Archives September 2010

This morning, the Montgomery County Planning Board appointed what looks to be 24 people to the new White Flint Advisory Committee required under the White Flint Sector Plan. This looks to include all 19 nominated by the deadline, plus a few more. I don’t have the official list yet, but here’s what I do have:

Residents:

 Dan Hoffman from Randolph Hills Civic Association and Citizens League of MoCo

Chad Salganik from Randolph Hills and the web wizard of Citizens League

Ed Rich from Old Farm

John Fry from Fallstone (a former Friends of White Flint Director)

Todd Lewers from the Forum (a Friends of White Flint Director)

Della Stolsworth from Luxmanor

Natalie Goldberg from Garrett Park Estates/White Flint Park

Karl Girschman from the Wisconsin

JM King

Ruan Salgado

Meredith Josef from Timberlawn

Business Representatives:

Barnaby Zall, a lawyer in White Flint, and an Old Farm resident (FoWF Co-Chair)

Dave Freishtat from the Bethesda-Chevy Chase Chamber of Commerce (FoWF Director)

Peggy Schwartz from the North Bethesda Traffic Management District

Mike Springer from the U.S. Nuclear Regulatory Commission (FoWF Director)

Property Owners/Developers: 

Greg Trimmer from JBG Companies (FoWF Treasurer)

Evan Goldman from Federal Realty (FoWF Co-Chair)

Francine Waters from Lerner Corp.

Arnold Kohn from Tower Companies

Mike Smith from LCOR White Flint LLC (FoWF Director)

Kurt Meeske from Combined Properties

County Government:

Diane Schwartz-Jones from the County Executive’s staff

Anne Root from the County Executive’s staff

Mike Coveyou from the County Executive’s staff

The first meeting is scheduled for October 11 (Columbus Day) at 7:30PM at the MCPPC headquarters in Silver Spring.

Barnaby Zall

A slide actually, not a nutshell. From last night’s Federal Realty presentation on Mid-Pike Plaza, a summary of costs and participation in financing infrastructure needed to implement the White Flint Sector Plan.  

For more details or an explanation, contact Evan Goldman, egoldman@federalrealty.com.  

Barnaby Zall

One of the more interesting elements of JBG’s proposal for the second phase of its North Bethesda Market project (located where the Chili’s building is now, along Rockville Pike and the new Executive Boulevard extended) is its Eurostyle plaza, where cars and people can safely mix. Now it seems that Federal Realty plans a similar kind of advanced mobility feature for its new Mid-Pike Plaza plan.

Evan Goldman and Tommy Mann presented the Mid-Pike Plaza plan again last night at Luxmanor Elementary School.  

In the northern portion of the Mid-Pike plan is their centerpiece park (apparently as-yet unnamed).

The park is in the middle of a flexible space, so that the surrounding streets can be closed off and converted for a street-festival-type atmosphere, similar to what is done in the new Reston Town Center, and planned for the new White Flint Mall festival area. He also said that the public art in this area would not only be artistic, but child-friendly, so that it would serve a dual-function as recreation while helping to beautify the area.

But last night Evan Goldman pointed out that they intended the same type of free-flowing mixed-mobility pattern for the park area that characterizes the Eurostyle plazas promoted by mobility expert Ian Lockwood. So even on “regular” non-festival days, the park area should be more lively than the pattern suggests.

When I asked about whether the road surface in this area would be friendly to the differently-abled, Evan said that the surface texture wasn’t set yet. He pledged that they would work with disabled advocates like Paul Meyer to be sure that the surface was appropriate.

One major disappointment to many was announced last night, though. Paula Bienenfeld, a Luxmanor activist, had long campaigned for Federal Realty to bring an In N Out Burger to Mid-Pike Plaza; those in the audience who had sampled that Western chain’s wares seconded the idea. Unfortunately, Evan said that he had contacted In N Out and they were “stuck in a suburban mode” and weren’t interested in a more urban setting.

Barnaby Zall

NEW URBAN NEWS, Volume 15, Number 6 – September 2010

“Best bet for tax revenue: mixed-use downtown development”

Studies in Florida and North Carolina show that dense urban development pays off for local governments. Big-box retail doesn’t.

At a time when local governments are struggling financially, two studies – one in Sarasota County, Florida, the other in Asheville, North Carolina – suggest the one of the best fiscal remedies is dense, mixed-use development.

