CAFR Report 1 Baltimore County Maryland Comprehensive Annual Financial Report For The Fiscal Year Ended June 30, 2020 Baltim

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Baltimore County
Maryland

Comprehensive Annual Financial Report
For The

Fiscal Year Ended June 30, 2020

Baltimore County, Maryland

Comprehensive Annual Financial Report

For The Fiscal Year Ended June 30, 2020

Prepared By The Office Of Budget and Finance

INTRODUCTORY

SECTION

COMPREHENSIVE ANNUAL FINANCIAL REPORT

BALTIMORE COUNTY, MARYLAND
FOR THE YEAR ENDED JUNE 30, 2020

TABLE OF CONTENTS

I. INTRODUCTORY SECTION

Letter of Transmittal III
Organizational Chart XVI
List of Principal Officials XVII
GFOA Certificate of Achievement XVIII

II. FINANCIAL SECTION

Independent Auditors’ Report 1

A. MANAGEMENT’S DISCUSSION AND ANALYSIS 4

B. BASIC FINANCIAL STATEMENTS

Government-Wide Financial Statements
Statement of Net Position 18
Statement of Activities 19

Fund Financial Statements

Governmental Fund Financial Statements
Balance Sheet 20
Statement of Revenues, Expenditures and Changes in Fund Balances 21
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances of Governmental Funds to the Statement of Activities 22
Budgetary Comparison Statement – General Fund 23

Proprietary Fund Financial Statements
Statement of Net Position 24
Statement of Revenues, Expenses, and Changes in Net Position 25
Statement of Cash Flows 26

Fiduciary Fund Financial Statements
Statement of Fiduciary Net Position 27
Statement of Changes in Fiduciary Net Position 28

Component Units Financial Statements
Statement of Net Position 29
Statement of Activities 30

Notes to Basic Financial Statements 31

C. REQUIRED SUPPLEMENTARY INFORMATION

Schedule of the County’s Proportionate Share of the Net Pension Liability and

Related Ratios – Employees’ Retirement System 84
Schedule of County Contributions – Employees’ Retirement System 85

Schedule of Changes in County’s Net Pension Liability and Related Ratios – Police
Fire and Widow’s Pension Plan (PFW) 86
Schedule of County Contributions – PFW Pension Plan 87
Schedule of Investment Returns – PFW Pension Plan 87
Schedule of Changes in Total Liability and Related Ratios – OPEB Trust 88
Schedule of the County’s Proportionate Share of the Net Pension Liability and 89
Related Ratios – OPEB Trust

I

COMPREHENSIVE ANNUAL FINANCIAL REPORT

BALTIMORE COUNTY, MARYLAND
FOR THE YEAR ENDED JUNE 30, 2020

TABLE OF CONTENTS
(continued)

D. COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES –
SUPPLEMENTARY INFORMATION

Governmental Funds
Schedule of Appropriations and Expenditures – Budget and Actual
– General Fund 92
Combining Balance Sheet – Nonmajor Governmental Funds 98
Combining Statement of Revenues, Expenditures and Changes in Fund Balance
– Nonmajor Governmental Funds 99
Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget
and Actual – Liquor License Fund 100
Internal Service Funds
Combining Statement of Net Position 101
Combining Statement of Revenues, Expenses and Changes in Net Position 102
Combining Statement of Cash Flows 103
Fiduciary Funds
Combining Statement of Fiduciary Net Position – Benefits Trust Funds 104
Combining Statement of Changes in Fiduciary Net Position
– Benefits Trust Funds 105

III. STATISTICAL SECTION

Financial Trends
Net Position by Component 107
Changes in Net Position 108
Fund Balances of Governmental Funds 110
Changes in Fund Balances of Governmental Funds 111
Unreserved Fund Balance and Revenue Stabilization Reserve Account Expressed
as a Percentage of General Fund Revenues and Transfers In 113
General Fund Revenues 114
General Fund Tax Revenues by Source 115
General Fund Expenditures and Transfers by Function 116

Revenue Capacity
Taxable Assessed Value and Estimated Actual Value of Taxable Property 117
Property Tax Rates – Direct and Overlapping Governments 118
Principal Property Taxpayers 119
Property Tax Levies and Collections 120

