2016 Subdivision Staging Policy Schools

Worksession #3 on the Public Hearing Draft

June 23, 2016

Recommendation #2: Hybrid Annual School Test

Implement a hybrid annual school test that

combines cluster utilization tests with
individual school capacity deficit tests.

Recommendation #2: Hybrid Annual School Test

CURRENT POLICY: The annual school test is a cluster level utilization test, meaning that
capacity utilization is calculated and evaluated at each school level (elementary, middle and
high) across the entire cluster.
The cluster utilization is tested against two thresholds:
105% for school facility payments
120% for a moratorium

The current annual school test is only equivalent to an individual school test at the high
school level.

Recommendation #2: Hybrid Annual School Test

RATIONALE FOR CHANGE: The current cluster-wide test does not recognize significant
overutilization at individual schools.
The assumption underlying the current policy is that if capacity is adequate across a cluster,
but not for an individual school, MCPS can and will redraw service area boundaries to
alleviate any inadequacies that might exist. For a variety of reasons such actions are not easy
to implement, and therefore not frequently used to address capacity issues at individual
schools:
the cost of conducting boundary studies
the distance between schools with excess capacity and schools in need of additional capacity
sometimes the other schools dont have excess capacity, but are very close to 100% utilization
for some middle schools, split articulation further complicates matters

Recommendation #2: Hybrid Annual School Test

RECOMMENDATION DETAILS: The recommended change maintains the current cluster
utilization test and thresholds and adds a component that evaluates the adequacy of
individual schools against new seat deficit thresholds as outlined below.
Individual School
Capacity Deficit Test
School Facility
Payments

Moratorium

Thresholds
Elementary
92-seat capacity
deficit projected in
the sixth year of the
CIP

Middle
150-seat capacity
deficit projected in
the sixth year of the
CIP

120% utilization and

110-seat capacity
deficit projected in
the sixth year of the
CIP

120% utilization and

180-seat capacity
deficit projected in
the sixth year of the
CIP

Action
School Facility Payment applies to the applicable
school service area, unless a capacity project is
planned elsewhere, specifically identified in the
CIP to relieve over-enrollment at the school failing
this adequacy test.
Moratorium applies to the applicable school
service area, unless a capacity project is planned
elsewhere, specifically identified in the CIP to
relieve over-enrollment at the school failing this
adequacy test.

This new test aligns the funding of solutions through the SSP with the MCPS thresholds
used to identify schools in need of a capacity solution

Recommendation #2: Hybrid Annual School Test

Action
School Facility
Payments

Moratorium

Inadequate Outcomes by Level

Middle

Elementary
Einstein Cluster (107.4%)
Gaithersburg Cluster (112.4%)
Northwood Cluster (116.0%)
Quince Orchard Cluster (113.2%)
Meadow Hall ES (-128), Rockville Cluster
Lake Seneca ES (-97), Seneca Valley Cluster
Garrett Park ES (-106), Walter Johnson Cluster

Gaithersburg Cluster (107.5%)

Rockville Cluster (116.2%)
Wheaton Cluster (110.7%)

High
Blair (116.3%)
Churchill (113.5%)
Einstein (116.9%)
Gaithersburg (107.6%)
Walter Johnson (113.9%)
Kennedy (112.5%)
Richard Montgomery (112.2%)
Northwood (114.8%)
Paint Branch (111.0%)
Quince Orchard (110.4%)

Rosemont ES (-144, 129.9%), Gaithersburg Cluster

Strawberry Knoll ES (-191, 141.0%), Gaithersburg Cluster
Summit Hall ES (-182, 129.2%), Gaithersburg Cluster

The following placeholder capital projects were used to determine capacities for purposes of this preliminary test:
Cluster
Northwest Cluster
Einstein Cluster
Walter Johnson Cluster
Northwood Cluster

Level
Elementary School
High School
High School
High School

Placeholder Capacity
20 classrooms
6 classrooms
8 classrooms
10 classrooms
6

Recommendation #2: Hybrid Annual School Test

Recommendation #2: Hybrid Annual School Test

COMMUNITY FEEDBACK: This recommendation was very well-received by the community.
MCCPTA representatives have been asking for an individual school test for quite some time.
The hybrid approach also received the support of the director of the MCPS Division of Long
Range Planning and the Board of Education Fiscal Management Committee.
The City of Gaithersburg and the City of Rockville were both highly supportive.

