By Adam Pagnucco.
Part One told a brief history of the Viva White Oak project. Part Two discussed the nature of Tax Increment Financing (TIF), which is being proposed to fund infrastructure for the project. Today, I unveil the results of my questions to (in bold) and answers from MCB Real Estate, which is the project’s developer.
Let’s get to it!
The Viva White Oak project was originally a public-private partnership between the county, which owned 110 acres of land in its vicinity, and an affiliate of Percontee, Inc., which owned 170 acres. Can you describe the current respective roles of the county, Percontee and MCB?
MCB is purchasing the property from an affiliate of Percontee, which will remain invested as a minority partner in the venture.
Variations of the Viva White Oak project have been in the works for more than a decade. Why is this project ready to move now?
MCB thrives on taking on complex, transformational projects. MCB did extensive due diligence on the site prior to executing an agreement with Percontee. The economics of this market, the regional nature of this location and the potential of this untapped gem, as well as elected officials who understand the need and value of public participation to support large-scale private investment, make this the perfect opportunity to move forward. The time and energy invested by the Elrich Administration and Councilmember Mink have been invaluable to moving this forward.
What is a TIF? How does it work and why should the public support it?
A TIF is an economic development tool used by local governments across the country, where the future new property tax proceeds from a development are monetized to pay for the up-front public infrastructure costs of that development. Independent analysis has shown that this development will be an economic driver for East County, which is especially important given the current economic landscape. The TIF will ultimately result in $62M in annual County revenues.
Can you describe the public infrastructure supported by the TIF that will be built to support the project?
The first phase is the creation of the “spine” infrastructure that must be in place before any vertical construction can commence. This includes three new roads required by the White Oak master plan, mass grading, and water and sewer infrastructure.
Will specific development phases be staged to follow the completion of specific infrastructure projects?
Yes, the first phases of vertical construction will follow the completion of the spine infrastructure, including the retail town center, some multifamily and office, and the development of the townhome lots. Future phases will follow, including the innovation cluster and additional multifamily.
Which phases of the Viva White Oak project have full financing, including equity financing, currently locked in? And if financing is not yet locked in, what role would the creation of the TIF play in securing it?
Investors of any size want to see support from communities and elected officials for projects of this nature. We have been fortunate to have had great partners at the grassroots and elected levels to help move the investment forward.
The Trump administration has implemented layoffs and is planning further cuts at the U.S. Food and Drug Administration, whose headquarters is next to the project. At one point, the administration even proposed selling the FDA headquarters. If the FDA’s presence is reduced or eliminated, how will that affect the Viva White Oak project?
We continue to monitor the federal landscape and will continue to advance the project in a way that does not rely on the federal government. While FDA can play a role in the future innovation ecosystem that is planned for the Project, the success of the project is dependent on the Montgomery County and regional market.
Many national real estate players have vowed to not invest in Montgomery County because of its new rent control law and other regulations on development. Is this sentiment, and the rent control law in particular, an impediment to the construction of Viva White Oak?
MCB would not be undertaking this project if we believed there wasn’t a market in Montgomery County.
Next: My take on this project.