strategic Plan
will impact future revenue and expenditures.
It
is too early to determine the fiscal impact.
7. An estimate of the staff time needed to implement the hill.
A team of senior managers from the County Executive's Office, the Office of the County
Attorney, the Office of Human Resources, the Office of Management and Budget, and the
Department of Economic Development will coordinate the transition ofDED to MEDC.
It
is
estimated that each agency would contribute on average 4-5 hours per week of staff time
until the transition is completed.
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_L_~
.. _.
i
_.1
9.
An
estimate of costs when an additional appropriation
is
needed.
As
explained
in
Question 2, no additional appropriation is anticipated for FY16 based on the
assumption ofpotential savings generated from the ramp down ofDED functions. Future
expenditure needs for MEDC will
be
reassessed once the transition is completed.
10. A description of any variable that could affect revenue and cost estimates.
The following are some factors which could affect revenue and cost estimates:
• Range of current DED duties
to
be
transferred
to
MEDC -
this
could affect the
MlIDC's
staff
size, budget, office space and
infrastructure
needs, space sharing
arrangements with partner organizations, and the number ofcontracts and MOUs with
existing DED partners to be assumed or executed.
• Dumtion of transition period from DED
to
MEDC - this would determine whether
some core DED services should continue
to
be
offered by the County until MEDC is
ready
to assume those services.
.
11. Ranges of revenue or
eIpenditu~esthat
are uncertain or difficult to project.
See response to Question 10.
----------.-----~--.---.--.
12. H a bill
is
likely
to have no :fiscal impact, why that
is
the ease.
Not applicable. The proposed legislation would have no net
fiscal
impact. See Question 2.
13. Other
fiscal
impacts or comments.
None
14. The foDowing contributed to and concurred with this analysis:
Peter Bang. Chief Operating Officer, Department ofEconomic Development
Pofen Salem, Office of Management and Budget
Date'
,
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'j
Economic Impact Statement
Bill ##-15, Economic Development Reorganization
Background:
This legislation would:
• Eliminate the Department of Economic Development (DED) as a principal
department ofthe Executive Branch;
• Transfer certain duties ofDED
to
other County agencies;
• Provide for the designation ofa non-profit corporation as the Montgomery
County Economic Development Corporation (MEDC);
• Assign
certain
duties to the MEDC;
and
• Remove the designation ofthe County's Business Development Corporation.
1. The sources of information, assumptions, and methodologies used.
The Department of Finance (Finance) assumes that the reorganization of the County's
economic development program
will
have a positive impact on the County's
economy as the Montgomery County Economic Development Corporation (MEDC)
will be formed to implement the County's new Economic Strategic Plan. As a non­
profit organization, MEDC
will
be
able to forge a better partnership with the
County's business communities. However, Finance assumes that there is no economic
impact attributed
to
the transfer of some ofDED programs and initiatives to other
County Agencies. Those programs and initiatives that are transferred will not change
and result in similar economic impacts even after the establishment of MEDC.
2. A description of any variable that could affect the economic impact estimates.
Not applicable
3. The Bill's positive or negative effect,
if
any on employment, spending, savings,
investment, incomes, and property values in the County.
The transfer ofduties
and
initiatives currently undertaken by DED and transferred to
other County agencies will have no economic impact on employment, private .
spending, savings, investment, incomes, and property values in the County.
However, the establishment ofMEDC
will
have a positive impact on the County's
economy.
4.
If
a Bill is likely to have no economic impact, why
is
that the case?
See paragraph #3
Page
1
of2
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· 'I
Economic Impact Statement
Bill ##-15, Economic Development
Reorganizatio~
5. The following contributed to or concurred with this analysis: David Platt and Rob
Hagedoom, Finance; Peter Bang, Department of Economic Development.
Page 2 of2
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\
Chief Administrative Officers Testimony on Reorganizing Economic Development
June
9, 2015, 1:30
pm
Council President George Leventhal and members of the County Council, I am Tim Firestine, Chief
Administrative Officer. I am here to speak on behalf of County Executive Ike Leggett on Bill
25-15,
which
proposes reorganizing the Department of Economic Development (DED) from a government agency to a
nonprofit corporation, the Montgomery County Economic Development Corporation.
Building on the momentum ofthe 6-point Economic Plan that the County Executive laid out in his inaugural
speech last December, this reorganization is part of a bigger reset to improve our economic competitiveness in
light of the dramatic changes in community and market dynamics. It is also a well-timed move as we complete
the Comprehensive Economic Strategy required by the County Council and realign our workforce development
strategies to meet both residents' and businesses' needs.
