Schools near metro will get more housing without overcrowding relief

[Anonymous]

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Anonymous wrote:I just don’t get why anyone would blindly support new developments without the infrastructure (like schools) to support it. Makes zero sense to me.

Montgomery County has NEVER built the schools before building the housing. Never.

Nobody is saying that Montgomery County needs to build the schools before the housing. However, it is reasonable to expect developers to set aside money or to designate a plot of land that can be used for future schools.

That is not happening.

Yes it is.

"Development Impact Taxes are, set by the Montgomery County Council, assessed on new residential and commercial buildings and additions to commercial buildings in the county to fund, in part, the improvements necessary to increase the transportation or public-school systems capacity, thereby allowing development to proceed."
https://www.montgomerycountymd.gov/DPS/fees/Taxes.html

What developers are paying is a fraction of what costs to support the students that new development generates. The county loses money on every housing unit it adds once you account for school costs. That’s a fact.

So two things:
1. The PP I was responding to said that developers are not required to set aside money to address schools. They are. That was false. You are now making a different point.
2. I genuinely and sincerely am interested in seeing anything that supports your "fact" that adding housing loses money for the county. And as you say not just theoretically or some, but "every unit" so indesputably true that "it is fact."

To your second point, look at the current impact fees and the average per seat cost of school construction. The impact fees are less than the average per seat cost of school construction. The county just lowered the impact fees again last year because school construction costs spiked and they didn’t want to burden developers with the cost increase. That impact fee cut last year was on top of the impact fee cut that they did three years ago.

There is a big difference between saying the impact fees don't meet per pupil cost and saying that the county loses money on housing units. Two erroneous assumptions off the top of my head: 1) not every unit results in a student; 2) It does not take into account ongoing tax revenue

I didn’t say pupil costs. I said average per seat construction costs. If impact fees are below cost recovery levels (which they are), then the county loses money every time it adds a housing unit. It is simple math. If fees are below cost recovery, the difference must be financed through debt issuance or taken from somewhere else. If it’s financed, then debt service costs eat away at the rest of the budget. (There’s also the choice of not building schools at all but that’s a bad outcome)

Ongoing tax revenue is going to support other services for new residents. For very expensive housing, ongoing tax revenue exceeds what services residents consume fairly quickly. For less expensive housing, it may take a long time. Either way, if impact fees are below recovery costs, something else gets hit or we don’t build schools.

And remember none of these fee cuts caused developers to lower prices or push the housing market into surplus. The fee cuts just made the developers’ profits bigger. It’s good for the county to spend money to achieve a public policy goal (lower housing prices in this case) but it’s not good for the county to spend scarce funds subsidizing developers to build high-end housing.

I appreciate your explanation. But I still disagree with the bolded. It is true that the discrete costs for building a new school are not explicitly met by new development, at this particular time. That remains a very different thing that the county as a whole losing money as a result of the development. For example, counties and municipalities frequently subsidize development on all scales (Amazon HQ, smaller cities attracting and retaining other company HQs, entertainment venues.) It is an immediate loss for a long term net gain.

You can’t compare commercial real estate and residential. Commercial consumes little in the way of services but pays a lot in tax revenue and has a high multiplier. The opposite is true of residential, and it’s worse when we subsidize developers to build market rate housing (income restricted is a different story).

My point was that there are multiple circumstance in which counties/municipalities will SPEND money for long term gain(above examples, building a new park, offering more city services, etc). You are talking about an example where a place is paying no money at all while still recouping a percentage of potential future cost.

To not have 100% immediate cost recovery (that is only hypothetical) does not in any way make something a net loss overall.

Your approach makes almost all housing units a short-term loss and causes the county to accrue debt service costs, which are deadweight costs. The benefit of your approach accrues almost entirely to the developer with costs imposed on everyone else.

I'm not at all sure what you think "my approach" is? I don't have one.

But I will say that my understanding is that there is in fact ZERO short term loss as a direct result of this development? There would only be any potential temporary loss (in the sense that the cost is not recovered in advance by this particular assessment) IF a school is built immediately after the development.

