Agenda Item 3A
May 18, 2016
Action
MEMORANDUM
May 16, 2016
TO:
FROM:
County Council
Robert H. Drummer, Senior Legislative
Glenn Orlin, Deputy Council Administrator
Attom_!!~s
(90
Rates - Allocations -
(\
SUBJECT:
Action:
Expedited Bill 15-16, Recordation Tax -
Amendments
Expedited Bill 15-16, Recordation Tax - Rates - Allocations - Amendments, sponsored by
Lead Sponsor Council President Floreen, was introduced on April 19, 2016. A public hearing was
held on May 10 and a Council worksession was held on May 12.
Bill 15-16 would increase the rate of the recordation tax levied under state law and allocate
the revenue received from the recordation tax for different uses.
Background
Recordation taxes are paid when a house or building is sold, or if the mortgage on a house .
or building is refinanced. There are three elements of the recordation tax:
The "base" recordation rate is $2.20/$500 on the sale price or,
if
refinancing, on the
additional amount borrowed over the remaining principal.
(If
acquiring a home, the first
$50,000 of the sale cost is exempt.) Bill 15-16 would not change the "base" rate or how
its revenue is allocated.
The "school increment" went into effect in 2004 and its rate is $1.25/$500.
It
is also based
on the sale price or, if refinancing, on the additional amount borrowed over the remaining
principal. This Bill would raise the rate to
$2.001$500,
effective July 1, and would generate
$125 million over the next six years. Currently the proceeds can be used for any
Montgomery County Public Schools (MCPS) capital project and for any Montgomery
College information technology capital project. The Bill would dedicate all the proceeds
to MCPS projects; College information technology projects can still be funded with general
Current Revenue.
The "Recordation Tax Premium" went into effect in 2008 and its rate is $1.5 5/$500. Unlike
the other two elements, the Premium applies only to the cost of a property or a refinancing
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that is in excess of $500,000. Half of the proceeds from the Premium are allocated to
County Government capital projects (i.e., capital projects of departments in the Executive
Branch); the other half is for rent assistance. This Bill would raise the rate to $2.30/$500,
effective July 1, and would generate $30 million more for County Government projects
and $30 million more for rental assistance over the next six years. On March 22, the
Council heard from Enterprise Community Partners about the need for more affordable
housing in Montgomery County and that part of the solution is more money. The
Recordation Tax Premium is an important revenue source for the Housing Initiative Fund.
It has been used for traditional monthly rental assistance and very effectively at the
Bonifant to make many of these new units affordable to very low income seniors. The
Department of Housing and Community Affairs has projects in the pipeline that may need
$40 to $50 million. This funding will help make sure there is adequate funding to move
forward when projects and programs are ready.
Lead Sponsor, Council President Floreen, explained the need for this Bill in an April 12
memorandum at ©5-6.
Public Hearing
The Council held a spirited public hearing on May 10 with 17 speakers and a large
audience. There were 2 opposing views. Lisa Siegel, representing the Rolling Terrace PTA (©26-
28), Sally McCarthy, representing the Walt Whitman Cluster (©58-59), Joyce Breiner (©60),
Charissa Scott, representing the Blake High School Cluster, Melissa McKenna, Maryvale
Elementary PTA, Joseph Piff, representing the Walter Johnson Cluster (©75-76), Debby Orsak,
representing Ashburton Elementary School (©77), Oscar Alvarenga, representing the
Gaithersburg High School Cluster, and Paul Geller, representing the Sherwood High School
Cluster (©78-79) each supported the Bill to fund much needed public school construction to reduce
significant overcrowding in many County schools. Robert Goldman, representing the
Montgomery Housing Partnership (©61-62), supported the Bill to increase funding for the
development of affordable housing in the County. Mr. Goldman suggested an amendment to
change the allocation of revenue from the cost of County government capital improvements to an
allocation for any type of capital improvements, such as public-private partnerships.
Many real estate professionals opposed the Bill because
it
would tax only buyers and sellers
of real property to fund capital projects that benefit all County residents. Jane Fairweather,
representing the Greater Bethesda Chamber of Commerce (©20-21), Peg Mancuso, Greater
Capital Area Association of Realtors (©22-25), Susann Haskins, Long and Foster Real Estate
(©29-38), Marty Stanton, KVS Title, LLC (©39-57), Nicola Whiteman, Apartment
&
Office
Building Association (©63-69), and Edward Krauze, Greater Capital Area Association of Realtors
(©70-73) each opposed the Bill. Several of these real estate professionals suggested the Council
fund the needed public school capital projects by increasing the property
tax
assessed against all
property owners. Robin Ficker opposed the Bill and argued that the State should increase its
funding for County public schools as the General Assembly recently did for Baltimore City. Kerry
Roth (©74) submitted written testimony opposing the Bill.
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May 12 Council Worksession
The Council discussed how the recordation tax is collected and how the total tax is
calculated. The Council discussed why an increase in revenue is necessary to fund the proposed
Capital Improvements Program, including much of the $160 million of the Montgomery County
Public Schools (MCPS) request for capital projects that the Executive did not recommend funding
in the Executive's Recommended FYI 7-22 Capital Improvements Program. Councilmembers
also discussed different scenarios for raising revenue through a combination of the property tax
and the recordation tax. Council staff was asked to research further information on the effect of
an increase in the recordation tax on the average home sale, how the recordation tax affects
settlement costs for sellers and buyers (including first-time home buyers), the effect of recordation
tax on commercial sales, and a comparison of recordation tax rates in the District of Columbia,
Fairfax County, and Arlington County.
Issues
1. What is the need to generate additional revenue for public school construction?
MCPS student enrollment has grown by 18,702 students since 2007. This year, MCPS is
using 3 81 relocatable classrooms to house 8, 700 students. Student enrollment is expected to
increase by an additional 10,151 students by 2021-2022. Absent additional revenue, the current
backlog of school capacity projects and school revitalization/expansion projects is likely to fall
further behind. Both new home sales and home resales often contribute to this student enrollment
growth. County School Board President Michael Durso explained the need for additional funding
for school capital projects and listed the projects that are likely to be delayed without increased
funding in an April 29 letter at ©8-12. Many of the speakers at the public hearing testified about
different schools that were currently operating with many more students than the building was
designed for.
2. How is the recordation tax paid at settlement?
At the May 12 worksession, Councilmembers asked for more information on how the
recordation tax is paid at settlement. Under Maryland law, the recordation tax can be paid by
either the seller or the buyer or a third party. Absent an agreement as to who pays the tax, it must
be split evenly between the buyer and the seller unless the seller is a first-time homebuyer in
Maryland.
If
there is not agreement and the buyer is an eligible first-time homebuyer, the seller
must pay 100% of the recordation tax. See MD Code, Real Property,§ 14-104.
The recordation tax must be paid in order to record the deed in the Circuit Court. The
settlement attorney will withhold the amount necessary to pay the tax from the proceeds of the sale
divided between seller and buyer as provided by the contract or by law. Therefore, the tax owed
by the buyer cannot generally be included as part of the loan. However, in some areas of the
County, the seller of a residence will pay a portion of the buyer's settlement costs (which include
3
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the buyer's portion of the recordation tax) in return for a slightly higher sales price as long as the
property appraisal is sufficient to cover a larger loan.
For refinancing, the recordation tax is paid only on the amount of the new loan that exceeds
the principal amount owed under the old loan. See MD Code, Tax - Property,
§
12-108(g).
Therefore, a person refinancing a loan on a residential or commercial property would not pay any
recordation tax if the new loan is not greater than the amount owed under the old loan.
If
it is, the
person would pay the tax on the difference.
If
a homeowner refinances a mortgage to gain a better
rate and to receive additional funds to pay for home improvements (or any other reason), the
homeowner can borrow enough to pay the recordation tax from the proceeds of the loan if the
homeowner' s equity is large enough.
3. How does the County's recordation tax rates compare to other Maryland Counties?
The chart below shows the current and proposed rates, and those of nearby counties in
Maryland. The chart expresses the rates in dollars/thousand dollars of home price or refinancing:
Jurisdiction
Montgomery (existing)
Montgomery (Bill 15-16)
Montgomery (Bill 15-16 with
higher school increment)
Frederick County
Carroll County
Howard County
Prince
Geor~e'
s County
*First $50,000 exempt for owner-occupied.
**On amount over $500,000.
Rate
$6.90/$1,000*
$10.00/$1,000**
$8.40/$1, 000*
$13.00/$1,000**
$8.90/$1,000*
$13.50/$1,000**
$12.00/$1,000
$10.00/$1,000
$5.00/$1,000
$5.00/$1,000
Montgomery County's existing rate is higher than Howard and Prince George's Counties,
and any increase would create a greater differential. Comparisons to Carroll and Frederick
Counties are more nuanced, since Montgomery's rate differs due to the $50,000 exemption and
the higher rate over $500,000. For example, if Bill 15-16 were enacted with the higher school
increment, Montgomery's recordation tax would still
be
lower than Carroll's on home sales or
refinancing less than $750,000, and lower than Frederick's on home sales or refinancing less than
$1,900,000.
4. How does the County's recordation tax rates compare to the District of Columbia, Fairfax
County and Arlington County?
It is.often difficult to compare a single tax rate in the County with a similar tax rate in the
District of Columbia (DC) or Virginia because their tax structures vary across the board. However,
both DC and Virginia have a recordation tax based upon the consideration paid for real property.
The DC recordation tax is 1.1 % of consideration or fair market value for residential property
transfers less than $400,000 and 1.45% of consideration or fair market value on the entire amount,
if the transfer is greater
than
$400,000. This rate is higher than the recordation tax in Bill 15-16.
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For example, the tax on a $400,000 house in DC would be $4,400. The tax for the same house in
Montgomery County ifBill 15-16 is enacted would be $2,940. For an $800,000 house in DC, the
tax would be $11,600 and would be $7,680 in Montgomery County under Bill 15-16.
Virginia's recordation tax is lower than Montgomery County's current recordation tax.
Virginia has an online calculator that can be used for different counties in Virginia. For example,
the recordation tax on a $500,000 home
in
both Fairfax and Arlington Counties would be
$2,959.67.
