Good morning everyone and welcome to the joint session of the government operations of fiscal policy committee and the Econ committee. Today we have one item on our agenda. It is bill 2-25, payment in lieu of taxes. This bill establishes a pilot for certain conversions of high vacancy commercial properties to residential use. Councilmember sales is joining us online today. And I'll just have a few remarks and a turn over my co-chair and Council member Fannie Gonzalez. This bill, this pilot bill is part of a larger package of ZTAs which are being discussed by the Planning Housing and Parks Committee. Given this bill deals with tax policy, this piece of the more housing now package comes to our committee, government operations, and fiscal policy, and the discussions on land use and zoning have been discussed starting on Monday in PHP, and will continue on other pieces of that housing package. Today we are doing this jointly with the Economic Development Committee because Econ has been doing a ton of work over the last year, taking up the issue of incentivizing conversions and looking at the economic impact of doing so in our county. And I know Mr. Ali has in particular done a great deal of work on this topic for the committee so I'm glad we can join forces this morning. We know we are facing a very difficult and uncertain market condition in which new construction, especially the construction of multifamily apartments is increasingly being stymied by factors outside of our control here in the county. We also know, and thanks to the Econ Committee's work, on this topic, that we have a supply of underutilized buildings that are not generating enough income for the county as they could. And we also know we're in a housing crisis and need to look at ways to increase supply and address issues of affordability in our county. So our task this morning, as we review this bill, is to consider the proposal before us and discuss the requirements of the pilot, things like the percentage of affordable units, length of the pilot and other items, to help us decide as these joint committee, if and how this vehicle can provide the incentive we need to encourage development and deliver on affordability. So that is our task this morning. We have quite a number of things to go through, but before we do that, I'll turn it over to my co-chair, Natalie Fanagasales. Thank you so much, Madam President. I'm very excited. I think this is our first e-con go work session ever. So that's a good thing. I want to touch on a couple of things. One highlighting something that the Council pression mentioned is that the Economic Development Committee, which was actually founded about two years ago, two and a half at this point, we're getting old. And one of the first things that we did is that I, one of the first things we did was creating a series of work sessions on the off, on the state of the office market in Montgomery County, okay? That led to several work sessions, a report with the commenditions and two of the things that came out of that report, well, many things came out of that report, but two of the highlights are being discussed this week. One was the conversion from the office to housing. It's a zoning tax amendment that was discussed in PHP on Monday. I'm a member of the PHP committee. And then today is the tax abamement that we're gonna worry about to be discussing. The reality is that vacant office buildings are not useful for anybody. On one side, they bring crime to communities. They don't activate communities. And on the other side, they produce very little tax contributions to the county. So this is a way to actually tackle that issue. And I look forward to that conversation later today. The other thing that I wanted to mention is that the Economic Development Committee, since it was founded, we have tackle different issues. And we do it through work sessions. So the office market is one example, but are not an example that I want to bring to, or to remind people, has been the sessions that we had on the restaurant industry, right? That led to the creation of two new inspectors, thanks to that work. Another one was on agro tourism, right? That led to the ZTA and overnight state that was sponsored by me and on site, Council Member Balkan and Don Luki. Okay, so the next one that we're going to be, that I already mentioned before and I reminded people on Monday was that the economic development committee is going to start a series of work sessions just on the retail space. So starting this fall, just like we did with the office market, we're going to do it on the retail starting in the fall. This is an issue that cannot just happen in one day in one work session, it's something that requires having stakeholders coming in, seeing what's happening in other places, just like we did with the office market. So that's gonna happen this fall. The issue related to lane use in retail spaces was discussed on Monday at PHP and I think the committee and I'm not gonna get into that on the on the results but it's important to say that the committee had a really good conversation and it passed unanimously and it's going to full-cancer but that issue was addressed there because he was lane use okay today we're not discussing lane use so I want to say that. And the last thing I would say is that at the end of the day, I think we need to remind folks that Montgomery County has been a leader on affordability when it comes to production of housing. I mean, you can look at many places across the county, Chewy Chase Lake always comes to mind. That property has what, 30% MPDU affordability. In my own district, district six, we have a couple of projects that I have deeply affordable housing components. Um, and that's because the government partners with a private sector to ensure that this is possible. This is nothing new for us. Uh, we have a track record and I just want to also remind people that later this year the Montgomery County housing department, alongside with a planning department, they're looking into that MPDU program and how we can do an update and it's important to mention all that because at the end of the day this conversation it's about creating more housing and making housing more affordable to everybody. So we are tackling the issue in so many sectors and so many projects because that's the right thing to do and we're walking that talk and we are continuing to be a role model across the nation. With that I'm going to pass it to my coach here and so we can start the conversation. Thank you. And I think the other lead on this bill, Council Member Freeson, wanted to say a few words. Thank you, Madam Co-chairs and Madam President. I just want to appreciate your work on this. We have a lack of housing supply. We have an oversupply of vacant office. This is attempting to address both. I really appreciate all the work that the Economic Development Committee in particular has done specifically on the office vacancy issue when we set out to do this and had begun having conversations in the community about housing. One of the things we heard over and over again was the concern that residents had with why we aren't doing more to address office vacancies. Why we aren't doing more to convert some of the underutilized lots and underutilized properties that are overly vacant into housing. This aspect of this proposal is attempting to do just that. Originally, and we had talked about this in a series of conversations, I had been working on the zoning aspect of this, and I know the Economic Development Committee and the Chair of the Committee had been working on the incentive side of this, today as the incentive side of this. And we ultimately decided to pair them together because they do relate and are together. But essentially, if we want this to happen, we have to incentivize it because it's very difficult. And it's very expensive and it's very cumbersome. And there's only a couple of ways to incentivize. Either we can provide grant funding out of taxpayer money, which is money that is coming out of the budget, or we can forego property tax revenue in order to incentivize and make it happen. That's what today is doing and what we're discussing. It's modeled in many ways after what other jurisdictions around the region and around the country have done. DC, for instance, it's very much aligned with what DC has done. I think it's important to note that we are for going property tax revenue, but we are increasing dramatically income tax revenue. We are adding impact tax