PHED Item
1
July 24, 2017
Worksession
MEMORANDUM
July 20, 2017
TO:
FROM:
Planning, Housing and E~onomi~ D~velopment C~~ttee
Robert H. Drummer, Semor Leg1slat1ve Attorney
fuuJ
SUBJECT:
Worksession:
Bill 4-17, Economic Development Fund - Small Business
Assistance Program - Amendments
Expected attendees:
Alex Espinosa, Director of Finance
Peter McGinnity, Finance
Bill 4-17, Economic Development Fund - Small Business Assistance Program -
Amendments, sponsored by Lead Sponsor Councilmember Eirich and Co-Sponsors,
Councilmembers Floreen, Katz, Rice, and Council President Berliner was introduced on March 7.
A public hearing was held on April 4.
Bill 4-17 would expand the eligibility for grants or loans under the small business
assistance program.
Background
Bill 6-12, enacted on April 17, 2012 and signed into law on April 26, 2012, established a
program to assist small businesses located in either an enterprise zone
1
or an urban renewal area
2
of the County who are adversely impacted by a County redevelopment project or a redevelopment
project located on County property. The Bill required the Director of the Department of Economic
Development to create and operate the program. The operation of the program was transferred to
the Director of Finance as part of the law creating the Montgomery County Economic
Development Corporation and eliminating the Department of Economic Development. Subject to
Council appropriation, the Director may award a grant or loan from the Economic Development
Fund (EDF) to an eligible small business and provide technical assistance and training to a small
business receiving financial assistance under the program.
The construction of a new office building for the Maryland-National Capital Park and
Planning Commission and several County Departments in Wheaton
3
was the County project that
1
2
An enterprise zone must be designated by the Maryland Department of Business and Economic Development.
An urban renewal area must be designated by the Council.
3
The 3 current enterprise zones in the County are Long Branch/Takoma Park, Wheaton, and Old Towne
Gaithersburg.
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inspired Bill 6-12. The groundbreaking for the Wheaton Revitalization Project was held on June
4, 2017.
Bill 4-17 would expand this program to a business adversely impacted by a County
redevelopment project located in a Parking Lot District. Section 60-1 established parking lot
districts in Bethesda, Wheaton, Silver Spring, and Montgomery Hills. The Bill would also expand
the definition of a County redevelopment project to include a project constructed by a private entity
for use, in whole or in part, by the County as a public facility.
Public Hearing
The lone speaker, County Finance Director Alex Espinosa, testifying on behalf of the
Executive, requested amendments to the Bill. See ©12-14. Mr. Espinosa argued that the Bill, as
introduced, would likely expand the scope of the existing Small Business Assistance Program to a
level that would not be financially sustainable. Mr. Espinosa suggested that the scope of the Bill
be reduced to cover only currently approved projects or limit the assistance to a one-time up-front
payment not based on compensation for lost profit.
Issues
1.
What is the fiscal and economic impact of the Bill?
The Regulations adopted by the Executive and approved by the Council to implement the
Small Business Assistance Program authorizes a grant or loan to an eligible small business up to
$75,000 based upon loss of net profit during the redevelopment project. See, COMCOR
§20.76B.0l.05. Based upon average compensation of between $37,500 and $75,000, 0MB
estimated the fiscal impact of compensating the estimated 125 small businesses that could be
adversely affected by either the Wheaton project or the Parking Lot #3 in Silver Spring to be
between $2.25 million and $9.38 million. 0MB also estimated the cost to add 2 full-time positions
to administer the Program to be $227,380 annually.
However, the fiscal impact includes the cost to compensate approximately 90 small
businesses that could be affected by the Wheaton project under the current law. Bill 4-17 would
expand the eligibility to up to 35 additional small businesses already affected by the Parking Lot
#3 ongoing project in Silver Spring. Therefore, the immediate fiscal impact of Bill 4-17 would be
the compensation for these additional 35 businesses. 0MB could not estimate the fiscal impact of
compensating businesses that may be adversely affected by future projects in any parking lot
district.