                The studies, by Public Interest Projects, a real estate development firm in downtown Asheville, show that on a per-acre basis, sprawling single-use developments such as big-box stores do a poor job of providing governments with needed tax revenue. Dense, mixed-use development, usually downtown or adjacent to transit, is financially much more beneficial.

                Peter Katz, director of smart growth/urban planning for Sarasota County, commissioned J. Patrick Whalen, Jr. and Joseph Minicozzi of Public Interest Projects to analyze how much property tax is produced per acre by various kinds of development. Looking at specific properties – from high-rise buildings in the City of Sarasota’s downtown to big-box stores and shopping malls across the country – the researchers discovered that dense, mixed-use urban development is far superior.

                From a tax revenue-per-acre (versus per lot or per household) perspective, the properties that are typically occupied by retailers like Walmart, Costco, and Sam’s Club turn out to be very disappointing. They generate about $8,350 per acre – “maybe $150 to $200 more per acre per year than single-family houses in the city like mine,” Katz says.

                The county’s premier mall, Westfield Southgate, anchored by Macy’s, Dillard’s, and Saks Fifth Avenue, was found to produce almost $22,000 per acre – nearly three times as much as a big-box center. “This is not surprising, given that it’s a higher-quality building in a better, close-in location (actually within the City of Sarasota),” Katz notes.

                Yet even a top-of-the-line mall pales in comparison to the per-acre revenue obtainable from dense urban development. A 17-story mixed-use building occupying .75 acres on Main Street downtown generates $1.01 million annually in city and county taxes, according to Katz. That building, completed in May 2007, which has retail in its base, several floors of offices, and then condominiums in the upper levels, produces $1.2 million per acre in county property taxes alone. “It would take about 145 acres of Walmarts – or five of them, to be precise – to equal the contribution of that one downtown building,” says Katz.

                “Even a mid-rise mixed-use building – about seven to nine stories – in the downtown brings in a healthy amount per year, from the mid-$500,000s to just under $800,000,” he says. “Low-rise construction – just two or three stories, with housing or offices over retail – the kind of ‘town center’ redevelopment now replacing many older suburban shopping areas, can bring in around $70-90,000 per acre. The high end of that range is more than four times that of the county’s highest earning mall,” Katz emphasizes.

                Similar patterns were found in Asheville and Buncombe County, North Carolina. Per acre, the best generator of county property taxes in the Asheville area was urban residential buildings of six stories or more, says Minicozzi. Ranking below those as tax generators were mixed-use condos of 3 to 4 stories and urban mixed-use buildings of 2 to 4 stories.

ALWAYS HIGHER RETURN

                “Downtowns achieve a higher rate of return than an acre of suburban development could ever do,” Minicozzi says. The reason is simple: “Once you start getting two stories, you start getting twice as much value.” As buildings go higher while covering much or all of their ground, the revenue escalates.

                Minicozzi argues that a municipality should look at tax revenue per acre just as a farmer looks at income per acre: “Urban development produces a valuable yield, like that of a cash crop, while low-density suburban development is the equivalent of growing an acre of grass. By our estimates, suburban development doesn’t even cover the cost of the infrastructure that serves it in a reasonable period of time.”

                When land and buildings are included, the suburban Asheville Mall produces taxes of $7,995 per acre for the county. That’s slightly more than the yield from one- and two-story buildings in the central business district. But keep in mind that many downtown buildings surpass the mall in tax contributions.

Greg Trimmer

Yesterday the Montgomery County Council heard a briefing from the County Executive’s staff on options for financing the infrastructure necessary to implement the White Flint Sector Plan. At 5:36PM the night before, the Executive sent proposed legislation and a cover letter to the Council, but several Councilmembers noted that they had not had time to consider the material before the briefing.

Here is the Executive’s letter. The Executive is proposing a development district for White Flint, as had been recommended by the Planning Board, but includes the triple tax increase discussed in some posts below.

The White Flint Partnership, www.whiteflintpartnership.com, immediately issued a response. The WFP letter rejected the Executive’s proposal, saying that businesses would find it too costly to invest in White Flint: “it will send another signal to the business community that Montgomery County is simply not open for business.”

Barnaby Zall

When I was new to this whole public development area (only a few short years ago), I presented the Final Report of the official White Flint Advisory Group to the Planning Board. (The Report seems to have disappeared off the Planning Board’s official White Flint page. www.whiteflintplanning.org, but still can be found here.) On P. 5, the Advisory Group’s Report complained that we did not have sufficient information to make a complete recommendation. When I repeated that caveat in testimony to the Planning Board, then-Chair Royce Hanson peered down at me and said “Welcome to our world.” Perfect information, and often even complete information, doesn’t exist in the planning process. Asking for it doesn’t usually get a lot of sympathy from those who have to make a decision.

