Category Archives: Adam Pagnucco

County Government Applying for Line of Credit

By Adam Pagnucco.

For the first time in its history, the Montgomery County Government will be applying for a line of credit. That’s a sign of how seriously county officials are taking the deep economic downturn caused by the COVID-19 crisis.

MoCo’s general obligation bonds have enjoyed a AAA rating since the 1970s. The county almost lost its credit rating in 2010 but avoided that fate through doubling the energy tax, implementing massive spending cuts and passing a plan to increase reserves to 10% of revenues in ten years. (The county has since met that target.) As bad as that year and others surrounding it were, the county never had to take out a credit line.

Now it will.

County budget director Rich Madaleno confirmed that the county planned to apply for a credit line in a conversation with the county council yesterday. The county’s Office of Legislative Oversight (OLO) has posted documentation on how a credit line would function in the context of county government. County governments, especially well-managed ones, hardly ever use debt to fund operating expenses. Indeed, section 312 of the county’s charter states, “No indebtedness for a term of more than one year shall be incurred by the County to meet current operating expenses.” So if MoCo borrows against the line, it would have to pay back the money pretty quickly.

When questioned about the purpose of the credit line by Council Member Andrew Friedson, Madaleno replied:

It’s to make sure in the extremely rare case that if there were a cash flow issue because of what you well know is the schedule of disbursements – we do not collect the income tax, the state does – we get them on set schedules. If we have to pay bills while two weeks before the February distribution or the November distribution you have in essence a credit card. And as any consumer knows, in these sorts of situations, you would want that credit card in hand and not be applying for it at the register because you don’t know if you’re going to get it and what the rates are going to be. This is a best practice. This is not at all, not at all and you can ask Mr. Coveyou [the county’s finance director] – this is not at all an action being taken because we are concerned about liquidity. This is a backup insurance plan as you would want a smart organization to have in its back pocket.

Let’s remember that the county has had to deal with state distribution schedules of income taxes for decades and never needed a line of credit until now. The difference between now and those other decades is the sheer havoc the COVID-19 crisis could wreak on county finances. Consider that the current worst case scenario estimates up to a $600 million revenue loss in FY20 and FY21 combined and that the current projection for ending reserves in FY21 is $554 million. No one should take comfort from those numbers, particularly given the possibility of their getting worse.

A sneak preview of a county budget briefing six months from now.

The amount of the county’s credit line has not been established but multiple sources suggest that it could be in the hundreds of millions of dollars. No information is available yet on which financial institution(s) would issue it.

Montgomery County is not alone. State and local governments around the country either have or are seeking lines of credit, including the State of New York ($3 billion), the State of Illinois ($1.2 billion), the City of Louisville in Kentucky ($240 million), the State of Rhode Island ($150 million), Cook County in Illinois ($100 million), the City of Portland in Oregon ($100 million), the City of New Orleans in Louisiana ($100 million), Fauquier County in Virginia ($50 million) and the City of Montgomery in Alabama ($35 million). By far the most cited reason for these credit lines is to hedge against the revenue impacts of COVID-19.

Madaleno could be right that this is a smart backup insurance plan. Even Friedson, who has been hammering the Elrich administration’s budgetary practices of late, called it a “prudent action.” But let’s not delude ourselves. Montgomery County Government is preparing for a serious recession.

This year’s budget is only the beginning.

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MoCo’s Nasty School Board Race, Part Two

By Adam Pagnucco.

In addition to being one of MoCo’s nastiest races of all time, this year’s school board election is arguably the strangest ever. Consider a list of typical election activities that are hampered or altogether prohibited by the COVID-19 lockdown.

Door knocking – Fuhgeddaboutit.

In-person campaign coffees and fundraisers – Fuhgeddaboutit.

Lit handouts at Metro stations – Fuhgeddaboutit.

Lit drops – It’s not clear if this counts as essential travel. It’s also not clear if this will creep out voters.

Campaign forums – They are not possible to do in person. There are opportunities to do these online but there will be far fewer of them than in a regular cycle.

Poll coverage – Fuhgeddaboutit!!