revenue. We are adding fees. And not only is it a net benefit in terms of the housing, it's a net benefit in terms of the ultimate revenue that we will receive. And after the end of the abatement process, there is, based on all the projections that we've done, a tenfold or more increase in the property tax revenue that comes from these properties. So at the end of the day, we are receiving more in income taxes and impact taxes and other revenue streams during the course of the pilot itself. After the exploration of the pilot within two to five years we're just going to see tremendously more revenue than what otherwise would occur. And that's not to mention the benefit that we get from the housing that we need and the benefit that we get from eliminating the scourge of vacant buildings, which are public safety issues, which are nuicences to communities in which we hear constantly the complaints and the concerns that we have from residents in our community. So I'm just really appreciative of the efforts here and all the work that has been undertaken, really appreciate the Econ Committee for the extensive briefings and conversations and reports that they worked on that help us get to this point and look forward for us to be moving forward in this direction. Great, I will turn it over now to our staff to walk us through the packet and we have received a number of amendments just from the code leads on this bill as well as members of the Economic Development Committee. So I'll turn it over to you guys. Thank you very much, Chair Stewart. I'll briefly start with the context in which the pilot programs exist within the county, provide a brief summary, a high level summary of bill 225E as it was introduced, and then also briefly run through each of the impact statements before we turn to the various discussion issues that are set forth in the staff report. Currently, the county code authorizes three mechanisms by which an owner may receive the benefit of payment in lieu of taxes. Specific to the issue here, the county code section 5224C contains Buy-Write pilot, which requires the finance director to grant a minimum pilot for certain housing developments based upon ownership or a numerated affordability requirements. The purpose of Bill 225E is to expand the Buy-Write plan to include an extended tax exemption period and reduce affordability requirements when the property developed is a conversion from a high vacancy commercial use to a residential use that achieves timely approval as set forth in various sections of the companion piece that the chair stood referred to 25.03. Specifically, as introduced, expedited bill 225 would establish a minimum payment in lieu of taxes for certain conversions of high vacancy commercial properties to residential use. It would establish the amount of the payment in lieu of taxes and would just generally amend the law governing. It would require the director of finance to offer a pilot for residential development resulting from the conversion of a property that was designated for commercial use, but had at least a 50% vacancy rate at the time of the development application to the planning department or the Department of Permitting Services as required and that's an issue we'll get into a little bit later. To be eligible for the pilot, the conversion of the property must comply with their requirements set fourth in section 3.3.2.2.b of chapter 59 of the zoning chapter, which is what was discussed at Monday's PHP hearing in ZTA-2.0.3, which allows for demolition or adaptive reuse contemplates multi-family or townhouse developments depending on the context, and sets applicable timelines for approval. It must also provide that at least 15% of units be affordable to households earning 60% or less of the area median income for a period of 25 years. In exchange, the bill would require a pilot that would exempt 100% of the real property tax that would otherwise be levied for that same 25-year period. The bill contains an effective date of 20 days after the date on which it becomes law, which aligns with the anticipated passage date of the more housing now package. As alluded to during introductory statements, there were several proposed amendments. Council staff recommends that we generally go through each of these amendments in order. So as to make sure that the conversation stay limited, we get some resolution on each discrete issue before moving on to the next. Because of its broad and overarching implication, staff recommends the conversation begin with the discussion of whether the conversion of vacant two-story retail buildings should be excluded from pilot eligibility in any particular zones. So for example, we would discuss the CRCRT, CRN, GRNR, LSER EOF zones if the chair is okay with that. Sounds like an excellent approach. Thank you. As background, a related issue did arise at Monday's PHP session, which I'll just sort of briefly describe the result of sort of the relevant vote for the committee members and the public's benefit. There was a 2-to-1 vote to eliminate the retail use from the GR and NR zones. And added to that, I'll note that the committee noted that if council staff could sort of word-smith solution that would allow ancillary retail within office, they were voting for that option as well. So there's a little bit more nuance to just say that there's no retail in the NR and GR zones. And I'm hearing from the Chair of PHP, the staff has drafted that. And so although the bill 225E and ZTA 2503 as introduced, were drafted to a line and The bill merely just referred to the ZTA and its applicability of the conversion process and the expedited process, depending on what zone and use. I'll note, staff would note that there is no, from a legal perspective, there's no cognitive dissonance from the ZTA and the pilot differing, which is to say that the ZTA addresses the zoning, the land use, the processes, and the pilot bill addresses more the tax incentive and the structure by which developers would be incentivized to engage in that process. So without taking a position, staff would just note that it is appropriate to discuss these issues here. It's not necessarily a re-litigation of PHP. It is more, there's a principled way in which they could depart from each other. Terrific. Mr. Rolald, do you have any, Ms. Rolald, do you have anything to add at this point? Okay. I know Council Member Sales has put in this amendment, so I'm going to turn over to her first to talk about it. My colleagues, Council Member Freetheson and Council Member Fahni Gonzalez for all your hard work in getting us to this point and working on this proposal. We know that the county has had to address affordability issues and supply issues converting underutilized commercial buildings into residential spaces is essential but did I lose? No, we didn't. Oh, okay, okay. So I'll go ahead and go. Okay. Converting under utilized commercial buildings into residential spaces is essential but it must be done responsibly given current budget constraints. We need to ensure that tax incentives for developers are justified, especially if we're asking residents to accept potential tax increases. This bill's expedited process also doesn't allow sufficient public input on such a significant tax incentive. A few committee sessions and then town halls are insufficient to consider policy changes that could have substantial financial impacts. The RESJ impact statement indicates that this proposal may benefit landlords and higher income residents more than those needing affordable housing. Given the proposed benefits, they're not enough NPD use. And so given my concerns, I will start with the first council members. Council members, sorry, my apologies for interrupting you. Council member sales, the staff had recommended given the implications for your fourth amendment that we start regarding the exclusion of retail in certain zones. So that's the amendment we were going to start with, my apologies. No, no worries. So I'm proposing that amendment to ensure that places that are already very active and attractive for redevelopment don't necessarily need a pilot to incentivize developers. This is where they want to redevelop. I'm hoping that we are redeveloping in areas as my colleagues mentioned that are experiencing blight. And so my recommendation was to exclude properties in general retail, neighborhood retail, commercial residential neighborhoods, and commercial residential towns. zones explicitly would not be eligible for the pilot if they are converted from