Commercial Broker Quarterly: Fall 2003 - GWCAR, Greater Washington Commercial Association of REALTORS(R)

CBQ >> Fall 2003 Issue

Montgomery County Council Studies Annual Growth Policy

by Meredith Weisel, Vice President of Public Policy/MD and Legal Counsel

In September, the Montgomery County Council commenced discussions regarding various modifications and changes to the process of the Montgomery County Park & Planning Board's Annual Growth Policy (AGP). According to the Planning Board, "since 1973, Montgomery County has managed the pace of development through an Adequate Public Facilities Ordinance, or APFO. The APFO prohibits the Montgomery County Planning Board from approving a new subdivision unless public facilities (transportation, schools, water and sewer, etc.) are adequate to support the new subdivision. The Montgomery County Council uses the Annual Growth Policy (AGP) to implement the adequate public facilities ordinance. The AGP is an annual resolution that provides the Council's guidance to the Planning Board for reviewing the adequacy of public facilities for proposed subdivisions."

Two public hearings have been held and several work sessions have been scheduled to analyze the Planning Board's recommendations to the council regarding growth, jobs and housing and the projections for the next several years in the county. GWCAR along with the Greater Capital Area Association of REALTORS^® (GCAAR) was asked to participate in the process by testifying on various parts of the AGP that will directly affect housing and commercial development and the job market. At the September 17 public policy committee meeting, Councilmember Steve Silverman, Chair of the Planning, Housing and Economic Development committee, came to discuss many aspects of the AGP and the concerns the REALTORS® should have with the Planning Board's proposals. GWCAR and GCAAR have also been working with the Montgomery County Chamber of Commerce and the Maryland National Capital Building Industry Association (BIA) to devise a more practical and constructive approach to any revisions made to the AGP.

The first and most critical concern the real estate industry has is the Planning Board's proposal to put a 1% growth cap on all development each year. GWCAR and GCAAR along with the Chamber and BIA have taken the position that a 1% growth cap essentially seeks to keep Montgomery County on "economic life support" by selecting the "minimum growth rate necessary to sustain the County's economy." The REALTORS^® believe this 1% cap places an artificial numerical restriction limit on future growth and ignores market realities. Further, it limits future growth in the county to a "bare minimum" that is required for economic vitality.

By limiting growth, the County will force new businesses to set up shop in surrounding jurisdictions, which in turn will affect the job growth rate. Further, County Executive Doug Duncan has also expressed concern with placing a growth cap on development each year.

Secondly, the Planning Board has proposed to replace the current AGP school test with a flat rate School Impact tax and has also recommended that all future proceeds from last year's increase in the recordation tax (approximately $22 million) be dedicated to funding school facilities.

GWCAR and GCAAR along with the Chamber and BIA concur but have made some different rate recommendations on the school impact tax than the planning board, which would ultimately generate more revenue but be more proportional to the type of housing being built (i.e. single-family, town home, multi-family).

Further, we want to be sure that all of the "school impact tax" money be directly dedicated to the school construction improvements.

Finally, the Planning board has proposed to eliminate the Policy Area Transportation Review and retain the Local Area Transportation Review (LATR) test. The REALTORS^® agree with the Chamber and BIA's proposal that the Policy Area Review no longer works but it's necessary to continue the use of the LATR test along with master plan restrictions, environmental limitations and several new measures that "would provide a more effective means of managing growth, providing additional incentives to encourage transit-oriented development, and add significant new revenue sources to meet the funding needs for necessary transportation infrastructure improvements."

GWCAR is inclined to agree with this perception also. Therefore, the committee has also agreed to support the Chamber/BIA alternative regarding the transportation impact tax and again makes sure the funds are directly placed in a transportation fund. More importantly, the proposal would impose lower impact fees on commercial development than the ones proposed by the Planning Board.

The Public Policy Committee has agreed to support the alternative proposal in general regarding the growth cap and the impact fees. The council is set to have a final vote on all of these recommendations to the AGP in late October.

For further information on the AGP, please contact Meredith Weisel at mweisel@gcaar.com or 301.590.8790.