GO Item 2
April 4, 2013
Worksession 2
MEMORANDUM
TO:
FROM:
Government Operations and Fiscal Policy Committee
Michael Faden, Senior Legislative Attorney
Glenn Orlin, Deputy Council Staff Director
~inda
McMillan, Senior Legislative Analyst
~
Go
SUBJECT:
Worksession 2:
Bill 39-11, Taxation - Development Impact Tax - Exemptions
Bill 39-11, Taxation - Development Impact Tax - Exemptions, sponsored by
Councilmembers Floreen and Rice, then-Council Vice President Navarro, and Council member
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.
A Government Operations and Fiscal Policy Committee worksession was held on
February 25. 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 believes 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
0
MB 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
each of the 10 added MPDU's, at current impact tax rates, to be $163,744.
1
At the February worksession the Committee asked for Council staffs best estimate of the
fiscal impact of Bill 39-11 if the Bill were amended to exclude 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 4 years. Data from M-NCPPC and DPS indicate that 4 years
is the average time between site plan approval and occupancy for multi-family residential
buildings. If this Bill is enacted this spring, it likely would have no effect - and so, would not
reduce impact tax revenue -- in FYs 14-17. The revenue loss would begin in FYI8, the last year
of the current CIP.
IThe calculation was: impact taxes per unit (school $11,358
+
transportation $7906
=
total impact tax/unit $19264) x
85 tax-forgiven units
=
$1,637,440 total impact tax revenue 10ss/1O added MPDU's
=
$163,744 revenue loss per
added MPDU.
2
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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: Wheaton 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 all these developments must meet
the minimum 12.5% MPDU requirement
and that MPDU's themselves are exempt from
impact taxes, as the law provides -the impact tax would apply to about 40,900 units. Finally,
the number of units in known 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 projected to apply on July 1, when
the 8.7% inflation index takes effect, are:
Garden apartments
$12,346/unit
High-rise apartments
$5,234/unit
I
School Impact Tax
Trans~ortation
Impact Tax
Metro Station Policy Areas
General District
$4,297/unit
$8,594/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. (Although 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
=
$160.0 million
Total $254.3 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 would 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 that
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 one-bedroom apartments, 50 two-bedroom apartments, and 4 three­
bedroom apartments (this distribution is modeled after an existing building in Wheaton), the
minimum requirement for MPDU is 22 units (12.5%). Revenue loss would be $1.8 million if the
building would be located in a Metro Station Policy area, or $2.45 million if it would be in the
General District. The cost for each additional MPDU (22) in the Metro Station Policy Area
would be about $81,600, and in the General District about $111 ,520. Assuming that one such
building would begin occupancy in FY18, then our revenue loss assumption would reduce the
revenue estimates by about $2.1 million, split between the transportation ($1 million) and school
($1.1 million) taxes.
Issues and options/Tentative Committee recommendations
At the February 25 worksession, Committee members discussed the following issues and
made several tentative recommendations, subject to further review after receiving Council staffs
fiscal impact estimates.
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 Housing Policy, now before
the Planning, Housing, and Economic Development Committee, includes action plans and
recommendations that support increased incentives such as this Bill would provide. The Draft
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 Itconsider
incentives such as increased heights, additional density, waiver of transportation and school
construction impact taxes and fees from the Washington Suburban Sanitary Commission
4
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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 million is best spent to increase the
number of MPDU's in any single applicable rental building, or to send an equal amount of funds
to the HIF where they could be targeted as a grant or repayable loan for a specific project. The
same amount of 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 a MPDU without an ongoing subsidy, and
those units are unlikely to be built without a County contribution.
Possible modifications Committee members discussed 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.) Modifications to limit the exemption could include:
Publicly owned land
Should developments on publicly owned land be eligible for an
exemption? (Publicly-owned land, rather than only County-owned, would include, for example,
school or WMATA property.) The tax exemption probably should not apply to developments on
publicly o\\>ned land where the value of the land is part of a negotiated development agreement
that requires more than the minimum number of affordable housing units. Similarly, should
developments in the CR zone which receive extra density when they furnish more affordable
housing units also be eligible for this kind of exemption?
Tentative Committee recommendation: exclude developments on publicly-owned land.