2.
Should the scope of the Bill be reduced?
The Executive suggested that the fiscal impact of expanding the Program to a
redevelopment project in any parking lot district would be unsustainable. The Executive suggested
2 alternatives - reduce the maximum compensation below the $75,000 authorized in the
regulations or limit the projects to the already known Wheaton project and the ongoing Parking
Lot #3 redevelopment in Silver Spring.
2
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Reducing the maximum compensation to a business can be done by amending the
regulations. Bill 6-12 did not establish a maximum payout and did not require the compensation
to be based upon net lost profit. The Executive Regulation established these limitations. Reducing
the maximum compensation for an individual business would adversely affect the businesses in
Wheaton that had a reasonable expectation based upon Bill 6-12 and the implementing regulations
before the project began construction. Council staff does not recommend this approach.
Amending the Bill to include only projects already under construction or fully approved
(Wheaton and Silver Spring) would not take away the reasonable expectations of any business. It
would, however, limit the life of the Program to these 2 projects. Undoubtedly there will be future
redevelopment projects in other areas of the County that may adversely affect small businesses.
The Council can consider adding new projects to the Program after the potential fiscal impact can
be estimated.
The original intent of the Bill was to limit the Program to areas of the County that were
undergoing revitalization - enterprise zones and urban renewal areas. Expanding the Program to
Parking Lot Districts would add Bethesda, Silver Spring, and Montgomery Hills. One possibility
to add just Silver Spring would be to include a project located in an Enterprise Zone or a former
Enterprise Zone as was done for the transportation development impact tax exemption. See
County Code §52-41 (g). This would capture both the Wheaton project and the Parking Lot
#3
project in Silver Spring without ending the Program. The Council could add future revitalization
areas as desired.
3.
Should the Bill be enacted?
Bill 4-17, as introduced, would create an additional cost for each new County
redevelopment project. The Bill would move away from the original intent to help mitigate the
adverse impacts on small businesses from a County redevelopment project located in an area that
is undergoing revitalization. Although a small business may be adversely impacted by a County
redevelopment project in any area of the County, the Committee must decide how best to allocate
limited County resources for future redevelopment projects.
Implementation of this Bill in FYI 8 would require a supplemental appropriation. In the
FYI 8 operating budget, the Council appropriated $200,000 for the Economic Development Fund
to provide financial assistance to impacted businesses in Wheaton and $360,000 in the NDA for
the Montgomery Economic Development Corporation to provide technical assistance for these
businesses through the County's community partners. The groundbreaking for the Wheaton
Revitalization Project occurred on June
4,
2017. Adding new County projects to this program
would require additional resources.
This packet contains:
Bill 4-17
Legislative Request Report
Fiscal and Economic Impact statement
Testimony of Alex Espinosa
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Bill No. ____
4.:....--'-'17'--------
Concerning: Economic
Development
Fund - Small Business Assistance
Program - Amendments
Revised: 3/2/2017
Draft No.
~
Introduced:
March 7 2017
Expires:
September 7, 2018
Enacted; _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: ~No~n~e_ _ _ _ _ __
Ch. _ _ , Laws of Mont. Co. _ _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember Eirich
Co-Sponsors: Councilmembers Floreen, Katz, Rice, and Council President Berliner
AN ACT
to:
(1)
(2)
expand the eligibility for grants or loans under the small business assistance
program; and
amend the laws governing the small business assistance program.
By amending
Montgomery County Code
Chapter 20, Finance
Section 20-76B
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deleted.from existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
NO. 4-17
1
Sec.
1.
Section 20-76B is amended as follows:
20-76B. Small Business Assistance Program.
2
3
4
(a)
Definitions.
As used
in
this Section:
Adverse impact
means a loss of revenue resulting from a redevelopment
project.
5
6
7
Director
means the Director of the Department of Finance.