So what’s left? No candidate currently has the money to do serious mail. Blast emails are possible, but if anyone has an email list, I’m not on it. (For the record, I have been added to TONS of political email lists!) Signs have been distributed along with the usual instances of illegal placement. Bethesda Beat is covered with school board ads. (Steve Hull wins every election!) Social media ads are cost effective and several candidates have used them, but they can’t replace all of the other campaign tools that have been knocked out by the virus. Then there is the word of mouth being circulated by supporters of one candidate or another, but to see it, you have to be connected to the partisans. The HUGE majority of voters are not in these bubbles.

Let’s remember that this is a presidential primary and all county voters with all party affiliations can vote. In the 2016 primary, 183,479 people voted in MoCo’s at-large school board race. That far exceeds the number who vote in mid-term Democratic primaries for governor, county executive and county council at-large, races which have much more financing than school board contests. The two candidates who emerged from the 2016 primary had more than 50,000 votes each. This year’s winning number could be higher if the all-mail election encourages higher turnout as it did in Rockville and also because of national factors.

Given all of these limitations, you would have to be crazy to be a campaign manager in this race!

That said, there are certain factors that could make a difference.

The Apple Ballot

The Montgomery County Education Association (MCEA) has an excellent record of getting its endorsed school board candidates through primaries. MCEA’s choice this year is Universities at Shady Grove professor Sunil Dasgupta, who proudly puts the Apple Ballot front and center on his website. Historically, the union’s most effective tactic has been distribution of Apple Ballots at voting precincts, but that is now impossible due to COVID-19 restrictions and the state’s transition to a mostly mail election. The teachers can still use social media and they have sent at least one mailer promoting their candidate. One note of caution comes from February 2008, when an ice storm shut down MCEA’s poll coverage, resulting in a rare defeat for its candidate in a primary.

The Washington Post

Along with the Apple Ballot, the Post’s endorsement is one of the top two in school board races and has a great record of helping candidates win. At first it seemed the Post was going to sit out the primary (as it has done before), but over the weekend, the newspaper endorsed former PTA president Lynne Harris. This is a huge problem for anti-boundary analysis leader Stephen Austin, who now faces one candidate with the Apple, another one with the Post and a primary from which only two candidates will emerge. One question: with Harris’s lack of funding and the Post endorsement coming so late, will she have the time and bandwidth to capitalize on it?

Stephen Austin’s Facebook Group

Say what you will about Austin and his group, but his page is larger than any other MCPS-related site that could play a part in this election. Consider these Facebook page statistics at this writing.

Montgomery County MD Neighbors for Local Schools (Austin’s group): 8,033 members
Montgomery County Education Association: 4,006 followers
Montgomery County Council of PTAs: 1,573 followers
SEIU Local 500 (an endorser of Dasgupta): 1,154 followers
One Montgomery (favors school equity, opposes Austin): 846 followers
Sunil Dasgupta’s campaign page: 595 followers
Stephen Austin’s campaign group: 358 members
Lynne Harris’s campaign page: 275 followers
Jay Guan’s campaign page: 185 followers

None of the candidates’ pages are large enough to have any organic effect on the election though they can be used for ads. But through his “neighbors for local schools” page, Austin can reach out to roughly 8,000 people, an advantage that no other candidate has. In an election with no poll coverage by the Apple Ballot, no ground-level campaigning and no serious money for any candidate, how big of an advantage is this?

One Montgomery’s Attack Piece

The brutal One Montgomery attack piece in Maryland Matters linking Austin to Trump supporters and anti-LGBTQ activists has gotten a lot of attention on his critics’ pages. But has it really penetrated beyond the progressive circles that were unlikely to vote for Austin anyway? For this piece to be truly effective, someone has to place a four- or five-digit social media ad buy to push it out to the general public. Otherwise it will be just one more thing to argue about for the relative handful of folks inside the bubble.

The Alphabet

Don’t laugh, but in down-ballot, under-the-radar races, being near or at the top of the ballot can get a candidate a few extra points. Research of varying quality has found this to be the case in Danish local and regional elections, Vancouver local elections, California state elections, California city council and school board elections, Ohio county elections and British local council elections. Austin will be listed second on the ballot. Will that matter?

