Supplement to the Preliminary Official Statement Dated February 22, 2017
Relating to the Issuance of $346,000,000 Baltimore County, Maryland General Obligation Bond Anticipation Notes
This Supplement to the Preliminary Official Statement (the “POS”) dated February 22, 2017 regarding the Baltimore County, Maryland General Obligation Bond Anticipation Notes in the aggregate principal amount of $346,000,000 (the “BANs”), including the Notices of Sale with respect to the BANs contained within the POS, modifies the interest payment dates for the BANs set forth in the POS, including the Notices of Sale contained therein. Interest on the BANs will be payable on September 16, 2017 and the maturity date of the BANs. Each reference in the POS, including the Notices of Sale, to the interest payment dates for the BANs is hereby replaced by the interest payment dates set forth in this Supplement.
February 27, 2017 This Preliminary Official Statement and the information contained herein are subject to completion or amendment and approval by the County. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. redeemable priortomaturity. BANs. BaltimoreCounty,MarylandwillactasPayingAgentandNoteRegistrar.TheBANs arenot day months.InterestontheBANswillbepayableSeptember15,2017andmaturitydate ofthe delivery to the maturity date of the BANs, computed on the basis of a year consisting of twelve 30- as Cede&Co.istheregisteredownerofBANs.TheBANswillbearinterestfrom date of New York(“DTC”),towhichprincipalandinterestpaymentsontheBANswillbemade so long registered inthenameofCede&Co.,asnomineeTheDepositoryTrustCompany,New York, OF THEBANS-Book-EntryOnlySystem,”theBANswillinitiallybeissuedinbook-entryform and denomination of$5,000eachoranyintegralmultiplethereof.Asdescribedunder“DESCRIPTION Dated: DateofDelivery herein speaks onlyasofthatdate. March 15,2017. in theNoticeofSale.The BANsindefinitiveformwillbeavailablefor deliverytoDTConorabout McKennon Shelton&Henn LLP,Baltimore,Maryland,BondCounsel, andotherconditionsspecified imposed onforeigncorporationsengagedin a tradeorbusinessintheUnitedStatesofAmerica. a corporation’salternativeminimumtaxable incomeandwillbesubjecttothebranchprofitstax interest earnedontheBANs,forfederalincome taxpurposes,maybeincludedinthecalculationof from grossincomeforfederaltaxpurposes. Asdescribedhereinunder“TAXMATTERS,” and underexistingstatutes,regulations decisions,interestontheBANswillbeexcludable or theinterestthereon;and(iii)assumingcompliance withcertaincovenantsdescribedherein as toestateorinheritancetaxes,anyother taxesnotleviedorassesseddirectlyontheBANs payable onthemareexemptfromStateofMarylandandlocaltaxation;noopinionisexpressed obligations of Baltimore County, Maryland; (ii) under existing law, the BANs and the interest NEW ISSUES–Book-EntryOnly $121,000,000 BaltimoreCountyConsolidatedPublicImprovementBondAnticipationNotes–2017Series $225,000,000 BaltimoreCountyMetropolitanDistrictBondAnticipationNotes–2017Series The BondAnticipationNotes(“BANs”)willbeissuableasfullyregisterednotesinthe The date of thisOfficial Statement isMarch__,2017andthe information contained The BANsareofferedfordeliverywhen,asand ifissued,subjecttotheapprovingopinionsof In theopinionofBondCounsel,(i)BANswillbevalidandlegallybindinggeneral PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY 22, 2017 General ObligationBondAnticipationNotes B
altimore Relating totheIssuanceof
Official Statement $346,000,000 C ounty , M aryland Moody's InvestorsService: S&P GlobalRatings: Due: March16,2018 See “Ratings” Fitch Ratings:
AMOUNTS, INTEREST RATES AND PRICES OR YIELDS
$225,000,000 Baltimore County Metropolitan District Bond Anticipation Notes – 2017 Series
Interest Rate*: Price or Yield*: CUSIP No.:
$121,000,000 Baltimore County Consolidated Public Improvement Bond Anticipation Notes – 2017 Series
Interest Rate*: Price or Yield*: CUSIP No.:
*The interest rates shown above are the interest rates payable by the County resulting from the successful bids for the BANs on March 1, 2017 by a group of banks and investment banking firms. The prices or yields shown above were furnished by the successful bidders for the BANs. Other information concerning the terms of reoffering of the BANs should be obtained from the successful bidders, and not from the County. See “SALE AT COMPETITIVE BIDDING.”
The CUSIP numbers listed above are provided by CUSIP Global Services and the County does not take any responsibility for the accuracy thereof. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Global Services information.
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BALTIMORE COUNTY, MARYLAND
CERTAIN ELECTED OFFICIALS
COUNTY EXECUTIVE
Kevin Kamenetz
COUNTY COUNCIL Tom Quirk, First District, Council Chairman Vicki Almond, Second District Wade Kach, Third District Julian Earl Jones, Jr., Fourth District David Marks, Fifth District Cathy A. Bevins, Sixth District Todd Crandell, Seventh District ______
CERTAIN APPOINTED OFFICIALS
Fred Homan, County Administrative Officer Keith Dorsey, Director of Budget and Finance Michael E. Field, County Attorney Will Anderson, Director of Economic and Workforce Development ______
BOND COUNSEL
McKennon Shelton & Henn LLP 401 East Pratt Street, Suite 2600 Baltimore, Maryland 21202
______
FINANCIAL ADVISOR
Public Resources Advisory Group 39 Broadway, Suite 1210 New York, New York 10006
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No dealer, broker, salesman or other person has been authorized by the County to give any information or to make any representations with respect to Baltimore County, Maryland, or the BANs issued thereby, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the County. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the BANs by any person, in any jurisdiction in which it is unlawful for such person to make such offer, solicitation, or sale.
TABLE OF CONTENTS
Page Page SUMMARY OF OFFICIAL STATEMENT ...... v Fiscal Years 2016 and 2017 Interim Budget Comparison ...... 27 SECTION I − THE ISSUES ...... 1 General Fund Revenues and Expenditures ...... 28 Description of the BANs ...... 1 Baltimore County’s 25 Largest Taxpayers ...... 30 Application of Proceeds ...... 4 Metropolitan District Enterprise Fund ...... 32 Tax Matters ...... 5 Budgetary Procedure...... 33 Ratings ...... 7 Pension and Retirement Plans ...... 34 Sale at Competitive Bidding ...... 7 SECTION IV − ECONOMIC AND DEMOGRAPHIC Continuing Disclosure ...... 8 INFORMATION ...... 40 Approval of Legal Proceedings ...... 8 Location and Size...... 40 Approval of Offering Statement ...... 8 Population ...... 40 SECTION II − DEBT SUMMARY ...... 9 Population by Age Group...... 40 Issuance and Authorization of Bonded Indebtedness...... 9 Income Levels ...... 41 Legal Debt Margin ...... 9 Per Capita Personal Income...... 41 Short Term Borrowing ...... 9 Distribution of Households by Effective Buying Income...... 41 Net Tax-Supported Debt Outstanding ...... 10 Employment ...... 41 Metropolitan District Debt Outstanding...... 10 Average Annual Employment ...... 42 No Overlapping Debt ...... 10 Employment by Industry Profile ...... 42 Debt Information ...... 10 Labor Market Characteristics ...... 43 Key Debt Ratios ...... 10 Private and Public Sector Employers ...... 44 Rapidity of Principal Retirement ...... 11 Commercial and Residential Growth ...... 45 Ratio of Debt Service to General Fund Revenues ...... 11 New Business and Real Estate Activity ...... 45 Summary of Debt Service Charges Until Maturity ...... 12 New Business Formation...... 49 General Obligation Debt Approved and Unissued ...... 13 Transportation Facilities...... 49 Leases ...... 13 Major Business Parks ...... 52 Other Agreements and Commitments ...... 15 Industrial Redevelopment...... 54 Capital Improvement Program Overview ...... 18 Technology Locations ...... 55 Capital Budget and Five Year Capital Program ...... 19 Enterprise Zones...... 57 SECTION III − FINANCIAL INFORMATION ...... 20 Housing ...... 57 Basis of Accounting ...... 20 SECTION V − COUNTY GOVERNMENT AND Fund Financial Statements ...... 20 ADMINISTRATION...... 58 Awards ...... 21 Description of the County Government Structure ...... 58 Revenue Stabilization Reserve and General Fund Surplus ... 21 Biographies ...... 58 Investment of Operating and Capital Funds ...... 21 Government Organization Chart of Baltimore County...... 61 Five Year Summary of General Fund Revenues and Description of Services and Agency Functions ...... 62 Expenditures ...... 22 Labor Relations ...... 64 General Fund Comparative Statement of Revenues, Litigation...... 64 Expenditures and Changes in Fund Balance ...... 23 Auditors...... 65 Five Year Summary of General Fund Budget and Actual Appendix A−Financial Statements Results ...... 24 Table of Contents for Financial Statements ...... A-1 Five Year Summary of General Fund Balance ...... 25 Appendix B−Proposed Forms of Opinion of Bond Counsel...... B-1 FY2017 Operating Budget ...... 25 Appendix C−Continuing Disclosure Agreement ...... C-1 General Fund Estimated Revenues and Budgeted Appendix D−Notice of Sale Metropolitan District BANs ...... D-1 Expenditures FY2016 and FY2017 ...... 26 Appendix E−Notice of Sale Consolidated Public Imp. BANs .. E-1
This Official Statement is not to be construed as a contract or agreement between the County and the purchasers or holders of any of the BANs.
All quotations from and summaries and explanations of provisions of laws and documents herein do not purport to be complete and reference is made to such laws and documents for full and complete statements of their provisions. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinion and not as representations of fact. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implications that there has been no change in the affairs of the County since the respective dates as of which information is given herein.
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SUMMARY OF OFFICIAL STATEMENT
The Issuer ...... Baltimore County is a body corporate and politic that performs all local governmental functions within its jurisdiction. It has no incorporated towns, villages, municipalities or other political subdivisions with separate taxing authority. There is no overlapping debt within the County. Baltimore County and Baltimore City are separate and independent corporate and political units.
The BANs ...... The $225,000,000 Baltimore County Metropolitan District Bond Anticipation Notes – 2017 Series and the $121,000,000 Baltimore County Consolidated Public Improvement Bond Anticipation Notes − 2017 Series (collectively, the “BANs”).
Maturity Date ...... The BANs mature on March 16, 2018.
Interest Payment Dates ...... The BANs will bear interest from the date of delivery to the maturity date of the BANs, computed on the basis of a year consisting of twelve 30-day months. Interest on the BANs will be payable on September 15, 2017 and the maturity date of the BANs.
Redemption ...... The BANs are not redeemable prior to maturity.
Application of Proceeds ...... The BANs are being issued for the purpose of providing interim funding for the County’s Capital Program.
Security for BANs...... The BANs will be obligations of the County for the payment and performance of which the full faith and credit and unlimited taxing power of the County are pledged. The principal source of repayment for the BANs will be the proceeds of the sale of additional bond anticipation notes or the bonds for which the BANs were issued in anticipation.
Maryland and Federal Income Tax ...... Under existing law, the BANs and the interest payable on them are exempt from State of Maryland and local taxation; no opinion is expressed as to estate or inheritance taxes, or any other taxes not levied or assessed directly on the BANs or the interest thereon; and, assuming compliance with certain covenants described herein, and under existing statutes, regulations and decisions, interest on the BANs will be excludable from gross income for federal income tax purposes. As described herein under “TAX MATTERS,” interest earned on the BANs, for federal income tax purposes, may be included in the calculation of a corporation’s alternative minimum taxable income and will be subject to the branch profits tax imposed on foreign corporations.
Book-Entry Only System ...... The BANs will initially be issued in book-entry form and registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York, which will act as securities depository for the BANs. As long as the book-entry system is maintained, beneficial owners of the BANs will not receive certificates representing their ownership interests in the BANs.
Continuing Disclosure ...... The County has covenanted for the benefit of the owners of the BANs to provide certain financial information and operating data, and to provide notice of certain events.
The information set forth in the Summary of the Official Statement is qualified in its entirety by the detailed information contained elsewhere in this document.
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Official Statement Relating to the Issuance of $346,000,000 Baltimore County, Maryland General Obligation Bond Anticipation Notes $225,000,000 Baltimore County Metropolitan District Bond Anticipation Notes – 2017 Series $121,000,000 Baltimore County Consolidated Public Improvement Bond Anticipation Notes – 2017 Series
SECTION I: THE ISSUES
The purpose of this Official Statement, including the cover page and appendices, is to provide information for prospective purchasers and others who may become holders of any of the $225,000,000 Baltimore County Metropolitan District Bond Anticipation Notes – 2017 Series (the “Metropolitan District BANs”) and $121,000,000 Baltimore County Consolidated Public Improvement Bond Anticipation Notes – 2017 Series (the “Consolidated Public Improvement BANs,” together with the Metropolitan District BANs, hereinafter referred to as the “BANs”) issued by Baltimore County, Maryland (the “County”). This Official Statement has been approved and authorized by the County for use in connection with the sale of the BANs. Financial and other information contained in this Official Statement have been prepared by the County from its records (except where other sources are noted). The information is not intended to indicate future or continuing trends in the financial or economic position of the County.
DESCRIPTION OF THE BANS
General
The Consolidated Public Improvement BANs will be issued in the aggregate principal amount of $121,000,000, and the Metropolitan District BANs will be issued in the aggregate principal amount of $225,000,000. The BANs will be dated the date of delivery, will mature on March 16, 2018 and bear interest at the interest rates set forth on the inside cover page of this Official Statement. The BANs will bear interest from the date of delivery to the maturity date of the BANs, computed on the basis of a year consisting of twelve 30-day months. Interest on the BANs will be payable on September 15, 2017 and the maturity date of the BANs. The BANs are not redeemable prior to maturity.
The BANs will be obligations of the County for the payment and performance of which the full faith and credit and unlimited taxing power of the County are pledged (see “Sources of Payment” below). So long as Cede & Co. is the registered owner of the BANs, the interest payments due under the BANs shall be made to Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”).
The principal of the BANs will be payable at the offices of the Director of Budget and Finance, Baltimore County, Maryland (the “Paying Agent” and “Note Registrar”). The County may designate another entity as Note Registrar and Paying Agent upon 30 days’ prior written notice to the registered owners of the BANs. Interest on the BANs will be payable by check or draft of the Paying Agent mailed to the registered owners thereof. So long as Cede & Co. is the registered owner of the BANs, the principal of the BANs may be paid at a location agreed upon by the County and DTC and may also be made by wire transfer of funds. The principal of and interest on the BANs will be paid in lawful money of the United States of America in the manner and at the places herein above prescribed.
Authorization
The BANs are being issued under the authority of Section 19-212 of the Local Government Article of the Annotated Code of Maryland (2013 Replacement Volume and 2016 Supplement) (the “Local Government Article”), the Baltimore County Charter (the “Charter”), with respect to the Metropolitan District BANs, Chapter 539 of the Acts of the General Assembly of Maryland of 1924, as amended, and with respect to the Consolidated Public Improvements BANs, Section 19-101 of the Local Government Article, and certain borrowing plan ordinances enacted by the County Council of Baltimore County, Maryland, as authorized by Bill No. 22-16 of the County Council of Baltimore County, Maryland, adopted on May 26, 2016.
Sources of Payment
The principal source of repayment of the BANs will be proceeds from the County’s issuance and sale of additional bond anticipation notes in the form of notes, commercial paper or other obligations or bonds in anticipation of the sale of which the BANs are issued. The County has covenanted to issue, upon its full faith and credit, bonds in anticipation of the sale of which the
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BANs are issued, when, and as soon as, the reason for deferring the issuance thereof no longer exists, and to pay the principal of and interest on the BANs from the proceeds of such bonds. If the County shall not, for any reason, issue and sell its bonds as aforesaid, or if the proceeds from the sale of such bonds shall be insufficient to pay the principal of and interest on the BANs, then the revenues from taxes and other sources intended for application to debt service on such bonds will be applied to the payment of the principal of and interest on the BANs. In such event, with respect to the Consolidated Public Improvement BANs, the County shall levy or cause to be levied ad valorem taxes upon all the assessable property within the corporate limits of the County in rate and amount sufficient to provide for the payment, when due, of the principal of and interest on all such Consolidated Public Improvement BANs. In the event the proceeds from the taxes so levied in any such fiscal year shall prove inadequate for such purposes, additional taxes shall be levied in the succeeding fiscal year to make up any such deficiency. With respect to the Metropolitan District BANs, the principal of and interest on the Metropolitan District BANs will be paid from time to time, as and when due, from the funds held by the County realized from the levy and collection of special assessments and charges within the Metropolitan District of the County (the “Metropolitan District”). In the event of a deficiency of such funds from special assessments and charges at any time while any of the Metropolitan District BANs are outstanding, for the purpose of paying the principal of and interest on the Metropolitan District BANs, the County will promptly levy upon all legally assessable property within the Metropolitan District a tax or taxes in an amount or amounts sufficient to make up any deficiency. Further, in the event the proceeds of such tax or taxes so levied prove insufficient, the County will levy a tax or taxes upon all of the legally assessable property within the entire corporate limits of the County in rates and amounts sufficient to provide for payment of the balance of the principal of and interest on the Metropolitan District BANs. Repayment of the principal of and the interest on the BANs is guaranteed by the irrevocable pledge of the full faith and credit and unlimited taxing power of the County.
Noteholders’ Remedies
It is the opinion of Bond Counsel that the County may be sued in the event that it fails to perform its obligations under the BANs to the holders thereof and that any judgments resulting from such suits would be enforceable against the County. Nevertheless, a holder of a BAN who has obtained any such judgment may be required to seek additional relief to compel the County to assess, levy and collect such taxes as may be necessary to provide the funds from which such judgment may be paid. Although there is no Maryland law with respect to this issue, it is the opinion of Bond Counsel that the appropriate courts of Maryland have jurisdiction to grant additional relief, such as a mandatory injunction, if necessary, to enforce the levy and collection of such taxes and payment of the proceeds thereof to the holders of general obligation notes, pari passu, subject to the inherent constitutional limitations referred to below.
It is also the opinion of Bond Counsel that, while remedies would be available to noteholders and while general obligation notes of the County are entitled to constitutional protection against the impairment of the obligation of contracts, such constitutional protection and the enforcement of such remedies would not be absolute. Enforcement of a claim for payment of the principal of or interest on the BANs could be made subject to the provisions of Chapter 9 of the federal bankruptcy laws or of any statutes that may hereafter be constitutionally enacted by the United States Congress or the Maryland General Assembly extending the time of payment or imposing other constraints upon enforcement.
Redemption
The BANs are not subject to redemption prior to maturity.
Form and Denomination
The BANs will be issuable in fully registered form in the denomination of $5,000 or any integral multiple thereof. The BANs will initially be issued in book-entry form without physical distribution of certificates made to the public. DTC will act as securities depository for the BANs, and the BANs will be registered in the name of Cede & Co., as nominee of DTC.
One certificate for each of the Consolidated Public Improvement BANs and the Metropolitan District BANs will be issued to DTC and held in its custody. The book-entry system will evidence ownership of the BANs in the principal amount of $5,000 or any integral multiple thereof, with transfers of ownership effected on the records of DTC and its participants.
Book-Entry Only System – General
DTC will act as securities depository for the BANs. The BANs will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate for each of the Consolidated Public Improvement BANs and the Metropolitan District BANs will be issued, each in the aggregate principal amount of such BAN, and will be deposited with DTC.
DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing
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corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of the BANs under the DTC system must be made by or through Direct Participants, which will receive a credit for the BANs on DTC’s records. The ownership interest of each actual purchaser of each BAN (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the BANs are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in BANs, except in the event that use of the book-entry system for the BANs is discontinued.
To facilitate subsequent transfers, all BANs deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of BANs with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the BANs; DTC’s records reflect only the identity of the Direct Participants to whose accounts such BANs are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to BANs unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the County as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts BANs are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Distributions on the BANs will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the County or the Registrar and Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Registrar and Paying Agent, or the County, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the County or the Registrar and Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the BANs at any time by giving reasonable notice to the County or the Registrar and Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, BAN certificates are required to be printed and delivered.
The County may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, BAN certificates will be printed and delivered to DTC.
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Book-Entry Only System − Miscellaneous
The information in the Section “Book-Entry Only System − General” has been obtained by the County from DTC. The County takes no responsibility for the accuracy or completeness thereof. The County will not have any responsibility or obligations to DTC Participants or the persons for whom they act as nominees with respect to the payments to or the providing of notice to the DTC Participants, or the Indirect Participants, or Beneficial Owners. The County cannot and does not give any assurance that DTC Participants will distribute principal and interest payments paid to DTC or its nominees, as the registered owner, or any notices, to the Beneficial Owners, or that they will do so on a timely basis or that DTC will serve and act in the manner described in this Official Statement.
Discontinuation of Book-Entry Only System
In the event that the book-entry only system is discontinued, the BANs will be delivered by DTC to the Note Registrar and such BANs will be exchanged for BANs registered in the names of DTC Participants or the Beneficial Owners identified to the Note Registrar. In such event, certain provisions of the BANs pertaining to ownership of the BANs will be applicable to the registered owners of the BANs as described below.
Interest on the BANs will be payable by check mailed by the note registrar and paying agent designated by the County (the “Designated Note Registrar”) to the persons in whose names the BANs are registered as of the close of business on the Regular Record Date (being the 15th day of the month immediately preceding the month in which the interest payment dates of the BANs occur) at the addresses shown on the registration books of the County maintained by the Designated Note Registrar; provided, however, that any such interest not punctually paid or duly provided for shall cease to be payable to the registered owner on such Regular Record Date, and may be paid to the persons in whose names such BANs are registered as of the close of business on a date to be fixed by the Designated Note Registrar for the payment of such defaulted interest (the “Special Record Date”), notice of which will be given by letter mailed first class, postage prepaid, to such persons, not less than 30 days prior to such Special Record Date, at the addresses of such persons appearing on the registration books of the County maintained by the Designated Note Registrar, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the BANs may be listed and upon such notice as may be required by such exchange. The principal of and premium, if any, on the BANs will be payable at the principal corporate trust office of the Designated Note Registrar.
The BANs in fully certificated form will be issued as fully registered BANs without coupons in the denomination of $5,000 each or any integral multiple thereof. Such BANs will be transferable only upon the registration books kept at the principal corporate trust office of the Designated Note Registrar, by the registered owner thereof in person, or by an attorney duly authorized in writing, upon surrender thereof together with a written instrument of transfer in the form attached thereto and satisfactory to the Designated Note Registrar, and duly executed by the registered owner or a duly authorized attorney. The County may deem and treat the person in whose name a BAN is registered as the absolute owner thereof for the purpose of receiving payment of or on account of the principal thereof and interest due thereon and for all other purposes.
The BANs may be transferred or exchanged at the principal corporate trust office of the Designated Note Registrar. Upon any such transfer or exchange, the County shall execute and the Designated Note Registrar shall authenticate and deliver a new registered BAN or BANs without coupons of any of the authorized denominations in an aggregate principal amount equal to the principal amount of the BAN exchanged or transferred, and maturing on the same date and bearing interest at the same rate. In each case, the Designated Note Registrar may require payment by any holder of BANs requesting exchange or transfer of BANs of any tax, fee or other governmental charge, shipping charges and insurance that may be required to be paid with respect to such exchange or transfer, but otherwise no charge shall be made to the holder of BANs for such exchange or transfer.
APPLICATION OF PROCEEDS
Baltimore County Metropolitan District Bond Anticipation Notes – 2017 Series
The $225,000,000 aggregate principal amount of proceeds from the sale of the Metropolitan District BANs will be utilized for interim funding of the design and construction, purchase or acquisition of the water supply, sewerage, and drainage systems.
Baltimore County Consolidated Public Improvement Bond Anticipation Notes − 2017 Series
The $121,000,000 aggregate principal amount of proceeds from the sale of the Consolidated Public Improvement BANs will be utilized for interim funding for Public Works, Parks Playgrounds and Greenways, Refuse Disposal, Community College, and Public Schools.
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TAX MATTERS
The following is only a general summary of certain provisions of the Internal Revenue Code of 1986, as amended (the “Code”) as enacted and in effect on the date hereof and does not discuss all aspects of federal income taxation that may be relevant to a particular holder of BANs in light of such holder’s particular circumstances and income tax situation. Each holder of BANs should consult such holder’s tax advisor as to the specific tax consequences to such holder of the ownership and disposition of the BANs, including the application of state, local, foreign and other tax laws.
Maryland Income Taxation
In the opinion of Bond Counsel, under existing law, the BANs and the interest payable on them are exempt from the State of Maryland and local taxation. No opinion is expressed as to estate or inheritance taxes, or any other taxes not levied or assessed directly on the BANs or the interest thereon. Interest on the BANs may be subject to state or local income taxes in jurisdictions other than the State of Maryland under applicable state or local tax laws. Purchasers of the BANs should consult their own tax advisors with respect to the taxable status of the BANs in jurisdictions other than Maryland.
Federal Income Taxation
In the opinion of Bond Counsel, assuming compliance with certain covenants described herein and under existing statutes, regulations and decisions, the interest on the BANs will be excludable from gross income for federal income tax purposes.
Under the provisions of the Code, there are certain restrictions that must be met subsequent to the delivery of the BANs, including restrictions that must be complied with throughout the term of the BANs, in order that the interest thereon be excludable from gross income. These include the following: (i) a requirement that certain earnings received from the investment of the proceeds of the BANs be rebated to the United States of America under certain circumstances (or that certain payments in lieu of rebate be made); (ii) other requirements applicable to the investment of the proceeds of the BANs; and (iii) other requirements applicable to the use of the proceeds of the BANs and the facilities financed or refinanced with such proceeds. Failure to comply with one or more of these requirements could result in the inclusion of the interest payable on the BANs in gross income for federal income tax purposes, effective from the date of their issuance. The County has covenanted to regulate the investment of the proceeds of the BANs and to take such other actions as may be required to maintain the excludability from gross income for federal income tax purposes of interest on the BANs.
Further, under existing statutes, regulations and decisions, Bond Counsel is of opinion that interest on the BANs is not included in the alternative minimum taxable income of individuals, corporations, or other taxpayers as an enumerated item of tax preference or other specific adjustment; however, for purposes of calculating the corporate alternative minimum tax, a corporation subject to such tax may be required to increase its alternative minimum taxable income by 75% of the amount by which its “adjusted current earnings” exceed its alternative minimum taxable income (computed without regard to this current earnings adjustment and the alternative tax net operating loss deduction). For such purposes, “adjusted current earnings” may include, among other items, interest income from the BANs. In addition, interest income on the BANs will be subject to the branch profits tax imposed by the Code on foreign corporations engaged in trade or business in the United States.
In rendering its opinions with respect to the BANs, Bond Counsel will rely without investigation on certifications provided by the County with respect to certain material facts within the knowledge of the County relevant to the tax-exempt status of interest on the BANs.
Certain Other Federal Tax Consequences
There are other federal tax consequences of ownership of obligations such as the BANs under certain circumstances, including the following: (i) deductions are disallowed for certain expenses of taxpayers allocable to interest on tax-exempt obligations, as well as interest on indebtedness incurred or continued to purchase or carry tax-exempt obligations and interest expense of financial institutions allocable to tax-exempt interest; (ii) for property and casualty insurance companies, the amount of the deduction for losses incurred must be reduced by 15% of the sum of tax-exempt interest income and the deductible portion of dividends received by such companies; (iii) interest income that is exempt from tax must be taken into account for the purpose of determining whether, and what amount of, Social Security or railroad retirement benefits are includable in gross income for federal income tax purposes; (iv) for S corporations having Subchapter C earnings and profits, the receipt of certain levels of passive investment income, which includes interest on tax-exempt obligations such as the BANs, can result in the imposition of tax on such passive investment income and, in some cases, loss of S corporation status; and (v) net gain realized upon the sale or other disposition of the BANs must be taken into account when computing the 3.8% Medicare tax with respect to investment income imposed on certain higher income individuals and specified trusts and estates.
