PAYMENT IN LIEU OF TAXES (PILOT)

PILOTS are regulated by State law ( Sections 7- 501, et seq. of the Tax-Property Article of the Annotated Code of Maryland and County law and regulations (Section 52-24 of the Montgomery County Code and Section 52.18M of the Code of Montgomery County Regulations).

Three types of PILOTs in Montgomery County are:

• Standard PILOT ( Section 52-24(b) of the County Code)
• “By right” PILOT ( Section 52-24(c) of the County Code)
• WMATA PILOT ( Section 52-24A of the County Code)

Other PILOT provisions from the Tax-Property Article of the Annotated Code of Maryland. These sections are used most frequently, although others may apply.

• MD Tax-Property Code Ann. § 7-503. Housing for low-income families
• MD Tax-Property Code Ann. § 7-505. Governmentally subsidized rental housing
• MD Tax-Property Code Ann. § 7-506.1. Governmentally subsidized housing outside Baltimore City
• MD Tax-Property Code Ann. § 9-104. Homeowners’ tax credits; disabled veterans

Standard PILOT

Under the Standard PILOT, the County’s real property tax abatement is usually based on each affordable rental unit in the rental project; and the tax abatement is equal to the average County homeowner tax credit (adjusted annually) authorized under Section 9-104 of the Tax-Property Article of the Annotated Code of Maryland. The term of the PILOT is tied to the affordability period desired by Montgomery County.

PILOTS are administered under a Regulatory Agreement signed by the property owner and the County and recorded among the land records for the term of the PILOT.  The Regulatory Agreement includes the County’s specific requirements for receiving the PILOT, including among other things, the affordability requirement of the rental units and the reporting requirements that must be met during the term of the PILOT.

Standard PILOTS are not transferable. A request for a PILOT is analyzed to define the level of PILOT required using financial information required from the property owner.

The following information is needed to apply for a Standard PILOT:

1. Legal description of the property.
2. Project financial pro forma, including evidence of financial commitments for total project costs and financial need for the PILOT.
3. Project description including total number of units in the project and the number of affordable units; documentation demonstrating affordability of the units (such as rent rolls or LIHTC Covenants). The Regulatory Agreement can also provide the property owner’s commitment to the affordability levels required under the PILOT.
4. Demonstrate site control equivalent to fee simple title, 99-year lease, or option to purchase with no contingencies except financing.
5. Any other information or documentation reasonably required by the County to determine the applicant’s eligibility.

To apply for a PILOT please send the required information electronically to:
dhca.pilot@montgomerycountymd.gov

or by mail to:
Department of Housing and Community Affairs
1401 Rockville Pike, 4th Floor
Attn: PILOT Request
Rockville, MD 20852 ​

“By right” PILOT - Section 52-24(c) of the County Code

For “by right” PILOTS all County real property taxes are abated for a term of at least 15 years for a rental property owned or controlled by a non-profit if at least 50% of the units in the rental property are leased to households with incomes no greater than 60% of the area median income (AMI) for the Washington Metropolitan Statistical Area. An applicant for a “by right” PILOT must meet the requirements of Maryland law governing PILOTS.

“By right” PILOTS are administered under a Regulatory Agreement signed by the property owner and the County and recorded among the land records for the term of the PILOT.  The Regulatory Agreement includes the County’s specific requirements for receiving the PILOT, including among other things, the affordability requirement of the rental units and the reporting requirements that must be met during the term of the PILOT.

“By right” PILOTS may be transferable under certain conditions, including the transferee meeting all State and County PILOT requirements.

The following information is needed to apply for a “by right” PILOT:

1. Legal description of the property.
2. Project description concerning the total number of units in the project and the number of affordable units; documentation demonstrating affordability of the units (such as rent rolls or LIHTC Covenants).
3. Any other information or documentation reasonably required by the County to determine the applicant’s eligibility.

“By right” PILOTs are new as of March 28, 2022, under Section 52-24(c) of the County Code and  Section 52-18M of the Code of Montgomery County Code of Regulation.

To apply for a PILOT please send the required information electronically to:
dhca.pilot@montgomerycountymd.gov

Or by mail to:
Department of Housing and Community Affairs
1401 Rockville Pike, 4th Floor
Attn:  PILOT Request
Rockville, MD 20852

WMATA PILOT - Section 52-24A of the County Code

For “WMATA” PILOTs all County real property taxes are abated for a term of at least 15 years if the project meets the definition of a “qualifying development” which includes:

• 50% of the project consists of the construction of one or more high-rise residential apartment buildings (more than 8 stories above the ground)
• The land on which the project is located at a Metro station on land leased from WMATA
• Project owner provides at least 25% of the moderately priced dwelling units (MPDUs) required for the project under Chapter 25A of the County Code (the MPDU law) so that they are affordable to households whose income is no greater than 50% of AMI
• An applicant and the project meet the requirements of Maryland law governing PILOTS
• WMATA PILOTS are administered under the MPDU Declaration of Covenants required under Chapter 25A of the County Code which are signed by the property owner and recorded among the land records
• WMATA PILOTS have specific requirements concerning the workers constructing the project, including the requirement that at least 25% of the workers constructing the qualifying project are residents of the County while constructing the project
• WMATA PILOTS have specific quarterly reporting requirements

The following information is needed to apply for a WMATA PILOT:

1. Legal description of the property.
2. An Agreement to Build MPDUs required under Chapter 25A describing the total number of units in the project and the number of MPDUs at the required levels of affordability, including those required at 50% of AMIA copy of the WMATA lease.
3. Documentation concerning the workers constructing the project.
4. Any other information or documentation reasonably required by the County to determine the applicant’s eligibility.

To apply for a PILOT please send the required information electronically to: dhca.pilot@montgomerycountymd.gov

Or by mail to:
Department of Housing and Community Affairs
1401 Rockville Pike, 4th Floor
Attn: PILOT Request
Rockville, MD 20852