Debt Capacity
Ratios of Outstanding Debt by Type 121
Ratios of Net General Obligation (GO) Debt to Estimated Actual Value of Property
And Net GO Debt per Capita 122
Legal Debt Margin Information 123

Demographic and Economic Information
Demographic and Economic Statistics 124
Principal Employers 125

Operating Information
Full-time Equivalent County Government Employees by Function 126
Operating Indicators by Function 128
Capital Asset Statistics by Function 130

II

III

PROFILE OF THE COUNTY

The Reporting Entity and Its Services

The County is a corporate polity which performs all local governmental functions within its
jurisdiction, as there are no incorporated towns, villages, municipalities or other political subdivisions with
separate taxing authority. Under home rule charter since 1957, the County is governed by an elected
County Executive and a seven-member County Council with each serving separate executive and
legislative functions, respectively.

The Community College of Baltimore County, the Board of Education of Baltimore County, and the
Board of Library Trustees for Baltimore County are reported as discretely presented component units
because they are deemed to be fiscally dependent on the County. The component units are reported
separately within the County’s financial statements to emphasize that they are legally separate from the
County. The County and its component units provide the full range of municipal services contemplated by
statute or charter. This includes education, police and fire protection, sanitation, health and social services,
public improvements, planning and zoning, recreational and cultural activities, and general administrative
services.

Adopted Budget

The annual budget serves as the foundation for the County’s financial planning and control.
Pursuant to County Charter, the County Executive presents the capital and operating budgets to the County
Council during April of each year. The County Council may decrease or delete any items in the budget
except those required by the public laws of the State of Maryland and except any provision for debt service
on outstanding obligations or for estimated cash deficits. In its deliberations, the Council considers the
recommendations of the Spending Affordability Committee (Committee) consisting of three members of the
County Council and two other members from an area of specialty, such as finance, organized labor, etc.
On or before February 15 in each year, the Committee submits to the County Council and County Executive
a report with recommendations on fiscal goals or growth in the County budget to a level that does not
exceed the rate of growth of the County’s economy. The budget must be adopted by the affirmative vote
of no less than four members of the County Council on or before June 1 each year. The adopted budget
becomes effective July 1 and provides the spending authority at the program level for the County’s
operations.

As demonstrated by the statements and schedules included in the financial section of this report,
the County continues to meet its responsibility for sound financial management. A budget-to-actual
comparison is provided for the General Fund on page 23 as part of the basic financial statements for the
governmental funds. Additional information regarding the County’s budget can be found in Note 1 of the
notes to the basic financial statements and in schedules provided in the other supplementary information
section.

As part of the annual operating budget process, the County develops a six-year Capital
Improvement Program (CIP) consisting of the upcoming fiscal year’s appropriations (the “Budget Year”)
and the succeeding five-year program. The CIP is divided into two areas: the Metropolitan District, for all
water and sewer projects, and the Consolidated Public Improvements for all other capital projects. A major
source of funding for the CIP is borrowed funds. CIP bond appropriations appearing in the Budget Year
represent an authorization to borrow money. The cost to service this debt impacts the General Fund and
the Metropolitan District Fund and increases with the amount of outstanding debt.

IV

INFORMATION USEFUL IN ASSESSING THE GOVERNMENT’S ECONOMIC CONDITION

The information presented in the financial statements is perhaps best understood when it is
considered from the broader perspective of the specific environment within which the County operates.

Economic Condition

The County is situated in the geographic center of Maryland, surrounding the City of Baltimore
almost entirely. The County is the largest jurisdiction by population in a metropolitan area with more than
2.8 million people. The City of Baltimore and the County are entirely separate political units.

The County has the third largest land area of any political subdivision in the State of Maryland.
Within its 612 square miles (plus an additional 28 square miles of water with over 200 miles of shoreline)
are situated at least 29 identifiable, unincorporated communities which, as of 2010, ranged in population
from approximately 4,300 to 63,000. The County’s overall population grew 10% from 754,292 in 2000 to
827,370 in 2019. The 2020 population estimate for Baltimore County is 847,000. Today, the County has
the third highest population in the State of Maryland.