Applicability
Should this exemption, if enacted, only apply to developments that have
not already received preliminary subdivision approval or site plan approval? In staffs view,
developments that have gone beyond those points arguably have already "made their pro
forma's" and don't need further County assistance.
Tentative Committee recommendation: exclude developments that have already
received subdivision or site plan approval.
Higher thresholds
Is 25% the optimal amount to trigger an impact tax exemption? HOC
and others that looked at this when this Bill was drafted noted that 25% was the highest 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 shortcut the property disposition process, and DHCA is generally seeking
at least 30% affordable housing in projects developed on publicly owned land.
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
5
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of payments in lieu of taxes (PILOT's)? Committee members expressed interest in setting either
an annual unit limit or revenue loss limit, or both, but did not decide on any specific limits.
Zoning credits
Committee members considered whether to exclude from this exemption
developments that receive extra credits under a CR zone for providing more affordable housing,
but did not decide
Sunset
If this exemption approach (or any variant of it) is used, should
it
be reviewed
after several years to see whether it has in fact accomplished its goals at a reasonable cost?
This packet contains:
Bill 39-11
Legislative Request Report
Fiscal and economic impact statement
Current County impact tax rates
Public hearing testimony
Walter Johnson cluster PTA letter
F:\LAW\B1LLS\I139 Impact Tax - Exemptions - Affordable Housing\GO Memo 4-4-13.Doc
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CORRECTED COPY
Bill No.
39-11
Concerning: Taxation -
Development
Impact Tax - Exemptions
Revised: 12-6-11
Draft No. _3_
Introduced:
December 6, 2011
Expires:
June 6.2013
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: --'-'-No=n.:..:;e'--_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmembers Floreen, 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
Section
1.
Sections 52-49 and 52-89 are amended as follows:
52-49.
Imposition and applicability of development impact taxes.
2
3
4
*
(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;
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
ill
any non-exempt rental dwelling unit in
f!
development in which at
least 25% of the dwelling units are exempt under paragraph
ill
@
ill
or
G1
or any combination of them; and
[(5)]
®
any development located in an enterprise zone designated by
the State or in an area previously designated as an enterprise
zone.
24
25
26
*
52-89. Imposition and applicability of tax.
*
*
@-f:\IaW\biIlS\1139 impact tax - exemptions - affordable housing\1139 bill 3.doc
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BILL
No.39-11
27
*
(C)
*
*
28
29
The tax under this Article 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;
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
ill
any non-exempt rental dwelling unit in
~
development in which at
least 25% of the dwelling units are exempt under paragraph
ill
46
47
48
[(5)]
111
ill
or
.G1
or any combination ofthem; and
®
any development located in an enterprise zone designated by
the State or in an area previously designated as an enterprise
zone.
49
50
*
Approved:
*
*
51
52
Nancy Navarro, President, County Council
Date
@-f:llaW\bills\1139 impact tax - exemptions - affordable housing\1139 bill 3.doc
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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
MUNICIP ALITIES:
PENALTIES:
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 u:t:Iits
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 expenditnres regardless of whether
the revenues or expenditures are assumed in the recommended or approved budget.
Includes source of information, assumptions, and methodologies nsed.
DPS
examined several areas that have major rental housing projects in the pipeline and
that are assumed to be moving fonvard. 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
otent
i
aIL os
tI
mpac tTax Revenues un
d
er
Maxunum-
L
oss
S
cenano
Additional Loss
in
Loss
in
Master/Sector Total
MPDUs
Trans:gortation School
Rental
Plan Area
Units
Imnact, Taxes Im:gact
Taxes
Smmlied
1,550
193
$10,728,442 $15,401,448
GSSC
3,266
408
N/A
$15,727,790
White Flint
33
1,114
$3,850,222
$11,062,692
CSPW
635
Totals:
$14.578.664
$42.,191~130
5.s!90
Loss
in
Total
Impact
Taxes
$26,129,890
$15,727,790
$14,912,914
Cost:ger
Additional
MPDU
$135,388
$38,525
$446,227
$56.770.594
$89.449
1
Under 'the above scenario, the additional
635
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
potentia110st 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 Illustrative revenue
impacts are described above.
ITotal lost
impact
tax
revenues divided
by
total additional MPDUs of 63:5
units.
1
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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.
I
I
Not applicable.
6. An estimate of the staff time needed to implement the bill
I;
No additional stafItime is needed from DHCA, DPS, and Finance.
