AGENDA ITEM 10
July 8, 2014
Public Hearing
MEMORANDUM
July 3, 2014
TO:
FROM:
SUBJECT:
County Council
/):]
J
1
Josh Hamlin, Legislative
Attom~
Public Hearing:
Bill 22-14, Property Tax - Rent Reduction Tax Credit
Bill 22-14, Property Tax - Rent Reduction Tax Credit, sponsored by Council Vice
President Leventhal and Councilmembers Berliner, EIrich, Floreen and Navarro, was introduced on
April 22, 2014. A Government Operations and Fiscal Policy Committee worksession will be
scheduled at a later date.
State law authorizes the County to create a tax credit for a property owner providing
reduced rent to any tenant who is at least 65 years old or has been determined to be permanently
and totally disabled under various federal acts or by the County health officer. The County is
also permitted to provide for additional limitations on eligibility for the credit. Bill 22-14 would
allow owners who charge reduced rent to eligible elderly or disabled tenants that is at least 15%
below market rent to apply for a credit against their County property tax. The amount of the
credit would be 50% of the difference between market rent and the reduced rent. Bill 22-14
would also require the Executive to adopt regulations to administer the credit, including income­
and asset-based eligibility requirements for tenants.
This packet contains:
Bill 22-14
Legislative Request Report
Md. Tax-Property Code, §9-219
Fiscal and Economic Impact Statement
Circle
#
1
5
6
8
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Bill No.
22-14
Concerning: Prooertv Tax -
Rent
Reduction Tax Credit
Revised:
05/07/2014
Draft No. 5
Introduced:
April 22. 2014
Expires:
October 22, 2015
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: _ _ _ _ _ _ __
Ch.
Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council Vice President Leventhal and Councilmembers Berliner, Eirich, Floreen and Navarro
AN
ACT to:
(1)
(2)
create a property
tax
credit for a property owner providing reduced rent for certain
elderly or disabled tenants; and
generally amend the law relating to property
tax
credits.
By adding
Montgomery County Code
Chapter 52, Taxation
Section [[52-18T]] 52-18W
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 unqffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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Bill No. 22-14
1
Sec. 1.
Section [[52-18T]] 52-18W is added as follows:
2
3
4
[[52-18T]] 52-18W.
disabled tenants.
Property tax credit
=
reduced rent for elderly
Q!
ill
Definitions.
In this Section:
Director
means the Director of Finance or the Director's designee.
Elderly or disabled tenant
means
subsection
ill
and:
~
5
6
7
tenant who meets the income- and
asset-based eligibility requirements established
Qy
regulation under
8
9
10
ill
ill
is at least 65 years old;
has been found permanently and totally disabled and has
qualified for benefits under:
(A)
the Social Security Act;
the Railroad Retirement Act;
11
12
13
an
@
14
15
(C)
any federal act for members of the United States armed
forces; or
any federal retirement system; or
16
17
ill
has been found permanently and totally disabled
Qy
the County
health officer.
18
19
Market rent
means an amount, determined
Qy
the Department of
Housing and Community Affairs, equal to:
20
21
ill
ill
the rent charged to other tenants for comparable units in the
same property; or
if there are no other comparable units in the same property, the
rent charged for comparable units in the same market area.
22
23
24
25
Reduced rent
means rent charged to an elderly or disabled tenant that
is at least 15% less than market rent.
26
27
Rent reduction
means the difference between the market rent and
reduced rent for the
dwe1lin~
F:\LAW\BILLS\1422 Rent Reduction Tax Credit\Bill 5.00c
28
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Bill No. 22-14
29
30
31
32
33
34
35
36
Tax-Property Article
means the Tax-Property Article of the Maryland
Code.
.Gil
Credit.
As authorized
Qy
§9-219 of the Tax-Property Article, the
owner of
~
rental dwelling who provides reduced rent to an elderly or
disabled tenant may receive
~
credit against the County property tax.
W
Amount
gj
Credit.
ill
The credit allowed under this Section is 500/0 of the total rent
reductions provided
Qy
the owner to elderly or disabled tenants
during the tax year.
37
38
39
40
ill
A credit granted to
~
person under this Section must not exceed
the amount of County property tax paid
Qy
the person in the tax
year in which the credit is granted.
