Live-blogging from the January 26, 2010 joint meeting of the Planning, Housing and Economic Development Committee and the Management and Fiscal Policy Committee of the Montgomery County Council. The topic is financing of the White Flint Sector Plan, a key component in any master plan, and critical in an innovative, complicated and multi-stage Plan such as for White Flint.
PHED Committee Chairman Mike opened the hearing by saying that they would be “starting” to look at financing. All of us are in agreement that a financing plan needs to be moving on a parallel track so the residents of the area understand how the infrastructure required for the development will be achieved. The details can be worked out over the next 12 months or so. Objective for today is just to lay out elements of financing. What are potential mechanisms that exist and what are the general goals and objectives we should look at in any financing plan and what is the scope of the resources to ultimately have this Plan be successful. So goal is not to have a financing plan available, but to give council information to help them understand how the pieces work together.
Councilmember Trachtenberg, Chair of MFP Committee: How do we provide a level of assurance and a level of asurance to get the infrastructure that is critical to the success of the Plan. Clearly will set some general principles in motion. One to start today is the sharing between private and public sectors around cost. Another worksession in a few weeks. About tomorrow and this will define how things get done in Montgomery County.
Diane Schwartz-Jones, representing the County Executive’s Office: state law requires us to identify costs. Our best estimates of pricing for public sector. Pricing for library is not included. [Note: memo is available here: http://www.montgomerycountymd.gov/content/council/pdf/agenda/cm/2010/100126/20100126_MFPPHED1.pdf]
Councilmember Berliner: everything we’re looking at is conceptual at this time. Depends on staging decisions. Assuring that the revenue is there when it’s needed to fund the infrastructure. Create the assurance that the infrastructure is available in a timely manner.
February 9 is the next worksession on financing.
Michael Faden, council staff: these are not hard numbers. These are just to give a general idea of what is involved. Knapp: orders of magnitude. Council President Nancy Floreen: at what point in time do you have sufficient certitude to put this into play? Do you have to know every element and all the players before you put this into a Plan? Clarksburg’s a problem because of this element, and something should have been placed. Do you have to have certainty about everything before you can get anything done?
County Executive staffer Jennifer Barrett: yes. We get a lot of flexibility because of our special obligation bonds and investors need a great deal of certainty before they’ll buy those bonds. Does not count against any county spending limits. General obligation bonds are different and our aim is to do GO financing here. Very much focussed on the ability to deliver not only the infrastructure but on the development that provides everything. You can start levying taxes to build up revenue before then. Floreen: so to have bonding capacity, we need certainty as to the properties? Barrett: Revenue stream. Knapp: some variability in how much certainty you need, but one of the elements is what financing is available.
Floreen: 20-50 year process and hoping to get the right tools. Much be realistic. Can’t control all these things. Small subset of property owners who have the right conditions to make investments in their properties. So getting all those parts right is hard.
Councilmember Marc Elrich: taxing now? Is this putting the money aside now or just putting it in the general fund? Barrett: special rules for special purpose funds. Elrich: we’ve got other plans that are competing for money and I don’t want this project gobbling up funds that are needed in other areas as well. This only works if the funds come from where we want them to, and the development to pay for it comes through as well. Barrett: it’s like bond covenants.
Faden: seven principles to have in mind on P. 2 of the memo.
l) Protect the Charter property tax limit
2) Secure revenue stream to pay off bonds
a) feasibility of bond funding: quality of bonds; guarantee that development will occur
3) Maintain County bond rating and good name; low risk exposure to County
4) Solid legal basis –avoid challenge to financing mechanisms
a) Property owners
5) Timely availability ofrevenue to produce infrastructure before/at development
6) Uniform/equitable approach regarding who pays
7) Clarity necessary for public understanding, acceptance
Faden: that was a problem in Clarksburg; didn’t get the bonds out soon enough for infrastructure. Floreen: we disagree. Barrett: I have a problem issuing bonds secured by bare dirt. Several other problems where permits were issued before infrastructure in place. Floreen: perspective is that bonds need certainty. Faden: mutual feedback there; each side needs certainty from the other side.