Enterprise zone
means an area designated under Maryland Code,
Economic Development Article, Section 5-704 or any successor
prov1s1on.
8
9
10
11
12
Fund
means the Economic Development Fund established
in
Section 20-
73.
Parking lot district
means
£1
geographical area of the County established
as
~
parking lot district in Section 60-1.
13
14
15
Program
means the Small Business Assistance Program.
Redevelopment project
means
any
construction,
alteration,
or
16
17
improvement in an urban renewal area.,_ [or] an enterprise zone.,_ or
£!
parking lot district where the existing land use is commercial or industrial
and is:
(1)
(2)
located on property owned by the County; [or]
financed in whole or in part by the County~ or
£!
project constructed
QY
g private entity for use, in whole or in part,
18
19
20
21
ill
22
23
24
25
QY
the County as
~
public facility.
Small business
means a privately owned business that meets the
requirements of Section 11B-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.
26
27
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BILL
No.
4-17
28
Urban renewal area
means an area of the County as defined in Section
29
30
31
56-9(f).
(b)
Establishment of Program.
Subject to appropriation, the Director must
create and administer a Small Business Assistance Program to assist
small businesses who are adversely impacted by a redevelopment project.
(
c)
32
33
34
Eligibility.
The Director, based upon information submitted by the
applicant for assistance, must find that:
( 1)
the applicant is the owner of an existing small business located
near an ongoing or future redevelopment project that is planned to
begin construction in less than 12 months after the application;
(2)
the applicant's small business is currently or is likely to be
adversely impacted by the redevelopment project; and
(3)
the applicant's small business is financially healthy and likely to
continue operating for the foreseeable future.
(d)
Conditions.
The Director may impose reasonable conditions on a small
35
36
37
38
39
40
41
42
43
44
45
46
(
e)
business, including the successful completion of approved technical
assistance training, in order to receive financial assistance from the Fund
under the Program.
Financial assistance.
The Director may award a grant or loan from the
47
48
49
Fund to an eligible small business under the Program.
(
f)
Regulations.
The Executive must adopt method 2 regulations to
implement this Section. The regulations must:
( 1)
require the Director to compile and maintain a list of approved
technical training courses on the appropriate website;
(2)
specify the application procedures and eligibility criteria for a
grant or loan to a small business under the Program;
50
51
52
53
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BILL
No. 4-17
54
55
56
(3)
specify conditions that the Director may impose on a small
business in order to receive financial assistance from the Fund
under the Program;
57
(4)
(5)
(6)
define what constitutes an adverse impact on a small business;
define what constitutes financial health of a small business; and
identify outreach methods and marketing strategies to inform local
small businesses of the program.
58
59
60
61
(g)
Reports.
On or before March 31 of each year, the Executive must report
to the Council on the activities of the Program. The report must include:
( 1)
(2)
(3)
the number of small· businesses participating in the Program;
the number and dollar amount of grants and loans made; and
an evaluation of the impact of each grant or loan on the operation
of the small business.
62
63
64
65
66
67
68
Approved:
Roger Berliner, President, County Council
Date
69
70
Approved:
Isiah Leggett, County Executive
71
Date
This is a correct copy ofCouncil action.
72
Linda M. Lauer, Clerk of the Council
Date
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LEGISLATIVE REQUEST REPORT
Bill 4-17
Economic Development Fund
-
Small Business Assistance Program
-
Amendments
DESCRIPTION:
Bill 4-1 7 would expand the existing small business assistance
program to a business adversely impacted by a County redevelopment
project located in a Parking Lot District. Section
60-1
established
parking lot districts in Bethesda, Wheaton, Silver Spring, and
Montgomery Hills. The Bill would also expand the definition of a
County redevelopment project to include a project constructed by a
private entity for use, in whole or in part, by the County as a public
facility.
PROBLEM:
The existing small business assistance program is limited to County
redevelopment projects located in an enterprise zone or an urban
renewal area. There are County redevelopment projects located
outside of these areas that also adversely affect small businesses.
