Monthly Archives: April 2020

Adam Pagnucco

New Version of Jawando Rent Control Bill Covers Commercial Properties

By Adam Pagnucco.

A few days ago, I reported on a bill to be introduced by Council Member Will Jawando that would prohibit rent increases during public emergencies. There has been some discussion about whether Jawando’s bill covers commercial properties. The short answer is: it may not have originally, but it does now.

In my original post on April 9, I described the bill’s provisions. It prohibits rent increases during public emergencies and also prohibits notices of rent increases extending to 30 days after the end of emergencies. I also said, “The bill does not distinguish between residential and commercial properties.”

On April 11, it was brought to my attention that while the bill does not mention property types, it adds language to a section of county law that regulates housing. I updated the original post with this statement:

Update: The bill adds language to Section 29 of the county code, which regulates landlords and tenants in the context of housing. Sec. 29-3(b)(1) states that the purpose of Section 29 is “to simplify and clarify the law governing the rental of dwelling units.”

Just an hour ago, I heard that a new version of the bill was online explicitly extending its provisions to commercial properties. That is apparent from the language in its transmission memo, which now states, “Expedited Bill 18-20 would prohibit the increase of residential and commercial rents during and after the current catastrophic health emergency declared by the Governor, prohibit certain notices of rent increases, and require certain notices to tenants.”

The change is also apparent from the language in the new draft of the bill which is now online. The bill now expands its definition of covered landlords and tenants to include “an individual or legal entity that leases a building, or portion of a building, for use or occupancy as a for-profit or non-profit business, including a sole proprietorship.” The relevant language is reprinted below.

Another change is that Council Member Nancy Navarro has been added as a co-sponsor, joining lead sponsor Jawando and original co-sponsors Sidney Katz and Craig Rice.

The bill refers to itself as a “rent stabilization” bill but by conventional definitions that is inaccurate. Rent stabilization ordinances typically allow rent increases but limit them to set percentages. This bill prohibits rent increases, at least during public emergencies. That is typical of rent control, which provides for hard limits on rent. Accordingly, from this point forward, I will be describing this as a rent control bill.

Expect a fight over this legislation.

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Montgomery County, taxes

Yes, Virginia, You Do Pay More in Taxes, Part II

Source: County Executive Budget Presentation

Continuing my occasional series, today, I look at commercial tax rates. Considering the bellyaching by business over the difficult climate in Montgomery, especially compared to Fairfax, you’d think we really dun them on taxes.

Turns out that’s not the case. Our commercial tax rates are lower than all of our major regional competitors in Virginia, DC and Maryland. Commercial taxes in both Fairfax and DC are over 50% higher than in Montgomery.

Thinking about not only this chart but other available information, I draw two conclusions that may seem opposed but are utterly compatible.

It’s Never Enough

No matter what Montgomery does, it will never been good enough for the business community. A case in point is the reaction to the major zoning changes adopted by the previous County Council. These changes greatly simplified the code and made it much easier and quicker for developers to move forward with projects in Montgomery.

Based on the chatter today, you’d never know this occurred. The major complaint of Empower Montgomery’s action plan to improve the business climate last year was to ease further limits on development without demanding any further contributions by developers.

These complaints continue even as the County continues to take a very friendly attitude towards development. For example, after adopting a zoning plan that increased the value of land around White Flint tremendously, we are dropping millions to build a new Metro access tunnel.

Yes, the new tunnel will make it easier for pedestrians to access Metro safely but it will also increase the value of properties in the area. Perhaps the developers should kick in for it?

All of this is just the business community acting sensibly in its own interest. I am no more surprised by it than I am that unions want higher salaries with more benefits. It doesn’t make them evil, but it also doesn’t mean that we have to swallow their narrative whole.

Other Real Barriers Exist

Like all good narratives, the Montgomery is hostile to business narrative mixes up fact and fiction. The fact remains that commercial business growth remains very poor in Montgomery, as Adam Pagnucco has explained in-depth previously.

Montgomery faces real challenges when it comes to business. They just aren’t necessarily the ones we hear about related to taxes and development that seem to attract the loudest moans because of developer muscle in the county.

I hope to explore some of these in the future. Some are easier to solve than others. We could do more to make the county bureaucracy nimbler, market the county, and support local small businesses. The County Council could spend less time on sideshows and more on our major challenges. It’ll be a harder lift to move Montgomery closer to a major airport.

In response to the first post in this series, I heard a lot about the impact of income taxes in the county. I plan to take a look at our overall tax burden including income taxes in Part III.