retail into residential houses. That was my thought. These places are actively employing some of our small business owners. We recently had our mom and pop proclamation yesterday and these two level businesses are the places where our small businesses are finding affordable rents and to think about displacing them and putting housing in a job created zone would be pretty difficult to replace this. and so I am asking for exclusion from certain zones and welcome any feedback or further discussion. Thank you very much Council Member Do I have a second for the amendment? I am not seeing a second for the amendment. Thank you again, Council Member Sales, for bringing that to the attention of the joint committee. I'll turn it back to staff so that we can continue going through the other amendments. Thank you very much, Madam Chair. I'll note I did omit and that was just merely an oversight to just briefly discuss the impact statements. I'm happy to walk through them very briefly at a high level, depending upon the outcome of much of the discussion that's going to come forth on these upcoming proposed amendments and discussion areas. Some of these impact statements, maybe all of them, will sort of become immediately anachronistic. I will note that we have council staff as well as planning staff, DHCA staff and finance staff here, if there are any specific questions about the existing impact statements or about how potential proposed amendments or just discussion items may affect from a high level view, any of the financial or zoning implications. So the next topic to discuss would be the percentage of affordable units for the committee members benefit. Those that are the subject of proposed amendments from both council member sales as well as from council members Freedzen and Fanny Gonzalez. There was public testimony in opposition to expedited Bill 225-E suggesting that the bill's requirement that 15% of the units be affordable is too low and not to be increased. The affordability requirement is of course one of the primary mechanisms that could be adjusted to increase affordable housing stock via the pilot. Council staff is not taking a position on any of these amendments, but does observe that although increasing affordability requirements for the pilot inherently increases affordable housing that is entered into a pilot agreement, the percentage also affects the viability of any particular project and could ultimately reduce the number of developments that the pilot might have incentivized to a point where the pilot is sort of rendered newgatorian has no more causal efficacy sort of. So of course, as I mentioned, Council staff is available to all the committee members to explore this in greater detail during discussion. I council member Freetzin first. Thank you. Appreciate it. Councilor Funnington-Zalas and I sent a memo to colleagues. We heard the feedback. Discussed among colleagues and move forward with or in our moving forward if the committee agrees with two adjustments. The first one is related specifically to the affordability and increasing it to 17.5% MPDU was originally at 15% at 60%, which is the lowest level of MPDU, which ranges from 60% to 70%. I'll just note that DC, as we talked about, their requirements 10%. So we were already above that. We already are traditionally above that. We'd be going beyond that. So I would move to increase the affordability level of the requirement to 17.5%. We have an amendment for 17.5%. On the floor and I know Council Member Glass you had a question. I do. I know there's a lot at us, right? So it's trying to figure out when to make some comments. I'll speak to this since it's on the floor, and it's been seconded. I appreciate increasing the 17 and a half percent. I clearly had a lot of questions about the proposal, and one of them was the level of MPTUs in that would be required. So this is clearly an improvement of that. But while I have the floor, I think I would like to ask the sponsors a general question. It has been brought to our attention that within the package that you have introduced, this is the only one that is expedited. And it has raised questions among people as to why this is expedited. Can you share as to why this is an expedited bill? Yeah, I can answer. I can answer. Yeah, so the reason is expedited is that the normal course of bill becomes effective on a far greater timeline than a ZTA becomes effective. So the reason that the bill was introduced as expedited was so that the bill's effective date would align with the effective date of the associated ZTAs. It doesn't necessarily have to be that way. So the ZTAs could have become law and there just would have been a lag by a few months for the pilot bill to become effective itself, but that was the only intent behind making this in expedite Bill. I appreciate that. I think it's really important for people to understand that, that while there are a package of bills and ZTAs in order for them to all work at the same time without having any lags, one, this one in particular, would need to be expedited. I think it's really important for understanding because there are various questions and concerns people have raised, but this is just about making the sequential order of all five legislative pieces work cohesively at the same time. That is correct. Yes. Thank you. So now back to the point on the floor. I appreciate this amendment. I have myself done landscape analyses of how these programs work. I'll talk more about that at another time, but very much think that we should do everything that we can while still making these programs and projects feasible. And so I will support this amendment. All right, thank you. I will also support the amendment and appreciate the co-leads for looking at this again and I know I want to thank Council Member Sales for also having raised some of these issues as well. As we are looking, we know having these conversations that look at how we increase supply and the affordability go hand in hand. So I appreciate the co-leads for looking at that again. I am not seeing anyone else who wishes to speak. We have an amendment on the floor to change the percentage of MPDU are required from 15 to 17.5% all those in favor please raise your hand and that is unanimous of everyone on the joint committees. Thank you very much. The next issue I don't believe there are any publicly circulated amendments to this effect but the staff report did note that depth of affordability is another lever that the committee could pull to adjust the impact of the pilot. As introduced, expedited bill 225 requires that eligibility for the pilot be contingent upon units being affordable to households earning 60% or less of the area median income. It's deeply entwined with the percentage of affordability. It's sort of two sides of the same coin and similar to the discussion before about percentage of affordable units to the extent that the AMI percentage is raised or lowered. It becomes more or less financially attractive to developers at their some lower level where it may end up making the pilot sort of completely ineffective because it no longer provides an incentive that overcomes the cost of that development. So I'll turn it back to the chair. Thank you and I do apologies we moved on to the depth and I do want to give council member sales an opportunity to speak to go back to the affordability requirements because she did want to speak to the amendment she had put forward. Thank you Madam Chair and I did put an amendment forward for 30% for the MPDU since we did not address the deeply affordable issue. And since some of my colleagues mentioned the WOMADA project as inspiration for this pilot looking at the affordability that resulted from that single project, There are no units available for middle income earners. And so I am very concerned about the sort of housing that will result from this pilot. If we are truly trying to address an affordable housing supply, housing supply shortage period, to make it accessible to the people who truly needed it. We just passed the Open ZTA my first year on the council. And so I did want to introduce an amendment to consider a 30% increase to the MPD use with 15% going towards 60% area median income for workforce housing and then 30% AMI for the remaining 15% to ensure that we are building equitable housing for our residents and we are not specifically building housing for a select few. Thank you Council Member Sales for raising that point. Do anyone like to second that amendment or have