Recommendation #2: Hybrid Annual School Test

STAFF RESPONSE: Is an individual elementary school with a seat deficit of 128 students and a
utilization rate of 117% adequate? Should we continue to allow development in the service area of an
elementary school 191 students over capacity with a utilization rate of 141%? Staff believes the answer
to both questions is no.
MCPS always has options to help alleviate enrollment burdens, even at the cluster level. We dont
exempt a cluster from the cluster test just because a boundary change could move students to a
neighboring cluster that has excess capacity.* The mere existence of potential solutions does not
alone mitigate the inadequacy.
The purpose of the SSP to identify the inadequacy (and as a result raise money to help fund a solution
to the inadequacy, and if necessary, halt development until the inadequacy is resolved). The SSP is not
designed to instruct MCPS on how to alleviate an infrastructure inadequacy.
Staff feels that a Subdivision Staging Policy that recognizes infrastructure inadequacies at the individual
school level helps highlight these areas, and may potentially help fund a solution to the overcrowding
better than the current policy of only evaluating cluster adequacy.
*This used to be the practice and was termed borrowing the 2007 Growth Policy removed borrowing as part of the annual school test.

Recommendation #6: Placeholder Limits

Placeholder capacity for a particular cluster

level or school can only be counted as
capacity in the annual school test for two
years.
10

Recommendation #6: Placeholder Limits

CURRENT POLICY: There is currently no formal policy as it relates to placeholders.
Placeholder projects have been the County Councils way of taking quick action to reserve
funds for needed school capacity, while also ensuring a clusters service area does not fall
into moratorium.
Placeholders allow development to move forward and for School Facility Payments to
continue to be collected. Lacking a thorough capacity study, the placeholder project adds a
minimum projection of the capital cost required to address facility needs, and serves as a
reminder that capital programming should be forthcoming.

11

Recommendation #6: Placeholder Limits

RATIONALE FOR CHANGE: One criticism of using placeholders is that the cost associated
with a placeholder project, which is assumed to add capacity to the sixth year of the
approved CIP, does not equal the ultimate cost of the capacity project that is required.
Another concern is that the placeholder project undermines the intent of the Subdivision
Staging Policy, which is to ensure that adequate public facilities exist or are funded prior to
approving new development.
Because the placeholder prevents a moratorium from being imposed despite not having a
fully-funded capital project, this recommendation ensures that placeholder projects are not
used to weaken the purpose of the SSP and the Countys Adequate Public Facilities
Ordinance.
12

Recommendation #6: Placeholder Limits

COMMUNITY FEEDBACK: The Board of Educations Fiscal Management Committee
expressed concern that the current practice of using placeholders takes the teeth out of
the school test. Committee members were therefore encouraged by this recommendation.
Others, including the MCCPTA reps, agreed that this was a step in the right direction, but
thought it might be best to eliminate the use of placeholders altogether.

STAFF RESPONSE: Staff believes this recommended policy would help ensure the integrity
and clarity of the SSP. In many ways, this will have no impact. No placeholder has been in
place for longer than two years. Nevertheless, this recommendation would assuage fears
among some community members that placeholders could undermine the intent of the SSP
if never replaced by a real project.