In
Montgomery County, the current recordation tax on a $500,000 home is $3,105 and
would rise to $3,780 under Bill 15-16. See the calculations for Fairfax at ©80 and Arlington at
©81.
5. Why does the Council need to set aside 8.4% of any additional property tax revenue for
reserves?
In
FYI 0, the County experienced an unprecedented $265 million decline
in
income tax
revenues, and weathered extraordinary expenditure requirements associated with the BINI flu
virus and successive and historic winter blizzards. Upon the recommendations of the Executive
and the County's financial advisor, the Council strengthened its policy on reserves and other fiscal
policies to ensure budget flexibility and structural stability by approving Resolution No. I6-415,
Reserve and Selected Fiscal Policies
on June 29, 20IO. On November 29, 2011, the Council
adopted Resolution No. I 7-3 I2,
Reserve and Selected Fiscal Policies,
further strengthening the
County's fiscal policies. Resolution No. 17-312 requires the County to place a minimum of 8.4%
of adjusted governmental revenues into reserve in FYI 7 to reach the County's goal of 10% of
adjusted governmental revenues in 2020. See Resolution No. I 7-312 at ©82-85.
6. What are some of the recordation tax/property tax scenarios that could be used to fund
the Council's initial reconciliation of the FYI 7-22 Capital Improvements Program?
The Council approved an initial reconciliation of the FYI 7-22 CIP to bring its programmed
spending within the approved spending levels and yet maintain an adequate reserve. The initial
reconciliation assumes an additional $I96 million in revenue for the CIP over FYI 7-22. The
Office of Management and Budget's Fiscal Impact Statement (©14-16) generally confirms the
revenue estimates made by the Bill's sponsor. OMB estimates that the Bill's rates would increase
revenue from the school increment by $125,975,000 over the next six years. By analogy, if this
rate were increased by $1.00/$500 instead, it would increase revenue by $167,967,000. OMB
projects that the Bill's proposed increase to the Recordation Tax Premium would generate
$64,959,000 over the next six years, to be split evenly between County Government CIP projects
and rental assistance.
At its May 12 worksession, Councilmembers discussed the possibility of mixing
recordation tax and property tax increases that would generate roughly the same amount of revenue
over the next six years as was assumed by the Initial CIP Reconciliation on April 26: $I 96 million
for the CIP and $30 million for rental assistance. Council staff has been requested to evaluate the
following options:
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Option 1-A: Approve the rates in Bill 15-16 (+$0.75/$500 for the school increment and
+$0.751$500
for the premium), and raise the remaining revenue with a property surtax.
Council staff calculates that the surtax would be 0.39¢/$100.
Option 2-A: Increase the school increment rate by a further $0.25/$500 (a net increase of
$1.00/$500) and increase the premium rate as per Bill 15-16 (+$0.75/$500). This would
not require a property surtax.
Option 3-A: Increase the school increment rate by a further $0.25/$500 (a net increase of
$1.00/$500), do not increase the premium rate at all, and raise the remaining revenue with
a property surtax. Council staff calculates that the surtax would be 0.60¢/$100.
There was some interest in the possibility of exempting first-time homebuyers. At the
worksession Council staff indicated that the revenue loss from such an exemption would be
extremely difficult to estimate, and that it could not be done in time for the Council's scheduled
action on the Bill on May 18. However, it was suggested that increasing the size of the exemption
would be a more progressive means for addressing the same objective. Subsequently, Council
staff was asked to develop options that would increase the exemption from $50,000 to $100,000:
Option 1-B: The same as Option 1-A, except to raise the exemption from $50,000 to
$100,000, and raise the remaining revenue with a property surtax. Council staff calculates
that the surtax would be 0.57¢/$100.
Option 2-B: The same as Option 1-A, except to raise the exemption from $50,000 to
$100,000, and raise the remaining revenue with a property surtax. Council staff calculates
that the surtax would be 0.18¢/$100.
Option 3-B: The same as Option I-A, except to raise the exemption from $50,000 to
$100,000, and raise the remaining revenue with a property surtax. Council staff calculates
that the surtax would be 0.78¢/$100.
The chart at ©7 shows, for each of the above six options at several price points, what the
recordation tax is for homebuyers at the current rates, what the tax would be with the new rates,
and what the increase would be over current rates. The effect of increasing the $50,000 residence
exemption to $100,000 is significant for lower priced homes. For example, increasing the rates
under Bill 15-16 and increasing the exemption to $100,000 would result in a reduction in the tax
for a $300,000 home from $1,725 to $1,680. See Option 1-B at ©7.
Council staff was also asked to explore the possibility of a two-tiered recordation tax
premium: the first tier including Bill 15-16' s increase for considerations between $500-$1 million
and a higher increase for considerations over $1 million. Unfortunately, sufficient data is not
available to develop a reliable revenue estimate at this time. A second tier would create even more
revenue, and the burden would fall more heavily on commercial developments.
Reallocation of recordation taxes.
At the worksession Council staff noted that if any
solution involves an increase in the property tax-which is the case for all of the above options
except Option 2-A, then it is likely that much or all of the CIP funds associated with that increase
(PA YGO and Current Revenue) would be redirected to meet operating budget needs in FY 18 and
beyond. Councilmember Eirich suggested reallocating the recordation tax in a way that would
protect these resources for the CIP.
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For example, under Option 1-A $2.20/$500 goes to the General Fund, $2.00/$500 would
go to the school increment, and $2.30/$500 (over $500,000) goes to the premium. Under Option
1-A, a property tax surtax of $0.39/$100 (which is equal to the revenue from a further $0.25/$500
increase to the school increment) would be needed for the CIP to achieve the revenue needed for
the April 26 Initial Reconciliation. However, ifthe allocation to the General Fund was reduced by
$0.25/$100 (to $1.95/$500) and the school increment was increased by $0.25/$500 (to
$2.25/$500), the property surtax could be allocated to the General Fund. All the revenue increase
for MCPS capital projects would be kept within the recordation tax's school increment, which the
Bill would reserve solely for MCPS capital projects. At the same time the General Fund would be
kept whole: the funds it "loses" in the reallocation would be recouped with the $0.39/$100 property
surtax.
This type of allocation can be applied to any of the options that include a property surtax.
If
one of these options is selected, Council staff recommends it be accompanied by such a
reallocation.
7. Should the Bill be amended to clarify the application of the $50,000 exemption for an
owner-occupied home?
Scott Foncannon, Acting Chief of the Division of Finance and Procurement in the County
Attorney's Office, recommended an amendment to clarify the application of the $50,000
exemption for an owner-occupied home. See the Bill Review Memo at ©13.
Mr.
Foncannon
recommends the following amendment:
Amend lines 21-26 as follows:
(b)
Exemption.
The first $50,000 of the consideration payable on the conveyance of any
owner-occupied residential property is exempt from the recordation
tax
if the buyer
of that property is an individual and intends to use the property as the buyer's principal
residence by actually occupying the residence for at least 7 months of the 12-month
period immediately after the property is conveyed.
The County has interpreted
this
provision to apply to a transfer to an individual and not a trust,
and this amendment would codify this interpretation.
Council staff recommendation:
approve the
requested amendment.
This packet contains:
Bill
15-16
Legislative Request Report
Council President Floreen April 12 Memorandum
1
Circle#
1
4
5
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Chart of Proposed Rates Under Different Scenarios
Board President Durso April 29 letter
County Attorney Bill Review Memo
Fiscal and Economic Impact statement
Public Hearing Testimony
Jane Fairweather
Peg Mancuso
Lisa Seigel
Susann Haskins
Marty Stanton
Sally McCarthy
Joyce Breiner
Robert Goldman
Nicola Whiteman
Edward Krauze
Kerry Roth
JosephPiff
Debby Orsak
Paul Geller
Fairfax County Recordation Tax
Arlington County Recordation Tax
Resolution No. 17-312
7
8
13
14
20
22
26
29
39
58
60
61
63
70
74
75
77
78
80
81
82
F:\LAW\BILLS\1615 Recordation Tax- Rates -Amendments\Action Memo.Docx
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Expedited Bill No.
15-16
Concerning: Recordation Tax - Rates -
Allocations - Amendments
Revised: April 14.
2016
Draft No.
L
Introduced:
April
19. 2016
Expires:
October
19. 2017
Enacted:
[date]
Executive:
[date signed]
Effective:
[date takes effect]
Sunset Date: _.,_,.No=n=e'--------
Ch.
_oo_,
Laws of Mont. Co.
[year]
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President Floreen
AN EXPEDITED ACT
to:
(1)
increase the rate of the recordation tax levied under state law for certain transactions;
(2)
allocate the revenue received from the recordation tax for certain uses; and
(3)
generally amend the law governing the recordation
tax
By amending
Montgomery County Code .
Chapter 52, Taxation
Section 52-l 6B
Boldface
Underlining
[Single boldface brackets]
Double undedining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deleted.from 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.
15-16
1
Sec.
1.
Section 52-16B is amended as follows:
52-16B. Recordation Tax.
(a)
Rates.
The rates and the allocations of the recordation tax, levied under
[state law] Md. Tax-Property Code §§12-101to12-118, as amended, are:
(1)
[$3.45) for each $500 or fraction of$500 of consideration payable
or of the principal amount of the debt secured for an instrument of
writing, including the amount of any mortgage or deed of trust
assumed by a grantee;
2
3
4
5
6
7
8
9
10
11
®
{ID
$2.20, of which the net revenue must be reserved for and
allocated to the County general fund; and
$2.00, of which the net revenue must be reserved for and
allocated to the cost of capital improvements to schools; and
12
13
14
15
(2)
if the consideration payable or principal amount of debt secured
exceeds $500,000, an additional [$1.55) $2.30 for each $500 or
fraction of $500 of the amount over $500,000.'1 of which the net
revenue must be reserved for and allocated equally to:
16
17
18
19
®
{ID
the cost of County government capital improvements; and
rent assistance for low and moderate income households,
which must not be used to supplant any otherwise available
funds.
20
21
(b)
Exemption.