Still, you gotta feel sorry for Diane Schwartz-Jones, the Executive Assistant to Montgomery County Executive Ike Leggett. Jones has been delegated the unhappy task of presenting the Executive’s position on White Flint for the last several years, and now she’s being asked to fall on her sword. A splintery, wooden sword, with some of the weakest arguments yet made for why the Executive hasn’t proposed an acceptable financing plan for White Flint infrastructure.  

People like Jones. She’s a very intelligent and capable staffer. Both in public and private, Councilmembers call her the “hardest-working person in Montgomery County government.”

But in her testimony before the County Council this morning, she had the unenviable task of saying they could not present a reasonable financing package that everyone would accept because they “don’t know what the costs will be in the future. We know what our costs are now, but they may change in the future.”

Well . . . sure. Things change. That’s the nature of a forty-year plan. But that’s why there are people in the world whose job it is to figure out those costs and the risks of change, and put a dollar figure to them. We call those people “bond counsel,” and they support a huge bond market. Montgomery County is justly proud of its high bond rating (meaning bonds are cheaper because MoCo is considered a good financial risk), so we not only have bond analysts here, but we are comfortable dealing with bond counsel. And the Executive hired an expensive consultant years ago to do just that kind of analysis, and apparently didn’t get anything from it. It’s embarassing.

Not to mention the really painful skewering that Councilmember Roger Berliner put Jones and her fellow staffers though, simply pointing out that some of the big-ticket items added to the White Flint cost list were not really part of the White Flint Plan, such as the Montrose Parkway. And when Berliner read back to her the County Executive’s own projections and asked whether any other project in the County would offer the same kind of return, Jones barked back: “I’m not going to take the words exactly as you wish me to take them!”

After Diane’s tortured appearance this morning, I talked with a respected public financing expert, who courteously suggested that “there are several different parts to this Plan and we have to get those right.” But he agreed that this was essentially a function of bond pricing, and not impossible.

I also talked to a Councilmember who succinctly described the County Executive’s midnight proposal of last night as “B___S___.”

Barnaby Zall

At its regular meeting on Tuesday, September 28, the Montgomery County Council will consider ways to finance the infrastructure needed under the new White Flint Sector Plan. After almost two years of consideration, the County Executive’s staff may finally present some definitive proposals for financing. Then the Council will have to decide how much tax is too little, too much or just right.

The Council staff has prepared a memo providing some background. In the memo, Michael Faden, a senior counsel to the Council, describes what happened over the last few months, but adds a pessimistic note about future action:

[County] Executive staff held a series of meetings with Council and Planning staff and a broad range of stakeholders over the summer and shared drafts of legislation to create a White Flint special taxing district and lists of infrastructure items that the proposed district would entirely or partly fund. We expect to receive that legislation for introduction in the coming weeks.

Faden also suggests four policy issues should be considered, but notes “none of [these issues] need to be resolved today,”

1) Should any new special taxing district include and tax existing residential properties?

2) Should a supplementary property tax be the only tax used to finance the special taxing district and White Flint development generally?

3) Should County transportation impact taxes continue to be charged to new development in the White Flint special taxing district?

4) Should this legislation only apply to a White Flint special taxing district, or should it be drafted as general enabling legislation, with the White Flint and each other special taxing district established by Council implementing resolution?

Thus, as noted in the prior two posts, the issue of taxing current residents remains very much alive.

Just as important are issues 2 and 3, ironically dealing with triple taxation. The principle behind the self-taxation agreed to by the White Flint developers was that the new taxes (which would be double the impact taxes otherwise imposed) would be in lieu of impact taxes. Item 2 asks for more taxes and Item 3 seems to add impact taxes to the new development taxes, making triple taxes on new and possibly current developments in White Flint.

This isn’t how it was supposed to be. We thought we had worked out a pretty good deal. Back in 2008, the Planning Board got the developers to agree to self-tax themselves at TWICE the impact fee rate. And, of course, the developers would also provide some 44% of the needed infrastructure at their own cost on their own properties; that includes new roads, libraries, community centers, daycare centers, and the like. The additional taxes would fund only the public infrastructure, like new roads, parks, schools and the like. The developers even said they would forward fund the initial stages, taxing themselves before their developments went on-line. The estimate was that the new development tax (twice the old rate) would generate SEVEN BILLION dollars in new property taxes for the County.

