Agenda Item 6B
November 17,2015
Introduction
MEMORANDUM
November 13,2015
TO:
FROM:
County Council
Glenn
Council Administrator
Amanda Mihill, Legislative
Attome~
Introduction:
Expedited Bill 47·15, Taxation - Transportation Impact Tax -
Revisions
Orli~eputy
SUBJECT:
Expedited Bill 47-15, Taxation - Transportation Impact Tax - Revisions, sponsored by Lead
Sponsor Council President at the request ofthe County Executive, is scheduled to be introduced on
November 17,2015. A public hearing is tentatively scheduled for December 8 at 11 :00 a.m.
Expedited Bill 47·15 would revise the life of a credit certified after a certain date; allow a credit
for reconstruction of an existing road; and generally amend County law regarding impact taxes.
Expedited Bill 47·15 includes 2 elements of Bill 34·15, Taxes- Transportation and School Impact
Tax Amendments, for which a public hearing was held on July 21,2015.
This packet contains:
Expedited Bill 47·15
Legislative Request Report
Memo from County Executive
Fiscal and Economic Impact Statements
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Impact
Tax\Intro Memo.Docx
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Expedited Bill No.
Bill 47-15
Concerning: Taxes -
Transportation
Impact Tax - Revisions
Revised:
11/10/2015
Draft No. _1_
Introduced:
November 17. 2015
Expires:
May 17, 2017
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective:
_~
_ _ _ _ _ __
Sunset Date: .....;N'-"o=n:.;:::e_ __::_----
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the Request of the County Executive
AN EXPEDITED ACT
to:
(1)
revise the life of a credit certified after a certain date;
(2)
allow a credit for reconstruction of an existing road; and
(3)
generally amend County law regarding impact taxes.
By amending
Montgomery County Code
Chapter 52. Taxation
Sections 52-55 and 52-58
Boldface
Underlining
[Single boldface brackets]
Double underlining
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
.
[[Double boldface bracketsD
* * *
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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EXPEDITED BILL
No.
47-15
1
2
Sec.
1.
Sections 52-55 and 52-58 are amended as follows:
52-55. Credits.
(b) A property owner must receive 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
3
4
5
6
7
8
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.
9
10
11
12
*
*
*
(4) Any credit that was certified under this subsection on or after
March 1, 2004, and before December 31, 2015, expires 6 years
after the Department certifies the credit. Any credit that was
certified under this subsection on or after January
L
2016, expires·
12 years after the Department certifies the credit.
13
14
15
16
17
*
52-58. Use of impact tax funds.
*
*
18
19
20
21
22
Impact tax funds may be used for any:
(a)
New road.1 [or] widening of an existing road.1 or total reconstruction of all
or part ofan existing road required as part ofwidening ofan existing road,
that adds highway or intersection capacity or improves transit service or
bicycle commuting, such as bus lanes or bike lanes.
23
24
25
26
*
Sec. 2. Expedited Effective Date.
*
*
The Council declares that this legislation is necessary for the immediate protection of
the public interest. This Act takes effect on the date on which it becomes law.
27
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LEGISLATIVE REQUEST REPORT
Taxation
DESCRIPTION:
Expedited Bill 47-15
Transportation Impact Tax
-
Revision
Amendments to Chapter 52 of the Montgomery County Code and
Corresponding Executive Regulation that relates to the Development
Impact Tax for Transportation Improvements. Revisions to the County
Code are the result of requests by Council to change the approach by
which credits are certified, and extend the life of a credit from its
existing 6 years to 12 years. Amendments to the Executive Regulation
provide guidance and clarification in interpreting the law with respect
to the certification of impact
tax
credits for transportation.
Historically, credits have been certified for the cost of improvements
that meet the intent of the code by providing new transportation
capacity. As a result, the cost of replacing or improving existing lanes
in order to add new or additional lanes (Le. 2-lanes
to
4 lanes) were not
eligible for a credit while the cost of providing the two new lanes
would
be
eligible. The Council requested that the code
be
modified so
that a credit can be certified for the total cost ofthe improvement. This
explains the proposed change to Chapter 52-58 of the County Code.
Chapter 52-55 is also being modified in this proposed amendment.
That modification allows that any new credit certified after a date
specific will have a 12-year credit life. The current law provides for a
6-year credit life.
A primary goal of the Executive Regulation is to provide clarification
and guidance as to the interpretation of the County Code.
Departments of Permitting Services and Finance.
To be requested.
To be requested.
To be requested.
To be researched.
