Friday, June 3, 2016

Should developers get tax cuts as County faces "perfect storm" of development, school overcrowding?

The first public discussion of two proposed massive tax cuts for developers took place before the Montgomery County Planning Board last night, but we won't have a sense of where this scheme is heading until we hear what the commissioners themselves have to say about it. That discussion will take place at a worksession next Thursday, June 9.

But to hear from parents and PTA officials at last night's public hearing, the school facility needs are great. And according to County Executive Ike Leggett, the County Council's disastrous FY-2017 tax-and-spend-and-tax-again budget means there will be no extra money next year.

The thought of cutting even a dime of taxes for developers - as taxes were just hiked to record levels on residents last week - should not even be under consideration by any credible public servant. We should be talking about an equal tax hike for developers, not a tax cut.

"The idea that growth and density are the solution to all problems" is the problem, suggested resident Max Bronstein. A representative of the Bethesda-Chevy Chase cluster called the massive pending redevelopment in downtown Bethesda, Chevy Chase Lake, Westbard and Lyttonsville "the perfect storm," which will have great impacts on individual schools. He and Bronstein both noted that those single-school impacts often can be hidden from attention by the County's policy of measuring capacity by cluster averaging, rather than by each school's capacity.

Edward Johnson, a public school parent who lives in Bethesda, said the proposed reductions in what developers will pay related to school capacity "stands out as a loss to the County. We already don't have adequate funding" as it is. If anything, Johnson suggested, fees paid by developers should be going up, not down. "The developers are building the houses," said a representative of the Springbrook cluster, and should be contributing toward the cost of the students they are generating.

"We are many, many years behind constructing elementary school capacity" in the County, said Melissa McKenna, the Chair of the Capital Improvement Program committee of the Montgomery County Council of PTAs. "Please keep in mind that 2500 students are enough to fill three-and-a-half elementary schools," she said.

One mechanism being used to deliver the massive tax cuts to developers is to only count student generation from developments built in the last 10 years, rather including homes built before then. McKenna asked the board to "reconsider using all-year rates" instead, which the planning staff's own report shows would generate as much as 60% more revenue for school construction - and even that isn't enough, as that's the tax level we're at right now for developers. As it stands, McKenna observed, developer school payments "strike me as under-received."

Clearly the County Council and planning staff are aiming to shift the cost burden of school construction from developers to residents, as the new FY-2017 budget proves. A massive tax hike for you, while giving a massive tax cut for developers, is simply immoral. If we are in as bad of a shape with infrastructure as we are told, what sane person would proposed reducing the burden of developers? What is the argument? To encourage more development with even less revenue to cover costs? Nuts.

A separate issue in the Subdivision Staging Plan that contains the developer tax cut proposals is whether or not to extend the tax exemptions for developers currently allowed via an Enterprise Zone in downtown Silver Spring.

One resident noted that it has cost the Silver Spring community severely in lost adequate facilities revenue, citing the "unintended consequences of the enterprise zone." Twenty years of exemption from school payments and taxes has had "consequences for our schools."

But representatives of downtown Silver Spring projects already in the works say it would be unfair to change the rules now. Attorney Bob Dalrymple, representing Washington Property Company, said his client's profit margin is already "razor-thin" on its Ripley public-private partnership project that includes a new Progress Place facility. "The real issue is the economic viability [of the project] and general fairness here," Dalrymple testified. He suggested the Board grandfather the WPC project to retain the enterprise zone tax terms.

Attorney Pat Harris, not testifying for a particular client, agreed that grandfathering would be a solution. Getting rid of the enterprise zone in the middle of the development process "creates an incredible burden" for existing projects.

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