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Privatizing Montgomery County's Economic Development Efforts

Real Estate Law Update

Montgomery County is in the process of privatizing its economic development efforts by dismantling its Department of Economic Development (DED) and transferring most of its functions to a new private entity, Montgomery County Economic Development Corporation (MCEDC).

The county approved the reorganization legislation mid-year 2015 and appointed the new board of directors in late October. The new company commenced start-up operations in December, and it will focus on marketing, business development, and company attraction/retention efforts.

The privatizing process began in 2010 when the county council adopted legislation authorizing the formation of Montgomery Business Development Corporation (MBDC). The focus for MBDC was to supplement DED’s work in marketing, business development, and company attraction/retention efforts. In late 2012, MBDC hired a CEO from Nashville, Holly Sears Sullivan. With a very small budget and staff based in Rockville, MBDC brought new energy and creativity to DED’s work and helped change the county’s culture regarding its relationship with the business community.

The success of the fledgling MBDC, along with the county’s continued stagnant growth following the 2008 recession, convinced County Executive Ike Leggett in late 2014 to privatize the economic development process by replacing DED with a new private entity, MCEDC. The county introduced legislation last May, and it was enacted by the council on June 30. The county executive appointed the initial board of directors members in October, followed by their confirmation by the county council in early November.

The legislation carved up DED’s responsibilities, delegating core economic development functions – marketing, business development, company attraction/retention – to MCEDC, and distributing other functions to various county agencies; a new Office of Agriculture took over agricultural reserve activities, and the County’s Department of Finance took over administration of economic incentives.

MCEDC will be a tax-exempt entity under federal law, and initially will receive the entirety of its funding from the county (estimated to be $4 million to $6 million annually, depending on staffing levels and marketing initiatives). MCEDC will be governed by an 11-member board of directors, including one member from the county’s reorganized workforce development program. Three additional board members serve ex-officio from the State Department of Commerce, the county executive’s office, and the county council. MCEDC will hire its own CEO, and have a full staff to support its mission. Its office will be independently located and managed.

MCEDC’s inaugural board meeting took place on December 18. The executive committee was elected (chair: Bob Buchanan, Buchanan Partners; vice-chair: Robby Brewer, Lerch, Early & Brewer; secretary: Ola Sage, e-Management; treasurer: Sanjay Rai, Montgomery College), DHR International was selected to conduct a CEO search, and RMR & Associates was selected as the initial public affairs consultant.

Because a new CEO is not expected to be hired until spring 2016, MCEDC is currently prioritizing its initiatives for the first quarter of 2016. Those initiatives are likely to include active participation in key industry sector trade conferences such as Mid-Atlantic ICSC, Bio 2016, and RSA Cyber Conference; strategic company visits, collaboration with company retention efforts (e.g., Marriott International), and input into ongoing task forces (e.g., vacant office space; pending Sector Plans).

MCEDC intends to work proactively with the business community to forge constructive relationships with Montgomery County, as well as to help the county compete and cooperate in economic development initiatives. Full implementation of MCEDC’s functions is expected to occur in the new fiscal year beginning July 1, 2016.

Robby Brewer is an attorney at Lerch, Early & Brewer in Bethesda, Maryland whose practice is rooted in the firm’s Land Use & Zoning and Health Care groups. Robby skillfully guides clients through the critical phases of expanding, developing, buying and selling real property, and has counseled hospitals, institutional health care entities and physicians in a wide variety of health care and land use matters. 

This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here.

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