13

Recommendation #6: Placeholder Limits

KEY

Cluster
Richard Montgomery
Northwood
Northwest
Bethesda-Chevy Chase
Bethesda-Chevy Chase
Northwood
Northwood
Gaithersburg
Wheaton
Einstein
Walter Johnson

Level
ES
ES
ES
MS
HS
MS
HS
ES
MS
HS
HS

2010-11 2011-12
FY11
FY12
PL 2015
MOR
PL 2016
PL 2016
PL 2016

School Year / Fiscal Year

2012-13 2013-14 2014-15 2015-16 2016-17
FY13
FY14
FY15
FY16
FY17
CP 2017 CP 2017 CP 2018 CP 2018 CP 2018
CP 2015 CP 2015 CP 2015 CP OPEN
CP 2017 CP 2017 CP 2018 CP 2018 PL 2020
CP 2017 CP 2017 CP 2017 CP 2017 CP 2017
PL 2017 PL 2018 CP 2018 CP 2018 CP 2018
PL 2020 CP 2020
PL 2020 PL 2021
PL 2020 CP 2020
PL 2020
PL 2020 PL 2021
PL 2020 PL 2021

PL: Placeholder for capacity in August

of indicated year
CP: Capacity project scheduled to
open in August of indicated year
MOR: Cluster placed in moratorium
CP OPEN: Capacity project open
Red text: Change in timeframe from
previous year

14

Recommendation #1: Student Generation Rates

Calculate School Facility Payments and the

School Impact Tax using student generation
rates associated with residential structures
built over the prior 10 years.
15

Recommendation #1: Student Generation Rates

HISTORICALLY (prior to 2014):
Used survey data to estimate student generation rates
Only looked at households that had moved in the last five years
CURRENT POLICY (since 2014):
Generation rates calculated using actual student enrollment data
For single family homes (both detached and attached), generation rates are based on
homes built in the last ten years
For multi-family structures, generation rates are based on units built any year
RATIONALE FOR CHANGE: School Facility Payments and School Impact Tax are intended to
mitigate the school construction costs associated with new development.
16

Recommendation #1: Student Generation Rates

Theory

Scenario 1: Last 10 Years

The purpose of the SSP is to
ensure the adequacy of
infrastructure for new
development. The Annual School
Test looks five years into the
future. The SSP is not intended to
evaluate the impact of new
development in perpetuity.

Scenario 2: Built Any Year

The SSP needs to
comprehensively address the
impact of new development over
the full life of that development.
To do otherwise is short-sighted.
It is important to understand
that MCPS will have to serve all of
the students from new housing,
regardless of time frame.

Scenario 3: Continued Hybrid

We should acknowledge the
different cycles of student
generation between single family
and multi-family homes. Single
family units generate more
students in the first years of their
occupancy, whereas multi-family
units generate more students as
these units age. It is important to
reflect the greatest impact each
type of new housing will have on
schools, whether it occurs in the
first years of single family
occupancies or in the longer time
frame of multi-family
occupancies.
17

Recommendation #1: Student Generation Rates

Scenario 1: Last 10 Years

New
Generation
Rates

Change from
Current Rates

SFD
SFA
MFLM
MFH

ES
0.358
0.193
0.071
0.038

MS
0.152
0.075
0.025
0.014

HS
0.157
0.090
0.039
0.015

Total
0.667
0.358
0.135
0.067

Single Family Detached: 5%

Single Family Attached: 12%
Multi-family Low to Mid Rise: 51%
Multi-family High Rise: 43%

Scenario 2: Built Any Year

ES
SFD
0.205
SFA
0.234
MFLM 0.203
MFH
0.071

MS
0.109
0.107
0.079
0.029

HS
0.148
0.143
0.103
0.038

Total
0.463
0.484
0.385
0.139

Single Family Detached: 34%

Single Family Attached: +18%
Multi-family Low to Mid Rise: +38%
Multi-family High Rise: +18%

Scenario 3: Continued Hybrid

SFD
SFA
MFLM
MFH

ES
0.358
0.193
0.203
0.071

MS
0.152
0.075
0.079
0.029

HS
0.157
0.090
0.103
0.038

Total
0.667
0.358
0.385
0.139

Single Family Detached: 5%

Single Family Attached: 12%
Multi-family Low to Mid Rise: +38%
Multi-family High Rise: +18%

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Recommendation #1: Student Generation Rates

COMMUNITY FEEDBACK:
Concern over impact on School Impact Taxes:
Large cuts in the revenue generated from developers would open a gap in school construction funding
recently closed by increasing recordation and property taxes on residents
Scenario 1: Last 10 Years
New School
Impact Taxes