Healthcare and education, the sectors that generally report job stability and growth despite
economic downturns, are well represented in the County by five regional medical centers and five major
colleges and universities. BD Diagnostic Systems shares a zip code with one of the largest concentrations
of computer game developers on the East Coast. Headquarters for the Social Security Administration and
Centers for Medicare and Medicaid Services and a core of IT contractors form the Woodlawn Federal
Center, the epicenter of national health care reform implementation are located in the County. Major
operations of T. Rowe Price, Toyota Financial Services, Euler Hermes, Zurich America, Baltimore Life, and
Bank of America form a powerful finance-insurance community. Manufacturing holds its place with BD
Diagnostics, McCormick, Stanley Black & Decker, Lockheed Martin, AAI Textron, Middle River Aircraft and
Coty (formerly Procter & Gamble Beauty).

New Business and Real Estate Activity

The following section highlights a sampling of business and real estate activity in the County from July
2019 to June 2020:

CENTRAL BALTIMORE COUNTY

Towson Square – Towson Square includes a 75,000 square foot, 3,400 seat, 15 screen multiplex cinema
atop a three story, 850 space garage. In addition, seven restaurants are open. Towson Square has brought
870 jobs related to the completed project. The project owner, Retail Properties of America, is now
redeveloping the former Towson Circle building and the site across the street into Towson Circle East. The
two projects will be integrated in design and street level amenities.

Towson Circle East – Retail Properties of America, the owner of Towson Square is now redeveloping the
former Towson Circle building and the site across the street into Towson Circle East. The two projects will
be integrated in design and street level amenities. This project is a $125 million mixed-use development
located at the traffic circle at York and Joppa Roads. The project includes 371 mid and high-rise apartments,
developed by Avalon Bay Communities, which accepted their first occupants in February 2020. The project
also includes over 24,000 square feet of new and refurbished retail space with some underground parking.
Shake Shack has been announced as the first tenant for the retail space and should occupy in late 2020 or
early 2021.

Towson Residential – Since 2008, three major projects consisting of over 1,200 new luxury apartments
have been completed with around 400 currently under construction. A $60 million, 611 bed, 248 unit student
housing project with first floor retail is under construction at 101 York Road. Federal Realty Investment
Trust’s project, The Flats at 703, a 105 unit apartment project located at 703 Washington Avenue, is
completed and fully leased. Towson Mews, 34 luxury townhomes developed by Evergreene Homes is near
completion.

V

Towson Row – This 1.2 million square foot mixed-use development situated at downtown Towson’s
southern gateway is bounded by York Road, Towsontown Boulevard, Chesapeake Avenue, and
Susquehanna Avenue. When fully developed, this $350 million project will offer roughly 145,000 square
feet of Class A office space, 250 market rate apartments and condominiums, 220 limited service and
extended stay hotel rooms, 985 beds for student housing, and roughly 140,000 square feet of commercial
space, including shops, restaurants, and a Whole Foods grocery store. The first phase of the student
housing portion of the development, which includes the Whole Foods garage, is expected to be completed
in 2020. Construction has begun on the Whole Foods market.

Towson University/Downtown Towson – Towson University has leased the former Towson Armory and
is renovating the space to accommodate a number of programs and offices focused on community
engagement and outreach, entrepreneurship, continuing education and workforce development. The
Armory will provide a place for students to engage with the business community as young entrepreneurs,
interns and future workers. The University has also purchased 401 Washington Avenue, across the street
from the Armory. The 130,000 square foot office building will be used for university administrative functions,
bringing Towson University employees into the heart of Towson.

Stanley Black & Decker Global Tools & Storage – The company signed a lease for an additional 92,000
square feet in the Greenleigh development in Middle River. 600 total employees will be located at
Greenleigh, 400 of which will be new employees hired by December 31, 2020 and the remaining 200 of
those employees are moving there from Towson. $8.5 million will be invested in the new space, including
real property improvements, furniture, fixtures, and equipment. The new space was necessary to
accommodate projected employment growth resulting from the two major purchases in the past few years
of the Newell Brands’ tool business and the Craftsman line of tools from Sears. These purchases helped
SB&D push deeper into the consumer and industrial equipment business sectors and extend its reach into
household brand name retail markets. Towson will continue to be the headquarters for Stanley Black &
Decker’s Global Tools and Storage business. The company currently occupies a total of 525,000 square
feet in the Towson area, split between the 31 acre campus they own at 701 E. Joppa Road and several
nearby leased properties. They currently employ 1,600 full-time employees and 350 private contractors.

