A project aimed at building up the area around the Shady Grove Metro station will bring in less than half of the revenue initially expected, new data show.
Proposed by Montgomery County Executive Ike Leggett, the “Smart Growth Initiative” moves or constructs numerous county facilities and agencies– including a Montgomery County Public Schools food production and distribution facility, new police headquarters and new fire and rescue headquarters — near the Shady Grove Metro station. The project is intended to align with plans for new residential, office and retail developments in the area.
When Leggett brought the now-$602.4 million project to the County Council in November 2008, the project was expected to bring in $54.3 million over 20 years. Because of the recession and other economic factors, it is now expected to net $22.1 million in that period.
“It is a concern that the number is significantly lower than it was expected to be, and the council will need to carefully evaluate whether it changes any of the plan,” said Councilman Phil Andrews, D-Gaithersburg/Rockville. “Given how tight the [capital budget] already is, it could affect the council’s decisions on timing of projects.”
Increased project costs are the biggest factor for the change, but lower revenue from land sales and some new expenses also contribute. The project still earns a net positive income for the county because of the tax revenue — $168.7 million–expected to result.
On Tuesday the council is scheduled to discuss what the change in income estimates means for the county’s capital budget in the coming fiscal year, as well as further down the line.
The most recent approved construction budget for fiscal 2013 through 2018 allocates $141.5 million to the Smart Growth Initiative. But some of the developments have increased in cost since the County Council approved them and will need an additional stamp of approval, said Linda McMillan, senior legislative analyst for the council.
But the project has a long-term benefit for the county, even with the added costs, said Joe Beach, director of the county’s Department of Finance. The development helps the county eliminate the cost of leasing buildings and moving out of facilities in need of repair.
“In the long run, I don’t think delay of any of these projects would save the county money,” he said