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Tax Accounting Treatment of Discount BANs
The BANs may be issued at an initial public offering price, which is less than the amount payable on such BANs at maturity (the “Discount BANs”). The difference between the initial offering price (including accrued interest, if any) at which a substantial amount of the Discount BANs was sold and the stated redemption price (principal and interest) of such Discount BANs payable at maturity constitutes original issue discount. In the case of any holder of Discount BANs, the amount of such original issue discount which is treated as having accrued with respect to such Discount BANs is added to the original cost basis of the holder in determining, for federal income tax purposes, gain or loss upon disposition (including sale or repayment at maturity). For federal income tax purposes (a) any holder of a Discount BAN will recognize gain or loss upon the disposition of such security (including sale or payment at maturity) in an amount equal to the difference between (i) the amount received upon such disposition and (ii) the sum of (1) the holder's original cost basis in such Discount BAN, and (2) the amount of original issue discount attributable to the period during which the holder held such Discount BAN, and (b) the amount of the basis adjustment described in clause (a)(ii)(2) will not be included in the gross income of the holder.
Original issue discount on Discount BANs will be attributed to permissible compounding periods during the life of any Discount BANs in accordance with a constant rate of interest accrual method. The yield to maturity of the Discount BANs is determined using permissible compounding periods. In general, the length of a permissible compounding period cannot exceed one year and a compounding period must end on the maturity date. Such yield then is used to determine an amount of accrued interest for each permissible compounding period. For this purpose, interest is treated as compounding periodically at the end of each applicable compounding period. The amount of original issue discount which is treated as having accrued in respect of a Discount BAN for any particular compounding period is equal to the excess of (a) the product of (i) the yield for the Discount BAN (adjusted as necessary for an initial short period) divided by the number of compounding periods in a year multiplied by (ii) the amount that would be the tax basis of such Discount BAN at the beginning of such period if held by an original purchaser who purchased at the initial public offering price, over (b) the amount actually payable as interest on such Discount BAN during such period. For purposes of the preceding sentence the tax basis of a Discount BAN, if held by an original purchaser, can be determined by adding to the initial public offering price of such Discount BAN the original issue discount that is treated as having accrued during all prior compounding periods. If a Discount BAN is sold or otherwise disposed of between compounding dates, then interest which would have accrued for that compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period.
The yield (and related prices) furnished by the successful bidders for the BANs as shown on the inside cover of this Official Statement may not reflect the initial issue price for the purposes of determining the original issue discount for federal income tax purposes.
The foregoing summarizes certain federal income tax consequences of original issue discount with respect to the Discount BANs but does not purport to deal with all aspects of federal income taxation that may be relevant to particular investors or circumstances, including those set out above. Prospective purchasers of Discount BANs should consider possible state and local income, excise or franchise tax consequences arising from original issue discount on Discount BANs. In addition, prospective corporate purchasers should consider possible federal tax consequences arising from original issue discount on such Discount BANs under the branch profits tax. The amount of original issue discount considered to have accrued may be reportable in the year of accrual for state and local tax purposes or for purposes of the branch profits tax without a corresponding receipt of cash with which to pay any tax liability attributable to such discount. Purchasers with questions concerning the detailed tax consequences of transactions in the Discount BANs should consult their tax advisors.
Purchase, Sale and Retirement of BANs
Except as noted below in the case of market discount, the sale or other disposition of a BAN will normally result in capital gain or loss to its holder. A holder's initial tax basis in a BAN will be its cost. Upon the sale or retirement of a BAN, for federal income tax purposes, a holder will recognize capital gain or loss upon the disposition of such security (including sale or payment at maturity) in an amount equal to the difference between (a) the amount received upon such disposition and (b) the tax basis in such BAN, determined by adding to the original cost basis in such BAN the amount of original issue discount that is treated as having accrued as described under “TAX MATTERS – Tax Accounting Treatment of Discount BANs.” Such gain or loss will be a long-term capital gain or loss if at the time of the sale or retirement the BAN has been held for more than one year. Present law taxes both long and short-term capital gains of corporations at the rates applicable to ordinary income. For noncorporate taxpayers, however, short-term capital gains are taxed at the rates applicable to ordinary income, while net capital gains are taxed at lower rates. Net capital gains are the excess of net long-term capital gains (gains on capital assets held for more than one year) over net short-term capital losses.
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Market Discount
If a holder acquires a BAN after its original issuance, at a discount below its stated redemption price at maturity (or in the case of a BAN issued at an original issue discount, at a price that produces a yield to maturity higher than the yield to maturity at which such bond anticipation note was first issued), the holder will be deemed to have acquired the BAN at “market discount,” unless the amount of market discount is de minimis, as described in the following paragraph. If a holder that acquires a BAN with market discount subsequently realizes a gain upon the disposition of the BAN, such gain shall be treated as taxable interest income to the extent such gain does not exceed the accrued market discount attributable to the period during which the holder held such BAN, and any gain realized in excess of such market discount will be treated as capital gain. Potential purchasers should consult their tax advisors as to the proper method of accruing market discount.
In the case of a BAN not issued at an original issue discount, market discount will be de minimis if the excess of the BAN’s stated redemption price at maturity over the holder's cost of acquiring the BAN is less than 0.25% of the stated redemption price at maturity multiplied by the number of complete years between the date the holder acquires the BAN and its maturity date. In the case of a BAN issued with original issue discount, market discount will be de minimis if the excess of the BAN’s revised issue price over the holder's cost of acquiring the BAN is less than 0.25% of the revised issue price multiplied by the number of complete years between the date the holder acquires the BAN and its stated maturity date. For this purpose, a BAN’s “revised issue price” is the sum of (i) its original issue price and (ii) the aggregate amount of original issue discount that is treated as having accrued with respect to the BAN during the period between its original issue date and the date of acquisition by the holder.
Amortizable Bond Anticipation Note Premium
A BAN will be considered to have been purchased at a premium if, and to the extent that, the holder's tax basis in the BAN exceeds the stated redemption price at maturity. The holder will be required to reduce his tax basis in the BAN for purposes of determining gain or loss upon disposition of the BAN by the amount of amortizable bond anticipation note premium that accrues, determined in the manner prescribed in the regulations. Generally, no deduction (or other tax benefit) is allowable in respect of any amount of amortizable bond anticipation note premium on the BANs.
Legislative Developments
Legislative proposals recently under consideration or proposed after issuance and delivery of the BANs could adversely affect the market value of the BANs. Further, if enacted into law, any such proposal could cause the interest on the BANs to be subject, directly or indirectly, to federal income taxation and could otherwise alter or amend one or more of the provisions of federal tax law described above or their consequences. Prospective purchasers of the BANs should consult with their tax advisors as to the status and potential effect of proposed legislative proposals, as to which Bond Counsel expresses no opinion.
RATINGS
Moody's Investors Services, Inc., S&P Global Ratings and Fitch Ratings have given the BANs the ratings of _____, _____ and ___, respectively. An explanation of the significance of such ratings may be obtained only from the rating agency furnishing the same. The County furnished to such rating agencies the information contained in a preliminary form of this Official Statement and certain publicly available materials and information respecting the County. Generally, rating agencies base their ratings on such materials and information, as well as investigations, studies and assumptions of the rating agencies. Such ratings may be changed at any time (including on, or before the settlement of the BANs) and no assurance can be given that they will not be revised downward or withdrawn entirely by any or all such rating agencies if, in the judgment of any or all, circumstances so warrant. Such circumstances may include, without limitation, changes in or unavailability of information relating to the County. Any such downward revision or withdrawal of any of said ratings may have an adverse effect on the market price of the BANs.
SALE AT COMPETITIVE BIDDING
The BANs will be offered by the County at competitive bidding on March 1, 2017, in accordance with the Notices of Sale, the forms of which are attached to this Official Statement as Appendix D and Appendix E. The interest rates shown on the inside front cover of this Official Statement are the interest rates resulting from the award of the BANs at competitive bidding.
The yields or prices shown on the inside front cover of this Official Statement are based on information supplied to the County by the successful bidder(s) respecting the resale prices (not including concessions) of the BANs established on the date hereof. Any other information concerning the terms of reoffering of the BANs, if any, including yields or prices, should be obtained from the successful bidder(s) therefor and not from the County.
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CONTINUING DISCLOSURE
The County will execute a Continuing Disclosure Agreement (the “Disclosure Agreement”) prior to or simultaneously with the issuance of the BANs. In the Disclosure Agreement, the County will covenant for the benefit of the Beneficial Owners of the BANs from time to time to provide certain financial information and operating data relating to the County (the “Annual Report”) within 275 days after the end of the County’s fiscal year, commencing 275 days after the end of the County’s fiscal year ended June 30, 2016, and to provide notices of the occurrence of certain enumerated events. The Annual Report is filed by the County and is expected to be made publicly available by the Municipal Securities Rulemaking Board (“MSRB”) through its Electronic Municipal Market Access (“EMMA”) repository accessible through the MSRB’s website at http://www.emma.msrb.org. The notices of events, if any, are filed by the County with the MSRB through EMMA. The County has made these covenants in order to assist the underwriters of the BANs in complying with SEC Rule 15c2-12(b)(5) (the “Rule”). The form of the Continuing Disclosure Agreement is set forth in Appendix C.
Except as otherwise disclosed herein, during the prior five years, the County has not failed to comply in any material respect with any prior continuing disclosure undertaking made pursuant to Rule 15c2-12. Although the County has timely filed complete information required by its continuing disclosure undertakings, the County had not associated the relevant CUSIP numbers will all its filings. The County has remedied the foregoing.
APPROVAL OF LEGAL PROCEEDINGS
All legal matters incident to the authorization, issuance and sale of the BANs are subject to the approval of McKennon Shelton & Henn LLP, Baltimore, Maryland, Bond Counsel. Delivery of the BANs is conditioned upon the delivery by Bond Counsel of opinions substantially in the forms attached hereto as Appendix B.
APPROVAL OF OFFERING STATEMENT
This Official Statement has been approved and authorized by the County for use in connection with the sale of the BANs.
Financial and other information contained in this Official Statement has been prepared by the County from its records (except where other sources are noted). The information is not intended to indicate future or continuing trends in the financial or economic position of the County.
BALTIMORE COUNTY, MARYLAND
By: ______County Executive
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SECTION II: DEBT SUMMARY
ISSUANCE AND AUTHORIZATION OF BONDED INDEBTEDNESS
According to the terms of the Charter, no bond or other evidence of indebtedness may be issued prior to approval by voter referendum except for emergency or tax anticipation notes or other evidences of indebtedness having a maturity not in excess of twelve months and self-liquidating obligations including obligations of the Metropolitan District (such obligations referred to in this Section II as “Metropolitan District Bonds” or “Metropolitan District Debt”). Bonded debt must be issued with maturities no longer than the probable useful life of the improvements or undertakings with respect to which they are issued; bonded debt other than Metropolitan District Bonds may not in any event be issued with maturities longer than 40 years. Under the terms of the Metropolitan District Act, Metropolitan District Bonds are not subject to the referendum requirements of the Charter or to the requirement that bonded debt must be issued in serial form.
Metropolitan District Bonds are issued for the purpose of providing funds for financing or refinancing the design and construction, purchase or acquisition of the water supply, sewerage, and drainage systems within the Metropolitan District, as provided for by Article 20 of the County Code. The principal source of repayment for the Metropolitan District Bonds is special assessments and charges levied against all property in the Metropolitan District of the County. See “FINANCIAL INFORMATION – Water Supply and Sewerage Revenues.” In the event of a deficiency of such funds from special assessments and charges, the Metropolitan District Bonds are payable as to both principal and interest, as general obligations, ultimately from ad valorem taxes, unlimited in rate and amount, which the County is empowered to levy upon real and tangible personal property and certain intangible personal property subject to assessment for unlimited County taxation.
Approved and unissued Consolidated Public Improvement general obligation bonded debt totaled $919,088,347 as of January 31, 2017. Metropolitan District debt issuances are not subject to referendum requirements. Appropriated and unissued Metropolitan District bonded debt totaled $1,059,835,041 as of January 31, 2017.
LEGAL DEBT MARGIN
In accordance with Section 10-3-111 of the Baltimore County Code, the aggregate amount of the County bonds and other evidences of indebtedness outstanding at any one time may not exceed 4.0% of the assessable basis of the County. As of January 31, 2017, the County’s Legal Debt Margin was $1,468,876,000 based on a legal limitation of $3,192,972,000 less outstanding debt of $1,724,096,000. In accordance with Section 20-4-103 of the County Code, at no time shall the total issue of Metropolitan District Bonds outstanding exceed 3.2% of the total assessable basis for County taxation purposes within the Metropolitan District. As of January 31, 2017, the County’s Metropolitan District Legal Debt Margin was $1,148,775,000 based on a legal limitation of $2,266,793,000 less outstanding Metropolitan District Debt of $1,118,018,000.
SHORT-TERM BORROWING
The County has never issued revenue and tax anticipation notes and currently has no plans to do so. The County’s debt issuance policies include a commitment to manage operations so that such borrowings will not be necessary.
As of January 31, 2017, the County had outstanding $199,100,000 Bond Anticipation Notes consisting of $99,800,000 Consolidated Public Improvement Commercial Paper Bond Anticipation Notes and $99,300,000 Metropolitan District Commercial Paper Bond Anticipation Notes (collectively, the “Commercial Paper BANs”). The Commercial Paper BANs are general obligations of the County, to the payment of which its full faith and credit and unlimited taxing power are pledged. The County issued the Commercial Paper BANs as interim funding for a portion of its Capital Program (see “CAPITAL IMPROVEMENT PROGRAM OVERVIEW”) in order to achieve lower short-term interest rates and greater borrowing flexibility. All of the Commercial Paper BANs are expected to be repaid with the proceeds from the issuance of bonds, as further described below.
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NET TAX-SUPPORTED DEBT OUTSTANDING As of January 31, 2017
Consolidated Public Improvement Bonds (Net of $1,645,000 held in escrow) ...... $1,245,910,000 Consolidated Public Improvement Commercial Paper Bond Anticipation Notes ...... 99,800,000 Pension Funding Bonds ...... 376,741,000 Certificates of Participation ...... 127,695,000 Single Stream Recycling Facility Loan ...... 7,271,000 Capital Leases ...... 19,403,000 Total Net Tax-Supported Debt ...... $1,876,820,000
METROPOLITAN DISTRICT DEBT OUTSTANDING As of January 31, 2017
Metropolitan District Bonds ...... $852,745,000 Metropolitan District Bonds – Maryland Water Quality Revolving Loan Fund...... 150,274,000 Metropolitan District Commercial Paper Bond Anticipation Notes ...... 99,300,000 Metropolitan District Pension Obligation Bonds ...... 15,699,000 Metropolitan District Certificates of Participation ...... 6,855,000 Total Metropolitan District Debt ...... $1,124,873,000
The County intends to issue on or about March 15, 2017 its general obligation bonds in the aggregate principal amount of $199,100,000 consisting of metropolitan district bonds in the aggregate principal amount of $99,300,000 and consolidated public improvement bonds in the aggregate principal amount of $99,800,000.
NO OVERLAPPING DEBT
The County is autonomous from any city, town or political subdivision of the State of Maryland. There are no jurisdictions with overlapping debt or taxing power.
DEBT INFORMATION
Information on the County’s indebtedness is presented in the following tables. Included is information on key debt ratios, rapidity of principal retirement, debt service to revenue ratios, summary of debt service charges and schedule of bonds authorized, issued and unissued.
KEY DEBT RATIOS FISCAL YEARS 2012 TO 2016
Net Tax-Supported Indebtedness Net Tax-Supported Indebtedness Including Pension Funding Bonds Excluding Pension Funding Bonds Estimated Per Per Market Capita Capita Value of Taxable as a % as a % Per Property Balance % of of Per % of of Per Fiscal Capita Fiscal Year as of Per Market Capita Balance as of Per Market Capita Year Population Income Ended June 30 June 30* Capita Value Income June 30 * Capita Value Income 2012 818,425 $53,004 $84,472,824,000 $1,451,052,000 $1,773 1.72% 3.35% $1,426,317,000 $1,743 1.69% 3.29% 2013 823,883 52,348 80,894,772,000 1,826,030,000 2,216 2.26 4.23 1,552,020,000 1,884 1.92 3.60 2014 826,925 53,949 78,535,220,000 1,865,889,000 2,256 2.38 4.18 1,598,804,000 1,933 2.04 3.58 2015 831,128 54,395 78,313,024,000 1,871,623,000 2,252 2.39 4.14 1,622,541,000 1,952 2.07 3.59 2016 834,302 56,027 79,824,301,000 1,761,473,000 2,111 2.21 3.77 1,522,545,000 1,825 1.91 3.26 ______* Includes General Obligation Bonds, Bond Anticipation Notes, Certificates of Participation and Capital Leases. Sources: Per Capita Income Data: 2012-2015 U.S. Bureau of Economic Analysis. 2016 estimated with a 3% increase. Population: 2012-2015 U.S. Census Bureau; 2016 Maryland Department of Planning (Interpolated).
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RAPIDITY OF PRINCIPAL RETIREMENT As of January 31, 2017
Net Tax- Supported Debt Net Tax- Excluding Metropolitan Maturing Supported % of Debt Pension Funding % of Debt District % of Debt Within Debt (1) Retired Bonds (1) Retired Debt (2) Retired 5 years $624,745,000 35.2% $576,664,000 41.2% $269,936,000 26.3% 10 years 1,124,457,000 63.3 1,021,629,000 73.0 515,562,000 50.3 15 years 1,473,060,000 82.9 1,307,279,000 93.4 719,004,000 70.1 20 years 1,640,537,000 92.3 1,400,279,000 100.0 881,459,000 85.9 25 years 1,729,533,000 97.3 989,356,000 96.5 30 years 1,777,020,000 100.0 1,025,573,000 100.0 ______(1) Does not include $99.8 million Consolidated Public Improvement Commercial Paper Bond Anticipation Notes outstanding. See “Short-Term Borrowing.” (2) Does not include $99.3 million Metropolitan District Commercial Paper Bond Anticipation Notes outstanding. See “Short-Term Borrowing.”
RATIO OF DEBT SERVICE ON NET TAX-SUPPORTED DEBT TO GENERAL FUND REVENUES FISCAL YEARS 2012 TO 2016
Debt Service Debt Service Including Excluding Fiscal General Fund Pension % of Pension % of Year Revenues Funding Bonds Revenues Funding Bonds Revenues 2012 ...... $1,630,201,000 $120,357,000 7.38% $111,873,000 6.86% 2013 ...... 1,701,812,000 124,972,000 7.34 116,896,000 6.87 2014 ...... 1,750,110,000 141,231,000 8.07 124,712,000 7.13 2015 ...... 1,820,656,000 157,201,000 8.63 141,190,000 7.75 2016 ...... 1,887,247,000 167,158,000 8.86 149,385,000 7.92
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BALTIMORE COUNTY, MARYLAND SUMMARY OF DEBT SERVICE CHARGES UNTIL MATURITY* JANUARY 31, 2017 (In Thousands)
Consolidated Public General Obligation Capital Leases, Total Net Tax-Supported Debt Improvement Bonds Taxable Bonds COPs, Other Service Metropolitan District Debt
Fiscal Year Principal Interest Principal Interest Principal Interest Principal Interest Total Principal Interest Total 2017 24,000 23,213 0 3,731 8,668 2,052 37,884 28,996 61,664 27,826 16,498 44,324 2018 95,045 48,804 8,059 13,058 26,868 3,253 129,972 65,115 195,087 53,388 32,223 85,611 2019 94,455 48,893 9,787 11,325 26,103 2,258 130,345 62,476 192,821 54,156 33,742 87,898 2020 92,050 44,628 9,916 11,197 18,868 2,785 120,834 58,610 179,444 52,188 35,509 87,697 2021 90,220 40,471 10,071 11,039 16,981 3,225 117,272 54,735 172,007 51,659 33,991 85,650 2022 90,380 36,359 10,248 10,854 16,026 2,429 116,654 49,642 166,296 51,627 32,071 83,698 2023 89,315 32,248 10,449 10,646 14,571 1,678 114,335 44,572 158,907 50,097 30,170 80,267 2024 82,590 28,396 10,675 10,413 6,571 1,150 99,836 39,959 139,795 48,152 28,192 76,344 2025 82,375 24,779 10,925 10,156 6,571 821 99,871 35,756 135,627 48,224 26,321 74,545 2026 77,665 21,244 11,198 9,877 6,571 493 95,434 31,614 127,048 48,255 24,449 72,704 2027 72,165 17,962 11,500 9,577 6,571 164 90,236 27,703 117,939 48,208 22,620 70,828 2028 68,180 14,927 11,818 9,257 79,998 24,184 104,182 45,123 20,863 65,986 2029 61,805 12,038 12,173 8,896 73,978 20,934 94,912 41,608 19,153 60,761 2030 61,665 8,856 12,566 8,493 74,231 17,349 91,580 41,539 17,445 58,984 2031 54,000 6,474 12,984 8,073 66,984 14,547 81,531 40,687 15,731 56,418 2032 41,000 4,505 13,412 7,636 54,412 12,141 66,553 37,546 14,241 51,787 2033 31,000 2,755 13,872 7,181 44,872 9,936 54,808 34,898 12,544 47,442 2034 20,000 1,670 14,362 6,700 34,362 8,370 42,732 32,428 10,930 43,358 2035 12,000 750 14,875 6,191 26,875 6,941 33,816 31,390 9,486 40,876 2036 6,000 300 15,408 5,662 21,408 5,962 27,370 29,742 8,114 37,856 2037 15,960 5,110 15,960 5,110 21,070 29,605 6,845 36,450 2038 16,546 4,531 16,546 4,531 21,077 26,629 5,580 32,209 2039 17,145 3,925 17,145 3,925 21,070 20,915 4,396 25,311 2040 17,774 3,297 17,774 3,297 21,071 20,941 3,390 24,331 2041 18,427 2,646 18,427 2,646 21,073 17,468 2,488 19,956 2042 19,104 1,971 19,104 1,971 21,075 13,296 1,795 15,091 2043 19,800 1,271 19,800 1,271 21,071 10,525 1,207 11,732 2044 6,586 806 6,586 806 7,392 7,974 784 8,758 2045 6,802 585 6,802 585 7,387 5,983 401 6,384 2046 7,032 356 7,032 356 7,388 3,193 168 3,361 2047 7,267 120 7,267 120 7,387 303 5 308 Total 1,245,910 419,272 376,741 204,580 154,369 20,308 1,777,020 644,160 2,421,180 1,025,573 471,352 1,496,925
* Does not include Commercial Paper outstanding but does include interest on Commercial Paper.
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BALTIMORE COUNTY, MARYLAND GENERAL OBLIGATION DEBT APPROVED AND UNISSUED AS OF JANUARY 31, 2017
Purpose Amount Consolidated Public Improvement: Agricultural Land Preservation ...... $9,102,000 Community College ...... 43,939,570 Community and Economic Improvements ...... 14,059,000 Elderly & Affordable Housing ...... 150,000 Operational Buildings ...... 73,776,396 Parks, Preservation and Greenways ...... 17,815,000 Public Schools ...... 470,745,881 Public Works ...... 223,581,500 Refuse Disposal ...... 28,905,000 Waterway Improvements ...... 37,014,000 Total Consolidated Public Improvement ...... $919,088,347
Metropolitan District ...... $1,069,893,150
Consolidated Public Improvement represents authority approved by voter referendum. Metropolitan District represents authority approved by County Council appropriation.
LEASES Operating Leases
The County is a party to numerous operating leases of facilities and equipment. The total rental expenditures for the year ended June 30, 2016, for all leases except those with terms of a month or less that were not renewed, were approximately $8.2 million for the primary government and $31.4 million for the component units. These leases include various office space rentals, parking facility rentals and telephone rentals.
The following is a schedule by fiscal years of future minimum rental payments for facilities and equipment under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of June 30, 2016:
Year Ending Primary Component June 30 Government Units 2017 $581,000 $38,645,000 2018 390,000 38,142,000 2019 348,000 31,267,000 2020 269,000 18,206,000 2021 106,000 2,651,000 2022-2026 202,000 8,268,000 2027-2031 116,000 1,977,000 2032-2036 99,000 - 2037-2041 44,000 - Total $2,155,000 $139,156,000
Contract Commitments
Contract commitments in the Consolidated Public Improvement Construction Fund, the Metropolitan District Enterprise Fund and the Gifts and Grants Fund amounted to $77.4 million, $122.3 million and $6.8 million, respectively, at June 30, 2016. Such amounts will be funded by future bond proceeds, approved federal and state grants, and future assessments.
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Capital Leases
The following is a schedule by fiscal years of the future minimum lease payments under the County’s capital lease agreements and the present value of the minimum lease payments at June 30, 2016. Any capital leases used to finance energy performance contracts where the energy savings are guaranteed by the contractor are not included below as they are not considered tax-supported debt under Maryland law. The lease agreements below are for the purchase of school buses and other vehicles for the Board of Education.
Minimum Year Ending June 30 Lease Payments 2017 ...... $8,846,000 2018 ...... 8,086,000 2019 ...... 6,600,000 2020 ...... 3,800,000 Total minimum lease payments ...... $19,403,000 Less amount representing interest ...... (477,000) Present value of future minimum lease payments...... $18,926,000
During FY2014, the Board of Education entered into a long-term capital lease to finance energy saving improvements in various schools. As of June 30, 2016, $23,247,000 of lease payments under this capital lease remain outstanding. The chart above does not include lease payments under this capital lease because the energy savings guaranteed by the contractor equal or exceed the capital lease payments on an annual basis.
Conditional Purchase Agreements
The County has entered into several conditional purchase agreements for the purchase of facilities and equipment. The County’s obligation to make purchase installments under such agreements in any fiscal year is contingent upon the County Council making an appropriation for such purpose in such year. In the event that the County Council does not appropriate moneys to make such purchase installments in any fiscal year, the County is required to return the equipment to the seller without any additional financial liability. The obligations of the County under the respective conditional purchase agreements do not constitute a pledge of the full faith and credit or of the taxing powers of the County.
On December 18, 2001, the County entered into a twenty-year conditional purchase agreement to acquire, renovate and improve an office building (the “Facility”) and the real property on which the office building is constructed to be used as office space for the Health and Social Services departments. The County uses approximately 30% of the Facility as office space for County employees. The balance of the Facility is being leased to the State of Maryland under a five-year agreement (which commenced on August 1, 2012), for use as office space for State employees. The conditional purchase agreement was financed through the sale of Certificates of Participation in the aggregate principal amount of $22,000,000. The lease payments made by the State are not pledged to the payment of the Certificates of Participation, and a default under the State lease will not constitute a default under the Purchase Agreement or otherwise excuse the payment of Purchase Installments by the County. On February 6, 2013, the County issued $11,830,000 to refund outstanding Certificates of Participation. As of January 31, 2017, the balance of the outstanding principal of the Certificates of Participation was $6,885,000.
On August 12, 2008, the County entered into a ten-year Conditional Purchase Agreement for the purchase of equipment. The equipment consists of the acquisition of (i) heavy equipment and vehicles for use primarily in the County’s public works department, (ii) fire trucks, medic units, and public safety equipment, and (iii) information technology hardware for various departments including 911 equipment. The Conditional Purchase Agreement was financed through the sale of Certificates of Participation in the aggregate principal amount of $36,700,000. As of January 31, 2017, the balance of the outstanding principal was $9,400,000.