7.
An
explanatiou of how the addition of new staff responsibilities 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
of
additional
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 of developers 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 ofthis bill.
11.
If
a bill
is
Dkely to have no fiscal impact, why that is the case.
The fiscal impact of this bill is difficult to determine since it depends completely on the
number ofdevelopers who avail themselves ofthis credit. A number of developers 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 ofthe 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 ofHousing and Community Affairs
Diane Schwartz Jones, Department ofPermitting Services
Reginald Jetter, Department ofPennitting Services
Mary
Beck, Office of Management and Budget
Naeem Mia, Office ofManagement and Budget
er
A.
es, Director
ofManagement and Budget
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 all current or
expected projects under development.
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Attachment A-2
p
""'._"'
.........
-
1 Lost I
-
.....
_
t
Tax R,
_.
-----
....
.
..
Potential Loss Potential Loss
Pi12eline ofregs;nt
in School'
GSSCMP al2l2lications
in
l
assumes develooer 'Olans Transportation Im'Oaet Taxes
at minimum MPDUs)
lmJ;!act Taxes
s
--
der
Diff4
...... ______..._ .. _'U'''''
IPotential Cost
Potential Loss Potential
in Total hnpact Additional Iper Additional
Taxes
MPDUs
MPDU
$24,946,880
$13,548,290
$26,129,890
$14,196,934
185
185
193
193
$134,8481
$73,2341
$135,388
$73,559
1480 mfd units (mid-rise)
1480 mfd units (high-rise)
1550 mfd units (mid-rise)
1550 mfd units (high-rise)
$10,238,270
$7~312,865
$10,728,442
$7,662,979
$14,708,610
$6,235,425
$15,401,448
$6,533,955
GSSCMP Maximum-loss Potential Loss Potential Loss
in School
scenario
hl
Transportation Impact Taxes
Imgact Taxes
1550 mfd units (mid-rise)
White Flint Sector Plan
(based on sketch glans)
$10,728,442
$15,401,44S
Potential Cost
Potential LQss Potential
in
Total Imuact Additional loer Additional
Taxes
MPDUs
MPDU
$26,129,890
193
$135,388
3266 mfd units
Potential Cost
Potential Loss Potential Loss Potential Loss Potential
in School'
in Total Im12act Additional per Additional
in
MPDUs
MPDU
Transoortation Im,l2act Iaxes Taxes
ImI!act Taxes
$38,525
$15,727,790
$15,727,790
408
N/A
Potential Loss Potential
in Total
Im~act
Additional
Taxes
MPDUs
Potential Cost
per Additional
MPDU
County Service Park West Potential Loss Potential Loss
in
School
in..
Transportation hnnact Taxes
Imgact Taxes
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 Potentia] Potential Loss Potential Loss Potential Loss Potential
Costner
Additiona
~
in Total
in'School
units
lE.lans
IMPDUs ITransoortatio hnnact Taxes Imnact Taxes !Additional
nImpact
MPDU
Taxes
193 $10,728,442
$15,401,44~
$26,129,89C
$135,38~
1,550
GSSCMP
$15,727,79( $15,727,79C
$38,525
White Flint
408
N/A
Sector Plan
3,266
. $3,850,222 $11,062,692 $14,912,914 $446,227
County
Service Park
West
33
1,114
ifotals:
5,930
635
$14,578,664
$42,191,93~
$56,770,594
$89,449
"
;-:;.
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Economic Impact Statement
Council Bill 39-11, Taxation - Development Impact Tax - Exemptions
Background:
1.
This proposed legislation would exempt the market-rate dwelling units in any
development which consists of
at
least 25% affordable housing units frOID: 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, Bill 39-11
(Bill)
exempts "any
non-exempt
rental
dwelling unit in a development in which
at
Le~st
25% ofthe
.
dwelling units are
exemp~
»
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 of economic assumptions
and data sources.
~.
The sources ofinformation, assumptions. and methodologies used.
Sources:
Montgomery Deparbnent ofHousing and Community Affairs (DHCA)
National Apartment ASsociation (www.naahq.org)
"Detenninants of Operating Costs ofMultifamily Rental Housing", Jack
Goodman, Hartrey Advisers, December 18, 2003.