The first $50,000 of the consideration payable on the
22
23
conveyance of any owner-occupied residential property is exempt from
the recordation tax if the buyer of that property intends to use the property
as the buyer's principal residence by actually occupying the residence for
at least 7 months of the 12-month period immediately after the property
is conveyed.
24
25
26
27
Sec. 2. Prior allocations.
0
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tax-
rates - amendments\bill 4.docx
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EXPEDITED BILL
No. 15-16
1
2
The allocation of recordation
tax
revenue made
in
Section 1 replaces each
allocation of recordation
tax
revenue established
in
previously enacted uncodified
legislation.
Sec. 3. 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, and applies to any transaction which occurs on or after July 1, 2016.
Approved:
3
4
5
6
7
8
9
Nancy Floreen, President, County Council
10
11
Date
Approved:
Isiah Leggett, County Executive
12
Date
This
is
a correct copy ofCouncil action.
13
Linda M. Lauer, Clerk of the Council
Date
0
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LEGISLATIVE REQUEST REPORT
Expedited Bill 15-16
Recordation Tax
-
Rates -Allocations -Amendments
DESCRIPTION:
Expedited Bill 15-16 would increase the recordation
tax
rates and
allocate the revenue received from the recordation tax. The portion of
the base rate allocated to school capital projects would increase from
$1.25/$500 to $2.00/$500 of value, effective July 1, 2016. The Bill
would also increase the premium rate charged against sales valued at
more than $500,000 from $1.55/$500 to $2.30/$500. The revenue
received frqm this premium rate would continue to be shared equally
between County capital projects and rent assistance.
The County needs to generate additional
tax
revenue to support MCPS
school construction and rent assistance for low and moderate income
households in the County.
Increased funding for MCPS school construction and rent assistance
for low and moderate income households in the County.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
To be requested.
To be requested.
To be requested.
To be researched.
Robert H. Drummer, Senior Legislative Attorney
To be researched.
Not applicable.
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MONTGOMERY COUNTY COUNCIL
ROCKVILLE, MARYLAND
NANCY FLOREEN
COUNCIL PRESIDENT
MEMORANDUM
April 12, 2016
TO:
FROM:
SUBJECT:
Counci1members
Nancy F l - : + President
Proposed increase to the recordation tax
As
I talk with residents across the county, it becomes increasingly clear to me that our
capital needs, particularly in the areas of school construction and affordable housing,
far
outweigh
our available resources. Times are tough to be sure, but
we
absolutely must keep up with our
obligations in these two important areas. That's why I will introduce a bill to increase the rate of
the recordation tax in a progressive way. The recordation tax is paid only when properties are sold
or refinanced. While nobody likes the idea of increasing taxes of any kind, our needs are great,
and this
tax
is less likely to affect those Montgomery County residents who are struggling most.
On the up side, it will generate millions of dollars to support our desperate need for new schools
and educational facility improvements. What's more, a portion of the recordation tax is earmarked
for affordable housing. I believe this proposal is the most progressive approach to meeting the
needs that our residents have clearly identified as their top priorities.
The attached expedited bill will raise both the School Increment of the Recordation Tax
and the Recordation Tax Premium by $0.75/$500 each. Over the six-year period these rates will
generate an estimated $155 million more in revenue for the CIP and $30 million more for rental
assistance for low and moderate income households.
There are three elements of the recordation tax:
The "base" recordation rate is $2.20/$500 on the sale price or,
if
refinancing, on the
additional amount borrowed over the remaining principal.
(If
acquiring a home, the first
$50,000 of the sale cost is exempt.) This bill does not change the "base,, rate or how its
revenue
is
allocated.
The "school increment" went into effect in 2004 and its rate is $1.25/$500.
It
is also based
on the sale price or,
if
refinancing, on the additional amount borrowed over the remaining
principal. This bill
would raise the rate to
$2.00/$500,
effective July
1, and
would
generate $125 million over the next six years. Currently the proceeds can
be
used for any
Montgomery County Public Schools capital project and for any Montgomery College
100 MARYLAND AVENUE, 6TH FLOOR •
ROCKVILLE, MARYLAND 20850
240n77-79l59 • FAX 240n77-7989 • COUNCILMEMBER.FLOREEN@MONTGOMERYCOUNTYMD.GOV
!~PRINTED
ON RECYCLED PAPER
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information technology capital project.
This
bill
would dedicate
all
the proceeds
to
MCPS
projects;
College information technology projects can be funded with general
Current Revenue.
The "Recordation Tax Premium" went into effect in 2008 and its rate is $1.55/$500. Unlike
the other two elements, the Premium applies only to the cost of a property or a refinancing
that is in excess of $500,000. Half of the proceeds from the Premium are allocated to
County Government capital projects (i.e., capital projects of departments
in
the Executive
Branch); the other half is for rent assistance. This bill
would raise the rate to
$2.30/$500,
effective
July
1, and would generate
$30
million more for County Government
projects and
$30
million more for rental assistance over the next six years.
On
March
22 the Council heard from Enterprise Community Partners about the need for more
affordable housing in Montgomery County and
that
part of the solution is more money.
The Recordation Tax Premium is an important revenue source for the Housing Initiative
Fund.
It
has
been used for traditional monthly rental assistance and very effectively at the
Bonifant to make many of these new units affordable to very low income seniors. The
Department of Housing and Community Affairs has projects in the pipeline that may need
$40 to $50 million. This funding will help make sure there is adequate funding to move
forward when projects and programs are ready.
Raising the two rates maintains a degree of progressivity in the recordation
tax.
The chart
below shows what the burden of the total recordation
tax
(i.e., all three elements) would
be
for
homes at different sale prices:
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
$1,200,000
$1,300,000
$1,400,000
$1,500,000
Current Rates
$1,725
$2,415
$3,105
$4,105
$5,105
$6,105
$7,105
$8,105
$9,105
$10,105
$11,105
$12,105
$13,105
Proposed Rates
$2,100
$2,940
$3,780
$5,080
$6,380
$7,680
$8,980
$10,280
$11,580
$12,880
$14,180
$15,480
$16,780
2
 PDF to HTML - Convert PDF files to HTML files
QPTION 1-A
Increase Recordation Tax School Increment
by
S0.75[S5001$1.SO[SlOOO)
and Recordation Tax Premium !!¥ $0.75[$5001s1.so[S10001
First SS0,000 Exem&n; add 0.39C[S100
to
(,!rol!!lrut tax
Consideration
Current Rates
New Rates
~
300,000
$
$
1,725
$
2,100
$
375
2,415
2,940
400,000
$
525
$
$
$
500,000
$
3,780
$
675
$
$ 3,105
600,000
$
$
4,105
$
5,080
$
975
700,000
6,380
$
$
1,275
$
5,105
$
7,680
800,000
$
1,575
$
$
6,105
$
900,000
$ 8,980
$
1,875
$
$
7,105
$
2,175
$ 1,000,000
$ 8,105
$ 10,280
$
2,475
$ 1,100,000
$ 9,105
$ 11,580
$ 2,775
$
1,200,000
$
10,105
$ 12,880
$ 11,105
$ 3,075
$ 1,300,000
$
14,180
$
1,400,000
$
12,105
$
3,375
$ 15,480
$ 3,675
$ 13,105
$ 1,500,000
$ 16,780
OPTION l·B
Increase Recordation Tax School Increment !!¥SO.
7SlS500
1$1.SO[SlOOOI
and Recordation Tax Premium.l:!y $0.75[SSOO 1$1.SOl'.SlOOO)
First $100,l!.Q!.! Exeml!!; add 0.57C[$100to l!rO!Hlrtvtax;
Increase
Current Rates
New Rates
Consideration
(45)
$
300,000
$
1,725
$
1,680
$
105
$ 2,520
400,000
$
$
2,415
$
255
$
3,360
$
500,000
$
3,105
$
555
$
600,000
$
4,105
$
4,660
$
$
5,960
$
855
700,000
$
5,105
$
1,155
$
6,105
$
7,260
$
800,000
$
$ 1,455
900,000
$
8,560
$
7,105
$
$ 9,860
$
1,755
$ 8,105
$
1,000,000
$ 11,160
$ 2,055
$
9,105
$ 1.100,000
$12,460
$ 2,355
$ 10,105
$ 1,200,000
$ 13,760
$ 2,655
$
11,105
$
1,300,000
$15,060
$ 12,105
$ 2,955
$
1,400,000
$
13,105
$16,360
$ 3,255
$
1,500,000
OPTION2·A
Increase Recordation Tax School Increment
by
$1.00[$500
(~2.00lUOOOl
and R!!;!!rdatlon..Tax Premium
by
S0.75[SSOO IU.SO[SlOOO)
First $50,000 Exeml!!; no Increase to l!ro!Hlrtv tax
Consideration
Current Rates
New Rates
Increase
300,000
$
$
1,725
$ 2,225
$ 500
400,000
3,115
$ 2,415
$
$
$ 700
500,000
$
$ 3,105
$
4,005
$
900
600,000
$
$
4,105
$
5,355
$
1,250
700,000
$
$
5,105
$ 6,705
$
1,600
800,000
$
$ 1,950
$ 6,105
$
8,055
900,000
$ 2,300
$
$ 7,105
$
9,405
1,000,000
8,105
10,755
$
$ 2,650
$
$
$
1,100,000
$ 9,105
$ 3,000
$ 12,105
$ 10,105
$ 3,350
$
13,455
$ 1,200,000
1,300,000
$ 11,105
14,805
$ 3,700
$
$
$ 4,050
$ 12,105
$ 1,400,000
$ 16,155
$ 13,105
$ 1,500,000
$ 4,400
$ 17,505
OPTION 2-B
Increase Recordatlon Tax 5chool Increment
l:!y
$1.00[SSOO ($2.00[$1000)
and Recordation Tax Premium
by
$0.7S[SSOO 1$1.50/$1000)
First $100,000 Exem(,!t; add 0.18C[S100
to
l!!:l!l!!lrtv tax;
Increase
New Rates
Consideration
Current Rates
$ 1,780
$
55
300,000
$
1,725
$
255
$
$ 2,670
400,000
$
$
2,415
455
500,000
$
3,560
$
$
$
3,105
805
600,000
$ 4,910
$
$
$ 4,105
700,000
$ 6,260
$ 1,155
$
$
5,105
$
1,505
$
800,000
$ 6,105
$ 7,610
$ 1,855
900,000
$ 8,960
$
$ 7,105
8,105
1,000,000
$10,310
$
$ 2,205
$
$ 11,660
$
2,555
$ 1,100,000
$
9,105
$13,010
$ 10,105
$ 2,905
$ 1,200,000
$ 11,105
$14,360
1,300,000
$ 3,255
$
$ 12,105
$15,710
$ 3,605
$ 1,400,000
$17,060
$13,105
$
3,955
$ 1,500,000
OPTION3·A
Increase Recordation Tax School Increment
by
Sl.00[$500{$2.00[SlOOO)
No Increase to Recordation Tax Premium
First $50,000 Exem11t; add
0.60e[~100
to 11ro11ertv tax
Consideration
Current Rates
New Rates
Increase
300,000
$
$
2,225
$
1,725
$
500
400,000
3,115
$
2,415
$
$
$ 700
500,000
4,005
$
$
3,105
$
$ 900
600,000
$
$ 4,105
$ 5,205
$
1,100
700,000
$
$
5,105
$
6,405
$
1,300
800,000
6,105
7,605
$
$
$
$
1,500
900,000
$
$ 7,105
$
1,700
$
8,805
$
1,000,000
$
8,105
$
10,005
$ 1,900
$
1,100,000
$ 9,105
$ 11,205
$
2,100
$ 10,105
$
12,405
$
1,200,000
$
2,300
$
1,300,000
$
11,105
$
13,605
$
2,500
$
12,105
$ 14,805
$
1,400,000
$
2,700
$ 13,105
$
2,900
$ 16,005
$ 1,500,000
OPTION3-B
Increase Recordation Tax School Increment
by
$1.00[$500 ($2.0!)l'.SlOOOl
No Increase to Recordation Tax Premium
First
~100,000
Exem(,!ti add O.
