Agenda Item 9
October 4,2011
Public Hearing
MEMORANDUM
TO:
FROM:
County Council
~
Michael Faden, Senior Legislative Attorney
(jO
Glenn Orlin, Deputy Council Staff Director
Public Hearing:
Bill 26-11, Taxation
Development Impact Taxes - Payment
SUBJECT:
Bill 26-11, Taxation - Development Impact Taxes - Payment, sponsored by
Councilmember Riemer, Council President Ervin, and Councilmembers Berliner, Floreen,
Leventhal, Navarro and Rice, was introduced on September 13, 2011. A Government
Operations and Fiscal Policy Committee worksession is tentatively scheduled for October 10 at
10:30 a.m.
Bill 26-11 would require the transportation and school development impact taxes, and the
associated transportation mitigation and school facilities payments, to be paid before a use and
occupancy permit is issued, rather than before a building permit is issued as current law
provides.
This packet contains:
Bill 26-11
Legislative Request Report
F:ILAWIBILLSIl126 Development Impact Taxes-PaymentlPublic Hearing Memo.Doc
Circle #
1
12
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Bill No.
26-11
Concerning: Taxation -
Development
Impact Tax - Payment
Revised: 8-17-2011
Draft No. 3
Introduced:
September 13, 2011
Expires:
March 13,2013
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: ____- - - - - - -
Ch, _ _. Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmember Riemer, Council President Ervin, and Councilmembers Berliner, Floreen,
Leventhal, Navarro and Rice
AN
ACT
to:
(1)
(2)
(3)
require any development impact tax to be paid before a use and occupancy permit is
issued;
require any transportation mitigation payment or school facilities payment to be paid
before a use and occupancy permit is issued; and
generally amend the law governing development impact taxes.
By amending
Montgomery County Code
Chapter 52, Taxation
Sections 52-47,52-49,52-50,52-51,52-54,52-55,52-56, 52-59, 52-89, 52-93, 52-94
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.
26-11
1
2
Section
1.
Sections 52-47,52-49,52-50,52-51,52-54,52-55,52-56,52-59,
52-89,52-93, and 52-94 are amended as follows:
52-47. Definitions.
In this Article the following tenns have the following meanings:
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4
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*
*
*
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Applicant
means the property owner, or duly designated agent of the property
owner, of land on which a [building] use and occupancy pennit has been
requested for development.
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*
*
*
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11
Development
means the carrying out of any building activity or the making of
any material change in the use of any structure or land which requires issuance
of a [building] use and occupancy pennit and:
(1)
(2)
Increases the number of dwelling units; or
Increases the gross floor area of nonresidential development.
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Development impact tax
means a pro rata per unit or per square foot of gross
floor area tax imposed before a [building] use and occupancy pennit. is issued
for development which is intended to defray a portion of the costs associated
with impact transportation improvements that are necessary to accommodate
the traffic generated by the development.
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*
*
*
Property owner
means any person, group of persons, finn, corporation, or
other entity with a proprietary interest in the land on which a [building] use
and occupancy pennit has been requested.
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25
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*
Use and occupancy permit
means
~
*
*
use and occupancy pennit issued
hY
the
Department of Pennitting Services under Chapter
~
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BILL No. 26-11
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52-49. Imposition and applicability of development impact taxes.
(a)
A development impact tax must be imposed before a [building] use and
occupancy permit is issued for development in the County.
(b)
An applicant for a [building] use and occupancy permit must pay a
development impact tax in the amount and manner provided in this
Article, unless a credit in the full amount of the applicable tax applies
under Section 52-55 or an appeal bond is posted under Section 52-56.
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*
*
*
*
~
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52-50. Collection of development impact taxes.
*
(b)
*
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[Applicants] Each applicant for [building permits]
use and occupancy
permit for development that is not exempt from the development impact
tax must supply to the Department of Permitting Services for each
requested [building] use and occupancy permit:
(1)
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The number and type of dwelling units for residential
development; and
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(2)
The gross floor area and type of development for nonresidential
development.
The
applicant
must
submit
for
inspection
relevant
support
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47
documentation as the Department requires.
(c)
The Department of Permitting Services must not issue a [building] use
and occupancy permit for development that is not exempt from the
development impact tax unless:
(1)
(2)
the applicant has paid the applicable development impact tax;
the applicant is entitled to a credit under Section 52-55 in the
amount of the applicable development impact tax; or
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BILL
No. 26-11
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(3)
an appeal has been taken and a bond or other surety posted under
Section 52-56.
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55
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(d)
When a person applies to a municipality in the County for a [building]
use and occupancy permit for a building or dwelling unit, the applicant
must show that all payments due under this Section with respect to the
building or unit have been paid. The Director of Finance must promptly
refund any payment made for any building or part of a building for
which a [building] use and occupancy permit is not issued by the
municipality.
