AGENDA ITEM 20
September 21, 2010
Public Hearing
MEMORANDUM
TO:
FROM:
County Council
\iMichael Faden, Senior Legislative Attorney
SUBJECT:
Public Hearing:
Expedited Bill 44-10, Room Rental and Transient Tax ­
Exemption - Corporate Facility
Expedited Bill 44-10, Room Rental and Transient Tax Exemption - Corporate Facility,
sponsored by the Council President at the request of the County Executive, was introduced on
July 27, 2010. A Management and Fiscal Policy Committee worksession is tentatively
scheduled for October 4 at 10 a.m.
Bill 44-10 would exempt a corporate lodging facility from the County's hotel-motel tax if
the facility supports that company's headquarters, campus, training facility, or conference
facility; provides lodging exclusively for that company's employees, contractors, vendors, and
other business invitees; and does not offer lodging to the public. As the Legislative Request
Report on ©4 noted: "At this time, the County is aware of one facility that this amendment
would impact, the Lockheed Martin Center for Leadership Excellence (CLE). Lockheed
Martin's annual transient room taxes for the CLE are approximately $450,000." Also see the
OMB fiscal impact statement on ©9.
In 2010 the state legislature enacted a similar law, HB 855 (see ©7-8), exempting this
kind of facility from the state sales tax at an estimated state revenue loss of $370,900.
This packet contains:
Expedited Bill 44-10
Legislative Request Report
Memo from County Executive
Similar state law
Fiscal Impact Statement
F:\LAW\BILLS\I 044 Room Rental And Transient Tax\Public Hearing Memo.Doc
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Expedited Bill No. -,-44--,-1
O~
_____---:-_
......
Concerning: Room Rental and Transient
Tax - Exemption - Corporate Facility
Revised: 7-21-10
Draft No. _1_
Introduced:
July 27.2010
Expires:
January 27.2012
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective:
Julv
1.
2010
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request of the County Executive
AN EXPEDITED ACT
to:
(1)
exempt certain corporate facilities from the County room rental and transient tax;
and
(2)
generally amend the law authorizing the County room rental and transient tax.
By amending
Montgomery County Code
Chapter 52, Finance
Section 52-16
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface bracketsTI
*
*
*
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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Expedited Bill No.44-1 0
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Sec.
1.
Section 52-16 is amended as follows:
52-16.
Room rental and transient tax.
*
following meanings:
*
*
(b) The following words and phrases, when used in this Section, have the
*
*
*
Broker:
A person, other than the owner or operator of a hotel or motel,
that receives payment for hotel or motel accommodations from a
transient who is subject to tax under subsection (a).
Hotel
or
motel:
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(1) Any hotel, inn, hostelry, tourist horne or house, motel, apartment
hotel, rooming house, or other lodging place that offers for
compensation sleeping accommodations in the County to 5 or
more transients at anyone time.
(2)
A hotel or motel does not include:
(A) a hospital, medical clinic, nursmg horne, rest horne,
convalescent horne, assisted living facility, or horne for
elderly individuals; [or]
(B) a facility owned or leased by an organization that is
exempt from taxation under section 501(c)(3) of the
Internal Revenue Code if the primary use of the facility is
other than housing overnight guests[.]; or
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lodging facility operated solely to support the
headquarters, campus, training facility, or conference
facility, of the corporation that owns the facility, which
offers lodging solely for that corporation's employees,
o
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Expedited Bill No.44-IO
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contractors, vendors, or business invitees, and does not
offer lodging to the public.
Hotelkeeper:
A person that:
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(1)
(2)
owns or operates a hotel or motel; or
acts as a broker.
*
Sec. 2.
*
*
Expedited Effective Date.
The Council declares that this Act is necessary for the immediate protection of
the public interest. This Act takes effect on the date when it becomes law, and
applies to any tax levied under County Code Section 52-16 on or after July 1,2010.
Approved:
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Nancy Floreen, President, County Council
Date
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Approved:
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Isiah Leggett, County Executive
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Date
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This is a correct copy o/Council action.
Linda M. Lauer, Clerk of the Council
Date
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Tax\BilL
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LEGISLATIVE REQUEST REPORT
Bill 44-10
Room Rental and Transient Tax - Exemption - Corporate Facility
Description:
The proposed amendment to County Code Section 52-16 seeks to clarify that a
lodging facility that is owned by a company and exists for the purpose of supporting that
company's operations and is used exclusively by its staff, contractors, vendors and other invitees
is not considered to be a hotel, and, as such, is not subject to the County's transient room tax.