However these factors mix, there are two likely scenarios. If Dasgupta and Harris emerge from the primary, this will turn into a traditional Apple vs Post race. But if Austin breaks through to claim one of the primary spots, this will be more insider vs outsider with school boundaries front and center. Jay Guan, the fundraising leader who has mailed a postcard, may also have a chance.

There is more to an election than tactics; there is also policy at stake. Part Three will conclude with a few issues that have been overshadowed by the boundary analysis war but nevertheless warrant attention from the candidates.

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Council Rejects Hidden Tax Hike

By Adam Pagnucco.

Yesterday afternoon, the county council rejected the hidden tax hike that was buried in the county executive’s recommended budget.

The primary issue that bothered the council was the lack of transparency surrounding the tax hike. It was not mentioned in the executive’s budget but it would have raised $5.1 million next year and more money cumulatively in later years. Tax increase proposals attract major attention at budget time with much discussion and public testimony. But this one, which was not published but still included in revenue numbers, flew under the radar until near the end of the FY21 budget process.

Multiple council members complained about process issues. Council Member Hans Riemer noted the failure of the budget to mention the tax hike and said, “This is about our values and our approach to government… The reason why I am so concerned about this proposal is because I really think it flies in the face of our approach to good government and to transparency.” Council Member Andrew Friedson said, “Public policy means public input. And we cannot have transparent and accountable policy making unless there are transparent and accountable decisions for how we make those decisions, how we calculate the policies that we make.”

Council Member Evan Glass put on his CNN journalist hat to investigate what happened. Glass asked council staff how the issue surfaced. Staff replied, “I did not read anything published that this was included,” and said the issue was uncovered through discussions with executive staff. Glass then asked budget director Rich Madaleno why the administration proceeded with it. Madaleno defended the executive’s proposal as an appropriate calculation of the charter limit and said the executive would have discussed this upon release of the budget but that event was canceled because of COVID-19 concerns. Madaleno also said this:

Council Member Riemer is correct that in the final iteration of the budget book the piece that explained this was taken out for revision and did not make it back in before it went to the printer. For that I am profoundly sorry but other than that there would have been deep conversation and of course many of you have heard the county executive say over and over that he thinks the charter interpretation is wrong and has been talking about that for months.

Glass acknowledged that he had heard Elrich express various opinions at forums. (Remember those back in the good old days?) But he replied, “To say something in a forum but then not convey it to the council or not to, as you noted, not to even include the cover page in the budget for whatever reason is a problem.”

Even Council Member Gabe “Mr. Rogers” Albornoz had nothing nice to say about the process for considering the tax hike. When Mr. Rogers is unhappy, there is a problem.

Riemer proceeded to claim that the executive’s proposal was actually illegal because it allegedly violated the charter. The charter’s exact language on the property tax charter limit says:

Unless approved by an affirmative vote of all current Councilmembers, the Council shall not levy an ad valorem tax on real property to finance the budgets that will produce total revenue that exceeds the total revenue produced by the tax on real property in the preceding fiscal year plus a percentage of the previous year’s real property tax revenues that equals any increase in the Consumer Price Index as computed under this section. This limit does not apply to revenue from: (1) newly constructed property, (2) newly rezoned property, (3) property that, because of a change in state law, is assessed differently than it was assessed in the previous tax year, (4) property that has undergone a change in use, and (5) any development district tax used to fund capital improvement projects.

So the charter applies the rate of inflation to adjust “the total revenue produced by the tax on real property in the preceding fiscal year” to calculate the charter limit. The methodology used by the finance department for the last 30 years uses actual taxes paid on real property, including partial-year taxes on newly constructed property which was in use for only part of the year, to calculate current year total revenues. The executive’s new methodology would use taxes that new construction would have paid if billed on an annual basis to calculate current year revenue even though full-year taxes on those properties were not actually collected.

Riemer alleged that the use of hypothetical revenues rather than actual revenues to calculate the charter limit violates the plain language of the charter and asked a council attorney for his opinion. After explaining the technical issues and the possible steps for analysis by the courts, the council attorney replied, “My opinion is that the courts if asked – the court of appeals if asked – would ultimately rule for all the reasons I explained that this provision means actual revenue received during the relevant year for newly constructed property and not the potential revenue you could have received had everything been online for a full year.”

