Agenda Item 5
May 7, 2013
Action
MEMORANDUM
TO:
FROM:
County Council
~ ~lenn
Orlin, Deputy Council Staff Director
~
Michael Faden, Senior Legislative Attorney
Action:
Bill 39-11, Taxation - Development Impact Tax - Exemptions
....w.\Itlnda McMillan, Senior Legislative Analyst
SUBJECT:
Government Operations and Fiscal Policy Committee recommendation: enact with
amendments.
Bill 39-11, Taxation - Development Impact Tax - Exemptions, sponsored by
Councilmembers Floreen and Rice, then-Council Vice President Navarro, and Councilmember
Ervin, was introduced on December 6, 2011. Bill 39-11 would exempt the market-rate rental
dwelling units in any development which consists of at least 25% affordable housing units from
the transportation and school development impact taxes.
A public hearing was held on January 24,2012 (see testimony, ©17-24). Representatives
of the Housing Opportunities Commission, Maryland-National Capital Building Industry
Association, and Montgomery Housing Partnership all urged that the Bill be broadened to cover
sale as well as rental units. Attorney Jody Kline also urged that the Bill exempt productivity
housing units in non-residential zones. Jim Humphrey of the County Civic Federation opposed
the Bill, suggesting that the Council revisit it when the County's fiscal situation improves. Also
see the letter from the Walter Johnson cluster PTA on ©25-26, opposing the diversion of school
impact tax funds.
Government Operations and Fiscal Policy Committee worksessions were held on
February 25 and April 4, 2013. At the first worksession, Committee members directed Council
staff to develop estimates of foregone impact tax revenue, assuming that the bill would not apply
to already approved subdivisions or to any development on public land, and assuming various
limits on the exemption available in a given year and various sunset provisions.
Fiscal impact estimates
OMB
An OMB/Finance Department fiscal and economic impact statement (see ©5-14)
concluded that the exemption allowed under this Bill could result in an impact tax revenue loss
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of as much as $56.7 million. Council staff believed that this estimate may be substantially
overstated because, among other reasons:
• it assumed that no transportation impact tax credits would be granted on account of the
housing built in specific areas with major transportation programs; and
• it appears not to take into account a provision in current law (County Code §52-90(d))
which reduces the school impact tax by 50% for any non-exempt dwelling unit located in
a development where at least 30% of the dwelling units are MPDU's or other affordable
units.
The OMB fiscal impact statement calculated that the impact tax revenue loss per added
affordable housing unit in selected areas would range from $38,525 to $446,227, and would
average $89,449. The breadth of these estimates suggests the difficulty of generating them. This
also assumes, as OMB noted, that this exemption will give developers sufficient incentive to
actually use it, about which Finance Department staff in the economic impact statement was
skeptical (see © 11-14).
Council staff
Using a simple method, Council staff initially estimated the impact tax
revenue loss from a hypothetical 100-unit 2-bedroom garden apartment development, not located
in an enterprise zone, in which the developer would increase the number of MPDU's from 15%
to 25% to take advantage of the exemption in this Bill. We calculated the impact tax lost per
1
each of the 10 added MPDU's, at current impact tax rates, to be $163,744.
At the February 25 worksession the Committee asked for Council staffs best estimate of
the fiscal impact of Bill 39-11 if the Bill were amended to e:?{clude both already-approved
subdivisions and developments on public land (where the value of the land was reduced as part
of a development agreement that requires a certain number of affordable units.) from its impact
tax exemption. Council staff conferred with staffs from M-NCPPC (Richard DuBose and
Roberto Ruiz), the Departments of Permitting Services (Reggie Jetter) and Finance (David Platt
and Mike Coveyou), and the Office of Management and Budget (Mary Beck) in developing our
assumptions and analysis.
One assumption we made is that the only developments that would take advantage of the
exemption would be multi-family residential or multi-family mixed-use projects. The Bill as
introduced exempts only rental units from the impact tax, and it is unlikely that a development of
rental attached or detached single family homes would use this provision.
Another assumption we used is that no additional affordable housing units resulting from
Bill 39-11 would occur in the next 3 years. Data from M-NCPPC and DPS indicate that 3 years
is the average time between site plan approval for multi-family residential buildings and the time
their impact tax payments would be due. If this Bill is enacted this spring, it likely would have
no effect - and so, would not reduce impact tax revenue -- in FYs 14-16. The revenue loss
would begin in FY17, the second-to-Iast year of the current CIP.
lThe calculation was: impact taxes per unit (school $11,358
+
transportation $7906
=
total impact tax/unit $19264) x
85 tax-forgiven units
=
$],637,440 total impact tax revenue 10ssll0 added MPDU's $163,744 revenue loss per
added MPDU.
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M-NCPPC's Center for Research and Information Systems estimated that, under current
master plans, about 55,000 multi-family units yet to be built are not already in the pipeline of
approved subdivisions. During 2001-2010 only 5.3% of the units were built in what are now
State-designated Enterprise Zones (EZ's), where impact taxes are not collected: \\'heaton CBD,
Long Branch, and Gaithersburg Town Center. However, this percentage does not include Silver
Spring CBD, which is no longer an EZ but is treated as one for impact tax purposes. The State is
considering establishing an EZ in Glenmont, and the County has already exempted the White
Flint special taxing district from payment of the transportation impact tax.
Taking these factors into account, Council staff believes that about 15% of all multi­
family units would not be subject to impact taxes, reducing the number of units in developments
where impact taxes would be levied to 46,750. Assuming that each of these developments must
meet the minimum 12.5% MPDU requirement - and knowing that the MPDU's themselves are
already exempt from impact taxes, as the law provides -the impact tax would apply to about
40,900 units. Finally, the number of units in kno\\<TI multi-family dwellings to be built on
County land - County Service Park West (Shady Grove) and the Public Service Training
Academy (Great Seneca Science Corridor) - is about 2,700, bringing the number of units where
the tax would be apply down to about 38,200.
The loss of impact tax revenue also depends on the split between garden apartments and
high-rise units, since the rates differ between them. The rates that will apply on July 1, when the
8.7% inflation index takes effect, are:
Garden apartments
School Impact Tax
Transportation Impact Tax
Metro Station Policy Areas
General District
$ 12,346/unit
$4,297/unit
$8,594/unit
High-rise apartments
$5,234/unit
$3,090/unit
$6, 1811unit
...