On June 19, 2012, the County entered into a ten-year Conditional Purchase Agreement for the purchase of equipment. The equipment consists of the acquisition of (i) heavy equipment and vehicles for use primarily in the County’s public works and recreation and parks departments, (ii) fire trucks, medic units, and public safety equipment, and (iii) information technology hardware for various departments including 911-equipment. The Conditional Purchase Agreement was financed through the sale of Certificates of Participation in the aggregate principal amount of $82,680,000. As of January 31, 2017, the balance of the outstanding principal was $54,550,000.
On December 11, 2012, the County entered into a loan agreement with the Employees’ Retirement System of Baltimore County for a line of credit not to exceed $21,508,651 to finance the costs of upgrading an existing transfer station and procuring and installing a single stream recyclables processing system at the Baltimore County Resource Recovery Facility in Cockeysville, Maryland. On August 15, 2013, the County repaid the loan in full to the Employees’ Retirement System and entered a conditional
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purchase agreement with the Baltimore County Police, Fire and Widows Plan to finance and refinance the County’s acquisition of the project up to a maximum purchase price of $18,625,000. The term of the agreement is from August 15, 2013 through June 30, 2018. Interest on the loan is payable on the last business day of each and every month and commencing September 30, 2013 at a rate of 7.875% per annum on the unpaid principal balance. Principal is due and payable each and every month commencing July 31, 2014 through June 30, 2018. As of January 31, 2017, the balance of the outstanding principal was $7,271,000.
On September 27, 2016, the County entered into a ten-year Conditional Purchase Agreement for the purchase of equipment. The equipment consists of the acquisition of (i) heavy equipment and vehicles for use primarily in the County’s public works and recreation and parks departments, (ii) fire trucks, medic units, and public safety equipment, and (iii) information technology hardware for various departments including 911-equipment. The Conditional Purchase Agreement was financed through the sale of Certificates of Participation in the aggregate principal amount of $63,715,000. As of January 31, 2017, the balance of the outstanding principal was $63,715,000.
OTHER AGREEMENTS AND COMMITMENTS
Maryland Water Quality Financing Administration
The County participates in the Maryland Water Quality Revolving Loan Fund that is administered by the Maryland Water Quality Financing Administration (“MWQFA”). The fund provides low interest loans to local jurisdictions for eligible water and sewer capital projects. Metropolitan District Bonds are issued to MWQFA to evidence the County’s full faith and credit pledge to repay the loans. Loans are repaid over 20 and 30 years from the Metropolitan District Operating Fund. Loans consist of a combination of proceeds from Bonds issued by MWQFA and certain grant funds. As of January 31, 2017, the outstanding balance of Metropolitan District Water Quality Bonds was $150,274,000.
Waste Disposal Agreements
Wheelabrator Baltimore, L.P. (formerly known as Baltimore Refuse Energy Systems Company, L. P.) (“Wheelabrator”)
The County entered into a waste disposal agreement in December 2009 with Wheelabrator to deliver residential solid waste to Wheelabrator’s refuse-to-energy disposal facility in Baltimore City, Maryland. The term of this contract is from December 7, 2009 through December 31, 2021 with three 5-year renewal options. The contract was amended in December 2011 to reduce the rate and enhance the benefits for the County. The amendment establishes a Guaranteed Annual Tonnage (GAT) of 215,000 tons per calendar year to be delivered to Wheelabrator’s refuse-to-energy disposal facility in Baltimore City, Maryland. The rate in effect at January 1, 2017 was $52.31 per ton. The rate increases during the term to $57.74 per ton. The County is responsible for the transport of the solid waste to Wheelabrator’s site (see “WB Services, LLC” below). The amendment provided for a one-time incentive payment of $2,150,000 paid to the County at the end of the first year to encourage the delivery of waste tonnage at or above the GAT. In addition, for delivering waste tonnage at or above the GAT, Wheelabrator will provide a $1 per ton rebate annually. The amendment also provided that the County receive an annual Guaranteed Ash Disposal payment for the right of Wheelabrator to bring up to 60,200 tons of ash into the County’s Eastern Sanitary Landfill. The initial year’s payment of $1,083,000 is based upon the service charge per ton in effect at January 1, 2012 of $18.00 per ton. The rate increases during the term to $22.48 per ton, or a payment of $1,353,296 in the final year of the contract. Wheelabrator is responsible for transport of the ash to the County’s landfill.
Harford County Municipal Solid Waste and Recyclables
The County entered into an agreement in August 2013 with Harford County to begin the transfer of Harford County’s Municipal Solid Waste delivered to the Eastern Sanitary Landfill beginning on or about March 17, 2016. In consideration, Harford County has agreed to pay the County an amount equal to Baltimore County’s actual debt service for the design and construction of a transfer station building (not to exceed $11,733,000) necessary to accommodate the increased transfer tonnage levels. This would be paid back in 20 annual installments, commencing July 1, 2014. These installments would equal the actual debt service divided by 20 or $588,650, whichever is less. Harford County also pays the cost of disposal via Waste Management at a rate starting at $56 per ton (adjusted for CPI and Fuel Surcharges) with the County receiving a $1.40 per ton host fee. Additionally, as part of this agreement, Harford County agreed, beginning January 1, 2014, to provide its single stream recyclables to Baltimore County. The County is required to cover transportation costs of the recyclables to its new Single Stream Processing Facility in Cockeysville (see Maryland Environmental Service (“MES”)” below); however, the County can retain all revenue from the sale of said recyclables.
Republic Services of Pennsylvania, LLC (“Republic”)
The County entered into a long-term contract effective December 7, 2009 with this contractor to provide for disposal of residential solid waste deposited at various County facilities by the County’s curbside haulers and residents. This is a ten-year
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contract with three 5-year renewal options. The rate in effect at December 7, 2015 was $52.23 per ton. The rate increases during the ten-year term to $58.75 per ton. The County is responsible for the transport of the solid waste to the contractor’s landfill in York, Pennsylvania (see “WB Services, LLC” below).
WB Services, LLC
The County entered into a contract to transport municipal solid waste from various County transfer facilities to their final destination sites effective September 5, 2012. The contract continues through June 30, 2019 with three 5-year renewal options. Pursuant to such transport agreement, the County pays a set transportation fee based upon the County facility where the waste is picked up and the disposal destination (see Wheelabrator, Harford County, and Republic above), peak or off-peak transport, type of trailer, fuel supplier and cost. The rates in effect at October 1, 2016 range from $10.58 to $20.36 per ton. The contract contains a yearly escalation clause linked to the CPI.
Maryland Environmental Service (“MES”)
In 1973, the County entered into a long-term contract (the “Service Contract”) with MES, which is a quasi-public agency of the State of Maryland. Under the Service Contract, the County and MES agreed to share the costs of constructing solid waste disposal facilities on land leased by the County to MES. The County entered into two new updated contracts with MES with a term of July 5, 2011 to July 4, 2031 with two 5-year renewal options. One agreement covers the Central Acceptance Facility (CAF) and a separate agreement covers the Western Acceptance Facility (WAF). MES is responsible for processing and transporting solid waste and recycled materials for the County at cost. Additionally, the contract covering the CAF includes that MES would be responsible for designing and building an Open Top Trailer Transfer Facility (OTTTF) (completed June 2013) and a Single Stream Recyclable Processing Facility (completed November 2013) at CAF. The OTTTF has greatly increased the County’s efficiency in waste transfer operations at the site. The Single Stream Facility allows the County to process its own collected recyclables into marketable commodities. Additionally in 2013, the County entered into an agreement with Harford County to receive and process that County’s recyclables through the Single Stream Processing Facility beginning January 1, 2014 (see “Harford County Municipal Solid Waste and Recyclables”). Revenues generated from the processing of the annual estimated 85,000 tons of recyclables are anticipated to be approximately $6.0 million.
Waste Management of Pennsylvania (“WMPA”) - Single Stream Recycling and Commercial Transfer
The County entered into a contract effective February 1, 2010 with WMPA for the use of the CAF and the Eastern Sanitary Landfill (ESL) for the transfer of commercial refuse. WMPA pays an $8 per ton fee for use of the facilities to transfer commercial refuse. In FY2016, WMPA transferred a combined 207,980 tons through these facilities generating $1.7 million in revenue for the County. The contract was amended in August 2016 to provide for the hauling and disposal of Baltimore County municipal solid waste out of Eastern Sanitary Landfill. This is a ten-year contract with three 5-year renewal options.
Residential Refuse Collections
In FY2016, the County collected 415,000 tons of residential refuse including tons collected through an extensive curbside recyclable materials collection program. This material was processed or disposed of in the following manner (figures are approximate):
• 221,000 tons or 53% was incinerated at Wheelabrator. This facility converts refuse into electricity and steam and recovers ferrous metals.
• 34,000 tons or 8% was incinerated at the Harford Waste to Energy Facility. This facility converted refuse into electricity and steam and recovered ferrous metals until closing in March 2016.
• 26,000 tons or 6% was transferred out completing the Harford County Municipal Solid Waste agreement due to the closing of the Harford Waste to Energy Facility.
• 86,000 tons or 21% was delivered to various recycling facilities, constituting paper and plastic/metal containers, yard material (including Christmas trees) picked up on a weekly basis from single family dwellings, town homes and multi-family units. Also included are recyclables (including electronics recycling, white ferrous metals and yard materials) delivered directly to county facilities by county residents.
• 48,000 tons or 12% was disposed of at the Eastern Sanitary Landfill (see below).
Through recycling, source reduction efforts and export of residential and commercial refuse, the useful life of the County’s only operating landfill, Eastern Sanitary Landfill in White Marsh, Maryland, is expected to last 30-40 years based on the
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current usage. The estimated useful life of the Eastern Sanitary Landfill is predicated on the long-term availability of out-of- County disposal facilities.
Metro Centre at Owings Mills Project
In April 2014, the Maryland Economic Development Corporation, a body corporate and politic and a public instrumentality of the State of Maryland (“Medco”), issued $33,050,000 aggregate principal amount of special obligation bonds to finance a parking garage located at Metro Centre at Owings Mills (see SECTION IV – “ECONOMIC AND DEMOGRAPHIC INFORMATION – New Business and Real Estate Activity – Metro Centre at Owings Mills”). The County has entered into a Contribution Agreement with Medco wherein the County has agreed to contribute County incremental tax revenues on the real property within a 45 acre (more or less) tract (the “District”) to provide for payment of debt service on the bonds and certain administrative costs and, as needed, to levy and collect an additional special tax on a portion of the District to pay debt service on the bonds and certain other costs. The bonds have been issued initially as variable rate bonds and, with the consent of the County are subject to conversion to fixed rate bonds. The bonds mature in 2043. Medco anticipates reoffering the bonds in March 2017 as fixed rate bonds. County ordinances authorize the County to provide tax increment revenue and special tax support for up to $135 million in Medco special obligation bonds for public infrastructure relating to the District.
Risk Management
The County’s Office of Budget and Finance administers the risk management program. In addition, the County has retained actuaries to conduct analyses of the Self-Insurance Fund covering its exposure for health care, general and automotive liability, and workers’ compensation claims. Each year the County appropriates and pays to the fund an amount, which is projected to fully fund, on a present value basis, all liabilities expected to occur during the upcoming fiscal year.
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CAPITAL IMPROVEMENT PROGRAM OVERVIEW
The Capital Improvement Program (“CIP”) consists of the Capital Budget and the Capital Program. The Capital Budget is the County’s plan to receive and expend funds for capital projects during the ensuing fiscal year. The Capital Program is the County’s plan to receive and expend funds for capital projects during the five fiscal years thereafter. The primary source of funding for the CIP is borrowed funds in the form of General Obligation Bonds. Other sources of funding include General Fund appropriations, intergovernmental aid and developer payments. The CIP is divided into two areas. The Metropolitan District Construction Fund includes all water and sewer projects and the Consolidated Public Improvement Construction Fund includes all other capital projects. General Obligation Bonds are comprised of Consolidated Public Improvement Bonds and Metropolitan District Bonds.
Before Consolidated Public Improvement Bonds may be appropriated, a borrowing referendum must be voted upon and approved. Metropolitan District Bonds do not require voter approval. Every two years at each general election, a borrowing referendum is placed on the ballot. The County Council establishes the borrowing referendum that appears on the ballot when adopting the CIP. The funding authorized through voter approval of the borrowing referendum is appropriated to capital projects beginning in the ensuing fiscal year after approval of the referendum. However, if approved in the referendum, funding may be appropriated in the current fiscal year.
The CIP is generally formulated on a biennial basis. For the even-numbered fiscal years, the County Executive will conduct a full-scale review of capital improvement needs. For the odd-numbered fiscal years, a cursory review is made, any urgent funding issues are addressed and any outside funding not previously anticipated is recognized.
The CIP is initiated by the preparation of an itemized list of the proposed capital projects in the ensuing fiscal year and the next five fiscal years thereafter from each office, department, institution, board, commission and other agency of the County government. After consideration by the Planning Board, the Director of Planning and Community Conservation transmits the recommended list of projects to be undertaken in such periods and corresponding cost estimates to the Director of Budget and Finance. The County Administrative Officer, with the assistance of the Director of Budget and Finance, considers such recommendations with the other budget proposals and submits to the County Executive, together with the operating budget, a complete CIP. The proposed CIP clearly sets forth the plan of proposed capital projects to be undertaken in the ensuing fiscal year and in each of the next five fiscal years, and also the proposed means of financing the same. The Capital Budget includes a statement of the receipts anticipated during the ensuing fiscal year from all borrowing and from other sources for capital projects. The County Executive submits the CIP together with the operating budget not later than seventy-five days prior to the end of the fiscal year.
The County utilizes “PAYGO” financing in the CIP. In doing so, the County finances the construction of certain capital projects by appropriating revenues from operating funds of the County. Through these appropriations of current revenues, the County has reduced the aggregate amount of general obligation indebtedness associated with the construction of capital projects. Effective in FY2014, Total PAYGO was defined to include funding provided to the Capital Budget from a variety of sources. Prior to FY2014, PAYGO included only funding from the General Fund. The FY2017 budgeted total PAYGO contribution of $127.4 million includes general fund contributions of $97.4 million, Stormwater Fees of $10.8 million, and Debt Premium of $19.2 million. In addition to the FY2017 PAYGO budget, the County Council passed a supplemental appropriation for $38.9 million for school air conditioning projects. The County’s General Fund PAYGO Contributions and Total PAYGO contributions are as follows for the past ten fiscal years:
General Fund Contribution Total PAYGO Contribution to the Capital Budget to the Capital Budget Fiscal Year (In Millions) (In Millions) FY2008 $146.9 NA FY2009 $138.5 NA FY2010 $33.1 NA FY2011 $2.6 NA FY2012 $0.6 NA FY2013 $13.9 NA FY2014 $43.8 $67.1 FY2015 $51.2 $91.3 FY2016 $101.4 $123.3 FY2017 Budget $136.3 $166.3
In FY2010 and FY2011, the County performed comprehensive reviews of existing capital projects to identify projects that could be closed out, eliminated as not essential, or delayed due to actual project timetables. As a result of these reviews, the County was able to revert $169 million of PAYGO financing back to the General Fund.
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Fiscal Year 2017 Capital Budget and Program
The County Council adopted the FY2017 Capital Budget and Five Year Program on May 26, 2015. The CIP includes $292,211,986 from the 2016 Borrowing Referendum Plan, $315,227,789 from the 2018 Borrowing Referendum Plan, and $265,500,000 from the 2020 Borrowing Referendum Plan. The following tables set forth the different classes of capital projects and the amounts included in the Capital Budget for FY2017 and the amounts included in the Capital Program for the five fiscal years indicated.
CAPITAL BUDGET AND FIVE YEAR CAPITAL PROGRAM (Dollars expressed in 000s)
BUDGET FIVE YEAR CAPITAL PROGRAM FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 APPROPRIATIONS Metropolitan Sewer and Water $89,797 $496,025 $0 $484,025 $0 $476,525 Public Works 41,291 85,949 10,000 81,784 10,000 65,320 Refuse Disposal 0 7,626 0 2,616 0 2,500 Community College 1,760 25,175 0 26,450 0 24,375 Operational Buildings 21,914 32,139 8,202 53,538 8,332 29,000 Parks, Preservations and Greenways 7,661 11,400 0 11,400 0 11,400 Schools 195,688 166,000 16,500 167,000 0 150,000 Land Preservation 0 2,460 0 2,460 0 2,460 Community Improvements 3,300 4,300 3,300 4,300 3,300 5,300 Waterway Improvements 21,650 12,056 0 10,856 0 10,856 $383,061 $843,130 $38,002 $844,429 $21,632 $777,736 RESOURCES Metropolitan District Funding(1) $89,797 $496,025 $0 $484,025 $0 $476,525 General Obligation Bonds (2) 36,461 292,212 0 315,228 0 265,500 General Funds (3) 99,585 23,227 38,002 11,610 21,632 12,300 Other County Funds 10,803 1,110 0 810 0 810 Non County Funds 146,415 30,656 0 32,756 0 22,601 $383,061 $843,130 $38,002 $844,429 $21,632 $777,736
(1) Includes reallocated bonds and funds from prior year appropriation and Maryland Water Quality Revolving Loan Fund. (2) Includes reallocated bonds from prior year appropriation and debt premium. (3) Includes reallocated funds from prior year appropriations.
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SECTION III: FINANCIAL INFORMATION
BASIS OF ACCOUNTING
The governmental funds financial statements are reported using the modified accrual basis of accounting. The measurement focus of these funds is the determination of financial position and changes in financial position ("current financial resources" focus). Under the modified accrual basis of accounting, revenues are recorded when they are both measurable and available. "Measurable" means the amount of the transaction can be determined and “available” means collectable within the current period or soon thereafter to pay liabilities of the current period. The County considers sales and income taxes, interest income and various intergovernmental revenues available if they are collected within 60 days after the fiscal year-end. Property tax revenue is recognized on receipts within 30 days of the fiscal year-end. Revenue related to expenditure driven grants is recognized when the applicable eligibility requirements have been met and to the extent that cash is expected to be received within one year of the fiscal year-end. Licenses and permits, charges for services, fines and forfeitures, and miscellaneous revenues are recorded when received in cash because they are generally not measurable until actually received. Expenditures, other than principal and interest on long-term debt and compensated absences, are recorded when the liability is incurred. Principal and interest on general long-term debt are recorded in the governmental funds as liabilities when due.
Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of enterprise and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. Revenues and expenses not meeting this definition are reported as non- operating revenues and expenses.
The pension trust funds and the other postemployment benefit trust fund use the accrual basis of accounting. Member contributions are recognized in the period when due. Employer contributions are recognized when due and a formal contribution commitment has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Investment purchases and sales are recorded on a trade-date basis. These transactions are not finalized until settlement date, which occurs approximately three business days after the trade date.
The County reports unearned revenue in the governmental funds and proprietary fund financial statements when cash is received prior to being earned. Deferred inflows are recognized in the governmental fund statements when revenue is unavailable.
FUND FINANCIAL STATEMENTS
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds. Major individual governmental funds, major individual proprietary funds and two combined non-major governmental (Liquor License and Stormwater Management) funds are reported as separate columns in the fund financial statements.
The County reports on the following major governmental funds:
The General Fund is the County’s general operating fund. It is used to account for all financial resources except those required to be accounted for in another fund.
The Gifts and Grants Fund accounts for a number of gifts and grants awarded to the County that are not accounted for in another fund.
The Consolidated Public Improvement Construction Fund accounts for the acquisition or construction and related financing sources for capital facilities of the primary government and for capital contributions made to the County’s component units for their capital facilities.
The County reports on the following major enterprise fund:
The Metropolitan District Fund accounts for the operation of the Metropolitan District, which provides water supply and sewerage systems to County residents within the Metropolitan District.
The County also reports on the following fund types:
Internal Service Funds account for the operation of a motor pool of passenger vehicles and light duty trucks, a printing facility and a self-insurance program for workers’ compensation; general and auto liability insurance; and employee health insurance.
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Benefits Trust Funds, which include the following:
Pension Trust Funds account for the accumulation of assets to be used for pension benefit payments to qualified employees.
Other Post-Employment Benefits Trust Fund accounts for the accumulation of assets to be used for healthcare and life insurance benefit payments to qualified employees.
AWARDS
The Government Finance Officers Association of the United States and Canada (“GFOA”) awarded a Certificate of Achievement for Excellence in Financial Reporting to the County for its Comprehensive Annual Financial Report (“CAFR”) for the fiscal year ended June 30, 2015. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR with contents that conform to program standards. Such CAFR must satisfy both Generally Accepted Accounting Principles (GAAP) and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year. The County has received a Certificate of Achievement for the last 37 consecutive years (fiscal years ended June 30, 1979-2015). The County submitted the CAFR for the fiscal year ended June 30, 2016 to GFOA for consideration and believes that it will continue to conform to the Certificate of Achievement program requirements.
REVENUE STABILIZATION RESERVE ACCOUNT AND GENERAL FUND SURPLUS
The County’s Revenue Stabilization Account was established to protect the County from unforeseen emergencies and future economic downturns which result in major revenue shortfalls. At the close of any fiscal year, the Director of Budget and Finance must transfer to the Revenue Stabilization Reserve Account any unreserved General Fund surplus equal to 5 percent of the budgeted General Fund revenue. Funds in the account may not be utilized for any other purpose without the specific recommendation of the County Executive and a majority plus one approval of the County Council.
To protect the County from unforeseen emergencies and future economic downturns, the County took the fiscally prudent step of raising its target level for unreserved General Fund balances. Rather than the long-term policy level of 5% of the revenue budget, the County will try to produce unreserved General Fund balances near 10% of General Fund revenues each year.
INVESTMENT OF OPERATING AND CAPITAL FUNDS
County funds held for operating and capital purposes are managed by the Office of Budget and Finance with strict guidelines as to investment vehicles. State of Maryland law and the County’s investment policy govern investments. The County is in full compliance with such laws. The County is permitted to invest in obligations of the United States Government, its agencies or instrumentalities, collateralized savings deposits, collateralized certificates of deposit, repurchase agreements, bankers' acceptances, money market funds and the Maryland Local Government Investment Pool. Deposits and repurchase agreements are collateralized by United States Government treasuries, agencies and instrumentalities, held by an independent third party custodian and marked to market daily. The County does not invest in leveraged products or reverse repurchase agreements.
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FIVE YEAR SUMMARY OF GENERAL FUND REVENUES AND EXPENDITURES
From FY2012 through FY2016, the County realized an excess of revenues over expenditures lead primarily by higher income tax revenues. For comparison purposes with other fiscal years, the $255 million Pension Obligation Bond issue has been reclassified under “Op. Transfers to Other Funds” from “Pension Plan Contributions.” The County’s Unassigned General Fund Balance increased from $230 million at the end of FY2012 to $295 million at the end of FY2013. The County, through a planned drawn down, has since reduced the Unassigned General Fund Balance to $240 million at the end of FY2016, which represents 13.7% of general fund revenues using the budgetary basis of accounting.
From FY2012 through FY2016, total revenues increased from $1.62 billion to $1.88 billion. During this period, income tax revenues increased by 20% or $116 million. General property tax revenues increased by 6% or $48 million. Property tax revenue from lower property assessments was mitigated by the County’s 4% homestead assessment growth cap on residential property. The homestead property tax credit has been steadily decreasing from $109 million in FY2012 to $13 million in FY2016. Other significant revenue increases during this period include sales and service taxes, up 47% or $50 million, driven by higher recordation and title transfer taxes. Intergovernmental aid also increased by 48% or $15 million.
Total expenditures increased by $275 million over the period. The County has a history of using excess revenues to fund one-time capital expenditures. Transfers to the capital budget (pay-as-you-go funding) from the General Fund totaled $225 million over the five-year period from FY2012 through FY2016. In FY2016, pay-as-you-go funding increased by $50.2 million to $101.4 million. In FY2013, general government staffing levels decreased 7.1% compared with FY2012 due to the Retirement Incentive Program that was offered to eligible employees during the winter of 2012. A stipulation of the program was that the department must be willing to abolish the vacant position and not rehire. All told, 310 government employees qualified for this program, saving the County an estimated $21 million each year.
The following statement presents the County’s actual revenues, expenditures and fund balance for the General Fund in accordance with generally accepted accounting principles. The revenues are presented according to source and the expenditures are presented according to major purpose for each of the last five fiscal years ending June 30. Contributions to the capital budget for public schools have been classified under “Operating Transfers to Capital Budget.”
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GENERAL FUND COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FISCAL YEARS 2012 TO 2016 (Dollars expressed in 000s)
2012 2013 2014 2015 2016 Revenues General Property Taxes ...... $845,238 $853,860 $853,317 $870,115 $892,906 Income Taxes ...... 593,204 624,060 667,924 696,335 709,377 Sales and Service Taxes ...... 107,168 128,039 124,409 137,031 157,551 Licenses & Permits ...... 4,916 4,970 4,925 5,306 5,194 Intergovernmental ...... 31,517 37,717 43,473 43,739 46,609 Charges for Services ...... 10,068 10,378 11,118 12,544 22,404 Fines & Forfeitures...... 5,149 4,844 5,066 6,033 7,099 Interest on Investments ...... 753 1,205 1,048 684 1,101 Miscellaneous ...... 24,498 27,861 28,837 40,072 33,576 Total Revenues ...... 1,622,511 1,692,934 1,740,117 1,811,859 1,875,817 Expenditures: General Government ...... 70,640 108,813 109,055 107,010 104,375 Public Safety ...... 331,603 324,201 332,145 340,410 345,365 Public Works ...... 115,393 100,540 114,481 112,309 117,531 Health and Human Services ...... 37,697 34,188 34,600 36,327 37,752 Recreation and Culture ...... 23,999 16,377 17,237 17,654 18,361 Economic Development ...... 1,349 1,287 1,129 1,079 1,169 Pension Plan Contributions ...... 58,985 65,818* 71.791 95,585 92,550 Healthcare Contributions ...... 66,676 92,311 99,447 99,924 126,386 Public Schools ...... 702,749 725,928 753,592 781,070 794,640 Community College ...... 38,463 38,463 39,043 39,876 41,653 Libraries ...... 34,070 33,925 35,875 33,563 32,764 Debt Service ...... 84,949 94,834 110,137 117,461 128,369 Miscellaneous ...... 16,942 16,067 16,532 17,571 17,852 Total Expenditures ...... 1,583,515 1,652,752 1,735,064 1,799,839 1,858,767 Excess (Deficiency) of Revenues Over Expenditures ...... 38,996 40,182* 5,053 12,020 17,050 Other Financing Sources (Uses): Bond Issued ...... 0 256,290 0 0 0 Certificates of Participation Proceeds ...... 92,689 0 0 0 0 Refunding Bonds Issued ...... 0 94,080 39,530 117,365 0 Refunding COPs Issued ...... 0 11,830 0 0 0 Payment to Refunding Escrow Agents ...... 0 (122,342) (44,190) (137,501) 0 Premiums on debt ...... 29,592 54,994 20,659 44,998 25,010 Op. Transfers In ...... 393 457 275 273 1,179 Op. Transfers to Capital Budget ...... (637) (13,938) (43,805) (59,474) (107,275) Op. Transfers to Other Funds ...... (8,855) (261,652)* (5,673) (6,073) (6,182) Total Other Financing Sources (Uses) ...... 113,182 19,719 (33,204) (40,412) (87,268) Net Change in Fund Balances ...... 152,178 59,901 (28,151) (28,392) (70,218) Fund Balance at Beginning of Year ...... 250,054 402,232 462,133 433,982 `405,590 Fund Balance at End of Year ...... $402,232 $462,133 $433,982 $405,590 $335,372
*For comparison purposes with other fiscal years, the $255 million Pension Obligation Bond Issuance has been reclassified under “Op. Transfer to Other Funds” from “Pension Plan Contributions.”