~gineering
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 rates for MPDUs (DHCA)
Developments are located in the General· 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.naahg.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 may or may not be truly reflective ofthe Washington Metropolitan Area
or Montgomery County.
b.
Rental:rates and Iv.IPDU rates
are
current
rates
and are not adjusted for
inflation.
4.
The Bill's positive or negative effect,
ifany
on employment, 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 asswnptions listed above. Those assmnptions
include: gross profit margin, impact
tax:
:rates, and rental rates - botb 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 assmning 25 percent
and
12.5 percent. For the two examples, Finance ..
calculated an
average annual gross profit
ofS2.6 million for the two properties providing
25 percent MPDUs, and slightly less than $2.8 million for
the
two properties providing
12.5 percent l\1PDUs. The impact tax fees are estimated at $3,321,750 (250
*
S13,287/tax
per unit) for the entire project. However, gross profits are higber 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 loss ofrevenues/profits, that amount of offset depends on the assumptions
listed above.
5.
Ifa
Bill 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
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SAMPLE
Profect
initial Investment
.
12.5%
MPDUs
l
25% MDPUs
~jt Cotl.~tructiQ!l
Costs . _ _ ,.._.......... _ _ _ ...__
L_--l!~.~1961_
.j136.J~Ji.
Number
of
Units
I.
2501
250
TOTAL CONSTRUcnON COSTS
$34,07411.!!l_~4!0741~16
. .__
.----.-.-~-.~.--
Oevelo~tmpactTax
!
..-.-,.--.-.--.. - ..--.-..........,........
--,.'-'''~'-''''-'-r'''"''''''-'----''''
Per Unit ._ __
'
..__
--.J________
~I_--
.
I
.::Reslden~L~ho~L.,_._.
.__.____.-.:..__
-Transportaion
(General
County'
.J.__.. _
_.$.§&?f~
......
-.--.-$~&~
...
!
$4.8151
$4815
Subtotal' ._____._,.__ ..____.._ .... _._. __ ...
L. ___
~.!~d?lt_._~_._lYt~!I
Number
of
Units
!
ZSO!
250
~~Q~!!'!.f::ID"...!..~~!~~-.-
.. '''' -.·-..
--I..
~
...
-$~e-~!t.!?Q}.--
...
~~~~~t!2!!
~w.-----·-- ·---··-~··
OEVElOPMENTIMPACTTlipAID··---.-~-t--i-:-906-:S31
t
..... " "".'" ....
_._.. ,.._. . ,,- .--__........ . . . .......... ". ---.. r ...........".... "-"
t--..
".
·-
'''-''-'0
.
.
f
OevaoPMENT
I
.
MPACTTAX
MPOU
DEDUcnCiN'RATEr---u.so%i----1OO.OO%
. -..·. --·-·-·-..··..
-·-·-·T-·--···--.....-._,....
1"-.........._-,,--­
~l~_~~_~I~===~_.~-~.
__,___._..........
J_..J.3JiA~/!~?L_
...'
$34P?!h~.~~.
I
. - - -
.....
---
..
~-
..
~.-.--.-.-
...
-~--.-----
......
..
..
_---_.
WH~W
I !
5 Years'
..·..- ..
···-·~
..·-·"..-.-....•.... ---·....--·..
·.-=-"1-·..
$i3~57;O§iC
.
==-Sli;703jlo
-_
""
I~-'-'";;.;..::;.---·---------------,---·~---"
~;; =~-
~
iOv;;;"
'~-"'''''''~---~--''--''''-----'''''-'~~1'--
$279'14:0701 ....·
r'"
-------.-.. -'--------.-......- -.. .
~
. -....'.... -.... - r_--.---!-.---.. .- - _ .
...
~
___.."_ .....__......_.._.__._......._..___.. _ ...._...
~-!
...__..._ ....._._...
~.L
..' .......____._.
30 Years
..$3j11i:730
t
i
iOy~~·"-
-". ----..- ...-.-
''''-~-'-'---''~"''-t~
$55:828;1401"'---$50,815:640
I
$83742210\
$76,223460
. - . .-' . . . --..
:==~=~=-==-+.=. $~1,87]:;io~t=-
$254Oi82ci
1
1-­ ___________.._._.___
~""'H_
.........
......,.~
......
~
One Bedroom
Units
n
...