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budget, Fire Fighters, Marc Elrich, MCGEO, MoCo Police

Elrich Agrees to Give Unions COVID-19 Differential Pay

By Adam Pagnucco.

County Executive Marc Elrich has reached agreement with the three county employee unions (MCGEO, the fire fighters and the police) to provide additional pay related to the COVID-19 crisis to their members. The additional pay will range up to $10 per hour, is retroactive to March 29 and will last for at least six pay periods. Elrich’s press release appears below.

*****

County and Labor Representatives Reach Agreement on Recognizing the Risks of On-site Employees

For Immediate Release: Friday, April 10, 2020

County Executive Marc Elrich is pleased to announce that the County has completed its negotiations with all three County unions and agreed upon COVID-19 differential pay to recognize the unusual risks employees now face in leaving their homes and delivering vital services to the public. These agreements are significant because the union representatives worked with management during this crisis time to achieve an agreement that ensures that critical services are maintained, employees are taken care of and fiscal realities are addressed. The three unions are the International Association of Fire Fighters, Local 1664; the Fraternal Order of Police, Lodge 35; and, the United Food and Commercial Workers, Local 1994 (MCGEO).

“I appreciate the work and the willingness of our union representatives to join with us in a collaborative approach to bargaining, to achieve an agreement that respects the increased risk for our workers who are continuing to do their jobs and respects our budgetary obligations,” County Executive Elrich said.

This agreement recognizes the increased risk of the work done by our first responders – firefighters and police officers during this pandemic. It also recognizes that other employees are doing work that requires public interaction – and therefore increased risk, including work by corrections officers, bus drivers, nurses, and social workers.

The County Executive noted that under provisions of existing county bargaining agreements (which were negotiated years ago), the unions could have insisted on much larger benefits, but they understood the importance of the ongoing fiscal health of the county. The County Executive also noted the progressive nature of the agreement, which gave dollar, rather than percentage, differential payments.

The County Executive acknowledged that the County has nonprofit partners serving on the front lines of the Corona-19 response and will work with them to find possible ways to help them maintain necessary staffing.

After teams of management, in close coordination with union representatives, identified the critical core services that would need to continue for the next eight weeks, the likely minimum duration of the COVID-19 crisis. This COVID-19 differential pay would apply to those front-facing and back-office onsite employees who are required to come to work to respond to COVID-19 or provide County’s selected critical core services. Those who must work onsite are in the following two categories:

Front Facing Onsite: work that cannot be performed by telework, involves physical interaction with the public and cannot be performed with appropriate social distancing.

Back Office Onsite: work that cannot be performed by telework and does not involve regular physical interaction with the public.
The broad details of the COVID-19 pay differential are as follows:

The differential pay will be uniform for FOP and IAFF members. For MCGEO-represented and GSS employees, the differential will distinguish between front-facing onsite and back office onsite work. The differential pay for all impacted employees are retroactive to March 29, the beginning of the current pay period.

The front-facing onsite employees will receive an additional $10/hr and the back-office onsite will receive $3/hr.

Additionally, this week masks will be distributed to employees who do not have them, and administrative leave will be given to high risk employees who cannot telework and do not feel safe working on site.

The agreements cover six pay periods, which started on March 29, or until the Maryland State of Emergency is lifted. If the State of Emergency is still in effect at the end of the six pay periods, the agreements will be revisited.

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Adam Pagnucco, COVID-19, taxes

D.C., Maryland Jurisdictions Start Deferring Taxes, Fees and Regulations

By Adam Pagnucco.

The District of Columbia and several local jurisdictions in Maryland have begun deferring a variety of taxes, fees and regulations during the coronavirus crisis. Taken together, these deferrals provide a useful menu of options for local policy makers.

The District has been the most aggressive local jurisdiction in deferring tax payments. D.C. has extended its filing deadline for individual and fiduciary income tax returns, partnership tax returns and franchise tax returns to July 15. (This matches the income tax filing extensions of the federal government and the State of Maryland.) D.C. has also extended deadlines for filing sales and use tax returns and paying hotel property taxes.

Baltimore County Executive John Olszewski Jr. issued an executive order “providing an extension of all County licenses, permits, registrations and other authorizations until 30 days following the end of the local state of emergency. The order also authorizes the head of each government agency to suspend the effect of any legal or procedural deadline, due date, time of default, time expiration, period of time or other statute, rule or regulation that it administers. This applies to suspensions concerning payments of late fees owed to Baltimore County.” The county also suspended all parking citations.

Garrett County deferred three scheduled payments of its accommodation tax by more than two months each. The deferrals followed closures of rental properties. Vacation rentals are a big business in Garrett County so this is not an insignificant act by the county.