See “Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds” in the County’s Comprehensive Annual Financial Report.
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FIVE YEAR SUMMARY OF GENERAL FUND BUDGET AND ACTUAL RESULTS
The following statement presents a comparison of budget versus actual revenues, expenditures and encumbrances and changes in fund balance in the County’s General Fund using the budgetary basis of accounting for each of the past five fiscal years ending June 30.
GENERAL FUND BUDGETARY COMPARISON FISCAL YEARS 2011 TO 2015 (Dollars expressed in 000s)
2012 2013 2014 2015 2016 Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Revenues: General Property Taxes ...... $847,853 $845,238 $847,853 $853,860 $860,143 $853,317 $866,858 $870,115 $884,330 $892,906 Income Taxes ...... 508,547 593,204 508,547 624,060 604,293 667,924 687,771 696,335 718,940 709,377 Sales and Service Taxes ...... 106,996 107,168 106,996 128,039 120,140 124,409 124,208 137,031 143,320 157,551 Licenses and Permits...... 3,520 4,916 3,520 4,970 4,559 4,925 4,854 5,306 4,842 5,194 Intergovernmental ...... 31,622 31,517 31,622 37,717 42,791 43,473 42,947 43,739 45,226 46,609 Charges for Services ...... 10,515 10,068 10,515 10,378 10,909 11,118 11,546 12,544 11,802 22,404 Fines and Forfeitures...... 3,754 5,149 3,754 4,844 4,612 5,066 4,901 6,033 5,927 7,099 Reimbursement from Other Funds ..... 7,193 7,699 7,193 8,202 8,502 8,637 8,727 10,107 11,021 12,115 Interest on Investments ...... 1,665 958 1,665 1,324 1,350 1,022 568 650 2,762 1,110 Operating Transfers In ...... 153 153 153 323 275 275 273 273 306 306 Miscellaneous ...... 21,399 24,131 21,399 28,095 27,385 29,944 34,171 38,523 33,659 32,576 Total Revenues ...... 1,543,217 1,630,201 1,543,217 1,701,812 1,684,959 1,750,110 1,786,824 1,820,656 1,862,135 1,887,247 Expenditures and Encumbrances: General Government ...... 76,680 73,710 105,189 102,135 106,578 103,973 113,272 109,697 117,990 113,437 Public Safety ...... 331,247 330,137 325,995 323,636 329,196 324,374 336,505 334,171 341,122 340,701 Public Works ...... 119,751 116,079 94,281 89,235 107,419 104,495 112,200 110,129 114,621 113,532 Health and Human Services ...... 38,030 37,595 35,140 34,311 35,930 34,837 37,728 36,448 38,616 37,936 Recreation and Culture ...... 24,764 23,812 18,044 16,684 18,078 17,289 18,509 17,940 19,162 18,307 Economic/Community Development . 1,642 1,419 1,345 1,295 1,249 1,170 1,230 1,015 1,196 1,192 Pension Plan Contributions ...... 59,010 59,009 65,857 65,856 71,810 71,807 95,891 95,618 92,598 92,598 Healthcare Contributions ...... 68,575 66,838 92,434 92,294 99,772 99,500 126,408 99,987 126,606 126,447 Public Schools ...... 702,982 702,749 725,066 723,040 730,398 730,302 776,990 776,989 789,656 788,619 Community College ...... 38,463 38,463 38,463 38,463 38,463 38,463 39,363 39,363 41,428 41,428 Libraries ...... 34,070 34,070 33,925 33,925 35,264 35,264 33,563 33,563 32,764 32,764 Debt Service ...... 82,393 78,370 84,376 81,835 95,959 95,922 109,674 109,664 119,600 118,692 Op. Transfers to Capital Budget ...... 637 637 13,938 13,938 43,805 43,805 51,224 51,224 101,385 101,385 Transfers to Other Funds ...... 6.753 6.753 6.652 6.652 5,673 5,673 6,073 6,073 6,183 6,183 Miscellaneous ...... 18,788 16,942 16,776 16,066 16,897 16,532 17,612 17,572 18,606 17,851 Total Expenditures & Encumbrances 1,603,785 1,586,583 1,657,481 1,639,365 1,736,491 1,723,406 1,876,242 1,839,453 1,961,533 1,951,072 Excess of Revenues over Expenditures and Encumbrances .... ($60,568) 43,618 ($49,585) 62,447 ($51,532) 26,704 ($89,418) ($18,797) ($99,398) ($63,825) Other Financing Source - COPs 92,689 Adjustments required under GAAP: Net Change in Res. for Encumbrances (894) 1,519 445 653 (2,314) Unbudgeted Equip. Finance Activity . (6,118) (30,438) (34,380) (17,537) (12,913) Unbudgeted Bond Escrow Payment ... 232 87 128 138 618 Net Change in Reserve for Inventories Imprest Funds and Other Programs . 21,481 24,820 (22,596) 6,179 5,205 Prior Year Encumbrance Liquidations 1,170 1,466 1,548 972 3,011 Net Change in Fund Balance 152,178 59,901 (28,151) (28,392) (70,218) Fund Balance at Beginning of Year .... 250,054 402,232 462,133 433,982 405,590 Fund Balance at End of Year ...... $402,232 $462,133 $433,982 $405,590 $335,372
See “Budgetary Comparison Statement – General Fund” in the County’s Comprehensive Annual Financial Report.
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FIVE YEAR SUMMARY OF GENERAL FUND BALANCE
GASB Statement No. 54 requires governments to use fund balance classifications of “Nonspendable”, “Restricted for”, “Assigned to”, and “Unassigned.” The following table presents a comparison of the County’s Revenues and General Fund balance for the past five fiscal years based on the new classifications of fund balance presented under GASB Statement No. 54. At the end of FY2016, the Unassigned General Fund Balance and Designated for Subsequent Years Expenditures totaled $258,652,000 or 13.7% of General Fund revenues using the budgetary basis of accounting. The Unassigned General Fund Balance and Designated for Subsequent Years Expenditures was referred to as “Unreserved General Fund Balance” prior to the implementation of GASB Statement No. 54.
GENERAL FUND BALANCE FISCAL YEARS 2012 TO 2016 (Dollars expressed in 000s)
Fiscal Year Ended June 30, 2012 2013 2014 2015 2016 Nonspendable: Inventories ...... $7,109 $6,772 $5,574 $6,998 $7,489 Restricted for: Equipment Financing ...... 99,260 68,821 34,441 16,904 3,991 Bond Escrow ...... 0 319 448 586 1,203 Restricted General Fund Balance ...... ………… 99,260 69,140 34,889 17,490 5,194 Assigned to: Encumbrances ...... 3,692 5,210 5,655 6,308 3,995 Imprest Funds ...... 69 69 69 74 75 Designated for Subsequent Year’s Expenditures ...... 40,584 39,532 78,056 89,648 19,124 Retirement of Long-term Debt ...... 21,314 46,475 25,075 29,826 34,540 Disputed Taxes ...... 000 25,427 25,427 Assigned General Fund Balance ...... ………… 65,659 91,286 108,855 151,283 83,161 Unassigned: Designated for Revenue Stabilization ...... 84,822 85,034 85,187 89,341 93,107 Undesignated ...... 145,150 209,901 199,477 140,478 146,421 Unassigned General Fund Balance ...... $229,972 $294,935 $284,664 $229,819 $239,528 Total General Fund Balance ...... $402,232 $462,133 $433,982 $405,819 $335,372
General Fund Revenues (Budgetary Basis) ...... $1,630,201 $1,701,812 $1,750,110 $1,820,656 $1,887,247
Unassigned General Fund Balance and Designated for Subsequent Year’s Expenditures as a % of GF Revenues ..... 16.6% 19.7% 20.7% 17.5% 13.7%
FISCAL YEAR 2017 OPERATING BUDGET
On May 26, 2016, the County Council adopted the FY2017 budget. The General Fund Operating Budget of $1,986,516,077 represents an increase of 1.78% or $34.7 million from the adjusted FY2016 operating budget of $1,951,782,630.
The budget’s on-going spending fell within the guideline established by the Spending Affordability Committee (“SAC”). Under SAC guidelines, the budget (excluding capital and one-time items as well as matching funds for grants) could grow by 3.5%. The basic growth factor allowed under the SAC guidelines reflects estimated personal income growth in the County.
There are no new taxes levied to fund the General Fund budget. The County’s income tax rate of 2.83% remains unchanged and the real property tax rate remained at $1.10 per $100 of assessed value. The personal property rate remained at $2.75 and the Homestead Assessment Growth Cap continued at 4%.
As in previous years, the FY2017 operating budget funds all eligible salary increments and longevities. The budget also includes a 2% Cost of Living Adjustment (COLA) for County employees effective July 1, 2016. COLA recipients include general government, Board of Education, Library, and Community College employees. Moreover, the budget includes funding for reclassification upgrades for selected personnel in the fire department and groups represented by the Federation of Public Employees (FPE) and the Supervisory, Management, Confidential (SMC) employees.
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The chart below presents the General Fund estimated revenues and budgeted expenditures for FY2016 and FY2017 and the percentage change by category. The FY2017 adopted budget has been adjusted to include both a $20,000,000 transfer from the public schools under Miscellaneous Revenues and a $38,940,000 supplemental appropriation under Capital Budget Contribution Appropriations for school air conditioning projects.
GENERAL FUND ESTIMATED REVENUES AND BUDGETED EXPENDITURES
FY2016 FY2017 Revised Adjusted Revenue Revenue % Estimate Estimate Change Revenues: Property Taxes ...... $893,320,725 $916,282,901 2.6% Income Taxes ...... 713,149,282 739,104,822 3.6 Sales and Service Taxes ...... 152,460,679 155,799,191 2.2 Charges for Services ...... 24,958,680 47,789,757 91.5 Intergovernmental Aid ...... 44,803,086 47,255,659 5.5 Reimbursements from Other Funds ...... 10,873,292 11,330,822 4.2 Fines and Forfeitures ...... 6,147,987 6,080,250 -1.1 Licenses and Permits ...... 5,052,000 5,263,028 4.2 Interests on Investments ...... 968,273 3,319,348 242.8 Miscellaneous ...... 32,155,239 54,970,707 71.0 Total Revenues ...... 1,883,889,243 1,987,196,485 5.5 Available from Surplus ...... 77,643,387 38,063,883 -60.0 Total Resources ...... $1,961,532,630 $2,025,260,368 3.2%
FY2016 FY2017 Revised Adjusted % Budget Budget Change Appropriations: Public Schools (Excludes PAYGO) ...... $789,656,235 $805,691,200 2.0% Public Safety ...... 340,587,445 349,138,216 2.5 Capital Budget Contribution (Includes Schools) ...... 101,385,266 136,318,023 34.5 Debt Service (Includes College Debt Service) ...... 120,134,743 126,408,605 5.2 General Government ...... 117,988,882 120,675,047 2.3 Public Works ...... 114,623,066 113,369,285 -1.1 Pension Plan Contributions ...... 92,596,120 104,554,099 12.9 Healthcare Contributions ...... 126,605,502 104,079,882 -17.8 Community College (Excludes Debt Service) ...... 41,427,542 44,329,043 7.0 Health and Human Services ...... 38,614,320 40,382,919 4.6 Libraries ...... 32,764,153 32,849,950 0.3 Recreation and Culture ...... 19,228,927 19,950,256 3.8 Social Security ...... 17,836,000 18,623,000 4.4 Grants ...... 6,191,223 6,606,335 6.7 Economic and Community Development ...... 1,195,797 1,284,508 7.4 Reserve for Contingencies ...... 697,409 1,000,000 43.4 Total Appropriations ...... $1,961,532,630 $2,025,260,368 3.2%
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FISCAL YEARS 2016 AND 2017 INTERIM BUDGET COMPARISON
The following statement compares the County’s actual revenues and actual expenditures and encumbrances for the first six months of FY2016 and FY2017 using the budgetary basis of accounting. The columns entitled, “% of Budget” calculate the percentage of estimated revenues received and the percentage of budgeted expenditures paid through the first six months of each fiscal year. The last column computes the percentage of increase or decrease of actual revenues and expenditures for the first six months of FY2017 over the first six months of FY2016.
BALTIMORE COUNTY, MARYLAND INTERIM STATEMENT OF REVENUES, EXPENDITURES AND ENCUMBRANCES – GENERAL FUND FIRST SIX MONTHS ACTUAL FY2016 AND FY2017 COMPARED WITH TOTAL BUDGET FY2016 AND FY2017 ($ in 000's)
Fiscal Year 2016 Fiscal Year 2017 % Increase (Decrease) Actual Actual Actual Through % of Through % of FY2017 vs 12/31/15 Budget* 12/31/16 Budget* FY2016 Revenues: Property Taxes ...... $884,552 100.0 % $917,185 100.1 % 3.7 % Income Taxes ...... 200,154 27.8 202,315 27.4 1.1 Sales and Service Taxes ...... 74,362 51.9 70,826 45.5 -4.8 Intergovernmental ...... 23,936 52.9 24,734 52.3 3.3 Charges for Services ...... 5,292 44.6 18,332 38.4 246.4 Reimbursements from Other Funds ...... 4,571 41.5 4,635 40.9 1.4 Fines and Forfeitures ...... 3,132 52.8 2,915 47.9 -6.9 Licenses and Permits ...... 1,964 40.6 2,244 42.6 14.3 Interest on Investments ...... 418 15.1 961 28.9 129.9 Miscellaneous ...... 8,853 26.1 34,525 62.8 290.0 $1,207,234 64.8 % $1,278,672 65.0 % 5.9 %
Expenditures and Encumbrances: Public Schools (Excludes PAYGO) ...... $417,652 52.9 % $457,745 56.8 % 9.6 % Public Safety ...... 173,489 51.0 180,041 51.6 3.8 Capital Budget Contribution (PAYGO) ..... 101,385 100.0 136,318 100.0 34.5 Pension Plan Contributions ...... 92,503 99.9 104,470 99.9 12.9 Debt Service (Includes Coll. Debt Svc) ..... 81,798 68.1 84,975 67.2 3.9 Public Works ...... 65,775 62.7 75,601 66.7 14.9 Healthcare Contributions ...... 88,219 69.7 64,793 62.3 -26.6 General Government ...... 60,187 51.0 63,867 52.9 6.1 Community College (Excludes Debt Svc) . 37,037 89.4 37,978 85.7 2.5 Health and Human Services ...... 19,465 50.4 20,438 50.0 5.0 Libraries ...... 19,573 59.7 16,198 49.3 -17.2 Recreation and Culture ...... 12,561 65.3 12,970 65.0 3.3 Social Security ...... 8,348 46.8 9,094 48.8 8.9 Grants ...... 6,191 100.0 6,531 98.9 5.5 Economic and Workforce Development .... 552 46.1 612 47.7 10.9 Reserve for Contingencies...... 0 0.0 0 0.0 --- Total Expenditures and Encumbrances ...... $1,184,735 60.7 % $1,271,631 62.8 % 7.3 %
*Includes budget revisions through December of each year.
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GENERAL FUND REVENUES AND EXPENDITURES
The General Fund is the primary operating fund maintained by the County to account for revenue derived from property taxes, income taxes, sales and service taxes, intergovernmental aid and other sources. General Fund expenditures include categories such as public schools, public safety, and other essential functions of government. The following is a discussion of the General Fund revenue structure and major classifications of General Fund expenditures.
Revenues
The County maintains a diversified and stable revenue system to shelter it from short-term fluctuations in any individual revenue source. The County follows an aggressive policy of collecting revenues. The County has established user charges and fees to cover the full cost of providing the service and reviews these charges and fees annually. General Fund revenues support most of the services provided by the County. The General Fund is comprised of taxes and other revenue sources. Taxes, the greatest source of revenues to the General Fund, provided the County with 94% of total revenue in FY2016. Other revenue sources include intergovernmental aid, interest on investments, charges for services, reimbursements from other funds, fines and forfeitures, licenses and permits, and miscellaneous revenues. General Fund revenue for FY2016 was $1,887,247,000, which is $67 million higher than the FY2016 General Fund revenues. The real property tax rate remained at $1.10 per $100 of assessed value in the FY2017 budget.
Taxes
The three categories of taxes include property taxes, income taxes and sales and service taxes and represented 51%, 40% and 9%, respectively, of the County’s total tax revenue for FY2016. The following table shows the County’s principal tax revenues by source for each of the ten most recent fiscal years.
General Sales and Fiscal Total Property Income Service Year Taxes Taxes Taxes Taxes 2007...... $1,441,828,000 $663,289,000 $607,932,000 $170,607,000 2008...... 1,499,041,000 713,116,000 640,985,000 144,940,000 2009...... 1,518,367,000 765,573,000 640,176,000 112,618,000 2010...... 1,414,148,000 814,099,000 495,656,000 104,393,000 2011...... 1,448,849,000 837,056,000 514,715,000 97,078,000 2012...... 1,545,610,000 845,238,000 593,204,000 107,168,000 2013...... 1,605,959,000 853,860,000 624,060,000 128,039,000 2014...... 1,645,650,000 853,317,000 667,924,000 124,409,000 2015...... 1,703,481,000 870,115,000 696,335,000 137,031,000 2016...... 1,759,834,000 892,906,000 709,377,000 157,551,000 ______Note: “General Property Taxes” represent net collections, which include interest on delinquent taxes, discounts allowance, interest refunds and real property tax credits for aged and disabled. “Sales and Service Taxes” include title transfer tax, recordation tax, electricity tax, telephone tax, admissions and amusement tax, motel and hotel occupancy tax, 911 fees, and auto trailer camp tax.
General Property Taxes
The County levies taxes on both real and personal property. The value of the two classes of property is determined by the State Department of Assessments and Taxation and is assessed at 100% of full cash value. One-third of the real property base is physically inspected and revalued once every three years. Any increase in full cash value arising from such reassessment is phased in over the ensuing three taxable years in equal annual installments, although a decline in assessed valuation becomes fully effective in the first year. The total assessed value of all tangible property in the County for FY2016 was $79.8 billion. General property taxes are estimated to be $916 million in FY2017.
The major portion of the County’s property tax is levied each July 1 on the assessed value listed as of that date for all real and personal property located in the County. Bills paid during July are granted a 1% discount and bills paid in August are granted a 0.5% discount. Taxes are considered delinquent and interest accrues at 1% per month from October 1 to the date of payment. Delinquent real properties are sold in June at the annual tax sale at which time the property owner has six months to pay tax and penalty in full before foreclosure proceedings begin. County taxpayers are billed on a semi-annual basis with payments due September 30 and December 31 but retain the option to pay in full on or before September 30.
Maryland law authorizes counties to establish a separate cap no higher than 10% on the annual growth in residential property assessments. The County has established a homestead property tax credit that capped assessment growth on residential property at 4%. The revenue loss due to the homestead property tax credit is estimated at $12.2 million in FY2017 compared with
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$13 million in FY2016 and $17.7 million in FY2015. Along with the homestead credit, a homeowner’s credit (Circuit breaker) program acts to lower a taxpayer’s tax liability based on the ability of the homeowners to pay property taxes. The homeowner’s credit program is expected to reduce property taxes by $8.5 million in FY2017 but most were reimbursed through a state grant-in aid.
Most tangible personal property is assessed at cost less 10% depreciation for each year held, subject to a minimum assessment of 25% of original cost. In addition to the standard assessment rate, items which are specifically listed in the State of Maryland, Department of Assessments and Taxation “Depreciation Rate Chart” are subject to varying assessment rates. Commercial and manufacturing inventory of business is assessed at cost, with no inflation allowance and is determined from annual reports filed with the State Department of Assessments and Taxation. In the County, commercial and manufacturing inventory, manufacturing machinery, farm implements and livestock are exempt from the personal property tax.
The following table sets forth the estimated full value of all taxable property in the County for each of the past ten fiscal years. Real and personal property were assessed at 100% of estimated full value. Tax-exempt properties owned by federal, state and county governments, churches, schools, fraternal organizations, cemeteries, disabled veterans, and the blind of approximately $8.0 billion are not included in the table.
Real Property Percentage Personal Property Percentage Total Percentage Estimated Change From Estimated Change from Estimated Change From Fiscal Year Full Value Prior Year Full Value Prior Year Full Value Prior Year 2007 ...... $60,039,162,000 12.9% $3,067,578,000 5.4% $63,106,759,000 12.5% 2008 ...... 69,346,671,000 15.5 3,067,834,000 0.0 72,413,505,000 14.7 2009 ...... 78,882,654,000 13.8 3,117,528,000 1.6 82,000,182,000 13.2 2010 ...... 86,262,930,000 9.4 3,110,576,000 (0.2) 89,373,506,000 9.0 2011 ...... 86,234,670,000 (0.0) 2,944,780,000 (5.3) 89,179,450,000 (0.2) 2012 ...... 81,448,482,000 (5.6) 3,024,342,000 2.7 84,472,824,000 (5.3) 2013 ...... 77,870,032,000 (4.4) 3,024,740,000 0.0 80,894,772,000 (4.2) 2014 ...... 75,548,498,000 (3.0) 2,986,722,000 (1.3) 78,535,220,000 (2.9) 2015 ...... 75,289,712,000 (0.3) 3,023,312,000 1.3 78,313,024,000 (0.3) 2016 ...... 76,579,861,000 1.7 3,244,439,000 7.3 79,824,300,000 1.9
The following table sets forth real and personal property tax rates and tax levies for the County for each of the past ten fiscal years. The real property tax rate for the County was set at $1.10 per $100 of assessed value in FY2007 through FY2016 and was also set at that level in the FY2017 budget.
County Tax Rates per $100 of Assessed Valuation Real Personal Fiscal Year Property Property Tax Levies 2007 ...... $1.100 $2.7500 $663,836,000 2008 ...... 1.100 2.7500 711,785,000 2009 ...... 1.100 2.7500 763,191,000 2010 ...... 1.100 2.7500 808,956,000 2011 ...... 1.100 2.7500 838,282,000 2012 ...... 1.100 2.7500 849,559,000 2013 ...... 1.100 2.7500 854,900,000 2014 ...... 1.100 2.7500 858,621,000 2015 ...... 1.100 2.7500 872,635,000 2016 ...... 1.100 2.7500 897,668,000
In the opinion of the County, the tax rate established by it for each fiscal year when applied to the assessed value of the real and personal property subject thereto is sufficient to provide revenues to discharge the County’s obligations to pay maturing principal of and interest on its issued and outstanding general obligation indebtedness for each such fiscal year.
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The following table sets forth information concerning the County’s property tax levies and collections for each of the past ten fiscal years ($s in 000’s).
Collected within the Fiscal Year of the Levy Total Collections to Date FY Prior Year Total Percentage Collections- Percentage Ended Original Adjusted Adjusted of Original Subsequent of Original June 30 Tax Levy Levy Levy Amount Levy Years Amount Levy 2007 $663,836 ($2,486) $661,350 $661,344 99.6% $129 $661,473 99.6% 2008 711,785 (1,955) 709,830 709,242 99.6 869 710,111 99.8 2009 763,191 (1,461) 761,730 758,977 99.4 886 759,863 99.6 2010 808,956 (881) 808,075 805,384 99.6 1,985 807,369 99.8 2011 838,282 (1,899) 836,383 834,831 99.6 1,334 836,165 99.7 2012 849,559 (2,925) 846,634 841,983 99.4 3,398 845,381 99.8 2013 854,900 (1,560) 853,340 851,115 99.7 895 852,010 99.8 2014 858,621 (3,217) 855,404 854,254 99.9 357 854,612 99.5 2015 872,635 (1,757) 870,878 869,303 99.6 2,698 872,271 99.9 2016 897,668 (1,823) 895,845 886,008 98.7 2,256 888,264 98.9
The following table sets forth the County’s 25 largest taxpayers in respect of ad valorem property taxes, the assessed valuation of property owned by each such taxpayer and the taxes levied by the County against each such taxpayer during FY2016.
BALTIMORE COUNTY’S 25 LARGEST TAXPAYERS FISCAL YEAR 2016
Total Assessed Total County Name of Taxpayer* Valuation Tax** 1 BGE...... $1,009,116,657 $26,599,031 2 Verizon ...... 246,850,340 6,783,431 3 Merritt Management Corp ...... 435,648,398 4,434,837 4 Home Properties ...... 298,322,851 3,305,362 5 Comcast ...... 92,028,540 2,530,785 6 Towson Town Center ...... 262,211,500 2,208,688 7 Walmart ...... 167,466,210 2,089,185 8 Sparrows Point Terminal LLC...... 172,025,653 2,006,809 9 TRP Suburban ...... 147,020,673 1,816,172 10 White Marsh Mall...... 145,477,440 1,608,877 11 Maryland Health and Higher Education ...... 140,041,900 1,540,461 12 Oak Campus Partners, LLC...... 137,103,300 1,508,136 13 Hunt Valley Towne Center LLC ...... 126,853,600 1,395,390 14 MCI Worldcom ...... 45,475,540 1,250,577 15 Cellco Partnership ...... 47,534,730 1,238,082 16 Security Land and Development Co...... 93,205,667 1,025,262 17 Avenue at White Marsh ...... 90,036,000 990,396 18 Mercy Ridge ...... 84,005,401 924,059 19 Consolidated Environmental Management ...... 31,736,060 872,742 20 Becton Dickinson and Co ...... 68,600,786 862,981 21 Lakeside Financial Center, LLC ...... 77,368,535 851,054 22 McCormick ...... 60,607,560 832,293 23 Baltimore MD Green II LLC ...... 72,012,366 792,136 24 Home Depot ...... 61,894,263 787,422 25 Bluegrass Materials Company ...... 38,027,620 779,273 $4,150,671,590 $70,018,811
* The information set forth above was compiled from tax rolls on which the names of owners are not always recorded in the same manner. ** Represents only County tax levied on assessed value of real and personal property; does not include State taxes or any other taxes or charges.
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Income Tax
The County's income tax rate has been set at 2.83% from 2002 through 2016. The County collected income tax revenue of $709 million in FY2016 and estimates collections of $739 million in FY2017.
Sales and Service Taxes
The County imposes excise taxes on certain activities. The County collected sales and service tax revenue of $158 million in FY2016 and estimates collections of $156 million in FY2017. The most notable of these is the title transfer tax estimated at $73 million for FY2017 levied upon the transfer or sale of property and the recordation tax estimated at $37 million for FY2017 that is applied to deeds and other such documents conveying title to property. Other sales and service taxes include electricity tax, telephone tax, motel and hotel occupancy tax, admissions and amusement tax, local 911 tax, and auto trailer camp tax.
Intergovernmental Aid
Intergovernmental aid from the State and Federal Government is the largest source of revenue to the County outside of taxes. Intergovernmental aid is comprised of state shared revenues, state grant aid and federal revenues. State shared revenues are generated from a Highway User tax on gasoline and motor vehicles and license fees on County businesses. State grant aid is generally for health and public safety. Federal revenues are partial reimbursements of Department of Social Services activities and payments for participation in federal law enforcement cases. The County collected $47 million in intergovernmental aid in FY2016 and estimates collections of $47 million in FY2017.
Charges for Current Services
User fees and charges for County services can be divided into major groupings of General Government, Recreation and Health and Human Services. General Government includes a new charge for EMS Transport Fees, Fire Inspection Fees, Development Fees, and Lien Certificates. Recreation fees are collected at the County’s two beaches, the fishing center at Loch Raven Reservoir and the Oregon Ridge Lodge. Health and Human Services includes single stream recycling revenues and tipping fees paid by commercial haulers at the County landfill, Medicare reimbursements for services provided by the County Health Department, and various other health service fees. The County expects to collect $48 million of Charges for Services in FY2017.