90% Cost
SFD
SFA
MFLM
MFH

Impact Tax
$24,022
$12,915
$4,925
$2,416

% Change
10%
36%
61%
55%

Scenario 2: Built Any Year

90% Cost
SFD
SFA
MFLM
MFH

Impact Tax
$17,010
$17,687
$13,960
$5,041

% Change
37%
12%
+9%
7%

Scenario 3: Continued Hybrid

90% Cost
SFD
SFA
MFLM
MFH

Impact Tax
$24,022
$12,915
$13,960
$5,041

% Change
10%
36%
+9%
7%

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Recommendation #1: Student Generation Rates

COMMUNITY FEEDBACK:
Concern over impact on School Impact Taxes:
Large cuts in the revenue generated from developers would open a gap in school construction funding
recently closed by increasing recordation and property taxes on residents
Comparison of Estimated Impact Tax Revenue Under Different Generation Rate Scenarios
Based on Actual Units Built in 2015 (at 90% Cost)*
$40,000,000
$35,000,000

$30,000,000

$35,963,357

$36,902,869

Scenario 2: Built Any Year

Scenario 3: Continued Hybrid

$25,000,000
$20,000,000

$15,000,000

$20,236,770

$10,000,000
$5,000,000
$0
Scenario 1: Last 10 Years

* These are based on the total units built (not permitted) in 2015 and does not account for excluded units built in current and former Enterprise Zones, or excluded de minimis
development. We have assumed a 12.5% reduction for the MPDU exemption.

20

Recommendation #1: Student Generation Rates

COMMUNITY FEEDBACK:
Likewise, concern over impact on School Facility Payments:

Scenario 1: Last 10 Years

New
Generation
Rates

60% Cost
SFD
SFA
MFLM
MFH

ES
$7,994
$4,311
$1,573
$855

MS
$3,601
$1,779
$605
$334

HS
$4,421
$2,520
$1,105
$421

Scenario 2: Built Any Year

60% Cost
SFD
SFA
MFLM
MFH

ES
$4,576
$5,221
$4,523
$1,592

MS
$2,601
$2,549
$1,875
$690

HS
$4,163
$4,021
$2,909
$1,079

Scenario 3: Continued Hybrid

60% Cost
SFD
SFA
MFLM
MFH

ES
$7,994
$4,311
$4,523
$1,592

MS
$3,601
$1,779
$1,875
$690

HS
$4,421
$2,520
$2,909
$1,079

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Recommendation #1: Student Generation Rates

STAFF RESPONSE:

Staff does not believe a hybrid approach should be continued. Ultimately,

however, this will be a policy decision for the Board, on whether the impact of
new development on schools should be evaluated over the short-term or full
life of the dwelling unit.

22

Recommendation #8: Impact Tax Multiplier

Remove the 0.9 multiplier in the School

Impact Tax, to capture the full cost of school
construction associated with a new residential
unit.
23

Recommendation #8: Impact Tax Multiplier

CURRENT POLICY: The Impact Tax calculation currently includes a 0.9 multiplier, meaning
that it captures 90% of the construction cost impact of a new unit.

RATIONALE FOR CHANGE: The 0.9 multiplier was applied to the calculation when the impact
tax was significantly revised in 2007. Prior to 2007, the school impact tax represented less
than 50 percent of the cost of a student seat. By removing the multiplier, the County is
ensured to receive 100% of the calculated construction cost impact of new development
on school infrastructure.
COMMUNITY FEEDBACK: Feedback from the community has been very positive toward this
recommendation. The only alternative proposed was by the Board of Educations Fiscal
Management Committee, which suggested possibly increasing the multiplier to a number
larger than 1.0, and dedicating the revenue generated beyond 100% of the calculated cost
impact to land acquisition.
24

Recommendation #8: Impact Tax Multiplier

MULTIPLIER COMPARISON:

Impact Taxes
Single Family Detached
Single Family Attached
Multi-family Low and Mid Rise
Multi-family High Rise

Current
$26,827
$20,198
$12,765
$5,412

90% Cost
$17,010
$17,687
$13,960
$5,041

100% Cost
$18,900
$19,652
$15,511
$5,601

STAFF RESPONSE: Staff recommends that the multiplier be removed to capture 100% of the
calculated construction cost impact of new development on school infrastructure.