Carroll County postponed its annual tax sale and froze penalties on unpaid tax accounts.

Charles County closed its government buildings but agreed to waive online transaction fees for payment of taxes and utilities.

The City of Frederick suspended daytime parking meter enforcement and extended due dates for city bills, permits, licensures and citations until 30 days after the state of emergency ends.

The City of Annapolis delayed its liquor license renewal requirement for 90 days and left open the possibility of further delays.

WSSC announced it would “suspend all water service shutoffs for those facing financial difficulties until further notice.”

None of these deferrals are earth shattering but they are helpful to residents and businesses in small ways. Policy makers in Montgomery County and beyond should consider if any of them, or perhaps others, are feasible and appropriate in their own jurisdictions.

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Adam Pagnucco

Jawando to Introduce Emergency Rent Stabilization Bill (Updated)

By Adam Pagnucco.

Council Member Will Jawando plans to introduce a bill on Tuesday providing for rent stabilization during states of emergency. The bill would take effect during a state of emergency or a catastrophic health emergency declared by the governor or a state of emergency declared by the county executive. Once the relevant emergency is active, landlords would be prohibited from enacting rent increases. Further, landlords are prohibited from notifying tenants of rent increases during the emergency and within 30 days of the expiration of the emergency. The bill does not distinguish between residential and commercial properties.

Council President Sidney Katz and Council Member Craig Rice are listed as co-sponsors.

It’s worth noting that evictions are temporarily suspended in both Montgomery County and the State of Maryland. But those suspensions say nothing about rent.

The text of Jawando’s bill can be found here.

Update: The bill adds language to Section 29 of the county code, which regulates landlords and tenants in the context of housing. Sec. 29-3(b)(1) states that the purpose of Section 29 is “to simplify and clarify the law governing the rental of dwelling units.”

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Adam Pagnucco, COVID-19, Economy

Will County Bureaucracy Strangle Small Business Assistance?

By Adam Pagnucco.

On March 31, the county council passed Bill 16-20E, which established a $20 million Public Health Emergency Grant Program to assist businesses and non-profits with 100 or fewer employees that have been damaged by the coronavirus crisis. The idea behind the bill was to get relief to small businesses quickly before they go under.

Unfortunately, the county bureaucracy may have other ideas.

Yesterday, seven council members released a blistering letter to the county executive slamming the administration for taking too long to implement the grant program. The letter stated in part:

This lack of urgency is beyond disappointing and directly contradicts the Council’s clear intent to get this funding to our local employers as quickly as possible. While the County’s capacity to help may be limited, our ability to move quickly should not be, especially as the level of government closest to our residents and employers. For the businesses struggling to keep their lights on and for the employees who depend on them, this program is only effective if it can get funds out in time to provide help when it’s desperately needed. Without question, that time is now.

We must move with the urgency that this moment requires because our small businesses and nonprofits are counting on us. The only thing that will help businesses right now is getting them the relief money already approved and appropriated by the Council. We urge you to get the Public Health Emergency Grant Program up and running immediately. We cannot afford to wait for some other support to come first. If we fail to act in time, our local businesses won’t be able to afford to stay open. The County Council stands ready to support your administration however we can.

We reprint the letter below.

Shortly after the letter was written, the administration published a required document list for businesses applying for assistance. (As of this writing, the application itself is not finalized.) The documents include a dizzying array of tax statements, bank statements, interim monthly or quarterly financial statements, corporate articles and invoices and quotes for telework software (if applicable) as well as a requirement that businesses verify their good standing on a state website. Most crucially, the document list states in bold: “You must apply for any applicable State and Federal programs to qualify for County assistance.” It then requires applicants to submit “evidence of application to Federal and/or State COVID-19 assistance programs, including award or denial letters.”

There is no requirement in the legislation passed by the council that applicants for county assistance must first apply for state or federal assistance. The council considered an amendment making county assistance “secondary” to state and federal assistance and allowing it to be used as a “supplement” to such aid but decided against it. This requirement has been added by the administration in direct contradiction of the will of the council.

This requirement is of great consequence. When following the links provided by the executive branch, one quickly sees that two of the state’s assistance programs – the Maryland Small Business COVID-19 Emergency Relief Grant Fund and the Maryland Small Business COVID-19 Emergency Relief Loan Fund – stopped accepting applications on April 6, two days before the administration published its document list. So by the executive branch’s criteria, if a MoCo small business missed the state application window, which was only open for about two weeks, it is disqualified from seeking county assistance.

The county is requiring business assistance applicants to apply to these two state funds but both are shut down.