The Shops at Kenilworth – Greenberg Gibbons is completing work on a $20 million renovation to The
Shops at Kenilworth, a landmark shopping destination in Towson, originally built in 1979. A brand new
Trader Joe’s opened on the upper level in 2017. A 3,600 square foot free-standing Felipe’s Mexican
Taqueria is under construction near the western lower level entrance. New shops in the center include:
Amaryllis, Kenilworth Wine & Spirits, Liza Byrd Boutique, Quiet Storm Surf Shop, TAC @ Kenilworth
(Summer Gallery), Wilkes & Riley, ZenLife Yoga Boutique & Juice Bar, longtime local boutique Ruth Shaw,
J Jill and Radcliffe Jewelers.

Towson Commons Retail – Affiliates of MFI and Woodmont Properties II are redeveloping 115,000 square
feet of retail space along York Road and Pennsylvania Avenue. Existing businesses, including CVS
Pharmacy, Chipotle, Hair Cuttery, Blaze Pizza, Brown Rice, New Generation Hot Pot, Insomnia Cookies,
First National Bank, C&R Pub, and Rosen, Sapperstein & Friedlander have opened and renovations are
underway for others.

U.S. Census Office – Towson was selected as the location for the 2020 U.S. Census. The office is creating
50 new jobs in an 8,000 square foot office building. This will be an 18 month term assignment for this
operation.

Mill Station – The former Owings Mills Mall site has been redeveloped as an outdoor shopping center
called Mill Station. This is a 575,000 square foot, $108 million project anchored by a new 148,000 square
foot Costco warehouse store. Other new tenants include an 111,000 square foot Lowe’s Home
Improvement store, Marshalls, Burlington, Homesense, Five Below and Giant Food. Other announced
tenants include: Mod Pizza, America’s Best Contacts & Eyeglasses, Mattress Warehouse, Sally Beauty,
Vineyard Elite and Village Nail Bar. The existing AMC Theatres has also been updated with new seating,
menus and technology.

VI

Metro Centre at Owings Mills – Metro Centre at Owings Mills is a $1 billion mixed-use, transit oriented
special taxing district that is being developed by Owings Mills Transit, LLC. At completion, the project will
support more than 1.2 million square feet of commercial office space, 300,000 square feet of
complementary retail space and 700 residential units and a full service 225 room hotel amenity. The project
adjoins the Owings Mills Metro stop and two commuter parking garages with a total of 5,277 spaces. The
project includes a County library, community college branch, and two five story upscale buildings with 232
apartments that are over 90% leased and ground floor retail and restaurant space. Salontra Select Suites,
Suya Spot, Club Pilates, and Hook and Reel, are the newest tenants. Construction is almost complete on
a new seven story apartment building, which will bring the total number of apartments at Metro Centre to
350. The 114 Class A unit building called The Met at Metro Centre is complete and has begun leasing. A
fourth apartment building, “The Willard,” with 237 Class A units, is in the design phase. A new ten story,
225 room full service Marriott International hotel with conference facilities and a 1,000 seat ballroom is
under construction and expected to open in 2021. The project represents a $70 million investment.

Foundry Row – This $140 million mixed-use development in Owings Mills, anchored by a Wegmans
grocery store, includes 356,000 square feet of retail space and 48,000 square feet of office space.
Businesses including LifeBridge Health, LA Fitness, DSW, Ulta Beauty, Poke Bowl, Panera Bread, Zoe’s
Kitchen, Smashburger, Nalley Fresh, Mission BBQ, Chipotle, La-Z-Boy Furniture, Old Navy, Floyd’s 99
Barbershop, Hair Cuttery, Sleep Number, Muse Paint Bar, Amazing Lash and Home Goods have all joined
Wegmans as tenants.