That’s an incorrect understanding, because the county has to borrow to pay for school construction and pay interest. All residential development that requires school additions to be financed results in some unrecoverable deadweight costs to the county (accruing to the benefit of bond buyers and developers). Over time, some residential development may be net positive, but that really depends on residents’ incomes and to a lesser extent turnover rates. Even for those projects, the county still accrued the short-term deadweight costs.

Let's get real specific here. Can you cite to any particular development project in MoCo in the past decade that led directly to "short term deadweight costs"? All of the development in downtown Bethesda, for example. What was this "short term deadweight cost"?

All recent residential development that paid less than recovery costs for adding school capacity.

I think you are missing my point. Where is the money loss?
To my knowledge no new schools were built. As a result, the county actually banked more money in school assessments to build future schools. No expenditure was made, so no debt was incurred.

DP. Do you live in Montgomery County? MCPS actually has built new schools.

I do live in Montgomery County, though not Bethesda. Were any new schools built for residents of the downtown area in the past five years?

The local unit of government in Montgomery County is Montgomery County. The school district in Montgomery County is Montgomery County Public Schools. There is no special separate fund for Bethesda.

I will note, however, that in recent years in the Bethesda area, Bethesda ES has gotten an addition, Whitman HS has gotten an addition, B-CC HS has gotten an addition, a new middle school has been built, and a new high school is being built. So it's not like the Bethesda area is being neglected. And that's just off the top of my head as another Montgomery County resident who doesn't live in Bethesda.

I understand the jurisdictions. If an expenditure is going to be tied to a development, the construction needs to be a result. Therefore, a school would need to be built in Bethesda to be a result of construction in Bethesda (generally speaking). A school built in Damascus is not a result of development on Woodmont Avenue.

The contract for the construction on Bethesda Elementary was awarded in early 2014.
The construction for Whitman occurred in early 2021.
The BCC addition was 2018

For all of that construction, the assessment covered the cost.
For construction already in planning based on development that occurred prior to mid-2023, the assessment covered the cost.

The only way there will POTENTIALLY be a loss is if another new school is built based on development that has occurred since mid-2023 and until the assessment can be recalculated based on construction costs for so long as they remain more than 20%.

I'm not saying that there is no theoretical short-term cost impact of the currently-capped assessment. I am saying: 1) there has not yet been a cost impact; and 2) short term debt is not tantamount to a long-term loss.

[Anonymous]

Anonymous wrote:Therefore, a school would need to be built in Bethesda to be a result of construction in Bethesda (generally speaking).

No it wouldn't. Again, MONTGOMERY COUNTY government, MONTGOMERY COUNTY revenue, MONTGOMERY COUNTY public schools.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Therefore, a school would need to be built in Bethesda to be a result of construction in Bethesda (generally speaking).

No it wouldn't. Again, MONTGOMERY COUNTY government, MONTGOMERY COUNTY revenue, MONTGOMERY COUNTY public schools.

I do not understand your point.

A development in one area is not the cause of an expenditure in another area.
I'll try again. An apartment is built in Damascus that does not result in a single student added to the local schools, but an assessment is collected nevertheless. It did not cause an expenditure on school construction in Takoma Park.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Therefore, a school would need to be built in Bethesda to be a result of construction in Bethesda (generally speaking).

No it wouldn't. Again, MONTGOMERY COUNTY government, MONTGOMERY COUNTY revenue, MONTGOMERY COUNTY public schools.

I do not understand your point.

A development in one area is not the cause of an expenditure in another area.
I'll try again. An apartment is built in Damascus that does not result in a single student added to the local schools, but an assessment is collected nevertheless. It did not cause an expenditure on school construction in Takoma Park.

DP. It's all going into one big countywide fund for the 211 schools.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Therefore, a school would need to be built in Bethesda to be a result of construction in Bethesda (generally speaking).

No it wouldn't. Again, MONTGOMERY COUNTY government, MONTGOMERY COUNTY revenue, MONTGOMERY COUNTY public schools.

I do not understand your point.

A development in one area is not the cause of an expenditure in another area.
I'll try again. An apartment is built in Damascus that does not result in a single student added to the local schools, but an assessment is collected nevertheless. It did not cause an expenditure on school construction in Takoma Park.

DP. It's all going into one big countywide fund for the 211 schools.

