Pay and Go and the Special Election, Part One

For all the discussion of developer contributions a year ago, none of the four District 4 candidates last time had any record on the development issue. This year, two of them do. But to find out what those records are, we had to go back over a decade to one of Montgomery County’s most hard-fought development battles: the legendary throwdown over Pay and Go.

Prior to 1997, Montgomery County’s famously complicated development policy included two elements that were despised by developers. First, if a project caused traffic to exceed county congestion standards, the developer would have to either bear the entire infrastructure improvement cost or wait for the county to build it. Second, some areas were subject to outright moratoriums. At the time, residential development moratoriums applied to Aspen Hill, Clarksburg, Damascus, Fairland-White Oak, Montgomery Village-Airpark and North Potomac. Commercial moratoriums applied to Clarksburg, Derwood, Fairland-White Oak and Montgomery Village-Airpark.

Some in the county believed these rules held back employment and population growth and created a competitive disadvantage against Fairfax. In May 1997, At-Large County Council Member Gail Ewing introduced Pay and Go, a plan supported by the Suburban Maryland Building Industry Association that was intended to provide an alternative development process. Under Pay and Go, developers would no longer be required to bear the entire cost of infrastructure improvements necessitated by their projects, but could merely pay a fee to the county. The county would then be responsible for building new capacity. The fee system would apply inside areas subject to moratoriums, effectively ending them. The Gazette laid out the fees in the plan:

Under the Pay and Go plan, developers would pay $2.50 per square foot for commercial space and $3.50 per square foot in areas where development has been halted. They also would pay $1,500 for a multifamily unit, $2,250 for a townhouse and $3,000 for a house -- but $2,500 for a multifamily unit, $3,500 for a townhouse and $4,500 for a house in areas where development is halted.

For months, debate raged over the plan. Supporters said it was necessary to jump-start the economy and would raise money for transportation projects. They claimed that Montgomery County had a reputation as “hostile to business” and that Pay and Go, as a four-year pilot, would be just one step in a different direction. Former County Executive and current County Council Member Neal Potter, an opponent, said this:

“We don’t need more jobs. I don’t know that we need more housing, that's questionable,” said Councilman Neal Potter (D-At large) of Chevy Chase. He added the council should ask itself, “Is this a help in building the infrastructure? [Or] is it just a proposal for building developments in basically undesirable areas?”

Opponents also pointed to a proposed development in South Germantown that required $17 million in infrastructure improvements under the current system. Under Pay and Go, the developer would be allowed to contribute just $4 million in fees.

The County Council passed Pay and Go in October by a 5-4 vote. Voting in favor were Gail Ewing (At-Large), Ike Leggett (At-Large), Mike Subin (At-Large), Derick Berlage (District 5) and William Hanna (District 3). Voting against were Neal Potter (At-Large), Marilyn Praisner (District 4), Betty Ann Krahnke (District 1) and Nancy Dacek (District 2). Ironically, Republicans Krahnke and Dacek opposed a plan backed by the Montgomery County Chamber of Commerce and a substantial portion of the county’s business community. Doug Duncan signed the bill the following month.

The Washington Post promptly proclaimed “Developers Win One in Montgomery” and Pay and Go became a big issue in the 1998 County Council elections. We’ll find out how big in Part Two.