During 2001-2010, about 20% of multi-family units were garden apartments with two or
more bedrooms, and 80% were high-rise units (which, for impact tax purposes, also include
studio and one-bedroom garden apartments). We assumed that only 25% of the 38,200 units
would be located in the remaining, non-exempt Metro Station Policy Areas: Friendship Heights,
Bethesda CBD, Grosvenor, Twinbrook, Rockville Town Center, and Shady Grove; and that the
rest would be built elsewhere. Therefore, if all future multi-family developments were to take
the exemption offered by this Bill, amounting to about 5,500 more affordable units over the rest
of the County's buildout, the exemption would result in an aggregate impact tax revenue loss of
$477 million, or about $87,000 of revenue for each added affordable unit. (Calculated in a very
different way, OMB's Fiscal Impact Statement estimated a revenue loss of about $89,000 for
each added affordable unit.) Our calculations are shown below:
New affordable units:
38,200 total units x
0.125/0.875
:=
5,457
~
5,500 affordable units
School tax lost:
38,200 total units x 0.20 garden units x $12,346/unit
=
$94.3 million
38,200 total units x 0.80 high rise x
$5,234/unit
Total
=
$254.3
million
$160.0 million
3
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Transportation tax lost:
38,200 total units x 0.25
38,200 total units x 0.75
. 38,200 total units x 0.25
38,200 total units x 0.75
Total
=
$222.7
million
Metro x 0.20 gardens x $4,297/unit = $8.2 million
General x 0.20 gardens x $8,594/unit $49.2 million
Metro x 0.80 high rise x $3,090/unit $23.6 million
General x 0.80 high rise x $6,1811unit $141.7 million
Of course, for other reasons not every developer will increase its share of affordable units
in return for an exemption on its impact taxes. So the challenging part of any fiscal impact
estimate is to hypothesize how many developers in a given time period would be likely to take
this option. In our educated guess, not more than one building a year is likely to do so, and its
developer is likely to be a mission-driven organization rather than a conventional developer.
Thus an alternative way to estimate this Bill's fiscal impact is to make an assumption
about how many developments that use this option might be completed in any fiscal year and
what a likely building might consist of. For example, if a 175-unit multi-family building has 6
efficiency units, 115 orie-bedroom apartments, 50 two-bedroom apartments, and 4 three­
bedroom apartments (this distribution is modeled after a building in Wheaton), the minimum
requirement for MPDU's is 22 units (12.5%). The impact tax revenue loss would be $1.8
million if the building were located in a Metro Station Policy area, or $2.45 million if it were in
the General District. The cost for each added MPDU (22) in the Metro Station Policy Area
would be about $81,600, and in the General District about $111,520. Assuming that the impact
tax for one such building would be due in FYI7, we would reduce the impact tax revenue
estimates by about $2.1 million
in
FY17 and in FY18 (and every year thereafter), split
between the transportation ($1 million/year) and school ($1.1 million/year) taxes.
Issues and options/Committee recommendations
At the Committee worksessions held on February 25 and April 4, the Committee
discussed the following issues and recommended several amendments to the Bill, which are
incorporated in the Committee redraft on
©1-3A:
Balance In Council staffs view, the central issue this Bill raises is how best to allocate
scarce County funds to promote affordable housing. The Draft 2012 County Housing Policy,
now before the Planning, Housing, and Economic Development Committee, includes action
plans and recommendations for increased incentives such as this Bill would provide. The Policy
recommends that the County should "explore financial and other incentives for high-rise rental
development to make the construction of MPDU's more feasible, especially for projects
providing more than the minimum number of MPDU' s and for those providing units with more
bedrooms", that the County should "create and design incentives that will lead to the
construction of well-located affordable rental housing", and that the County should "consider
incentives such as increased heights, additional density, waiver of transportation and school
construction impact taxes and fees from the Washington Suburban Sanitary Commission
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(WSSC), and other fees and taxes that contribute to increased cost of developing affordable
housing."
The critical question then is whether an estimated $2.1 million each year is best spent to
increase the number of MPDU's in any single applicable rental building, or to send the same
amount of funds to the Housing Initiative Fund (HIF), where they could be targeted as a grant or
repayable loan for a specific project. The same funds could also be allocated to increase the
ceiling on non-HOC Payments in Lieu of Taxes (PILOT's). Many projects where the HIF is
used to provide interim or low cost financing in exchange for additional MPDU's result in
additional affordable housing at no or low cost to the County. Conversely, creating permanent
affordable housing that does not depend on an ongoing subsidy for very-low-income people can
be costly on a per-unit basis. Very-low-income people are not generally able to be housed in an
MPDU without an ongoing subsidy, and those units are unlikely to be built without a County
contribution.
Cost-saving modifications The Committee considered ways to more narrowly channel
this kind of exemption in order to make it a more efficient use of County funds. No Committee
member expressed interest in broadening the Bill's scope to include sale units, as several
speakers at the hearing proposed.
Applicability
Should this exemption, if enacted, only apply to developments that have
not already received preliminary subdivision approval or site plan approval? The Committee
agreed with Council staff that developments which have gone beyond those points arguably have
already "made their pro forma's" and don't need further County assistance.
Committee recommendation: exclude developments that received subdivision or site
plan approval before this Bill takes effect.
Publicly owned land
Should developments on publicly owned land be eligible for an
exemption? (Publicly-owned land, rather than only County-owned land, would include, for
example, school or WMATA property.) The Committee concluded that the tax exemption
should not apply to any development on publicly owned land where a lower value of the land
was part of a negotiated development agreement that required more than the minimum number of
affordable housing units.
Committee recommendation: exclude developments on publicly-owned land.
Zoning credits
Similarly, should developments which receive extra density for
furnishing more affordable housing units be eligible for this kind of exemption? Committee
members considered whether to exclude from this exemption developments that receive a zoning
benefit, such as extra credits under a CR zone, for providing more affordable housing.
Committee recommendation: exclude developments that have received a zoning benefit
for providing more units of affordable housing.
Higher thresholds
Is 25% the optimal amount to trigger an impact
tax
exemption? HOC
and others who were consulted when this Bill was drafted concluded that 25% was the highest
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the exemption could go and still let the numbers work to move forward with a development.
HOC staff noted that the 25% ceiling came from "mission driven" developers. On the other
hand, in Bill 11-12 last year the Council selected 30% as the level of affordable housing that
would be substantial enough to shorten the property disposition process, and DHCA generally
2
seeks at least 30% affordable housing in projects developed on publicly owned land.
Committee recommendation: leave the affordable housing threshold at 25%.
Dollar or unit limits
Should the law limit the number of units eligible for this exemption
each year, or the amount of County funds allocated, much like the current system to set the level
of payments in lieu of taxes (PILOT's)? Committee members discussed setting either an annual
unit limit or revenue loss limit, or both, but did not decide on any specific limits.
Committee recommendation: do not set any specific dollar or unit limits on this
exemption.
Sunset
If this exemption approach (or any variant of it) is used, should
it
be sunset after
several years to see whether it has in fact accomplished its goals at a reasonable cost?
Committee recommendation (2-1, Councilmember Ervin dissenting): do not sunset
this exemption, but review it periodically.
This packet contains:
Bill 39-11 with Committee amendments
Legislative Request Report
Fiscal and economic impact statement
Current County impact tax rates
Public hearing testimony
Walter Johnson cluster PTA letter
F:\LAW\BILLS\1139 Impact Tax - Exemptions - Affordable Housing\Action Memo.Doc
Circle
#
1
4
5
15
17
25
2Since the Bill's language refers to "a
development
in which at least 25% of the dwelling units are exempt" (see ©2,
lines 19-20, and ©3, lines 50-51) (emphasis added), if more than 25% of the units in a single building in that
development are affordable units, that fact would not make the market-rate units in that building or those in the
entire development exempt from the impact tax under this Bill.