Glenn Orlin, Deputy Council Administrator, 240-777-7936
Amanda Mihill, Legislative Attorney, 240-777-7815
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Chapter 52 is applicable in municipalities
N/A
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OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE!, MARYLAND 20850
Isiah Leggett
County Executive
MEMORANDUM
November 10,2015
TO:
George Leventhal, President
Montgomery County Council
Isiah Leggett, County Executive
~
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FROM:
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SUBJECT: Expedited Bill No. XX-IS, Amendments to Montgomery County Code
Chapter 52, Taxation, Sections 52-55 and 52-58
The purpose of this memorandwn is
to
transmit, for the County Council's
approval, Expedited Bill No. XX-15, Amendments to Chapter 52 oftfie Montgomery
County Code that relates to the Development Impact Tax for Transportation
Improvements. Executive Regulation 26-13 was transmitted to the Council on June 4,
2014
with the purpose of proposing revisions to the Executive Regulations for
Development Impact Tax for Transportation. The purpose of this regulation was to (1)
allow the Greenway Trail in Clarksburg to be eligible for an Impact Tax credit (which
was a condition of the agreement for the Clarksburg Roads settlement); (2) clarify
language related to credits for park-and-ride lots; and (3) add language for Bikesharing
sites to be eligible for credits.
Council staff recommended, and the T&E Committee agreed at the July
28,2014
T&E Committee meeting, that other sections of the Regulations be revised to
provide credits for the full cost of an improvement where an existing road is being
realigned or expanded, as opposed to just the pro-rata share for the highway capacity
added by the newly constructed lanes (i.e., developers do not currently receive an impact
tax credit for reconstructing the existing portion of the road). Following consultation with
the Office of the County Attorney it was determined that the best plan of action would be
to amend the County Code to reflect the Council's desire to change the approach by
which credits are certified.
As a result, revisions to Sections 52-55 and 52-58 of the County Code are
proposed to respond to two additional areas of concern beyond the changes proposed in
Executive Regulation 26-13 .
montgomerycountymd.gov/311
.
3'
:
'X
240-0773-3551 TTY
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George Leventhal
November 10,2015
Page 2
Section 52-55 ofthe Code is proposed to be amended to provide a credit
life of 12 years for any new credit certified as of a specific date. Currently, the Code
states that transportation impact tax credits have a life of 6 years. This reflects a
compromise between the existing 6-year life and a previously proposed increase
to
20
years ...
Section 52-58 is also being amended and stems from a proposed change in
the way the law has been applied. Under the proposed change to this section, in
determining the amount of a credit for an expansion in the number of lanes that adds new
highway capacity, the cost associated with reconstruction of the existing lanes can be
factored into the overall calculation of the credit amount. The law has been consistently
applied so that only the costs associated with ''new'' capacity are eligible for a credit.
In
this manner, the cost of providing new lanes was eligible but the cost of reconstructing,
improving and/or realigning the existing road
was
not eligible. Under this proposed
amendment, the costs associated with reconstructing the existing and constructing the
new lanes would be eligible for a credit in that they all would
be
considered part of the
cost of making the eligible transportation improvement.
Executive Regulation 26-13AMII remains with the Council for final
action, and reflects language to ensure consistency between
it
and the proposed code
amendments.
The amendments are transmitted for the Council's review and
consideration. Please direct any questions to Emil Wolanin, Acting Deputy Director of
the Department of Transportation at 240-777-8788.
AR:dm
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Fiscal Impact Statement
BIIIXX-IS
Taxes - Tnmsportation Impact Tax - Amendments
1. Legislative Bill Summary
The
proposed amendments
to
Chapter 52 of
the
Montgomery County Code relate
to
the
Development Impact Tax for Transportation Improvements. Revisions
to
the County
Code
are
the
result ofrequests by Council
to
change the approach by which
impact
tax
credits are certified
and
to extend the life ofa credit from its existing
6
years
to 12
years.
2.
An
estimate of changes
in
County' revenues and expenditures regardlesJ ofwhether
the revenues or expenditures are assumed in the recommended or approved budget.
Includes source of information, assumptions, and methodologies used. .
The proposed bill does not directly impact County revenues
and
expenditures at this time.
The proposed bill changes the method ofcalculation ofimpact
tax
credits
for eligible
capital projects.
It
is difficult
to
estimate which capital projects are eligible or how large
the impact
tax
credit to a developer is;
tax
credits
are determined by the developer's costs
in constructing the improvement (in lieu ofpaying the impact
tax).
Any increase in the impact
tax
credit would result in a decrease in impact
tax
revenues
to
the County;
this
change is difficult
to
quantify
until
the eligible improvement
and
amount
ofthe credit
is
identified.
.
3. Revenue and expenditure estimates covering at least the next 6 fiKaI years.
See
item
#2
above.
4. An actuarial analysis through the entire amortization period for each regulation
that would affect retiree pension or group insurance costs.
Not Applicable.
S. Later actions that may affect future revenue and expenditures
if
the regulation
authorizes future spending.
None.
