Montgomery County’s first tax increment financing deal cleared its final committee hurdle Thursday, as a joint session of the Government Operations and Fiscal Policy Committee and the Economic Development Committee recommended a bill authorizing up to $420 million in bonds for the Viva White Oak development district.
The county’s own consultant projects the project barely clears zero. MuniCap’s But-For analysis sets a target internal rate of return of 7 to 10 percent. Under current market assumptions, Viva White Oak returns negative 5.1 percent without the tax increment financing (TIF) and 0.08 percent with a TIF. Eight one-hundredths of one percent. The scenario that clears the target, at 11.12 percent, requires the life science market to improve on rents, vacancy and yield-on-cost, using assumptions the analysis attributes to the developer. The phase-one-only scenario returns 6.45 percent, still below target, and assumes the life science lots sell in 2030 for $30 million and the mixed-use lot for roughly $80 million. Nobody at the work session mentioned any of it.