Expenditures
The County pays the costs of general government functions from the General Fund. These costs include those of public safety, recreation and parks, economic development, environmental protection, governmental administration, retirement and debt service. The Public Works Department is funded through a combination of General Fund and Metropolitan District Fund appropriations. In addition, General Fund appropriations are merged with State and Federal gifts and grants to fund education, the Community College, libraries, health and welfare, and community development programs.
Funding of education through the Baltimore County Public Schools is the largest single area of expenditure. The school systems in Maryland do not exist as independent tax districts and therefore rely totally on governmental support. The County has increased its school spending by $28.9 million or 3.5% in the FY2017 budget, inclusive of the capital budget contribution. The Public School budget comprises 43% of the County’s FY2017 General Fund budget.
The responsibility for public safety is shared by four agencies: Police Department, Fire Department, the Bureau of Corrections and the Central Communications Center. Covering a large geographical area with no incorporated municipalities, the Baltimore County Police Department is one of the largest county departments in the nation. The Fire Department, with an integrated career and volunteer system, is also one of the largest departments in the nation. Public Safety comprises 18% of the FY2017 General Fund budget.
The County provides a variety of medical and social services through its departments of Health, Social Services, Aging, and Environmental Protection and Resource Management. The Department of Social Services, which has a separate and larger State operated component, also has responsibility for administering emergency shelter and housing programs.
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Payments to Component Units
The following chart shows appropriations for Component Units in the FY2017 budget:
Public Schools $852,900,000 Community College 53,062,000 Library 32,850,000 Total $938,812,000
Appropriations from the County’s General Fund represent 51% of funding for the Public Schools, 21% of funding for the Community College and 81% of funding for the Libraries. The remainder of the funding for these agencies is principally provided through state and federal funds that are distributed directly to these agencies. The Community College is also funded through tuitions. The General Fund appropriation for these three component units in the FY2017 budget equates to 47% of the County’s total General Fund operating budget. The County disburses operating funds to the agencies periodically throughout the fiscal year.
METROPOLITAN DISTRICT ENTERPRISE FUND
The Metropolitan District Enterprise Fund was established in FY2002 as a result of Governmental Accounting Standards Board (GASB) Statement No. 34, as amended by GASB Statement No. 37, requiring new financial reporting standards for state and local governments. The Metropolitan District Enterprise Fund combines the Metropolitan District Operating and Metropolitan District Capital Projects funds.
Five Year Summary of Metropolitan District Enterprise Fund – Operating Portion
The operating portion of the Metropolitan District Enterprise Fund is segregated for comparison purposes. The revenues are presented according to source and the expenditures are presented according to major purpose for each of the past five fiscal years ended June 30.
METROPOLITAN DISTRICT ENTERPRISE FUND – OPERATING PORTION COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FISCAL YEARS 2012-2016
FY2012 FY2013 FY2014 FY2015 FY2016 Revenues: Licenses and Permits ...... $922,000 $978,000 $1,080,000 $985,000 $1,092,000 Charges for Services ...... 160,855,000 162,235,000 157,978,000 152,852,000 178,793,000 Assessments ...... 12,911,000 13,060,000 12,766,000 12,826,000 12,085,000 Investments income ...... 360,000 320,000 192,000 98,000 50,000 Intergovernmental ...... 3,239,000 3,216,000 2,958,000 2,922,000 2,900,000 Miscellaneous ...... 1,000 456,000 241,000 93,000 15,000 Total ...... 178,288,000 180,265,000 175,215,000 169,776,000 194,935,000 Expenditures: General Government ...... 1,602,000 1,331,000 1,441,000 1,462,000 1,500,000 Public Works ...... 98,205,000 113,978,000 117,128,000 123,855,000 119,252,000 Debt Service: Principal Retirement ...... 38,339,000 43,533,000 44,274,000 44,276,000 49,137,000 Interest and Fiscal Charges ...... 34,436,000 36,646,000 37,379,000 38,789,000 39,051,000 Total Expenditures ...... 172,582,000 195,488,000 200,222,000 208,382,000 208,940,000 Excess (Deficiency) of Revenues over Expenditures...... 5,706,000 (15,223,000) (25,007,000) (38,606,000) (14,005,000) Other Financing Sources (Uses): Bond Premium ...... 9,015,000 4,353,000 4,592,000 16,531,000 17,765,000 Transfer Out ...... 0 0 0 0 (3,378,000) Total Other Financing Sources (Uses) ...... 9,015,000 4,353,000 4,592,000 16,531,000 14,387,000 Excess (Deficiency) of Revenues and Other Sources over Expenditures and Other Uses ...... 14,721,000 (10,870,000) (20,415,000) (22,075,000) 382,000 Beginning of Year Fund Balance ...... 81,767,000 96,488,000 85,618,000 65,203,000 43,128,000 End of Year Fund Balance ...... $96,488,000 $85,618,000 $65,203,000 $43,128,000 $43,510,000
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Water Supply and Sewerage Revenues
The Metropolitan District receives revenues from the net receipts on the sale of water, water service, and sewer service. Such revenues are expended for the maintenance and operation of the water and sewerage system. All rates are reviewed annually on a funds-needs basis and revisions are recommended to the County Executive. The authority for setting water consumption rates rests with Baltimore City’s Board of Estimates, based on recommendations submitted by the Baltimore County Director of Public Works. The County increased rates 15% on July 1, 2007, 7.5% on July 1, 2008, 5% on July 1, 2009, 10% on July 1, 2010, 15% on July 1, 2015 and 12% on July 1, 2016 to offset projected increases in the County’s share of expenditures as estimated by Baltimore City. The authority for setting other Metropolitan District rates lies with the County’s executive branch by Executive Order. The County has the right to appeal water and sewer rates to the Public Service Commission of Maryland.
The Metropolitan District also receives the annual front foot assessment charges for water and sewer mains installed that abut properties within the Metropolitan District and charges for connection to the system. The majority of these charges are used to pay debt service on Metropolitan District Bonds outstanding. Representative rates for the Metropolitan District are set out below for FY2017.
Front Foot Assessments (Assessed over 40 years)
Property Type Water Sewer Subdivision @$1.20 @$2.00 Agriculture (150 ft. maximum) 1.20 2.00 Small Acreage (Up to 200 ft.) 1.20 2.00 (Next 200 ft.) 0.80 1.35 (Remainder) 0.40 0.65 Industrial or Commercial 2.30 3.10
Sewer Service Charges for Individually Metered Domiciles
$50.85 per 1,000 cu. ft. of water consumption for FY2017.
Annual Water Distribution Charges
$126.37 up to $39,765.97 per unit, depending on size of meter for FY2017.
BUDGETARY PROCEDURE
The formulation of the County’s budget is the responsibility of the Director of Budget and Finance who is subject to the supervision of the County Administrative Officer. The County Administrative Officer serves as the chief fiscal officer for the County. In addition to formulating the budget, the Director of Budget and Finance is responsible for the study of the organization, methods and procedures of each office, department, board, commission, institution and agency of the County government; the submission to the County Administrative Officer of periodic reports on their efficiency and economy; and such other duties and functions as may be assigned by the County Administrative Officer.
Proposal of the Budget
The Operating Budget (the “Budget”), which in accordance with the Charter must be balanced, is prepared and submitted for approval to the County Executive by the County Administrative Officer and is based upon estimated revenues and expenditures of operations for the ensuing fiscal year. These estimates are prepared by the head of each office, department and other agency of the County government and are subject to review by the Director of Budget and Finance. The County Executive, after approving the Budget, submits the Budget along with a Budget Message to the County Council (the “Budget Message”). In addition to a summary of the Budget, the Budget Message indicates any major changes in financial policy and in expenditures, appropriations and revenues as compared with the fiscal year then ending, as well as the reasons for such changes. With respect to the Capital Budget, the Budget Message includes an explanation of changes made by the County Executive in the Capital Program recommended by the Baltimore County Planning Board. The Capital Budget is proposed each two-year period. The County Executive shall submit the budget not later than 75 days prior to the end of the fiscal year.
The Planning Board, which provides input from the community and neighborhood perspective, is charged with the responsibility of recommending a Capital Improvement Program (CIP) to the County Executive. The Planning Board hears testimony from each of the County agencies that have capital budget requests. In even numbered calendar years, the Planning
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Board makes recommendations for the amount and allocation of the bond referendum by programming funds for the appropriate two fiscal years, the budget year, and the rest of the capital program. In odd numbered calendar years, the Planning Board reviews requests for changes to the Budget and the capital program due to emergencies or other compelling reasons. Nothing precludes the Planning Board from making major changes to the Budget and the capital program in the odd numbered calendar years. However, the most recently passed referendum provides a fiscal parameter and the previous CIP provides a guideline for capital project scheduling. The County Executive is free to change the CIP recommended by the Planning Board, but any change must be pointed out to the County Council in the Budget Message.
The Master Plan, which is adopted at the start of each decade, is an important tool for ensuring that the growth of the County is managed in an orderly and rational manner. Community plans are prepared cooperatively by residents, landowners, business representatives and County staff. Many of the activities of government, such as the capital improvement program, require or recommend conformance with the Master Plan.
Adoption of the Budget
The County Council may decrease or delete any items in the Budget except those required by the public general laws of the State of Maryland and except any provision for debt service on obligations then outstanding or for estimated cash deficits. The County Council has no power to change the form of the Budget as submitted by the County Executive, to alter the revenue estimates (except to correct mathematical errors), or to increase any expenditure recommended by the County Executive for operating or capital purposes. The Budget must be adopted by the affirmative vote of not less than four members of the County Council. The Budget shall be adopted by the County Council on or before the first day of the last month of the fiscal year.
In its deliberations, the County Council will consider the recommendations of the Spending Affordability Committee (SAC). The SAC consists of five members, three of whom are members of the County Council. The remaining members may be from an area of specialty, such as finance or organized labor. The chairman of the County Council appoints the SAC members and may appoint an advisory committee of citizens to assist the SAC. On or before February 15 in each year, the SAC submits to the County Council and the County Executive a report with recommendations on fiscal goals for the upcoming budget. The goal of those spending guidelines is to limit the rate of growth in the Budget to a level that does not exceed the rate of growth of the County’s economy. The County Executive is free to propose a budget that exceeds that spending limit. If the County Council decides to adopt a budget that exceeds the SAC recommendations, then it must explain its rationale for exceeding the recommendations.
Amending the Budget
Transfers of funds from the Operating Budget to the Capital Budget or between specific projects contained in the Capital Budget may be authorized by the County Administrative Officer only with the approval of the County Executive and at least four members of the County Council. Operating budget inter-program transfers of no more than 10% of either program’s budget may be authorized by the Administrative Officer. However, transfers of greater than 10% or transfers between agencies require approval by the County Executive and at least four members of the County Council. Inter-agency transfers may be made during the last quarter of the fiscal year.
To meet a public emergency affecting life, health or property, the County Council may, by ordinance, make emergency appropriations from contingent funds, from revenues received from anticipated sources but in excess of the Budget estimates, or from revenues received from sources not anticipated in the Budget for the current fiscal year.
PENSION AND RETIREMENT PLANS
Employees' Retirement System of Baltimore County
Plan History
Established January 1, 1945, by County ordinance, the Employees’ Retirement System of the County (the “System”) is a defined benefit plan. The authority to establish and maintain the System is specified in Section 5-1-101 of the County Code. Membership in the System is open to employees in both the classified and unclassified service of Baltimore County, employees of the Revenue Authority and employees of the Baltimore County Board of Education, the Baltimore County Board of Library Trustees and the Community College of Baltimore County who are not eligible to participate in the Maryland State Retirement and Pension Systems. Direct appointees of the Governor of Maryland, temporary employees and employees for whom there are existing pension provisions are excluded. System membership is compulsory for general County classified employees after two years of service. Immediate membership is mandatory for police officers and fire fighters as a condition of employment. Membership is optional for part-time employees. System assets are well diversified, in domestic and international equities, fixed income, private equity, hedge funds, real estate and real assets. The County Council passed Bill No. 65-12 on October 15, 2012
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that formally closed the System for members hired before July 1, 2007, now known as “Plan A.” Members hired on or after July 1, 2007 are considered members of “Plan B.” As of June 30, 2016, the System had a combined market value of $2.33 billion covering 9,525 active members and 7,756 retirees and beneficiaries.
Benefits Provided
The System provides normal service retirement and discontinued service retirement benefits for members who attain the age and service requirements. Coverage for occupational disability benefits is immediate upon entry into the System. Disability benefits for non-occupational related injury or illness are provided after five years of creditable service for public safety or 10 years of creditable service for general employees. Occupational death benefits are provided upon membership for any member whose death results from an injury occurring in the actual performance of their job. Non-occupational related death benefits are available to public safety members after one year of service and to general members after ten years of creditable service. Members are vested after five or ten years of service, depending if the member was hired before or after July 1, 2007, and are also eligible for benefits at the normal or discontinued service retirement date. Provided sufficient excess investment earnings exist in the Post Retirement Increase Fund, post-retirement allowance adjustments are granted annually to members who have been retired for at least 60 months and have earned 20 years of creditable service. Benefit payments totaled $249 million for the fiscal year ended June 30, 2016.
Summary of Changes to the Retirement System Effective July 1, 2007
Through the labor negotiation process, changes were made to extend career service of employees and lower the County’s Other Post-Employment Benefit (“OPEB”) liability. The County established Deferred Retirement Option Programs (“DROP”) for general employees, correctional officers and deputy sheriffs hired prior to July 1, 2007. The County increased benefit accrual rates in the later years for police and fire to extend career service. The County reduced benefit accrual rates for general employees hired prior to July 1, 2007 that did not meet 30 years of creditable service, age 65 with 5 years of creditable service, or were age 60 with 5 years of creditable service as of June 30, 2007. For employees hired on or after July 1, 2007, the County increased age and service requirements for retirement eligibility for all groups. Lastly, the County created a lower benefit structure for general employees hired on or after July 1, 2007.
Summary of Changes to the Retirement System Effective July 1, 2010
On May 27, 2010, the County Council approved a series of changes to the County retirement system. These changes, which were successfully negotiated with the County labor unions, were necessary to protect the viability of the system. Highlights of the changes include the following:
• Increased employee contributions - Rates for public safety and department heads were increased by 1% on July 1, 2010 and an additional 0.5% on July 1, 2011. - Rates for general employees were increased by 0.5% on July 1, 2010 and an additional 0.5% on July 1, 2011.
• Changes to post-retirement cost-of-living adjustments (COLAs) - The eligibility period for post-retirement COLAs was increased from a minimum of 12 months to a minimum of 60 months - Active members must have 20 years of creditable service (25 if hired on or after July 1, 2007) to be COLA eligible - The cap on post-retirement COLAs was reduced from 4% to 3% for all members - The maximum account balance in the Post-Retirement Increase Fund was reduced from 8% to 6%. This Fund is credited with excess investment earnings that are used to fund the COLAs.
• Other Changes - General members eligible for a service retirement and applying for an ordinary disability may be required to accept a normal service retirement - Ordinary disability for general members increased from 5 years to 10 years - Accidental disabilities for general members were tiered based on degree of disability - Eligibility for ordinary death benefits for general members was increased from 1 year to 5 years - The age of hire at which an employee may opt not to join the System was lowered from age 59 to age 55
Employee Contribution Increases Effective July 1, 2011
The County has negotiated labor agreements that increased the retirement contribution for Deputy Sheriffs and Correctional Officers hired on or after July 1, 2011 from 8% to 10%, and for Firefighters hired on or after July 1, 2011 from 8.5% to 10%.
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Retirement Incentive Program Effective February 29, 2012
The County offered a retirement incentive program to certain employees in order to reduce the number of County employees on payroll. However, the incentive was granted only on the condition that a position would be eliminated for each retiree. The County provided 1.5 months of additional creditable service for each year of creditable service up to a maximum of 3 years and eliminated the early retirement penalty. To be eligible a member had to be age 60 with 5 years of creditable service, age 50 with 20 years of creditable service or have a minimum of 22 years and 3 months of creditable service regardless of age as of February 29, 2012. As a result of the incentive program, 310 members retired, saving $21 million in annual payroll costs.
Employee Contribution Increases Effective July 1, 2012
The County negotiated a labor agreement with Police SMC (Supervisory, Management and Confidential) that increased the retirement contribution by 1% for members of the Police SMC prior to July 1, 2012. Members who joined the Police SMC on or after July 1, 2012 will contribute 10%.
Reduction in Valuation Rate and Pension Obligation Bond Issuance Effective July 1, 2012
Effective July 1, 2012, the Board of Trustees of the Employee Retirement System reduced the valuation rate from 7.875% to 7.25%, which increased the present value of the liabilities of the System by approximately $275 million as calculated by the County’s actuary. Under Maryland State law, the County has the authority to issue pension obligation bonds for a closed plan. Of the $275 million increase, the actuary attributed $255 million of this increase to the closed plan (Plan A). On December 13, 2012, the County issued $256,290,000, including issuance costs and underwriters discount, of taxable general obligation bonds at a true interest cost of 3.43% to pay for the increased liabilities of the closed plan and deposited the bond proceeds into the County’s retirement system to be invested alongside other funds in the System. The annual County contribution to the System plus debt service on the bonds is expected to be less than what the annual County contribution would have been in the absence of the bonds.
Further Reduction in Valuation Rate Effective July 1, 2013
Effective July 1, 2013, the Board of Trustees of the Employee Retirement System reduced the valuation rate from 7.25% to 7.00%, which increased the present value of the liabilities of the System by approximately $92 million as calculated by the County’s actuary.
Employee Contribution Increases Effective July 1, 2014
The County negotiated a labor agreement with the Fraternal Order of Police, Lodge 4 to increase the retirement contribution for members hired on or after July 1, 2014 from 8.5% to 10%.
Further Reduction in Valuation Rate Effective July 1, 2015
Effective July 1, 2015, the Board of Trustees of the Employee Retirement System reduced the valuation rate from 7.00% to 6.75%, which increased the present value of the liabilities of the System by approximately $102 million as calculated by the County’s actuary.
Reduction in Valuation Rate and Pension Obligation Bond Issuance Effective July 1, 2016
Effective July 1, 2016, the Board of Trustees of the Employee Retirement System reduced the valuation rate from 6.75% to 6.375%, which increased the present value of the liabilities of the System by approximately $165 million as calculated by the County’s actuary. Under Maryland State law, the County has the authority to issue pension obligation bonds for a closed plan. Of the $165 million increase, the actuary attributed $159 million of this increase to the closed plan (Plan A). On August 3, 2016, the County issued $150,000,000, including issuance costs and underwriters discount, of taxable general obligation bonds at a true interest cost of 3.09% to pay for the increased liabilities of the closed plan and deposited the bond proceeds into the County’s retirement system to be invested alongside other funds in the System. The annual County contribution to the System plus debt service on the bonds is expected to be less than what the annual County contribution would have been in the absence of the bonds.
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Employee Contribution Increases Effective July 1, 2016 through July 1, 2018
The County negotiated labor agreements with all labor groups to equalize and increase member contribution rates beginning July 1, 2016 through July 1, 2018 as follows:
Effective 7/1/16, the following changes will be made to members hired prior to 7/1/2007: General employees will contribute between 6.25% and 7.25% Police Officers will contribute 8.65% Firefighters will contribute 8.65% Correctional Officers and Deputy Sheriffs will contribute between 6.5% and 7.5% Appointed Department Heads will contribute between 8.75% and 10%
Firefighters hired between 7/1/2007 and 6/30/2011 will contribute 8.65%
Effective 7/1/17, the following changes will be made to members hired prior to 7/1/2007: General employees will contribute between 6.75% and 7.25% Firefighters will contribute 9% Correctional Officers and Deputy Sheriffs will contribute between 7% and 7.5% Appointed Department Heads will contribute between 9.25% and 10%
Firefighters hired between 7/1/2007 and 6/30/2011 will contribute 9%
Effective 7/1/18, the following changes will be made to members hired prior to 7/1/2007 General employees will contribute 7.25% Firefighters who are not supervisory, management and confidential will contribute 9.5% Firefighters who are supervisory, management and confidential will contribute 10% Correctional Officers and Deputy Sheriffs will contribute 7.5% Appointed Department Heads will contribute 10%
Firefighters who are not supervisory, management and confidential hired between 7/1/2007 and 6/30/2011 will contribute 9.5%
Administrative Authority
The Board of Trustees of the System (the “Board”) is empowered to invest the System's assets and to take appropriate action regarding the investment, management and custodianship of plan assets. The Board of Trustees is comprised of eleven members, five ex-officio members, two active elected members, one retired elected member, two County Council appointees and one County executive appointee that is currently vacant. A pension investment consultant has been appointed to advise and consult with the Board, prepare recommendations on investment policies, investment management structure and asset allocation, and to monitor and evaluate the performance of the investment managers and the asset custodian. The administration of the System is vested in the Director of Budget and Finance who has the responsibility to implement policies of the Board as they pertain to the System and to ensure the System operates within the guidelines as set forth in those policies.
Actuarial Valuation
Actuarial valuations of the System are performed annually. The latest actuarial valuation of the System was prepared as of June 30, 2015. The actuarial cost method utilized is Projected Unit Credit. The actuarial asset valuation method is a ten-year smoothed market value without a corridor. Based on that method, the actuarial value of the System assets was $2,553,597,000 as of June 30, 2015. The actuarial accrued liability is the present value of benefits accumulated to date under the System's funding method and reflects future pay increases for active employees. As of June 30, 2015, the actuarial accrued liability of the System was $3,834,258,000. The System's actuarial funded status is measured by comparing the actuarial value of assets with the actuarial accrued liability. On this basis, the System's funded ratio as of June 30, 2015 was 66.6%. Cost-of-living adjustments are granted to qualifying members only if sufficient reserves have accumulated in the Post Retirement Increase Fund.
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Contributions
The following table sets forth the contributions for the County and the employees for each of the ten most recent fiscal years ended June 30.
Fiscal County Employee Total Year Contribution Contribution Contribution 2007 $40,065,000 $27,773,000 $67,838,000 2008 44,168,000 29,962,000 74,130,000 2009 49,763,000 31,423,000 81,186,000 2010 57,976,000 33,236,000 91,212,000 2011 58,340,000 36,567,000 94,907,000 2012 65,127,000 39,481,000 104,608,000 2013 73,362,000 37,682,000 111,044,000 2014 80,454,000 37,844,000 118,298,000 2015 108,191,000 39,725,000 147,916,000 2016 105,742,000 40,812,000 146,554,000
In each such fiscal year, the County has fully funded its contribution in accordance with the actuary’s contribution recommendation.
System Financial Report
The Office of Budget and Finance prepares a separate CAFR for the System. The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the Employees' Retirement System of Baltimore County for its CAFR for the fiscal year ended June 30, 2015. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive financial report with contents that conform to program standards. Such CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The Employees' Retirement System of Baltimore County has received a Certificate of Achievement for each of its reports (fiscal years ended June 30, 1994-2015). The County plans to submit the CAFR for the fiscal year ended June 30, 2016 to GFOA to determine its eligibility for another Certificate of Achievement and believes that it will continue to conform to the program requirements.
Police, Fire and Widows' Pension Plan
The County is the administrator of a frozen defined benefit pension plan (the “Plan”) providing benefits to County firefighters and police officers hired prior to October 1, 1959 and their spouses. The pension allowance for retired firefighters and police officers is one-half of the base salary of an active firefighter or police officer, respectively, of the same rank the pensioner held at the time of retirement. The pension allowance to the surviving spouse is one-half of the pension allowance of the retiree.
The County deposited to an escrow fund moneys derived from the issuance of General Obligation Pension Funding Bonds in order to provide funding for the Plan. The County maintains responsibility for amounts payable under the Plan if, and to the extent that, investments acquired with the proceeds of the bonds provide insufficient funds to satisfy the County’s liabilities under the Plan.
As of June 30, 2016, the Plan had 213 retirees and beneficiaries. The market value of the escrow fund investments was $32 million, comprised of a diversified portfolio of equities and fixed income investments. As of June 30, 2016, the plan fiduciary net position as a percentage of the total pension liability was 56.6% assuming an investment rate of return of 3.30%.
Other Post Employment Benefit Plan (OPEB)
The County has adopted GASB 45 and administers an OPEB trust fund that provides for payment of healthcare and life insurance benefits to eligible retirees of Baltimore County Government, the Baltimore County Board of Education, the Community College of Baltimore County, the Board of Library Trustees for Baltimore County and the Baltimore County Revenue Authority (BCRA). The assets of the OPEB plan are invested in the same manner as the Employees’ Retirement System. As of June 30, 2016, the OPEB Plan had a market value of $396 million and covered a projected 32,662 members, consisting of 19,176 active
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plan members and 13,486 retirees. The June 30, 2016 OPEB actuarial valuation shows a funded ratio of 27.7% based on the actuarial value of assets of $435 million and an actuarial accrued liability of $1.57 billion. Detailed accounting information for Fiscal Year 2016 may be found in Note 14 of the Comprehensive Annual Financial Report.
Compensated Absences
County employees are granted vacation, personal, and sick leave in varying amounts. In the event of termination, an employee is reimbursed for accumulated vacation and personal leave days up to a certain maximum depending on years of service. Employees are not reimbursed for accumulated sick leave. However, accumulated sick leave can be added to the calculation of retirement benefits. As of June 30, 2015, the County’s total compensated absences liability, stated in Note 8 of the Comprehensive Annual Financial Report (Long-Term Obligations), was $67,480,000 for the primary government and $31,999,000 for the component units.
Published Financial Information
The County prepares an annual Budget, a Comprehensive Annual Financial Report (CAFR), and an Employees’ Retirement System Comprehensive Annual Financial Report (ERS CAFR). • The Annual Budgets and the CAFRs may be found online at www.baltimorecountymd.gov/Agencies/budfin. • The ERS CAFRs may be found online at www.baltimorecountymd.gov/Agencies/budfin/retirement/index.html.
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SECTION IV: ECONOMIC AND DEMOGRAPHIC INFORMATION
LOCATION AND SIZE
The County is situated in the geographic center of Maryland, surrounding the City of Baltimore almost entirely. The County is the largest jurisdiction in the Baltimore metropolitan area with a population in excess of 2.7 million. The City of Baltimore and the County are entirely separate political units.
The County is the third largest land area of any political subdivision in the State of Maryland. Within its 612 square miles (plus an additional 28 square miles of water with over 200 miles of shoreline) are situated at least 29 identifiable, unincorporated communities which, as of 2010, ranged in population from approximately 4,300 to 63,000.
Healthcare and education, the sectors that generally report job stability and growth despite economic downturns, are well represented in Baltimore County by five regional medical centers and five major colleges and universities. BD Diagnostic Systems shares a zip code with one of the largest concentrations of computer game developers on the East Coast. Headquarters for the Social Security Administration and Centers for Medicare and Medicaid Services and a core of IT contractors form the Woodlawn Federal Center, the epicenter of national health care reform implementation. Major operations of T. Rowe Price, Toyota Financial Services, Euler Hermes, Zurich America, Baltimore Life, and Bank of America form a powerful finance-insurance community. Manufacturing holds its place with General Motors, McCormick, Stanley Black & Decker, Lockheed Martin, AAI Textron, Middle River Aircraft and Procter & Gamble Beauty.
POPULATION
The County, the largest jurisdiction in the Baltimore Metropolitan Area, experienced an increase in population of 6.7% from 2000 to 2010. The 2015 population for Baltimore County is 831,128. Today, the County has the third highest population in the State of Maryland and the second highest number of jobs.