6
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Bill No.
39-11
Concerning: Taxation -
Development
Impact Tax - Exemptions
Revised: 5-1-13
Draft No.
~
Introduced:
December 6, 2011
Expires:
June 6,2013
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
-'N!...!.o~n~e:...._
_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmembers Floreen and Rice, Council Vice President Navarro, and Councilmember Ervin
AN
ACT
to:
(1)
(2)
exempt certain market-rate dwelling units from certain development impact taxes;
and
generally amend the law governing development impact taxes.
By amending
Montgomery County Code
Chapter 52, Taxation
Sections 52-49 and 52-89
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
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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BILL NO.39-11
1
2
3
4
5
6
7
8
9
10
11
12
13
Section 1. Sections 52-49 and 52-89 are amended as follows:
52-49.
Imposition and applicability of development impact taxes.
*
(g)
*
*
A development impact tax must not be imposed on:
(1) any Moderately Priced Dwelling Unit built under Chapter 25A or
any similar program enacted by either Gaithersburg or Rockville,
(2)
any other dwelling unit built under a government regulation or
binding agreement that limits for at least 15 years the price or rent
charged for the unit in order to make the unit affordable to
households earning less than 60% of the area median income,
adjusted for family size;
(3) any Personal Living Quarters unit built under Sec. 59-A-6.15,
which meets the price or rent eligibility standards for a
moderately priced dwelling unit under Chapter 25A;
(4)
any dwelling unit in an Opportunity Housing Project built under
Sections 56-28 through 56-32, which meets the price or rent
eligibility standards for a moderately priced dwelling unit under
Chapter 25A;
14
15
16
17
18
19
20
21
22
23
24
25
26
27
ill
any non-exempt rental dwelling unit in
~
development in which at
least 25% of the dwelling units
~
exempt under paragraph
ill
111
Q1
or
G1
or any combination of them, if:
tAl
the development is not located on
publicly-ownedJ~
land that was publicly-owned when the development was
proposed~
(W
the zoning of the development has not been benefitted
because the developmentincludes more than the minimum
required affordable housing;, and
0:\laW\biIlS\1139 impact tax - exemptions - affordable housing\1139 bil14 committee.c
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BILL NO.39-11
28
[(5)]
@
any development located in an enterprise zone designated by
the State or in an area previously designated as an enterprise
zone.
29
30
31
32
*
52-89. Imposition and applicability of tax.
*
*
*
*
33
34
35
*
(c)
(1)
The tax under this Article must not be imposed on:
any Moderately Priced Dwelling Unit built under Chapter 25A
or any similar program enacted by either Gaithersburg or
Rockville,
(2)
any other dwelling unit built under a government regulation or
binding agreement that limits for at least 15 years the price or
rent charged for the unit in order to make the unit affordable to
households earning less than 60% of the area median income,
adjusted for family size;
(3)
any Personal Living Quarters unit built under Sec. 59-A-6.15,
which meets the price or rent eligibility standards for a
moderately priced dwelling unit under Chapter 25A;
(4)
any dwelling unit in an Opportunity Housing Project built under
Sections 56-28 through 56-32, which meets the price or rent
eligibility standards for a moderately priced dwelling unit under
Chapter 25A;
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
ill
any non-exempt rental dwelling unit in
~
development in which at
least 25% of the dwelling units are exempt under paragraph
ill
51
52
53
mill
or
~
or any combination of them, if:
(A)
the development is not located on publicly-owned land or
land that was publicly-owned when the development was
54
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1139
impact tax - exemptions - affordable housing\
1139
bill
4
committee.c
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BILL NO.39-11
55
56
57
proposed: and
!ill
the zoning of the development has not been benefitted
because the development includes more than the minimum
required a(fordable housing; and
58
59
[(S)]
®
any development located in an enterprise zone designated by
60
6]
62
the State or in an area previously designated as an enterprise
zone.
*
*
*
63
64
65
66
Applicability.
Section S2-49(g)(S) and Section S2-89(c)(S)' both inserted by
Section 1 of this Act. do not apply to any development which received preliminary
subdivision plan approval or site plan approval (or a similar approval in a
municipality) before this Act took effect.
Approved:
67
68
Nancy Navarro, President, County Council
Date
69
Approved:
70
Isiah Leggett, County Executive
Date
71
This is a correct copy ofCouncil action.
72
Linda M. Lauer, Clerk of the Council
Date
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LEGISLATIVE REQUEST REPORT
Bill 39-11
Taxation
-
Development Impact Tax
-
Exemptions
DESCRIPTION:
Exempts the market-rate rental dwelling units in any development
which consists of at least 25% affordable housing units from the
transportation and school development impact taxes.
Need to encourage provision of affordable housing.
To create further incentives to increase the share of low- and
moderate-income housing in new developments
Department of Permitting Services, Department of Housing and
Community Affairs, Planning Board
To be requested.
To be requested.
To be requested.
To be researched.
Michael Faden, Senior Legislative Attorney, 240-777-7905
Glenn Orlin, Deputy Council Staff Director, 240-777-7936
Impact taxes apply County-wide.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENAL TIES:
Not applicable.
f:\law\bills\1139 impact tax - exemptions - affordable housing\legislative req
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Fiscal Impact Statement
Council Bill 39-11
Taxation - Development Impact
Tax -
Exemptions
1. Legislative Summary.
Bill 39-11
would exempt the rental market-rate dwelling w:tits
in
any housing development
which consists ofat least 25% affordable housing units
from
the transportation and school
development impact taxes they would otherwise have to pay.
2.
An
estimate of changes in County revenues and expenditures regardless of whether
the revenues or expenditures
are
assumed in the recommended or approved budget.
Includes source of information, assumptions, and methodologies used.
DPS examined several areas that have major rental housing projects in the pipeline and
that are assumed
to
be moving forward. This analysis assumes anticipated development
in
three planning areas (Great Seneca Science Corridor (GSSC); White Flint; and Shady
Grove-County Service Park West (CSWP)) and projects the lost impact tax revenue if
all
potential
projects took advantage ofthe proposed bill.
p
otentialL
os
tlmpac
tT
ax
R
evenues un
d
er
M
axunum-L oss
Scenano
.
)
I
I
I
r
!
Additional Loss
in
Master/Sector Total
Loss
in
Rental
Plan Area
MPDUs
TnuJ§QQrtation School
Units
ImnactTaxes Impact
Sunnlied
Taxes
193
1,550
$10,728,442 $15,401,448
GSSC
408
$15,727,790
N/A
White Flint
3,266
1,114
33
$3,850,222 $11,062,692
CSPW
635
$14..578.664 $42_191.130
Totals:
5~0
Loss
in
Cost 12er
Additional
Total
Impact
MPDU
Taxes
$26,129,890 $135,388
$15,727,790 $38,525
$14,912,914 $446,227
$56.770.594 $89.449
1
Under 'the above scenario, the additiona1635 affordable units provided under the waiver
would result
in
$56.770.594 in lost impact
tax
revenues at
an
average cost of $89,449 per
each additional
MPDU
constructed.
