Empower Montgomery (EM) released a report today, displayed at the bottom of this post, arguing that Montgomery County faces strong economic headwinds. In particular, it highlights \u201ca disproportionate, unhealthy reliance on residential tax base\u201d for new revenues and a corresponding lack of growth in commercial business.<\/p>\n\n\n\n
And this is where they lost the plot.<\/p>\n\n\n\n
Despite having identified the lack of growth in commercial business, and \u201cunimpressive\u201d commercial real estate valuations, as critical challenges for the county, EM’s number one solution is bizarrely geared towards promoting more residential growth.<\/p>\n\n\n\n
Specifically, EM\u2019s report expresses alarm that several areas in the county could soon face building moratoria because of the lack of sufficient spaces in public schools to educate more kids. Empower Montgomery regards moratoria as a major business challenge and calls for building more schools to prevent them.<\/p>\n\n\n\n
Leaving aside the question of the best places for needed capital investment in the public school system, often in existing schools, the problem facing Montgomery County is not residential development but commercial business<\/a>. Put another way, we need more businesses that produce goods and services other than more housing.<\/p>\n\n\n\n Though this is the central point of the entire report, EM\u2019s number one solution (literally, it\u2019s numbered \u201c1\u201d) is obliviously to promote more residential housing growth. EM links school construction, rather than improving what’s inside the schools, to better outcomes. Perhaps it’s not accidental that the former but not the latter enables more housing construction.<\/p>\n\n\n\n In a similar vein, EM comes up with concrete ways to fund school construction. But their report is silent on the question of funding operations, which is far more critical to long-term student success and a heavy ongoing cost. Again, one might almost think schools are more about housing development than child development.<\/p>\n\n\n\n Beyond failing to make the connection between school construction and student performance, EM\u2019s report completely neglects to explain why building more residential housing attracts new commercial business. That may be because the report itself inadvertently shows that it doesn\u2019t. After all, EM\u2019s report reveals that Montgomery\u2019s housing stock and population have grown without attracting needed new business.<\/p>\n\n\n\n The truth about residential development is that it is often unprofitable from the county\u2019s perspective. Once the builders are gone, they leave a new group of residents demanding additional infrastructure and services. While commercial business brings both employment and tax revenues, new residential development is much closer to a break-even proposition.<\/p>\n\n\n\n Even new residents who don\u2019t need special government\nservices\u2014and many will\u2014still require more police and fire protection. More\nresidents mean we need more people at the 911 call center to take just one\nmundane example.<\/p>\n\n\n\n One set of new residents is especially expensive: children. Education is by far the most expensive service that local government provides. It takes up roughly one-half of the current county budget. Very few families are net contributors to the county budget while they have kids in the public schools. Unless we\u2019re willing to increase classroom sizes, it\u2019s also not easy to achieve economies of scale.<\/p>\n\n\n\n Depending upon who moves into new homes and infrastructure required, and the county school system remains a core asset, residential development can even exacerbate county balance sheet problems. I\u2019m not saying education is not a worthwhile expense. As an educator, I have a decidedly vested interest in promoting it. But it\u2019s not cheap.<\/p>\n\n\n\n In short, focusing on residential development as the\nsolution ignores the critical problem. Even more myopically, it utterly ignores\nelection results not just in Montgomery but also in other parts of the state,\nsuch as Anne Arundel, expressing frustration with the lack of infrastructure to\nsupport current residents.<\/p>\n\n\n\n Let\u2019s be blunt. For too long, the county has often conflated building and business. We need to spend a lot more time thinking about how to attract and to grow commercial businesses into commercial spaces than building more residential housing. Attracting more business would sure help us afford the new residents for whom there is already ample zoning.<\/p>\n\n\n\n EM is right that expanding the commercial tax base has to be\na key part of addressing that problem. As the previous county council under the\nleadership of Councilmember Nancy Floreen revised the zoning code in a\npro-business manner, it would be welcome if the new council would turn its\nattention to promoting new commercial business.<\/p>\n\n\n\n In contrast, pursuing EM\u2019s approach on development would be a perfect example of trying the same solution again and expecting a different result. Why on earth shoring up residential development is touted as essential when the central problem is a badly anemic commercial business sector remains a mystery. <\/p>\n\n\n\n Empower Montgomery is a business group\u2014it supported David\nBlair for county executive\u2014and it unsurprisingly contains pro-business\nrecommendations. In terms of residential development, their approach represents\nmore of the same, and it\u2019s not going to cut it.<\/p>\n\n\n\n We are not going to solve our problems in attracting new commercial businesses by building more residential homes. At the same time, EM is right that expanding the commercial tax base has to be a key part of addressing that problem. Other ideas in the report may be well worth considering. I\u2019m certainly a fan of privatizing the liquor monopoly<\/a>.<\/p>\n\n\n\n The previous county council just revised the zoning code in a pro-business manner. It would be welcome if the new council would shift its attention to promoting new commercial business. We have a bunch of new councilmembers who hopefully can bring new perspectives on how to bring new business vitality to the county.<\/p>\n\n\n\n It would also be terrific if the business community would\npartner with the new executive and council in figuring out ways to both make\nMontgomery County government more innovative and efficient, and also work far\nbetter to attract business. Reforming county government has been a central plank\nof Marc Elrich\u2019s platform. If business doesn\u2019t take him up on it and keeps\nmaking him out to be the boogeyman, they\u2019re missing a real opportunity.<\/p>\n\n\n\n Business needs to play a bigger role in helping move Montgomery County forward. But this report\u2019s focus on residential development as a solution to commercial business problems suggests that the political representation of business may be just as skewed towards the residential developers as the county\u2019s tax base is to residential development.<\/p>\n\n\n\n