The goal is to expand the program to other areas of the County where
small businesses are similarly affected.
GOALSAND
OBJECTIVES:
COORDINATION:
Finance, 0MB
FISCAL IMPACT:
Office of Management and Budget
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
To be researched.
NIA
To be researched.
Robert H. Drummer, Senior Legislative Attorney
APPLICATION
WITHIN
MUNICIPALITIES:
Applicable.
PENALTIES:
None
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Fiscal Impact Statement
Council Bill 4-17
Small Business Assistance Program-Amendments
L
Legislative Summary.
Bill 4-17 would expand the eligibility for grants or loans under the Small Business
Assistance Program created by the Bill 6-12 to a business adversely impacted by a County
redevelopment project located in a Parking Lot District. Four parking lot districts are
established in the County, including Bethesda, Wheaton} Silver Spring, and Montgomery
Hills.
The original Bill 6-12 was created
to
assist small businesses located in either an enterprise
zone or an urban renewal area of the County which are adversely impacted by a County
re-development project (defined as partially or entirely financed by the County) or a
redevelopment project located on County property. By this definition, the only eligible
County project meeting the eligibility definition was the Wheaton Redevelopment Project.
Bill 4-17 would expand the scope of Bill 6-12 to make business adversely impacted
by
a
County redevelopment project located in a Parking Lot District, and expand the definition of
a County redevelopment project to include a project constructed by a private entity for use, in
"vhole or
in.
part,
by
the County as a public facHity. One existing project affected
by
Bill 4~
17
is the development of Studio Plaza in the Fenton Village area of.dovvntown Silver Spring that
includes
the construction of a County parking garage and the closure of Parking Lot District
Lot #3.
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 estimate of changes in expenditures and revenues cannot be made at this time but \viU be
influenced
by
the following factors:
a. The number of
Cmmty
projects
and/or projects
on
County owned property in the four
Parking Lot Districts of the County that have either been approved, are in the
pipeline, or are in the planning stages;
b. The number of small businesses that are eligible and financially healthy as defined by
Executive
Regulation
(ER) 24-12AM in the expanded scope
that
includes
County
projects and/or projects on County owned property in the four Parking Lot Districts;
and
c. The
number
of eligible and
financially healthy small
businesses
that experience a loss
in net profit.
ER 24-12AM addresses
administration of the Small Business
Assistance
Program created
by
Bill 6-12 and stipulates a maximum of$75,000
per
eligible
and
financially healthy small
business for the duration of the construction period. This amount is dependent on the ability
of the small businesses
to
provide documentation that supports their eligibility, :financial
health, and loss of net profit. Based on the maximum compensation, it is estimated that
additional County resources in a range of $2.25M to $9.38M is
likely needed
to support
impacted businesses seeking financial assistance under proposed Bill 4-17. The cost estimate
is based on the follovving assumptions:
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Approximately 90 businesses may be adversely impacted under the original Bill 6-12,
all located in the vicinity of Parking Lot 13 in Wheaton. With proposed Bill 4-17, the
number of impacted businesses
may
increase by approximately 35, all surrounding
the Parking Lot #3 in Silver Spring, reaching a total of 125.
While the exact number of businesses eligible for compensation, or whether each of
those adversely impacted businesses
\ViU
suffer a loss of profit up to the maximum
compensation ceiling cannot be determined, some pennutations can be evaluated. As
shown
in the table below, the need of additional County resources can be derived
from the following assumptions and calculations:
o
Any
impacted business
will
suffer a net profit loss of at least an average of
$37,500
per year.
This
amount equates to
$120 a
day. based
on 6 days
per
week operation.
o At Ieast 50% of impacted area businesses will seek financial assistance from
the County. This represents approximately between 60 and 125 businesses
who are likely to seek financial compensation.
