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County Council Votes to Privatize the Economic Development

July 6, 2015

 

Last week, the Montgomery County Council approved County Executive Ike Leggett’s plan to privatize the County Department of Economic Development. It is hoped that the move will boost business attraction and retention and strengthen the growth of good jobs in the County.

   The bill, which was approved by a unanimous vote of the County Council last Tuesday, June 30, eliminates the Department of Economic Development as a principal department of the Executive Branch; provides for the designation of a non-profit corporation as the Montgomery County Economic Development Corporation; creates an Office of Agriculture; and transfers certain duties of the Department of Economic Development to other County agencies.

   “I want to thank the Council for their strong support of this change,” said Leggett. “I also appreciate the support for this from the business community. From the time I was sworn in last December, I promised that Montgomery County government would change its relationship with the business community.”

   According to the Bill, the Montgomery County Office of Management and Budgets “estimated that there will be no net fiscal impact due to the implementation of the legislation. This estimate assumes that current resources allocated to DED will be reallocated either to other County departments, to the new workforce development entity, or to the new economic development entity.”

   Based on the fiscal impact statement, annualized personnel costs of approximately $2.4 million are expected to shift to the new economic development organization, as well as $3.8 million in operating expenditures. The estimated $3.8 million in operating expenditures includes $869,000 for incubator program operations, as well as some lease expenditures that should be allocated to other budgets.

   However, the Bill also states that “if the If the new organization is to achieve substantially better results than DED, additional resources may be necessary.”

   “Montgomery County is competitive,” said Leggett, “but we need to be more competitive in order to meet the dynamic challenges that face the Washington DC metropolitan region. To continue moving forward, I believe it is necessary to eliminate even more barriers to remaining competitive regionally, nationally and globally.”

   “While our Department of Economic Development is doing a good job given the worst economic conditions in decades, we can do better. We must do better. We must be more attuned to business trends and needs. We must be more flexible in our approach. The bottom line is that Montgomery County needs to more aggressively enhance and institutionalize private sector engagement in economic development,” said Leggett.

   “County Executive Ike Leggett is clearly pleased that the Council unanimously approved the legislation to privatize DED,” said Timothy L. Firestine, MoCo’s Chief Administrative Officer.   “Privatization will allow the economic development function to become more nimble and responsive to the business community,” Firestine continued.

    The transition will begin once the legislation becomes effective which is expected to be July 1, 2016. In the meantime, Sally Sternbach, Acting Director for the Department Economic Development will continue as the head of the department and maintain the County’s focus on economic development. “Sally has the full support and confidence of the County Executive to lead the department through the transition,” said Firestine. In addition to the council’s action on privatization, Sternbach was re-confirmed as Acting Director of the department by unanimous vote.

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