This is the second of the agenda items from tonight’s Council meeting that I found interesting enough to post about.
As stated in the memo below from Assistant City Manager Fred Felton, while the County’s Annual Growth Policy does not apply within the City, the schools and transportation impact taxes do. The County is now engaging in their biannual review of this policy, and some of the proposed changes are concerning. I think that the approach that Mr. Felton recommends here is quite reasonable, and for the most part I’ll let his memo speak for itself. I will add a note about the consequences of the conflict between the City’s Adequate Public Facilities Ordinance (APFO) and the County’s Annual Growth Policy.
According to Mr. Felton’s memo, the County is proposing that development will be allowed to proceed as long as the schools are at less than 135% of program capacity; developers would be required to pay an additional tax if the capacity is between 110% and 135%, toward the end of providing additional funds to alleviate the overcrowding. While allowing more children to be sent to such already-overcrowded schools is somewhat frightening, I believe that this tax should never have to be paid within the City of Gaithersburg, because, by the City’s APFO, proposed developments will not be approved if the schools are at 110% of capacity or more; the City also uses a more restrictive test to determine capacity.
Nevertheless, some schools attended by Gaithersburg students could well be driven to as high as 135% or more of program capacity because the school districts routinely cross the City boundary and include students from developments outside the City. I’m not sure there’s much that the City can do about this; they’ve already made a fairly strong statement of their opinion of this sort of folly via their APFO. However, as residents of the County, we can all at least directly tell the County Council what we think of this proposal.
The proposed waiver of impact taxes within Strategic Economic Development Projects could be another big help to the revitalization of Olde Towne, and the 50% credit of transportation impact taxes near MARC stations is a strong smart-growth proposal for the entire County.
The original of this memo, as well as the attachments to which the memo refers, are contained in a PDF that is part of the background materials for tonight’s meeting. Again, this was an OCR’d PDF, and I had to make a number of corrections, especially in formatting and punctuation. Please refer to the original for an authoritative copy, and let me know if you see any errors in my transcription.
| MEMORANDUM TO: |
Mayor and City Council |
| VIA: |
David B. Humpton, City Manager |
| FROM: |
Frederick J. Felton, Assistant City Manager |
| DATE: |
July 5 2007 |
| SUBJECT: |
Montgomery County Annual Growth Policy and Impact Tax Legislation |
On May 18 2007, staff sent a memorandum to the Mayor and City Council that included the Montgomery County Planning Board’s recommendations for the 2007 Annual Growth Policy (AGP) and modifications to the impact tax legislation. While the County’s AGP does not apply within the City of Gaithersburg, the County’s impact taxes for both schools and transportation are applicable to development in the City.
Over the last month, staff has attended a series of County Council hearings and Committee work sessions on the AGP and the impact tax. During the June 19, 2007 Public Hearing, former Assistant Chief Administrative Officer Scott Reilly provided testimony on behalf of County Executive Leggett. Given that the Executive is proposing significant modifications from the Planning Board recommendation, I have attached a copy of Mr Reilly’s remarks for your review.
Schools Test
Over the last three AGP cycles (2005, 2003, and 2001), the City has commented extensively on the schools test formula. In particular, the City has expressed serious concerns about sharing of capacity between schools and allowing residential development to continue with affected schools going as high as 110% of AGP capacity
In January of 2007, the City of Gaithersburg adopted an Adequate Public Facilities Ordinance that included a schools test that was significantly more restrictive than the current County schools test. The City’s schools test was modeled closely after the City of Rockville’s schools test and closes an area to residential development if any of the receiving schools will exceed 110% of program capacity. Additionally, the City’s schools test does not permit sharing of capacity within or between clusters and only gives credit for Capital Improvements that are scheduled to be completed within a two-year timeframe
The Planning Board’s current proposal for the schools test reflects a new approach that both the County Executive and some County Council members have expressed concerns about. Rather than attempting to ensure that the current and forecasted schools can support students generated as a result of development approvals, the Planning Board approach attempts to generate significant revenues for future school construction. The Planning Board’s proposal evaluates elementary schools and middle schools on a cluster wide basis, but does not permit sharing of capacity between high schools. The Planning Board’s proposal would allow residential development to continue until a school’s capacity reached 135% of program capacity, but a substantial “special facilities payment” would be required for each anticipated student when capacity was between 110% and 135% of program capacity. These payments would range from $32,524 at the elementary level to $47,501 at the high school level. For your review I have attached an excerpt from the background material for the July 2, 2007 PHED Committee work session that discusses this issue in some detail.
Impact Taxes
As previously noted, Montgomery County impact taxes are assessed on new construction in the City of Gaithersburg. The Planning Board is recommending significant increases to both the school impact taxes and the transportation impact taxes. For example the school impact tax for a single family detached dwelling would increase from $8,464 to $22,729 per unit. The transportation impact tax for a single family detached dwelling would increase from $5,819 to $8,380. For your review, I have attached a memorandum dated May 14, 2007 from Research and Technology Chief Karl Moritz that outlines the Planning Board’s rationale.
While most County Council members appear to be supportive of some level of impact tax increase, a number of members have expressed concern that the recommendation may be excessive. An equally important issue is the timing of any impact tax increases. There has been some discussion of phasing in an increase over time to lessen the impact on projects in the pipeline.
At one point, the County allowed an exemption that would limit or waive impact taxes for Strategic Economic Development Projects. The County Executive’s staff has recommended that this exemption be reinstated in the current legislation.
For many years, the County has only charged 50% of the transportation impact tax for projects located in Metro Station Policy areas. In previous years the City has requested that this reduced rate also be applied to projects near MARC stations but the County Council has not acted favorably upon this request to date.
Staff Recommendations
Staff is recommending that the City of Gaithersburg make the following recommendations to the County Council with regard to the AGP and the impact tax legislation:
- That the County’s schools test be modified to be more in line with the schools test adopted by the City of Gaithersburg and the City of Rockville.
- That any impact tax increases be phased in over time to minimize hardship on development projects already in the pipeline.
- That the exemption for Strategic Economic Development Project be reinstated, and that Olde Towne Gaithersburg be specifically designated as a Strategic Economic Development Project.
- That development projects located in the vicinity of MARC stations (including Olde Towne and Metropolitan Grove Road) be given a 50% credit for the transportation impact tax.
I will be seeking guidance on the development of the City’s position on the AGP and impact tax legislation during the July 9, 2007 Mayor and City Council meeting. If you have any questions or wish to discuss this matter please feel free to contact me.
FJF/ms
Attachments