No. oflmpacted Businesses Seeking
Financial Assistance
60
$
2,250,000
$
2,400,000
I
Compensation per
, Business
$
$
$
,$
l
$
$
$
37,500
40.000
50.000
75,000
S 3.000000
S
4,500,000
$
80
2,400,000
3,200,000
4,000,000
6,000,000
$
$
$
$
100
3,000,000
4,000,000
5,000,000
7,500,000
'
$
$
$
S
125
3,750,000
5,000,000
6,250,000
9,375,000
As a result, the fiscal impact to the County could be in the range of $2.25M to
$9.38M for the current two redevelopment projects in Wheaton and Silver Spring.
Additionally, it is anticipated that up to two full-time equivalent (either contractor or term)
Program Manager II positions, Grade 25,
will
be needed to administer and manage the
expanded definition and eligibility of adversely impacted businesses as defined in Bill 4-17.
The total cost estimate of two contractors or term positions would be approximately
$227,380 (each position is estimated at $109,190 for PC and $4~500 for OE).
3. Revenue and expenditure estimates covering at
least
the next 6 fiscal
years.
Revenue and expenditure estimates are unknown at this time due to the variables listed in #2.
4. An actuarial
analysis
through the entire amortization period for each bill that would
affect retiree pension or group insurance costs.
Not applicable.
'
5. An estimate of
expenditures
related
to
County's information technology
(IT)
systems,
including Enterprise Resource PJanning
{ERP) systems.
Not applicable.
6. Later
actions
that
may affeet future
revenue
and
expenditures
if
the bill
author.izes
future spending.
(j)
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The number of redevelopment projects, as defined
by
Montgomery County Code 20-76B,
would be expanded by Bill 4-17 which could increase adverse impacts on small businesses as
defined
by
the program in the County and increase future spending.
7.
An
estimate of the staff time needed to implement the bill.
Similar
to
Bill 6- I2, proposed Bill 4-17 allows applicants to apply 12 months prior to any
redevelopment project actually impacting their business. As such, staff involvement with
administering this Small Business Assistance Program can begin as soon as funds for a
redevelopment plan
are
appropriated, much earlier than when
redevelopment
construction
actually begins.
To carry out the duties as required
by
Bill 4-17, the following are anticipated work scope of
staff:
a. Coordination
'With
the Department of General Services and/or Department of
Transportation on current and future redevelopment projects and their impact on
business conditions in the affected area;
b.
Assessing the type of businesses
that
could be impacted, and the nature and extent of
the
impacts;
c. Marketing the program and conducting business visits;
d. Assisting in the application process, reviewing applications. auditing/monitoring the
business for financial health, and underwrite the conditional grant or loan package;
e.
Conducting performance monitoring and loan servicing/loan workout, and
f.
Assembling, evaluating and monitoring various technical training programs that can
assist the businesses.
As indicated in #2,
it
is anticipated that up to two full-time equivalent (either contractor or
term)
Program
Manager II positions, Grade 25,
wiH
be required to manage
the
Small
Business Assistance Program at an estimated cost of approximately $227,380.
8.
An
explanation
of
how the addition
of
new staff responsibilities would affect other
duties.
111e additional new staff is anticipated to
be
fully occupied \Vith delivering the mandated
services to eligible businesses in the 'Wheaton area as required by Bill 6· 12 and eligible
businesses
in
four Parking Lot Districts under proposed Bill 4-17.
9. An estimate of
costs when an additional appropriation is needed.
See #2 and #7 for the estimated costs to administer the Small Business Assistance Program
and provide financial assistance
to
impacted businesses. It is unknown at this time how
much would
be
needed for financial assistance. However, an additional appropriation is
needed to implement the program as the existing funding level in the EDF would
be
insufficient to meet the anticipated need.
10. A description of any variable that could affect revenue and cost estimates.
Descriptions of variables that may impact revenue and cost estimates are
in
responses for #2,
#6, and#7.
