Who will pay for new development?

Clarksburg residents charge developers are illegally shifting their responsibilities onto homeowners

Residents of development districts pay special tax assessments to help pay for infrastructure and amenities beyond what is normally required of developers.

Development districts become partnerships between developers and the county to fund projects in new communities. During the process, the county sells municipal bonds and money from the development district tax repays the bondholders.

The three development districts planned for Clarksburg are not the first created by the county, so the county knows they are a valid financing tool, County Council President Marilyn J. Praisner (D-Dist. 4) of Calverton said in a prepared statement.

‘‘A significant issue is not whether development districts are legal, but whether appropriate procedures were followed in all cases,” she said.

The 1994 Clarksburg Master Plan envisioned using development districts to help pay for the infrastructure required for Clarksburg to grow from less than 2,000 residents to 40,000 in a relatively short period of time.

Development districts were to help fund the infrastructure for the new community so that Clarksburg’s development did not become a burden on the rest of the county. Development district funding would allow developers to provide infrastructure faster than if they had to vie with other county projects for county funding.

Former County Executive Douglas M. Duncan last April appointed a group to decide which projects would be funded by development district money in Clarksburg.

However, the group’s report released last week questions the use of development districts in Clarksburg and essentially agrees with a report issued by the Clarksburg Town Center Advisory Committee that finds problems in the way the county is implementing the districts in Clarksburg.

‘‘As a condition of approval, the Montgomery County Planning Board imposed additional infrastructure and land dedication requirements on the developers of Clarksburg Town Center, Clarksburg Village and Arora Hills (Greenway Village),” according to the report issued last week by the Clarksburg Development District Advisory Committee. ‘‘However, it is clear ... that any alternative financing vehicles (including development districts) were to have been secured prior to any development approvals.”

The County Council has approved a development district for the Clarksburg Town Center but has not authorized the bonds necessary to fund it. Development districts have also been proposed for Clarksburg Village and Arora Hills, but they have not yet been approved.

‘‘The law requires home sellers to inform home buyers in any area designated as a development district that the property is located in a development district and they may have to pay additional taxes as a result,” Praisner said.

Buyers were not told, according to both committees.

According to the Clarksburg Development District Advisory Committee’s interpretation of state law, 80 percent of the property owners in a development district have to approve creating the district.

That was not done, according to both committees.

Whether it was done is a question of interpretation, said Michael Faden, County Council staff attorney.

Under county law, the initial petition to create a development district has to be triggered by 80 percent of the property owners and, in all three Clarksburg cases, the developers, who were the landowners, asked the council to create the development districts, he said.

The report issued by the Clarksburg Development District Advisory Committee said residents were not properly notified that the development districts were in place.

‘‘I think they ask a lot of good questions,” Councilman Michael J. Knapp (D-Dist. 2) of Germantown said. ‘‘We’ve got to delve into it.”

The County Council should have asked developers many more questions about their implementation plans before supporting the development district law, said Amy Presley, president of the Clarksburg Town Center Advisory Committee, the residents’ group that uncovered hundreds of building violations in the Clarksburg Town Center in 2005.

The development districts were set up as special tax assessment on residents to help pay for roads, parks and other necessities above and beyond what is normally required of developers. Developers are also responsible for contributing some of the funding for those districts.

‘‘In terms of governance, the most egregious is the development process for Clarksburg, which is flawed at every level,” Presley said. ‘‘No one caught that, or if they did catch it they did not act on it.”

She said it is also egregious that residents will be asked to pay millions of dollars to fund infrastructure that should be the responsibility of developers.

The misapplication of development district law amounts to an illegal transfer of obligations, according to the Clarksburg Town Center Advisory Committee’s report.

‘‘I feel the county has let us down by not having protection for the people living there,” said Dave McDermott, a resident of Arora Hills and a member of the Clarksburg Development District Advisory Committee. ‘‘It allows developers to dictate how the laws will be interpreted.”

The Clarksburg Town Center Advisory Committee is cynical about the County Council’s internal investigation of alleged improper implementation of development districts in Clarksburg.

‘‘We believe we need an objective investigation from someone outside of the county,” Presley said.

At least one developer feels the process has been appropriate since the beginning.

‘‘Our client believes that everything that was done here was done in a full, public, transparent process in accordance with law,” said Stephen Kaufman, the lawyer representing Clarksburg Town Center developer Newland Communities and its predecessor, Terrabrooke.

Newland Communities bought Clarksburg Town Center after the county had created a development district for the community.

‘‘The company acquired it with the understanding a development district was in place,” said Douglas Delano, Newland vice president.

Newland expects development district funds to pay for extending the public water line to the community, the Stringtown Road widening and other road projects, among others, he said.

‘‘We’re optimistic we’ll find the county did what it was supposed to do,” he said.

He hopes development districts are not removed as a financing tool for projects in Montgomery County and Maryland.

‘‘Nothing is a done deal yet,” Knapp said.

Council staff is to report to the council on the development district issue June 15.