This story was updated at 9:25 a.m. Feb. 27, 2023, to clarify the tax structure listed for the urban district in Friendship Heights.
County Councilmember Andrew Friedson (D-Dist. 1) is proposing a new urban district for Friendship Heights, a neighborhood along Metro’s Red Line that straddles the Washington, D.C., border.
The Friendship Heights area, once known as a high-end shopping and retail hub, has seen less economic activity in recent years. Supporters of the urban district proposal say it will help revitalize the neighborhood through branding, marketing, and creating a better identity of what the area represents.
According to a bill proposed by Friedson that is scheduled to be introduced during Tuesday’s council meeting, a Friendship Heights Urban District Advisory Committee of five members would also be created. It would consist of two commercial property owners chosen by the Friendship Heights Alliance—a nonprofit organization dedicated to furthering business and commercial activity in the neighborhood.
It would also consist of one residential renter in the district, one residential property owner and one business owner nominated by the Greater Bethesda Chamber of Commerce. Friedson’s proposal would work in tandem with a proposed business improvement district on the Washington, D.C., side.
Currently, there are three urban districts in Montgomery County: Bethesda, Silver Spring and Wheaton.
Natalie Avery, director of strategy and engagement for the Friendship Heights Alliance, said in an interview that an Urban Land Institute report from 2021 looking at how to revitalize Friendship Heights was a key catalyst in looking at a business improvement district and urban district for the neighborhood.
The business improvement district and urban district would aim to do the same thing; the former are used in neighborhoods throughout Washington, D.C., and D.C. Ward 3 Councilmember Matt Frumin has introduced a bill aiming to establish a business improvement district on the D.C. side of Friendship Heights.
With more housing coming to Friendship Heights, it’s important that local leaders focus on the area’s shift from a destination shopping center to one that serves those who live in the neighborhood, Avery said. There will still be some of that, but the legislation aims to create a neighborhood and business area that serves residents, she added.
“I’m not an economist … but the face of retail is just changing everywhere, and here, we need to keep up with that changing retail environment,” said Cindy Gibson, Friedson’s chief of staff, about the proposal.
The legislation also shows taxes within the district, including “$0.165 per square foot for each net rentable square foot” on commercial properties, $120 per motel and hotel rooms, and $120 per unit for residential properties that have five or more units. Residential units that make 100% of the area median income or less are exempt from the tax, also known as the “commercial district charge.”
According to the county’s Department of Housing and Community Affairs, the area median income is just under $100,000.
Avery said the taxes are based on square footage—versus other urban districts in the county, which don’t use square footage—to stay consistent the components of D.C.’s business improvement district for Friendship Heights.
Money collected within Montgomery County urban districts are typically spent on streetscape improvements and additional public amenities like seating, plants, public art and other cultural programming and activities, according to the county’s budget page for them.
In the current budget, about $10.4 million has been allocated for the county’s three urban districts, and more than 60 full-time equivalent employees work within them.
A public hearing for the bill is scheduled for March 14 at 1:30 p.m. It will then be referred to the County Council’s Economic Development committee.