(j)
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a. The number of County projects that have either been approved, are in the pipeline, or
are in the planning stages;
b. The number of small businesses that are eligible and financially healthy as defined
by
ER 24-12AM; and
c. The
number
of eligible
and financially healthy small businesses that experience a loss
in net profit
11. Ranges of revenue or expenditures that are uncertain or difficult to project.
All revenue or expenditures are difficult to project at this time due to the variables described
in#2.
12.
If
a bill is likely to have no fiscal impact, why that is the case.
The proposed legislation would have a fiscal impact as de-scribed in #9.
13. Other fiscal impacts or comments.
None.
14. The
r
olJowing contributed to and concurred with this analysis:
Peter Bang, Economic Development Manager, Department of Finance
Po fen Salem, Office of Management and Budget
Deborah Lambert, Office of Management and Budget
-Qv
d__{4._ .,~·-
·
'
Jeyt ifer
ughes, Director/
0 ' 1cc o • anagement and . u get
.L....,.___
Date
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Economic Impact Statement
Bill 4-17 Economic Development Fund
-
Small Business Assistance Program
-
Amendments
Background:
Bill
4-17
would expand the existing small business assistance program
to
a business adversely
impacted
by
a County redevelopment project located
'in
a Parking Lot District. The existing
small business assistance program is limited to County redevelopment projects located
in
an
enterprise zone or an urban renewal area. There are County redevelopment projects located
outside of these areas that also adversely affect small businesses.
The original Bill 6-12 was created to assist small businesses located in either
an
enterprise zone
or
an urban
renewal area of the County that are adversely impacted by
a
County redevelopment
project (defined as partially or entirely financed by the County) or a redevelopment project
located on County property. By this definition, the only eligible County project meeting the
eligibility definition was the Wheaton Redevelopment Project. Bill 4-17 would expand Bill 6-12
to include businesses adversely impacted by a County redevelopment project located in
a
Parking Lot District, and expand the definition of a County redevelopment project to include a
project constructed by a private entity
for
use,
in
whole or in part, by the County as
a
public
facility.
1. The sources of information, assumptions, and methodologies used
Montgomery County Economic Development Corporation Year-End Market Report
2016
MCDOT Montgomery County Department of Transportation
2. A description of any variable that could affect the economic impact estimates.
Variables that could affect economic impact estimates include:
A.
The size and scope of Cow1ty-funded redevelopment projects in the
four
Parking Lot
Districts including Bethesda, Wheaton, Silver Spring,
and
Montgomery Hills;
B.
The size
and
scope of private redevelopment projects constructed for use,
in
whole or
in
part,
by the County as a public facility
in
the four Parking Lot Districts;
.
C.
The
number of small businesses that are eligible
and
fmancially healthy
as
defined
by
original Bill 6-12;
·
D. The number of eligible and financially healthy small businesses that experience a loss in
net profit. Executive Regulation 24-12AM, prepared to administer the Small Business
Assistance Program created by Bill 6-12, stipulates a maximum of $75,000 per eligible
and financially healthy small business. This amount is dependent on the ability of the
small businesses
to
provide documentation that supports their eligibility, financial health,
and loss of net profit.
E.
The total
amount of economic assistance provided to affect small businesses.
1
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Economic Impact Statement
Bill 4-17 Economic Development
Fund-
Small Business Assistance Program
-
Amendments
3.
The Bill's positive or negative effect,
if
any on employment, spending, savings,
investment, incomes, and property values in the County.
The legislation seeks to expand the mitigation of adverse impacts of future County fostered
redevelopment projects as defined by Bill 6-12 on nearby small businesses that are otherwise
:financially healthy specifically located in Parking Lot Districts. One project that would be
eligible under this legislation is the development of Studio Plaza in the Fenton Village area
of downtown Silver Spring that includes the construction of
a
County parking garage and the
closure of Parking Lot District Lot 3. Approximately 35 businesses are near this project and
may experience disruption during construction.