@
41
42
43
44
45
Annual aggregate limit.
ill
Unless
~
larger amount is approved in the annual operating
budget or
~
Council resolution, during any fiscal year, the total
credits granted under this Section must not exceed $250,000.
ill
ill
Credits must be granted in the order in which the Department of
Finance receives complete applications under subsection
hl
A complete application that, if granted, would cause the limit
set in paragraph
46
47
48
49
ill
of this subsection to be exceeded, must be
granted in the next fiscal year or years based on the order in
which the Department of Finance received the application.
50
51
W
Application.
52
53
54
55
ill
A property owner must submit an application to the Director on
or before the date that the Director sets.
ill
An
application must:
®
be on the form that the Director requires; and
CD
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Bill No. 22-14
56
all
demonstrate that the taxpayer is entitled to the credit.
The County Executive must adopt regulations under
57
58
ill
Regulations.
method
ill
to administer this Section, including income- and asset­
59
60
61
based tenant eligibility requirements.
(g)
Applicability.
The credit authorized
l2y
this Section applies to any tax
year beginning after June 30, 2014.
Approved:
62
63
64
65
Craig
L.
Rice, President, County Council
Date
66
Approved:
67
68
69
Isiah Leggett, County Executive
Date
70
71
This is a correct copy ofCouncil action.
72
73
Linda M. Lauer, Clerk ofthe Council
Date
G
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LEGISLATIVE REQUEST REPORT
Bill 22-14
Property Tax
-
Rent Reduction Tax Credit
DESCRIPTION:
Bill 22-14 would allow owners who charge reduced rent to eligible
elderly or disabled tenants that is at least 15% below market rent to
apply for a credit against their County property tax. The amount of
the credit would be 50% of the difference between market rent and
the reduced rent.
The County wishes to ensure that affordable housing options are
available to elderly and disabled residents.
To provide property tax relief to owners who charge reduced rent to
eligible elderly or disabled tenants.
Office of Finance
To be requested.
To be requested.
To be requested.
To be researched.
Josh Hamlin, 240-777-7892
Tax credit applies Countywide.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Not applicable.
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Page I
,. N·
ieXIS
·
L
eXls·
®
loflDOCUMENT
Annotated Code of Maryland
Copyright 2014 by Matthew Bender and Company, Inc., a member of the LexisNexis Group
All rights reserved.
*"'*
Statutes current through Chapter 1 of the 2014 General Assembly Regular Session
***
***
Annotations current through December 7,2013
***
TAX - PROPERTY
TITLE 9. PROPERTY TAX CREDITS AND PROPERTY TAX RELIEF
SUBTITLE 2. STATEWIDE OPTIONAL
GO TO MARYLAND STATUTES ARCHIVE DIRECTORY
Md. TAX-PROPERTY Code Ann.
§
9-219
(2014)
§ 9-219. Rental dwellings providing reduced rents for elderly or disabled tenants
(a) Qualifications for credit. -- The Mayor and City Council of Baltimore City or the governing body of a county or of
a municipal corporation may grant, by law, a property tax credit against the county or municipal corporation property
tax imposed on rental dwellings of owners who provide reduced rents for any tenant who:
(1) is at least 65 years old;
(2) has been found permanently and totally disabled and has qualified for benefits under:
(i)
the Social Security Act;
(ii) the Railroad Retirement Act;
(iii) any federal act for members of the United States armed forces; or
(iv) any federal retirement system; or
(3) has been found permanently and totally disabled by a county health officer or the Baltimore City
Commissioner of Health.
(b) Eligibility; amount and duration; implementation. -- The county or municipal corporation may provide, by law,
for:
(1) the specific requirements for eligibility for a tax credit authorized under this section;
(2) additional limitations on eligibility for the credit;
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Page 2
Md. TAX-PROPERTY Code Ann.
§
9-219
(3) the amount and duration of the credit; and
(4) any other provision appropriate to implement the credit.
HISTORY:
1991, ch. 415; 1995, ch. 3,
§
1.
NOTES:
LexisNexis 50 State Surveys, Legislation
&
Regulations
Archaeological and Historic Sites
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ROCKVILLE,
MARYL\J.~D
MEMORANDUM
May 12,2014
TO:
Craig Rice, President, County Council
Jennifer A. Hugbes, Oir
Joseph F. Beach, Direct
ICC
FROM:
of Management and Budget
ment of Finance
SUBJECT:
FElS for Council Bill 22-1 ,Property Tax - Rent Reduction Tax Credit
Please find attached the fiscal and economic impact statements for the above­
referenced legislation.