Sure, but if the need is in Takoma Park and the development is in Damascus the fees assessed are HELPFUL, not creating a debt.

In other words, if that development were NOT built, the debt would be worse.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Therefore, a school would need to be built in Bethesda to be a result of construction in Bethesda (generally speaking).

No it wouldn't. Again, MONTGOMERY COUNTY government, MONTGOMERY COUNTY revenue, MONTGOMERY COUNTY public schools.

I do not understand your point.

A development in one area is not the cause of an expenditure in another area.
I'll try again. An apartment is built in Damascus that does not result in a single student added to the local schools, but an assessment is collected nevertheless. It did not cause an expenditure on school construction in Takoma Park.

DP. It's all going into one big countywide fund for the 211 schools.

Sure, but if the need is in Takoma Park and the development is in Damascus the fees assessed are HELPFUL, not creating a debt.

In other words, if that development were NOT built, the debt would be worse.

Where do you think the kids from the development in Damascus go to school? In Damascus! Guess what one of the overcrowded schools in need of expansion is? Damascus! If they need to build capacity in Damascus for new development, and impact fees don’t cover the cost, they have to borrow or forgo a project somewhere else. They’ve been doing both.

Also, the only developments that don’t generate any students are age-restricted housing. Those don’t pay school impact fees, though they are used in the calculation of student generation rates that are used to set impact fees for other types of housing. In addition, impact fees are scaled based on the type of housing. One apartment only generates a fraction of a student (on average) so they pay a lower fee than a townhouse, which generates students at a higher rate (on average).

None of this is rocket science, and the basic design of the system is set up to match expected impacts with expected costs, but the council has repeatedly caved to developers and cut fees even as costs of addressing impacts has gone up.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Therefore, a school would need to be built in Bethesda to be a result of construction in Bethesda (generally speaking).

No it wouldn't. Again, MONTGOMERY COUNTY government, MONTGOMERY COUNTY revenue, MONTGOMERY COUNTY public schools.

I do not understand your point.

A development in one area is not the cause of an expenditure in another area.
I'll try again. An apartment is built in Damascus that does not result in a single student added to the local schools, but an assessment is collected nevertheless. It did not cause an expenditure on school construction in Takoma Park.

The thing about Montgomery County Public Schools is, it doesn't have separate capital or operational funding streams for schools in Damascus, schools in Takoma Park, schools in [wherever else in Montgomery County].

[Anonymous]

Anonymous wrote:

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Anonymous wrote:I just don’t get why anyone would blindly support new developments without the infrastructure (like schools) to support it. Makes zero sense to me.

Montgomery County has NEVER built the schools before building the housing. Never.

Nobody is saying that Montgomery County needs to build the schools before the housing. However, it is reasonable to expect developers to set aside money or to designate a plot of land that can be used for future schools.

That is not happening.

Yes it is.

"Development Impact Taxes are, set by the Montgomery County Council, assessed on new residential and commercial buildings and additions to commercial buildings in the county to fund, in part, the improvements necessary to increase the transportation or public-school systems capacity, thereby allowing development to proceed."
https://www.montgomerycountymd.gov/DPS/fees/Taxes.html

What developers are paying is a fraction of what costs to support the students that new development generates. The county loses money on every housing unit it adds once you account for school costs. That’s a fact.

So two things:
1. The PP I was responding to said that developers are not required to set aside money to address schools. They are. That was false. You are now making a different point.
2. I genuinely and sincerely am interested in seeing anything that supports your "fact" that adding housing loses money for the county. And as you say not just theoretically or some, but "every unit" so indesputably true that "it is fact."

To your second point, look at the current impact fees and the average per seat cost of school construction. The impact fees are less than the average per seat cost of school construction. The county just lowered the impact fees again last year because school construction costs spiked and they didn’t want to burden developers with the cost increase. That impact fee cut last year was on top of the impact fee cut that they did three years ago.