any questions? Council Member Glass has a question. Thank you, Councilmember Sales, for raising this issue. I have a question for you. You said that the single project that was created using the Womada pilot didn't create any all users in her middle class housing. Can you expand upon that? What data you're referring to? Well, have you seen the rents for that building? Well, that's what I'm asking. As we're trying to assess it, I want to better understand your point so I can get your way through the end of it for us. Yeah, so a three-bedroom apartment is upwards of almost $11,000 a month. So I'm just trying to understand what sort of housing will result from the houses that we aren't and incentivizing through this pilot. For 60% area median income, which was just approved for 17.5% 60% of the area median income or higher who can truly access those rentals. The deeply affordable housing supply that we desperately need, where we just allocated almost $3 million to help people pay their rent who couldn't afford to pay their rent, and all of the evictions that we are seeing, we are not investing in enough deeply affordable housing. And so my proposal is to split whatever housing MPDU supply is introduced to ensure that we're also meeting the needs of the deeply affordable needs of our residents. I thank you for expanding upon that. I still have questions about the statement that was made about middle-class housing not being built. As I enter this entire conversation, I recognize that there is a need for deeply affordable housing to which we commit tens of millions of dollars every year towards that goal. But what I'm also really focused on is making sure that recent college graduates who are outside that AMI area can afford to live back in Montgomery County that a newly married couple with tens of thousands of dollars in college loans, graduate school loans, law school loans can afford to live in Montgomery County and to hear a statement that middle class housing is not being built there, I was surprised by it and that's why I asked for information. I yield back. What are you surprised by? I have a college graduate. There are many people, people who work in my office, who can't afford to buy a home. People who are living in people's basements because they can't afford to buy a home here in Montgomery County. This is a reality. This is not just a blanket statement or a random issue. This is the reality for many residents. So I hope you're not surprised by the statement. I was looking for some data to back up the statement. I yield back. Thank you. Thank you, Council Member Sales. If I may, I just want to sort of make sure we're centering the our centering the discussion to make sure we all sort of know what we're talking about. Thank you, I appreciate that. Just because some of the conversation, the colloquy between council members, glass and sales, did veer a little bit into the four-sale option, and I know that was another amendment that council member sales introduced. I just want to make sure that everyone understands that the motion that was on the table is for a 30% affordability requirement. At this juncture, it would be only as being discussed right now is the four rent units. And I understand Council Member Salis, you also do have, I think I don't know where to look at. You do have, may, you do have an amendment as well, about four sale that has a little bit more nuance and division. So I just want to make sure that everyone is sort of talking apples to apples during this conversation. Appreciate that clarification. I think Councilmember Freetzin and then Fannie Gonzales. Thank you. I just wanted to respond and clarify to Councilmember Glass's question. The Strathmore Square Project, which I think is what was referenced in the more housing at Metro Proposal, which is a project that's been completed, there are other projects that are potentially in the works as part of that effort. That is 22% affordable. The requirement is part of the- You say that number again? 22% over 20% it's between 20 and 22%. Like of the total units. The requirement is part of the More Housing At Metro was 15% but there was a deeply affordable requirement. Within that we opted to make the number higher to 17 and a half percent. You can choose both of those, you know, it's a,'s a, they have different financial impacts. The financial impact of going to 17.5% is actually a little bit more significant than increasing the depth within the 15% generally in terms of what we did at Strathmore Square as a body. The Amazon equity fund participated in that, which helped to increase the level of affordability, which does speak to the aspect when you make these projects happen, when you create more housing, you create more opportunities for affordable housing as well. And I appreciate Council Member Sales is my partner. I partnered with her on the Open ZTA that she referenced. I will note that those projects are largely non-profit and affordable housing providers through income housing tax credit and other programs that largely get high levels of public sub-cities through the Housing Initiative Fund and other efforts to make those projects work. The idea of accelerating it so that we don't have to subsidize projects that are being slowed down is really important. I think that effort is critical. I'm fully committed to expanding our affordable housing units, but I just think it was important to clarify the question that you had, Councillor McLaughlin, to speak to that. But really appreciate the conversation. I think it's an important one. We need more affordable housing. We need more housing. We need to make sure that we are supporting as many people as we can. I just wanted to clarify that one point. Thank you. I appreciate the envelope. Thank you. Councilmember Fanning, as well. I'm going to say thank you so much to Councilmember Laurie and Cells because the fact that we continue talking about the need of creating more housing and the people of affordable housing, this is what we're here today. And this issue doesn't get solved with one effort, like the situation is one out of so many things that we're doing, and it's very important to continue talking about it. So I love her for saying that. So I just want to put that out there. The other thing I wanted to re-emphasize, we're talking about a minimum. We're say minimum 17.5% requirement for MPDU, minimum. And I will say once again, what I was saying in my introduction remarks is that, and I feel so proud that there are at least two projects going on right now in my district. One of them, the Forest Glen one, Rhinex Forest Glen Metro Station that is providing, I'm going to read it, ready for no me. M.H.P. will restrict 100% of the units for Russians earning at or below 60% of the area median income. That's amazing and it's happening right now. There is another one on Vios Me Road with Randolph where we used to have the old rec center deeply affordable housing. Then the other one that starts this year in Wheaton with the Arts and Culture Center and plus another one that I'm not allowed to announce but it's coming at the end of this year and it's going to be market rate. That's all I'm gonna say because I can say anymore but it's on the move and I just want to say it is so that word is so important minimum 17.5 percent that's it thank you. Thank you. Council Member Malcolm. Thank you. Appreciate this discussion. And I think that this, I just want to highlight something that was in the packet and already alluded to is that there is a balance, right? We, the Economic Development Committee worked for almost a year to look at these, that are vacancy rates at the same time that we're talking about creating more housing. And this, of course, this package is great. And very often, in the discussion of that we need more housing, people will invariably say, well, why don't you just convert the empty office buildings? It's a common throwaway line, but it can't happen without incentive. So I so appreciate this packet, and particularly this conversion. But it's a balance in terms of the incentives, we have to incentivize it. It won't happen if we don't incentivize it. But there is a balance in terms of, of course, we want to make sure that we have affordable units. I supported the 17% increase the increase to 17%. But we have to make sure that the balance works and we can't if we go too high for affordability or the we extend it or the tax abatatement is too low it's not going to work financially so I'm good with where we've ended up