JAH:fz
co: Bonnie Kirkland, Assistant Chief Administrative Officer
Usa Austin, Offices
of
the
County Executive
Joy Nunni, Special Assistant to the County Executive
Patrick Lacefield, Director, Public Information Office
Joseph F. Beach, Director, Department of Finance
Michael Coveyou, Department of Finance
David Platt, Department ofFinance
Robert Hagedoorn, Department of Finance
Jed Millard, OfTice of Management and Budget
Alex
Espinosa.. Office of Management and Budget
Felicia Zhang. Office of Management and Budget
Naeem Mia,
Office
of.Management and Budget
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Fiscal Impact Statement
Council
niH
22-14, Property Tax - Rent Reduction Tax Credit
1.
Legislative
Summary.
Bill 22-14 would create a property
tax:
credit for any property owner providing reduced
rent to any tenant who
is
at least
65
years old or has been determined to be permanently
and tot:iUy disabled tmder various federal acts or by the County health officer. The
Bill
would allow property owners who charge reduced rent to eligible elderly or disabled
tenants that
is at
least
15
percent below market rate to apply for
a
credit
against
their
County property
tax,
The amount oft11e credit would be 50 percent of the difference
between market rent and the reduced rent. The
Bill
would also require the County
Executive to adopt regulations to administer the credit, including income- and asset-ba..qed
eligibi
Ii
ty requirements for tenanis.
.
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.
Pursuant to section (d)(1) ofBm 22-14, "unless a larger amount is approved in the annual
operating budget or
a
Council resolution, during any fiscal year, the total credits granted
under this Section must not exceed
$250,000."
The Department of Housing and Community Affairs
(DHCA)
believes that there would
be few, if any, applicants for
this
tax:
credit program
as
the
Bill
provides
no
incentive for
property owners to provide tenants with reduced rent. The amount of a credit a property
owner could be granted is only 50 percent ofthe difference between market rates and the
reduced rate. However, due to already thinly stretched resources in the Department of
Finance, if there are applicants for this progranl, one additional full-time administrative
position at Grade
18
would
be
required
to
administer any new property
tax
credits created
by the County. This amounts to a cost of approximately
$72,000
annually to the
Department in total personnel costs.
Considerable staff time may also be required by the DHCA to conduct research on renter
statistics and to
certify
eligibility of tenants and property owners (landlords).
At
this
time, it is not possible to accurately quantify
the
tot:11 number
and
amount of tax
credits that would be granted under tbis program. Data is not readily available as to how
many tenants in the County would be eligible and
are
paying reduced rents and how
many property
O\\ll1erS
would apply for the credit.
3. Revenue and expenditure estimates covering
at
least the next 6 fiscal years.
See #2.
4. An actuarial analysis through the entire amortization period for each bill that would affect
retiree pension or group insurance costs.
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N/A
5. Later actions that may affect future revenue and expenditures iftbe bill authorizes future
spending,
Any appropriation
in
the operating budget or by Council resolution to raise or lower the
maximum level of support for this
tax
credit program would affect future expenditures.
Creation of any incentives for property owners to offer reduced rents would also increase
expenditures.
6. An estimate
of the staff time needed to implement the
bilL
DHCA believes that there would be few, if any, applicants for this
tax
credit program as
the Bill provides
no
incentive for property ovvners to provide tenants with reduced rent.
Ho,,>,."Cver, due to already thinly stretched resources in the Department of Finance, if there
are applicants for this progran1, one additional full-time administrative position
at
Grade
18 would be required to administer any new property ta.x credits created by the County,
This
~ounts
to a cost of approximately
$72,000
annually to the Department
in
total
personnel costs.
Considerable staff time may also be required by DHCA to conduct research on renter
statistics and to
certjfy
eligibility .oftenants and property cmmers (landlords).
7. An explanation ofllow the addition of new staff responsibilities would affect other duties.
Duties of current staff would not be affected
~ith
the addition of one full-time, Grade
18
administrative position in the Department of Finance.