See Attachment A for sources, assumptions, methodologies, additional scenarios, and
potential10st impact tax revenues projections.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
No additional expenditures are expected as a result ofthis bill. TIlustrative revenue
impacts are described above.
ITotallost impact
laX
revenues divided
by
total
additionsl MPDUs of 635 units.
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4.
An
actuarial analysis through the entire amortization period for each bill that would
affect retiree pension or group insurance costs.
Not applicable.
5. Later actions that may affect future revenue and expenditures
if
the bill authorizes
future spending.
Not applicable.
6. An estimate of the staff time needed to implement the bill.
No additional staff time is needed from DHCA, DPS. and Finance.
7.
An
explanation of how the addition of new staff responsibDities would affect other
duties.
Not applicable.
8. An estimate of costs when an additional appropriation
is
needed.
Not applicable.
9. A description of any variable that could affect revenue and cost estimates.
Revenues (or lost impact tax revenues) may be affected by changes in the impact tax rate.
The quantity ofadditional MPDUs developers elect to build may also affect revenues (or
lost impact tax revenues).
10. Ranges of revenue or expenditures that are uncertain or difficult to project
The change in impact tax receipts is difficult to project. Impact tax revenues would vary,
depending on the number ofdevelopers that elect to build under this waiver.
Additionally,
the
market dictates whether projects will
be
condominium or rentals and
it
is difficult to predict what future shifts will be. If expected development in different plan
areas changes from rental to fee simple sales, fewer projects would make use of the
provisions of this bill
11.
If
a bill
is
likely
to
have no fiscal impact, why that is the case.
The fiscal impact ofthis bill is difficult to determine since it depends completely on the
number of developers who avail themselves ofthis credit A number ofdevelopers have
indicated
it
is unlikely that the credit provides them with a sufficient incentive to build
additional MPDUs
(up
to the 25% required for the waiver).
If
that is the case, then it is unlikely this bill will result in a significant fiscal impact as it
will
not achieve the stated goal of the legislation.
2
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12. Other fIScal impacts or comments.
Not applicable.
13. The following contributed
to
and concurred with this analysis:
Rick Nelson, Department ofHousing and Community Affairs
Chris Anderson, Department ofRousing and Community Affuirs
Diane Schwartz Jones, Department ofPermitting Services
Reginald Jetter, Department ofPennitting Services
Mary
Beck,
Office of
Management and Budget
Naeem
Mia,.
Office ofManagement and Budget
Date
,
3
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Attachment A-1
Sources of Information:
1. Montgomery County Department of Housing Affairs (DHCA)
2. Montgomery County Department of Permitting Services (DPS)
3. Master Plans/Sector Plans for housing projects in GSSCMP, White Flint, and CSPW
4. Lost impact tax revenues are calculated by DPS based on current impact tax rates
Assumptions:
1. Developers to build to 25% of all units (in all projects) as MPDU under the legislative waiver
2. All units/projects are assumed to be rental units
.
3. No transportation impact
tax
for White Flint Area (current law)
4. All projects in White Flint are high-rise
5. Number of units are based on current Master/Sector plans or units under development
Methodologies:
DPS calculated lost impact tax revenues using the current impact tax rates as applied to aI/ current or
expected projects under development.
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Attachment
A~2
......
_
..
t
Tax R,
......
_.
-_
...
_-
der Different S
-_
_
........
Potential Lost I
--
"'..."
Pineline of recent
GSSCMP 8PPlicatio1J£
Ifassumes develoner plans
at minimum MPDUs)
1480 mfd units (mid-rise)
1480 mfd units (high-rise)
1550 mfd units (mid-rise)
1550 mfd units (high-rise)
Potential Loss Potential Loss
in School
in
rtation Impact Taxes
T
ImRact Taxes
$10,238,270
$7,312,865
$10,728,442
$7,662,979
$14,708,61C
$6,235,425
$15,401,448
$6,533,955
Potential Loss Potential
in Total ImRact Additional
MPDUs
Tao;es
$24,946,889
$13,548,29()
$26,129,89()
$14,196,934
185
185
193
193
Potential Cost
I
tler AdditiQnall
MPDU
J
$134,848
$73,234
$135,388
$73,559
Potential Cost
I
per Additional:
MPDU
$135,388
GSSCMP Maximum-lQ§§ Potential Loss Potential Loss
scenario
in
in School
Transportation Impact Taxes
Impact Taxes
1550 mfd
units
(mid-rise)
While Elint Sector Plan
(based on sketch plans)
$10,728,442
$15,401,448
eotentl,al
LQss
Potential
in
Total Imnset Additional
Taxes
MPDUs
$26,129,89C
193
Potential Loss Potential Loss
In
in School
Transnortation
Im~act
laxes
Impact Taxes
.
Potential Loss Potential
Potential Cost
in Total Impact Additional Iner Additional
Taxes
MPDUs
MPDU
$15,727,790
408
$38,525
Potential Cost
oer Additional
MPDU
I
3266 mfd units
N/A
$15,727,790
County Service Park West Potential Loss Potential Loss
in
School
Transnortation Impact Taxes
ImR8Ct Taxes
m..
Potential Loss PQtential
in Total Impact Additional
Taxes
MPDUs
I
1,114
mfd units
$3,850,222
$11,062,692
$14,912,914
33
$446,227
~
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Attachment A-3
Potential Lost Impact Tax Revenues under Maximum-Loss Scenario
Master/Sector TotalMFD Potential Potential Loss Potential Loss Potential Loss Potential
Additiona
rill-
in
School
in
Total
Costner
units
Plans
IMPDUs
Trnnsoortatio hnl!act Taxes hnl!act Taxes Additional
nhnmct
MPDU
Taxes
193 $10,728,442 $15,401,448 $26,129,890 $135,388
1,550
GSSCMP
$15,727,790 $15,727.79(J
$38,525
White Flint
N/A
Sector Plan
3,266
408
$3,850,222 $11,062,692 $14,912,914 $446,227
County
Service Park
West
1,114
33
ifotals:
5,930
635
$14~578,664
$42,191,93~
$56,770~94
$89,449
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Economic Impact Statement
Council Bill 39-11, Taxation - Development Impact Tax - Exemptions
Background:
L This
proposed legislation would exempt the market-rate dwelling uUits in any
development which consists ofat least 25% affordable housing units frol11: the
transportation and school development impact taxes. The goal ofthe proposed
legislation is to create further incentives
to
increase the share oflow- and moderate­
income housing in the new development Specially, Bi1l39-11
(Bill)
exempts "any
non-exempt
rental
dwelling
unit
in a development in which
at
least 25% ofthe
dwelling units are exempt:
n
.
The
analysis that follows
is
a determination of whether a developer of rental property
would opt for the 25% exemption and is based on a number ofeconomic assumptions
and
data
sources.
~.
The
SQurces
of information, assumptions, and methodologies used.
Sources:
Montgomery Department ofHousing and Community Affairs (DHCA)
National
Apartment
Association (www.naahq.org)
('Determinants of Operating Costs ofMultifamily Rental Housing", Jack
Goodman, Hartrey Advisers, December
18,2003 .
