PAY AND GO: Possibly the Worst
Piece of Legislation in 50 Years
No Go to Pay and Go
an article from
Testimony on Pay and Go, January 1998
TESTIMONY ON PROPOSALS TO MODIFY PAY-GO
Good evening Council President and members of the Council. Last night the City Council of Takoma Park unanimously passed a resolution requesting that this Council repeal the Pay-Go legislation and return to the normal planning process, or, failing that, that the Council adopt the legislation proposed by Councilmember Potter. My comments address both the residential and office component of Pay-Go.
The Council's previous decision to enact Pay Go is seriously flawed. At a time when we have County wide problems of meeting the school, transportation, recreation, police and fire service needs of our existing residents, it makes no sense to create demand for new infrastructure. At a time when we can't fund road improvements, when we've deferred maintenance, when classes are over-crowded, when the unending litany coming from the Council is that we don't have the money to do the things we'd like to do, it makes no sense to spur development that pays a fraction of the road costs and not one penny toward all of the other infrastructure. This is not just bad policy, but its unneeded bad policy. Its a poor effort to solve a problem that doesn't exist.
In the first place using Fairfax as a comparison is ridiculous. In a most fundamental way, I don't want Montgomery County to resemble Fairfax. As a policy matter, the proper level of development has nothing to do with what Fairfax does, but does have everything to do with whether we have the infrastructure to support it. Fairfax's numbers are irrelevant to what is appropriate here. But if your going to envy Fairfax, then you should understand two fundamental differences. First, Fairfax remains closer to the Federal City and the Pentagon than outer Montgomery will ever be and more easily benefits from the Federal presence. Building off an established base is easier than trying to build a new office/industrial base as we are doing. Secondly, Fairfax has an office vacancy rate of 7.7% while we are at 17.7%. It's hard to justify building new space, when we still haven't absorbed our surplus office space. The market, vacancy rates, and lack of tenants have slowed our office growth, not imaginary onerous regulatory policies. The planning staff and responsible members of the business community know this. You should know this.
Montgomery County has a huge pipeline of office construction and related jobs - 127,000 jobs. We are building out 3% of that a year, so we are in no danger of losing our ability to provide jobs anytime in the near future and that level matches well with our housing growth. The expiration of approvals for 1/3 of those jobs in 2001 will further allow reallocation of jobs to projects that are better located and ready to go. Again, the problem here isn't tied to regulation, its tied to the markets. Moreover, to spur new construction at a time when we have such high vacancy rates, only serves to undercut the office market in the policy areas with the highest vacancies. If your goal is to revitalize, energize older communities with excess office space, spurring new construction will absolutely undercut that goal and leave these areas in economic difficulty. Does the left hand know what the right hand is doing?
We also have large residential pipeline and have had a steady utilization rate of about 3,000 homes a year, in an otherwise soft housing market., for about 6 years. We are far from stagnant. Residential construction is the most problematic of all, because the infrastructure costs and the on-going operating expenses associated with it, do not make good economics. Every new household that adds 2 children to our school system creates an annual liability of over $14,000 - a sum that is not likely to be recovered in any combination of property and income taxes from most households. Add to that the cost of new facilities and your left to wonder what advantage is conferred by spurring more rapid housing growth. The linkage to jobs is important, people have referenced the jobs as important to the tax base, but we only get the taxes if people live here and with costs associated with residential, those income tax dollars come at a mighty high price.
But worse than the economic impact of giving away development capacity is the community impact, the effect on our quality of life. Our projection for roads and schools is predicated on a growth rate like what we are experiencing and we are struggling, accelerate that growth and we'll be drowning. Our roads and our schools are a mess. At our current pace of development, we have an accumulated backlog in both areas. We spend a lot of time in Annapolis arguing for dollars to relieve these problems, yet now you're prepared to make the situation worse. Spurring development where there is no road infrastructure and, in some cases, no provision in the CIP to provide it is senseless. Since developers are not paying for the roads, it leaves you to raise taxes, shift CIP priorities, or ignore the problems. Someone has said that we'll get $11 million which would be nice if it didn't come with a $44 million liability for the roads alone.
Moreover, spurring office development may spur residential development, already discussed as a dubious economic proposition. But lets look at the effect on community. At the current rate of growth the school system is expected to soon reach 145,000 students - an increase of 20,000. As a result of the need to accommodate this growth, we have a backlog of renovations stretching to 2009. Accelerate growth, create more new demand for schools(to be paid for by anyone but a developer) and that backlog can only grow. We have over-crowded classrooms, no matter what the statistics say. No cluster has failed your AGP test because the whole cluster and the adjoining clusters would have to be at 110% of capacity. If you set the standards low enough, nothing fails, and that is what you've done. Gail you referenced the Blair cluster and the new school, but you didn't say that we were 900 seats deficit at the middle school level, or that even with the additional renovated and new school that there will still be children in portables.
Children and education suffers when schools are over-crowded. Communities become less desirable when prospective residents find portables on lots or visit cramped classrooms. And neighborhoods really suffer when their school boundaries and their relationship to neighborhood schools is constantly in jeopardy as your policy of "flexibility" tries to accommodate more and more development. It is as if we live in world where the only rights that exist are conferred on developers - the right to use land, change zoning and maximize their profits. But there are no balancing rights to the community - safe streets, reasonable levels of traffic, decent schools, adequate parks, libraries and fire service. Something is wrong here.
We have just seen in a small way the consequences of our growth policies played out over a fire truck. To provide a necessary service to the up-county we have reduced services in Silver Spring. You would diminish services rather than raise the taxes to maintain them because it lays bear the notion that all this development was a free ride. The fact is that the way we have financially mismanaged growth means that if the up-county got all the services it needed and if the down-county had its aging infrastructure properly cared for, taxes would have to be raised. Developers have taken a generous free ride on the backs of County homeowners and left us with paying their fare in the end because no ride is truly free. Having created this mess, we, as a community need to work our way out of it. Not by pitting north against south or east against west, not by calculating the relative political damage of harming a given community, but rather by adopting sound growth policies that allow modest growth, in places the infrastructure can support it and which enhances the quality of life of the community. Instead of forcing communities to accommodate development, instead of constantly lowering standards whether it be response times, class size, or definitions of how much traffic is acceptable, we need a growth policy that ensures that development fits the community.
MC has enormous assets, the greatest of which is its quality of life, which happens to be one of the prime reasons for business location decisions. Letting go of growth controls threatens that asset and is more anti-business in the long run than anything we do to manage growth responsibly. The economy is recovering here. Vacancy rates are falling as are interest rates. We are poised, the Asian question aside, for a more vigorous period of growth in this County and everyone knows it. That is the sorriest thing about Pay-go. It comes not at the depth of recession, but at the point of recovery. Its uses yesterday's bad news to panic you into a give away program to supposedly "stimulate" growth , but that growth was on its way anyway. Two years from now they'll be laughing their way to the bank and some of you, who may be still sitting there, will be wringing your hands over how to find the money to keep up with the growth you foolishly unleashed. And then, four years from now, having let the genie out of the bottle because of developer pressure, do you really believe that you'll reinstitute the necessary fees and regulations. It only takes one of the five of you to step back from this precipice. I hope someone has the sense to do so.
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