78Cl~l00
to l!ro!Hlrut tax;
Increase
Current Rates
New Rates
Consideration
300,000
55
$
$
1,725
$
1,780
$
255
400,000
$ 2,415
$
$ 2,670
$
455
500,000
$ 3,560
$
$
3,105
$
655
$
4,105
600,000
$ 4,760
$
$
855
700,000
$
5,105
$
$
5,960
$
800,000
$
1,055
$
$
6,105
$
7,160
900,000
$ 1,255
$
$ 7,105
$ 8,360
$ 1,455
$ 9,560
$ 1,000,000
$ 8,105
$
9,105
$ 10,760
$ 1,655
$ 1,100,000
$11,960
$
1,855
$ 10,105
$
1,200,000
$13,160
$
11,105
$ 2,055
$
1,300,000
$ 14,360
$ 12,105
$ 2,255
$ 1,400,000
$15,560
$13,105
$ 2,455
$ 1,500,000
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MONTGOMERY
COUNTY
BOARD OF
EDUCATION
850 Hungerford Drive• R.oom 123
+
RockvillerMaryland
20850
I/
.
Malcolm
fl..~~rmal
Q.,..l!(y
Award.
B~ldrige
OW Awazd
Recipient
The
Honorable Nancy
Floreen,
President
Montgomety County
Council
Stella B. Wemer QQuncil Office
Building
lOOMaryland Avenue·
RockviH~, M~land
20850
Dear
M.8;
Flore.en:
On behalf
of
the Board of Education.we greatlyappreciate the
intr.oductJoo
()fExpeditedBiU
15~16
that woqld increase
the school
irtcre1:ne11t
of
t:he
9ounty
Recorqatian
tax.
ftqm $1.251$500
t()
$2,00/$500
on
the sales price of
honies~
We understand
that
this
bill
also·
WiU
dedicate
all ofthis
revenue
to
MontgomeryCounty:.PublioSebools
(MCPS)
capital
projects. Thead<litional
$125 million
over the
six-year
period
will
holp
~dN~S
the
backlqg
of
schQol
capacity projectsj
revitalization/expansion projepts,. as well
as
fund out systemwlde systemic projeetll. Colletting
:additional revenue
from
tl,iis tax makes.sense
since
the tµrnover of
existing
housing
units1
as well as
first-time
home salesi
r~ults
in
sigrtifl®Irt
et.lrollment
irt¢reMes for MCPS. I believe
this
is.
an
opportune time to
ll\tSe
the
llecordQtIOrt
tax
in
li8fl~
ofthc
stro~g.housing
market,
the magnitude
of
enr(lllm.ent increases;
and
the
backlog
m
school
:capacity.
projects.
I
also
believe the time is now
to
con.Sider
increases in
the.
School
Impact Tax. Multiple
in.creases
in
revenue
sources
are
critical
to
a<kfress the challenges facing our
school
system's
facilities.
Since 2007" enrollment
has
increased
by
18,,702
student$.
Despite the
opening ofi:i.
number of
new
schools:. addition
projects, and
n;:;vitaUzatloniexpaosfons since
2Cl07, ·tnany
of
qur
sohoo
ls
continue
to
await funding for
thei.r
capital projects; This year,
381 relocatable
classrooms are
in
use,
hou.~ing
approximately,
8, 700 students. Without
an infusion
of new
r~venue,
this :situation
only
will
worsen as
enrollrnentis
projected to
increase
by
an addltion1d
l0,15.
t
students
by202
l~022.
Ma:nyof
the
needed
capaeity pn:;ijects have been designed, are
~'shov.el•ready,"
and
simply
await funding.
Irt
rny .letter ofApril 'h
2016,
I· provided, you with the enclosed
listof
nort-reco111mended
reductions
to
fhe
Board of Education's Requested FY 2017
Capital
Budget and FY
1017-2022
Capital
Improvements
Progr(lm
(Cl}>)
that would
be
reqtJir"°
to
~ddfl}ss
the
$160,2
million
shortfall.
based
oh
the county
executive's
recommended CIP. lt is
important
to
note
that
the Board's
requeste.d.
ClP.,
at
$L128 billion, dld
not
include
all
the
proj~Pts
necessary
for
ourprqje~ted
$pace
defi~!ts.andalso
did
notadeqµ~~U'
fund
our vital
systemic projects; The additional
$125
mUJlon generated
by
approval
of
Bi1115-16 would
bea
major ste.p
toward
closinRtbefimdinggapforschoolfacility needs.
 PDF to HTML - Convert PDF files to HTML files
The
Boar<!
of
Edu.:;af:ion
appreciate$ your
comrnfll~'1t
w
the
sehoobi ofMontgQmety
County
to
considei; (he increase
in·
the
school
im:~~e11t
of
the
Re(}Of(!~tion
Ta&
to.
ftu~d
our
County''S
~pital
needs4
·If
you
have
atty
questions~
please
contact
Dr.
Andrew
M. Zuckerman, chief operating
officer~
at 301-279:.3627 ot: Mr.
J~ne$ Son~,
directPr;J::>eplU'tment
QfFacilitl~s Ma~~el)t1 ~t
;t40,.3 l
4-lU64,
~itJJ:;erely.
~/r1JAp
Michael A. Durso
Pr.~sident
Enclosure
Copy
to!
Members
of
the
County
Covncil
M¢mbe~
of
tf:le:BQR.td
9f
Education
Mr.Bower$
Dr:. Zuckerman
Mr.Edwards
Mr.Song
Mr.
[khefoa
(jJ
 PDF to HTML - Convert PDF files to HTML files
Couocilmanic
Districts:
Impact of
Non-Recommended Reducti.ons
on Capital Projects
FY.
2011-.:2(l22
Capital lrnprovements.
Pr~ram
District!
Board-Of
EClw::~tl<m's
Reque$~ed
Non~Recommended
Rei:lu~on
SdlOol
Project
type.
Corilpletlon
'Oate'
8/16
completion
l:late
...! ...
Wil'.lstol'I ctmrchlll High
Schoof
i}foolesYllle High Sl;h()OI
PlAR-R1,mnlngTt~¢k
Resurtac.e
_, __
~/i
7
~-h~o_ma~·
_s_w;_·'_,PV,_.ie_M_·_kl_dl_e_St_h_:o_ol_·
------+--A~dd'-it'-lo'-n--~--------+---8/=-2'-1)---+..~-B_,_/21
Re\l.lt;aliiatton/Ex~pa_n~s_i0_11
_ _ _ _ _ _
-+-
S/23
·8/24
_t
rtion'li$
w.
Pirlli!:Mlt:ldl1aScbool
S Walt
Whitman
HigH
Sthool
Roof
Repla®rneftt
AdditiQtl
S/t7
$/20
8/1$._
8/22
District
2
BpardO:f.
Edutatitin'i
.Requesfeli
Completion
school
Project
Type.
NOU.Reto,ti'lti'l¢ndelf
~t!dl!et.lon
CompletJ911
o,ate
$/11
Date
S/18
.~--'----'-'--'-'-=--=-""'--'--------+-"--"'-'-'-'-"-'--'-'--~;...;.....-------l----"'------+----'-'-----1
t--+---~-'---'-'---'---'--------1--'-~.;.......!..;___:._;;...;_.;.;_.;'"'-'~---~+----l------l-'---'---·~--
1
J<>lln
T. Bg:l<l!lr..
l\-1lcid~
Stj:root
. HVAC
Repla~ement
Pna:s111.1
2 JbhnT. 8akerMlddleSChOQf
HVACRep!a~mentPbaseJI
8/18
8/19
TBD
a
Clarksburg
duster
Elementary
School
New
school
8/1.i
4 Clearsprfng
ElerrnmtarySclio~I
PLAR-.Gym
!=loor Fteplacement
8/16
8/17.
s Clearspring l:U;?tiierit<1t:Y
$thP91
1
Dµflet Elelrumt11fy.Schopl
PY\R-~n:iertency~~nef.i.tot
S/to
8/17
....