New population growth in the County is being directed toward the targeted growth areas – White Marsh to the northeast and Owings Mills, to the northwest. Designated as growth areas in a 1979 master land use plan, each town center is adjacent to major transportation networks and anchored by a regional shopping center. White Marsh, which includes over 12,000 acres, has an estimated population of 73,903. The Owings Mills community, which consists of 13,282 acres, has an estimated population of 75,597. The I-83 corridor, a traditional center of corporate and residential strength that includes Hunt Valley, Cockeysville and Timonium, has an estimated 5-mile radius population of 76,295 with 62,767 in the corridor’s labor force. The chart below compares the population growth for the County, the Baltimore Metropolitan Area and the State of Maryland.
Baltimore % Baltimore % State of % Year County Change Metro Area* Change Maryland Change 1980...... 655,615 – 2,174,023 – 4,216,975 – 1990...... 692,134 5.6% 2,382,172 9.6% 4,781,461 13.4% 2000...... 754,292 9.0 2,552,994 7.2 5,296,486 10.8 2010 ...... 805,029 6.7 2,710,489 6.2 5,773,552 9.0
* Includes Baltimore City, Anne Arundel, Baltimore, Carroll, Harford, Howard and Queen Anne's Counties (Queen Anne’s County population figures not a part of MSA totals until 1986). SOURCE: Maryland Department of Planning March 2010; Bureau of Census base for 2000.
The following chart compares population by age group for the County, the State of Maryland and the United States.
POPULATION BY AGE GROUP
Baltimore State of United County Maryland States Percent under 5 years ...... 6.0% 6.6% 6.9% Percent school age (5-19 years)...... 19.0 20.4 20.5 Percent working age (20-64 years)...... 60.0 61.1 59.9 Percent 65 years and older ...... 14.5 11.8 12.6
SOURCE: U.S. Census Bureau, 2010 American Community Survey.
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INCOME LEVELS
Personal Income
Personal income per capita for the County residents has traditionally been above that of the Baltimore Region, the State, and the United States. In 2015, the per capita personal income for County residents exceeded the nation’s per capita personal income by 13.1%.
PER CAPITA PERSONAL INCOME
Baltimore Baltimore State of United Year County Region* Maryland States 2006...... $47,125 $44,664 $44,979 $37,698 2007...... 49,201 46,813 46,998 39,461 2008...... 50,438 49,133 49,778 40,873 2009...... 49,077 48,737 49,285 39,379 2010...... 49,724 49,657 50,035 40,144 2011...... 51,886 52,247 52,191 42,332 2012……………………………………………………… 53,835 54,148 53,659 44,200 2013……………………………………………………… 54,009 54,451 53,826 44,765 2014……………………………………………………… 53,949 53,690 54,176 46,049 2015……………………………………………………… 54,395 56,435 55,972 48,112
* Includes Baltimore City, Anne Arundel, Baltimore, Carroll, Harford, and Howard Counties. SOURCE: Maryland Department of Planning and U.S. BEA new estimates, November 2016.
DISTRIBUTION OF ESTIMATED HOUSEHOLDS BY EFFECTIVE BUYING INCOME* CALENDAR YEAR 2015
Distribution Baltimore County Baltimore Metro Area State of Maryland United States Less than $15,000 8.9% 10.6% 9.1% 13.5% $15,000-$34,999 19.3 17.9 16.9 24.7 $35,000-$49,999 17.0 14.6 14.5 16.8 $50,000 or more 54.8 56.9 59.4 44.9
SOURCE: Nielsen Data 2015, Demographic Updated Estimates. * Effective Buying Income (EBI) is a classification developed exclusively by Sales & Marketing Management to distinguish it from other sources reporting income statistics, and is defined as all money income less personal tax and non-tax payments. The latter includes fines, fees, penalties, and personal contributions to social insurance.
EMPLOYMENT
The County’s diverse business base employed a total work force of 370,665 in 2015. From 2002 through 2007 average annual employment for Baltimore County increased with the addition of 16,042 jobs. That amount, representing a 4.45% growth rate, compared to a 4.92% Maryland State job growth rate and 5.27% U.S. job growth rate. The high point of job growth in Baltimore County was achieved in 2007, when the County recorded 376,715 jobs. Between 2007 and 2010, as the full effects of the national recession hit Maryland, the County lost 15,286 jobs (4%), compared to a national job loss of 5.6%. Since 2010, the County has added thousands of new jobs, although the total is still lower than the 2007 high point.
The County's largest employers anchor over 65,000 jobs in the most concentrated business areas of White Marsh, Owings Mills, Woodlawn and the I-83 corridor. At the same time, new land and redevelopment opportunities allow for strategic growth elsewhere in the County.
In keeping with national trends, the manufacturing sector continues to contract in terms of employment, even as the average manufacturing wages in the County increase, reflecting the loss of low-end manufacturing jobs. The County continues to maintain a solid regional manufacturing base, traditionally centralized in the eastern, southwestern and north central areas of the County. Industry initiatives focus on retraining and upgrading of skill levels and improving capability and product linkages across the manufacturing spectrum. Important sectors of the County’s manufacturing employment are biotechnology, with companies such as BD Diagnostic Systems and Pharmaceutics International, and defense/high technology with companies such as Lockheed Martin, Textron, and GE Middle River Aircraft Systems.
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AVERAGE ANNUAL EMPLOYMENT
2005 2015 Change Baltimore County ...... 371,371 370,665 -0.2% Baltimore Metropolitan Area...... 1,229,724 1,290,908 5.0% State of Maryland...... 2,497,416 2,590,860 3.7% United States...... 134,042,417 141,832,833 5.8%
SOURCE: “Employment and Payrolls,” Maryland Department of Labor, Licensing and Regulation, 2005 and 2015 Annual Averages; “Employees on nonfarm payrolls by major industry sector,” 1960 to date, BLS.
EMPLOYMENT BY INDUSTRY PROFILE
The chart below shows employment by industry profile for the County, the Baltimore MSA and the State of Maryland using the North American Industry Classification System. Included are all workers covered by the Unemployment Insurance (UI) Law of Maryland and the unemployment compensation for federal employees (UCFE) program.
2005 ANNUAL AVERAGES 2015 ANNUAL AVERAGES
Baltimore State of Baltimore State of County Maryland United States County Maryland United States % of % of % of % of Number Number % of Number Number Number % of Number Private Sector Employed Total Employed Total Employed Total Employed Total Employed Total Employed Total Goods Producing: Nat'l Res & Mining 569 * 6,891 * 627,333 * 495 * 6,473 * 819,583 1% Construction 26,144 7% 182,878 7% 7,333,417 5% 23,272 6% 154,047 6% 6,443,333 5% Manufacturing 26,316 7% 140,666 6% 14,225,667 11% 14,114 4% 103,896 4% 12,318,083 9%
Total Goods Prod 53,029 14% 330,435 13% 22,186,417 17% 37,881 10% 264,416 10% 19,580,999 14% Service Providing: Trade, Trans, Util 71,037 19% 466,162 19% 25,960,000 19% 67,305 18% 458,015 18% 26,913,417 19% Information 6,531 2% 50,368 2% 3,061,083 2% 5,056 1% 38,449 1% 2,751,000 2% Financial Activities 31,227 8% 158,234 6% 8,196,583 6% 30,844 8% 138,896 5% 8,124,417 6% Prof & Business 50,528 14% 383,250 15% 16,951,833 13% 58,370 16% 430,326 17% 19,664,333 14% Education & Health 58,041 16% 340,182 14% 17,674,500 13% 69,269 19% 417,845 16% 22,050,000 16% Leisure & Hosp 30,565 8% 229,246 9% 12,813,167 10% 34,558 9% 267,202 10% 15,121,750 11% Other Services 11,669 4% 89,141 4% 5,394,750 4% 11,441 3% 90,025 3% 5,624,167 4% Total Service Providing 259,598 70% 1,716,583 69% 90,051,917 67% 276,843 75% 1,840,758 71% 100,249,084 71%
Unclassified 3 * 1,771 * 0 * 0 * 0 * 0 * Total Private Sector 312,630 84% 2,048,789 82% 112,238,333 84% 314,724 85% 2,105,175 81% 119,830,083 84% Public Sector Local 29,721 8% 226,183 9% 14,041,083 10% 29,423 8% 242,724 9% 14,148,667 10% State 11,952 3% 96,707 4% 5,031,500 4% 11,158 3% 98,833 4% 5,101,833 4% Federal 17,068 5% 125,737 5% 2,731,500 2% 15,360 4% 144,128 6% 2,752,250 2%
Total Public Sector 58,741 16% 448,627 18% 21,804,083 16% 55,941 15% 485,685 19% 22,002,750 16% TOTAL EMPLOYMENT: 371,371 100% 2,497,416 100% 134,042,417 100% 370,665 100% 2,590,860 100% 141,832,833 100%
* Less than 1%. SOURCE: “Employment and Payrolls,” 2005 and 2015 Annual Averages, Maryland Department of Labor, Licensing and Regulation. U.S. Department of Labor, Bureau of Labor Statistics, Employees on Nonfarm Payrolls by Industry.
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LABOR MARKET CHARACTERISTICS
Below is a comparison of the unemployment rate among the County, the Baltimore Metropolitan Area, the State of Maryland, and the United States.
Baltimore County ______%Unemployed______Calendar Civilian Total Baltimore Baltimore State of United Year Labor Force Employment County Metro Area Maryland States 2006 ...... 431,306 413,233 4.0% 4.1% 3.9% 4.6% 2007 ...... 428,860 413,416 3.6 3.7 3.6 4.6 2008 ...... 431,037 411,531 4.5 4.6 4.4 5.8 2009 ...... 427,421 395,718 7.4 7.4 7.0 9.3 2010 ...... 425,018 391,107 8.0 7.9 7.5 9.6 2011 ...... 443,127 409,881 7.5 7.5 7.0 8.6 2012 ...... 452,683 419,821 7.3 7.2 6.8 7.4 2013 ……… ...... 453,280 422,190 6.9 6.8 6.6 7.4 2014 ……… ...... 451,502 424,368 6.0 6.0 5.8 6.2 2015 ……… ...... 449,700 427,721 5.4 5.4 5.2 5.3 2016 (December) ……… ...... 451,462 432,936 4.1 4.0 3.8 4.5
SOURCES: Maryland Department of Labor, Licensing and Regulation. United States Department of Labor, Bureau of Labor Statistics. NOTE: Labor market information refers to employment activity of people who live within a jurisdiction, whereas, employment by sector refers to activity by place of work. Data vary for each level of government due to reporting differences.
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PRIVATE AND PUBLIC SECTOR EMPLOYERS
Private Sector Employment
The County is Maryland’s second largest jurisdiction in terms of jobs and is home to more than 21,000 employer establishments. Private sector jobs make up a larger share of the total in the County than they do in the State of Maryland and several neighboring counties. The County's economy is extremely diverse with strong representation across sectors. This diversity is reflected in the following table, which presents available information on current employment numbers for 35 of the County’s largest manufacturing, research and development, health care, utilities, education and financial services firms. In recent years, as firms have sought to increase productivity by adopting labor-saving technologies, in some cases the number of employees may have decreased even as a company’s overall strength and profitability increased. The following table presents available information on current employment levels, as voluntary self-reported by employers to the Baltimore County Department of Economic and Workforce Development either in response to periodic written and telephone inquiries, or provided in the context of ongoing business outreach by department staff.
LARGEST PRIVATE EMPLOYERS Exclusive of retail Company Name Employees Business T. Rowe Price Associates, Inc. 4,200 Financial Services & Investments Greater Baltimore Medical Center 3,900 Hospital Towson University 3,476 University Franklin Square Hospital Center 2,829 Hospital University of Maryland St. Joseph Medical Center 2,250 Hospital CareFirst BlueChoice, Inc. 2,220 Health insurance McCormick & Company, Inc. 2,132 Spices and food flavorings University of Maryland, Baltimore County 2,017 University Sheppard Pratt Health System 1,913 Hospital Northwest Hospital Center 1,600 Hospital BD Life Science, Diagnostic Systems 1,600 Microbiology/medical, diagnostic equipment Lockheed Martin 1,519 Defense Textron (formerly AAI) 1,500 Aerospace / Defense Stanley Black & Decker Global Tools & Storage Headquarters 1,200 Power tools / small appliances United Parcel Service 1,140 Parcel distribution Stevenson University 1,094 University Comcast 1,074 Cable television / internet access Element Fleet Management (formerly PHH) 1,000 Corporate vehicle / fleet mgmt. Verizon — Maryland 978 Telecommunications (finance/billing) Coty (formerly Procter & Gamble Beauty) 940 Cosmetic manufacturing Bank of America 841 Credit card center/financial services Quest Diagnostics 768 Medical Laboratories Goucher College 700 University Stella Maris 700 Healthcare Whiting Turner 679 General building contractor TESSCO Technologies 668 Communications equipment General Dynamics Information Technology(GDIT) 600 Healthcare software ADP 500 Business services KCI Technologies 400 Engineering MarquipWard United 350 High-speed manufacturing equipment U.S. Filter – Pall Corporation 285 Filtration devices General Motors Baltimore Operations 274 Vehicle and hybrid transmissions
SOURCE: Latest available information as reported by employers to Baltimore County Department of Economic and Workforce Development – December 2016.
NOTE: There is no legal requirement for private companies to share employment data with local governments. Although they do report this data to the Maryland Department of Labor Licensing and Regulation and U.S. Bureau of Labor Statistics as part of the unemployment insurance system, the data is held in strict confidence by the collecting agencies and any individually-identifiable data may be used by those agencies only for statistical purposes. As a result, data on the number of employees individual firms have in a jurisdiction is not available from one centralized source and must be requested of companies individually. Companies sometimes fail to respond or decline to participate in such surveys. In other cases, it is difficult to reach the person with access to the correct figure and the authority to release it. This table reflects the best information currently available, recognizing these limitations.
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Public Sector Employment
The two largest government institutions in the County, headquarters for the Social Security Administration and Centers for Medicare & Medicaid Services, total nearly 14,000 jobs on the County’s west side in Woodlawn. The following measures employment by place of work and is compiled from quarterly contributions reports submitted by employers subject to the Maryland Unemployment Insurance Law.
Government Employers
2005 Average 2015 Average Number of Employees Number of Employees Baltimore State of Baltimore State of County Maryland County Maryland Local Government ...... 29,721 226,183 29,423 242,724 State Government ...... 11,952 96,707 11,158 98,833 Federal Government ...... 17,068 125,737 15,360 144,128 Total ...... 58,741 448,627 55,941 485,685
SOURCE: “Employment & Payrolls,” 2005 and 2015 Annual Averages, Maryland Department of Labor, Licensing and Regulation.
COMMERCIAL AND RESIDENTIAL GROWTH
The following table presents the number and value of commercial and residential construction permits issued for each of the past 10 years. Construction Permits Issued
Commercial Residential Total Value Value Value Year No. (in 000’s) No. (in 000’s) No. (in 000’s) 2007 ...... 1,632 $500,604 3,522 $369,278 5,154 $869,882 2008 ...... 1,617 333,214 2,604 402,555 5,001 735,770 2009 ...... 1,305 573,406 1,937 234,266 3,242 807,672 2010 ...... 1,295 423,187 2,235 252,906 3,530 865,187 2011 ...... 1,615 384,933 2,116 179,761 3,731 564,694 2012 ...... 1,344 574,100 2,149 227,604 3,493 801,704 2013……………………... 1,322 384,380 2,223 261,535 3,545 645,916 2014...... 1,316 338,774 2,373 282,377 3,689 621,151 2015 ...... 1,773 498,153 2,498 263,175 4,271 761,329 2016 ...... 1,593 797,021 2,726 342,555 4,319 1,139,576
* Total No. and Value of commercial permits includes a new mixed-use permit classification beginning July 2012.
Commercial no. and value includes permits issued for new commercial construction and those for additions, alterations and repairs (AAR) valued over $10,000. Residential no. and value includes permits issued for new single-family, new multi-family and those for AAR data tabulated valued over $10,000. Source: Building Permit Data System (BPDS), Baltimore Metropolitan Council Regional Construction Report 2007-2016
NEW BUSINESS AND REAL ESTATE ACTIVITY
The following list highlights a selection of business and real estate activity in Baltimore County from January 2016 to January 2017. Towson Square – This mixed-use project in Towson, developed by a joint venture of Heritage Properties and The Cordish Company, was acquired by Retail Properties of America, Inc. (“RPAI”) for a gross purchase price of $39.7 million. RPAI is a REIT and is one of the largest owners and operators of high quality, strategically located shopping centers in the United States. As of September 30, 2015, RPAI owned 201 retail operating properties representing 29.2 million square feet. Towson Square includes a 75,000 square-foot, 3,400-seat, 15-screen multiplex cinema atop a three-story, 850-space garage. Seven restaurants are open. The pedestrian-friendly plaza includes a traffic circle with a European-style fountain, bistro-style outdoor dining areas and landscaping. The County invested $6.2 million toward the parking garage and $2 million for infrastructure improvements, which is leveraging $85 million in private investment. The project has brought an estimated 1,530 jobs to the area, consisting of 660 construction jobs and another 870 jobs related to the completed project.
Towson Residential - Since 2008, over 1,200 new luxury apartment units in three major projects have been completed. Wood Partners has teamed with Chesapeake Realty Partners to develop The Winthrop, which consists of 295 units. A second phase of 175 units, developed by Wood Partners and Taylor Property Group, has been completed. These buildings replace a 70 year-old, 150-unit apartment complex and triple the site’s density.
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A $60 million, 611-bed, 248-unit student housing project with first floor retail is planned at 101 York Rd. Project details are being finalized.
Federal Realty Investment Trust is constructing The Flats at 703, a new 105-unit apartment project located at 703 Washington Avenue. Rents will range from $1,300 for a one-bedroom to $1,900 for some two-bedroom apartments. A roof deck planned for the project will include a gazebo, water feature, seating, and elevator access. Street level features include landscaping, bike racks and benches. The project is expected to be completed in 2017.
RPAI and AvalonBay Communities have announced that work will begin next year on a major mixed-use residential high-rise project with ground-floor retail at the corner of Dulaney Valley Road and Joppa Road in the heart of Towson. The goal is to activate the area around Towson Circle by adding apartments to the project and bringing the underground retail from Joppa Road to street level. Structured parking will be included for both the retail and the residential. Long-term plans include integrating the new project with Towson Square which RPAI purchased last year.
Evergreene Homes is constructing Towson Mews, thirty four luxury townhomes to be built on two acres bounded by East Pennsylvania, Jefferson, and Virginia Avenues.
Towson Row - Demolition is complete on this transformative, $239 million mixed-use development at the southern gateway to downtown Towson, one block from Towson University. The development program calls for 134,000 square feet of Class A office space, 250 luxury residential units, 220 limited service hotel rooms, 905 quality student housing units and more than 100,000 square feet of retail, shops, restaurants and anchored by the 45,000 square-foot Whole Foods Market grocery chain. The Shops at Kenilworth - Greenberg Gibbons is under construction on a $20 million renovation to The Shops at Kenilworth, a landmark shopping destination in Towson, Md., originally built in 1979. Plans call for transforming the concrete exterior and outdated interior into a more contemporary and welcoming specialty shopping and community gathering place. The design concept includes reducing the current space by 8,000 square feet and adding a 20,000 square-foot, three-level “marketplace” featuring a wine bar, a mix of casual and fine dining options, and a rooftop garden with panoramic views. Project completion is targeted for 2017. Stebbins Anderson has already opened their new store, now completely located on the lower level of Kenilworth. Trader Joe’s will open in The Shops at Kenilworth in spring 2017. Towson Commons Retail - Affiliates of MFI and Woodmont Properties II have taken control of, and are redeveloping 115,000 square feet of retail space along York Road and Pennsylvania Avenue. MFI Realty, a retail-focused brokerage, is the leasing agent for the local investment group. Boho Nation recently opened in a retail space on York Road next to the entrance. This retailer of “bohemian-style” women’s clothing was attracted to the project because of the proximity of Urban Outfitters, which caters to a similar demographic. CVS opened a store on the York Road frontage. Nacho Mamas opened a 6,700 square-foot restaurant in December 2016 in the former S&G Crab Ranch space on Pennsylvania Avenue. Metro Centre at Owings Mills - Metro Centre at Owings Mills is a mixed-use, transit-oriented special taxing district that is being developed by Owings Mills Transit, LLC through the use of tax increment financing. At completion, the project will support more than 1.2 million square feet of commercial office space; 300,000 square feet of complementary retail space; 1,700 residential units; educational facilities and a hospitality component. The project adjoins the Owings Mills Metro stop and two commuter parking garages with a total of 5,277 spaces. Total investment in the project is expected to be $550 million. Already completed is the 120,000 square-foot County Campus that includes a County library, community college branch, and two five-story upscale buildings with 232 apartments that are 85% leased and ground-floor retail and restaurant space that is 60% leased. Honey House and Eggspectation are the newest retail tenants. A new four-story 200,000-square-foot Class A mixed-use office and retail building is almost complete. The building, including the linked parking garage, represents a $50 million investment. The developer, David S. Brown Enterprises, Ltd., will initiate construction of a full-service, 225-room hotel amenity in 2017. It is expected to have large event and conference room space including catering facilities. CareFirst has renewed their leases for 655,000 square feet of office space located in six buildings in Owings Mills. The approximately 2,200 CareFirst employees currently employed at the leased facilities will remain there. The company conducted a search for space in the region and was considering other options before electing to stay in Baltimore County. Foundry Row – This $140 million mixed-use development in Owings Mills, anchored by a Wegman’s grocery store, will include 356,000 square feet of retail space and 48,000 square feet of office space. Joining Wegmans as retail tenants will be LA Fitness, DSW, Ulta Beauty, Bagby Pizza, Panera Bread, Zoe's Kitchen, Smashburger, Nally Fresh, Bar Louie, Mission BBQ, a La-Z-Boy furniture, Chipotle, Xfinity, Foundry Row Wine & Spirits, Massage Envy, Sleep Number, Mani Luxe, Hair Cuttery and a Floyd's 99 Barbershop. The Wegmans store opened in September 2016 and other retailers are opening weekly. LifeBridge Health will occupy 40,000 square feet of office space in the project.
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Hunt Valley Towne Centre - Avalon Hunt Valley, a $70M upscale apartment complex on the eastern end of Hunt Valley Towne Centre, has begun renting its first units in August. The 332-unit Class-A apartment building offers a variety of amenities, including a dog park, a gym and a game room. The new apartment community will sit above 30,000 square feet of retail space. Executive Plaza, a 550,000 square-foot office complex in Hunt Valley built in the 1960s and 1970s, has undergone a $12 million renovation. Improvements include a fresh coat of paint on the building’s façade; energy-efficient, floor-to-ceiling windows; 40 renovated restrooms, 36 renovated elevator lobbies; and new exterior signage and new landscaping. The complex’s retail area, which features a daycare center, a branch of the U.S. Post Office, dry cleaners, cafeteria and conference center, is also getting redesigned. Occupancy in the project’s four office buildings is up to 90% from a recession low of 78% and over 150,000 square feet of space has been leased in recent months. A new 7,200 square-foot Texas Roadhouse restaurant is also under construction on a pad site in the complex. McCormick & Company – The international spice manufacturer, currently located in Sparks, will consolidate 900 office employees from several area locations into a 340,000 square-foot headquarters project at 99 Shawan Road, to be completed in 2018. A former telephone company building on the site will be completely redone, creating a state-of-the-art corporate campus for McCormick. The building will house corporate functions, the company’s US consumer and industrial divisions and a health and wellness center. Company officials spent 15 months studying 60 possible sites in three states before selecting the Shawan Road project. Johnson, Mirmiran & Thompson (JMT), a nationally-ranked architectural and engineering firm, will move its headquarters from Sparks to a new five-story 130,000 square-foot building on Wight Avenue in Hunt Valley. Companywide, the firm employs 1,200 engineers, architects, planners, technicians and other employees; 600 of which will be located in the new headquarters. Construction is underway on the new building at 40 Wight Avenue. JMT expects to move in early 2017. Sylvan Learning System has moved its corporate headquarters and 125 employees from downtown Baltimore City to 25,000 square feet at 4 North Park Drive in Hunt Valley. Firaxis has expanded into 9,000 square feet of additional space at 12 Loveton Circle in Sparks and employs 170 at that location. Stegman & Co. - a 40-employee firm based in Towson, Stegman & Company, founded in 1915 and recognized as the oldest privately-held accounting and auditing firm operating in the State of Maryland, leased 11,000 square feet of space at Cromwell Center in Towson. The company relocated its 45-employee workforce and celebrated their 100th anniversary in the new space. Savills Studley - the premier global real estate arm of London-headquartered Savills plc, opened its newest office at 102 West Pennsylvania Avenue in Towson, expanding its presence in the Mid-Atlantic region. The office’s four real estate brokers join Savills’ 30,000 professionals in over 60 countries around the world. Mobtown Fermentation - moved into new space in Timonium at 9 West Aylesbury Road. The startup, founded in 2014, is moving into a 4,000 square-foot space, formerly occupied by Michele's Granola. The company employs 4 people at that location. Whitney, Bailey, Cox & Magnani LLC, - Engineers and architects, this firm has moved into 37,244 square feet at 300 E. Joppa Road in Towson. U.S. Lacrosse Headquarters – The 450,000-member national lacrosse organization recently occupied its new headquarters in Sparks. The $15 million project includes a 45,000 square-foot headquarters building, an outdoor training facility for the U.S. National men’s and women’s teams, the national lacrosse museum and the National Lacrosse Hall of Fame, and classrooms and offices for 89 staff. The expected economic impact of this project will be over $6 million. Apex IT Services - This IT solutions provider to federal, state and commercial clients relocated from Columbia, Maryland to leased office space on Lord Baltimore Drive in Woodlawn. Plans include adding 53 jobs. Tradepoint Atlantic – Formerly Sparrows Point LLC, Tradepoint Atlantic recently acquired the 3,100-acre former steel production facility at Sparrows Point. The new owners agreed to $48 million in assurances to pay for the environmental clean-up. The property is being redeveloped for industrial and distribution use. For more information about current tenants at Tradepoint Atlantic, see Industrial Redevelopment section.
H&E Equipment is leasing a new 38,000 square-foot facility on Grays Road in Dundalk, MD, and will bring 30 jobs. H&E is a rental company for new and used construction equipment.
Loomis Armored U.S signed a 50,000 square-foot lease at 4979 Mercantile Road in the White Marsh Business Community. Loomis plans to double its work force from 100 to 200 people after it moves from its location near Golden Ring Park in Rosedale.
Lockheed Martin’s contract with the U.S. Navy was renewed for $235 million to manufacture missile-firing systems used on warships at Lockheed’s facility in Middle River. The deal extends through 2022 and could be worth as much as $356 million if the Navy adds optional orders. The flexible missile system can launch a variety of missiles.
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Vac Pac acquired a 46,000 square-foot building at 917 Middle River Road, where the company relocated 15 employees in October 2016. Vac Pac specializes in cooking bags for ovens and microwaves. Vac Pac does between $5 and $10 million in annual revenue.
Bottling Group, LLC, moved into 48,000 square feet of the new 60,000 square-foot warehouse and distribution facility at 6300 Days Cove Road in the White Marsh Business Park. Products such as Pepsi, 7-Up and Gatorade moved into the new facility in November 2016.
RPM Warehouse leased the 435,000 square foot Chesapeake Real Estate facility on Tangier Drive in Crossroads @ 95, needing expansion from its previous 238,000 square feet at the same location.
Aging Barns LLC, part of Sagamore Development, purchased the parcel at 4611 North Point Boulevard to transform it into five aging barns to store up to 80,000 barrels of Sagamore Spirit Rye Whiskey. The first building is scheduled for availability in March 2017.
