Part IV: Priority Funding Areas

Part IV: Priority Funding Areas & Their Role in the Planning Process
May 12, 2008

1. What is a “Priority Funding Area?”
A “Priority Funding Area” is a developed or planned development area within which certain State agencies will prioritize investments to support growth and economic development. It is a “Smart Growth” planning concept that is intended to target State resources to support economic development and growth in areas where those investments will promote revitalization of older neighborhoods, encourage infill development and planned expansion of existing developed areas, and discourage scattered or “leap-frog” development in environmentally sensitive rural areas.

The legislation that created Priority Funding Areas, or PFA’s as they are often called, was Senate Bill 389, which was part of the “Smart Growth Act” adopted during the 1997 Legislative Session. The legislation applies to all State agencies, but has specific requirements for certain assurances, guarantees, grants, credits, tax credits, loans, and other financial considerations offered by the following State agencies:
  • A. Maryland Department of Transportation (major capital projects, with the exception of existing transportation facilities and planning projects)
  • B. Department of Housing and Community Development
  • C. Department of Business and Economic Development
  • D. Department of the Environment
  • E. Department of General Services
The original bill also specified the criteria to determine which areas within the State could be designated as Priority Funding Areas. Initially, those areas included all incorporated municipalities, areas located inside the Baltimore and Washington Beltways, neighborhoods designated for revitalization by the Department of Housing and Community Development, Enterprise and Empowerment Zones (a special program that was created and funded under the Clinton Administration), and certified Heritage Areas within county-designated growth areas. The bill authorized Counties to designate PFA’s in certain areas outside municipal boundaries that met certain criteria, such as areas with industrial zoning, rural villages as identified in the County’s Comprehensive Plan, existing communities within county-designated growth areas that were established prior to January 1, 1997 and were served by public water and sewer, and certain other areas. While all incorporated municipalities were automatically designated as PFA’s, the designation only applied to those areas already within the municipality or annexed prior to January 1, 1997. Any areas annexed by a municipality after January 1, 1997 (regardless of whether or not they were located within a County PFA) may be added to the municipality’s PFA only through an amendment process that is administered by the MD Department of Planning. This process includes certain criteria that must be used to determine if a proposed new land area is eligible to qualify as a PFA.

For land intended for residential development, these criteria include consistency with the Comprehensive Plan (a basic criterion for all PFA designations), demonstrated need for residential development based on a Development Capacity Analysis conducted by MDP, provision of public and/or community water and sewer service, and a permitted average zoned development density of 3.5 units per acre (for properties intended for residential development). For land intended to be developed for nonresidential uses, the area must be designated for planned water/sewer service in the County’s 10 year Water and Sewer Plan and the area must constitute an “employment area.” The Priority Funding Area bill also provides for a process to give special considerations to employment-generating areas that might not specifically satisfy the PFA eligibility criteria. Such requests must be approved by the “Smart Growth Coordinating Committee,” after consultation with the State Agency that oversees the financial assistance program(s) or approvals that may be needed or desired to support development of the site.

To apply a municipality’s PFA to a newly annexed area, the city must first establish that the eligibility criteria can be satisfied. Since MDP must ultimately review and concur with the petition, early coordination with MDP staff prior to submitting a request for expansion of a PFA can be helpful. Once the municipality determines that it wishes to add annexed lands to its PFA, it must provide MDP with a request, a map of the area to be added, and its justification for inclusion. If MDP concurs with the request, the agency’s official PFA maps will be updated. If MDP does not concur, the annexation may be added to the official PFA map as a “comment area.” Such a classification would require approval of the Smart Growth Coordinating Committee for any needed or desired funding assistance or approvals by the affected State Agencies.

2. How Should PFAs Be Used by the Planning Commission?
Since the PFA boundaries can affect various State Agency approvals and funding support for development activity, the PFA should be considered in the Comprehensive Planning process when determining future growth areas for the community and when determining where infrastructure improvement investments should be made to support future growth. Since the inclusion of planned water and sewer improvements in the County’s 10-year Water and Sewer Plan is an important consideration for PFA boundary amendments, the municipality should make sure that it reports any and all such planned improvements to the County and that the County includes those improvements in its updates to the Water and Sewer Plan. The PFA also is a consideration for annexation petitions, rezoning petitions, and review of subdivision and site plans, especially when the Planning Commission will be involved in those approvals.

It may be difficult at times to determine how to use the PFA boundaries in making a specific development or annexation decision. Should a PFA amendment be requested for a proposed new development, or should the development be denied simply because it is not in a PFA? Ultimately, the PFA is a tool to implement the Comprehensive Plan when managing the growth and development of a community. Therefore, the Comprehensive Plan should be the ultimate driving force in determining where and when to amend the PFA. That is one of the reasons why the Municipal Growth Element was added to the list of required elements by House Bill 1141. Municipalities should use their Municipal Growth Elements to identify desired future growth areas outside their current boundaries, which will serve as a justification for expansion of the PFA when those areas are annexed and developed. In that way, issues about coordinated expansion of supporting infrastructure and the timing and financing of those improvements can be addressed. This process also gives the Planning Commission an important opportunity to influence the PFA process.