As for the federal assistance programs, the U.S. Small Business Administration (SBA) is under heavy criticism for not getting money out quickly. Some small businesses report that they have not heard anything from SBA after applying, not even a confirmation email. One of the SBA programs relies on private financial institutions to process applications, and some of them are either not taking applications or limiting them to existing clients. One community bank president even said, “What I thought was a brilliant plan is turning into a quagmire of quicksand.”

MoCo is insisting that its businesses jump down these bottomless state and federal rabbit holes to get county assistance. Again, this requirement simply does not appear in the legislation that the executive branch is charged with implementing.

So which businesses will be best able to navigate the process set up by the administration? Naturally, they will be the ones who are the most financially sophisticated, have the best accountants and have the most familiarity with government business assistance programs. Those who lack those assets – especially those with limited English language skills and less entrepreneurial experience – will be left behind. And so a county that prides itself on progressive values might actually wind up directing assistance disproportionately to the most privileged elements of the business community while the others will face extinction.

It’s not too late for the county to streamline its process. But it has to act fast. As in, NOW.

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Adam Pagnucco, Republicans, taxes

Is the County Council Sneaking in a Tax Hike?

By Adam Pagnucco.

The Montgomery County Republican Party has alleged on its website and through blast email that the county council is “sneaking in” a tax hike. County GOP Chairman Alexander A. Bush wrote:

At a time when unemployment claims in Montgomery County have increased by 4,717% since the first week of March, our County Council has agreed with County Executive Elrich to give notice that they are “considering” an increase in the property tax rate “4.5% higher than the constant yield tax rate [which] will generate $62,978,926 in additional property tax revenues.”

Mr. Elrich admitted in his March 15th budget proposal that the current COVID-19 crisis will exacerbate the decline of income tax revenues in the County. But rather than tightening its belt, like families and private businesses must do, Mr. Elrich asked the County Council to drastically increase property taxes to make up the difference.

I was heartened by the March 16th response from eight of the councilmembers: “this is a time for cautious decision-making, not property tax increases.” And thus, I was surprised by the County Council’s notice on Thursday that they were, in fact, “considering” the full tax increase.

At a time when small businesses throughout the County are closing their doors and desperately hoping to survive long enough to reopen, this proposed property tax increase is obscene. This may be why the County Council has worked so hard to hide it from the public. Thursday’s legally-mandated notice in the print edition of the Washington Post is the only trace of it. The notice is not published online and the Council’s calendar entry for the April 21st meeting makes no mention of it. This notice was allegedly approved at the Council’s March 31st meeting, however (and possibly in violation of the Maryland Open Meetings Act) the recording shows no discussion of this issue whatsoever. In fact, it was approved unanimously – and without any debate – as part of the “consent calendar,” which is reserved for uncontroversial matters.

Is the GOP right? Does this constitute “sneaking in” a tax hike?

It is true that the county executive proposed a property tax hike in his recommended budget that was promptly rejected by 8 council members. But that fact is actually irrelevant to the advertisement taken out in the Washington Post. The advertisement was mandated by state law regarding increases in property tax rates above the constant yield tax rate, which is defined as “the General Fund real property tax rate for the coming fiscal year that would generate the same amount of revenue that was generated during the current fiscal year.” The state law is extremely specific on the wording, style, placement and timing of the advertisement. It even requires that the county send the advertisement to the state to prove that it is following state law.

An excerpt from the county Republicans’ website.

The county’s standard practice is to exceed the constant yield tax rate but to restrict the growth in property tax collections to the rate of inflation, which is consistent with the county’s charter limit. Staying within the charter limit does not constitute a tax hike. In contrast to MoCo, most other Maryland counties lack charter limits on property taxes at all. In times of rising assessments, these other counties can leave their property tax rates constant and their collections can easily rise faster than inflation. (Let’s note that many of these counties are governed by Republicans!)

As to the GOP’s allegation that this notice was somehow hidden from the public, that is absolutely false. All of the details were contained in a staff memo posted in plain view on the council’s website. The memo includes the language of the newspaper advertisement which we reprint below.

This is perfectly consistent with past practice even when the executive is not proposing a tax hike. Here are the council resolutions on newspaper advertisements for constant yield tax rates from 2018 and 2019, when the county executive did not propose and the council did not pass property tax hikes.

And so there is no “sneaking” of any kind. The county followed state law on newspaper advertisements, a requirement that has nothing to do with decisions on tax increases. It would seem that the Montgomery County Republican Party has a problem with the county obeying state law.