_ .. ............. _ ....
~~
...........- ....'"
.!
1
-.-.--..----...-.-.. -.--.-- ----- t---·----..­ .
--·----·-r·........... _._,--"'­
Total Rentfor
MarketUnitsi
"_H'___ '_ ... " ... _ ...._ " -..­ ....- .......
._-I._... . :. ___
.~11~?_4_4!-.
__..___
._.g11f32~
t.. . . .
·~·~.---.
-.. .,. . . . . . . _,.. . . . . . . }-, . -, "'.. -,............_. . . . ­ __._
.
~.!
...... ,,-""
..............
~
"...
II?~LR..~H9rMPp!:l~.~
... -.............
_.$.gJ,~~.~_
.. _. '.....
.._..
2~~~n
Two Bedroom
Units
..
f
------­ ......--..- - - - .
-·.._
..··'-r---
--.-._._---......
-!-........­ ........ - " - - ­
."_.__ ...._
J~!.1!~J.fp.r
MfRl1![_._. ____...._...
~.~gJ!?!?L
.................
_~,~~~
.......
Total Rentfor
Market
Unltsl
$172,083
1
$147,500
"" ·..
~·w.J:~l
...'..,' ..........
~~_~.1.L.~.~
$l25
052;
$107,188
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/permittingservices/
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 Tvpe
Single-family detached
Single-family attached
Single Family house surcharge
School Impact Tax Per Dwelling Unit
$23,868
$17,970
$2 per square foot of gross floor area that exceeds 3,500 square
feet, to a maximum of 8,500 square feet)
$11,358
$4,815
$0
!
Multifamily (except high-rise)
HiQh-rise
~Multifamily
senior
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
6f27f2011
@)
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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.
I
Building Type
~ngle-Family
Metro
Station
$6,213
$5,084
$3,953
$2,824
$1,129
$5.65
$2.85
$0
$5.05
$0.35
$0.45
$0
Clarksburg
$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
I
!
General
detached residential (per dwelling unit)
I
Single-Family attached residential (per dwelling unit)
Multifamily residential (Garden apartments) (per dwelling unit)
High-rise residential (per dwelling unit)
. MultifafTlily-senior residential (per dwelling unit)
~ffice
{per sq.
ft.
GFA}
.
Industrial (per sq.
ft.
GFA)
Bioscience facility (per
sq.
ft.
GFA)
l
Retail {per sq.
ft.
GFA}
i
Place of worship (per
sq.
ft.
GFA)
ll!ivate
elementa~
and
seconda~
school (per sq.
ft.
GFA)
i
Hospital (per sq.
ft.
GFA)
Social Service Agency
Other nonresidential (per sq.
ft.
GFA)
$0
$2.85
• $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
Page 2 of 2 ReVised
6/27/2011
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Bill
39-111
Taxation - Development Impact Tax - Exemptions
Housing Opportunities Commission Public Hearing Testimony
January
241 2012
Good afternoon. I am Sally RomanI Vice-Chair of the Housing Opportunities Commission.
First, HOC wants to thank the sponsors of Bill
39-111
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% of the 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 offour-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 sponsorsl 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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MARYLAND-NATIONAL CAPITAL BUILDING INDUSTRY ASSOCIATION
.
1738 Eltoll Road, Suite 200, Silver Sprillg. Maryland 20903
Ph: (3011445-5400; Fax: (301)445-5499
£mail: 'J<lnmunjcatloDS@mncblaQ£l!
Web:
Y(WW
mncbla oil:
IIUlUlIIIG
HOMB
CRUlING IIEIGHBORIIOOOS
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 M PDUs overcomes one of the 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 for 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 adjusted 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 "loss 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% of their 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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%
of Persons with Homeowner Cost> 30% of Income
Poo'~ville
%
of llomeowncrl
spending:>
30
%
o'lUI
income on housing
r--,~
L
__
J-L~-
10 ­
13.99
14
-
_ _
.
-
.