Riemer was bothered by both the transparency issue and the legal risks of the executive’s proposal and he linked the two.

The fundamental issue here is, given how risky it is, the fact that the county council and even more importantly, the public was not informed of this proposal is highly problematic. If you look at the county executive’s budget, you will not find an explanation of this decision. It’s not there. The county executive did not present a budget explaining this method of calculation. The fact is it is a $5 million increase in property taxes from all payers of property taxes in the county. But there is no explanation of that in the county’s budget. It is unthinkable to me that we would have a tax increase that has not actually been transparently presented to the community and, what more, is actually illegal. It is a violation of the charter. The combination of those two aspects of this proposal are just profoundly troubling.

Let’s remember that the principal charter limit activist in the county – Robin Ficker – is an attorney who has sued the county before and prevailed multiple times. A legal challenge to a change in charter limit administration is far from a hypothetical thing.

It’s not clear that a majority of the council agrees with Riemer on opposing the merits of the executive’s proposal. But there was obvious discomfort in dealing with this issue both late and without public input. That goes on top of other tensions with the executive branch on the budget and issues ranging beyond that. Add in stir craziness during the lockdown and these are strange times in Rockville.

After 40 minutes of discussion, the council killed the executive’s hidden tax hike on a 9-0 vote.

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Elrich’s Hidden Tax Hike

By Adam Pagnucco.

One month ago, I roasted the Montgomery County Republican Party for inaccurately claiming that the county was trying to “sneak in” a tax hike. At that time, the issue was a state notice requirement and not actual intent – at least not by the county council – to raise taxes. But it turns out that there actually was a hidden tax hike embedded in the budget on top of the executive’s open recommendation to raise property taxes. No one reading the budget would have found it. But county council staff did find it and now the matter is exposed.

Folks, I have been reading county budgets for almost 15 years and I don’t remember seeing anything like this.

The issue at hand is how the county calculates the charter limit on property taxes. In concept, it’s a simple procedure. The county’s finance department uses two data points: the estimated amount of real property tax revenues collected in the current fiscal year and the percentage growth of the consumer price index from the previous calendar year. Tack on inflation to the current fiscal year’s property tax revenue and that’s the charter limit for the next fiscal year. (The county can collect additional property tax revenues on a few other categories of property outside the charter limit.)

Sounds easy, yeah? But what about taxes collected from properties newly built during the current fiscal year? For the last 30 years, the county’s finance department has included the actual taxes paid on those properties in its calculation of current year revenues. So if a property was built halfway through the fiscal year, half of its annual tax bill is included in current year revenues. If a property was built nine months into the fiscal year, then one-quarter of its annual tax bill is counted. And so on. Add in these pro-rated tax bills to full-year tax bills for existing properties and that’s the current year property tax collections. Tack on inflation and that’s the charter limit.

The Elrich administration used a new methodology to calculate the charter limit in its FY21 recommended budget. Instead of using the actual tax bills paid by newly built properties in the current fiscal year, it included full-year tax bills in its estimate of current revenues even though those bills were not actually paid for the full year. That allowed the administration to calculate slightly higher current year property tax revenues. Tack on inflation and the charter limit is slightly higher. And so there is more room to raise the property tax rate than there would be otherwise.

In other words, it’s a tax hike.

It’s not a very large tax hike. Council staff estimates that the new methodology allows the county to raise an extra $5.1 million in the FY21 budget, or 0.24 cents per $100 of assessed value. (By contrast, the executive’s openly recommended tax hike was 3.18 cents.) But if this new methodology is adopted, it will compound over time and eventually raise tens of millions of dollars more than under the old methodology.

Basing tax estimates on taxes not actually received is a questionable practice at best, but let’s set aside the merits of the policy for now. The disturbing thing about this is that it was not disclosed to the public through the budget. Search the county’s 831 page budget for “charter limit” and you won’t find any discussion of this methodology change. Instead, the matter first surfaced in a council staff memo released late last week. The council held a closed session to discuss the legal ramifications of the change on Wednesday. The council will now decide the matter today.

Regardless of how one feels about taxes, let’s agree that decisions concerning them are important and warrant public scrutiny and participation. The issue was not publicly known when testimony was heard on the budget, so residents were denied the opportunity to weigh in. That is a direct result of the administration’s failure to disclose the issue in its published budget.