25

Recommendation #5: Land Acquisition Fund

Require a portion of the School Facility

Payment equivalent to 10 percent of the cost
of a student seat be dedicated to land
acquisition for new schools in the cluster for
which the payment is collected.
26

Recommendation #5: Land Acquisition Fund

CURRENT POLICY: There is no policy currently that requires any portion of the collected
School Facility Payments or School Impact Taxes be dedicated to land acquisition for new
schools.
RATIONALE FOR CHANGE: The cost of acquiring land for new schools has become
prohibitively expensive. Dedicating funds for land acquisition will help ensure that MCPS
has more options available in their quest to provide adequate school infrastructure.

27

Recommendation #5: Land Acquisition Fund

COMMUNITY FEEDBACK: The MCCPTA reps supported the concept of dedicating funds for
land acquisition, but felt that pulling the dedicated funds from School Facility Payments
would not generate enough money to actually make land acquisition a viable option to
MCPS.
They also did not want it taken out of the increased School Impact Tax payment. Since the
school construction cost component of the School Impact Tax calculation does not factor in
the cost of acquiring land, the MCCPTA reps felt that this dedicated funding should not be
pulled from the School Impact Tax.
MCCPTA recommends having a separate land acquisition tax, equivalent to 10% of the
school construction cost impact.
28

Recommendation #5: Land Acquisition Fund

COMMUNITY FEEDBACK: The Board of Educations Fiscal Management Committee feels that
identifying a funding source for school site acquisition is important, but that it should not
cut into the funds collected through the School Impact Tax for school construction.
Instead, the Committee recommends the creation of a separate impact tax or increasing the
School Impact Tax beyond 100% of the school construction cost impact of a new unit.

29

Recommendation #5: Land Acquisition Fund

STAFF RESPONSE: Staff feels strongly that the funds dedicated for land acquisition should
not be pulled from the School Facility Payments. Unless there is interest in creating a
separate impact tax for school land acquisition, staff believes theres merit in dedicating the
Impact Tax increase resulting from elimination of the multiplier to land acquisition.
The table below shows the amount of funding that would have been dedicated to land
acquisition over the last five fiscal years, under each scenario:

Fiscal Year
2011
2012
2013
2014
2015
TOTAL

Dedicated Land Acquisition Funding Based on

Facility Payment Collected
Impact Tax Collected
$1,041
$1,608,983
$27,320
$1,829,155
$2,542
$3,100,195
$334,729
$5,093,030
$327,965
$3,630,753
$693,597
$15,262,116
30

Recommendation #4: Facility Payment Multiplier

Modify the calculation of the School Facility

Payments to apply a 0.5 multiplier instead of
the current 0.6 multiplier.

31

Recommendation #4: Facility Payment Multiplier

CURRENT POLICY: The current multiplier is 0.6, meaning that when a School Facility
Payment is made it captures 60% of the construction cost impact of a new unit at the level
deemed inadequate.
The payment is made in addition to the School Impact Tax (which is paid on all school levels
regardless of adequacy). The Impact Tax calculation currently includes a 0.9 multiplier,
meaning that it captures 90% of the construction cost impact of a new unit. Therefore,
developers could pay up to 150% of the school construction cost impact generated by a
new unit, depending on how many school levels require facility payments.

32

Recommendation #4: Facility Payment Multiplier

RATIONALE FOR CHANGE: Recommendation #8 changes the calculation of the Impact Tax to
remove the 0.9 multiplier, increasing it to capture 100% of the construction cost impact of a
new dwelling unit. The rationale for this recommendation, which cuts the School Facility
Payment multiplier from 0.6 to 0.5, was to maintain the maximum 150% payment level
when a School Facility Payment applies.

