Agenda Item 9B
February 3, 2015
Action
ADDENDUM
MEMORANDUM
TO:
County Council
FROM:
SUBJECT:
Robert H. Drummer, Senior Legislative Atromey{;;;J
Addendum:
Bill 62-14, Taxation - Development Impact Taxes
Ancillary Facilities
Exemption
Bill 62-14, Taxation - Development Impact Taxes Exemption - Ancillary Facilities,
sponsored by then-Council President Rice, was introduced on November 25,2014. After the Bill
was introduced, Council President Leventhal and Councilmembers Floreen, Katz, Riemer, and
Navarro added themselves as co-sponsors.
After extensive discussion with Council staff and Diane Schwartz Jones, Director of the
Department of Pennitting Services, representing the County Executive, the Government
Operations and Fiscal Policy Committee voted 2-1 (Committee Chair Navarro dissenting) to
recommend incorporating the Executive amendments in the Bill at the January 29 worksession.
Committee Chair Navarro preferred to introduce the Executive amendments as a separate Bill so
that they would receive a public hearing. The Committee requested further infonnation from Ms.
Jones about the scope and cost of the Executive amendments; particularly the broad proposed
definition of "charitable, philanthropic institution". Since this Bill is scheduled for Council
consideration on February 3, Ms. Jones said she could provide that information by Friday January
30; however, we received that information after the Action packet went to print. The information
received from Ms. Jones is at
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This packet contains:
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F:\LAW\BILLS\1462 Impact Tax - Exemption - Ancillary Facilities\Action Addendum.Docx
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MEMORANDUM
January 30, 2015
To:
Nancy Navarro, Chair
GO Committee
Diane R. Schwartz Jones, Director
Montgomery County Department of Permitting Services
Bill 62-14-GO Committee requested information
From:
Subject:
At yesterday's GO Committee meeting, you requested additional information relative to County
Executive Leggett's recommended amendments to Bill 62-14, which the Committee unanimously
supported in concept and procedurally supported by a 2-1 vote. In particular, with respect to the
proposal to replace the effectively undefined term "social service provider" with the term "Charitable,
Philanthropic Institution," the Committee requested follow-up with examples of types of uses that
would fit into the definition of Charitable, Philanthropic Institution and how would that relate to other
types of uses.
The term "social service provider" is defined as "a locally-based, federally tax-exempt nonprofit
direct provider of social services whose primary service area is Montgomery County." The term social
se rvices itself is not defined. This issue does not come up often, but from time to time non-profit
organizations come to us and ask that they not be obligated to pay impact taxes because they are non­
profit and providing beneficial services. This has come up for administrative offices for an organization
serving people with disabilities, an organization building a youth development facility, and in other
limited circumstances as well. Most recently, this came up with respect to a non-profit museum that
operates on limited hours and is engaged in educational programs in coordination with county schools.
The definition of Charitable, Philanthropic Institution "means a private, tax-exempt
organization whose primary function is to provide services, research, or educational activities in areas
such as health, social service, recreation, or environmental conservation." This definition comes from
the recently adopted zoning ordinance and would provide greater clarity for the department.
Overall and in the longterm, the fiscal impact of this amendment is not likely to be significant.
The immediate impact is that one recent permittee (a common ownership community) would be
entitled to a refund of $5,535 and a 2
nd
recent permittee (a non-profit museum) would pay at a reduced
rate and would be entitled to a refund of $416,450.
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Nancy Navarro, Chair, GO Committee
January
30, 2015
Page 20f2
It is important to note that one of the threshold rationales behind impact taxes is that
developers pay for the service and infrastructure demands generated by their projects. This policy does
not apply in the same way where a non-profit organization is providing services that supplement or
relieve the need for services or quality of life amenities that the County would otherwise provide or find
desirable, or where other important competing policies are involved. That is what has given rise to
certain exemptions and rates of
$0
for some types of land use. For example, and in response to some
of the specific uses that were discussed in Committee session yesterday, the following uses pay a rate of
$0:
bioscience facilities; hospitals, and other social service agencies, which the department must
currently decide on an ad hoc basis. Additionally, facilities owned
and
used by government agencies are
exempt from payment of impact taxes, as are moderately priced dwelling units, workforce housing,
personal living quarter projects, opportunity housing projects and development that is constructed in an
area that is currently or formerly identified as an enterprise zone.
services,
research, or
educational
activities in
areas, such
as
. health
Socia I se rvice
recreation
Impact tax
rates
FY12
FY13
FY14
$0
$0
Exempt for
HOAs and
common
ownership
communities
per
62-14
0
0
1
(would
qualify
under
original bill)
0
0
1
(would
qualify
under
original bill}
0
0
Environmental
conservation
0
0
0
0
A review of the past three fiscal years has identified no projects that would qualify as a
Charitable Philanthropic Organization other than two that would be covered by the original bill and one
project that would qualify as a Cultural Institution. I am aware of an environmental sustainab.ility
building that is planned and
may
qualify as a Charitable Philanthropic Organization, but at this time I do
not have any information because the permit application has not yet been submitted and we do not yet
know the ownership structure.
CC:
George Leventhal, Council President
Craig Rice, Councilmember
Hans Riemer, Councilmember
Sidney Katz, Councilmember
Timothy
L.
Firestine, CAO
Joseph Beach, Director, Department of Finance
Jennifer Hughes, Director, OMB
Bonnie Kirkland, ACAO