We deserve better.

Let’s see what the council makes of this.

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Post Endorses Harris and Evans for School Board

By Adam Pagnucco.

The Washington Post has endorsed Lynne Harris and Shebra Evans for school board. Evans is an incumbent running for reelection in District 4. Harris is a former PTA president running for an open at-large seat in a strongly contested and controversy-packed race.

The Post and the Apple Ballot are hugely influential in school board elections. Because Universities at Shady Grove professor Sunil Dasgupta already has the Apple, it will be hard (but not impossible) for candidates other than Harris and Dasgupta to make it out of the at-large primary.

I will have a lot more to say about this soon.

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MoCo’s Nasty School Board Race, Part One

By Adam Pagnucco.

Negative campaigning has a long and brutal history in Montgomery County but this year’s school board election is emerging as one of the most contentious contests in decades. The arguments contain echoes of the titanic school board election battles of the early 1980s, in which a conservative faction led by Marian Greenblatt was eventually toppled. Then as now, race, school boundaries, accusations of busing and the shadow of national politics mixed in a bubbling witches’ brew that no cauldron could hold. There is nothing new here. Rather, skeletons emerge from the grave to refight battles that seem as eternal as they are ancient.

The immediate impetus of the current dispute is a change made to MCPS’s facility planning policy in September 2018. Prior to the change, four factors were weighted equally in picking sites for new schools and changing school boundaries: demographic characteristics of student population, geography, stability of school assignments over time and facility utilization. The new policy was revised to contain this sentence on demographics: “Options should especially strive to create a diverse student body in each of the affected schools in alignment with Board Policy ACD, Quality Integrated Education.” Jill Ortman-Fouse, who at that time was on the school board and helped lead the effort to change the policy, justified it by saying, “Diversity matters. Let’s weight that a little bit more.” MCPS followed up by hiring a contractor to study school boundaries and implementing a redistricting in Germantown and Clarksburg that spawned a lawsuit.

Now supporters and opponents of the new facilities policy and the boundary analysis are at war. The leader of the opposition is Stephen Austin, a newcomer to MoCo politics who set up a Facebook group last winter that now has almost 8,000 members. It’s unusual in the county for such a large group to form so quickly without external organization and funding, but schools are a hot issue here for folks with all kinds of perspectives. The other side is a group of MCPS activists favoring the boundary analysis, many of whom have been active on school issues for a long time. Their spiritual leader is Ortman-Fouse, who has made diversity her signature issue both during and after her tenure on the school board. Austin is one of 13 candidates running for an at-large school board seat in a field with varying views on school boundaries. Strong feelings run high on both sides.

My personal sympathies lie with those who favor diverse schools. My upstate New York elementary school was roughly 90% white. When I moved to MoCo, I deliberately chose to live near a diverse public elementary school so that my kid could benefit from being around others with different races, cultures and life experiences. My choice paid off in a BIG way. My kid has experienced both diversity and superb academic instruction at the same time. He is much better prepared for the modern world than I was at his age. So I won’t be voting for any candidate who opposes diversity.

But there is more going on here than just that one issue.

I read the posts in Austin’s Facebook group almost every day. There are statements on there with which I disagree. There is some nastiness directed at the other side (and the press). But there are also participants who express a mixture of curiosity, concern and skepticism. Some distrust what they see as a centralized school bureaucracy that does not communicate very well. (This is one sentiment they share with some on the other side!) There are plenty of folks there who are not white. There has also been discussion of issues other than the boundary analysis. It’s a more complicated place than Austin’s opponents might admit. However, some of the blame for that goes to the moderators who have kicked out people who disagree, causing the exiles to assume the worst since they can’t view the content themselves. Inflammatory tidbits sometimes leak anyway.

I’m not all that worried about the pugilists in the ring. In politics, anyone who throws a punch should be ready to take a punch. But I do wonder about the people in Austin’s group, as well as on other social media threads, who read all of this material and say nothing. What are they thinking? I bet more than a few believe there is no point in saying anything because if they do, and if they vary from the orthodoxy of either side, they will be subject to bitter, public personal attacks. How many folks who have something to contribute will never run for school board or get involved with school issues at all for fear of being hurled into the mud?