Problem:
Transient lodging facilities that are owned by a private company and used solely to
accommodate its staff, contractors and vendors are currently required to pay the County transient
room tax, although they are not open to the general public.
Goals & Objectives:
To help Montgomery County companies be competitive in bidding on
federal government contracts by ensuring that they are not required to pay the County transient
room taxes for lodging facilities that are for the exclusive use of their staff, contractors, vendors
and other invitees and that are not open to the general public.
Coordination:
Department of Economic Development
Fiscal Impact:
At this time, the County is aware of one facility that this amendment would
impact, the Lockheed Martin Center for Leadership Excellence (CLE). Lockheed Martin's
annual transient room taxes for the CLE are approximately $450,000.
Economic Impact:
The CLE has created 175 new permanent jobs in the County. From April
through December of 2009, the CLE brought 9,000 Lockheed employees, contractors, vendors
and other invitees to Bethesda. They generated 6,000 spillover room nights in County hotels and
substantial new revenues for County retail, restaurant and service establishments. According to
Lockheed figures, the projected total economic impact of its overall Montgomery County
operations from direct and induced employment for the period 2007 - 2009 was $7.1 billion.
Experience Elsewhere:
In the 2010 Maryland General Assembly, legislation (HB 855) was
passed that provides an exemption under the State sales and use
tax
for the "sale of a right to
occupy a room or lodgings as a transient guest at a dormitory or other lodging facility that is
operated solely in support of specified facilities or campuses, that provides lodging solely for
employees, contractors, vendors, and other invitees of the corporation that owns the dormitory or
lodging facility, and that does not offer lodging services to the general public."
Sources of Information:
Corinne Rothblum, Department of Economic Development
240-777 -2011; corinne. rothblum@montgomervcountvmd.gov
Mike Coveyou, Department of Finance
240-777 -8878; mike.coveyou(mmontgomerycountymd.gov
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3:
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OFFICES OF THE COUNTY EXECUTIVE
Isiah Leggett
County Executive
lk
61>
IJ1;1
.J
f'
Timothy
L.
Firestine
. ChiefAdministrative Officer
lVIEIHORANDUlVI
June 21, 2010
057656
TO:
FROM:
SUBJECT:
N
aney
Floreen, President, County council)
~f---­
Isiah Leggett, County Executive
-P/
~
Proposed Amendment to County Code Section 52-16 - Room Rental and
Transient Tax.
I am transmitting for Council introduction a bill that amends County law
. governing the County's transient room tax. Specifically, the bill clarifies that a lodging facility
that is owned by a company and exists for the purpose of supporting that company's operations
and that is used exclusively by its staff, contractors, vendors and other invitees is not considered
to be a hotel and is not subject to the County's transient room tax.
The Maryland General Assembly recognized this distinction during the 20 10
session.
It
passed legislation (HB 855) that provides an exemption under the State sales and use
tax for the "sale of a right to occupy a room or lodgings as a transient guest at a dormitory or
other lodging facility that is operated solely in support of specified facilities or campuses, that
provides lodging solely for employees, contractors, vendors, and other invitees of the corporation
that owns the dormitory or lodging facility, and that does not offer lodging services to the general
public." To synchronize the attached bill with the 2010 State legislation, the effective date of the
billis retroactive to July 1, 2010
At this time, the County is aware of one facility that falls into this category -
Lockheed Martin's recently constructed Center for Leadership Excellence (CLE) on the campus
of its corporate headquarters in Bethesda. The $110 million CLE provides a high-security, full
service, state-of-the-art training facility with 183 single occupancy sleeping rooms that are for the
exclusive use of Lockheed Martin employees, contractors, vendors and other invitees. The
Defense Contract Audit Agency requires the company to use its internal employee credit card
system to allocate charges to the appropriate federal contract (Lockheed Martin has an agreement
to charge the federal
per diem
rate in all of its federal contracts). As a consequence, since
opening in April 2009, the CLE has been treated as a hotel and has been subject to the County's
room rental transient tax, even though
it
is not open or accessible to the general public and is not
operated on a for profit basis.
101 Momoe Street· Rockville, Maryland 20850
240-777-2500 • 240-777-2544 TTY· 240-777-2518 FAX
www.montgomerycountymd.gov
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Nancy Floreen
June 21, 2010 .
Page 2
In
these challenging economic times, it is critically important that the County
create an enabling business environment, that we identify and address unwarranted impediments
to private sector growth, and that we help our companies be competitive in bidding on federal
government contracts. I ask that you introduce this bill on my behalf and thank you for your
prompt consideration.