Montgomery County today is at a cross roads. Like our neighbors in the National Capital Region, our economy
~ -is-n(rn5itlonlng~from-on-edriven-large!v-bythe-public=sectorto-one-rncreasingly-driven--by-marketdemand:-The-~--~--~­
suburbanization of poverty means we have a preSSing need to grow quality middle class jobs through
diversifying our economic infrastructure and building a stronger entrepreneurial culture. We must overcome
any sense of complacency to achieve the next level of success and that requires fresh thinking and stronger
partnership with the private sector.
There are numerous examples of public-private partnership economic development organizations around the
country and the Region. In Maryland, Prince George's, Howard, and Anne Arundel counties as well as the City
of Baltimore all have non-governmental economic development organizations. The Fairfax County Economic
Development Authority is well known in the Region and so is the Washington, DC Economic Partnership.
On behalf of the County Executive, I want to take a moment to thank our Department of Economic
Development and its dedicated staff for their service to our business community and contributions to our
economy. This restructuring should not be seen as a lack of confidence in the staffs competencies or
commitment. Rather, it reflects our belief that being part of the government structure simply does not provide
the level of flexibility and nimbleness required to respond to market opportunities or business needs in this
increasingly competitive regional and global landscape. A public-private partnership will greatly enhance the
business community's engagement in economic development while improving operational efficiency as we
integrate the programs and services of DED with those of Montgomery Business Development Corporation.
On this note, let me also acknowledge the MBDC board and staff for their partnership and contributions to our
economic development efforts.
We fully understand the complexity of the restructuring process and are working hard to make this a smooth
transition on both operational and personnel fronts. With the Council's approval, we will be able to move
expeditiously to execute the transition so that we may complete the incorporation process and have a board
of directors in place by the end of the calendar year.
Thank you for your continued leadership and support as we work together to build a stronger economy for
Montgomery County!
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Testimony ofJames Moody,
Montgomery County Department ofEconomic Development Employee and Shop
Steward
Regarding Bill
25-15:
Economic Development Reorganization
-
Montgomery County
Economic Development Corporation
June 9,2015
President Leventhal and members of the County Council:
I'm James Moody, UFCW Local 1994's shop steward at the county's Department of
Economic Development Thank you for the opportunity to represent the employees of the
department at this hearing. I'm particularly appreciative because many others in the
community called to testify either in favor or opposition to this bill and were told they had
to be put on a wait-list
-------- --'f.heempl-ay-ees-O-f-th-e-depM-tmem-fi-rst-leal'-ned-ofa-plan-t-Q-pl'-i:vatize-tbe.depar-tment-wheIl---------------­
we read about it in an article in the Washington Business Journal in late February. Since
that time, we have had only a handful of meetings with management or representatives of
the administration. Yet, as of today, the administration has been unable to provide a clear
answer as to what will happen to the employees of the department should this bill pass.
County Executive Leggett has been quoted twice in the media saying that employees will be
transferred to other jobs in the county and that there will be no layoffs as a result of this
change. But the legislation as it exists makes no such provisions. The majority of the
employees who appear to be affected by this bill are over 50, and a majority of that group
are women.
Despite these concerns, this legislation has been fast-tracked. The County Council is being
asked to vote on this legislation a mere five months after it was hinted at in the press. The
legislation wasn't introduced until May 19. As late as last week [June 1], DED Acting
Director Sally Sternbach indicated that the legislation was still being amended because, in
her words, "it is a complex piece of legislation."
­
No matter whether you support or oppose this bill, it does seem to be moving far too
quickly for something so important.
If
privatizing the department is truly the best way to
go, allowing more time for discussion by a broader cross section of the business community
can only make choosing that option more compelling. Given a choice between getting this
important issue done right or done quickly, everyone's best interests will be served by
allowing further debate during the council's summer recess.
The other major concern opponents of this bill have concerns its lack of transparency. Greg
LeRoy of the non-profit "Good Jobs First" has made that case in a couple of studies. But a _
case in point can be made with the Montgomery Economic Development Corporation.
MBDC's board set the compensation for the officers of that organization. An examination of
MBDC's Form 990 filed with the IRS for 2013 reveals that the president and Director of
Operations received compensation that year of$340,lll-which equaled 68 percent of the
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$500,000 in funding the county provided that year. It's this lack of control and
transparency that is so troubling.
For these and many other reasons, much more consideration needs to be given to this
legislation before it is enacted. At the very least, tabling Bill 25-15 until after the County
Council's summer recess is a rational idea.
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• -.
