U.S. Construction Spending at Highest Level Since 2008

WTOP Radio reported today that U.S. construction spending in July climbed to its highest level since May 2008.

The Commerce Department said Tuesday that construction spending rose 0.7 percent to a seasonally adjusted annual rate of $1.08 trillion, the highest level since May 2008. The report also revised up the June increase in construction spending to 0.7 percent from 0.1 percent previously.

Ground breakings for houses, apartment complexes and commercial centers have helped to improve overall economic growth. The government said last week that the U.S. economy expanded at an annual rate of 3.7 percent in the April-June quarter, after having edged up just 0.6 percent in the first quarter.

The increased activity is a result of housing starts; and the building of factories and power plants.

In July, construction of single-family houses advanced 2.1 percent. Factories rose 4.7 percent, and power facilities increased 2.1 percent.

While government projects fell slightly, they have risen over the past year due to the construction and maintenance of roadways.

Howard County Recognized for Procurement Excellence

Howard County Executive Allan Kittleman announced yesterday that the county was awarded with the Achievement of Excellence in Procurement for the seventh straight year by the National Procurement Institute (NPI). As reported by the Baltimore Sun,

“The Office of Purchasing is a key support function that keeps local government running smoothly by supplying our agencies with the goods and resources they need to serve our residents,” Kittleman said. “We remain committed to increasing education and raising awareness about the procurement process for those who want to do business with Howard County. The devotion and professionalism of the staff allow us to make smart and responsible purchasing decisions that offer the best value and results for our residents’ tax dollars.”

The Office of Purchasing oversees all procurement for Howard County and the county is one of 47 counties in the U.S. and Canada to receive an award.

The NPI award program evaluates innovation, professionalism, e-procurement, productivity and leadership attributes of public procurement organizations.

Apply for MEA’s Game Changer Competitive Grant Program by October 30th

The Maryland Energy Administration (MEA) is pleased to announce the opening of the FY16 Game Changer Program. The Competitive program provides financial assistance for the deployment of innovative renewable energy systems.

According to MEA’s Game Changer Program webpage:

This is a competitive grant program, with awards expected to range from $50,000 to $250,000 per award. Up to a total of $1 million, subject to funding availability, is available through the program. Applicants are expected to contribute at least 70% of total project costs.

Project Goal:

To support innovative “game changing” renewable energy systems, specifically in two areas of interest:

Area of Interest 1: Innovative technologies that are expected to reduce the cost or increase the efficiency of traditional Tier 11 renewable energy systems while driving economic development opportunities; and

Area of Interest 2: Commercial, customer-sited electric storage systems that are integrated with a Tier 11 renewable energy source. MEA will only consider systems that provide a quantifiable reliability or resiliency benefit, demonstrate an innovative use case for storage, and drive economic development opportunities. Examples of innovative use cases may include the potential for storage to mitigate intermittency from on-site renewable generation, to manage on-site demand during times of highest need, or to provide another benefit to the host customer or electric system more generally, including utility distribution systems and wholesale markets.

For more on the application materials, minimum requirements and competitive evaluation criteria, please carefully review the Funding Opportunity Announcement.

Through the program, MEA seeks to demonstrate new technologies and storage applications, with a goal of encouraging replication of systems that can advance the market for renewable energy in Maryland. MEA will publicize projects and require grantees to share certain project details in a final report that can made public.

Applications are due by Noon on October 30, 2015.

Frederick County Prohibits Elected Officials From Bidding on Contracts

The Frederick County Council approved a measure this week to prohibit county elected officials from bidding on county contracts on behalf of companies they own.  As reported by the Frederick News-Post,

The Frederick County Council voted 4-3 Tuesday to change the county’s purchasing law to state that the county will not enter into contracts with its elected officials, or with business entities owned by the elected officials or their spouse, parent or child. Council members Jerry Donald, Jessica Fitzwater and M.C. Keegan-Ayer and Council President Bud Otis voted for the bill, and council members Tony Chmelik, Kirby Delauter and Billy Shreve voted against the bill.