Attachments
cc:
Jennifer Barrett, Director; Department of Finance
Joe Beach, Director, Office of Management and Budget
Kathleen Boucher, Assistant County Administrative Officer
Jennifer Hughes, Special Assistant to the County Executive
Steve Silverman, Director, Department of Economic Development
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Martin O'Malley, Governor
Ch.706
Chapter 706
(House Bill 855)
AN ACT concerning
Sales and Use Tax - Exemption - Lodging at
ft
Corporate Training Center
1ft
M8fttg8m8l"Y
C
8Uftty
MC
aa
10
FOR the purpose of providing an exemption under the sales and use tax for the sale of
a right to occupy a room or lodgings as a transient guest at certain facilities
~
@@l't~i:ft
@€Ht:ftty
operated
}:lriM~rity
in
support of certain facilities or campuses;
and generally relating to a sales and use tax exemption for the sale of certain
lodging at certain facilities.
BY adding to
Article - Tax - General
Section 11-231
Annotated Code of Maryland
(2004 Replacement Volume and 2009 Supplement)
SECTION
1.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF
JYIARYLAND, That the Laws of Maryland read as follows:
Article - Tax - General
11-231.
THE SALES AND USE TAX DOES NOT APPLY TO THE SALE OF A RIGHT TO
OCCUpy A ROOM OR LODGINGS AS A TRANSIENT GUEST AT A DORMITORY OR
OTHER LODGING FACILITY ar
l\IQN'FQQl\mRY CQ'WNl'Y
THAT:
IS OPERATED
PRIUt..RIlSY
SOLELY IN SUPPORT OF A
CORPORATE OR ANY OTHER HEADQUARTERS, TRAINING, CONFERENCE, OR
AWARDS FACILITY OR CAMPUS;
PROVIDES
LODGING
PRRQQl\UNAN'FlSY
SOLELY
EMPLOYEES, CONTRACTORS, VENDORS, AND OTHER INVITEES OF
CORPORATION THAT OWNS THE DORMITORY OR LODGING FACILITY; AND
(1)
(2)
FOR
THE
-1­
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Ch.706
2010 LAWS OF MARYLAND
.
(3)
PUBLIC.
DOES NOT OFFER LODGING SERVICES TO THE GENERAL
SECTION 2. AND BE
IT
FURTHER ENACTED, That this Act shall take effect
July 1, 2010.
Approved by the Governor, May 20, 2010.
-2­
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sepl
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At\
OFFICE OF MAJ.'lAGEMENT A..'I\[D BUDGET
Isiah Leggett
COU/1ty
Executive
. Joseph
F.
Beach
Director
MEMORANDUM
September 2, 2010
058631
TO:
FROM:
SUBJECT:
Nancy Floreen, President. County Council
JO~~~C~
Expedited BiI144-10, Room Rental and Transient Tax. - Exemption - Corporate Facility
The purpose of this memorandum is to transmit a fiscal and economic impact statement to
the Council on the subject legislation.
LEGISLATION SUMMARY
The proposed amendment to County Code Section 52-16 seeks
to
clarify that a lodging
facility that is owned by a company and exists for the purpose of supporting that company's
operations and is used exclusively by its staff, contractors, vendors and other invitees is not
considered to be a hotel, and, as such, is not subject to the County's transient room
tax.
FISCAL AND ECONOMIC SUlVlMARY
Expedited Bil144-10 would exempt a corporate lodging facility from the Countys
hotel-motel tax if the facility supports that company's headquarters, campus, training facility, or
conference facility; provides lodging exclusively for that
company'~
employees, contractors, vendors,
and other business invitees; and does not offer lodging to the public. At this time, the County is
aware of one facility that this amendment would impact; the Lockheed Martin Center for Leadership
Excellence (CLE). Lockheed Martin's annual transient room taxes for the CLE are approximately
$450,000. As proposed, this legislation would be effective July 1,2010, therefore, the estimated
amount of revenue loss for FYI1 and future years would be $450,000 annually.
The CLE has created 175 new perrrianentjobs
in
the County. From April through
December of2009, the CLE brought 9,000 Lockheed employees, contractors, vendors and other
invitees to Bethesda. They generated 6,000 spillover room nights in County hotels and substantial
new revenues for County retail, restaurant and service establishments. According to Lockheed·
figures, the projected total economic impact of its overall Montgomery County operations from
direct and induced employment for the period 2007 -2009 was
.
$7.1 billion.
.
Office of the Director
101 Monroe Street, 14th.Floor • Rockville,
Malyland
20850 • 240-777-2800
www.montgornerycountyrnd.gov