An
estimated economic impact cannot be quantified with specificity on employment,
spending, savings, investment, incomes, or property values given
a
lack of
data
enumerating
the number of dependent businesses affected and receiving aid, the total amount of aid
deployed, and the number
of
employees affected as well as their respective industry. The
analysis would also need to consider whether the aid was necessary to retain the entire
business or would address revenue shortfalls during implementation of the redevelopment
project.
4.
If
a Bill is likely to have no economic impact, why is that the case?
See number 3.
5. The following contributed to or concurred with this analysis:
David Platt, Dennis Hetman, and Robert Hagedoom, Finance.
Alexandre A. E s p i n o ~
Department of Finance
~c2.~J~/rd,,r
1
ate
2of2
(0
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Testimony on behalf of County Executive Isiah Leggett on
Bill 4-17, Economic Development Fund-Small Business Assistance Program-
Amendments
April 4, 2017
'
Good afternoon. My name is Alex Espinosa, and I am the Director of the
Montgomery County Department of Finance. I am here today testifying on behalf
of the County Executive to urge the County Council modify Bill 4-17 or consider
an alternative method to achieve its intent.
Bill 4-17 would expand the scope of the Small Business Assistance Program
(Program), established by Bill 6-12, to include businesses that are adversely
impacted by a County redevelopment project located
in
a Parking Lot District, and
expand the definition of a County redevelopment project to include a project
constructed by a private entity for use, in whole or in part, by the County as a
public facility.
Unlike Bill 6-12, which was drafted narrowly and currently only covers the
Wheaton Redevelopment project, Bill 4-17 would significantly broaden the
Program's scope of potential eligibility. The Bill would not only cover the current
Silver Spring Parking District Lot 3 project, but also any future County
redevelopment project in the four parking lot districts.
The County Executive's main concern is that Bill 4-17, as written, will not
be sustainable. While we cannot determine the exact number of businesses eligible
for financial assistance under the legislation, or whether each of those businesses
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will experience a loss of profit up to the maximum amount of assistance currently
set by Executive Regulation 24-12, we believe that for just the two projects in
Wheaton and Silver Spring as many as 125 businesses may be eligible for
assistance under an expanded Program. The fiscal impact of Bill 4-1 7 could be up
to $2.6 million on top of the assistance Wheaton businesses may be eligible to
receive. Unlike Bill 6-12's narrow focus, Bill 4-17 has a much broader potential
fiscal impact to the County.
The County Executive is also concerned about the method of assisting
impacted business under the Program's current maximum of $75,000. Similar
programs in other jurisdictions have awarded upfront, one-time assistance as an
acknowledgment of the disruption and inconvenience of redevelopment activity, as
opposed to assistance to compensate for the revenue or profit loss due to the
project. The logic of the approach taken in other jurisdictions is twofold; first,
correlating the adverse impact from the project to profit loss in a precise manner is
very difficult; and secondly, affected businesses could enjoy a better business
environment and enhanced revenue and profitability after the project is completed.
The Council should consider a similar approach. For example, the County
Council in 2005 conceived a very effective program when it established the Impact
Assistance Program within the Economic Development Fund through budgetary
action, not legislation. The Impact Assistance Program was designed to mitigate
adverse impacts that small businesses might experience due to County-initiated
development, redevelopment, or renovation projects. Twenty-seven businesses
received grants totaling approximately $475,000 during FY05-FY09 when the
program was active. The grants ranged from $2,800 to $20,000, which was the
maximum set by the Council. The Council could reestablish a similar program to
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achieve the intent ofBill 4-17 and ensure it is sustainable as it considers all other
budget items.
If legislation is still preferred, the Council could modify Bill 4-17 to limit
the eligible projects to those either under construction or fully approved and
funded as of the Bill's effective date. This, again, would limit the potential fiscal
impact on the County. Any future assistance could be determined through future
Council action.
On behalf of County Executive Leggett, thank you for the opportunity to
testify on Bill 4-17. By modifying Bill 4-17 or achieving the Bill's intent by other
means, the County Executive believes that we can support our small business
community in an affordable and financially sustainable manner.