(a) (1) In this section the following words have the meanings indicated.
(2) "Costs" means any expense necessary or incident to building, acquiring, or financing any public infrastructure improvement.
(3) "Development district" means a special taxing district or special assessment district that:
(i) is created to facilitate financing under this section for the costs of public infrastructure to serve proposed:
1. new development; or
2. redevelopment of commercial or industrial properties; and
(ii) the County Council designates as a development district.
(b) Subject to the limitations under this section, the County Council may enact a law to provide for the issuance of bonds or other obligations to finance the costs of public infrastructure for a development district for which the principal, interest, and any premium shall be paid from special taxes, assessments, fees, or charges collected by the County in the development district.
(c) (1) Bonds or other obligations issued under this section may not constitute a general obligation debt of the County or a pledge of the County's full faith and credit or taxing power.
(2) Bonds or other obligations issued under this section may be sold at a private negotiated sale and are not subject to Article 31, §§ 10 and 11 of the Annotated Code of Maryland.
(3) With the exception of § 312 of the County charter, bonds or other obligations issued under this section shall be subject to the provisions of that charter.
(4) This section may not be construed to limit the power of the County to create development districts or issue special obligation bonds or other obligations under any other applicable law.
(5) The bonds and any other evidences of obligation issued under this section, their transfer, the interest payable on them, and any income derived from them, including any profit realized on their sale or exchange, shall be exempt at all times from every kind and nature of taxation by the state or by any of its political subdivisions, municipal corporations, or public agencies of any kind.
(d) (1) Prior to the issuance of debt under this section, the County shall notify and consult with those organizations that rate the County's general obligation bonds in an effort to ensure, to the extent reasonably possible, that the County's general obligation bond ratings will not be adversely affected by the issuance of the special obligation debt.
(2) (I) Except as provided under subparagraph (II) of this paragraph, bonds may not be issued under this section unless the County obtains a rating of investment grade for the bonds from at least one of the organizations that rate the County's general obligation bonds.
(II) An investment grade rating is not required for bonds that are sold to not more than 35 purchasers, each of whom certifies to the County and the participating underwriter that the purchaser:
1. has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of investment in the bonds; and
2. is not purchasing for more than one account or with a view to distributing the bonds.
(3) Bonds or other evidences of indebtedness issued under this section shall be treated as securities to the same extent permitted for special obligation debt issued under Article 24, § 9-1301 of the Code.
(e) (1) Debt issued under this section:
(i) shall be used only to finance the costs of public infrastructure to serve the development district; and
(ii) shall be secured by revenues derived from the development district.
(2) This subsection does not prohibit the financing under this section of public infrastructure that also provides benefits to the general public.
(f) (1) Before the creation of a new development district established to finance special obligation debt under this section, the County Council shall provide public notice of the creation of the proposed district by advertisement in at least two newspapers of general circulation in the County and at least one public hearing.
(2) A new development district may not be created to finance special obligation debt under this section unless the proposed action is approved by:
(i) at least 80% of the owners of the real property located within the proposed development district, treating multiple owners of a single parcel as one owner and treating a single owner of multiple parcels as one owner; and
(ii) the owners of at least 80% of the assessed valuation of the real property located within the proposed development district.
(g) A law enacted by the County Council under this section:
(1) shall specify the types of infrastructure and related costs that may be financed;
(2) shall require:
(i) reasonable disclosure in the real estate contract to buyers of real property within a development district of any special assessment, special tax, or other fee or charge for which the buyer would be liable due to development district financing under this section.
(ii) that a seller's failure to provide the disclosure required under item (i) of this paragraph renders the contract voidable at the option of the buyer before the date of settlement; and
(iii) that adequate debt service reserve funds be maintained;
(3) may not allow:
(i) acceleration of assessments or taxes by reason of bond default; or
(ii) an increase in the maximum special assessments, special taxes, or other fees or charges applicable to any individual property in the event that other property owners become delinquent in the payment of a special assessment, special tax, or other fee or charge securing special obligation debt issued under this section; and
(4) may provide:
(i) for exemptions, deferrals, and credits; and
(ii) that a lien attaches to property within a development district to the extent of that property owner's obligation under any special obligation debt financing.
(h) A development district created for purposes of development district financing under this section shall terminate when all debt attributable to the development district is repaid.
(i) An encumbrance on property in a development district attributable to development district financing under this section shall:
(1) be recorded in the land records of the County; and
(2) have the same priority as County taxes under state and County law.
(j) (1) This subsection applies only to:
(i) a special ad valorem tax that is imposed to support special obligation debt under this section; and
(ii) an owner of land in the development district who:
1. did not approve of the creation of the district under subsection (f)(2) of this section; and
2. elects to defer special taxes under this section effective on the date of finality next following the creation of the development district.
(2) a person who is a successor in interest to an owner of land in the development district acquires the same rights and obligations under this subsection as the person's predecessor in title.
(3) (i) Payment of special ad valorem taxes under this section shall be deferred until a development plan or a plan of subdivision or resubdivision is approved.
(ii) the property owner and the County may agree to a payment schedule.
(iii) deferred special taxes shall be subject to the interest rate applicable by law to unpaid County property taxes for each year of the deferral.
(iv) provisions for the deferral under this subsection shall be included in the law enacted by the County Council.
(k) This section does not prohibit the County or the Montgomery County Planning Board from obtaining from developers appropriate infrastructure contributions to support proposed development as allowed by law in addition to those financed under this section. (1994, ch. 612, § 1; 1996, ch. 625, § 1; 2016 L.M.C., ch. 7, § 1.)
Editor’s note—See County Attorney Opinion dated 7/26/07 discussing multiple issues deriving from the Clarksburg Master Plan and related issues regarding development districts.