I
I
ell
montgomery
business.development
corporation
22 Baltimore Road
3
business 'works
here
I
Rockville,
MD
20850
I
T
240.399.3903
I
www.montgomerybusiness.org
June 9, 2015
Hon. George Leventhal
President, Montgomery County Council
100 Maryland Avenue
Rockville, Maryland 20850
Re:
Economic Development Reorganization
Bill 25-15
-----DeaF-Mr.Le-venthal-andGeunGil-Me-mbers,-····--·-··---··--···--"'---.
"~----
. . - -.. . - -.- . - -..- - . - - - ­
On
behalf of the Board ofDirectors of Montgomery Business Development Corporation,
I am writing to express our support for the pending Bill to privatize the County's economic
development efforts.
MBDC was formed four years ago to help the County be more strategic and proactive in
its marketing and. business development activities. We recruited a nationally known CEO, Holly
Sears Sullivan, and she and our small staff, along with our dedicated and selfless Board of
Directors, have assisted in facilitating a change in culture and attitudes about business--its value,
its virtues, and its necessity for a strong economy. MBDC has also made its own contributions,
through marketing campaigns, data collection and dissemination, and opportunistic sponsorships,
to focus positive energy and resources into growing our talented business community. We are
proud of our accomplishments, but there is so much more to do!
This Bill represents a fresh approach to help tackle the growing need to make
Montgomery County more competitive and collaborative in the region, and to retain and target
key business sectors to sustain our
tax
base and high quality of life. It preserves within County
government those functions most suited to government, and transitions to a pUblic/private
partnership those activities better suited to a smaller, more dynamic organization with greater
focus and market identity. It contains an array of healthy checks and .balances to ensure that
public resources are used wisely, while preserving separate governance and management
functions inherent to a private organization.
We are confident that a new economic development organization, if properly funded and
staffed, will sustain and accelerate the progress made by MBDC and others recently in the
economic development realm. We hope and expect that the new organization's leadership will
be creative, collaborative, entrepreneurial and regional in its work, and that the board members
chosen will broadly represent the County's key industries and businesses. MBDC will do its best
to cooperate with and transition its activities to the new organization as soon as it is ready.
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Hon. George Leventhal
June
9.
2015
Page 2
Meanwhile, MBDC
will
continue to work with the Department ofEconomic Development and
its
staff
to help sustain the current momentum and address pending priorities.
Thank
you very much for yom favorable consideration.
s~_
Robert G. Brewer, Jr.
Chair
cc:
Hon. Isiah Leggett
Ms. Sally Sternbach
MBDC Board ofDirectors
Ms. Holly Sears Sullivan
202]421.1
08107.005
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Q
GINO RENNE PRESIDENT
ti
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Testimony from
Gino Renne
President, UFCW
Local 1994
TO
Bill 25-15
The Privatization
of the
Department
of Economic
Development
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A report from Good Jobs First has said that the privatization of the functions of
economic development agencies "is an inherently corrupting action that states
should avoid or repeal." Yet, here I sit, once again, fighting against privatizing yet
another government function. Let me be clear, Local 1994 favors a more ro bust
economic development strategy. Our members, as well as the community we serve
more effective leadership not by relinquishing that responsibility to the private
sector.
Economist Milton Friedman is the original disaster capitalist - he basically created
the idea of privatization as a way to cure any and all woes and his ideas are what
have brought us here today. He claimed that the business world is more "nimble"
than the government world and more able to adapt and change to provide better
service to the consumer.
It hasn't sorted out problems like Friedman claimed it would. And in the world of
state and local economic development corporations, privatization has been
scandalous: overpaying their executives, misusing taxpayer funds, grossly
overstating job creation numbers, failing in accountability to the public and
awarding questionable subsidies.
The latest example of those lies comes from the great state of Wisconsin and
Governor Scott Walker. Last month, it was discovered through an audit of
Wisconsin's Economic Development Corporation that the WEDC hadn't reqUired
grant, loan or tax credit recipients to submit any information that they added or
saved jobs. The agency has been plagued with problems since it was created in
2011. Previous audits said the agency failed to justify spending on expenses and
hadn't tracked grants.1
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VICE PRESiDENTS:
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FRANK
BECKHN1 II JERRY
BONAPARTE
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MARJORIE BROWN-NELSON
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SEAN
COLLINS
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JOSEPH
DICKSON It
PAULETTE
KEE-DUDLEY
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DENISE BRUSKIN-GAMSREU.
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ROBERT LE!-lMAN "TERR.I MILLER
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JA
ROWE
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T.4,f\A HUBER
ANDREA DEj.4,RNETTE
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