.t;ngineering News Record
McGraw-Hill Dodge Local Construction
Metropolitan Regional Information System
Assumptions:
Current market rental rates for two high-riSe developments (DHCA and
Finance) with
250
units
each.
Current
market
mtes
for
MPDUs
enHCA)
Developments are located in the Geneml· County transportation area to
employ the transportation impact
tax
rate for high-rise developments
Gross operating profit margin for rental units (www.naahq.org and
Goodman article)
Methodologies:
Gross operating
profit
margin is derived from data provided by
www.naahq.org and Goodman article by subtracting operating expenses
and capital expenditures per unit from revenue per rental unit and dividing
the result into the revenue per rental unit to derive gross operating margin.
That result is used to calculate gross profit margin per unit.
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3. A description of any variable that could affect the economic impact estimates.
a. Derivation of gross profit which is based on data. based on a national survey
and mayor may not be truly reflective ofthe Washington Metropolitan Area
or Montgomery County.
b. Rental
rates
and MPDU rates
are
current rates and
are
not adjusted for
inflation.
4. The Bill's positive or negative effect,
ifany
on emptoymen4 spending, saving.
investment, incomes, and property values in the County.
The Bill could have an effect on the profitability ofnew rental development
However, this effect is based on the assumptions listed above. Those assumptions
include: gross profit margin, impact tax
rates,
and rental rates - both market and
MPDU.
Using data. provided
by
DHCA, Finance selected two sample properties located in
the General County transportation impact tax district and calculated the gross
profit
margin (please see the tables, below),
Finance calculated the loss
in
average annual gross profits
for a "new' rental
development assuming 25 percent and 12.5 percent. For the two examples, Finance.
calculated an
average annual gross profit
of
$2.6
million for the two properties providing
25
percent MPDUs, and slightly less than
$2.8
million for
the
two properties providing
12.5 percent MPDUs. The impact tax fees are estimated at $3,321,750 (250 ...
$13,287
ftax
per unit) for the entire project. However, gross profits are higher than net
profits or net income. therefore the book profits for the two properties will be less than
the gross profits. Second, the gross profits are calculated based on a national survey and
the gross profit margin
used
in this analysis may not reflect the actual gross profit margin
for rental properties in Montgomery County. While the exemption ofthe impact taxes .
offset the
10ss
ofrevenueslprofits, that amount of offset depends on the assumptions
listed above.
5. lfaBill is likely to have no economic impact, why is that the case?
Not applicable.
6. The following contributed to and concurred with this analysis: David Platt, Finance;
Mike Coveyou. Finance
Datd
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SAMPlE Project Initial Investment
;
!IE-It
eonstructiQll Costs ___ .___ .•.. ___ .. __
Number
of
Units
I
.L___
$J36.296!\: __...
j13~.J~..6
.
250
250
12.5% MPDUs
l
25% MDPUs
TOTAl
CONSTRucnON
COSTS
!_
I
~op;ent l~~rtT;;·p;u~it.='":"~~;~····"·I====:===C····"--
-Residential
~t:;hoC?lL_
$34,974t!~~!!:t074,116
!
....._.__
._._~
___.__....:.___..__.__
~61.~_
...____
._$.8,47~
-----..
-=
250
-Transportaion
(General
County
SUbtotal
~_
.._.___._;. _....____..._ ... _'.'__ ..
Number
of
Units
TOTAL
DEVELQ~!'!!.~ UV!MQ:~_
......... _.,....
1._.__
!
i
$4815!$4,815
?;t1-l?.rl_._~_
..
_.$..t~~§l
250l
1--_ _ _ _ _ _._ _ _ _ _ _ _ _
, _ 1________
1
_______
i-='-·------·-----~·
--I..- ....
-~2~!,,7~9.t
...
~
..
1~,1~.~J5f!
I
,'V
. . . . . . . . . .. .
DEVaoPMENTIMPACTTAXMPOU DEDUCTION RATE!
I - - - - - - - -..
--·--·-··--------j--·---·-.:-- .......-..._--
DEVEtOPMENTIMPACTTAX
. .....
.
2,906,531
-_.__.. ._ ._--"_.-- .
PAID
._..... "....... r ........"", . . ,
I
f ".
........-
0
12.50%1
100.00%
..·-··..
~·"·-·--·--····--·r·-·--·
..-·..··'·-'·-r·""··
.......-.,,---­
,
I
. _ - _ .....- -..--.- .......
---.--.--!-~.---.
_.. _--......._---_.­
OOHMW
- - - - . -.......... - -••
~
...
~
...
~
....
INmAllf;l_~~J~~==~=.
__
.M_.___.......
_==L..J.36i801~~.?L~
. .
$342i1~~!~
, .., - -........
~
... - ........
~-~-.,-
......- .... ·-""t......_ ,...._______ .... _
5 Years
_.
....
.10
~
__.___
~
___________
I-~~~!4'07~l-......,.g.s,4071~20
15
V;;;·....-....
--.-........-.--.. ---..
-.~
.. -..-..-.
·-·~-T~
r
--_.. -_........_-_..-........_
.._-_......
-.---j.---~"----.
1' ..·.._ - - - _ ·
I
I
...
~
...
u.~<""
$13,9S7,Q.?~}
•.. _. $12/703,910
i
s......
-,.--~---#---
~-~- -:-~~====~·.·=.=~=-~- -=~~~~~-:--
.
!
C==~===·:ll ~~-
20 Years
$55828 140
$50,815,640
~=== ==~_=~=~~~.:~.=.=~~.·~=·.~.'.-~·":J==~~:=~=~C-~=~==~=.=
30 Years
I
$83,742,210\
$76,223,460
.
.
.
,
..
-$4i:s7iiosr......
$381i1730
....
~~=:~~=~=,~~==~ =·~=.~:l=:~·,,:~·~:~-~-·~.=.~.=~:=f~~·'-".· .-~
. . .
~.~~
~!?~_~--
.
:":~==.~.~:
.5ftlC!~f.lE.YJ!~HL
.._
~
..
_~
__
~~+~
. .
g~.%..M~_
...
!.--.-}.?%,..
~
....
I. -··..
-T~~·I·i_:!~;n~~~~:{~i!;r···
$~~~!~~11'"
......
~:i~~ci
«- "" ....
>0
..
.
'.
$114 844!
1------·-----.----..
"
!
'1,·-.·-......----..
,-::J:..--..
I
.
' - _ .._ ,....._ . " ..n "
_ . ._ ........ _ ..........._..... ; _ . . . . . . _ . . .
--~"'-~----~.
__
L_,
• ....
$111 354
---l.. .
_......
.-. .
-.-.-----L
.
."
....
"..
.
_ ...._.....
.--.
_.. ."..
_.$.gJ,i!~L...
.
_
...$.~4~?1.
.....
~,.
....._ ....
.JQ~Lfi.~tf9! .MP.P.Y~""
..._ _ ...._ .... ) . . •••..
,,_,.., , " , , _ , _
O~I!!.Bet!f.~l?.I!I_U
..
~~_
.. -._---
Total Rentfor Market Units:
$1250521'
$107188
Gross
Profits!