Here is a great irony. Austin’s supporters believe that the school board does not do enough to oversee or challenge MCPS management – a view shared by some on the left. It’s a common perception that some school board members get assimilated into the system after winning office (with the notable exception of the 2015 revolt against then-Superintendent Josh Starr). Bereft of a sizeable, independent staff of analysts reporting exclusively to them, the board risks being at the mercy of a management that can control information and set tight boundaries for policy decisions. One school board member who resisted that tendency was none other than Ortman-Fouse, who never backed down from management, regularly demanded (and released) data and engaged in actual constituent service – just like elected officials are supposed to do. Put aside their ideological disagreements and Ortman-Fouse could provide a model of independent-minded school board service that even Austin and his folks could appreciate were it not for their mutual loathing.

At this point, tribal politics has taken over this race. Each tribe fears what the other one will do if it wins. Non-tribe members are barely acknowledged even though at least 99% of the county has no idea what is going on in this election. The disengagement of so many voters and the sheer oddities of present times make this a hard race to divine.

In Part Two, I’ll assess the tactical environment in what might be MoCo’s strangest election ever.

And in Part Three, I’ll talk about a few issues that have been largely undiscussed so far but collectively will determine at least as much of MCPS’s future as any boundary analysis.

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Delegates Call on Governor to Cancel Rent, Mortgage Payments (Updated)

By Adam Pagnucco.

District 20 Delegate Jheanelle Wilkins has organized a joint letter to Governor Larry Hogan signed by 48 Delegates asking him to cancel rent and mortgage payments for businesses and residents affected by the COVID-19 crisis. The delegates also write:

In addition to rent and mortgage cancellation, we urge you to take executive action to require renewal of expiring leases, prohibit rent increases and late fees, and require that landlords negotiate reasonable, long-term payment plans. Finally, the undersigned urge the creation of a robust housing relief fund for renters and homeowners alike.

Half of MoCo’s house delegation signed the letter, including Delegates Gabe Acevero (D-39), Lorig Charkoudian (D-20), Charlotte Crutchfield (D-19), Bonnie Cullison (D-19), Lesley Lopez (D-39), David Moon (D-20), Julie Palakovich Carr (D-17), Kirill Reznik (D-39), Emily Shetty (D-18), Jared Solomon (D-18), Vaughn Stewart (D-19) and Wilkins.

We reprint the letter below.

Update: Two more delegates – Dalya Attar (District 41 in Baltimore City) and Al Carr (District 18 in Montgomery County) have signed the letter after we posted it. That means 50 delegates have signed. The updated version appears below.

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Union Files Unfair Labor Practice Charge Against MCM

By Adam Pagnucco.

NABET-CWA Local 31 has filed an unfair labor practice charge against MCM (Montgomery Community Media) alleging that MCM is refusing to bargain a new collective bargaining agreement. MCM is a non-profit that acts as a vendor for Montgomery County Government by operating a cable access channel and covering county events. In the year ended 6/30/18, MCM reported revenues of $3,567,892, net assets of $1,332,862 and positive net income of $151,566. The county reported giving MCM $2,608,164 in FY18, meaning that 73% of the non-profit’s budget came from the county.

The union, which represents production employees but not other classifications, is alleging that MCM is refusing to negotiate a new contract after its prior one expired on 6/30/18. The union claims that its members have not received a raise since a 3% increase in 2015. (This is waaaaay below the regular wage increases received by county employees.) The union also claims that MCM is using the pandemic as an excuse to avoid bargaining by refusing to discuss the contract in person, by video, by phone or by email. The union filed an unfair labor practice charge against MCM on April 24 and appealed to the county council for help last week.

Given the fact that the county funds nearly three-quarters of MCM’s budget, the council has enormous leverage to end this labor dispute.

We reprint the letter written to the council below and follow with a copy of the unfair labor practice charge.

*****

Dear Council President Katz,

My name is Barbara Krieger. I hope you are well. I am an employee, and the NABET-CWA Contract negotiator at Montgomery Community Television. (d/b/a: MCM) As the County begins to hand out money to businesses because of the pandemic, please read what is happening at MCT. When a Company doesn’t take care of its people before a pandemic, how can you expect them to disperse money to these “Essential” employees because of this present health tragedy!!