There is a big difference between saying the impact fees don't meet per pupil cost and saying that the county loses money on housing units. Two erroneous assumptions off the top of my head: 1) not every unit results in a student; 2) It does not take into account ongoing tax revenue

I didn’t say pupil costs. I said average per seat construction costs. If impact fees are below cost recovery levels (which they are), then the county loses money every time it adds a housing unit. It is simple math. If fees are below cost recovery, the difference must be financed through debt issuance or taken from somewhere else. If it’s financed, then debt service costs eat away at the rest of the budget. (There’s also the choice of not building schools at all but that’s a bad outcome)

Ongoing tax revenue is going to support other services for new residents. For very expensive housing, ongoing tax revenue exceeds what services residents consume fairly quickly. For less expensive housing, it may take a long time. Either way, if impact fees are below recovery costs, something else gets hit or we don’t build schools.

And remember none of these fee cuts caused developers to lower prices or push the housing market into surplus. The fee cuts just made the developers’ profits bigger. It’s good for the county to spend money to achieve a public policy goal (lower housing prices in this case) but it’s not good for the county to spend scarce funds subsidizing developers to build high-end housing.

I appreciate your explanation. But I still disagree with the bolded. It is true that the discrete costs for building a new school are not explicitly met by new development, at this particular time. That remains a very different thing that the county as a whole losing money as a result of the development. For example, counties and municipalities frequently subsidize development on all scales (Amazon HQ, smaller cities attracting and retaining other company HQs, entertainment venues.) It is an immediate loss for a long term net gain.

You can’t compare commercial real estate and residential. Commercial consumes little in the way of services but pays a lot in tax revenue and has a high multiplier. The opposite is true of residential, and it’s worse when we subsidize developers to build market rate housing (income restricted is a different story).

My point was that there are multiple circumstance in which counties/municipalities will SPEND money for long term gain(above examples, building a new park, offering more city services, etc). You are talking about an example where a place is paying no money at all while still recouping a percentage of potential future cost.

To not have 100% immediate cost recovery (that is only hypothetical) does not in any way make something a net loss overall.

Your approach makes almost all housing units a short-term loss and causes the county to accrue debt service costs, which are deadweight costs. The benefit of your approach accrues almost entirely to the developer with costs imposed on everyone else.

I'm not at all sure what you think "my approach" is? I don't have one.

But I will say that my understanding is that there is in fact ZERO short term loss as a direct result of this development? There would only be any potential temporary loss (in the sense that the cost is not recovered in advance by this particular assessment) IF a school is built immediately after the development.

That’s an incorrect understanding, because the county has to borrow to pay for school construction and pay interest. All residential development that requires school additions to be financed results in some unrecoverable deadweight costs to the county (accruing to the benefit of bond buyers and developers). Over time, some residential development may be net positive, but that really depends on residents’ incomes and to a lesser extent turnover rates. Even for those projects, the county still accrued the short-term deadweight costs.

Let's get real specific here. Can you cite to any particular development project in MoCo in the past decade that led directly to "short term deadweight costs"? All of the development in downtown Bethesda, for example. What was this "short term deadweight cost"?

All recent residential development that paid less than recovery costs for adding school capacity.

I think you are missing my point. Where is the money loss?
To my knowledge no new schools were built. As a result, the county actually banked more money in school assessments to build future schools. No expenditure was made, so no debt was incurred.

The money loss is the debt service (principal plus interest, and specifically the interest). The county isn’t “banking money.” If you save $5 but the thing you’re paying for is $7, you’re $2 in the red. Read up on public finance if you need more detail.

Where is the expenditure that incurs the debt? For example, several new multi-family apartments were built in Rockville (I understand this is not MoCo jurisdiction). An impact fee was assessed. No new school was built. Where is the loss?

That’s right. So when county has to build in Clarksburg and developers don’t pay in enough, Wootton, Magruder, Eastern, and Damascus all suffer.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Therefore, a school would need to be built in Bethesda to be a result of construction in Bethesda (generally speaking).

No it wouldn't. Again, MONTGOMERY COUNTY government, MONTGOMERY COUNTY revenue, MONTGOMERY COUNTY public schools.

I do not understand your point.

A development in one area is not the cause of an expenditure in another area.
I'll try again. An apartment is built in Damascus that does not result in a single student added to the local schools, but an assessment is collected nevertheless. It did not cause an expenditure on school construction in Takoma Park.

DP. It's all going into one big countywide fund for the 211 schools.