33

Recommendation #4: Facility Payment Multiplier

COMMUNITY FEEDBACK: MCCPTA felt strongly that the multiplier should not be cut, but
instead should be increased to 0.75.
These payments help fund desperately needed capacity increases at schools and clusters
with the most need.
Unlike the School Impact Taxes, which are used to fund capital projects across the County,
School Facility Payments directly target the impact of the new development for which
they are collected by restricting their use to the impacted cluster and school level.
To make the MCCPTA reps suggested change would mean to charge developers 175% of
the construction cost impact generated by a new unit for any level for which a School
Facility Payment applies.
The City of Gaithersburg submitted testimony in favor of this recommended change to
decrease the multiplier from 0.6 to 0.5, but did not provide any rationale for its support.
34

Recommendation #4: Facility Payment Multiplier

Current
SFD
SFA
MFLM
MFH

ES
$6,940
$4,160
$2,838
$1,166

MS
$3,251
$1,743
$1,169
$531

HS
$4,631
$2,754
$1,877
$804

50% Cost
SFD
SFA
MFLM
MFH

ES
$3,813
$4,350
$3,769
$1,326

MS
$2,168
$2,124
$1,562
$575

HS
$3,469
$3,351
$2,424
$899

60% Cost
SFD
SFA
MFLM
MFH

ES
$4,576
$5,221
$4,523
$1,592

MS
$2,601
$2,549
$1,875
$690

HS
$4,163
$4,021
$2,909
$1,079

75% Cost
SFD
SFA
MFLM
MFH

ES
$5,719
$6,526
$5,653
$1,989

MS
$3,252
$3,186
$2,343
$862

HS
$5,204
$5,027
$3,636
$1,349
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Recommendation #4: Facility Payment Multiplier

STAFF RESPONSE: In light of the community response and also in light of staffs
recommendation on Recommendation #5, which would dedicate all of the increase in the
Impact Tax resulting from removal of the 0.9 multiplier to land acquisition for new schools,
staff does not believe a cut in the School Facility Payment multiplier is necessary.
Staff recommends maintaining the current multiplier of 0.6, which would continue to
dedicate 150% of a new units school construction cost impact to funding new school
infrastructure while also dedicating 10% of the cost impact to land acquisition. The total
cost impact to new development would be 160% of a new units school cost impact.

36

Recommendation #7: Impact Tax Updates

Update the calculation of the School Impact

Taxes on a biennial basis (concurrent with the
annual school test) using the latest student
generation rates and school construction cost
data.
37

Recommendation #7: Impact Tax Updates

CURRENT POLICY: Updates to the School Impact Taxes are not specifically addressed
through the Subdivision Staging Policy. The School Impact Taxes actually fall under a different
part of the County Code from the SSP. The construction cost component of the School
Impact Tax is updated on a biennial basis using a construction cost index. The calculation has
not been reset with current generation rates or construction costs since 2007.
RATIONALE FOR CHANGE: Actual per pupil construction costs have not kept pace with the
construction cost index used to update the School Impact Tax. Therefore, it is important to
reset the School Impact Tax to accurately and fairly include current MCPS school
construction costs. Formalizing a timeframe for updating the School Impact Taxes ensures
that the taxes are fair.

38

Recommendation #7: Impact Tax Updates

RECOMMENDATION DETAILS: The table below shows the data used to calculate the 2016
per student school construction costs:
Capacity/Core
Building Size (sf)
Project Cost
2016 Cost per Pupil
2007 Cost per Pupil
Change Since 2007

Elementary School
740
99,000
$27,522,000
$37,192
$32,525
+$4,667

Middle School
1,200
165,000
$47,520,000
$39,600
$42,352
$2,752

High School
2,400
400,000
$112,500,000
$46,875
$47,502
$627

Note: Figures reflect average cost based on 2016 construction market conditions and will vary, pending proposed programs and existing conditions of each project. Figures include all
site work, furniture and equipment.
Source: MCPS Department of Facilities Management.