The NABET-CWA Union has been attempting to negotiate a Contract with MCT since it expired June 1, 2018. For nearly two years MCT’s CEO, Nanette Hobson has insisted there’s no money for wage increases for the Union-represented employees, who have not had a raise in almost five years!! Yet MCT has received money for “staff” in every County approved budget in the last five years; and moreover, MCT provided a 3% raise to every non-union employee early last summer.

Now, MCT is shifting the blame for not bargaining over employee wages to the County Council and yourself!! According to the Company lawyer… “the pandemic, and resulting uncertainty on the budget, renders my client unable to confidently commit to any wage-related proposal.” The reference to the “budget” is of course the County’s approval of this year’s fiscal budget.

Secondly, MCT has refused to continue the negotiations claiming that parties need to meet in person. Such an argument is frivolous because it ignores the fact that negotiations can still take place by video conference, telephone conference or even email. For these reasons of refusal to bargain, the Union has today filed an Unfair Labor Practice with the NLRB.

Please contact Ms. Nanette Hobson, CEO/MCT. Please inquire as to what’s been happening to the money the County Council has been approving every year for the organization. How can any Company expect employees to live in this wonderful County without at least a Cost of Living raise each year?? These Union employees are “Essential Employees,” who continue to work during this despairing time of the pandemic!

Thank you in advance for your assistance with this egregious problem.
Barbara Krieger
Assistant to the President
NABET-CWA, Local 31

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Why Would Anyone Want to Build Rental Units in MoCo?

By Adam Pagnucco.

Left largely undiscussed during the debate over MoCo’s recently passed rent stabilization bill was the overall condition of the county’s rental market. Yes, Council Member Andrew Friedson brought up our recently published data showing that rents are declining in MoCo and are projected to continue falling for the rest of the year. But there’s a lot more to this issue, especially when considering the long-term needs of tenants and the associated implications for the county’s economy.

The bottom line is that MoCo is emerging as one of the most unattractive places in the D.C. area to build rental units.

Put yourself in the shoes of a regional developer, real estate investor or creditor and consider the following facts.

1. MoCo’s rental market is one of the slowest growing in the region.

This is the first sign that not all is right in the county. MoCo has a relatively affluent population, 11 Metrorail stations, a nationally recognized school system, a new light rail route (the Purple Line) under construction and is planning several bus rapid transit routes. Developers should want to build here, but disproportionately, they are not. If Downtown Bethesda were removed from the county’s unit statistics, one wonders how poorly the rest of the county would rank in the D.C. region.

2. Rents in MoCo are also growing slowly.

With the exception of Loudoun County, every other major jurisdiction in the region has seen more growth in average rent than MoCo. That’s good for tenants but not so good for investors looking for an adequate return. That is especially the case given the level of uncertainty in MoCo’s real estate market, which would normally demand higher returns to compensate investors for dealing with it. More on that in a bit.

Here is an interesting fact. Loudoun, Arlington and Howard have been the three fastest-growing large jurisdictions in the area in terms of renter occupied units. They are also three of the four slowest-growing jurisdictions in terms of rents. That’s how a market should work – rapidly expanding supply should keep prices down even with substantial demand, and Loudoun has been one of the fastest growing counties in the nation. But MoCo has seen slow growth in both construction and rents, making it an outlier.

3. No other major jurisdiction in the area has experienced a larger increase in rental vacancy since 2010 than MoCo.

You might think that with MoCo’s relatively stagnant construction demand for housing would push vacancy down. Instead, it’s gone up – by more than any other jurisdiction in the region. In 2010, MoCo’s rental vacancy rate was 2.7%, the second-lowest of 10 large area jurisdictions. In 2018, MoCo’s rental vacancy rate was 4.9%, tied for the third-highest rate. The vacancy rate gain (2.2 points) was the largest in the area. This is going to get worse as vacancy rates for Class A and Class B units are projected to approach 7% in coming years.