The council members in support of the bill said they see it as a conflict, or perceived conflict, for elected officials to bid on projects. Among them was Otis, who proposed the bill. If people have the perception that a bid poses a conflict, it is important for the county not to have that perception hanging over its head, Otis said after the meeting.

Members in opposition did not see a conflict and tried to offer amendments to allow local elected officials to bid on county contracts if it were disclosed prior to bidding; and to delay the effective date until after December 1, 2018 to apply to a new group of elected officials. Both amendments failed.

Under the new law, the county can’t contract with any for-profit entity owned by a county elected official or qualified family member, not including governmental entities. The rule applies when the council member or family member owns an interest of 5 percent or more in a company, or is an officer, director, trustee or partner of the company.

Conference Attendees Learn About Leveraging Private Sector Investments for Energy Improvements

Local officials learned about leveraging private sector investments to “green” facilities and save on energy costs during a lunch session on the first day of the MACo Summer Conference. The session titled “Leveraging Private Investment to Capitalize Energy Improvements” was moderated by MACo First Vice President and Washington County Commissioner John Barr.

Speakers included Laura Franke, the Managing Director  for Public Financial Management, Inc.; Wyatt Shifflet, the Director of Finance Programs for the Maryland Clean Energy Center; David Lever, Executive Director  of the Public School Construction Program; and Mike Dow, Esq., with the firm Womble Carlyle Sandridge & Rice LLP.

Speakers discussed “green bank” lending programs, Energy Performance Contracting and Power Purchase Agreements,the use of taxable and tax-exempt bonds to finance projects, innovative approaches to finance school renovations, and model projects that use Commercial Property Assessed Clean Energy (CPACE) lending.

New GASB Rule Will Require Disclosure of Tax Credits

The Governmental Accounting Standards Board issued a new rule this week that will require state and local governments to show the value of property, income, and sales taxes that have been waived for businesses and other taxpayers. States and local governments offer these credits and exemptions to incentivize businesses to locate or expand in certain areas, or to provide certain incentives to property owners. Investors, government officials and others are growing concerned that these types of economic incentives are limiting financial flexibility leading to their disclosure on financial reports.

As reported by the Wall Street Journal (Subscription Required),

“These agreements reduce the amount of tax revenue you get, but you never see that, because it’s not reflected in the accounting system,” said Dean Mead, a research manager at the Governmental Accounting Standards Board. “To understand what they can collect, you need to know about things that would prevent them from collecting taxes.”

Cities use a number of incentives to lure businesses or keep them there. They may reduce or even suspend tax collections of businesses for years, or transfer tax receipts directly to developers and employers. Another popular approach is to agree to spend any tax revenue from projects to improve the surrounding areas. That spending then benefits the companies that set up shop, directly or indirectly.

“Anything that gives more transparency to what a government is doing and what is behind government finances, I’m all for it,” said Hugh McGuirk, head of mutual-fund company T. Rowe Price Group Inc. ’s municipal-bond team. “If we find out that, of the potential tax revenue, they’re only realizing 60%, versus another entity that’s realizing 98% of potential, maybe they’ve been a little too generous with their tax incentives.”

The reporting of this information will begin next year.

Leveraging Private Investment to Capitalize Energy Improvements

To become more energy-efficient and save on energy costs, counties are partnering with the private sector to build solar generating facilities and many other green initiatives.

To learn more about how to leverage private sector investments to save on energy costs attend the MACo Summer Conference session titled “Leveraging Private Investment to Capitalize Energy Improvements.” Information about the session is below.