$2 791
4071
$2,540 782
@
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Department of Permitting Services
255 Rockville Pike. 2nd Floor
Rockville. MD 20850-4166
Phone: 311 in Montgomery County or 240-777-0311
Fax(240~777-6262
http://montgomerycountymd.gov/permittingservicesl
New and Revised Impact Taxes Effective July 1, 2011
Pursuant to Chapter 52, Sections
57(e)
and
90(e)
of the Montgomery County Code (Development
Impact Tax for Transportation Improvements and Development Impact Tax for Public School
Improvements, respectively) the Director of Finance has adjusted the tax rates set under Sections
57(a) and
90(e).
As prescribed by law, the Director must adjust the tax rates by the annual average
increase or decrease in a published construction cost index specified by regulation for the two most
recent calendar years. The Director must calculate the adjustment to the nearest multiple of 5 cents
for rates per square foot of gross floor area or one dollar for rates per dwelling unit. Based on the
change in the Engineering-News Record's Baltimore Construction Cost Index for calendar years 2009
and 2010, the existing rates were increased by a rate of 8.89 percent. The rates were adjusted to the
nearest 5 cents for rates calculated per square foot of gross floor area (GFA) or adjusted to the
nearest dollar for rates calculated per dwelling unit. Applicants for building permits for residential
developments filed on and after July 1, 2011, will be assessed the tax rates below:
'DWelling Type
Single-family detached
Single-family attached
I
Single Family house surcharge
• Multifamily (except high-rise)
High-rise
Multifamily senior
School Impact Tax Per Dwelling Unit
$23,868
$17,970
. $2 per square foot of gross floor area that exceeds 3,500 square
i
feet, to a maximum of 8,500 square feet)
.
$11,358
$4,815
$0
In the event the school cluster has exceeded the 105% school program capacity, applicants will be
required to pay a per unit School Facilities payment.
Page 1 of 2 Revised
6/27/2011
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In addition to the School Impact Tax, applicants for building permits in a residential development must
also pay the Transportation Impact Tax.
,
Building Type
t§ingle-Famil;t detached residential
(~er
dwelling unit)
• Single-Family attached residential (per dwelling unit)
Multifamily residential (Garden apartments) (per dwelling unit)
I
High-rise residential (per dwelling unit)
i
Multifamil;t-senior residential
(~er
dwellins unit)
I
Office (per
SQ.
ft.
GFA)
Industrial (per
SQ.
ft.
GFA)
I
Bioscience facility (per
SQ.
ft.
GFA)
I
Retail (per sq.
ft.
GFA)
I
Place
ofworshi~
(per
SQ.
ft.
GFA)
!
Private elementarY and secondarY school (per
SQ.
ft.
GFA)
Hos~ital
(per
SQ.
ft.
GFA)
Social Service Agency
Other nonresidential (per
SQ.
ft.
GFA)
Metro
Station
$6,213
$5,084
$3,953
$2,824
$1,129
$5.65
$2.85
$0
$5.05
$0.35
$0.45
$0
$0
$2.85
:
Clarksburg
I
General
$18,638
$15,250
$11,860
$8,472
$3,388
$13.60
$6.75
$0
$12.20
$0.80
$1.20
$0
$0
$6.75
$12,425
$10,166
$7,906
$5,687
$2,259
$11.30
$5.65
$0
$10.15
$0.60
$0.95
$0
$0
$5.65
i
I
!
i
i
!
i
Page 2 of 2 Revised
6/27/2011
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Bill 39-11, Taxation - Development Impact Tax
Exemptions
Housing Opportunities Commission Public Hearing Testimony
January 24, 2012
Good afternoon. I am Sally Roman, Vice-Chair ofthe Housing Opportunities Commission.
First, HOC wants to thank the sponsors of Bill 39-11, Councilmembers Floreen, Rice and
Navarro. Clearly we need new ideas to generate development of more housing affordable to
the families who work in Montgomery County. We commend the sponsors for this approach
which exempts entire multi-family, rental developments from development impact taxes if at
least 25% ofthe units are MPDUs or otherwise exempt under current law.
HOC's Real Estate Development Division has run the numbers on some hypothetical
development scenarios, and this is what we found. We estimate that exempting all units,
affordable and market, from impact taxes breaks even in developments of four-story buildings­
stick built - in Metro and non-Metro areas, with 25% affordable units. What we mean is that
the return is essentially the same for the developer as it would be with a comparably sized and
located development with the standard MPDU allotment of 12.5%.
HOC believes that this incentive will have a welcome impact on developers motivated to add to
the county's affordable housing inventory such as HOC and the non-profit developers.
Inasmuch as the numbers seem to indicate that the developments would break even with 25%
MPDU-like units,it might well also provide an incentive for market rate developers.
My fellow Commissioners and I would like to suggest an amendment to the bill. We would like
to see its benefits available to multi-family developments that are for sale, as well to those that
are rental.
Again, we appreciate the sponsors' developing this idea and introducing Bill No. 39-11.We look
forward to working with the committee as the Council continues to address it.
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l
MARYlAND-NATIONAL CAPITAL BUILDING INDUSTRY ASSOCIATION
.
1738
Elton
Road, Suite 200,
Sliver Spring. Maryland
20903
Ph: (301) 445-5400; Fax: (301)445-5499
Email: commIlQjcatloD5@mncbla org
Web:
WVjW
mncb1a ore
&UIUlIH6 HOMES
tl!£AlltlG N£!GH&OIIHOOOS
Testimony (Revised)
Maryland National Capital Building Industry Association
Bill 39-11, Impact Taxes
January 24, 2012
The Building Industry supports efforts to increase affordable housing in the County, including Bill 39-11
to eliminate Impact Taxes for rental communities for communities that provide an increased percentage
of MPDUs. This is an important step in promoting affordable housing. However, we recommend
changes that can help improve the effectiveness of this program and can expand affordable housing
even more.
The concept of allowing impact tax exemptions for an increase in MPDUs overcomes one ofthe major
obstacles to building affordable housing in the County. Every new home comes with the financial
burden of over $30,000 in Impact Taxes in addition to development costs, land costs, application fees
and approval fees. This bill overcomes the obstacle for affordable housing in two ways, it increases the
supply of MPDUs within a community and it reduces the costs and price of market rate rental
apartments substantially. We strongly support a program that will eliminate or reduce the Impact Tax
burden on new housing through a builder meeting the necessary public goal of increasing housing for
low and moderate income households.
Rentals: High and Low Rise
Based on our calculations and feedback from builders of multi-family rental communities, the current
proposals for a requirement of 25% MPDU to eliminate Impact Tax payments for rental communities
fails to offset the MPDU subsidy for high rise multi-family buildings given the high cost of construction,
the cost of structured parking and the loss of market rents. For some low rise rental multi-family
construction, the 25% requirement can be met but only under ideal and unrealistic conditions. We
therefore recommend that the Council remand the bill to staff and for staff to work with the industry to
determine an appropriate MPDU requirement f9r multifamily. Initial analysis indicates that the MPDU
requirement for low rise rental apartments needs to be between 15-20% and that high rise apartments
may not work at any percentage.