39

Recommendation #7: Impact Tax Updates

COMMUNITY FEEDBACK: Feedback on this particular recommendation was consistently
positive. The Board of Educations Fiscal Management Committee suggested that we might
want to consider updating the construction cost component on an annual basis. Others
expressed concern that frequent updates to the taxes would result in a higher degree of
uncertainty for developers and the housing market.
STAFF RESPONSE: Staff recommends modifying the text of this recommendation to say
concurrent with the annual school test or with the update to the SSP. The SSP updates are
not finalized until the County Council adopts the SSP in November. The Annual School Test,
however, is completed in June of each year. Without this additional language, its possible the
School Impact Tax might change twice in one year once in June with the annual school test
and again in November if the SSP update modifies the calculation in any way.
As impact taxes are currently modified based on a construction cost index on a biennial basis,
updating the impact taxes to reflect more accurate construction costs and generation rates
would not change the pace at which the rates are revised.
40

Recommendation #3: Facility Payment Updates

Update the calculation of the School Facility

Payment on a biennial basis (concurrent with
the annual school test) using the latest
student generation rates and school
construction cost data.
41

Recommendation #3: Facility Payment Updates

CURRENT POLICY: Updates to the School Facility Payment amounts have regularly occurred
with each update to the Subdivision Staging Policy. The generation rates used to calculate
the School Facility Payments were last updated in 2014, but the per pupil construction costs
were last updated with the adoption of the 2012 SSP.
RATIONALE FOR CHANGE: Formalizing a timeframe for updating the School Facility
Payments by requiring that the generation rates and construction costs are both updated
every two years ensures that the School Facility Payments are as current and accurate as
possible.

42

Recommendation #3: Facility Payment Updates

COMMUNITY FEEDBACK: Feedback on this particular recommendation was consistently
positive. The Board of Educations Fiscal Management Committee suggested that we might
want to consider updating the construction cost component on an annual basis. Others
expressed concern that frequent updates to the payments would result in a higher degree of
uncertainty for developers and the housing market.

STAFF RESPONSE: Staff recommends modifying the text of this recommendation to say
concurrent with the annual school test or with the update to the SSP. The SSP updates are
not finalized until the County Council adopts the SSP in November. The Annual School Test,
however, is completed in June of each year. Without this additional language, its possible the
School Facility Payments might change twice in one year once in June with annual school
test and again in November if the SSP update modifies the calculation in any way.

43

Recommendation #9: Former Enterprise Zones

Remove the School Impact Tax and School

Facility Payments exemptions in former
Enterprise Zones through a phased approach.

44

Recommendation #9: Former Enterprise Zones

CURRENT POLICY: New development in current and former Enterprise Zones is exempt from
School Impact Taxes and School Facility Payments, if otherwise applicable.

RATIONALE FOR CHANGE: Marylands Enterprise Zone program offers businesses income
and property tax credits for creating jobs within these areas. Currently, the Silver Spring
CBD is the Countys only former Enterprise Zone. The designation had just expired when
significant changes to the SSP and Impact Tax laws were adopted in 2007. The sentiment at
the time was to provide Silver Spring a little longer to solidify its redevelopment. It has now
been 10 years since the designation expired and exemption with respect to this status no
longer seems applicable.
Since the Silver Spring CBD lost its designation 10 years ago, 3,784 multi-family high rise
units have been built within the former Enterprise Zone. Our student generation rates
suggest those units include 255 MCPS students. The exemption has resulted in a savings for
developers of over $20 million.
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Recommendation #9: Former Enterprise Zones

RECOMMENDATION DETAILS:
For the first three years following the expiration of the Enterprise Zone designation, the
standard School Impact Tax and School Facility Payments (if applicable) would be
discounted by 50 percent.
After three years, the School Impact Taxes and School Facility Payments will increase to the
full level.
All former Enterprise Zones at the time of adoption would enter into the three-year
discount phase, regardless of the length of time since the Enterprise Zone designation
expired.