8. An estimate of costs when
an
additional appropriation
is
needed.
See #5,
9. A description of any variable that could affect revenue and cost estimates.
Variables affectmg revenue and cost estimates include, but are not limited to:
a. The number of eligible elderly or disabled tenants in the County
b. The number of property owners providing rent for eligible tenants at least 15
percent below market rates
c. The number of eligible property ovmers who apply for the program
d. Creation of incentives for property owners to provide reduced rent
to
eligible
tenants
10. Ranges of reVCllUe or expenditures that are uncertain or difficult to project
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At this
time,
it is
not possible to accurately quantify the total number and amount of
tax
credits that would be granted under this program. Dard is not readily available as to how
many tenants in the County would be eligible and are paying reduced rents and how
many
property owners would apply for the credit.
Considerable staff time may be required by DHCA to conduct research on renter statistics
and to certify eligibility oftenants and property o'W"I}ers (landlords).
11. If
a
bill
is
likely to have no
fiscal impact,
why that
is
the case.
N/A
12. Other fiscal impacts or commentc;.
N/A
13. The following contributed to and concurred
with
this analysis:
Richard Y. Nelson, Director, Department ofHousing and Commuriity Affairs
Michael Coveyou, Department of Finance
Jedediah Millard, Office of Management and Budget
@
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Economic Impact Statement
SiD 22-14,
Property Tax - Rent Reduction Tax Credit
Background:
This legislation would <'-'Teate a property tax credit for a property owner providing reduced rent
for certain elderly or disabled tenants. Bi1122-14 would allow owners who charge reduced rent
(at least fifteen percent
(15%)
below market rent)
to
eligible elderly or disabled tenants to apply
for a credit against their County property tax. 'The amount of the credit would
be
fifty
percent
(50%) of
me
difference between the market rent and the reduced rent. Bill 22-14 would limit the
total credits granted to $250,000 during any fiscal year unless a larger amount is approved either
in
the annual operating budget or a Council resolution.
1. The sources of information, assumptions, and methodologies used.
Sources of information and data include tbe Department of Finance. the Department of
Housing and Conununity Affairs (DHCA), and the American Community Survey (ACS),
U.S. Bureau of the Census.
The assumption
is
that there would be fewer than 200 credit requests according to
information provided by DHCA.
According
to
ACS, the number of renter-occupied housing units in Montgomery County with
the age of the head of the household 65 years or olderwdS 17,431 in 2012. According to the
survey, nearly 10,000 household's gross rent
is
thirty-five percent or more oftotal household
income. However, the total number of eligible
hou:'~eholds
would be limited because
households 9.rho reside in either Moderately Priced Dwelling Units (MPDU) or receive
a
subsidy are not eligible for this credit.
2.
A
description of any variable that could affect the economic impact estimates.
The variables that could affect the economic impact estimate are the total amount of the
credit that
is
available, the number of credit requests, the average monthly rent in the County,
and, at a minimum. the number of renter-occupied housing units \\ith the age of the head of
the household
65
years or older, and the number of renter-occupied housing units
that are
classified
as
either MPDUs or receive a subsidy.
3.
The
Bilrs
positive or negative effect,
if
any on employment, spending, saving,
inve..~tment,
incomes, and property values in the County.
According to infomlation provided by DHCA, the
Bill
would likely have
very
little economic
impact on personal income to the renters and business income of the property o'Wners.
Tenants who reside in an MPDU or receive a subsidy would be excluded from receiving the
credit. DHCA suggest<; that because prope.rty ovvners who apply for this program would
have
to
incur lost rent in the amount of fifty percent ofthe rent reduction, there would not be
an economic incentive, in most cases. to voluntarily reduce the rent for the eligible occupants
in exchange for the property
tax
credit.
Page 1 of2
@
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Economic Impact Statement
Bill 22-14, Property Tax. - Rent Red..ction Tax Credit
4.
If
a Bill is likely to have no economic impact,
why
is that the case?
The Bill
is likely not to
have a material economic impact for
reasons presented
in
#3 above.
5. The following contributed to and concurred with this analysis: David
Platt,
Rob
Hagedoom. and Michael Coveyou,
Finance;
and Richard
Nelson,
Department
of Housing
and Community Affairs.
2fiif}kec-to~
Department of Finance
Page 2 of2