4. Evictions in MoCo are time consuming and expensive.

In 2018, the county’s Office of Legislative Oversight (OLO) studied evictions in MoCo and stated, “The Montgomery County Sheriff’s Office reports that on average it takes 12-13 weeks to evict a tenant for nonpayment of rent, though the process can sometimes be significantly longer.” OLO also found that the cost to evict a tenant can range from $5,700 to $16,600, landlords “are often unable to recover lost rent” and “costs and process delays discourage small property landlords from renting out.”

Landlords with lots of units and market power might be able to spread these costs to other tenants in the form of higher rents. Other landlords might choose to avoid the county altogether if they believe its procedures are more onerous than its neighbors.

5. The county executive is an open housing skeptic.

Before becoming executive, Marc Elrich built his political career by opposing development, voting against seven different master plans (six centered near transit stations) and famously comparing growth to a tumor. He has not changed much since then. Over the last three years, he has compared gentrification to ethnic cleansing, said he doesn’t believe in missing middle housing, said he doesn’t want to lose affordable units “to build housing for millennials” and opposed regional targets for housing construction. His opposition to accessory dwelling units even attracted criticism from his fellow socialists. The executive doesn’t control county land use policy, but he does control the Department of Housing and Community Affairs, the county’s principal regulator of landlords.

6. The county’s moratorium policy is a major source of uncertainty for residential builders.

MoCo stops new applications for housing development in school clusters that exceed certain capacity thresholds. Last year, the county imposed moratoriums on four high school clusters and 13 individual elementary school service areas that accounted for roughly 12% of the county and included parts of high-profile housing markets like Downtown Silver Spring and North Bethesda. This year, more areas could be at risk. The moratoriums do nothing to stop school crowding but they do create serious uncertainty for the real estate industry. Who wants to spend millions on design, architecture, planning reviews, public outreach and land use attorneys only to see a project stopped dead in its tracks by an arbitrary moratorium?

7. The county just passed temporary rent stabilization.

The council made major changes to Council Member Will Jawando’s rent control bill, allowing rent increases up to the county’s voluntary guidelines and extending the bill’s duration to 90 days after a catastrophic health emergency. The direct economic impact of the bill may be mild because it is temporary, allows small increases and takes effect in an environment in which rents are declining. But it could be extended at a later time, a possibility that adds to the uncertainty of investing in MoCo. It also has tremendous symbolic importance. Let’s remember that Takoma Park has had rent stabilization for decades and has suffered absolute losses of rental units.

Consider this. It’s hard to find two terms that are more hated by the residential rental industry than “moratoriums” and “rent stabilization.” At this moment, MoCo is the only jurisdiction in the Washington region that has both of them.

MoCo is still seeing residential construction from projects that were approved before the current downturn, before the current round of moratoriums, before the approval of rent stabilization and before the current executive took office. But after that wave (a rather small wave) of construction wraps up, what will come next?

Imagine that you are a regional developer, real estate investor or creditor and you are evaluating a jurisdiction that has had slow rent growth (and now falling rents), slow unit growth, rising vacancy, expensive and time consuming evictions, a moratorium policy, temporary rent stabilization that could be extended and a county executive who is an open skeptic of housing construction. Right next to that jurisdiction are several others with fewer or none of those drawbacks.

Given all of the above, why would anyone want to build rental units in MoCo?

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Liquor Monopoly Truck Crashes in Aspen Hill (Updated)

By Adam Pagnucco.

This morning, a delivery truck operated by MoCo’s liquor monopoly crashed in Aspen Hill. The crash occurred on Connecticut Avenue near the intersection with Georgia Avenue, shutting down southbound traffic and sending countless cases of liquor splattering across multiple road lanes.

The first indication of the crash was this set of pictures posted on Facebook by a person who came across the crash scene.

Montgomery County Fire and Rescue Spokesman Pete Piringer tweeted three times about the crash.

Here are close-ups of the four pictures tweeted by Piringer.

NBC Chopper 4 reporter Brad Freitas posted video of the aftermath on Twitter.

From Piringer’s reporting, what is known right now is that there were two occupants of the truck, both of whom were transported away by ambulance, and that the driver was trapped and had to be extricated from the truck. Traffic was completely shut down on southbound Connecticut Avenue and limited to one lane northbound. The mess will take some time to clear.

At this time, the cause of the accident is unknown.

Update: NBC4 has video of how this crash affected seven lanes of traffic.

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