Subdivision Staging Policy (aka Growth Policy)

Briefing on possible changes to the school test methodology and the school impact tax

March 17, 2016

Background
Adequate Public Facilities Ordinance (APFO)
Section 50-35(k) of the Montgomery County Code, originally adopted in
1973:
Adequate public facilities. The Planning Board must not approve a
preliminary plan of subdivision unless the Board finds that public facilities
will be adequate to support and service the area of the proposed
subdivision. Public facilities and services to be examined for adequacy
include roads and public transportation facilities, sewerage and water
service, schools, police stations, firehouses, and health clinics.

Background
The Subdivision Staging Policy (formerly the Growth Policy) is the set of policy
tools that:
Establish criteria to determine and test the adequacy of public facilities.
Match the timing of private development with the availability of public
facilities (schools, transportation, water, sewer and other infrastructure).

Background
PAST: APFO and the Growth Policy were designed to ensure that road and
school capacity kept pace with growth.
Where new areas of the County were being developed, infrastructure to support new
homes and businesses was needed.

TODAY: Much of the County has already been developed.

Growth is occurring through infill development and redevelopment, as well as through
the resale of existing homes to young families in many of the Countys established
neighborhoods.
Pressure on transportation systems and school facilities already built.

Update Process
Quadrennial update to
the Subdivision Staging
Policy.
Do the current tools
used to evaluate the
impact of new
development
adequately account for
growth, especially in the
face of changing growth
patterns?

SSP Schools Update Schedule

Kick-off Open House

October 2015

Community Meetings

January February 2016

Planning Board Briefing

Today

Working (Staff) Draft of SSP

April/May 2016

Public Hearing on Working Draft

June 2016

Worksessions on the Working Draft

June/July 2016

Planning Board Draft and Resolution

July 2016

County Council Adoption

November 2016

School Conversations
Infrastructure and Growth Forum: March 7, 2015
Subdivision Staging Policy Kick-off Meeting:
October 19, 2015
Two additional community meetings on school
infrastructure and growth:
January 12, 2016
February 18, 2016

School Conversations
What were hearing from the community:
How can we address capacity issues in
the long and short term?
Are we forecasting future school
enrollment accurately?
How can we fund our infrastructure
needs most effectively?
Does new development contribute
sufficiently for school facilities?

What are we reviewing?

Annual School Test
Test Methodology (Application and Student Generation Rates)
Test Thresholds (Facility Standards)

SSP-related School Construction Funding

School Impact Tax

School Facility Payments
Recordation Tax
Use of Placeholder Projects

Other Jurisdictions

Annual School Test Methodology

Each June, MCPS works with
Planning Staff to conduct
tests of school adequacy.
Conducted based on a
clusters projected
utilization rate across each
school level (elementary,
middle and high).
Projected utilization is
projected school capacity
compared to projected
enrollment 5 years in the
future.
9

Annual School Test Methodology

Projected capacity measures existing and planned school capacity.
Existing school capacity is defined as MCPS program capacity.
Planned school capacity is the capacity funded in the 6-year CIP.

10

Annual School Test Methodology

Projected enrollment is based on several factors:
Births in the County;
Aging of the school-age population;
Migration of residents into and out of the County; and,
Housing (new housing and the resale of existing homes).

Montgomery County: Resales of Existing Homes

Montgomery County: Residential Starts

0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

13,214

13,022

13,064

13,101

13,273

13,493

13,681

13,843

13,806

13,507

13,546

13,529

13,154

12,500

13,149

13,000

13,055

Number of Births

3,839

4,343

13,500

2,372

2,036
966

2,267

1,000

3,269

2,000

3,424

3,000

4,686

4,000

5,268

5,000

Single Family Detached and Townhouse

6,931

Number of Units

10,976

11,406

10,094

9,490

10,401

10,376

8,519

16,909

17,753

16,553

6,000

10,355

5,000

Multi-family

7,000

13,494

10,000

16,071

Number of Units

15,000

Montgomery County: Resident Births

14,000

8,000

2,134

20,000

3,933

12,000
11,500
11,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
prelim.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

11

Student Generation Rates

Student generation rates identify the average number of public school
students generated from particular housing types.
Student generation rates are used to:
Estimate the future enrollment impact of different housing types within new
development.
Calculate School Impact Tax and School Facility Payments.