Sure, but if the need is in Takoma Park and the development is in Damascus the fees assessed are HELPFUL, not creating a debt.

In other words, if that development were NOT built, the debt would be worse.

Where do you think the kids from the development in Damascus go to school? In Damascus! Guess what one of the overcrowded schools in need of expansion is? Damascus! If they need to build capacity in Damascus for new development, and impact fees don’t cover the cost, they have to borrow or forgo a project somewhere else. They’ve been doing both.

Also, the only developments that don’t generate any students are age-restricted housing. Those don’t pay school impact fees, though they are used in the calculation of student generation rates that are used to set impact fees for other types of housing. In addition, impact fees are scaled based on the type of housing. One apartment only generates a fraction of a student (on average) so they pay a lower fee than a townhouse, which generates students at a higher rate (on average).

None of this is rocket science, and the basic design of the system is set up to match expected impacts with expected costs, but the council has repeatedly caved to developers and cut fees even as costs of addressing impacts has gone up.

Impact fees aren't supposed to cover ALL of the cost of building a new school. Just like recordation taxes aren't supposed to cover ALL of the cost of building a new school. You don't expect new residents of an existing residential building to pay for the costs of building an entire school, right? So why would you expect the residents of a new residential building to pay for the costs of building an entire school?

[Anonymous]

Anonymous wrote:

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Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I just don’t get why anyone would blindly support new developments without the infrastructure (like schools) to support it. Makes zero sense to me.

Montgomery County has NEVER built the schools before building the housing. Never.

Nobody is saying that Montgomery County needs to build the schools before the housing. However, it is reasonable to expect developers to set aside money or to designate a plot of land that can be used for future schools.

That is not happening.

Yes it is.

"Development Impact Taxes are, set by the Montgomery County Council, assessed on new residential and commercial buildings and additions to commercial buildings in the county to fund, in part, the improvements necessary to increase the transportation or public-school systems capacity, thereby allowing development to proceed."
https://www.montgomerycountymd.gov/DPS/fees/Taxes.html

What developers are paying is a fraction of what costs to support the students that new development generates. The county loses money on every housing unit it adds once you account for school costs. That’s a fact.

So two things:
1. The PP I was responding to said that developers are not required to set aside money to address schools. They are. That was false. You are now making a different point.
2. I genuinely and sincerely am interested in seeing anything that supports your "fact" that adding housing loses money for the county. And as you say not just theoretically or some, but "every unit" so indesputably true that "it is fact."

To your second point, look at the current impact fees and the average per seat cost of school construction. The impact fees are less than the average per seat cost of school construction. The county just lowered the impact fees again last year because school construction costs spiked and they didn’t want to burden developers with the cost increase. That impact fee cut last year was on top of the impact fee cut that they did three years ago.

There is a big difference between saying the impact fees don't meet per pupil cost and saying that the county loses money on housing units. Two erroneous assumptions off the top of my head: 1) not every unit results in a student; 2) It does not take into account ongoing tax revenue

I didn’t say pupil costs. I said average per seat construction costs. If impact fees are below cost recovery levels (which they are), then the county loses money every time it adds a housing unit. It is simple math. If fees are below cost recovery, the difference must be financed through debt issuance or taken from somewhere else. If it’s financed, then debt service costs eat away at the rest of the budget. (There’s also the choice of not building schools at all but that’s a bad outcome)

Ongoing tax revenue is going to support other services for new residents. For very expensive housing, ongoing tax revenue exceeds what services residents consume fairly quickly. For less expensive housing, it may take a long time. Either way, if impact fees are below recovery costs, something else gets hit or we don’t build schools.

And remember none of these fee cuts caused developers to lower prices or push the housing market into surplus. The fee cuts just made the developers’ profits bigger. It’s good for the county to spend money to achieve a public policy goal (lower housing prices in this case) but it’s not good for the county to spend scarce funds subsidizing developers to build high-end housing.

I appreciate your explanation. But I still disagree with the bolded. It is true that the discrete costs for building a new school are not explicitly met by new development, at this particular time. That remains a very different thing that the county as a whole losing money as a result of the development. For example, counties and municipalities frequently subsidize development on all scales (Amazon HQ, smaller cities attracting and retaining other company HQs, entertainment venues.) It is an immediate loss for a long term net gain.