~------~~-f-~--'-..._---+----'-----;
-l
...!L
~~J'.!~.!~
.
1..~!Ii.~~
..!.?!.'Y
El~!!!l!..~.~!.Y::~.h~~·~····-·~~- !:LAR-~m~erg""·
-en_c.,_y_.G_e_ner_.
_at_or.·_ _ _ _ _ _ _ _ _
8_c_/_1_6_ _
-i--__:.··W;.c.;;;··';.....1_'1_ _
··'
Rei/ftallzi.ltton/E~PC!l'lsti:>h
8/2.1
1/23
8/22
1/24
8'
Damascus ElementarySchool
9:
Damascus
High
School
Revrtalization/Expan.sfon
HVACRepla(lement
8/17
8/18
I
2-!_
M:artlri Luther'Klng,
Jr.
Middle
Schotil
PLA!t-Paittt
(il'Yferl~or_&~exte_.
_11-'o-"f")'-----~---&,_/1_7
_ _ _ _ _
":/.1_8......,..._ _
_
8"'
12
Or.SallyltRldeElementarySc~L
.... _._.._ _..
RO()fReplace!!l.~e_nt_·
_ _ _ _ _ _ _ _
1, - -_ _
8_}_18~
...
..
·~-....---T_.8~0
_ __.
j!.·
~!..~
._
R.ockwe·l.IElem.
entary·S·c·.hooI
.
..
...
14 Strawberry
Kn9ll
Elett$ntaiy
$Chool
HVACl\epJaremel'lt
HVAC
Replacement
8/18
8/18
TBD
TBD
15
1(?
Watkins
Mlll_§"l."'.!ll~~~S.C..f!oo!
_
---------+P_l_A_R
-Walk-ln
Refrigerator
Re~p_la_ce_m_en_t
__
1-_ _ _
._8_/l_7~~"··-t~~··-·8~/~18-·
___
1
__
Watkins
Miit
Htgh
School
1---··
l7 watkins Miii High
School
~B~<!_ge
Walkway Skylight
Replacement
Pt.AR:--Gteen
House_~rm~p_rov_·_e_m_en_ts-'--.
---r--~&/~l_7
_ _ _ _ _ _
_.- - - - ;
•1J/_U?_.·
8/17
tJ/18
8/18.
18 Whmstone Elementary
Schoof
HVA.CReplacem~"-!_
..__-·-.
--··----...,.....,1----8=--/1_7_ _-+---8'-/1_8___
1
.
19
W<JQdfl~d
Elementary
SChool
Pl.AR-COncrete Walkway Replacement
S/17
•N/A inditates all
(!l(pi!ndlt-0res
remOVed from the requested CIR Md
wm
be teel:lt!Sldered fur funding In a future CIP request.
• •rao
lndil:ates
c1>ontywlde~ystett1lc:pro]ects
that·are
riotll'ltluded
In
the
ftr&ttwo
years
of
the
CIP are reevaluated for a completltm date ln
the
.nei¢tC!P;
 PDF to HTML - Convert PDF files to HTML files
Enclosure
touncllmanlc
t>istrtcts
h11pact
of
Non·~~9Qmrnen.d~(,f
Redtlc;tions
on
cap:ltal
Projects
fY
2017-:202.l~pital
lrtipro\!'etnents
Program
District
3
Beal'd.of
SChool
l
Project
Typ•
ReV'ltal~ation/Expanslpn
~()OfRepfa~ment
·Educatton'il
Reque$tQd
Completlon
Pate
.8/21
N~Heco.mmendecl
tt$1u~on
P:iml>fetlon
Date
ThomasS.WootronHlghScho.~o.:..I
_______, .
_Rw_·
_1t~a1_12_at~ion~···:c....tf.__....xpa,-'.-'-n
.
_sl_on _ _
~- ~--+---'~~f-'-:u-'-.
--+---8f2.-_·
_ ____,
_2_·
2 told
Sprtfl_~~~:::ientcarv
School
4 R<>ckllllle.
High~opl
5
8/2:'.J.
rso
~3:...i-:-:.Ro=b=e=rt~fr~a5=t~.M~.··=1d~ql~e=Sch=·=0o=l~------------1~~tAR
·.•·~··.~'--"'-~·s£p~ha=tt~fB=a=s=ke=tb=a~IU,__
_ _ _
~~-1--~--
2
8/l-'-.·-6~--+---:~8~/1_1
__
~
2
8/if!;
1/23
1/23
'.rwlnbrOQk Elemet)tary SChool
Revit;i!lzat!on/Expan51on
Revitalizatlon/Expansron
l/24
1/24
6 Summit
Hall
Efe~ta.rv
School
District4
Board of
Fducatlori's
flequeiited
Corpp~tton
Non~Recommef!cfed
R~dut:tlon
tomplf:ltion
~e
~c:hool
1
~lrrif>nt El~e11tarvscnoor
2
Brooke
GtoveEi¢mentary School
ProJect Type
.Oate
8/22
.S/21
.
Revitalization~pa:nsi~.----------+-~----;;;._'-------t----_c:._------1
i:IVACReplfwement
3/11
8/18
TSO
8/18
~;t-+l~Flowe=r...::H:::::il~lf:::le:;.:.me.:;:.'::::.n:L;~::;;.f'f:_.
: : .$c:z:. hc::P=..ol=-··
-------l-!'!_~AC
Repla.cement
·~-______......_
,_4_-...___;.we-'-
-
.
"-r-"-H_;.i.U-'-~-'-!e" l 'l" '·._~_nt"'"a" ry'- 'S_c. .:.h
.
o"'
9.; ;.J_ _ _ _ _ _-1--PLA'--W-_E-=.rt:ili!rgeney Generator
JFlo
"
811~
-··----·--·-
.
'8/17
._!_
Georgfari fdrest
Elehient.ary
School
6
l,aytpnsvllle
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_
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HVAC
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8/18
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@
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Enclosure
tound.Ima111c·oistricrs
Imp.act of
Nort<!Recommended ft@ducti.ons
on
~pita1
Projects.
FY 2017-2022 Capltaf
Jmpn:W-e;m~nts
.Program
Districts
Seard of
EducatiOn's
Requested
Non-R~mmended
Reduction
eornpletion
Project fype
Date
8/la
Completion
Date
TBD
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Repfa¢ement
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mm
the
req ue$ted
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ate
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11re rl!l!llaluated fora comp
l~on
da.te .in
thee
ooxt·CI P.
N/A
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OFFICE
OF
TH:B
COUNTY
ATT6RNEY
Isiah
Leggett
Coutity.Exe'i:uliVe
Marc P.
Hansen
t;;,~Ath;ri1ey
to:
Jq~hB~li, Qitec.f~
Department
of
Filiance
$cQttR.
F<mcmmon~
Acting Chief
DiViskln
of'.Finan~ a.u4Pnwur~t·
VIA:
Edward
tlivisit;>n()ftk:t~ ~~·
. .
a.
Lattner,
Chief
Cc,
DA'm:
April 22. 2016
Rlk
Bill l5-l6E.
Re®rdati.onTax--~t~s-'- ~lPAAtio~
..
A.m~4mell.~
lhave !lad an opPQ:rtiinity to
r.eVi~~pe.di~
Bill
fS,..f6~R~ordation
Tax
-Rates-
All(}C8t:i9.ns
-Atttendments.
This biU
increases the rates
of recordation
tax
and
modifi~
the·
allocation ofthe
rec()t"dation
tal!i
imposed.
This bill is
authqriz~d
by
Stilte
law
and is
within
the
authQrity:
pf
th~ ~qunty
Ccµl).qil.
'fhe
bill is not
va.gUe~
Will
not
inttea<;e
ot
decrease
the
Q>unty~
sliability
exposure and, in
my
opinion, the
.billJs constitutionaL
cw~
the
yeatS there have
been
issimSwith the prov1si.otrs of52-16(b).
This section
creates
an
e~emptionfor
the
first
$$0)0(}() ofCQnsideration on a !;Qnveyance of o\Vner oc¢Upied
~sjdet)tial
property
where the buyer intends
to
use
the property as the
bu~r's
principal.
residence
fbr7 out of
the;
lZ·rnonths
immediately
.after
the
property
is
conveyed.
This haS
always
been
mterp~
bytbe.
Coupty
to
Only
apply
to
a
transfer to an
individual and
not
to
a transfer to a
uust. l would recommend
that an amendment be proposed
in
line
23
so.that this exemption
tAAds,
·~
..,.
if
the bu.yer o.ftbat prnperty
is an. individl.IRl
and
intends
to
use the
property....
n
Vlith
the
amen.dment of
this section
of
the
County
Cod~~
it
will become clear
that
the exemption
8.pPlies only
to
an individual buyer
and norto
transfers
to
a
trust.
MJll\W~\V
t6-4Q298l
1fll}.fuuroe·~ R~Ville;Mat)'l~4 lf)Ss~:?SSU
(240}777.fi~STfP.(24j'})'177~7M~
•FM((t4(}}
777~G~·~~tgo.PlCIY~untJ'll'.ld.~or
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Fiscal Impact Statement
Bill 15-16E, Recordation
Tax~
Rates -Allocation -Amendments
l. Legislative
Summary:
This legislation would increase the rate of the recordation
tax
levied by the County
under state law
and
allocate the revenue received from the recordation
tax
for different
uses. Recordation taxes are imposed on the privilege of recording a document among
the
land
records
of the
CoUnty
and
they are
paid when real
property
is transferred,
when
the mortgage on real property
is
refinanced, or when any other inStrument of ·writing
securing a debt is recorded.
There are three separate recordation tax rates. The first rate, or base rate, is $2.20
per
$500
of the
consideration
in a
deed or,
if
mortgage refinancing, on the additional amount
of the debt secured above the existing principle balance. This rate translated into a
percentage is 0.44 percent. For purposes of calculating the recordation tax on a deed,
the first
$50~000
of the consideration amount is exempt from the tax
if
the transaction
pertains
to
a buyer of owner-occupied residential property. Bill 15-
J
6 does not change
the
base rate.