with 17 percent thank you. Thank you council member cats. Thank you. If I can figure out how to cut my microphone here that's the right microphone. Thank you very much and I appreciate the discussion as could be noted I'm not a I'm not a co-sponsor of this legislation, but I do have a general statement I'd like to talk about. There is no question we have a problem right now in Montgomery County with vacant office space, and it's only going to get worse now that the federal government is doing away with some of their leases and that also involves the contractors who are dependent on the federal government as well and they can commercial buildings are not helpful for anyone. One of the things that has always been disturbing to me, and I've had this conversation just recently with Councilmember Freetzon, is that if the assessments of the vacant building or partially vacant are based on the leases of that building. So if the assessor comes in and says this building is you know really is worth this and the property owner says but I don't have anybody in here you got to reassess it. The assessor says well you're right you reassess it. The assessment is good for three years. The next week or a month later they get a tenant and we're glad for that the property owner was able to be successful with that. However, we're stuck with that low reassessment for three years. So it's not like anybody's calling them back and saying good news we have somebody in this building. This discussion in it's about, but it really is, and it certainly involves housing, and it involves affordable housing, but the larger discussion is the conversion of office space to residential. That's what this larger discussion needs to be about. And this is not part of what we've done as we've said because we do budgets one year at a time. But because there was the 20 year or whatever it was for for the abatement, let's talk about how much it's going to cost us for the 20 years. This is an investment. How much are we going to be better off at the end of those 20 years so that people will be able to get the income tax and be able to get the higher property taxes that we need. We use. It is for the betterment of all of Montgomery County, the monies that we spend. The people that disagree and say, I don't like this part and there's other parts they don't like, but the reality is in general, we need to get services. So this is not an investment for the short term. This is an investment for the longer term. And I think it needs to be pointed out that not everybody's gonna be under this program. I mean, it would be wonderful if we had legislation and everybody in the world said, this is the one I'm going to, we're not. But the reality is we need to have something that is actually going to get something built. And that's what we need to be doing. I think through the give and take of this discussion, through the give and take, we can actually get something done, something built, and that somebody would convert their office building over to residential, and then people could be there. Thank you very much. Thank you, Councilmember Katz. Just as a reminder, we have on the table a motion by Council Member Sales to look at the affordability and to increase what we have on the table now was the 17.5% in the amendment we passed to do a minimum of MPD use to 30%. I will turn it back to Council Member Sales. Council President Stewart, and thank you Council Member Cats for bringing up the office conversion. And just to be clear, we are not talking about the vacant office buildings only. We are talking about live work units, as well, retail storefronts, two-story storefronts. And so I think there needs to be a bigger discussion about what is now at stake for benefiting from these conversions because the last amendment that failed was about removing those retail spaces like the ones that exist in the Kentlands or along New Hampshire Avenue. I want to assist developers with converting these large vacant office spaces and buildings government-owned. This 30% and Councilmember Glass you asked about data. The self-sufficiency standard for family afford to adults and two children is $141,336. That's average. 60% of the area median income is not going to be able to afford the houses that were just the apartments that were just built at Strathmore Square. So me asking for deeply affordable housing to be considered in the 17.5 percent since it passed or considering the 30 percent higher threshold so that more housing can be built at the 60% area median income and have some also considered at 30% will help our educators. It will help our frontliners be able to live in Montgomery County and not have to go to Frederick to afford to live and then commute on our roads to get here. So I just want us to be clear about what sort of housing we are supplying our community with through these pilots. Thank you. Thank you very much Council Member Sales. So we have a motion for this amendment to increase it to 30% MPD use. Do I have a second? Not seeing a second. Before we move on, I just asked the staff to clarify, because I know this was a conversation in PHP on Monday, and it got a bit confusing. And as we're moving forward, I think it's important for people to understand what would be considered under this ZTA, excuse me, this bill to make sure that we understand what commercial properties would be looking at this pilot when they converted to residential. Absolutely. And I can sort of re-highlight in a little bit more depth what occurred at PHP on top, as it was drafted on top of the ZTA, as introduced. And I'll also note that if there are any specific questions about a specific area, neighborhood, part of the county, we have council staff, planning staff here available to answer any of those questions. And so I guess I'll note that in here. So basically the ZTA originally allowed the expedited process and this conversion of office and it was defined as commercial use that was office buildings and retail buildings and that was within the panopoli of rezones that had been under consideration. At PHP, the retail building use within that commercial use was excluded in the NR and GR zones, which means so, and as of now at least, the pilot is sort of inextricably linked to the ZTA, so whatever happened at the ZTA, as of now at least is what the pilot would provide. And so the pilot would be available to developments of a commercial use, to or commercial use to a residential use and commercial is defined as an office use or a retail use. Keeping in mind that needs to be at least 50% vacant and two stories tall. All of those zones with the exception, which was what was created at the PHP hearing, in the NR and GR zones, a retail building use within that commercial use is ineligible for the expedited process, which means it would be ineligible for the pilot. So that carries through to the pilot. So as of now, they're inextricably linked to anything that was changed in PHP or anything that might change at full council in the ZTA Would carry through to the pilot as presently drafted Yes as a reminder the cities of Rockville and Gathersburg have their own zoning and so anything within those municipalities would not come under The zoning text amendment nor our pilot correct as mr. Ali was is hopefully trying to remind me to say out loud. Yes. I channeled. I got it. GTA does not apply to Rockville and Gathersburg or in or any municipality with independent zoning authority because they're inextricably linked therefore the pilot would not apply to those. Right. Thank you. Clear as mud. Um, um, um, Councillor Meing back on, did you want to? Yes, so I just wanted to, so we had, I watched the PHP Committee, clear as mud. But the assumption is that we will see an amendment or we will see not an amendment but a clarification from the staff. I voted against voted against that proposal but on the chair, the committee that was the committee's votes on beautifully channeling my chairmanship here. The committee requested that staff develop an amendment to clarify the issue that was raised by planning staff of ancillary uses in many of the commercial properties. So like a small cafe or some small retail use that's in many buildings, but it's not the primary use of that building. It's not even potentially a storefront. It could be within the interior confines that only serves that building. If you have a vacant or overwhelmingly vacant building, the viability of that retail space that is supposed to serve the use of the building is no