You can’t compare commercial real estate and residential. Commercial consumes little in the way of services but pays a lot in tax revenue and has a high multiplier. The opposite is true of residential, and it’s worse when we subsidize developers to build market rate housing (income restricted is a different story).

My point was that there are multiple circumstance in which counties/municipalities will SPEND money for long term gain(above examples, building a new park, offering more city services, etc). You are talking about an example where a place is paying no money at all while still recouping a percentage of potential future cost.

To not have 100% immediate cost recovery (that is only hypothetical) does not in any way make something a net loss overall.

Your approach makes almost all housing units a short-term loss and causes the county to accrue debt service costs, which are deadweight costs. The benefit of your approach accrues almost entirely to the developer with costs imposed on everyone else.

I'm not at all sure what you think "my approach" is? I don't have one.

But I will say that my understanding is that there is in fact ZERO short term loss as a direct result of this development? There would only be any potential temporary loss (in the sense that the cost is not recovered in advance by this particular assessment) IF a school is built immediately after the development.

That’s an incorrect understanding, because the county has to borrow to pay for school construction and pay interest. All residential development that requires school additions to be financed results in some unrecoverable deadweight costs to the county (accruing to the benefit of bond buyers and developers). Over time, some residential development may be net positive, but that really depends on residents’ incomes and to a lesser extent turnover rates. Even for those projects, the county still accrued the short-term deadweight costs.

Let's get real specific here. Can you cite to any particular development project in MoCo in the past decade that led directly to "short term deadweight costs"? All of the development in downtown Bethesda, for example. What was this "short term deadweight cost"?

All recent residential development that paid less than recovery costs for adding school capacity.

I think you are missing my point. Where is the money loss?
To my knowledge no new schools were built. As a result, the county actually banked more money in school assessments to build future schools. No expenditure was made, so no debt was incurred.

The money loss is the debt service (principal plus interest, and specifically the interest). The county isn’t “banking money.” If you save $5 but the thing you’re paying for is $7, you’re $2 in the red. Read up on public finance if you need more detail.

Where is the expenditure that incurs the debt? For example, several new multi-family apartments were built in Rockville (I understand this is not MoCo jurisdiction). An impact fee was assessed. No new school was built. Where is the loss?

That’s right. So when county has to build in Clarksburg and developers don’t pay in enough, Wootton, Magruder, Eastern, and Damascus all suffer.

Enough for what?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Therefore, a school would need to be built in Bethesda to be a result of construction in Bethesda (generally speaking).

No it wouldn't. Again, MONTGOMERY COUNTY government, MONTGOMERY COUNTY revenue, MONTGOMERY COUNTY public schools.

I do not understand your point.

A development in one area is not the cause of an expenditure in another area.
I'll try again. An apartment is built in Damascus that does not result in a single student added to the local schools, but an assessment is collected nevertheless. It did not cause an expenditure on school construction in Takoma Park.

DP. It's all going into one big countywide fund for the 211 schools.

Sure, but if the need is in Takoma Park and the development is in Damascus the fees assessed are HELPFUL, not creating a debt.

In other words, if that development were NOT built, the debt would be worse.

Where do you think the kids from the development in Damascus go to school? In Damascus! Guess what one of the overcrowded schools in need of expansion is? Damascus! If they need to build capacity in Damascus for new development, and impact fees don’t cover the cost, they have to borrow or forgo a project somewhere else. They’ve been doing both.

Also, the only developments that don’t generate any students are age-restricted housing. Those don’t pay school impact fees, though they are used in the calculation of student generation rates that are used to set impact fees for other types of housing. In addition, impact fees are scaled based on the type of housing. One apartment only generates a fraction of a student (on average) so they pay a lower fee than a townhouse, which generates students at a higher rate (on average).

None of this is rocket science, and the basic design of the system is set up to match expected impacts with expected costs, but the council has repeatedly caved to developers and cut fees even as costs of addressing impacts has gone up.