The second rate, or school increment, is $1.25 per $500 of the consideration and
went
into effect in 2004. The rate is based on the same criteria as the base rate. Bill 15"16
proposes to raise the rate from $1.25 per $500 to $2.00 per $500-an increase of
sixty
percent (60%). These rates translated into a percentage is an increase from 0.25 percent
to 0.40 percent. Bill 15-16 would dedicate all proceeds from
the
rate increase to
Montgomery County
Public
Schools capital projects.
The third rate, or the Recordation Tax Premium ("premium")) is $1.55 per $500 and
went
into
effect in 2008. The "premium"
tax
is applied when the consideration is a deed
or a mortgage refinancing in excess of $500,000.
fifty
percent (50%) of the premium
funds County Government capital projects and
:fifty
percent (50%) funds rent assistance.
Bill 15-16 proposes
to
raise the premium rate from $1.55 per $500
to
$2.30 per $500 -
an increase of over forty-eight percent (48.4%). These rates expended as a percentage
vrould increase from 0.31 percent to 0.46 percent.
2. An estimate of changes in County revenues and expenditures regardless of whether
the revenues or expenditures are assumed in the recommended or approved budget.
Includes source of information, assumptions, and methodologies used.
'Ibe Department of Finance (Finance) confirms the fiscal impact from Bill 15-16 as
estimated by County Council
staff
of$J25.975 million for the school increment and
$64.959 million for
th.e
•;premium"
that
are based on
the
percent increases in the second
and third rates to the revenue forecasts for the School CIP and the premium submitted in
the
County
Executive's
FYI 7 Recommended Capital Budget. Finance assumes
that
the
revenue forecasts prepared by County Council staff do not affect the economic
assumptions for residential and non-residential transactions prepared for the County
Executive's FYl 7 Recommended Capital Budget
In
other words, that the increase
in
the
rate schedule will have no material behavioral impact on the
num~
and amount of
transactions subject to the recordation tax.
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3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
The estimated additional revenues from the increase in the school increment are $125.975
million from FY2017
to
FY2022. The estimated additional revenues from the increase in
the "premium" are $64.959 million from
FY2017
tO
FY2022.
The
estimated
revenues
by
fiscal year are as folfows:
School incremental increase:
o
FY17: +$18.712 million
o FY18: +$19.369 million
o FY19: +$20.368 million
o FY20: +$20.893 million
o FY21: +$22.536 million
o
FY22:
+$24.097 million
Premium increase:
o FYI 7: +$9.649 million
b
FY18: +$9.987 million
o
FY19: +$10.503 million
o
FY20: +$10.773
million
o
FY21: +$11.620 million
o
FY22: +$12.427 million
4. An actuarial analysis through the entire amortization period for each bill that would
affect retiree pension or group insurance costs.
Not applicable
5. An estimate of expenditures related to County's information technology (IT)
systems, including Enterprise Resource Planning (ERP) systems.
There are no additional expenditures related to the County's information (IT) systems
including ERP.
6. Later actions that may
aff
ert
future revenue and expenditures
if
the bill authorizes
future spending.
Finance, which administers this tax, does not expect later actions that may affect future
revenue and expenditures.
7. An estimate of the staff time needed to implement the bill.
There is no additional
staff
time required of
Finance
to
implement Bill 15-16.
8. An explanation of how the addition of new staff responsibilities would affect other
duties.
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Not applicable
9. An estimate of costs when an additional appropriation
is
needed.
Not applicable
10. A
description of any variable that could affect revenue and cost estimates.
As
noted in item #2.- the revenue estimates are based on economic
assumptions
prepared
for the County Executive's FYl 7 Recommended Capital Budget. However, there may be
instances where
the
higher recordation tax, and
therefore higher closing
cost, could have
an impact on the sale or sales price of a property.
11. Ranges of
revenue
or expenditures that are uncertain or difficult
to
project.
Because the
estimates
prepared for Bill 15-16 are a six-year
forecast,
there are always
uncertainty
with
any forecasts of revenues whether in the short- or long-term.
12.
If
a bill
is
likely to have no fiscal impact,
why
that
is
the case.
Bill 15-16 -vvill have
a fiscal impact
13. Other fiscal impacts or comments.
Not applicable
The
following contributed to and concurred
v.rith
this analysis:
David Platt,
MHre
Coveyou, and Rob Hagedoorn, Finance
Jane Mukira, Mary Beck, OMB
Date
@
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Econ()mic Impact Statement
Bill l5-l6E, Recordation Tax
-Rates -Allocations -Amendments
Background:
This legislation would increru.'e the rate of the recordation
tax
levied
by
the County under
state
law
and allocate the revenue received fron1 the recordation tax for different uses.
Recordation taxes are imposed on the privilege of recording a document among the land
records of the County and they are usually paid when real prope.rty is transferred, if the
mortgage on
real property
is refinanced, or
if any
oth(.,'I'
instrument
of
v,,riting securing
a
debt is recorded.
There are three separate recordation
tax
rates. The first rate, or base rate, is $2.20 per
$500
of
the
consideration in a
deed or, if mortgage refinancing, on the additional an1ount
of the debt secured above the existing principle balance. This rate translated into a
percentage is 0.44 percent. For purposes of calculating the recordation
tax
on a deed, the
first $50,000 of the consideration amount is exempt from the
tax
if
the transaction
pertains to. a
buyer of mvner-occupied residential property. Bill 15-16 does not change
the base rate.
The second rate, or school increment, is $1.25 per $500 of the consideration
and
went
into effect in 2004. The rate is based
011
the same criteria as rhe base rate. Bi11 15-16
proposes to raise the rate from $1.25 per $500
to
$2.00 per $500 - an. increase of sixty
percent (60%). These rates translated into a percentage is an increase from 0.25 percent
to 0.40 percent. Bill 15-16 would dedicate all proceeds from the rate increase to
Montgomery County Public Schools capital projects.
The third rate, or the Recordation Tax Premium ("premium"),
is
$1.55 per $500 and went
into effect in 2008. The ""premium"
tax
is applied when the consideration is a deed or a
mortgage refinancing in excess of$500,000. Fifty percent (50%) of the premium fund
Co\)nty Government capital projects and
fifty
percent (50%) fund rent assistance. Bill
15-16 proposes to raise the premium
r-a.te
from $1.55 per $500
to
$2.30 per $500 - an
increa;;e
of over forty-eight
percent (
48.4%
).
These rates
translated
into a percentage is
an increase fro:rn 0.31 percent to 0.46 percent.
1. The soµrces of infonnation, assumptions, and methodologies used.
Sources of information used in the preparation of the economic impact statement are:
• Greater Capital
Area Association
of
Realtors (GCAAR),
• Maryland Association of Realtors (MAR),
• "111e Behavioral.
Response to Housing Transfer Taxes: Evidence from a
Notched Change in D.C. Policy'', Working
.Paper~
Joel Slemrod, el
al.,
February 2016,
• "The effects of land transfer taxes on real estate estimate markets:
Evidence from a natural experiment in
Toronto",
Working Paper 423,
Department of Economics, University of
Toronto,
February 14, 2011, and
~"Potential
lmpacts of Increases in Real Estate Transfer Taxes," National
Association of Realtors, 2003.
Page 1of3 ,
@
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Economic Impact Statement
Bill 15-16E, Recordation Tax - Rates -Alloeation.s -Amendments
The Department
offinanc·e
(Finance) confim1s that the increase in revenues from Bill
15-16 as t--stimated by County Council
staffis
based on the percent
increases
in the
second
and
third rates
to
the
revt"Ilue
forecasts for
the
School CIP and the premium
submitted in the County Executive's FYI 7 Recommended Capital Budget. Finance
assumes that
the
revenue forecasts prepared by County Council staff do not affoct the
economic
assumptions
for residential and non-residential transactions prepared for
the County Executive's FYl 7 Recommended Capital Budget. In other words, that the
increase in the rate schedule
\.\ill
have no material behavioral impact on the number
and amount of tr.msactions
subject
to the recordation tax.
2. A description of any variable that could affect the economic impact estimates.
.TI1e
variables
that could affect the t>conornic impact estimates are the responses to
real estate transactions and the real estate market, both sales
and
sales prices. from the
increase in both the school increment rate of sixty percent and the premium of over
forty-eight
percent. Specifically,
the proposed
rates would increase the
closing costs
to
both buyers and sellers.
3. The Bill's
positive
or negative effect,
if
any on employment, spending, savings,
investment, incomes, and property values in the County.
Finance estimates
that
the closing costs from both recordation and transfer tax.es for
selected residential sales
would int1ease
from $300 for a sales price of$250,000, or
21.7
percent. to
$2,175 for a sales price of $1 million, or 26.8 percent. For non-
residential properties,
the closing cost
would
increase $375 for
commercial properties
with
a
sales price of $250,000, or 2L7
percent.
to $149,250, or 29.9
percent,
for
commercial properties
with a
sales
price of$50 million.
Based
on those estimates, the average
effective
tax
rate for
residential
sales would
increase from 0.55
percent
to 0.67 percent
for property with
a
sales
price of $250,000
and from 0.81 percent to l .03
percent
for
property
v.ith a
sales price
of$1 million.
1ne
effective tax rate for non-residential sales would increac;e from 1.00
percent
to
1.30 percent for properties '-Yith a sales price of $50 million. Thls also confim1s that
the recordationtaxes are progressive in
terms of
sales prices under both
current and
proposed rates.
While Bill 15-16
will increase the closing costs for both residential and non-
residential transactions, the legislation would have no impact on employmenL
savings, and non-real estate investment, and incomes in the County..However, the
effect of an increase in the closing costs could have a modest impact on real estaie
sales and property values. Without historical County data on the
responses
of real
estate transactions to rate
increases.
estimates of such increases on the number and
value
oftransactions
is
difficult to
mea~ure
with any
specificity.
Page 2 of3
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Economic lmpad Statement
Bm 15-16E,
Recordation Tax - Rates - Allocations -
Amendments
4.
If
a Bill is likely to have no economic impact, why is that the case?
Bill 15-16 could have a modest impact on sales prices and number of residential and
non-residential
transactions but no impact on the County's
employment,
savings,
investment. and incomes.