6. An estimate of the staff time needed
to
implement the regulation and/or Code.
The
staff
time needed
to
implement
the
Code modifications does not change; the
proposed bill provides clarification
as
to what is
required
in order for an impact
tax
credit
to
be
certified.
7. An explanation
of
how the addition of new staff responsibilities would affect other
duties.
The proposed bill does not create new staff responsibilities.
8.
An
estimate of costs when an additional appropriation is needed.
Not Applicable.
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9. A description of any variable that could affect revenue and cost estimates.
The number of eligible capital improvements and the size of the impact
tax
credit are the
primary variables which could affect revenue and cost estimates for the proposed bill.
10. Ranges of revenue or expenditures that are uncertain or difficult
to
project.
Changes in impact tax revenues are difficult to project as
the
number of credit-eligible
projects and the
si~
ofthe credit is unknown.
11. U a regulation or revision to the County Code is likely to have no fiscal impact, why
that is the case.
The proposed regulation serves the purpose of providing clarification. guidance, and
"direction as
to
what requirements must
be
met in order for an impact
tax
credit to be
certified for certain specific types ofimprovements (hiker-biker trail, transit center, park­
and-ride,
and
bikesharing).
It
also provides guidance in determining the amount of a
credit to be certified for these improvements.
Current County laws and regulations
state
that
adding only
new
roadway capacity (i.e.,
adding a new lane) was eligible for impact
tax
credit. The proposed bill revises current
law such that improvements to
existing
lanes are eligible for credits, resulting in larger
credit
than
in the past. Since the credit
is
used in lieu ofpaying impact tax, the fiscal
impact would be that iess impact tax revenues are collected.
12. Other rlScal impacts or comments.
None.
13. The following contributed to this analysis:
Emil Wolanin, Department ofTransportation
David Moss, Department of Transportation
Scott
Foncanno~
Office of County Attorney
Brady Goldsmith, Office ofManagement and Budget
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Economic Impact Statement
Bill ##-15, Concerning Taxes -Transportation Impact Tax -Amendments
I
i
I
Background:
This legislation would limit the life of an impact
true
credit certified after January 1, 2016
to
12 years, and allow credit for reconstruction of an existing road.
a
Bill ##-15 amends Section 52-55 ofthe County Code by providing any new credit certified
on or after January 1, 2016 will have a twelve year life. The Code currently states that any
credit certified after March 1, 2004, has a six year life.
1. The sources of information, assumptions, and methodologies used.
Sources ofinformation include the Department ofTransportation (DOT) and the
Department ofPermitting Services (DPS). According to data provided by DPS, the
amount ofunused credits outstanding is $45.5 million from transactions between April
30, 2008, and April 30, 2015. Since specific data on the start ofthe transaction is not
available, the Department ofFinance assumes that the amount ofcredit available is an
average of approximately $6.5 million per year. Using this assumption and the first
transaction period occurring between April 30,2008, and April 29,2009, the first set of
credits under the six year limit has expired with the remaining $39.0 million of available
credits remaining under the current six-year limit. Given the assumption of the $6.5
million average credit available per year, the remaining credit amount will expire by 2021.
Since it is uncertain what the amount of credits are that will be available starting on
January 1,2016 the twelve-year time life, the economic impact on the developers
t
impact
tax
liability and business income cannot
be
estimated with any specificity.
2. A description of any variable that could affect the economic impact estimates.
The variable that could affect the economic impact estimates attributed to Bill ##-15 is the
amount of credits available starting with the transaction date of January 1,2016 and a
credit life of twelve years. Certainly by extending the life ofthe credit from six to twelve
years, it will have some economic impact on business revenues but that impact is
dependent on the number of development projects and the cOsts of such projects incurred
by developers over the twelve year period and whether such extension will encourage
more development. Since that information is not available on specific
future
development,
it is uncertain with any specificity what the economic impact on business revenue,
investment, and property values will be.
3. The Bill's positive or negative effect,
if
any on employment, spending, savings,
investment, incomes, and property values.in the County.
Bill ##-15 could have a positive economic effect on business revenue and income, but
without specific data as stated
in
paragraph #2, it is uncertain with any specificity what the
amount of that impact will be. By extending the life of the credit, Bill ##-15 could delay
Page I of2
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Economic Impact Statement
Bill ##-15, Concerning Taxes "Transportation Impact Tax -Amendments
annual project development by spreading such development over a twelve-year rather than a
six-year period and have an effect on short-tenn business income, investment, and property
values but would not have
a
long-term effect.
4.
If
a Bill
is
likely to have no economic impact, wby is
that
tbe case?
Please see paragraph #3.
5. The following contributed to or concurred with tbis analysis:
David Platt and Rob
Hagedoom, Deparlment pfFinance;
and
David Moss, Department ofTransportation.
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