Student Generation Rates

Relatively new methodology developed in cooperation with Montgomery
County Public Schools (MCPS).
Generation rates are updated biennially, with two major inputs:
Student addresses with grade-level information attached (confidential information
removed) supplied by MCPS.
Parcel File with residential structure information.

Current rates based on 2013 enrollment data.

13

Student Generation Rate

New Student Generation Rates calculated using 2015 enrollment data:
Number of Students Generated per Unit
Single Family Detached
Single Family Attached
Multi-Family Low- to Mid-Rise
Multi-Family High-Rise

Upcounty Region
ES
MS
HS
0.422
0.177
0.191
0.216
0.085
0.097
0.192
0.069
0.089
0.064
0.029
0.038

Southwest Region
ES
MS
HS
0.323
0.163
0.154
0.144
0.064
0.073
0.112
0.049
0.062
0.048
0.02
0.026

East Region
ES
MS
HS
0.248
0.109
0.130
0.169
0.072
0.094
0.240
0.096
0.128
0.078
0.031
0.041

Countywide
ES
MS
HS
0.358
0.161 0.168
0.201
0.081 0.095
0.194
0.076 0.099
0.062
0.025 0.033

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Student Generation Rate

Percentage change in student generation rates from 2013 to 2015.

Single Family Detached*

Single Family Attached*
Multi-Family Low- to Mid-Rise**
Multi-Family High-Rise**

Upcounty
-1.7%
-12.5%
17.4%
-9.7%

Southwest
5.3%
-16.6%
45.8%
14.6%

East
-11.9%
-1.8%
39.3%
0.7%

Countywide
-1.9%
-7.8%
32.7%
1.7%

*Single Family Residential structures are those built between 2005 and 2015 - selected due to higher student impact.
** Multi Family Residential structures are those built any year - selected due to higher student impact

15

Things to Consider: Student Generation Rates

Is it feasible to calculate cluster-specific generation rates by housing type?
If so, how much variation exists in generation rates across clusters?
What purpose would they serve student projections, impact tax rate calculations?

Should generation rates (and thus the cost of a seat) account for the
occupancy rates of multi-family construction and the occupancy rates during
phasing to full build-out of housing in new developments?

16

Annual School Test Thresholds

Following adoption of the CIP (or CIP amendment) each May, MCPS works with Planning
Staff to conduct tests of school adequacy.
Currently, the tests are conducted based on a clusters utilization rate across each school
level (elementary, middle and high). If a school level within a cluster is:
> 105% utilization, the cluster is considered inadequate and a School Facility Payment is
required for each new residential unit.
> 120% utilization, the cluster is placed in moratorium and no new residential development
may be approved.*

*Exception: subdivisions of 3 or fewer units may be approved, though School Facility Payment is still required.

17

Annual School Test Thresholds

18

Annual School Test Thresholds

Furthermore, a moratorium does not guarantee that a clusters enrollment will
not continue to increase:
A large share of enrollment growth is due to turnover within the existing housing
stock.
Any previously approved development can still be built.

19

Annual School Test Thresholds

MCPS uses school level thresholds to determine when an individual school
should be considered for an addition:
Elementary School forecasted enrollment in the sixth year of the CIP exceeds
capacity by 4 classrooms, or 92 students (a 92-seat capacity deficit).
Middle School forecasted enrollment in the sixth year of the CIP exceeds capacity by
6 classrooms, or 150 students.
High School forecasted enrollment in the sixth year of the CIP exceeds capacity by 8
classrooms, or 200 students.
Threshold

Min. Utilization

Max. Utilization

Avg. Utilization

ES

92

110.4%

142.0%

115.9%

MS

150

110.0%

132.1%

114.9%

HS

200

106.8%

117.1%

109.9%
20

Things to Consider: Annual School Test Thresholds

Are current adequacy thresholds set to the appropriate levels?
Should we adopt school level tests in addition to, or possibly in lieu of cluster
level tests?

21

Things to Consider: Annual School Test Thresholds

School Service Area testing cluster level testing can mask utilization issues at
individual schools (especially at the elementary school level). For example:
QUINCE ORCHARD CLUSTER ELEMENTARY SCHOOLS
Actual Utilization
Projected Utilization Projected Available Space
2015-2016
Revitalization/Expansion
2021-2022
2021-2022
Brown Station ES

113%

Rachel Carson ES

Opens 2017-18; 263 seats

82%

128

157%

148%

-323

Fields Road ES

108%

112%

-50

Jones Lane ES

106%

101%

-4

Thurgood Marshall ES

124%

122%

-118

Cluster Totals

125%

113%

-367

A cluster level test assumes that MCPS will act to distribute a clusters enrollment
across all schools in a particular level, but this is not always feasible.
22

Things to Consider: Annual School Test Thresholds

Should we move to a seat deficit test as opposed to a utilization rate test?
What would the seat deficit thresholds be for School Facility Payments? 92, 150 and
200 for individual schools?
What would the moratorium thresholds be?