5. The following contributed to or concurred with this analysis: David Platt and
Robert Hagedoorn, Finance.
.
Date
.
t.
&.. . . . . . . .
.
~L+l
Page 3 of3
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(
THE
GREATER
BETHESDA-CHEVY CHASE
CHAMBER OF COMMERCE
7910 Woodmont Avenue, Suite 1204
Bethesda, MD 20814
T:
{301) 652-4900
F: (301) 657-1973
staff@bccchamber.org
www.bccchamber.org
Your Business Is
Our Only Business
THE GREATER BETHESDA CHAMBER OF COMMERCE
TESTIMONY BY JANE FAIRWEATHER
ON EXPIDITED BILL 15-16: RECORDATION TAX- RATES ALLOCATIONS- AMENDMENTS
BEFORE THE MONTGOMERY COUNTY COUNCIL
MAY 10,2016
Good afternoon. I am Jane Fairweather, a member of the Executive Board of The Greater Bethesda Chamber
of Commerce, and
I
am
here to testify on behalf of our 600 plus member organizations in opposition to
Expedited Bill 15-16.
The piece of legislation you have before you would increase recordation tax rates in certain instances by 22%
to 48%. While we applaud the Council's interest in maintaining quality schools in Montgomery County,
with this increased recordation tax we are chasing away the very families who would benefit from living here
and attending these schools .
. There is no dispute that the County is in need of afforctable housing, a strongly held belief and goal that
all
of us in the housing industry support. However, out there in the real world, as elected officials, you
must understand that even for those people who are trying to purchase market rate units, the current
costs are almost untenable and becoming even more so, particularly for first time home buyers. A report
released last week by Trulia indicated that Silver Spring tops the list when it comes to metro areas
nationwide where low-income residents have been priced out of the market. When you add the fact that
Maryland has the highest closing costs in the region, you harm the least capable that you claim to care about
the most.
15 years ago, the State of Maryland recognized the burden high costs placed on first time buyers and passed
the First Time Maryland Home Buyers Act. This legislation allows first time buyers in Maryland to get a
significant discount on their transfer taxes in an effort to encourage more home buyers to settle here. Even
with this discount, we still have the highest closing costs in the region.
Many borrowers already have difficulty accumulating the cash needed to enter the housing market the first
time. Of note as well, is the fact that in Northern Virginia and DC, real estate taxes are paid in arrears, while
in Maryland they are paid in advance, thereby requiring a buyer in Maryland to be responsible for 9-10
months of taxes delivered in cash at settlement. By increasing recordation taxes, you will greatly harm first
time and mid-level buyers who are already disadvantaged by the loss of entry level homes and escalating
prices. The proposed companion increase in the property tax rate this year will deal an even stronger blow at
closing, given that buyers are not eligible for the homestead exemption in that first year.
It
will also have an
impact on sellers since the typical transaction splits transfer and recordation costs 50/50.
An
analysis by
GCAAR points out that
if
passed, recordation costs will increase approximately 22% on homes $500,000 and
below which translates into a $675 increase on a $500,000 home and 48% on every dollar over $500,000.
This means a $1275 increase on a $700,000 home, and $2000 on a $950,000 home. These are significant
amounts that will, without question, impact the recovering housing market.
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During a time when we are trying to send a message that Montgomery County is open for business and seeks
to welcome new businesses through our newly privatized economic development vehicle, we seem to
be
ignoring the fact that when businesses evaluate relocation, the future housing needs of their employees is a
tangible item to consider. With higher transactional costs already associated with Montgomery County
before
the advent of this bill, why would we
be
moving in this direction, which is
at
cross purposes with our
economic development strategies?
The business community is witness to many such conflicting policies in the County that make it increasingly
difficult and expensive to operate a successful enterprise within our boarders. We need some help, not
additional burdensome costs.
We thank you for the opportunity to present these comments.
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Greater Capital Association of REAL TORS® (GCAAR)
Expedited
Bill 15-16,
"Recordation Tax -Rates -Allocations-Amendments"
Position: STRONG OPPOSITION
May
10,2016
Honorable Councilmembers, my name is Peg Mancuso, I am the president of Greater Capital
Area Association of REALTORS® and
am
testifying on their behalf. GCAAR represents
nearly 10,000 REALTORS® and
real
estate professionals. We are also the voice for
thousands
of buyers, sellers and homeowners. While currently serving
as
GCAAR's
President,
I
also bring over
30
years' experience in real estate in Montgomery County.
First and foremost, GCAAR maintains an absolute commitment
to
fostering a world class
public school system in Montgomery County. Vibrant public schools are a critical
investment in our youth and, thus, the future well-being of the entire County. We recognize
MCPS' success is a public trust and responsibility, and current construction challenges
present obstacles we all must
be
committed to solving.
With that understanding,
GCAAR
is
firm
in
its belief that President Floreen's idea to
generate financing by placing a disproportionate burden on homeownership is neither
sound nor fair, and we must vehemently oppose the proposed recordation
tax
increase. This Expedited Bill not only pays for school improvements, but other government
expenditures at the expense of a targeted segment of the population: those purchasing, selling
and refinancing homes.
1
Just as education is of critical importance to the future of the County, the investment in
homeownership is a constant positive force in our communities. Homeowners across the
economic spectrum contribute immensely to Montgomery County's revenue stream, not just
via the taxes they pay but also
local
businesses they own
and
support.
2
Recordation taxes in the county
are
ALREADY
among the
highest in the countrv3,
and
despite being dedicated in large part to education, this Bill would instantly increase those
taxes by an astronomical
22%,
with a
48%
rise on the rate for the valuation of properties over
the first $500,000.
4
Just to farther clarify, transfer and/or recordation taxes differ from ordinary property taxes in that the transfer or recordation tax is a one-time
payment made
at
the transfer ofthe
land.
It is a common misconception that these taxes are amortized in.to
the
mortgage or capitalized into to
the
price of the property. This difference significantly affects the stability of
tax
revenue-transactions
actually
need to transpire for a
jurisdiction to collect transfer or recordation taxes. Excessive dependence on these as a significant share of government revenue
is
risky
given
the ups and
downs
of real estate markets and transactions.
2
It should be noted that when properties are sold, the revenue contributions of new property owners are invaluable to Montgomery County's
economy. Residential buyers invest millions of dollars in retail as they
make
improvements and decorate their
new
homes (e.g., sales tax revenue
and increase in property value assessment revenue).
5
The Federal Government and 14 States have already done away with recordation and transfer taxes altogether, with four
of
them going so far
as to pass Constitutional amendments
agai.nst
their
creation.
·
4
GCAAR's calculation is on the "base" recordation rate
of
$2.20/$500 on the sale price or,
if
refinancing, on the additional amount borrowed
over the remaining principaL Currently, the "school increment" is $1.25/$500. The introduced Bill would raise the rate
by
$.75
to
$2.00/$500.
1
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Why are the homeowners we continually strive to usher into Montgomery County being
asked to bear such a disproportionate load.?
5
All residents will benefit from public service
improvements, therefore we all should be invested in paying for them.
GCAAR also finds it inconceivable, nay incomprehensible, that the Council would consider
pushing through a $185 million tax increase on homeownership in less than a month's
time. Such a significant surge in tax rates would present immediate challenges to all
homeowners, but would
be
particularly onerous for first-time homebuyers, seniors, and any
resident who needs to access the equity in their home to pay for a challenge or change in real
life circumstances, such as college and medical emergencies. These are
people
being
affected, not just ATM machines.
6
Further,
if
the Council is looking for more revenue, there can be equitable and broad based
funding solutions. Using the narrow approach of solely raising recordation taxes to fund the
County's most valuable asset is short-sighted and unpredictable.
7
The constant need for
funding improvements to our schools deserves a more measurable revenue stream.
8
In conclusion, GCAAR is entirely committed to finding funding solutions for
MCPS. However, we do not believe overburdening those who make long term investments
in our County is neither just nor prudent
9
Homeownership is one of the best opportunities
for people to maintain security and build equity-not a piggy bank for the Council to use at
whim.
There must be a better way-let's find it together.
The "Recordation Tax Premium" is $1.551$500 and applies to the am.oWlt in excess of $500,000. The introduced Bill would also raise that rate by
$.75 to $2.30/$50).
5
We understand there are many factors that detennine the jurisdictions to which residems will move, but you have heard innumerable times that
taxes play a significant part
in
that
decision. ANY increase
in
recordation and transfer
tax
rates from this point forward would prove
coumerproductive
by
limiting homeuwnership and reducing mobility.
6
See also comparative example of a $450k home and a $750k. It should be noted, however, that Montgomery CoW!ty's average sales home price
is
currently approximately $474k. which
is
significantly more than all of our neighboring jurisdictions-even Haward County (see March 2016
Housing Statistics). Even
if
those other jurisdictions doubled their recordotion and transfer taxes, they would likely still pay less than
Momgomery Counry currently does:
7
The National Association ofREALTORS® has also done an extensive study on the negative effects ofrecordation
and
transfer taxes throughout
the nation available for your review at htm:llarchjve.realtor.org/sites/de(aultlfiles!retransfenaxes,pdf. There you can also review a more
comprehensive overview of
haw
recordation and transfer taxes are narrowly based taxes resulting in «dead:K>eight loss of taxation." Source:
National Association
of
REALTORS®, Potential Impacts of Increase in Real Estate Transfer Taxes (August 2003.)
8
It is also important to note that based on the most recent housing statistics (see attached), Montgomery County's average home sales price has
actually decreased
by
over $2511:. This
is
significant, considering that recordation and transfer taxes are dependent on the sales price of a home.
9
From a policy perspective, recordation and transfer taxes are characteristically discriminatory because they single out one panic.ular type of
asset and activity
-
the purchase of real estate. How
is
it fair to punitively tax real estate transactions out of the millions of other transactions
that take place in Montgomery County every year? Recordotion and trarisfer taxes blatantly discriminate against buying a home versus buying
some other type of asset such as stocks,
bonds,
or other ownership interest purchases.