Greenleigh at Crossroads, developed by St. John Properties and Somerset Construction Company, broke ground in May, 2016 on a $750 million mixed-use community of offices, shops, apartments, single-family homes and a hotel. The project will occupy 250 of the 1,000-acre Baltimore Crossroads and is expected to build out over 10 to 15 years. Greenleigh will include 1,000 detached homes and townhouses, three midrise office buildings totaling 300,000 square feet, another 350,000 square feet in single-story office buildings, 116,000 square feet of retail and a 120-room Springhill Suites by Marriott hotel.
Carpet Consultants, a provider of residential and commercial flooring products, has signed a lease for approximately 18,000 square feet of space at 11501 Pocomoke Circle in Crossroads @95 business park. The company, which markets a full range of products including carpeting, hardwood, laminate, tile and stone, intends to relocate its entire operation to the new building.
CapRock Grain, an import supplier of organic animal grain, signed a fully-executed five-year lease at 8907 Bethlehem Blvd. Future plans include a soybean milling and crushing manufacturing operation, resulting in an oil product for export. Current job potential is 10-25, and 200 in five years.
Pro Transport Inc. has signed a 51,100 square-foot lease to expand at 11630 Crossroads Circle in Crossroads @95 business park. The company will lease the entire building, which features 16-foot ceiling heights and drive-in loading capabilities.
MedStar Franklin Square Hospital opened a new $7.8 million neo-natal intensive care unit. The 16,000 square-foot newly constructed facility has 23 beds.
C Steinwig - purchased the 230,835 square foot industrial building at 4505 North Point Blvd. in Edgemere, Baltimore County, Maryland 21219.
Bob’s Overhead Door - In December 2015, the company purchased a 27,000 square-foot building on 100 Eyring Ave in Essex MD for $1.15 million, securing a loan with the County for $250K.
Fraley & Schilling (Transportation and Distribution) - In November 2015, purchased a 136,000 square-foot building at 8911 Bethlehem Blvd, Edgemere, MD 21219, for $2.7 million.
Ruxton Chocolates - the maker of Mary Sue, Naron and Glauber’s candies began construction in November 2016, of a new 100,000 square foot, $8 million headquarters and manufacturing plant facility at 1412 Tangier Drive in Middle River, MD. Ruxton will bring 43 new jobs to Baltimore County when the facility opens in summer 2017. Baltimore County helped Ruxton reduce the cost of borrowing by supporting an $8 million industrial revenue bond.
Hollins Ferry Logistics Center – Completed construction on a 285,000 square-foot, class A warehouse and logistics center. Located at 4803 Hollins Ferry Rd, Halethorpe, this new facility will continue to attract major tenants to Baltimore County throughout 2017.
Security Square Mall - Seoul Plaza section of the shopping mall will be undergoing a major redevelopment to attract national tenant to revitalize this shopping center.
ATI Performance – Recently purchased 6747 Whitestone Rd for $3 million to remain in Baltimore County and expand their business.
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Amethyst Technologies – Expanded their bwtech space to include a new 3,000 square-foot lab and increase their line of services to include Advent Laboratories.
Social Security Administration (SSA) – Social Security headquarters in Woodlawn announced that they will receive a $150 million Congressional Appropriation for major renovations of their main administrative building. SSA employs approximately 11,000 at this site and this significant investment ensures that Baltimore County remains home to the Social Security Administration for decades to come.
Rolling Run Tech Park ground breaking took place on April 19, 2016 located at 2270 Rolling Run Road. They are constructing a 58,000 square-foot., Class A office building next to the Center for Medicare Medicaid Services headquarters. This office building has an open design with energy efficient systems and materials. The project was completed in November 2016 and new tenants are expected to move in spring 2017.
Merritt Beltway Business Park - A major expansion and renovation was completed at 1730 Twin Springs Drive, home of the Living Legacy Foundation. This expansion adds a second story to the facility, increasing the size up to 47,000 square feet. The project was completed in summer 2016.
Lifebridge Health – In February 2016, Northwest Hospital System opened a new facility at 8600 Liberty Rd. The 13,500 square foot building houses an ExpressCare urgent care center and offices for primary care doctors and specialists. The building is part of a larger campus expansion at Northwest Hospital that is expected to cost between $20 million and $25 million. The Liberty Center project itself cost $5 million.
NEW BUSINESS FORMATION
The following table presents the number of business locations as reported to the Maryland Department of Labor Licensing and Regulation for the past 10 years.
Business Establishments Fiscal Year Establishments 2006 21,740 2007 22,180 2008 21,793 2009 21,466 2010 21,309 2011 21,143 2012 21,371 2013 21,498 2014 21,263 2015 21,344
SOURCE: Maryland Department of Labor, Licensing and Regulation. Employment and Payrolls – County Industry Series 2006-2015.
TRANSPORTATION FACILITIES
The County's central location in the Baltimore Metropolitan Region, the State of Maryland and the eastern seaboard of the United States offers access to an inter-connected air, sea, rail, and road transportation system.
Capital Improvements
The availability of convenient access and public infrastructure is critical to business location decisions. The County and State have moved forward aggressively to construct several road projects to enable key development opportunity sites. One such project, Baltimore Crossroads @95 (“Crossroads”), is one of the largest development ready land opportunities between Philadelphia and Richmond along I-95. Crossroads has seen significant speculative and tenanted construction of office, flex and industrial buildings. Of the 1.6 million square feet proposed for the business park, 1.1 million square feet has been constructed, housing 1,250 employees and 30 businesses. Reliable Churchill, LLP, Maryland’s largest wine and spirits distributorship, started construction of a 449,200 square foot headquarters facility and opened in September 2014.
The Maryland Transportation Authority (MDTA) constructed two additional lanes on the most congested 10-mile portion of I-95 north of Baltimore City to White Marsh in the County. These two express toll lanes (ETLs) will facilitate both regional commuting and interstate commercial and personal travel. The ETLs are fully operational.
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The Maryland State Highway Administration is making major bridge and interchange improvements along the southwest portion of the Baltimore Beltway, I-695, to accommodate planned future widening.
Baltimore County has included $4,000,000 in its FY2016 capital program to design and construct a half-mile extension of Security Boulevard, which currently terminates at the national headquarters of the U.S. Centers for Medicare and Medicaid, to provide access to 160 acres of undeveloped land zoned for commercial and residential development. It is anticipated that this project will be a catalyst for new job-creating economic development on the west side of the County.
In response to an earlier feasibility study jointly funded by the County and the State of Maryland, the State Highway Administration initiated a formal project planning study for the I-795/Dolfield Boulevard area, including a potential interchange at the Pleasant Hill Road/Dolfield Boulevard overpass, to provide improved access to the major employment corridor along Red Run Boulevard on the west side of I-795. The preferred alignment for the intersection has been chosen and the project remains in the State Highway Administration’s Development and Evaluation Program. Due to a recent revenue enhancement, the State will restart its project and environmental planning on the project.
The $8 million Dolfield Boulevard Bridge over Red Run was opened to traffic in May 2010. This bridge provides a key east-west connection between the Red Run Boulevard employment corridor and the residential growth area in Owings Mills New Town, an important piece of transportation infrastructure supporting the Owings Mills growth area.
In August 2012, a new extension of Owings Mills Boulevard opened to traffic. This segment from Lyons Mill Road to Winands Road is the first phase of a two-phase project that provides a direct connection between the Owings Mills Growth Area and Liberty Road. Owings Mills Boulevard South, Phase II, which extends from Winands Road to Liberty Road was completed in 2015.
The Campbell Boulevard extension connecting Pulaski Highway (Route 40) to Bird River Road opened in November 2015. The extension project will help alleviate traffic as the Middle River area continues to grow. The new road is part of a larger design that will eventually link Philadelphia Road with White Marsh Boulevard. Once the project is complete, Campbell Boulevard will run for three miles. The project will include three bridges, water utilities, improved stormwater management, sidewalks and numerous intersection improvements.
As part of the implementation of the 1996 Eastern Baltimore County Revitalization Strategy, the County extended Kelso Drive in Rosedale, Maryland, enabling the development of the Marshfield Business Park. The Park now has 1.3 million square feet of space generating 500 jobs, with tenants such as U.S. Can, Restoration Hardware, and DAP. A second extension of Kelso Drive to open up more than 100 acres of additional land for business development is possible in the future.
Mass Transit
Baltimore County residents and businesses have access to a growing regional mass transit system. The Baltimore Metro, a 15-mile heavy rail line, provides a fast, direct connection from Owings Mills Town Center in the northwest part of the County to the Johns Hopkins medical campus in downtown Baltimore. A 30-mile light rail line runs from a northern terminus in Baltimore County’s Hunt Valley south through Baltimore City past Oriole Park at Camden Yards, to BWI Airport.
One of three MARC (Maryland Area Regional Commuter) lines runs through the County, providing access to Baltimore and Washington, D.C. to the south and Harford County to the north. With support from the County, the State Department of Transportation completed a study in September 2010 assessing the feasibility of relocating the Middle River MARC station to create greater transit synergies with the future redevelopment of a 1.9 million square foot Middle River Station (former GSA Depot).
Air
BWI Marshall Airport, located in Anne Arundel County (adjacent to the County), has maintained a steady flow of traffic year over year since its record peak of 22 million passengers in July 2011. The 23,820,000 commercial passengers who flew through the facility in CY 2015 increased by 8% from that record peak. Annual cargo shipments increased at BWI Marshall in 2015. Total cargo for CY 2015 year reached 257 million pounds, an increase of 11% over CY 2014.
Martin State Airport, just a congestion-free 10-minute drive along MD43 from I-95, is one of the nation’s largest general aviation facilities. Martin State Airport provides a convenient home for corporate jets.
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Port
Located 150 miles inland, the Port of Baltimore (the "Port") is the closest East Coast port to the Midwest. It is accessible to several major interstate highways located within minutes of its terminals. By truck, cargo leaving the Port is within an overnight drive to two-thirds of America's population. Business at the Port of Baltimore generates about 14,630 direct jobs, while about 108,000 jobs in Maryland are linked to Port activities. The Port is responsible for $3 billion in personal wages and salary and more than $300 million in state and local taxes. Cargo volume at the Port’s public marine terminals handled a record 9.7 million tons of general cargo during Fiscal Year 2013, including consecutive monthly records for exported cars. In 2014, the Port exported 259,312 cars, up from its previous record of 237,397 in 2013, setting its own record for cars exported through public terminals for the fourth year in a row. Autos set their own international shipping record, with the Port bringing in and sending out a total of 792,795 cars at public and private terminals up from previous high of 752,100 cars in 2013. Auto shipping has been a point of focus for the Port, which opened a new $22 million berth at its Masonville/Fairfield Marine Terminal in the fall of 2014 that should allow it to ship more of the cars it handles for brands like Mercedes-Benz, Chrysler, Jeep, Toyota and Fiat. The Port is ranked as the top port among 360 U.S. ports for handling autos and light trucks, farm and construction machinery, imported forest products, imported sugar, imported aluminum and imported gypsum. Baltimore ranks second in the U.S. for exported coal, and imported iron ores. Among all U.S. ports, it ranked ninth in total value and 13th in tonnage shipped. Overall, the Port of Baltimore handled 29.5 million tons of international cargo with an aggregate value of about $52.5 billion. In 2009, the State of Maryland announced a 50-year public-private partnership with Ports America that will allow the port to better compete in a global market. Ports America is investing in a new crane at the Sea Girt Marine Terminal. The 50-year lease also included immediate payment in excess of $100 million to MDTA to pay for needed system preservation of its roads, tunnel, and bridge facilities. As a result, the Port of Baltimore is one of only two U.S. East Coast ports with a 50’ deep channel, and berth. Four 400-foot tall cranes have been installed at the berth and are already operational, ready to accommodate the supersized Panamax container ships. In June, 2016, a 1,095-foot Taiwanese cargo ship, the first of a new generation of massive container ships to call on the port after transiting the newly expanded Panama Canal, brought in 8,452 20-foot shipping containers. The new, modern cruise passenger facility located at the South Locust Point Terminal includes easy access on and off I- 95, over 1,500 parking spaces, a short 2.5 mile trip to Baltimore's Inner Harbor and availability to more than 40 million people that live within a six-hour drive. In 2012, the cruise ship terminal served its one millionth passenger.
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MAJOR BUSINESS PARKS
The following represents major office and industrial parks completed or with additional acreage suitable for expansion and future development in the County.
Business Parks in Baltimore County
Name and Location Total Acres Total S.F. Use Baltimore Crossroads@95 Middle River MD 21220 1,000 5,500,000 Office, Retail, Light and Heavy Industrial Beltway Business Center Halethorpe MD 21227 63 562,500 Office, R&D, Lt. Industry Benson Business Park Arbutus MD 21227 9 285,000 Office, R&D, Lt. Industry
Business Center at Owings Mills 123 620,600 Office, R&D, Lt. Industry Owings Mills MD 21117 bwtech@UMBC Catonsville MD 21228 41 350,000 R&D, business incubator
Colgate Business Park 89 890,000 Lt. & Heavy Industry, Distribution Rosedale MD 21224
Eastport Industrial Center 32 621,000 Lt. & Heavy Industry, Distribution Rosedale MD 21237
Franklin Square Professional Center 7.7 120,000 Medical, Office Space (Proposed)
Golden Ring Industrial Park 16 185,000 Office, R&D, Lt. Industry Rosedale MD 21237 Greenspring Station Lutherville MD 21093 30 282,100 Office Hollins End Corporate Park Halethorpe, MD 21227 51 700,000 Warehouse, Industrial Hollins End-East Corporate Park Halethorpe, MD 21227 24 517,000 Warehouse, Industrial The Highlands Sparks MD 21052 140 232,826 Office, R&D, Lt. Industry Hunt Valley Business Community Hunt Valley MD 21031 435 2,100,000 Office, R&D Hunt Valley Executive Plaza Hunt Valley MD 21031 30 517,000 Office Longview Executive Park Hunt Valley MD 21030 30 370,000 Office Loveton Center Sparks MD 21152 246 1,400,000 Office, R&D, Lt. Industry Marshfield Business Park Rosedale MD 21237 73 1,500,000 Lt. & Heavy Industry
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Business Parks in Baltimore County, continued
Name and Location Total Acres Total S.F. Use McDonogh Crossroads Owings Mills MD 21117 42 500,000 Office Meadows Business Park Woodlawn MD 21207 475 1,080,000 Office, R&D, Lt. Industry North Park Hunt Valley MD 21030 28 320,150 Office North Point Industrial Center Dundalk MD 21222 36 220,000 Lt. & Heavy Industry Owings Mills Corporate Campus Owings Mills MD 21117 250 438,320 Office Pulaski Business Park Middle River MD 21220 42 300,400 Lt. Industry
Pulaski Industrial Park 150 1,441,200 Office, R&D, Lt. & Heavy Industry Middle River, MD 21220 Radio Park Towson MD 21286 15 250,000 Office
Red Brook Financial Center 68 600,000 Office, R&D Owings Mills MD 21117
Red Run Corporate Center 11 200,000 Office Owings Mills MD 21117 Riparius Center at Owings Mills Owings Mills MD 21117 160 2,500,000 Office, R&D Rolling Heights Business Center Woodlawn, MD 21244 80 931,000 Office, R&D, Lt. Industry
Rosewood Technology Park 35 Owings Mills MD 21117 110,000 R&D, Lt. Industry Rossville Industrial Park Rossville MD 21237 156 1,562,285 Office, R&D, Lt. Industry Route 7 Commercial Center White Marsh MD 21220 30 340,000 Office, R&D, Lt. Industry Rutherford Business Center Woodlawn MD 21244 289 1,500,000 Office, R&D, Lt. Industry
Seven Square Corporate Park - 191,226 Office, Medical Space Shawan Center Hunt Valley MD 21030 36 316,000 Office techcenter@UMBC Catonsville MD 21227 30 170,000 R&D, incubator White Marsh Business Community White Marsh MD 21236 2,000 4,475,000 Office, R&D, Lt. Industry Windsor Corporate Park Woodlawn MD 21244 82 390,000 Office, R&D, Lt. Industry
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INDUSTRIAL REDEVELOPMENT
Sparrows Point/Dundalk
The Sparrows Point peninsula was the location of a major integrated steel mill for more than 100 years. In May 2012, the final steel mill operator, RG Steel, declared bankruptcy and announced plans to close the facility and lay off all 2,000 workers. For two years, Baltimore County worked aggressively both to define and pursue a new vision for this valuable 3,100 acres of land with deep water, freight rail and interstate access, and to help the dislocated steelworkers acquire the training and support services they need to enable them to move into new careers. The Sparrows Point Partnership, an advisory group of private-sector port, logistics and real estate professionals, was established by the County Executive in 2012 to recommend how best to position Sparrows Point and the surrounding area for long term job growth. In May 2013, the Partnership released its first-year report, which highlighted the area’s exceptional assets: • A massive land product: 5.3 square miles, with more than 3,300-acres zoned for industrial use • Deepwater access near the growing Port of Baltimore • Interconnected transportation, including direct connection to two Class One railroads and interstate highways • Exceptional natural gas and electricity supplies • A large supply of treated water flowing directly to the site • A highly capable, motivated workforce The report also outlined the County’s vision for growth at Sparrows Point, driven by several key principles: • Expand maritime use on the peninsula in partnership with the Maryland Port Administration • Retain the current zoning for industrial use • Encourage private ownership to rebuild the aging infrastructure on the site • Manage a long-term strategy that includes active participation and guidance from Baltimore County, the State of Maryland and the Port of Baltimore The following list highlights recent business and real estate activity at Tradepoint Atlantic: Sparrows Point Terminal LLC – recently acquired the 3,100-acre former steel production facility. The new owners agreed to $48 million in assurances to pay for the environmental clean-up. The property will be redeveloped for industrial use. Tradepoint Atlantic (formerly Sparrows Point Terminal LLC) changed their tradename for marketing purposes in January 2016. FedEx secured a long term lease and is building a 300,000 square-foot distribution center at Sparrow’s Point. FedEx expects to employ between 150 and 300 employees at the site. Harley-Davidson is relocating a training center there that is projected to train 800 students per year on the site. In June 2016, Pasha Automotive Services, a global logistics and transportation company, signed a lease to launch automobile processing operations at Tradepoint Atlantic. In August 2016, Under Armour, the sports clothing company, announced the opening of a 1.3 million square-foot e- commerce distribution and warehouse facility at Tradepoint Atlantic. Tradepoint Atlantic is also leasing existing warehouse space to Pacorini Metals, which provides warehousing and logistics services to the metal industry. Essex/Middle River
The U.S. General Services Administration (GSA) auctioned the 1.9 million square-foot former GSA Depot facility in Middle River in 2006 for a record $37.5 million. This higher-than-expected sale price was evidence of the success of the County's waterfront revitalization efforts over the previous ten years. Now known as Martin’s Landing, the complex is strategically located near the waterfront and just minutes from I-95 along MD43, and across the street from Martin State Airport, a general aviation facility that handles a significant level of corporate air travel. The County is working with the owners, a New York-based investment team, to encourage a quality redevelopment that will incorporate a mix of business, residential and commercial uses. In the County’s 2012 comprehensive rezoning process, the 53-acre property was rezoned from heavy industrial to a classification that allows a mix of uses.
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TECHNOLOGY LOCATIONS bwtech@UMBC
The bwtech@UMBC Research & Technology Park is a 71-acre community engaged in research, entrepreneurship, and economic development. The bwtech@UMBC Research & Technology Park contains eight buildings, including multi- and single- tenant buildings and 3 incubators. Over 40 Cyber Security companies currently reside and do business in the Park. The Research Park is adjacent to the main UMBC campus with direct access to the innovative research and amenities, of a major university.
The bwtech@UMBC Research & Technology Park includes 118 tenants and 1,200 employees, including mature, emerging and incubator companies. bwtech@UMBC operates these distinct business incubators with specific industry orientation. bwtech@umbc companies have access to UMBC campus amenities and enjoy the strategic location only minutes away from BWI Thurgood Marshall Airport, downtown Baltimore, and the federal agencies located in the Washington, D.C. corridor. The location, coupled with the opportunity to collaborate with the talented students and faculty of UMBC's nationally recognized science and engineering programs, makes bwtech@UMBC an ideal location for technology, bioscience and research organizations at all stages of development.
UMBC intends to invest in a RISE Zone in the Catonsville-Arbutus area of southwestern Baltimore County by doubling or tripling the size of bwtech@UMBC. The expansion would add hundreds of new jobs to the park as well as increase opportunities for local businesses.
UMBC has significant resources and expertise in the areas of economic development and community relations that it expects to apply to these goals. Senior officials in charge of bwtech@UMBC, corporate relations, and community relations will lead planning for the zone. The success of bwtech—currently virtually all the park’s 525,000 square feet are leased and the park generated nearly $500 million in income and business sales in 2014—speaks to UMBC’s economic development ability.
The following list highlights new tenants at bwtech@UMBC Research & Technology Park since July 2015: Advent Laboratories, LLC - provides analytical analysis, stability testing, research and development, validation, microbial testing, contract laboratories, and retain services.
Allotropic Tech, LLC - a custom protein/enzyme production company.
American Sample Archive, LLC - a company that obtains, verifies identity and quality of biological materials then archives them for future scientific uses such as the development of new sample analysis and identification methodologies.
Anchor Technology and Consultants - a Service Disabled Veteran Owned Small Business (SDVOSB) providing expertise and proven processes to assist Federal agencies in meeting a variety of IT security requirements supporting NIST, FISCAM, FedRAMP, and DIACAP compliance.
Becrypt - provides a range of cyber security solutions to protect data at rest and data in use across a broad range of platforms, including desktops, laptops, tablets and smartphones, running Windows, iOS and Android.
Bestgate Engineering – offers expertise in surveillance, profiling, and data mining by delivering mechanisms to perform unsolicited stimulation of 802.11 stations, directional antenna geolocation algorithms, frame parsing, and analysis tools.
Clear Ridge Defense - defense contractor providing specialized cyber capability and mission support services to the Department of Defense and Intel Community in the Ft. Meade, Maryland area.
Cyber Delivered - provides national security and corporate clients the highest levels of expertise in cybersecurity software engineering and analysis through Computer Network Operations (CNO), Advanced Persistent Threat (APT) tradecraft, and APT intrusion tools.
Cyber Pack Ventures - provides technical and managerial consulting services to industry and government in the technical, scientific, procedural, and operational disciplines associated with national security.
DNA4 Technologies, LLC – is developing genomic approaches to the validation and forensic identification of food and food products. Specifically, they have developed methods for the targeted enrichment of specific genomes in mixtures of DNAs.
Efflux Systems – the first scalable cybersecurity hunting platform to simplify and automate traditionally manual analytics, finding hackers inside your network before data is lost.
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Ennoblis - a high-tech minority owned corporation providing innovative, transformational, integrated solutions for a variety of industries worldwide.
Fortego – solves cyber security problems by understanding the full life-cycle of cyber warfare - from discovering vulnerabilities and writing exploit code to reverse engineering malware to designing strategies to better detect and mitigate future attacks.
Fzata, LLC - a biotech company focusing on developing antibody-based therapeutic and preventative medicines, as well as diagnostic products. They focus on several disease areas: gastric infectious diseases, HIV, cancer and neurodegenerative diseases, all having huge markets nationally and internationally.
Gendx Products, Inc. - develops and markets a comprehensive line of In Vitro Diagnostic (IVD) tests and services, analysis software and education. The company is a pioneer in the area of Sequencing-Based Typing (SBT) for transplantation.
Glycomantra, Inc. - provides technology expertise in glycobiology research leading to the development of carbohydrate-based therapeutics for treatment of advanced prostate cancer.
The Hershey Company - The Hershey Company (NYSE: HSY), headquartered in Hershey, PA, is a global confectionery leader known for bringing goodness to the world through its chocolate, sweets, mints and other great-tasting snacks. Hershey has approximately 13,000 employees around the world who work every day to deliver delicious, quality products.
Huntress Labs – Cyber security protection with focus on incident response, malware analysis, and offensive cyber operations
Jak Tec - provides solutions for planning cloud migration, offering tools to reduce the time it takes to purchase and begin using cloud services.
Leverege - develops software products that enable customers to intelligently manage and visualize large networks of diverse sensors;providing actionable insights and spotting trends that lead to better decision making.
NEXT Phase Solutions - Provides a deep, multi-vector cyber threat defense system to protect your network.
OnSystem Logic - Secures critical computing resources and information. Specializes in assisting information assurance professionals with hardening their enterprise and proactively protecting critical assets.
Papivax, LLC - developing a therapeutic vaccine to treat HPV associated diseases including cervical cancer.
Prime AE - provides a full range of services in architecture and engineering, construction management and inspection, technology, transportation, and water resources.
Scientific Systems and Software International Corporation - provides advanced solutions that deliver timely, enabling technology and information to civilian, military, state/local, and commercial customers. Most recently, SSSI has provided information security support to the Social Security Administration (SSA) and the Department of Labor (DOL) for both on-premise and cloud-based implementations.
ServBeyond Solutions - IT consulting services company with expertise in design, development, and management of a broad range of IT applications, systems and processes.
The Sharps Solutions - Provides information security support to Federal agencies at the enterprise and project levels to help meet agency-specific security and privacy requirements.
Quality Oriented Solutions – Provides software and applications for quality management, software testing, independent verification, and project training.
Que Technology - a scalable IT infrastructure solution provider to help clients develop and implement upgrading legacy systems or installing twenty-first century technology that will grow as your business does.
X8 - Design of intelligent industrial sensor systems, as well as the cyber assurance required to protect these systems.
Y Tech - SBA certified 8(a) company that provides innovative and cost-effective information technology and consulting services to the federal and state government, private sector, and non-profit organizations.
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ENTERPRISE ZONES
An enterprise zone is a tool the State of Maryland offers to local jurisdictions for promoting economic development in certain qualifying areas. The County has three Enterprise Zones - the Chesapeake Zone (formerly known as the North Point Zone), located along the industrial North Point corridor in eastern Baltimore County; the Southwest Zone, located in the Washington Boulevard/Hollins Ferry Road industrial corridor; and the Federal Center at Woodlawn Zone. These three areas contain over 10,000 acres of industrial and office-zoned land, and over 700 businesses. Since the approval of the first zone in December 1995, more than 130 businesses in the North Point and Southwest enterprise zones have committed to investing over $315 million in real property improvements and $270 million in machinery and equipment. In addition, approximately 3,700 new jobs have been created. The Halethorpe-Arbutus area in the Southwest Enterprise Zone has seen dramatic growth, with almost 600 new jobs in a four-year period. The Southwest Enterprise Zone was amended and redesignated in June 2013. The North Point Zone expired and was replaced in 2015 by the Chesapeake Zone, a larger area that now includes the entire Sparrows Point peninsula, now known as Tradepoint Atlantic.
The program offers two primary benefits to businesses in the designated zone that make new investments or hire new employees:
1. Property Tax Credits. The local jurisdiction provides an annual property tax credit that is phased out over a ten-year period. For the first five years, the credit is equal to 80% of the increase in property tax resulting from the new investment in real property. In the subsequent five years, the credit decreases 10% annually until it is phased-out entirely in the eleventh year.
2. Income Tax Credits. For each new, full-time job created in an enterprise zone, the State grants a $1,000, one-time State income tax credit to the employer. If a worker who is certified as economically disadvantaged fills the new job, the credit can total as much as $6,000 over three years.
The local property tax credit is applied only to the increased tax liability resulting from the new investment. Therefore, the County experiences no loss in property tax revenue as a result of the program; it simply foregoes a portion of the increase in property tax revenue that results from the new investment. Additionally, the State of Maryland reimburses the County for 50% of the property tax credits to businesses.