For-Sale Housing
The opportunity to provide affordable housing in the County can be enhanced by including for-sale
housing in the equation. Currently a limited number of MPDUs are produced annually with sale prices in
the mid $100s. The lowest priced market rate housing in the County is priced in the upper $200's and is
likely to increase substantially should the market turn around. Therefore, there remains a gap today
between the mid $100s and the upper $200s. We urge that the Council consider two programs to help
expand the number of MPDUs and help fill the gap between the MPDUs and the market rate homes.
First, we urge that Bill 39-11 be expanded to include for-sale new housing communities (subdivisions)at
a 20% MPDU requirement. Communities that commit to 20% MPDUs would be exempt from all Impact
Taxes for the entire residential community. This would include high rise and low rise condominium
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buildings, single family attached communities, single family detached communities and mixed
residential communities. We see no reason to limit affordable housing efforts to rental housing.
The second approach we propose is to exempt individual houses from Impact Taxes if the applicant
commits to sell the home for below $275,000 aQjusted annually to reflect changes in the Consumer
Price Index for Urban areas. We propose further that the optional Moderate Price Home Incentive
Program be limited to buyers who currently live or work in the County and affirm that they intend to
purchase the home as their primary residence.
The need for affordable and moderate priced homes in the County is both intuitive and supported by
the data. We refer to the excellent study by Stephen Fuller and the George Mason University Center for
Regional Analysis. Even the recent articled by Roger Lewis on the loss of Affordable Housing highlights
the difficulty in providing housing for our middle and low income families. Clearly the future of
economic development hinges on the ability of the County to retain and attract moderate wage earners
and the younger, skilled labor force. While these outcomes may be intuitive and obvious, the less
obvious advantages of an increase in affordable and moderate price housing include the following:
• Moderate price home ownership starts the path of building household equity
• Mixing affordable and moderate priced homes in single family communities solidifies
the sense of community and improves overall school achievement for low and moderate
income households
• Moderate priced homes serves the market for "move-down" empty nester households
• Affordable and Moderate priced homes provide housing for single heads of household,
divorced households and young starter families.
Legitimate questions opponents may ask concerning these proposals involve the apparent "Ioss of
impact tax revenue." However, we contend that the loss is a phantom loss in that these taxes would
not be collected in the first place, that without these two programs, the subdivisions and the individual
housing would not otherwise be built. Clearly, if they were readily in the market, there would be no
need for the programs.
Lastly, we urge the Council to reconsider the MPDU time period and deed restriction and reduce the
time back to 20 years (total) for the for-sale and 30 years (total) for rental MPDU. Under current
conditions and likely for some time, the resale market offers competition for the MPDU seller and
builders are finding it more difficult to sell the MPDU. Buyers balance the opportunity to buy a new
MPDU with the resale restrictions versus a resale home with no restrictions. For rental units, the 99
year restriction seriously erodes the resale value of the apartment complex and affects the amount
banks are willing to lend against the complex. Reducing the time frame for the deed restrictions can
help build stable communities, help owners build equity and encourage more home construction,
especially rental buildings.
In conclusion, Montgomery County has by far the highest impact fee in the State of Maryland. There is
an existing and projected deficiency in affordable housing for low and moderate income household,
according to Park and Planning. The larger the household the greater the need for affordable housing
options which supports are recommendation to include for sale housing in this proposal.
Nationwide studies have shown that impact fee place an unfair burden on lower income households.
The resultant Montgomery County impact fees policy creates a situation in which many new residents of
the County are paying more than 30% oftheir household income for housing.
®
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Although this proposal will may not improve housing affordable countywide, it will improve the
affordability of many hundreds of new residents.
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..
"U
..... , ••
r
."'
H,
. . .
C&..I
'II." ,......... " ."••
II.
t
<O
• •••
I
,c,
.
%
of Persons with Homeowner Cost> 30% of Income
Poole\ville
%
of Homeowners spending> 30
%
01
1111
income on housing
i
-
--'
_~
___ _
.
18·
12
.99
23
-
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.
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17
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.-;
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4
Jl(llIogillg
Growlh: Tlte Use
0/
DlI'1'elopll/etlt Impact Fees
mtd BI/i/dillg
Excise Taxes
il/
]101';1'101/(1
Exhibit 2
County Development Impact Fees/Excise Tax Rates
Counn'
Anne Arundel
Calvert
Caroline
3
Carroll
Charles
Dorchester
4
Fredericl2
Harford
Howard
6
Montgomery7
Prince George'sS
Queen Anne's
St Mary's
Talbof
1O
Washington
Wicomico
Tvpe
Impact Fee
Excise Tax
Excise Tax
Impact Fee
Excise Tax
Excise Tax
Both
Impact Fee
Excise Tax
Excise Tax
Excise Tax
Impact Fee
Impact Fee
Impact Fee
Excise Tax
Impact Fee
FY2007
$4,781
12,950
5,000
6,836
10,859
3,671
11,595
7,442
See note
14,283
19,361
6,606
4,500
5,347
13,000
5,231
FeelRate
Pel' Dwellint
FY 2008
$4,904
12,950
5,000
6,836
11,400
3,671
13,121
8,269
See note
31,105
19,864
$3.93/sq.
ft.
4,500
5,513
13,000
5,231
FY2009
$1,759
2
12,950
5,000
6,836
11,598
3,671
13,733
8,269
See note
31,105
20,638
$4.05/sq.
ft.
4,500
5,684
$3.00/sq.
ft.
5,231
I
Rates listed are generally those applicable to single-family detached dwellings and are per dwelling unless
otherwise indicated.
1
Rate for a 1500-1,599 square foot residential unit fronl January I, 2009 through December 31. 2010. Residential
rates vary
by
the square footage of a unit and increase in 2010 and 2011.
I
A $750 development excise tax for agricultural land preservation is also imposed on single-family residential lots
created by subdivision in a
"fll.fal
district."
4
A slightly higher rate, S3,765 per dwelling, applies outside of the Cambridge and Hurlock areas.
5
The rates shown only reflect the public school and library impact fee total. The roads tax (unchanged for all three
fiscal years) is $O.lO/sq.
ft.
or SO.25/sq.
ft.
(depending on the square footage), with the first 700 square feet not
taxed.
6
Roads
tax
is MOO for the first 500 sq.
ft.
and $0.90/sq.
ft.
(SO.BS/sq.
ft.
in fiscal 2008 and SO.SO/sq.
ft.
in fiscal
2007) for square footage in excess of 500 sq.
ft.
School surcharge is SL14/sq.
ft.
($1.09/sq.
ft
in fiscal 2008 and
Sl.07!sq.
ft.
in fiscal 2007).
1
Fiscal200B and 2009 amounts rep.resent $10,649 for transportation and $20,456 fur schools, effective December 1,
2007. Fiscal 2007 amount represents $5,819 for transportation and
S8,464
for schools (these amounts were
moderately increased at the beginning of fiscal 2008, prior to the December
1,
2007 increase.) The school excise tax
is increased by $2 for each square foot between 3,500 and 8,500 gross square feet (reflecting a change effective
December 1, 2007). Different transportation rates apply in the Meuo Station and Clarksburg impact
tax
districts.