I was responding to the assertion that the fees from development in one area CAUSE debt in areas where schools are built. They don't. They limit debt. That just don't fully cover cost, cost which would be incurred whether that development occurred or not.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Therefore, a school would need to be built in Bethesda to be a result of construction in Bethesda (generally speaking).

No it wouldn't. Again, MONTGOMERY COUNTY government, MONTGOMERY COUNTY revenue, MONTGOMERY COUNTY public schools.

I do not understand your point.

A development in one area is not the cause of an expenditure in another area.
I'll try again. An apartment is built in Damascus that does not result in a single student added to the local schools, but an assessment is collected nevertheless. It did not cause an expenditure on school construction in Takoma Park.

The thing about Montgomery County Public Schools is, it doesn't have separate capital or operational funding streams for schools in Damascus, schools in Takoma Park, schools in [wherever else in Montgomery County].

Right, and development in one are helps defer costs. It does not create them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I just don’t get why anyone would blindly support new developments without the infrastructure (like schools) to support it. Makes zero sense to me.

Montgomery County has NEVER built the schools before building the housing. Never.

Nobody is saying that Montgomery County needs to build the schools before the housing. However, it is reasonable to expect developers to set aside money or to designate a plot of land that can be used for future schools.

That is not happening.

Yes it is.

"Development Impact Taxes are, set by the Montgomery County Council, assessed on new residential and commercial buildings and additions to commercial buildings in the county to fund, in part, the improvements necessary to increase the transportation or public-school systems capacity, thereby allowing development to proceed."
https://www.montgomerycountymd.gov/DPS/fees/Taxes.html

What developers are paying is a fraction of what costs to support the students that new development generates. The county loses money on every housing unit it adds once you account for school costs. That’s a fact.

So two things:
1. The PP I was responding to said that developers are not required to set aside money to address schools. They are. That was false. You are now making a different point.
2. I genuinely and sincerely am interested in seeing anything that supports your "fact" that adding housing loses money for the county. And as you say not just theoretically or some, but "every unit" so indesputably true that "it is fact."

To your second point, look at the current impact fees and the average per seat cost of school construction. The impact fees are less than the average per seat cost of school construction. The county just lowered the impact fees again last year because school construction costs spiked and they didn’t want to burden developers with the cost increase. That impact fee cut last year was on top of the impact fee cut that they did three years ago.

There is a big difference between saying the impact fees don't meet per pupil cost and saying that the county loses money on housing units. Two erroneous assumptions off the top of my head: 1) not every unit results in a student; 2) It does not take into account ongoing tax revenue

I didn’t say pupil costs. I said average per seat construction costs. If impact fees are below cost recovery levels (which they are), then the county loses money every time it adds a housing unit. It is simple math. If fees are below cost recovery, the difference must be financed through debt issuance or taken from somewhere else. If it’s financed, then debt service costs eat away at the rest of the budget. (There’s also the choice of not building schools at all but that’s a bad outcome)

Ongoing tax revenue is going to support other services for new residents. For very expensive housing, ongoing tax revenue exceeds what services residents consume fairly quickly. For less expensive housing, it may take a long time. Either way, if impact fees are below recovery costs, something else gets hit or we don’t build schools.

And remember none of these fee cuts caused developers to lower prices or push the housing market into surplus. The fee cuts just made the developers’ profits bigger. It’s good for the county to spend money to achieve a public policy goal (lower housing prices in this case) but it’s not good for the county to spend scarce funds subsidizing developers to build high-end housing.

I appreciate your explanation. But I still disagree with the bolded. It is true that the discrete costs for building a new school are not explicitly met by new development, at this particular time. That remains a very different thing that the county as a whole losing money as a result of the development. For example, counties and municipalities frequently subsidize development on all scales (Amazon HQ, smaller cities attracting and retaining other company HQs, entertainment venues.) It is an immediate loss for a long term net gain.

You can’t compare commercial real estate and residential. Commercial consumes little in the way of services but pays a lot in tax revenue and has a high multiplier. The opposite is true of residential, and it’s worse when we subsidize developers to build market rate housing (income restricted is a different story).

My point was that there are multiple circumstance in which counties/municipalities will SPEND money for long term gain(above examples, building a new park, offering more city services, etc). You are talking about an example where a place is paying no money at all while still recouping a percentage of potential future cost.