17.99
18 -
22
.99
2)
-
3';
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4
Mal/ogillg Growtll: Tile Use oJDe1'elopml?1lt Impact Fees al1d Buildillg
E:o..
cise Ta.W?s ;11.:flary/al/d
Exhibit 2
County Development Impact FeeslExcise Tax Rates
FeelRate Per Dwelling
l
.9!.Y.!!tt
Anne Anmdel
Calvert
3
Caroline
Carroll
Charles
Dorchester
4
Fredericrs
Harford
Howard°
Montgomery7
Prince George'sS
Queen Anne's
Ttpe
FY2007
FYZOO8
FY2009
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
$4,781
12,950
5,000
6,836
10,859
3,671
11,595
7,442
$4,904
12,950
5,000
6,836
11,400
3,671
13,121
8,269
$1,759
2
12,950
5,000
6,836
11,598
3,671
13,733
8,269
See note
14,283
19,361
6,606
4,500
5,347
13,000
5,231
See note
31,105
19,864
$3.93/sq.
ft.
4,500
5,513
13,000
5,231
See note
31,105
20,638
$4.05/sq.
ft.
4,500
5,684
$3.00/sq.
ft.
5,231
st.
Mary's
Talbot
Washington
lO
Wicomico
1
Rates listed are generally those applicable to single-family detached dwdlings and are per dwelling unless
otherwise indicated.
2
Rate for a 1,500-1,599 squarefoot residential unit from January 1, 2009 through December 31. 2010. Residential
rates
Va!Y
by the square footage of a unit and increase in 2010 and 2011.
3
A S750 development excise tax for agricultural land preservation is also imposed on single-family residential lots
created by subdivision in a
"rural
district."
4
A slightly higher rate, S3,765 per dwelling, applies o\ltside 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
aU
three
fiscal years)
is
SO.10/sq.
ft.
or SO.25/sq.
ft.
(depending on the square footage), with the first 700 square feet not
ta."f{ed.
6
Roads tax is $400 for the first 500 sq.
ft.
and SO.9O/sq.
ft.
(SO.88/sq.
ft.
in fiscal200S and SO.SO/sq.
ft.
in fiscal
2007) for square footage in excess of 500
sq.
ft.
School surcharge
is
SU4/sq.
ft.
(S1.09/sq.
ft.
in f15ca12oo8 and
S1.07/sq.
ft.
in fiscal 2007).
7
Fiscal 2008 and 2009 amounts represent $10,649 for transportation and $20,456 for schools. effective December
1,
2007. Fiscal 2007 amount represents S5,819 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 Metro Station and Clarksburg impact tax districts.
8
Fiscal 2009 amount represents S14,019 for school facilities and $6,619 for public safety. A lower school facilities
rate (S8,l77 in fiscal 2009) applies inside the beltway and a lower public safety rate (S2,207 in fiscal 2009) applies
inside the "developed tier" as defined in the 2002 Prince George's County Approved General Plan.
9
A lower rate ($4,912 in fiscal 2009) applies to "in-to\....n" development.
10
In
fiscal 2007 and 2008, the rate for a nonapart1llent, residential dwelling less than l,500 sq.
ft.
in area was
S1.00/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 FOR LOW AND MODERATE INCOME 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
. househoJ.d income on housing; living in smaller than ideal units (greater than two persons per bedroom);
orcould not afford to purchase their home today .
. Summary of Demand and Supply Imbalance (2005)·
Annual Household Income
Affordable Monthly Housing
Cost
Number of Units
Demanded
Number Supplied Number Supplied Sufficiency/
(Owner Occupied) (Renter Occupied] (Deficiency)
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 arid 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
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)
16,179)
9,545
11;884
26,676
.The housing supply shortage for households earni
.
ng low to moderate incomes is on Iyexpected
.
to
.
.
. worsen over the next 20+ years. There is a slight amount of excess supplyanticipated 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 su pply will be quickly absorbed by the bordering cohorts (households earning less
than $30,000 and households earning between $60,000 and
$8~,999.
.
..
.
.
·suminary
ofD~mand
and Supply Imbalance (2030).
Affordable Monthlv 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,;150
to
$2,999
$3,000
to
$3,749
$3,750 and above
SO,797
99,104
86,729
73,234
1,491
12,465·
52,631
75,304
60,197
105,701
19,478
93,327
21;300
3,643
1,401
981
(29,828)
6,688
(12,799)
5,713
15,689
21,156
·45,909
85,527
2
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It
MAJOR POINTS PRESENTED
IN
TESTIMO~-Y
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
(+/-)
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
cl uster' 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 of PTAs 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, if MCPS 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]
@