8
Fiscal 2009 amount represents $14,019 for school facilities and $6,619 for public safety. A lower school facilities
rate ($8,177 in fiscal 2009) applies inside the beltway and a lower public safety rate ($2,207 in fiscal 2009) applies
inside the "developed tier" as defined in the 2002 Prince George's CoUllty Approved General Plan.
9
A lower rate ($4,912
in
fiscal 2009) applies to "in-to..
'O»
devl'iopment.
10
In
fiscal 2007 and 200S, the rate for a nonapactmeut, residential dwelliug less than 1,500 sq.
ft.
in
area was
SLOO/sq.
ft.
Source: Department of Legislative Services
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SUMMARY OF
FINDINGS
FINDING ONE:
THERE IS
AN
EXISTING AND
PROJECTED DEFICIENCY IN
AFFORDABLE HOUSING FORlOW AND MODERATE INCOIVIE HOUSEHOLDS
There is currently not enough housing priced affordably for households earning less than $90,000 per
year. Those households earning the most (greater than $150,000 annually) have an excess supply of
affordable housing. This finding indicates that households are paying greater than 30% of their
. household income on housing; living in smaller than ideal units (greater than two persons per bedroom);
or could not afford to purchase their home today.
Summary
of
Demand and Supply hnbalahce (2005)
Annual Household Income
Less
than
$30,000
Affordable Monthly Housing
Cost
Number of Units
Demanded
Number Supplied Number Supplied
Sufficien~y/
(Owner
Oc~upied)
(Renter Occupied) (Deficiency)
less
than
$ 749
$ 750
to
$1,499
$1,500
to
$2,249
39,942
77,926
68,196
57,585
36,099
67,251
619
8,325
48,337
64,790
.. 47,083
93,296
12',510
59,940
13,680
2,340
900
630
(26,813)
(9,661)
(6,179)
9,545
11,884
26,676
$30,000
to
$59,999
$60,000
to.
$89,999
$90,000
to
$119,000
. $120
to
$149;000
$150,000
and above
$2,250
to
$2,999
$3,000
to
$3,749
$3,750
and above.
The housing supply shortage for households earning low to moderate. incomes is only expected to
worsen over the next 20+years. There is a slight amount of excess supply anticipated for households
earning under $60,000. This is due to the large number of rental multifamily units projected to be. built
between 2005 and 2030. The majority of multifamily units have monthly rents ranging
from
$750­
$1,499.The eXcess supply will be quickly absorbed by the bordering cohorts (households earning less
than$30,OOO and households earning between $60,000 and $89;999.
. Summary
.
.
of
Demand andSupp:lylmbalance (2030)·
Affordable Monthly Housing
Cost
Number of Units
Demanded
Number Supplied Number Supplied SuffiCiency/
(Owner Occupied) (Renter Occupied) (Deficiency)
Annual Household Income
. Less than
$30,000
$30,000
to.
$59,999
$60,000
to
$89,999
$90.000
to
$119,000
$120
to
$149,000
$150,000
and above
less
than $749
$750
to
$1,499
$1,500
to
$2,249
$2,250
to.
$2,999
$3,000 to $3,749·
$3,750
and above
50,797
99,104.
86,729
73,234
45,909
85,527
1,491
12,465
52,631
75,304
60,197
105,701
19,478
93,327
21;300
3,643
1,40i
981
(29,828)
6,688
. (12,799)
5,713
15,689
21,156
2
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MAJOR POINTS PRESENTED
IN TESTIMONY BY
JODYKLINE
ON BILL 39-11
24 JANUARY 2012
• Exemption from impact fees is a dramatic incentive to create affordable housing.
• . The universe of affordable housing programs that could benefit from such an incentive is not
limited to the Moderate Priced Dwelling Unit program.
• The County encourages redevelopment of under utilized commercially or industrially zoned
land with multi-family residential uses.
• "Productivity Housing" (a special exception use in commercial, employment and industrial
zones) is one of the few programs available to accomplish the planning goal of introducing
residential uses on non-residentially zoned property.
• Productivity housing is an option available in non-residential zones for projects that provide
35%
of the units at productivity housing rates.
• By regulation, DHCA establishes productivity housing rental rates at 75%
of the area-wide median income (adjusted for family size).
• The burden of implementing this program is borne out by the fact that there is only
ONE
productivity housing project in all of Montgomery County since the creation of the program
twenty-five
(+1-)
years ago.
• Extending the scope of Bill 39-11 to include "productivity housing" would have the
following public benefits:
• Increase the amount of affordable housing in the County.
• Reduce the impediments to implementing the program.
• Encourage more mixed-use development.
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February 25, 2013
Government Operations
&
Fiscal Policy Committee
Montgomery County Council
100 Maryland Ave., Rockville, MD 20850
Dear Chairperson Navarro, and Councilmembers Ervin and Riemer:
On behalf of the PTAs in the Walter Johnson cluster, I am writing to resubmit the
cluster's April 2012 letter - expressing our concerns about Bill 39-11.
Given increasing school enrollment and upcoming development, and growing demands
on the MCPS capital budget, we are concerned about any strategy that would decrease
resources for school construction. Thank you for your consideration of our views.
Sincerely,
Mary Cassell
Cluster Coordinator
Walter Johnson Cluster
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April 17, 2012
Government Operations
&
Fiscal Policy Committee
Montgomery County Council
100 Maryland Ave., Rockville, MD 20850
Dear Chairperson Navarro, and Councilmembers Ervin and Riemer:
We are writing, on behalf ofPTAs in our cluster, to express our concerns about Bill 39­
11. While its goals are laudable, the bill funds moderately priced housing from the wrong
sources. Also,
it
could have an enrollment impact on nearby schools.
(1)
Specifically, the bill would cost up to $42,191,000 in lost school impact tax. Housing
should not be funded through school capital funds, which are already insufficient.
What would $42,191,000 mean for schools? Well, ifMCPS chose to spend the money in
our cluster, half of that sum - $19,000,000 - could build a new elementary school. Such a
school will be much needed to serve the 400+ ES students added by 3 recent and upco­
ming sector plans in our cluster. Or MCPS could choose to use $42,191,000 to add
capacity to secondary schools in our cluster. That would meet the needs of either the
projected 400+ MS students, or the estimated 350+ HS students, added by the plans.
(2) We are also concerned about Bill 39-11 because we seek an accurate projection of
enrollment in our cluster. We are working with the MCPS Division of Long-Range
Planning to explore whether the MPDUs that would be added by the bill up to 408 of
them in our cluster might raise the student generation rate in the White Flint area.
We do commend the bill's sponsors for their dedication to increasing the County's
moderately priced housing. We agree that the County needs more of this housing: many
young teachers and families with school-age children would benefit.
However, if our County can afford to spend $42,191,000 on MPDUs, we ask the Council
to pay for them directly, without siphoning the money out of school accounts. Or, provide
$42,191,000 to replace the potential school impact taxes lost under the bill. And, please
consider any enrollment impact. Development should not come at the expense of school
construction, especially given the development already planned for within our cluster.
Sincerely,
[Walter Johnson Cluster signatures]
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