Description: Savvy leaders across the country are learning how to leverage private sector investments to “green” facilities and save on energy costs. Find out how your county can successfully use “green bank” lending programs and take advantage of public private partnerships to retain local debt capacity. Speakers will discuss Energy Performance Contracting and Power Purchase Agreements, examine innovative approaches to finance school renovations, and showcase model projects that use Commercial Property Assessed Clean Energy (CPACE) lending.


  • Wyatt Shifflet, Director of Finance Programs, Maryland Clean Energy Center
  • David Lever, Executive Director, Public School Construction Program
  • Laura Franke, Managing Director, Public Financial Management, Inc.
  • Mike Dow, Esq.; Womble Carlyle Sandridge & Rice LLP

Moderator: The Honorable Sallie Jameson, Maryland House of Delegates

Date/Time: Wednesday, August 12, 2015; 12:00 pm – 1:00 pm

Learn more about MACo’s Summer Conference:

For a schedule of educational sessions at MACo’s Summer Conference, please view the Registration Brochure. Questions? Contact Meetings & Events Director Virginia White.

St. Mary’s County Names Cudmore as MACo OPEB Trustee

The St. Mary’s County Commissioners this week formally named CFO Jeanett Cudmore to serve as the county’s representative Trustee on the MACo OPEB Investment Trust. Ms. Cudmore was appointed to the CFO position for the county in May, following the death of longtime CFO Elaine Kramer.

The MACo Pooled OPEB Investment Trust is a vehicle designed to help local governments invest current funds toward future obligations for retiree health insurance, a.k.a. “other post-employment benefits.” Recent accounting rule changes have highlighted these liabilities on government balance sheets, and many counties are amidst plans to save toward these future costs.

Counties, county-funded agencies (like libraries and community colleges), and municipal governments are welcome to join the MACo OPEB Investment Trust to make long-term plans for assets dedicated to these obligations. Interested county officials are invited to contact MACo Executive Director Michael Sanderson for more details.

State’s $500M Bond Sale Finds Low, Competitive Rates

The State of Maryland’s recent sale of $500 million in top-rated general obligation bonds yielded low interest rates – a function of the state’s highly respected fiscal reputation, and the generally low-yield marketplace for high quality investments.

The main sale of $450 million in tax-exempt municipal bonds was awarded at 2.825% interest (true interest cost) with an immediate bond premium of over $44 million, and an additional $50 million in taxable bonds were let at 1.345% interest.

From Treasurer Nancy Kopp’s press release:

Treasurer Kopp commented “This was a great bond sale with high participation by outstanding investors. This is truly a win-win situation. Maryland’s taxpayers benefit from the low interest rates associated with a very competitive sale of a triple AAA-rated instrument while investors take advantage of a safe place to invest their money.”

Read the Treasurer’s press release online.

Baltimore City Considers Sale of Parking Garages to Fund Recreation Centers

To raise revenue for recreation center improvements, Mayor Stephanie Rawlings-Blake has proposed selling four city-owned parking garages. However, some are questioning whether this plan makes sense in the long-term.

As reported by the Baltimore Business Journal,

The mayor’s office estimates the garages could be sold for $40 to $60 million. Such a sale price would be much larger than the amount of money they make for the city each year — together, the four garages generated net income of $2.8 million in 2014.

That’s not counting taxes, but the mayor’s office doesn’t anticipate tax revenue changing with the sale. The garages actually pulled in $8.7 million in gross revenue, only to have operating expenses and debt payments eat into that.

Rawlings-Blake anticipates the city would have to sink more money into the garages if it continues to own them, she said Wednesday.

City Council President Jack Young has expressed concern with this plan,

City Council President Bernard C. “Jack” Young has been among those questioning the long-term financial wisdom of the plan. He has not changed his stance, said spokesman Lester Davis.

“It’s still a concern,” Davis said. “He’s certainly not in any rush to unload property that is, by all accounts and all parties involved, an absolute asset.”

Young doesn’t dispute that investments should be made in recreation centers, Davis said. But he’d rather see the money come from other places in Baltimore’s budget.