To not have 100% immediate cost recovery (that is only hypothetical) does not in any way make something a net loss overall.

Your approach makes almost all housing units a short-term loss and causes the county to accrue debt service costs, which are deadweight costs. The benefit of your approach accrues almost entirely to the developer with costs imposed on everyone else.

I'm not at all sure what you think "my approach" is? I don't have one.

But I will say that my understanding is that there is in fact ZERO short term loss as a direct result of this development? There would only be any potential temporary loss (in the sense that the cost is not recovered in advance by this particular assessment) IF a school is built immediately after the development.

That’s an incorrect understanding, because the county has to borrow to pay for school construction and pay interest. All residential development that requires school additions to be financed results in some unrecoverable deadweight costs to the county (accruing to the benefit of bond buyers and developers). Over time, some residential development may be net positive, but that really depends on residents’ incomes and to a lesser extent turnover rates. Even for those projects, the county still accrued the short-term deadweight costs.

Let's get real specific here. Can you cite to any particular development project in MoCo in the past decade that led directly to "short term deadweight costs"? All of the development in downtown Bethesda, for example. What was this "short term deadweight cost"?

All recent residential development that paid less than recovery costs for adding school capacity.

I think you are missing my point. Where is the money loss?
To my knowledge no new schools were built. As a result, the county actually banked more money in school assessments to build future schools. No expenditure was made, so no debt was incurred.

The money loss is the debt service (principal plus interest, and specifically the interest). The county isn’t “banking money.” If you save $5 but the thing you’re paying for is $7, you’re $2 in the red. Read up on public finance if you need more detail.

Where is the expenditure that incurs the debt? For example, several new multi-family apartments were built in Rockville (I understand this is not MoCo jurisdiction). An impact fee was assessed. No new school was built. Where is the loss?

That’s right. So when county has to build in Clarksburg and developers don’t pay in enough, Wootton, Magruder, Eastern, and Damascus all suffer.

What is right? Where is the loss? Where is the burden on those other schools?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Therefore, a school would need to be built in Bethesda to be a result of construction in Bethesda (generally speaking).

No it wouldn't. Again, MONTGOMERY COUNTY government, MONTGOMERY COUNTY revenue, MONTGOMERY COUNTY public schools.

I do not understand your point.

A development in one area is not the cause of an expenditure in another area.
I'll try again. An apartment is built in Damascus that does not result in a single student added to the local schools, but an assessment is collected nevertheless. It did not cause an expenditure on school construction in Takoma Park.

The thing about Montgomery County Public Schools is, it doesn't have separate capital or operational funding streams for schools in Damascus, schools in Takoma Park, schools in [wherever else in Montgomery County].

If, as you seem to be saying, MCPS relies on fees from developers to fund schools, we should be encouraging more development everywhere even if the assessment does not fully cover cost. Otherwise there would be 0$ to address overcrowded school.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The county needs more housing without more traffic; this is a win. MCPS needs to better use the capacity they have; that's on the BOE. Or something like that.

This is either a troll response or someone with no kids in MCPS. First of all, there is a baked-in assumption that mixed-income and low-income housing residents don't own cars if they are walking distance to public transportation. As a result, new buildings often have far fewer parking spaces than they do units. However, the assumptions here are not actually true, particularly post-covid. All of the amenities that make it possible for white collar professionals to comfortably work from home and have their take-out, groceries, and office supplies delivered to their door? Those are all brought by residents of multi-family dwellings using their own personal vehicles. In the gig economy, a working class family needs a car, and needs somewhere to park it.

Further, in most of these neighborhoods, there is no capacity to use. Schools at all levels are giving up playground and outdoor space to make room for portable classrooms. The failure of our municipal/county leadership to work with MCPS to deal with these issues is not only troubling, but ultimately will damage any nascent YIMBY movement that would have otherwise developed.

Basically, the YIMBY approach in MoCo is one of "heightening the differences." Rather than making things better for everyone by building enough parking or working with the school district to absorb capacity, the approach is to make everyone so miserable that they start riding public transportation because the roads are so gridlocked with InstaCart drivers that regular residents can't get out of the neighborhoods.

+1 so many people are either morons or developer shills.

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