There are two possibilities accounting for the Republicans’ argument: mendacity or ignorance. Neither is a good reason for why they should replace the Democrats in power.

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Montgomery County, taxes

Yes, Virginia, You Do Pay More in Taxes, Part I

Source: County Executive Budget Presentation

In Montgomery County, there has been a long-term tendency to moan that we can’t compete with Fairfax due to higher property taxes. In short, we should be more like Virginia.

Unfortunately for that argument, Fairfax, and now Virginia, have decided instead to be more like Maryland. Loudoun and Fairfax Counties all have higher property taxes than Montgomery. Arlington property taxes are essentially the same as ours.

Only the District of Columbia has substantially lower property taxes. On the other hand, services in Montgomery from schools to recreation facilities are, frankly speaking, much better than in the District.

Does this mean we should raise our property taxes? No. But it does mean that it’s time to abandon the myth that we pay more than our neighbors on the other side of the Potomac.

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Adam Pagnucco, MoCo Most Influential

MoCo’s Most Influential, Part Five

By Adam Pagnucco.

Part One of this series laid out the rules and methodology for how we determined MoCo’s most influential people. These lists were developed by adding together the nominations of 85 people who are themselves extremely knowledgeable and influential. Today, we begin the list of the most influential non-elected people in MoCo. They may not have the direct power of elected officials, but they still have considerable indirect ability to shape this county’s politics and government.

15 (tied). David Blair, Executive Chairman, Accountable Health, Inc. and Chairman, Coalition for Advocacy and Policy Solutions – 7 votes

AP: David Blair is a double threat with both the non-profit think tank he chairs, the Coalition for Advocacy and Policy Solutions (CAPS), and his status as a potential candidate for another run for office. No matter where you go in MoCo politics today, the question of “What is Blair going to do?” keeps popping up. (Disclosure: CAPS is one of my clients.)

15 (tied). Joy Nurmi, Chief of Staff, Office of Council Member Gabe Albornoz – 7 votes

Source: Commands influence and knows what’s going on.

Source: She knows where all of the bodies are buried, and Gabe Albornoz was very wise to hire her as chief of staff. Possibly the driest humor I’ve ever encountered in Rockville. Cross her at your peril.

Source: As plugged in as anyone in County politics. The close relationship with the CE has clearly cooled, but her deep ties to virtually all the holdovers in his administration are as strong as ever. She’s fiercely loyal to her current boss (Gabe) as she was to her last ones (Leggett & Praisner). Has unbridled passion and a powerful bull in a china shop personality — an interesting juxtaposition to a boss who has been referred to as “Mr. Rogers.”

AP: The Fixer. She is tougher than you. She knows more than you do. She remembers things that you have never heard about. Don’t even think about messing with her. I did once when I was young and foolish. Never again! All of that said, The Fixer gets a lot of respect and is a serious force for good in Rockville.

15 (tied). Dan Reed, Author, Just Up the Pike/Greater Greater Washington – 7 votes

Source: The public intellectual we have done nothing to deserve.

AP: If Planning Board Chairman Casey Anderson is the primary smart growth leader inside the government, Dan is the main leader outside of it. Young people who are looking to get involved in the county should look to Dan as a role model.

15 (tied). Laura Stewart, Vice President for Advocacy, MCCPTA – 7 votes

Source: Works A TON behind the scenes. She is my go to gal when I’m going into the weeds on anything school related. She has relationships and a wide breadth of advocacy experience.

Source: Everywhere all the time – in Annapolis and at the Council. Persistent!

AP: Only the coronavirus could stop Laura from going to events non-stop! Few activists aside from Diana Conway show up at more things, know more people and work as hard as she does.

13 (tied). Glenn Orlin, Transportation and Capital Budget Expert, County Council – 8 votes

Source: Retirement leaves massive void. But his impact will last decades, arguably having more power (right or wrong) than individual Council Members on CIP projects, school construction/subdivision staging policy and transportation projects, planning and policy.

Source: Retiring, but has been so influential even this last year he stays on my list.

AP: The reason why Glenn doesn’t rank higher is that his influence is largely invisible outside of the county council building. But make no mistake: his knowledge and his experience are vast. Few if any public officials will leave a longer-lasting mark on this county than Glenn and that includes his bosses on the council.

13 (tied). Julie Verratti, Co-Founder, Denizens Brewing Company – 8 votes

Source: The go-to voice of small biz in MoCo and Maryland, especially recently with COVID economic remedies.

AP: A rare crossover figure between the worlds of business and politics. She is responsible for opening up the craft brewing world in MoCo and helps run one of the best breweries anywhere.

More to come in Part Six!

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