But double taxes, generating $7 billion, appears not to be enough. First the County Executive’s staff complained about “fairness” and how White Flint shouldn’t get anything because it was a “wealthy” area. Then it was that a development district, successfully used in St. Louis, Chicago, and elsewhere, would tread on the Executive’s ability to shift White Flint’s revenue to other parts of the County. Then it was that the Executive’s high-priced consultant couldn’t figure out how development bonds work, or maybe it was how forward funding worked, or some such conundrum. Now the County Executive appears to be pushing to have its cake and eat it too. Executive staff wants to have both impact taxes and the new development taxes.

The problem is that it’s a pretty big jump to ask those operating developments in White Flint to shut down, spend billions of dollars on new construction, and then pay triple taxes. White Flint is a huge economic engine right now; it’s sprawled out over a big area, which is why it looks deceptively quiet. But those Rockville Pike parking lots bring in big bucks for the State and County already; rents are sky-high, even in the recession, showing that businesses want even the enormous grey parking lots, overhead wires and old strip malls, because they make money there. It was already a big sell to get these businesses to see the value of transit-oriented, sustainable development, and then we put new CR Zone obligations on them to build day-care centers, green buildings, and so on, plus help shift their workers to transit commuting. But, for whatever reason, they agreed to double their own taxes.

Now add triple taxes?

Likely to be the straw that broke this camel’s back. It would sure be a lot easier to keep all those asphalt parking lots along Rockville Pike. All it would take is just to renew those expiring leases which have been suspended for the five years the White Flint planning process has taken. Once that’s done, the County’s dreams evaporate for the ten or fifteen years it will take for this latest round of leases to run their course.

And that seven billion dollars? Only a little bit, less than ten percent, would have been needed for everything in White Flint. The rest, $6 billion, could have been used, as we’ve talked about in Friends of White Flint for years now, to bring workers from East County to the new jobs in White Flint, for rapid transit, for County services.

Now it won’t. Won’t be used to renovate Rockville Pike, so traffic will just get worse and worse and worse. Won’t be used for new libraries, parks, schools. Won’t be used to fund new dreams in Wheaton, the Route 29 corridor and beyond. Won’t be used for anything. Because it won’t exist.

Just because triple taxes are too much more than double taxes.

Meanwhile, Arlington County has booming corridors in Ballston and Courthouse. Ten percent of Arlington County is in those development corridors, but they produce half the County’s tax revenue. And they are transit-oriented, where people take the Metro everywhere. And they’re attracting business like crazy. We can see right next door what smart growth does: protect existing communities, throw off money to help other areas, and bring jobs and housing in balance next to transit. But here we just can’t seem to move ourselves beyond immediate greed, short-sighted power grabs, or some other form of blinders.

So like Goldilocks, the County Council is faced with three bowls of porridge. One is too cold (the original impact taxes); one is too hot (triple taxes = new taxes or impact taxes plus the new double-high development taxes). One seems to be in the middle and just right: the new development taxes.

We’ll see on Tuesday what the Council wants to eat.

Barnaby Zall

Thank you for your recent letter about redevelopment in the White Flint area.

We are examining alternatives for financing including one that would not result in any additional costs for existing residential property owners related to the implementation of the $1 billion plus White Flint Sector Plan. Such a plan would fund this very intensive program without charging additional taxes or fees to those who currently own homes in the Sector Plan area. To that end, County staff is working diligently with representatives from the various condominium associations, commercial property owners, Planning Board staff and financial advisors to determine how to pay for the new and rebuilt infrastructure while reducing or eliminating any additional burden on current homeowners in the White Flint area.

I appreciate your taking the time to share your concerns – improving the White Flint area will require a long-term commitment by all of us involved in the task.

Sincerely,

Isiah Leggett

County Executive

[posted by Edward Shafer]

I’ve been quiet on White Flint financing now for a month or so, relying on people to work things out in “stakeholder meetings” and so on. But maybe there’s something on the horizon?  

We’ve been waiting for months for the County Executive to propose a financing plan for the White Flint Sector Plan. Discussions started last year, with the County Executive telling the Montgomery County Planning Board that White Flint was a wealthy area and funds should not be reserved for helping the wealthy when there were greater needs in other parts of the County. The Executive hired an expensive outside consultant to figure out financing ideas, rejecting the careful compromises worked out by the Planning Board and development community (in which, by the way, the developers agreed to tax themselves to pay for needed infrastructure, even before they began building).