longer viable as well. I want to eliminate those that was not within the spirit of what even the colleagues that supported that they noted in committee. So at full council, the committee's recommendation will include the clarified language from staff that includes language on the ancillary use because the idea was to protect the retail storefronts that are neighborhood serving, community serving, but not those smaller, ancillary uses that are intended to serve the building itself that is vacant. Hopefully that was clearer than might. Much clearer and I assume that that's what was going to happen afterwards and and because I think it's an important issue it's hard to have the discussion about how this impacts the pilot without having a full understanding of the ZTA that accompanies it. So thank you. So now I think we clarified again what this would cover in terms of retail and not, and we've dealt with the situation and looked at and increased the affordability criteria here. So why don't we turn now to the length of the pilot, which I think is also, is that okay with you? Before I just wanted to make sure that there were no motions related to the depth of affordability before we- No, I did not see any. Yeah. So I think on the affordability, we're good, and now I think the other piece of this, as Council Member Balcum said, there are many moving pieces. And when you look at the affordability and you also look at length of the pilot is also key as people are looking at the benefit they may get from this type of pilot. So let's go to length. Absolutely. So as introduced for eligible properties, the pilot provides tax exemption for 25 years from the year in which use and occupancy is issued. So it's not from application or anything like that. It's from when you and I always issued for the development. This again presents a variable that council could revise to increase the county's long-term revenue as compared to the bill as introduced. Again, as with the percentage of affordable units in depth of affordability, reducing the number of years for which a property receives a tax exemption, but ultimately reduced the number of developments that might have been incentivized. And again, their likely is some floor at which the pilot is no longer an effective tool to incentivize development. To center the committee members, this is the subject that two circulated proposed amendments, one from Council members, Friedside and Fenyngan-Sales, and the other from Council members Sales. I would like to move the amendment that reduces the time to the tax abamement to 20 years. This is something that we have studied and we have seen how it gets implemented in Washington DC. In DC, just so people can see and compare, the DC stacks a payment program ranges from 20 to 40 years. So we, we, Council Member Fritz and I have put together a proposal that will lower the 25 years original proposal to 20 and I urge the Council to, this committee, the joint committee to do that. Anything lower than 20 won't be an incentive. It will like truly kill the whole idea of incentive icing developers to do this. So I'll move back. We have a motion and a second to change the length of the pilot to from 25 to 20 years. Any councilmember boss? Thank you. Thank you Madam Chair. I appreciate this amendment being introduced. Again it was one of the big questions I had when the legislative package was originally introduced why 25 years because I had done a landscape analysis and our neighbors in Washington of a 20-year pilot program Seattle offers a 20-year pilot program Boston actually offers a 29-year program, but that's only with a 75% tax abatement. So there's lots of ways to mix Mix these incentives, but I thought 25 was too high and I will support this for 20 I see no one else willing to, oh, willing, wanting to, I'm wanting to speak. Yeah. Oh, so did everybody. Everybody's willing. Everybody's willing. All those in favor of this amendment, please raise your hand. And I have everyone present in the room, supportive of it. And we did did have another amendment but I'm not sure if Councilmember sales wanted to speak to the idea of a 10 year. I'm not seeing her. Oh, you're there. Okay. Yes. I'm going to thank you. Yes. Thank you. Sorry. Can we clarify the vote on the? Oh, yes, Council Member Sale, sorry, apologies. We don't see you on video. Can you clarify your vote on the amendment for the pilot length to be 20 years? Was that support, abstain, opposition? Abstain. Okay, thank you. So now we'll turn it to you for your amendment. Thank you Madam Chair. I proposed a 10-year pilot where this was in hopes of the open ZTA being passed, but even though it didn't, they are still receiving an expedited review through this process and then they have two years to build. So no one's building one project at a time and I think 10 years is more than enough time to contribute to our housing supply and my follow-up amendment would be the sunset. So even if we are considering a lower pilot that we also consider a sunset to evaluate the effectiveness and the return on the investment, how many houses are we actually contributing to the community through these pilots? And so I'm hoping that there is consensus to be able to evaluate these pilots for their return on investment to the community. Thank you, Council Member Sales. Let's take these one at a time. Is there a second for moving the length of the pilot to 10 years? Not seeing any. Let's move on to Council Member Sales. Other recommendation in moving a sunset provision so that we can reevaluate. The amendment is a proposed sunset after 10 years. Do I have a second for the sunset? Second. Council Member Fanny Gonzalez, second for the sunset. Anyone wishing to speak to this amendment? Council Member, welcome. Yes, thank you. Yes, I support this amendment. And I just want to be on record as I generally support sunsets. I think we should do them more. Thank you. All right, thank you. And thank you, Council Member Sales, as well. I really appreciate the idea of a sunset and considering that there's so much changing in our county and in the country right now. And I think having the stability of the pilot for 20 years is appropriate as an incentive, but us coming back and looking at it and having the sunset for 10 years is an excellent idea. I'll turn it over to Councilmember Fannie Gonzalez. Also, we have the sunset 10 years. It's a great idea. And I thank Councilmember Cells for providing the amendment. Great. Does staff have any comments on this amendment? All right. No, all right. favorite of the the sunset amendment, please raise your hand. That is everyone, Council Member Sales just clarifying that you are raising your hand. Thank you very much. So we have now taken care of affordability, length, and the sunset. I believe there's one other item on. Oh, Council Member Glass, did you have a, your end up? There are. Oh, too, too. I, my apologies, yes. Couple of issues. So the next one in the staff report relates to pilot retroactivity, which to center the council members, council member Glass this morning, his office circulated a proposed amendment related to retroactivity. Several proponents of expedited bill 225E testified that the bill should be amended to allow for properties that have already applied to either the planning department or the Department of Permitting Services as required to be eligible for the pilot without having to reapply under the new expedited process set forth in 2503. Council staff had made a recommendation to sort of baseline to the extent that that is explored, what would make sense mechanically, operationally within the framework, and I'll turn over to Councilmember Glass if that's okay, Chair. Thank you very much for that. So I think it's important to recognize how this will actually work from moving from theory to actuality. And as we move forward and put this legislative package into law, there are a number of projects that are at various stages of development. Some of them are very, very early on. And my question for staff is if this package were to pass, which I presume it will, it was introduced with majority support, and presumed it will pick up more support. If it were to pass for a home builder that's already in the process, what would they do in order to receive the benefits of this? So depending upon where they are in the process, so if a developer has already had submitted some application to either the planning department or the department of permitting services to receive the benefit of the pilot because