Should we adopt a hybrid solution that includes utilization rate tests for
entire cluster levels and seat deficit tests for individual schools?

23

Related Funding Sources

School Impact Tax. Set by the County Council, the School Impact Tax is assessed on all* new
residential development to help fund improvements necessary to increase public school
capacity across the county.
School Facility Payments. School Facility Payments are levied on all* new residential
development located in an area with school facilities that have been deemed to be
inadequate.
Recordation Tax. When a land transfer is recorded in the Maryland Land Records such as
the purchase of an existing home the recordation tax is assessed on the transaction.

* Some exemptions apply.

24

School Impact Tax

Assessed on all new residential units, regardless of school adequacy, with the
exception of:
Units built within current and former State of Maryland designated Enterprise Zones;
Units that are age-restricted for seniors; and,
Moderately Priced Dwelling Units (MPDUs).

Represents 90% of the cost of a student seat generated by a new residential

unit.
Calculated for every school level (elementary, middle, high) as follows:
0.9 x (per student construction cost) x (countywide student generation rate for type of unit)

Collected impact taxes fund school capital projects throughout the county.
25

School Impact Tax

Fiscal Year
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

School Impact Tax Collections

$434,713
$7,695,345
$6,960,032
$9,562,889
$6,766,534
$7,925,495
$11,473,071
$14,480,846
$16,462,394
$27,901,753
$45,837,273
$32,676,773
26

Data source: Montgomery County Department of Finance.

School Impact Tax

The school impact tax is assessed when a building permit is issued, based on
the applicable tax per unit in effect at the time of the payment.
Impact taxes calculations can be updated anytime; however it is not unusual
to consider an update as part of the SSP process, using updated school
construction costs and generation rates:

Unit Type
Single Family Detached
Single Family Attached
Multi-Family Low- to Mid-Rise
Multi-Family High-Rise

Current Impact Tax

per Unit (2007)
$26,827
$20,198
$12,765
$5,412

Possible Impact Tax

per Unit (2016)
$24,809
$13,623
$13,379
$4,359
27

School Impact Tax

NOTE: When a cluster is placed in moratorium, no new impact taxes (school or
transportation) or School Facility Payments are collected, because no new
development is being approved.

28

Things to Consider: School Impact Tax

Should the School Impact Tax multiplier be raised from 0.9 to 1.0 to capture
the full per pupil construction cost?
Should the per pupil construction cost include some factor for land
acquisition costs?
Should the exemption for former Enterprise Zones be retained?
Should all or some portion of School Impact Taxes remain within the cluster
from which they are generated?
Possibly use generation rates by region or by cluster in determining the taxes, rather
than countywide generation rates.

29

School Facility Payments

School Facility Payments are levied on development located in an area with
inadequate facilities. Exceptions include:
Units built within current and former State of Maryland designated Enterprise Zones;
Units that are age-restricted for seniors; and,
Moderately Priced Dwelling Units (MPDUs).

School Facility Payments = 60% of the cost of a student seat.

Calculated for each school level (elementary, middle, high) as follows:
0.6 x (per student construction cost) x (countywide student generation rate for type of unit)

It is paid in addition to the School Impact Tax.

Collected school facility payments are dedicated for capital projects within
the cluster and for the school level for which they are collected.
30

2011
2012

$163,918

$15,250
$24,794

2015

$22,228

Total

$6,244

$6,244
$163,918

2013
2014

Whitman

Walter Johnson

Wootton

Rockville

Northwood

Northwest

Gaithersburg

Clarksburg

Fiscal
Year

BethesdaChevy Chase

School Facility Payments

$3,060

$58,171

$952,402

$724,354

$375,920

$12,354
$64,544

$123,050

$15,250
$237,600

$2,008,371

$577,684

$1,967,790
31

Data source: Montgomery County Department of Finance.