Avalon Foundry Row – In October 2019, the Northern Virginia-based AvalonBay Communities broke
ground on the four-star, 437 unit, Avalon Foundry Row which is adjacent to the shopping center. Upon
completion in early 2021, the property will feature studio to three bedroom apartments with modern
amenities.

Hunt Valley Towne Centre – Avalon Hunt Valley, a $70 million upscale apartment complex on the eastern
end of Hunt Valley Towne Centre, is fully occupied. The Class A apartment building offers a variety of
amenities, including a dog park, a gym, and a game room. The new apartment community sits above 30,000
square feet of retail. Towne Centre owner Greenberg Gibbons has announced a $150 million plan for the
expansion of the Towne Centre. The plan would include apartments, office space and a hotel in the
northwest corner of the property, behind the former Sears building.

Bank of America – Bank of America (BofA) plans to add 600 jobs at its call center in Hunt Valley by the
end of 2020. These jobs will join the 300 jobs that the bank added at the two-building complex in 2017. The
new positions will be primarily call center and staff support positions and will bring the bank’s employee
count at the site up to 1,500 over the next two years. BofA has taken over new space, upgraded interiors,
and increased parking at the 377,000 square foot complex they own at 11333 McCormick Road. Merrill
Lynch, Bank of America’s wealth management division, also has offices at the site.

226 Schilling Circle – Merritt Properties has acquired 226 Schilling Circle, a 98,000 square foot former
McCormick office building. Merritt will redevelop the building into Schilling Green III, a three story Class A
office that is intended for LEED Silver certification.

First Financial Federal Credit Union of Maryland – This bank purchased and occupied the 47,600 square
foot former JMT office building at 72 Loveton Circle.

Kaiser Foundation Health Plan of the Mid-Atlantic States – This company is investing over $200 million
in a new regional medical hub project in Timonium. The 227,000 square foot facility on five acres will include

VII

25 medical specialties and employ 350 people upon opening with another 150 expected to be added within
ten years. Construction is underway and the project is expected to open in 2022.

Point Breeze Credit Union (PBCU) – PBCU is constructing a new two story, 20,000 square foot addition
to their current corporate offices at 11104 McCormick Road. The addition will increase its headquarters to
40,000 square feet while consolidating all of the credit union’s administrative functions under one roof.

Tradepoint Atlantic – In 2014, Tradepoint Atlantic acquired the former steel production facility at Sparrows
Point. The 3,250-acre property is being redeveloped for industrial and distribution use. In summer 2018,
Tradepoint Atlantic purchased Sparrows Point Shipyard for $33.5 million to expand its maritime operations.
For more information about current tenants at Tradepoint Atlantic, see Industrial Redevelopment section.

Aviation Station – In September 2019, local real estate developer Blue Ocean acquired the former Middle
River Depot, a two story, 1.92 million square foot facility on over 50 acres in Middle River. Located only
hundreds of yards from the Middle River MARC train station, the developer hopes to acquire Transit
Oriented Development (TOD) status from MDOT. In addition, Aviation Station was awarded the highest
allocation of state historic tax credits available. The proposed mixed-use development includes a family-
friendly focus with athletic playing fields, retail, office and light manufacturing spaces, and parking for
hundreds of vehicles. The development is expected to create hundreds of new jobs.

Lockheed Martin – Lockheed Martin’s contract with the U.S. Navy was renewed for $235 million to
manufacture missile firing systems used on warships at Lockheed’s facility in Middle River. The deal
extends through 2022 and could be worth as much as $356 million if the Navy adds optional orders. The
flexible missile system can launch a variety of missiles.

Greenleigh at Crossroads – Greenleigh at Crossroads broke ground in May 2016 on a $750 million mixed-
use community of offices, shops, apartments, single-family homes, and a hotel. The project will occupy 250
acres of the 1,000 acre Baltimore Crossroads and is expected to build out over 10 to 15 years. Greenleigh
plans currently include 1,800 detached homes and townhomes, three mid-rise office buildings totaling
300,000 square feet, another 350,000 square feet in single-story office buildings, 116,000 square feet of
retail, and a 120-room Springhill Suites by Marriott hotel.