the pilot again is inextricably linked to the ZTA as they are each introduced and amended with the ZTA, that developer no matter where they are in the process would need to go back to the planning department and reapply go through the site plan process now. Note that within ZTA-2503 if it is passed, it would be a 60-day timeline for them to get that resolution from planning at which point the individuals would have two years from planning board resolution to apply to the Department of Permitting Services for their building permit that gives them time to get their core in shell and some of that engineering. And then they would have two additional years from the time of application. So it's not necessarily a two plus two, two years from the application of DPS to obtain the building permit. Department of Permanent Services has assured Council staff that that is ample time for any developer to reach those milestones if they are indeed motivated and engaged with the Department of Permanent Services. So to answer your question more briefly, Council Member Glass, for a developer or a multi-family Home Builder who is already in the process, they would sort of have to go back to stage one with the bill as presently drafted. Right. And so, thank you for that. So there are a lot of different stages and lots of levels of investment that are made. But let's make the assumption that a home builder who is in the very first stage has submitted and received approval for, let's say, site plan. All that they would then have to do is resubmit. Is that correct? As presently drafted. So if without this amendment, without the amendment, if this legislative package moves forward, all they would have to do is resubmit and then get an approval in 60 days. Correct. Because they've already gotten the approval. Correct. So they would go through this process because it would help them build more homes. Presumably, yes. Right. So, thank you for that. And so the reality is the homebothers are who are in the earliest stages are going to to just simply reapply so they can participate in this program and All that actually does is just delay homes coming online by at least 60 days possibly more So the amendment I'd like to introduce Will allow those in that earliest stage? Well, it doesn't specify the earliest stage, but that's really where it really where it becomes most feasible. Allow them to apply for this program because the reality is it will help those homes come online sooner. They are going to participate. And if the goal here in this legislative package is to help more homes come online as soon as possible, this does that too. So I make a motion to introduce this amendment. If you said all right, Council members, if I just clarify the amendment as- Yes, please could you read it or yeah, yeah, yeah, yeah, absolutely. Before we have discussion and seconds and votes, the amendment as introduced or as proposed would add line 60 to 69 of the bill, though depending on where the sunset comes that may adjust the line numbers. It would add a section four transition period, which would provide that if a property has obtained site plan approval from the planning board by the effective date of this legislation, then the property is eligible for a payment in lieu of taxes under Section 5224C4 as amended by this act. If it otherwise complies with sub-paragraphs for A and 4C of Section 5224C as amended by this act, and an applicant for the property. One applies for a building permit, which is accepted by the Department of Permanent Services and includes the core and shell of the principal building within two years of the earlier date of the planning board's resolution or the effective date of this legislation. And two, obtains the building permit within two years of DPS's acceptance of the building permit application that includes the core and shell of the principal building. And for the committee's benefit, so essentially what that does, that places those developers who have already received site plan certification from the planning board on equal footing with any other entity that would have to go through the expedited process. It obviates the need to reapply through planning, but places them on that same footing so that they can just move forward at DPS with the same exigency that is required under the expedited process. Second from Councilmember Fanning Gonzales. Second and I'm glad I'm Jim. I'm just going to call you by your first name. Glad to fight. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry. Clarified and I want to thank Councilmember Glass for providing the transition amendment. And I'll support it. Thank you. Councilmember Freizen. Yeah, thanks. I supported as well. Appreciate it. I'll note, when we originally proposed as the reason why it wasn't included, was the thought process was that we were trying to unstick things that were stuck and allow things to move forward that otherwise weren't moving forward. The thought processes, those that were going through site plan, were moving forward in some capacity. Although we do know that there are a number of projects that do go through site plan that never actually move forward to actually provide housing to the people who needed it or actually take the vacant properties offline. We have lots of examples of that. So that was the reason why I wasn't originally included. The original thought process was let's focus on the vacant buildings that nothing is happening with, which we have a large number of those unfortunately, which was the primary objective. There is a secondary group of those projects that are going through or have gone through some aspect of the process, but may not continue on through fruition. And we wanna make sure that they can move forward as quickly as possible and not create in extra 60 days that would be unnecessary. So I support it and appreciate it, but just did wanna to clarify why it wasn't included in the original package and what we were originally focused on and why I'm comfortable and happy with moving forward with the support for this amendment. Now just say thank you to Council Member Glass. I appreciate the leads thinking originally. And I think as each day goes by, right now we are seeing so much volatility in the market and instability that being able to give the support to folks who may have gone through that site plan to get them to the next level is important. So appreciate that. All right, all those in favor of this amendment, please raise your hand and that is unanimous of the joint committees. All right, I think now we have one more item. One more. We have two more items. Sorry, I have two more items. That's the most important. So the next item in the staff report relates to whether the pilot should be extended to allow for four sale units. This originally was raised by the planning board, which recommended that council expand the pilot to also allow the option for four sale units. This is the only issue that staff took a position on in the staff report. As a sort of practical. Staff does not believe that the pilot mechanism will work with a four-sale unit. Basically, that selling the units rather than renting them would, first of all, make it a little bit more administratively challenging for the county because of potential resale. And moreover, it is unclear whether, as a practical matter, a developer would be able to sufficiently monetize future tax relief through sale and the way it could properly plan forward for the tax exemption on rental properties. I would also add this is not in the staff report, but the state enabling legislation for the pilots refers specifically to rentals. It does not specifically referred to fore sale. That may have been an oversight. It's a close call. My own read is that because the way that the county pilot is crafted, an applicant needs to comply with the state law as well as the county law. So we just say that if an amendment were added and passed to add a fore sale option, it would not be per se illegal, but it may be completely ineffective because an applicant may not be able to take advantage of it. On the flip side, I would note that if the General Assembly then promptly changed the state law to allow for four-sale, then the county would have a trigger in place that would allow that pilot to take place. That's sort of the background that I would place. It was proposed by planning and to center the council, are the committee members as well. There was also a proposed amendment to this effect by council member sales that was