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*
(k)
*
*
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If, within 10 years after a [building] use and occupancy permit is issued,
any person changes the use of all or part of a building to a use for which
a higher tax would have been due under this Article when the [building]
use and occupancy permit was issued (including a change from a status,
use, or ownership that is exempt from payment to a status, use, or
ownership that is not so exempt), the owner of the building must within
10 days after the change in status, use, or ownership pay all additional
taxes that would have been due if the building or part of the building
had originally been used as it is later used. If the building owner does
not pay any additional tax when due, each later owner is liable for the
tax, and any interest or penalty due, until all taxes, interest, and penalties
are paid.
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52-51. Calculation of development impact tax.
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(a)
The Department of Permitting Services must calculate the amount of the
applicable development impact tax due for each [building] use and
occupancy pennit by:
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BILL
No. 26-11
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(l)
determining the applicable impact tax district and whether the
permit is for development that is exempt from the tax under
Section 52-49(f);
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(2)
verifYing the number and type of dwelling units and the gross
floor area and type of nonresidential development for which each
[building] use and occupancy permit is sought;
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(3)
(4)
determining the applicable tax under Section 52-57; and
multiplying the applicable tax by:
(A)
(B)
the appropriate number of dwelling units; and
the gross floor area of nonresidential development.
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(b)
If the development for which a [building] use and occupancy permit is
sought contains a mix of uses, the Department must separately calculate
the development impact tax due for each type of development.
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(c)
If the type of proposed development cannot be categorized under the
definitions of nonresidential and residential in Section 52-47, the
Department must use the rate assigned to the type of development
which generates the most similar traffic impact characteristics.
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(d)
The Department must calculate the amount of the development impact
tax due under this Article in effect when the [building] use and
occupancv permit application is submitted to the Department, or before
a [building] use and occupancy permit is issued by a municipality.
(e)
A [building] use and occupancy permit application, or if the property is
located in a municipality with authority to issue [building] use and
occupancy permits, a request to determine the amount of the impact tax,
must be resubmitted to the Department if the applicant changes the
project by:
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lD
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BILL
No.
26-11
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(2)
increasing the gross floor area of nonresidential development; or
changing the type of development so that the development impact
tax would be increased.
(3)
The Department must recalculate the development impact tax based on
the plans contained in the resubmitted [building1 use and occupancy
permit application.
52-54. Refunds.
(a)
Any person who has paid a development impact tax may apply for a
refund of the impact tax if:
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(1)
the County has not appropriated the funds
for impact
transportation improvements of the types listed in Section 52-58,
or otherwise formally designated a specific improvement of a
type
list~d
in Section 52-58 to receive funds, by the end of the
sixth fiscal year after the tax is collected;
(2)
the [building1 use and occupancy permit has been revoked or has
lapsed because construction did not start; or
(3)
the project has been physically altered, resulting in a decrease in
the amount of impact tax due.
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*
52-55. Credits.
(a)
(1)
*
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A
property owner is entitled to a credit if the owner, before July
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1, 2002, entered into a participation agreement, or a similar
agreement with the state or a municipality, the purpose of which
was to provide additional transportation capacity.
A
property
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owner is also entitled to a credit if the owner receives approval
before July 1, 2002, of a subdivision plan, development plan, or
SImI
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development approval by the County or
a
municipaEty
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BILL
No. 26-11
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that requires the owner to build or contribute to a transportation
improvement that provides additional transportation capacity.
The Department of Transportation must calculate the credit. The
credit must equal the amount of any charge paid under the
participation agreement. The Department may give credit only
for [building] use and occupancy permit applications for
development on the site covered by the participation agreement.
*
(b)
*
*
A property owner must receive a credit for constructing or contributing
to an improvement of the type listed in Section 52-58 if the
improvement
reduces
traffic
demand
or
provides
additional
transportation capacity. However, the Department must not certifY a
credit for any improvement in the right-of-way of a State road, except a
transit or trip reduction program that operates on or relieves traffic on a
State road or an improvement to a State road that is included in a
memorandum of understanding between the County and either
Rockville or Gaithersburg.
(1)
If the property owner elects to make the improvement, the owner
must enter into an agreement with a municipality or the County,
or receive a development approval based on making the
improvement, before any [building] use and occupancy permit is
issued. The agreement or development approval must contain:
(A)
(B)
the estimated cost of the improvement, if known then;
the dates or triggering actions to start and, if known then,
finish the improvement;
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BILL
No. 26-11
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(C)
a requirement that the property owner complete the
improvement according to applicable municipal or County
standards; and
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(D)
any other term or condition that the municipality or County
finds necessary.