HOUSING
The following table shows the number of residential housing units sold, total sold dollar volume, average and median price of a residential unit sold in the County in December 2016 compared with December 2015.
December 2016 December 2015 % Change Total Sold Dollar Volume: $224,677,839 $220,684,362 1.81% Average Sold Price: $253,016 $251,063 0.78% Median Sold Price: $224,675 $212,000 5.98% Total Units Sold: 888 879 1.02% Average Days on Market: 70 73 -4.11% Average List Price for Sold Units: $260,533 $259,404 0.44% Average Sale Price as a percentage of Average List Price: 94.5% 92.6% 2.07%
SOURCE: Metropolitan Regional Information Systems, Inc., December 2016
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SECTION V: COUNTY GOVERNMENT AND ADMINISTRATION
DESCRIPTION OF THE COUNTY GOVERNMENT STRUCTURE
The County’s seat of government is located in Towson, Maryland. The County performs all local government functions within its jurisdiction, as there are no incorporated towns, villages, municipalities or other political subdivisions with separate taxing authority. Under home rule since 1957, an elected County Executive and a seven-member County Council, with each serving separate executive and legislative functions, govern the County.
The County Council members are elected from each of seven contiguous and equally populated council districts. The County Executive and the County Council serve contemporaneous four-year terms in office with the current term ending December 2018. There is no term limitation for County Council members. However, the County Executive may only serve two consecutive terms in office.
Each member of the County Council has one vote, and a simple majority of the County Council is sufficient to pass legislation in the absence of higher voting requirements. Emergency bills and County Council actions to override a veto by the County Executive require the vote of five members of the County Council. The citizens of the County may petition to referendum any law or any appropriation increase approved by the Council. The County Council elects its own chairperson annually.
The Executive Branch is comprised of the County Executive and the County Administrative Officer. The County Executive is the chief executive officer of the County and the official head of the County government. The County Executive appoints the County Administrative Officer subject to the County Council's approval. The County Administrative Officer oversees the daily operations of the County Government. The Legislative Branch is comprised of the County Council, the County Auditor and the Board of Appeals.
County operating agencies include the following departments: Environmental Protection and Sustainability, Economic Development, Police, Fire, Health, Aging, Recreation and Parks, Corrections, Permits Approvals and Inspections, and Public Works. County staff agencies include the following offices: Budget and Finance, Information Technology, Human Resources, Law and Planning. Agencies subject to control by charter and/or County funding include the following: Department of Education, Circuit Court, Public Libraries, State’s Attorney, Social Services, County Sheriff, Community College, Orphan’s Court, Board of Elections, Liquor License Commissioners, and the University of Maryland Extension. A chart of the County governmental organization is set forth following this section. Biographical descriptions of elected officials and key administrative officials follow.
BIOGRAPHIES
County Executive
KEVIN KAMENETZ, Baltimore County Executive, earned his Bachelor's degree from Johns Hopkins University and law degree from the University of Baltimore School of Law. He is a former Assistant State's Attorney for Baltimore City and a three- term elected member of the Democratic Central Committee. He has served as President of Safety First, a crime fighting coalition and Vice President of B’nai B’rith (Menorah Lodge). Mr. Kamenetz was elected to the County Council in 1994, 1998, 2002 and 2006. He served as Chairman of the County Council in 1996, 1999, 2003, and 2008. Mr. Kamenetz was elected County Executive in 2010 and 2014.
County Council
TOM QUIRK, Councilman, First District. Mr. Quirk is a Certified Financial Planner practitioner, Chartered Retirement Planning Counselor and small business owner in Catonsville. A graduate of Western Maryland (now McDaniel) College where he tripled majored in Economics, Business Administration, and Political Science; he has been active within his community and in politics since his early teens. Mr. Quirk was elected to the County Council in 2010 and 2014, served as Chairman in 2013 and is currently serving as Chairman in 2017.
VICKI ALMOND, Councilwoman, Second District. Prior to becoming Councilwoman, Mrs. Almond was employed as Chief of Staff for a State Senator. She has served as Vice-President on the Police Community Relations Council, President for Franklin Middle and High School PTAs from 1986-1994, on the Reister’s Towne Festival from 1996-1998, and the Reisterstown, Owings Mills, Glyndon Coordinating Council from 1994-97 and 2002-04. She was appointed to the Rosewood Citizen’s Advisory Council and the Baltimore County Commission for Women. She is currently serving as the community representative for the School Resource Officer Program. Mrs. Almond was elected to the County Council in 2010 and 2014 and served as Chairwoman in 2012 and 2015.
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WADE KACH, Councilman, Third District. Born in West Baltimore, Wade Kach attended Baltimore City Public Schools, graduating from The Baltimore Polytechnic Institute (Poly) and Western Maryland College (now McDaniel College), earning a B.A. in Mathematics in 1970. Given his penchant for math, Wade taught middle school math in the Baltimore County Public Schools from 1970 to 1992 before moving into the Audit Office of the County School System after more than two decades in the classroom. Active in the Republican Party throughout his legislative career as well, Wade was elected as a delegate to the Republican Party National Convention in 1988 and 2000. Wade was first elected to the Maryland House of Delegates in 1975, continuously serving large portions of Baltimore County until 2014. Upon election to the County Council, Wade retired tied as the longest-serving member of the Maryland House of Delegates. Wade has received numerous honors, including an award from the Maryland Society of Accountants in 1999 and the Casper R. Taylor, Jr., Founder's Award, from the House of Delegates in 2006. Mr. Kach was elected to the County Council in 2014.
JULIAN EARL JONES, JR., Councilman, Fourth District. Mr. Jones is a Division Chief in the Anne Arundel County Fire Department with 29 years of experience. He has held many positions in the Fire Department including Executive Board member of the International Association of Fire Fighters, Local 1563, President of the Anne Arundel County Professional Black Firefighter Association, President of the Anne Arundel County Professional Fire Chiefs Association, United Way Chairperson and has commanded several divisions in the fire department including the Communication, Logistics and Operations Division. Mr. Jones is a member of the Maryland Fire Service Personnel Qualification Board and has attained the highest professional certifications in many disciplines including Fire, Hazardous Materials, Instruction, Management and Rescue. Mr. Jones led Maryland Fire and EMS forces on a rescue mission to New Orleans after the devastation of Hurricane Katrina. Mr. Jones graduated from the University of Maryland, Baltimore County with a Bachelors of Science Degree in Information Systems Management. Mr. Jones is a licensed Real Estate Agent and Business Owner. His company specializes in real estate rehabilitation and renovation and was established in 1988. Mr. Jones is a community leader, former PTA President of Hernwood Elementary School, member of the Caucus of African American Leaders and a two term member of the Baltimore County Democratic Central Committee. Mr. Jones was elected to the County Council in 2014.
DAVID MARKS, Councilman, Fifth District. Earned a B.A. degree in government and politics (high honors) from the University of Maryland at College Park and a Master of Arts in public policy from the Johns Hopkins University in 1997. Mr. Marks worked for 14 years in various positions at the U.S. Department of Transportation and the Maryland Department of Transportation, where he was Chief of Staff to the Secretary. A former nine-term President of the Perry Hall Improvement Association, he also served on the Baltimore County Republican Central Committee and the Executive Board for the Baltimore County Historical Trust. Mr. Marks was elected to the County Council in 2010 and 2014.
CATHY A. BEVINS, Councilwoman, Sixth District. Councilwoman Bevins was born and raised on the Eastside of Baltimore County. Councilwoman Bevins has served her community for over 25 years through her children’s PTA groups, church based outreach, homeless outreach and community advocacy. Prior to her election to the Baltimore County Council, she served as a Constituent Services Coordinator for six years, assisting the residents of the eastside of Baltimore County resolving issues on the local, state and federal levels. She was recently appointed to serve as Liaison to the Maryland Association of Counties for Baltimore County. Mrs. Bevins was elected to the County Council in 2010 and 2014 and served as chairwoman in 2014.
TODD CRANDELL, Councilman, Seventh District. He was born and raised in Dundalk where he currently resides. The son, grandson, and nephew of steelworkers, Councilman Crandell attended Gilman School and was a Division I wrestler at Rider University. As a consultant and entrepreneur, he has over twenty years of experience in the manufacturing, aerospace, and internet industries. Mr. Crandell is a former high school wrestling coach, has led workshops for the Future Business Leaders of America and has served on advisory boards for Baltimore Healthcare for the Homeless, the MIT Enterprise Forum, Content Clothing, and is a former District Chairman for the Baltimore Area Council of the Boy Scouts of America. Mr. Crandell was elected to the County Council in 2014.
Administrative Officials
FRED HOMAN, County Administrative Officer, holds a B.A. degree in Political Science from East Stroudsburg State University and a J.D. from the University of Baltimore. He is also a member of the Maryland Bar. Mr. Homan has been employed by the County since 1978 and was appointed County Administrative Officer on June 1, 2007. From July 1996 through May 2007, Mr. Homan served as Director of Budget and Finance. Prior to the merger of the Budget and Finance offices on July 1, 1996, Mr. Homan served as the Director of the Budget from December 1989 to June 1996. Prior to 1989, Mr. Homan served as Deputy Director of the Budget and the Investment Administrator in the Office of Budget and Finance.
KEITH DORSEY, Director of Budget and Finance, holds a B.A degree in Economics from the University of Maryland, Baltimore County. Mr. Dorsey has been employed by the County since 1983 and was appointed Director of Budget and Finance on July 3, 2007. From February 12, 2005 through July 3, 2007, Mr. Dorsey served as Deputy Director of Budget and Finance. Prior to February 2005, Mr. Dorsey served as a Budget Analyst for Baltimore County.
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MICHAEL E. FIELD, County Attorney for Baltimore County was admitted to the Maryland Bar in 1994 after receiving his law degree from the University of Maryland School of Law. Mr. Field received his undergraduate degree in 1983 from the University of Maryland. Prior to his service as County Attorney, Mr. Field was an Assistant County Attorney for Baltimore County and a Legislative Analyst in the Department of Legislative Services of the Maryland General Assembly.
WILL ANDERSON, Director of the Department of Economic and Workforce Development, earned his B.A. degree from Rutgers University in 1989 and an M.S. in Interdisciplinary Science from The Johns Hopkins University in 1996. Previously, he served as Chief Technology Officer for the Maryland Business Roundtable for Education (MBRT) where he led the organization's business partnerships and convened-executive level advisory groups in industry, education and the public sector. He also served in leadership roles -- in corporate, small business, public sector and not-for-profit organizations -- from sales, marketing, management, software, technology, to community and public relations, and served as founding partner and lead business developer of a Maryland-based web development provider.
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VOTERS BALTIMORE COUNTY, MARYLAND COUNTY GOVERNMENT ORGANIZATION CHART
LEGISLATIVE BRANCH EXECUTIVE BRANCH
COUNTY COUNTY COUNCIL EXECUTIVE
COUNTY BOARD OF COUNTY ADMINISTRATIVE APPEALS AUDITOR OFFICER
AGENCIES SUBJECT TO OPERATING STAFF CONTROL BY CHARTER AGENCIES AGENCIES &/OR COUNTY FUNDING
DEPARTMENT 61 DEPT. OF ENVIRONMENTAL OF ECONOMIC OFFICE OF BUDGET OFFICE OF DEPARTMENT CIRCUIT PROTECTION AND AND AND INFORMATION OF COURT SUSTAINABILITY WORKFORCE FINANCE TECHNOLOGY EDUCATION DEVELOPMENT
DEPARTMENT POLICE FIRE OFFICE OF HUMAN OFFICE OF STATE’S OF DEPARTMENT DEPARTMENT RESOURCES LAW ATTORNEY LIBRARIES
DEPARTMENT DEPARTMENT OF DEPARTMENT OF HEALTH COUNTY OF PLANNING SOCIAL DEPARTMENT SHERIFF AGING SERVICES
DEPARTMENT OF DEPARTMENT COMMUNITY ORPHAN’S RECREATION OF COLLEGE COURT AND PARKS CORRECTIONS
DEPARTMENT OF PERMITS, DEPARTMENT SUPERVISOR LIQUOR LICENSE APPROVALS, AND OF PUBLIC OF ELECTIONS COMMISSIONERS INSPECTIONS WORKS
UNIVERSITY OF
MARYLAND EXTENSION
DESCRIPTION OF SERVICES AND AGENCY FUNCTIONS
The following list highlights some of the services of the County government and provides a brief description of the services provided, as well as current updates. For more information on all services of the County, visit the County’s website at www.baltimorecountymd.gov.
Public Schools
Overseen by an eleven member Board of Education and administered by a superintendent, the Department of Education is responsible for the overall operation of the County’s 173 schools, centers and programs. The majority of education funding is provided by the County with the balance derived from a combination of federal, state and other funds.
The following table provides actual and projected public school enrollment for school years 2011/12 – 2020/21:
Enrollment: School Years 2011/12 – 2020/21 Actual Actual Actual Actual Actual Actual Projected Projected Projected Projected 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019- 2020- Grades 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Elementary 50,757 52,499 53,873 55,278 55,933 56,193 56,438 56,060 55,867 55,551 Middle 22,411 22,391 22,632 23,233 23,737 24,325 24,899 25,685 26,307 26,864 High 30,554 30,573 30,359 30,541 30,571 30,736 31,001 31,649 32,464 33,500 Alt & Special 858 861 851 798 770 771 781 781 781 781 Other 735 709 661 134 115 114 122 122 122 122 Grand Totals 105,315 107,033 108,376 109,984 111,126 112,139 113,241 114,297 115,541 116,818
Source: BCPS FY17 Operating Budget, Executive Summary
Police
Under the direction of the Chief of Police, the Department has the general duty to safeguard the lives and safety of all persons within the County, to protect property, and to assist in securing to all persons the equal protection of the laws. It is divided into 8 precincts with its headquarters located in Towson. The Department also maintains a K9 training center, a marine unit, an aviation unit, and a crime laboratory.
Fire
Under the direction of the Fire Chief, the Fire Department is responsible for the protection of persons and property in the County. It is composed of 25 career and 33 volunteer companies. The Department’s 29 advanced life support medic units and several fire engines staffed with paramedics are equipped to provide emergency cardiac rescue services. The Department also has responsibility for the Emergency Operations Center and provides for response to natural and man-made disasters.
Economic and Workforce Development
The Department’s responsibilities include the promotion of an economic development program, especially the solicitation of new business and investment, as well as other activities necessary to reach that goal. As of 2011, the Office of Workforce Development became part of Economic Development and provides training, career consultation and job placement services to unemployed and underemployed County residents so they can meet the County's workforce needs and obtain and retain long-term employment with good wages and benefits.
Community College of Baltimore County (CCBC)
CCBC comprises the largest community college system in the State of Maryland with campuses at Catonsville, Dundalk and Essex and various centers throughout the County. CCBC offers a broad array of general education, career programs, and training related to economic and community development activities.
Libraries
Overseen by a Board of Library Trustees appointed by the County Executive and administered by a director accountable to the Board, the Department of Libraries provides general public library services to the County through its 15 branches.
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Environmental Protection and Sustainability
The Department of Environmental Protection and Sustainability is responsible for administering and enforcing environmental laws, regulations, programs and activities for the purpose of conserving, enhancing and perpetuating the natural resources of the County. The sustainability component was added in 2011 and is responsible for a number of resource management programs including forest sustainability and environmental education including Green Schools, County energy grant coordination, a sustainability network, and intergovernmental coordination for reservoir, coastal zone, and master plan policy. The Department is also responsible for the oversight and management of the Stormwater Management Fund established in Fiscal Year 2014 to mitigate state and federal stormwater runoff regulations.
Planning
The Department of Planning is responsible for preparation of the master plan for adoption by the Planning Board and the County Council, recommending to the Director of Budget and Finance a six-year capital program, reviewing and making recommendations on plans for all development in the County, recommending zoning map amendments to the County Council or the County Board of Appeals, and administering Community Development Block Grant funds. Planning also includes the Office of Administrative Hearings which serves as an independent, judicial body comprised of administrative law judges who hear cases and issue decisions on a variety of matters including, but not limited to, zoning, land use and related matters. Water Supply and Sewerage
Under the Metropolitan District Act, the Metropolitan District was created as a separate and financially self- supporting entity under the jurisdiction of the County to supply water and to provide sewerage and drainage systems to residents of the County living within certain prescribed areas. The extension of these boundaries is subject to the approval of the County Council with the consent and approval of the Mayor and City Council of Baltimore (the “City”). The Public Works Department administers the Metropolitan District Fund under the direction of the County Executive and County Administrative Officer. The Metropolitan District has its own revenue and bond issuance powers, subject to authorization by the County Council. The Metropolitan District Act requires the City to provide water to the Metropolitan District at cost. Although the Metropolitan District constructs water facilities within its boundaries, under an agreement between the City and the Metropolitan District, the City operates and maintains the facilities at cost, including billing and collecting water rents. Under said agreement, the City and County have also agreed to pay for certain new capital projects and the repair and enlargement of additions or improvements to certain existing water facilities on a specified pro-rata basis. In addition, the County, from time to time, has entered into agreements with Anne Arundel County and Howard County under which, among other things, certain of the County's water distribution facilities are made available to each of said counties. For use of the County's water distribution facilities, Anne Arundel County and Howard County have respectively agreed to pay for part of the cost of certain new capital projects and for the repair to and the enlargement of additions or improvements to certain existing facilities on a specified pro-rata basis.
Long-range planning for major water facilities is accomplished through a joint office staffed full-time by both City and County personnel. Such planning is subject to the approval of both the City and the County. Water, principally from sources located within the County, is treated, delivered and distributed by the City to County residents and the City bills for these services at rates designed to reimburse the City at cost. At each fiscal year's end, any excess of revenues received by the City over its costs is remitted to the Metropolitan District, and any deficit is paid by the Metropolitan District to the City. There were 233,404 water accounts in the County on July 1, 2016.
The Metropolitan District constructs, operates, and maintains all sewerage collection and transmission facilities located within the County. County-generated sanitary sewerage is treated and disposed of at cost by two City-owned and operated treatment plants, one of which is located in the County; the other plant is located in Baltimore City. Under an agreement between the City and the County, the City's sewerage facilities are made available to the County, and the City and County have agreed to pay for certain new capital projects and the repair and the enlargement of additions or improvements to certain existing sewerage facilities on specified pro-rata bases. On July 1, 2016, there were 224,447 sewerage accounts in the County. The County has entered into agreements with Anne Arundel County and Howard County, respectively, under which, among other things, certain of the County's sewerage facilities are made available to each of said counties. The agreements also provide for the payment to the County by Anne Arundel County and Howard County, respectively, of an operating charge for the use of the County's sewerage facilities as well as the payment for certain new capital projects and the repair to and the enlargement of additions or improvements to certain existing sewerage facilities on specific pro-rata bases.
The County residents served by the sewerage facilities are billed by the County for annual service charges and front foot benefit assessments. When a new connection is made, connection charges are levied. 63
Solid Waste
The County is responsible for collecting and disposing of residential solid waste and recyclable materials. Collection is performed by private haulers who make one solid waste and one recycle pickup per week. The disposal function is carried out in a variety of methods. (SEE SECTION II: DEBT SUMMARY -- Other Agreements and Commitments -- Waste Disposal Agreements.)
LABOR RELATIONS
The County has a classified service that includes all jobs (except exempt positions) in the County career system; these positions number 5,747 employees. All other employees (elected officials, department heads, and various non-merit full-time and part-time positions) are collectively known as the exempt service; these positions number 1,639 employees.
On July 13, 1977, Baltimore County enacted the Employee Relations Act, which permits employees of the County, with certain exceptions, to join and be represented by labor unions and other employee organizations. The Employee Relations Act defines six representation units within the classified service; provides a procedure for recognition of employee organizations as the exclusive representative of employees in an appropriate representation unit; establishes a procedure and time limits for negotiating with recognized employee organizations matters pertaining to wages and other conditions of employment; provides procedures for settling disputes and grievances; and prohibits strikes, work stoppages, lockouts and secondary boycotts, with penalties for violations of such prohibitions. Labor agreements have been signed into effect with the following representative organizations:
A three-year agreement with the American Federation of State, County and Municipal Employees, Local 921, Council 67, AFL-CIO, has been ratified and will remain in effect through June 30, 2019. This organization represents 703 hourly employees. These employees are primarily Public Works employees; however, this union also represents employees in other offices and departments of the County.
A three-year agreement with the Baltimore County Federation of Public Employees, the American Federation of Teachers (“AFT”), AFL-CIO has been reached and is expected to be ratified, and will remain in effect through June 30, 2019. This organization represents 1,471 salaried employees in various offices and departments of the County.
A three-year agreement with the Baltimore County Federation of Public Health Nurses, AFT, AFL-CIO, has been ratified and will remain in effect through June 30, 2019. This organization represents 61 full-time and 21 part-time nurses in the Health Department.
A three-year agreement with the Baltimore County Professional Fire Fighters Association, International Association of Firefighters Local 1311, AFL-CIO, has been reached and is expected to be ratified, and will remain in effect through June 30, 2019. This organization represents 946 sworn personnel in the Fire Department up to and including the rank of Captain.
A three-year agreement with the Fraternal Order of Police Lodge 25, has been ratified and will remain in effect through June 30, 2019. The Lodge represents 67 sworn deputy sheriffs in the Sheriff’s Office up to and including the rank of Lieutenant.
A one-year agreement with the Fraternal Order of Police Lodge 4 effective July 1, 2016 through June 30, 2017. This organization represents 1,845 sworn personnel in the Police Department up to and including the rank of Lieutenant.
LITIGATION
On May 18, 2015, the Supreme Court of the United States decided against the State of Maryland in Comptroller of the Treasury of Maryland v. Wynne Et Ux. Under state law, residents who pay income tax to another state for income earned in that other state are allowed a credit against their Maryland state income tax but not against the so-called piggy-back tax of the county or municipality where they reside. Plaintiffs argued that not granting a credit against the local income tax is a violation of the U.S. Constitution. By a 5 to 4 vote, the Supreme Court found for the plaintiffs holding generally that the state law violates what is known as the Dormant Commerce Clause. This decision means that Maryland counties, including Baltimore County, need to reserve funds against refund claims by certain taxpayers (particularly S corporation shareholders) dating back to Tax Year 2007. Baltimore County estimates that it needs to reserve approximately $25.5 million against these potential claims. The County utilized money from its Health Insurance Fund, which had over $35 million of surplus funds at June 30, 2015, to finance the new Reserve for Income Tax Claims. The County estimates that future loss of revenues may amount to $4.5 - $5 million per year and will be absorbed through the normal budgeting process.
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Under Maryland law, taxpayers are generally eligible for interest on certain tax refunds calculated at an annual rate of interest equal to the greater of (i) three percentage points above the average prime rate of interest or (ii) 13%. In 2014, the Maryland General Assembly adopted legislation that set the annual interest rate for an income tax refund that is a result of the final decision under the Wynne case to a percent equal to the average prime rate of interest. This legislation substantially lowers the interest rate on tax refunds due as a result of the Wynne decision. Further, the legislation was intended to be effective retroactively. On November 13, 2015, lawyers for Michael J. Holzheid filed a class action complaint, Michael J. Holzheid v. Comptroller of the Treasury of Maryland, et al, in the Circuit Court for Baltimore City challenging the state legislation. Other taxpayers may also file claims or appeals challenging the state legislation. If such claims or appeals are successful, the estimated amount of interest on refunds owed by the County would increase.
There are other miscellaneous claims against the County including claims now in litigation. In the opinion of the County Attorney, none of these claims would materially affect the County's financial position.
There is one significant outstanding claim against Baltimore County that has the potential to impact members’ contributions to the Employees’ Retirement System of Baltimore County. The U.S. Equal Employment Opportunity Commission (EEOC) has sued Baltimore County and six (6) County Unions claiming that they violated the Age Discrimination in Employment Act (ADEA) by requiring employees who join the retirement system as older workers to contribute more than workers who joined at a younger age. The United States District Court for the District of Maryland granted Baltimore County’s Motion for Summary Judgment on January 21, 2009. The Fourth Circuit Court of Appeals reversed and remanded the case to the District Court. By Order entered on October 17, 2012, the District Court reversed itself and found the County liable for age discrimination. After the District Court granted the County permission to file an interlocutory appeal, the Fourth Circuit affirmed the liability determination of the District Court on March 31, 2014. The Supreme Court denied the County’s Petition for Writ of Certiorari on November 3, 2014 and the case has been remanded to the District Court for a determination of damages. The County filed a separate action in federal court seeking a declaration that its long-term actuary, Buck Consultants, LLC (Buck), is contractually obligated to defend, indemnify and hold the County harmless in the underlying EEOC action. On March 29, 2016, the District Court granted Buck’s Motion to Dismiss the claim for indemnification and hold harmless, but denied it as to Buck’s duty to defend the County. On May 5, 2016, the District Court stayed the declaratory action for six (6) months. In addition, the County filed in the underlying EEOC action a Motion for Leave to file a third-party Complaint against Buck for common law indemnification and contribution in that action. Before the District Court ruled on that motion, the County and Buck filed a Stipulation and Order dismissing the Buck case and terminating all other possible actions regarding this matter, which was signed by the district Court on October 13, 2016. On April 27, 2016, the court entered a Joint Consent Order Regarding Injunctive Relief, which resolved EEOC’s claim for injunctive relief. On that same day, the court ordered the parties to submit briefs on the question of whether EEOC was entitled to any retroactive or prospective damages for claimed “excess contributions” by older members. The court conducted a hearing on July 29, 2016 to determine that issue. EEOC’s claim for “excess contributions” by older workers was previously estimated to be $17 million to $19 million. On August 24, 2016, the Court issued an order denying EEOC's Motion for Determination on Availability of Retroactive and Prospective Monetary Relief for the "excess contributions," and held specifically that "[n]either retroactive nor prospective monetary relief is available in this case," and closed the case. The EEOC has filed an appeal from the order to the United States Court of Appeals for the Fourth Circuit.
The County Attorney is of the opinion that there is no litigation pending or threatened in either Maryland or Federal courts which would in any way affect the validity of the BANs or the right of the County to levy and collect ad valorem taxes, without limitation as to rate or amount, for payment of the BANs and interest thereon.
AUDITORS
The financial statements in Appendix A have been prepared by the Office of Budget and Finance and audited by CliftonLarsonAllen LLP, independent certified public accountants. Such statements have been included in reliance upon such report and given upon the authority of such firm as experts in accounting and auditing.
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APPENDIX A
BALTIMORE COUNTY, MARYLAND COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2016
TABLE OF CONTENTS
Financial Section Independent Auditors’ Report ...... A-2
Baltimore County, Maryland Management’s Discussion and Analysis ...... A-5
Basic Financial Statements
Statement of Net Position ...... A-17
Statement of Activities ...... A-18
Balance Sheet – Government Funds ...... A-19
Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ...... A-20
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ...... A-21
Budgetary Comparison Statement – General Fund ...... A-22
Statement of Net Position – Proprietary Funds ...... A-23
Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds ...... A-24
Statement of Cash Flows – Proprietary Funds ...... A-25
Statement of Fiduciary Net Position – Fiduciary Funds ...... A-26
Statement of Changes in Fiduciary Net Position – Fiduciary Funds ...... A-27
Statement of Net Position - Component Units ...... A-28
Statement of Activities - Component Units ...... A-29
Notes to Basic Financial Statements ...... A-30
Required Supplementary Information ...... A-78
A-1 CliftonLarsonAllen LLP CLAconnect.com INDEPENDENT AUDITORS' REPORT The Honorable County Executive and Members of the County Council Baltimore County, Maryland Towson, Maryland Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Baltimore County, Maryland (the County), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.