Eisai Inc. – The U.S. pharmaceutical subsidiary of Tokyo-based Eisai Co. Ltd., signed a 40,000 square
foot building lease within Greenleigh at Crossroads. The company expects to relocate approximately 55
employees from its existing location in Baltimore City in 2020 after construction is completed.

Mistral Group – This company, which provides practical system solutions through adaptation and
integration of Israeli defense technologies and U.S. engineering and manufacturing, relocated to White
Marsh to combine and establish a new manufacturing facility, resulting in 50 new jobs company-wide.

MedStar Franklin Square Hospital – In July 2017, MedStar Franklin Square Medical Center was approved
by the Maryland Health Care Commission to move forward with a $70 million project to replace old surgical
facilities with a new two story 75,000 square foot building and 14 operating rooms to be constructed on the
hospital’s Rosedale campus. The work began in October 2017 with the demolition of an old building that
sat on the site. About $40 million for the project will come from tax exempt debt financing, $10 million will
come from hospital operations, and the other $20 million will come from several private and public
investments. The project is intended to replace Franklin Square’s current surgical facilities and will be
constructed over the next two years. In January 2018 MedStar Orthopedic Institute opened the Orthopedic
and Sports Medicine Center at MedStar Franklin Square Medical Center. Located in 10,043 square feet of
space, the practice is dedicated to bone, joint, and soft tissue injuries, and includes seven orthopedic and
sports medicine experts, along with rehabilitation therapy in one centralized location. The new center is
located in the Medical Arts building across from the main hospital on Franklin Square Drive. It will include
18 exam rooms, two imaging suites, and an expansive waiting room with an area for children to play. The
location is convenient to communities of Harford County and Eastern Baltimore County–including Perry
Hall, Nottingham, Dundalk, Middle River, and Parkville.

VIII

Social Security Administration (SSA) – Social Security headquarters in Woodlawn announced that they
will receive a $150 million Congressional Appropriation for major renovations of their main administrative
building. SSA employs approximately 11,000 at this site and this significant investment ensures that
Baltimore County remains home to the Social Security Administration for decades to come.

iCyberCenter@bwtech – Located at UMBC’s business incubator, the iCyberCenter is the first global cyber
incubator that will attract international companies to the Maryland market, and offer connections with
existing organizations. Currently, there are eight national and international companies participating in the
program.

Guinness Open Gate Brewery and Barrel House – In 2017, Diageo announced that the first Guinness
brewery in the United States in over 50 years would be located in Relay, Maryland, in a former Diageo
spirits bottling facility. The $80 million brewery project, which opened fully in 2018, created over 200
production and hospitality jobs. The brewery produces Guinness Blonde Lager as well as experimental
brews. In 2019, the brewery announced national distribution of the first beer developed at Open Gate, Over
the Moon Milk Stout. The Open Gate Brewery attracted over 300,000 visitors in its first year of operation.

Beltway Business Park – Merritt Properties constructed two new buildings on Twin Springs Road in fall
2017 and spring of 2018. Both buildings are about 40,000 square feet each, and the total investment
including land was $6.2 million. The first building opened for new tenants in 2019.

Junior Achievement – In June 2020, Junior Achievement plans to relocate to a new facility in Beltway
Business Park, which will more than double their existing space from 12,600 square feet to 28,800 square
feet. They expect to increase the number of employees from 15 to 25. The new facility will require over $3
million in buildout and renovations.

Good Wrappers – Good Wrappers recently purchased 3901 Washington Blvd for expansion of their
operation. The $2.6 million expansion will provide 160,000 square feet of additional space. As a result of
the expansion, they more than doubled their employment base to 55 employees.

Heavy Seas – The brewery is in the process of expanding and renovating their taproom in Halethorpe. The
expansion will increase the size of the taproom seven-fold and double the size of the outside patio. The
brewery also is constructing a new, 15-barrel innovation brew house that will allow the team to create limited
releases exclusively for the taproom. They expect to add four more positions to their existing workforce of
55 employees. Completion is expected sometime in 2020.

Vanns Spices – In Spring 2019, Vanns Spices relocated to a new facility in Baltimore County which doubled
their existing space from 30,000 square …

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