Then the Executive’s staff held a series of meetings with the County Council. Those meetings were notable for looking at a variety of “options,” most of which made no sense, and would never be used. The consultant didn’t seem to produce anything of note.  

Then, we waited, and waited, and waited. We got pledges that legislation would be drafted by the end of July. And it was. (Not introduced, but someone worked on it.) The legislation wasn’t bad, but it had some pretty enormous holes as well. Most notably, it was completely open-ended on the amount of taxes. And some of the comments suggested that the Executive was thinking of taxing current residents. Can’t let those wealthy people get away scot-free, I guess. But then cooler heads prevailed, and Diane Schwartz-Jones, the lead staffer for the County Executive, announced that current residents wouldn’t be taxed after all.

Fast-forward to last week. Diane Jones appears at the Chamber of Commerce meeting. Asked about White Flint financing, she said “this is a complicated and expensive Plan.” And then she stopped. [Blink.] What? Waxing poetic on Science City, but on White Flint . . . ?

So, let’s review the bidding: we have a big White Flint Plan. Will generate, by the Executive’s own numbers Seven BILLION dollars in new tax revenue (that’s not counting taxes on current residents). A lot of the infrastructure will be provided for free by developers. Developers worked out a comprehensive financing package, including self-taxation at a reasonable level, so long as part of the money was used in White Flint to generate that $7 billion. A schedule was even agreed to, with specific infrastructure needs laid out. Everybody happy, right?

Um, nope. Now we hear that the County Exec’s “soak the wealthy” plan is back. Let’s double or even triple the taxes on White Flint. That’ll work, and we know somebody else needs the money, right?

Who are they kidding? This Plan has always been vulnerable to one thing: fear. Fear that Montgomery County would not keep its promises. Happened before. Apparently happening again. This triple tax nonsense will simply kill the Plan. As we know from past discussions, those massive parking lots and strip malls in White Flint are currently making money; that’s why rents are so high here (higher than in renovated Bethesda). You can’t triple taxes and expect people to give up on-going businesses to pay much much more. Especially if MoCo itself isn’t willing to even work on the preliminary planning phase.

I guess there’s a reason companies won’t relocate here. And there’s a reason East County gets starved. Montgomery County apparently is willing to give up billions in new tax revenue for something . . . else? Why can’t we all realize that White Flint is potentially an economic engine that can fund a lot of future benefits for a ton of people throughout MoCo? Why do we have to use it as an economic scapegoat for something else somewhere else?

Anyway, on Tuesday, the Council will get yet another briefing from the Executive’s staff on White Flint Financing. 11AM in the Council Building in Rockville. Who knows what wonderous messages we’ll get this time?

Barnaby Zall

Generation Y Giving Cars a Pass

The generation gap is a growing, long-term headache for automakers.

By Jim Ostroff

Selling cars to young adults under 30 is proving to be a real challenge for automakers. Unlike their elders, Generation Yers own fewer cars and don’t drive much. They’re likely to see autos as a source of pollution, not as a sex or status symbol.Motorists aged 21 to 30 now account for 14% of miles driven, down from 21% in 1995.  They’re more apt to ride mass transit to work and use car sharing services — pioneered by Zipcar — for longer trips.  And car sharing choices are expanding, with car rental firms moving into the market, making it convenient for young folks to rent with hourly rates and easy insurance. Connect by Hertz, for example, is rolling out its car sharing services in the New York metropolitan area, with plans to eventually expand them to around 40 college campuses nationwide.

The trend won’t cause car sales to tank, of course, but the generational shift doesn’t bode well for manufacturers and auto dealers, which for decades have counted on wooing young new drivers to their brands in hopes of cementing lifetime customer relationships.Gen Yers are a big potential market: At 80 million strong, they represent the biggest generation in U.S. history. Baby boomers are a close second, but millions of them begin turning 65 next year — an age at which car purchases drop off sharply.“It’s a matter of mind-set far more than affordability,” says William Draves, president of Learning Resources Network, an association that studies consumer trends and provides education and training services.“This generation focuses its buying on computers, BlackBerrys, music and software and views commuting a few hours by car a huge productivity waste when they can work using PDAs while taking the bus and train,” says Draves.Moreover, in survey after survey, Gen Yers say that they believe cars are damaging to the environment.  Even hybrid electric vehicles don’t seem to be changing young consumers’ attitudes much. 

Greg Trimmer