circulated. Before we turn to the amendment, I just wanted to see if you have any clarifying questions from what was presented on the for sale. Council member Lath. So clarifying question into the mechanics of something like this. Is it essentially, would it become essentially a tax credit for a new home owner in effect? Essentially yes for that 25 year period. I mean, it's not a tax, it's just the tax abatement each of the 25 years is how it would work. So it would be that the developer has entered into this pilot agreement, but the manner in which the abatement occurs is on the annual tax levy. And so it would not really be able to be captured by the developer, but also could really be monetized through resale. Right. And I think that's important. Aside from, or in addition to all the other legal complications that you noted, it takes the scope very in a very different direction than has was originally intended to. Thank you for that clarification. Thank you, Council Member Sales, given the legal advice and analysis we just received, just wanted to see if you had any questions or thoughts on the amendment that we received from you this morning. Yes, I just wanted to clarify that a developer's benefits now convey to homeowners when and they assume the properties that are built by a developer. I didn't realize that developers, I mean, the new home owner, Leon Lords will benefit from these tax breaks, these tax abatements. Is that what you're saying, Jim? So as presently drafted because it only applies to rental units, the tax abatement would be addressed with the developer. If a four sale, oh sorry. I amend men for the ability for homeowners to take advantage of these new projects that are being built through pilots to become homeowners and to build well would not be recipients of the tax evapment that we are extending to developers to increase our affordable housing supply. So it would be a little complicated because the pilot agreement would actually be between the developer and the county, but the benefit of the tax abamement would go to the recipient of the tax levy in subsequent years. And so that's why mechanically council staff is not certain how a four cell model would work with the pilot because of the the the the sale of the property and the tax obligation changing from the developer to a subsequent owner. I don't think that's a member. Sorry, I was going to say council member Sally. I other point that The staff made was oh, I'm sorry. I was just saying that it looks like Jim main want to do additional research to ensure that what he is communicating to us is in fact true because if the ability for home owners people who want to not just rent in Montgomery County, but want the ability to purchase a home should also be able to benefit from this without being able to receive the tax benefits that we are extending to the developers for producing this affordable housing supply. Yes, thank you, Councilmember Sales. And obviously this will go to full council, and we can have a further conversation there if you would like. I think that the other thing that council staff has talked about is the state law that we also must abide by specifically says rental and does not say home ownership. So I think in the future this may be something that we need to clarify at the state level. And so but I'm sure that staff as we put together this packet for conversation at full council We can make sure that is also included in it. Absolutely. Okay. Sounds good. Thank you very much. All right. Now on to the next item. I'm saying last anymore. So the last item, if I'm not mistaken, is the staff amendment that was circulated within the addendum. This is a clarifying amendment that is merely intended to achieve the intent as it was drafted. So specifically, there are some, there are very, very few, but there are some developments that could potentially go convert from within all of the confines of the ZTAs, could convert from a commercial use to a residential use while never requiring planning a review on site plan from planning. As presently draft, DPS, sort of anecdotally said, it would be like 1% or less, and so it may not arise. But as presently drafted, upon review of the language and speaking with some stakeholders, council staff decided that that language could use a little bit of clarifying. So essentially, it would amend lines 31 through 54, which is the broad part. But in subpart 4a of the bill, it deletes the reference to the Department of Permitting Services in the first instance, and then clarifies that it is if the properties development does not require site plan approval from the planning department to the Department of Permitting Services. So that sort of serves two purposes first to achieve the intent, but also to clarify that that 50% vacancy rate is at the time of the applicable regulatory unit. So for example, if an entity does need to go through planning board review, the 50% vacancy rate, the applicable time is at application to planning board. Only if planning board review is unnecessary for that development, is the 50% vacancy rate at application to Department of Programming Services applicable. And then in subpart B of that same subparagraph, the new language would be added so that it would say that the properties development meets all the requirements of an expedited approval plan, there's section 7.3.5 of chapter 59, which is what's there, but because certain developments may not need to go through that expedited process to make sure that they weren't inadvertently removed from eligibility for the pilot, proposed language from from staff would add that accept that if a property's development does not require site plan approval from the planning department, it is not required to meet the requirements of an expedited approval plan, but must obtain the building permit within two years of acceptance by the Department of Permitting Services of the building permit application that includes the core and shell of the principal building. And that language there mimics what is in 7.3.5 with that two year requirement once the application is submitted to the Department of Permitting Services. Any questions on that? No, but I would like to second the staff recommendation. I think it completely makes sense and thank you so much for catching that. Councilmember? Yes, just to clarify clarify, and you may have said it, and I missed it. Give me an example of when a conversion wouldn't need a site plan. Phone a friend. I'm going to phone a friend because it's so rare that I need to turn to someone who knows more than me. You would say the question is, if one would you not need a site plan for an office conversion? Yeah, if you're not significantly changing the footprint of the building, if you're not going to be adding infrastructure to the building, you wouldn't necessarily need to do it. I think there's an example in Silver Spring of a conversion on near Spring Street, I believe, that went straight to building permit a few years ago, like back in before 2020. But that's the only example that I'm aware of. So. Thank you. Thanks. All those in favor of the technical amendment from staff? Please raise your hand. Oh, sorry. Oh, sorry. I'm sorry. Yeah, the one clarification included in the language is the original as drafted affordability and timeline requirements. So I just would note that the motion just to clarify to make sure that we clarify that on the record. The motion is based on the amended or earlier amended affordability and time horizon of 17.5% and 20 years. Absolutely. I wanted to note that before we took the vote. Thank you. All those in favor of the amendment, please raise your hand. And I see, Council Member Sales, are you good with the technical amendment? Yes. Yes. All of us. Now I think we're gone through the packet. And I think there were just to keep track for everyone. We amended it to increase the affordability to 17.5% MPDU. The pilot is now for 20 years. We have the 10 year sunset. We added the transition language thanks to Councilmember Glass and then had the technical amendment. That is correct. That is all. I'm going taking one final vote because it's fun. All of those in the committee, join committee in favor of the amended bill. Please raise your hand. In council member, council member, sales just checking with you. Council member, sales is abstaining. And so we have a joint committee recommendation to the full council for this bill. Thank you very much. Thank you. Thank you. Great job, everybody. Thank you. Thank you.