School Facility Payments

School Facility Payments are assessed when a building permit is issued, based
on the adequacy status at the time of the projects preliminary plan approval.
Impact taxes calculations are updated as part of the SSP process, using
updated school construction costs and generation rates:
Current (2012) School Facility Payments

Possible (2016) School Facility Payments

ES

MS

HS

ES

MS

HS

Single-family detached

$ 6,940

$ 3,251

$ 4,631

$ 7,989

$ 3,825

$ 4,725

Single-family attached

$ 4,160

$ 1,743

$ 2,754

$ 4,485

$ 1,925

$ 2,672

Multi-family low to mid rise

$ 2,838

$ 1,169

$ 1,877

$ 4,329

$ 1,806

$ 2,784

Multi-family high rise

$ 1,166

$ 531

$ 804

$ 1,384

$ 594

$ 928

32

Things to Consider: School Facility Payments

Since school adequacy is measured by cluster, and School Facility Payments
stay with the cluster, should cluster generation rates be used to determine
the appropriate facility payment?
Should the School Facility Payment multiplier be increased above 0.6 to
capture more of the per pupil construction cost?

33

Recordation Tax
The Recordation Tax is levied when a land transfer is recorded in the
Maryland Land Records. It is paid upon the purchase of all existing and new
homes.
The Recordation Tax is calculated based on the selling price of the property:
First $500,000: $3.45 for each $500 or fraction of $500
Beyond $500,000: computed at 1% of the value

A portion of the collected tax is dedicated to funding school capital projects

across the county.
Fiscal
Year
2013
2014
2015

Recordation Tax Collections

for School CIP Projects
$27,640,951
$24,948,565
$26,147,938
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Data source: Montgomery County Department of Finance.

Things to Consider: Recordation Tax

Although the Recordation Tax is not technically part of the SSP, should we
evaluate whether it can better provide funding for school capacity resulting
from the turnover of the existing housing stock?
Should all or part of the portion of a recordation tax payment that supports
school construction be used to fund capacity for the cluster within which it is
generated?

35

Use of Placeholder Projects

Placeholders are unspecified capital projects that are added to the CIP by the
County Council to ensure a clusters utilization rate is below the 120%
moratorium threshold.
The intention is that the Board of Education will supersede the placeholder
project with a real capital project that will bring the utilization of the cluster
below 100 percent.
There is a concern among community members that placeholder projects do
not always lead to real capital projects within the original CIP timeframe.

36

Use of Placeholder Projects

The use of placeholders is a relatively new action, the use of which has
increased in recent years.
We are reviewing past CIPs to determine the validity of statements related to
placeholder projects not materializing into funded capacity projects within
the original CIP 6-year timeframe.

37

Things to Consider: Placeholder Projects

Should we eliminate the use of placeholders?
This would result in service areas being placed in moratoria until specific capital
projects are included in a six-year CIP timeframe.

Should we continue to use placeholders, but if a real capital project does not
appear in the CIP within two years, then no longer include the placeholder
capacity in the annual school test?

38

Other Jurisdictions
Within Maryland, school APFO rules vary.
Fee calculation factors include square footage, location within the county, type of unit.
Thresholds vary from 100% to 116% utilization (often using State Rated Capacity).
Exemptions include development within particular parts of a county, age-restricted
housing, development of 6 lots or fewer, housing for the handicapped, and moderate
income housing.

39

Data source: Duncan Associates National Impact Fee Survey, 2012.

Impact Fee

10

Jurisdiction Count

School Impact Fees - Single-Family

16

14

$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
$5,500
$6,000
$6,500
$7,000
$7,500
$8,000
$8,500
$9,000
$9,500
$10,000
$10,500
$11,000
$11,500
$12,000
$12,500
$13,000
$13,500
$14,000
$14,500
$15,000

$25,000

$24,000

$23,000

$22,000

$21,000

$20,000

$19,000

$18,000

$17,000

$16,000

$15,000

$14,000

$13,000

$12,000

$11,000

$10,000

$9,000

$8,000

$7,000

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$0

Jurisdiction Count

Other Jurisdictions
Montgomery County School Impact Tax quite high relative to other impact
fees charged across the country.
School Impact Fees - Multi-Family

20

18

12

16

14

12

10
8

4
6

Impact Fee

40

Next Steps
SSP Schools Update Schedule
Kick-off Open House
Community Meetings
Planning Board Briefing
Working (Staff) Draft of SSP
Public Hearing on Working Draft
Worksessions on the Working Draft
Planning Board Draft and Resolution
County Council Adoption

October 2015
January February 2016
Today
April/May 2016
June 2016
June/July 2016
July 2016
November 2016
41