(2)
The Department of Transportation must:
(A)
(B)
(C)
review the improvement plan;
verify costs and time schedules;
determine whether the
improvement
IS
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an
impact
transportation improvement;
(D)
determine the amount of the credit for the improvement
that will apply to the development impact tax; and
(E)
certify the amount of the credit to the Department of
Permitting
Services
before
that
Department
or
a
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municipality Issues any [building] use and occupancy
permit.
*
52-56. Appeals.
*
*
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After determination of the amount of the development impact tax or credit due,
an applicant for a [building] use and occupancy permit or a property owner may
appeal to the Maryland Tax Court to the extent permitted by state law or, if the
Maryland Tax Court does not have jurisdiction, to the Circuit Court under the
Maryland Rules of Procedure that regulate administrative appeals. If the appealing
party posts a bond or other sufficient surety satisfactory to the County Attorney in an
amount equal to the applicable development impact tax as calculated by the
Department of Permitting Services, the Department or municipality must issue the
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[building
I
and
-=-::...;:...::.:.~=_
pennit
if
all
other
applicable
conditions
have
been
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BILL No. 26-11
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satisfied. The filing of an appeal does not stay the collection of the development
impact tax until a bond or other surety satisfactory to the County Attorney has been
filed with the Department of Permitting Services.
52-59. Transportation Mitigation Payment.
(
a)
In addition to the tax due under this Article, an applicant for a [building]
use and occupancy permit for any building on which an impact tax is
imposed under this Article must pay to the Department of Finance a
Transportation Mitigation Payment if that building was included in a
preliminary plan of subdivision that was approved under the
Transportation
Mitigation
Payment
provisions
in
the
County
Subdivision Staging Policy.
*
(
a) .
*
*
52-89. Imposition and applicability
of tax.
An
applicant for a [building] use and occupancy permit for a residential
development must pay a development impact tax for public school
improvements in the amount and manner provided in this Article before
a [building] use and occupancy permit is issued for any residential
development in the County unless:
(I)
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a credit for the entire tax owed is allowed under Section 52-93; or
an appeal bond is posted under Section 52-56.
(2)
52-93. Credits.
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*
*
(b)
*
*
*
*
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Ifthe property owner elects to make a qualified improvement, the owner
must enter into an agreement with the Director of Permitting Services,
or receive a development approval based on making the improvement,
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BILL No. 26-11
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before any [building] use and occupancy permit IS issued.
agreement or development approval must contain:
(1)
(2)
the estimated cost ofthe improvement, if known then,
The
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the dates or triggering actions to start and, if known then, finish
the improvement.
(3)
a requirement that the property owner complete the improvement
according to Montgomery County Public Schools standards, and
(4)
(c)
such other terms and conditions as MCPS finds necessary.
MCPS must:
(1)
(2)
(3)
review the improvement plan,
verifY costs and time schedules,
,
determine whether the improvement
IS
a public school
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improvement ofthe type listed in Section 52-91(d),
(4)
(5)
determine the amount of the credit for the improvement, and
certifY the amount of the credit to the Department of Permitting
Services before that Department or a municipality Issues any
[building] use and occupancy permit.
*
52-94. School Facilities Payment.
*
*
(a)
In
addition to the tax due under this Article, an applicant for a [building]
use and occupancy permit for any building on which a tax is imposed
under this Article must pay to the Department of Finance a School
Facilities Payment if that building was included in a preliminary plan of
subdivision that was approved under the School Facilities Payment
provisions in the County Subdivision Staging Policy.
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*
*
*
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BILL
No.
26-11
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Section. 2. Effective date.
This Act takes effect 91 days after
it
becomes law. The development impact
tax imposed under Article VII and XII of Chapter 52, as amended by Section 1 of
this Act, applies to any building for which an application for a use and occupancy
permit is filed on or after that date. However, an applicant need not pay the tax
before receiving a use and occupancy permit for development if the applicant paid
the tax before receiving a building permit for the same development.
Approved:
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Valerie Ervin, President, County Council
Date
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Approved:
Isiah Leggett, County Executive
Date
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This is a correct copy o/Council action.
Linda M. Lauer, Clerk of the Council
Date
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LEGISLATIVE REQUEST REPORT
Bill 26-11
Taxation
DESCRIPTION:
Development Impact Taxes
-
Payment
Requires any development impact tax, and the associated
transportation mitigation and school facilities payments, to be paid
before a use and occupancy permit is issued, rather than before a
building permit is issued.
Requiring impact taxes to be paid before a building permit is issued
can cause cash flow difficulties for builders since the payment comes
well before the building is sold or leased.
To mitigate cash flow hardships that builders encounter without
reducing impact tax payments to the County.
Department of Permitting Services, Department of Finance
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
Taxes and payments apply County-wide.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICA TION
WITHIN
MUNICIPALITIES:
PENALTIES:
Not applicable.
\0
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