TESTIMONY OF JOHN R. ORRICK, JR.
PUBLIC HEARING ON ANNUAL GROWTH POLICY
MONTGOMERY COUNTY COUNCIL
SEPTEMBER 24, 2003
I am John Orrick of the law firm of Linowes and Blocher LLP testifying on behalf of several of my clients, Terrabrook Clarksburg, LLC, Artery-Beazer Clarksburg, LLC, Clarksburg Village, LLC, and King Farm Limited Partnership, each of which are petitioners, or plan to file petitions, for development districts in the Clarksburg area of the County.
As you are aware, the County’s development district statute, Chapters 14 and 20A of the Montgomery County Code, provides a vehicle to finance the construction of public infrastructure necessary to satisfy the County’s Adequate Public Facilities Ordinance. Two development districts have been successfully implemented in Germantown, and there are three currently pending in Clarksburg, with a fourth (Cabin Branch) likely to soon follow. I am appearing before you this evening to request that the pending amendments to the County’s Annual Growth Policy take into consideration the important benefits that these development districts provide to the County in providing the needed public infrastructure for growth, and to express my clients’ hope that these changes not be implemented in a manner that would reduce the incentives that are available to developers who choose to pursue the creation of these districts.
The practice of the County in approving past development districts, which is continuing with the proposed development districts in Clarksburg, has been to require that the development districts finance additional “general benefit” infrastructure costs over and above the infrastructure required of the developments to satisfy the County’s Adequate Public Facilities Ordinance, due, at least in part, to the fact that the development districts have enjoyed a credit against development impact taxes. The amount of this “general benefit” infrastructure is significant and represents a substantial investment by the private sector towards completion of the County’s public infrastructure which would have to be funded out of the County’s general funds absent the implementation of the development district.
In Chairman Berlage’s August 6 letter to Chairman Subin and County Executive Duncan, he states in reference to the proposed changes in the rates of development impact taxes for transportation improvements and the establishment of a separate impact tax for schools that “the Board would continue to apply the tax at building permit to all approved development, and would not expand the credit provisions of the impact tax.” (Aug. 6, 2003, letter at pg. 6.)
Under Chapter 14 of Montgomery County Code, the amount of special taxes and assessments on properties located in development districts must be credited against the development impact tax imposed under Chapter 52 (in addition to other charges, fees, or taxes imposed to finance the cost of infrastructure improvements necessary to allow development). It is imperative that any amendments adopted by the Council to the development impact tax statute as part of its implementation of the Annual Growth Policy maintain the existing credit against transportation impact taxes for all special taxes and assessments imposed against the properties located within development districts, as currently recognized under Chapter 52. Further, a similar credit musts be allowed against any new impact taxes for schools to the extent that County school facility costs are financed through development districts. These costs would include school building site preparation costs, such as the provision of engineered fill material and grading of school sites, furnishing of utility connections, provision of stormwater management facilities and reforestation areas, seeding of ball fields, and construction of playground facilities, as well as the cost of construction of school facilities or financial contributions thereto.
The letter of Chairman Berlage further indicates that 100 percent developer mitigation on the impacts of generated trips, whether they be through the provision of transportation infrastructure or increasing transit usage, is a means to allow for growth within a given area outside of the 1 percent preliminary plan approval “growth cap”. (Aug. 6, 2003, letter at pg. 4.) As development districts allow for the financing of infrastructure which provides such mitigation and are typically used only for larger projects which may exceed the growth cap limitations within a given sub-area in a given year, any legislation adopted by the Council should expressly provided that the adoption of a development district for a given project which provides the necessary infrastructure would automatically be deemed to satisfy any County limitations on growth allocation. Development district financing through the issuance of municipal bonds is dependent upon certainty in the development process, and there should be no discretionary authority to the County to limit such growth once the development district has been approved. It is not reasonable or workable to require a developer seeking to create a development district, who must also provide interim privately financed funding for the project pending the issuance of bonds on behalf of the district and the completion of the infrastructure to a point of substantial completion, to risk that the project cannot be built due to the imposition of a growth cap by the County after the district has been approved.
We further believe that due to the County policy of setting a targeted amount of special taxes at the time the development district is created by resolution of the County Council, that the rate and amount of any development impact taxes which may be imposed by the County for transportation or school infrastructure for the properties located within the district, and which are to be credited against such special taxes and assessments, should be fixed at the level then existing at the time the development district is created to avoid the potential that future increases in the development impact tax would offset the benefit afforded by the development district special tax credits.
In passing, I note that we support the philosophy of recently introduced Council Bill 31-03, which removes the list of specific transportation improvements which are to be financed through impact taxes, instead allowing them to be used for any transportation improvements that provide additional capacity, whether that be road widening, intersection improvements, or new road construction, as well as the other categories for transit, parking facilities, hiker-biker trails and sidewalk connections currently listed. We do believe, however, that the impact taxes collected within a given impact tax district should be used for transportation improvements within the same impact tax district rather than being available County-wide.
Finally, while we would be willing to support a higher level of impact taxes than what is currently charged to developments in Clarksburg, we believe that the rate of such impact taxes should be less for an identified growth area, such as Clarksburg, where the County is seeking to encourage new development, than for a generic “Suburban” impact tax district provided in Bill 31-03 that includes areas that are more fully built out, such as Potomac, Aspen Hill and Montgomery Village. We would therefore request that the Council consider the creation of a new category of impact tax district to be created for Clarksburg which would have lower impact tax rates than for the general Suburban tax district.
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