46

Recommendation #9: Former Enterprise Zones

COMMUNITY FEEDBACK: Several people and organizations, including the MCCPTA and the
League of Women Voters, testified in favor of this change. Others requested that
consideration be given to continued exclusion for development projects currently in
progress.
STAFF RESPONSE: Staff believes a case could be made for removing the exemption from
current Enterprise Zones as well, but is reluctant to make such a recommendation until new
criteria that directly relate to residential development and schools can be developed for
identifying areas of the County eligible for impact tax and facility payment exemption.
Staff further agrees with those who requested a grandfathering of the exemption for those
projects currently in progress. It seems appropriate that any project that has an accepted
application within the Silver Spring CBD by the effective date of this SSP (or in another
Enterprise Zone prior to the expiration of its designation) be allowed to proceed without
payment of School Impact Taxes or School Facility Payments.
47

Recommendation #10: Future Exemptions

Conduct further research to develop the

criteria and process by which an area of the
County can be exempted from the School
Impact Tax and School Facility Payments.
48

Recommendation #10: Future Exemptions

RATIONALE: There is a tenuous relationship between the purpose of Enterprise Zones,
which is to stimulate job creation and economic growth, and the exemption of impact taxes
and facility payments for new dwelling units within the Enterprise Zones. There could be
criteria that more directly relates to residential development (and schools) by which we
designate areas of the county for impact tax and facility payment exemptions.
COMMUNITY FEEDBACK: There was little feedback on this particular recommendation. The
feedback that was received was generally positive.

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Other School Tests in Maryland

Test Outcomes

Locality

Test Area

Test Time Frame

Payment

Moratorium

Montgomery Co.

Cluster

5 years

Utilization* > 105%

Utilization* > 120%

City of Rockville1

Cluster

5 years

None

Utilization* > 120%

City of Gaithersburg2

School

6 years

Utilization* > 105%

Utilization* > 150%

Prince Georges Co.

Cluster

Residential completion
date or end of each stage

Utilization* > 105%

Utilization* > 120%

Anne Arundel Co.

School

3 years

Frederick Co.

School

2 years

Carroll Co.

School

Harford Co.

Other
Placeholder projects for utilizations 106-119%

If Closed

Wait list for closed areas with 6 year max wait

Utilization** > 120%

Request to redistrict***

6 years

Utilization** > 120%

Permit restrictions for utilizations 110-119%

School

3 years

Utilization** > 110%

Howard Co.

School Region
and School

Scheduled project or
phase completion year

St. Marys Co.

County

3 years

Utilization** > 100%

If Closed

Utilization** > 115%

Limit of 300 housing unit allocations per ES

service area if ES Region > 100%

Utilization** > 107% for ES; >

109% for MS; >116% for HS

Source: Montgomery County Public Schools Division of Long Range Planning (DRAFT).
* Capacity as determined by the BOE is used in utilization calculations.
** State-rated capacity is used in utilization calculations.
*** A request to redistrict may be made by an applicant if an adjoining district is below 20% capacity and the BOE determines redistricting to be a viable option.
1 The City of Rockville test is the same as the Montgomery County test.
2 The City of Gaithersburg requires any school payment to be used to relieve over-utilization at the school where it was collected. If no capacity can be added there, the funds can be used to support additional
capacity at the school that will relieve the over-utilized school.

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FY15 Impact Taxes in Maryland Jurisdictions

Jurisdiction
Anne Arundel County
Calvert County
Caroline County
Carroll County
Charles County
Frederick County
Harford County
Howard County
Montgomery County
Prince Georges County
Queen Anne's County
St.
Mary's County
Source: Maryland Dept. of Legislative Services

Rate Basis
Unit Sq. Ft.
Unit Type
Flat Rate
Unit Type
Unit Type
Unit Type
Unit Type
Unit Sq. Ft.
Unit Type
Location1
Unit Sq. Ft.
Unit

Highest Fee
$10,502
$7,800
$5,000
$533
$13,366
$13,478
$6,000
$1.25/Sq. Ft.
$26,827
$15,489
$3.96/Sq. Ft.
$3,375

Lowest Fee
$2,273
$2,600
$5,000
$438
$9,646
$5,595
$1,200
$1.25/Sq. Ft.
$5,412
$9,035
$3.96/Sq. Ft.
$3,375

1The

higher impact charge applies to development located outside the Beltway while the lower charge applies to development located inside the Beltway and/or near mass transit (abutting an
existing or planned mass transit rail station site operated by WMATA).

51