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Board reviews proposed changes to Montgomery Development Fund; prevailing-wage question sends item back for clarification
Summary
Staff presented updates to the three Montgomery Development Fund programs including renaming the forgivable loan program, converting to reimbursement up to $20,000, a longer clawback for downtown hospitality loans and higher application fees; trustees asked staff to clarify prevailing-wage implications before final approval.
Village staff presented proposed revisions to the Montgomery Development Fund (MDF) programs and asked the board for direction. The proposal would rename and revise three programs, change some terms and increase application fees.
Manager Burke summarized the package: the forgivable-loan program would be renamed the "Montgomery Commercial Improvement Program," broadened to allow certain interior improvements, and converted to a dollar-for-dollar reimbursement up to $20,000. New businesses seeking that fund would be required to work with the Small Business Development Center on a business plan. The board heard staff say approved applicants would commit to remain in business for three years.
The Mill District incentive would be renamed the "Downtown Hospitality Forgivable Loan Program," and staff proposed increasing the period for prorated recapture (referred to as a "clawback") from three to five years and changing reimbursements so funds are paid after the certificate of occupancy is issued. Staff also proposed raising application fees on MDF programs from $250 to $500 to cover attorney fees associated with drafting agreements; staff said MDF application-fee revenue is deposited back into the MDF fund.
During discussion trustees raised a legal and financial concern that accepting small government funding for a subset of a larger private project can, under prevailing-wage rules, convert the entire construction project into a prevailing-wage contract — substantially increasing costs. One trustee asked whether the $20,000 reimbursement could be carved out to avoid triggering prevailing-wage requirements for the full project. Staff said they would research drafting options so that the MDF payment would not automatically subject the whole project to prevailing wage, or otherwise clarify the legal effect. Trustees asked to defer final action until the prevailing-wage question is resolved to avoid unintended cost consequences.
The board did not vote on the package and directed staff to return with clarified language at a future meeting.