Why
are we choosing to discriminate those who want to
invest their families in Montgomery County?
From the real estate market perspective,
if
people cannot move up
from
starter homes, it actually
has
negative effects on overall affordable
housing perspectives because there will be less affordable housing stock available. Those who have the
ability
to
move from their older
properties may also be hesitating because of all the costs associated-stifling the improvement
of
these properties.
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Housmg
s
tat1s
f
ICS:
March
2016
.
Units
Average Price
Median Price
Pending Units
Active Inventory
Months of
Inventory*
2016
2015
37
556
641
688
93
34
158
74
172
38
276
26
219
270
21
836
705
52
24
91
45
131
84
146
%Chg
-13.5%
22.1%
-0.2%
10.0%
21.5%
-41.2%
17.1%
5.4%
18.6%
-13.2%
7.6%
19.2%
25.1%
4.1%
-33.3%
0.6%
2.0%
-11.5%
-20.8%
12.1%
4.4%
6.1%
7.1%
-10.3%
2016
$76,720
$341,773
$148,063
$248,847
$315,234
$143,641
$324,636
$213,869
$270,034
$112,551
$292,458
$251,966
$235,286
$425,222
$150,056
$473,902
$240,076
$409,604
$140,847
$281,435
$357,817
$167,606
$140,321
$253,766
2015
$69,787
$355,516
$146,683
$251,879
$298,730
$155,268
$269,370
$188,833
$254,244
$158,371
$284,984
$330,370
$254,800
$391,038
$259,248
$499,348
$234,460
$249,843
$95, 117
$252,750
$310,271
$166,720
$149,898
$237,228
%Chg
9.9%
-3.9%
0.9%
-1.2%
5.5%
-7.5%
20.5%
13.3%
6.2%
-28.9%
2.6%
-23.7%
-7.7%
8.7%
-42.1%
-5.1%
2.4%
63.9%
48.1%
11.3%
15.3%
0.5%
-6.4%
7.0%
2016
$59,950
$300,000
$107,450
$212,000
$285,000
$120,000
$292,500
$204,000
$260,000
$82,854
$260,000
$190,000
$224,000
$373,000
$120,000
$38.5,000
$234,900
$292,500
$76,000
$261,250
$270,000
$140,500
$142,000
$224,900
2015
$56,000
$299,450
$87,500
$208,350
$273,000
$155,700
$259,250
$180,000
$249,692
$137,500
$260,500
$305,000
$230,000
$365,162
$180,000
$397,450
$224,900
$235,000
$65,200
$230,000
$270,200
$149,900
$151,950
$210,500
%Chg
7.1%
0.2%
22.8%
1.8%
4.4%
-22.9%
12.8%
13.3%
4.1%
-39.7%
-0.2%
-37.7%
-2.6%
2.1%
-33.3%
-3.1%
4.4%
24.5%
16.6%
13.6%
-0.1% .
-6.3%
-6.5%
6.8%
2016
57
1047
996
1275
207
51
310
150
295
34
481
55
411
514
48
1453
1312
95
25
175
66
235
122
219
2015
70
866
946
1051
158
46
242
118
275
36
405
28
331
425
28
1310
1119
86
23
145
48
187
105
192
2016
463
2508
3144
2650
614
235
759
660
818
316
1140
415
1175
992
322
2519
1699
511
205
684
482
745
555
1536
2015
525
2736
3028
2659
697
278
827
721
777
336
1034
444
1252
1010
338
2504
1638
633
218
711
514
833
578
1748
2016
14.5
3.7
4.9
3.5
5.4
11.8
4.1
8.5
4.0
9.6
3.8
13.4
4.3
3.5
23.0
3.0
2.4
11.1
10.8
6.7
10.3
5.4
6.2
11.7
2015
14.2
4.9
4.7
3.9
7.5
8.2
5.2
9.7
4.5
8.8
3.7
17.1
5.7
3.7
16.1
3.0
2.3
12.2
9.1
7.8
11.4
6.4
6.9
12.0
Allegany
Anne Arundel
Baltimore City
Baltimore County
· Calvert
Caroline
Carroll
Cecil
Charles
Dorchester
Frederick
Garrett
Harford
Howard
Kent
Mo~tgomery
32
679
640
757
113
20
185
78
204
33
297
31
274
281
14
841
719
46
19
102
47
139
90
131
~.
Prince George's
Queen Anne's
Somerset
St. Mary's
Talbot
Washington
Wicomico
Worcester
MARYLAND
·
-
------
.
I
5,772 5,417
6.6% .
~291,025
$288,911
0.7% $252,068 $246,361
8,240 25,147 26,039
· - -
4.4
2.3% 9,633
·
Reported
by
MRIS and Coastal Association of Realtors. NOTE: UNITS ARE THE "UNITS" SOLD, PENDING ARE UNDER CONTRACT
4.8
*Months of inventory based on current active inventory and monthly sales for the corresponding month; Data are revised on a regular basis. Readers of these reports
should note that older reports have not been adjusted to reflect these revised data. This report, however, contains the latest reliable data to date.
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~--
May 9, 2016
Montgomery County Board of Education
Carver Educational Services Center
850 Hungerford Drive, Room 123
Rockville, MD 20850
Montgomery County Council of PTAs
Upcounty Regional Services Center
12900 Middlebrook Road, 3rd Floor
Germantown, MD 20984
Re.
Invitation to Work Together on Stable and Equitable Funding Solutions for MCPS
Honorable Members of the Montgomery County School Board
~d
Council of PTAs:
I am reaching out to you on behalf of the Greater Capital Area Association of REALTORS® (GCAAR).
Our Association, along with our 10,000 members, extends our solid commitment to ensuring
Montgomery County Public Schools remain amongst the best in the nation. We know MCPS is facing
serious challenges in financing vital capital improvements. In an effort to find secure and adequate
funding solutions, we would like to work together.
GCAAR values investments in education. Our public schools embody an exemplary system where
students of all backgrounds are able to attain a world-class education without concern over cost. For the
homebuyers and renters we serve (specifically those with or planning to have children), it is often why
they choose to build their lives in Montgomery County. Overall, a vibrant school system fosters
communities, feeds local businesses and benefits the entire County. Our schools' success is a public
responsibility and current construction challenges present obstacles we all must be committed to solving.
It is unacceptable an institution as critical as MCPS is unable to operate at its full potential.
However, we do not believe Council President Floreen's idea to generate monies solely taxing
homebuyers alone is a fair nor stable way to fund our school construction needs. Just as education is of
critical importance, homeownership also positively impacts the quality of
life
in our community. To
illustrate, the County has over 1,000,000 residents and tens of thousands of businesses and employees.
The proposed
tax
would put the burden of generating new school construction money ONLY on those
buying, selling, or refinancing a home. Why are we asking the few, who are already taking on a life-
changing event (buying or selling a home, refinancing their home for education, health or other family
reasons) to pay for the entire community's school needs? Aren't we all in this together?
Further, economic circumstances change from year to year, and sales prices can fluctuate.
It
is difficult
for both County analysts and real estate professionals to accurately predict revenue from home sales.
Using a narrow approach such as recordation taxes to fund the County's most valuable asset is short-
sighted, uncertain and imbalanced: let's find a more equitable, across the board and balanced approach.
While it is unfortunate GCAAR was not involved in any of the funding conversations to date, it is not too
late. We respectfully ask for a thoughtful discussion on developing a more equitable, across the board,
predictable plan to support our schools. We are confident our shared commitment to our youth and
schools will lead to better solutions. We look forward to setting up a meeting as soon as possible.
Sincerely,
Peg Mancuso, 2016 GCAAR President Contact: ekrauze@gcaar.com
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Before the Montgomery County Council
Expedited Bill 15-16- Recordation Tax- Rates -Allocations -Amendments
SUPPORT
March 6, 2016
Dear Councilmembers,
It is with great respect for the work that you do in balancing the needs of our wonderful
county, that I write this testimony to ask for your help for our schools. I applaud Council
President, Nancy Floreen, for introducing this bill to increase the Recordation Tax. It is
essential that the council fully fund the Board of Education's request for Capital
Improvements in our schools and the Recordation Tax is a step in that direction.
For those who say that the Recordation Tax increase will lead to a decline in home
sales, I ask them to consider whether home sales would also be impacted by a decline
in the school system which is the inevitable result of not fully funding MCPS. Parents in
MCPS schools have been outspoken this year because we are not okay with the
decline in our school system. We have seen that year after year, the County Council
and Board of Education have not been able to increase funding for our schools in large
part because of revenue shortages in our county.
One of the- projects in the BOE's CIP request is an addition which would partially relieve
the capacity problem at my son's school, Rolling Terrace Elementary.
The needs at Rolling Terrace are much more dire than the MCPS numbers suggest.
Rolling Terrace currently has about 900 students.
Our building has classroom space
for 747 students and so MCPS calculates our building as about 153 students over-
capacity. But our school is actually more than 250 students over the school's core
capacity.
Core spaces are the shared spaces in the school: the cafeteria, the gym, the field and
playground space, media center, bathrooms and pull-out spaces. Although MCPS
calculates Rolling Terrace as being able to fit 7 4 7 students into classroom spaces, they
have only provided us with enough
core space for 640 students (this is our "core
capacity" number). So, we are actually looking at a number of more than 250
over core capacity.
Why does this matter? Because elementary school students at Rolling Terrace begin
eating lunch at 10:15 when they finished eating school breakfast at 9. Every day,
students waste valuable learning time waiting in bathroom lines. Administrators spend
more time solving space and scheduling issues and less time working with teachers to
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improve their teaching. If it's been raining, parents walk through inches of mud to pick
up their kids at the end of the school day because there is no more grass on the field.
We even have ESOL students who are receiving pull-out services in what used to be a
closet.
If the Board of Education CIP request is fully funded, Rolling Terrace will receive some
relief for this overcapacity in 2020. However, the proposed tax increases still fall short of
fully funding the Board of Education's CIP requests. On April
14th,
you received a "Non-
Recommended Capacity Project Delays" list from MCPS (see attachment) and the
Rolling Terrace relief project is on this list. Because of this document, Deputy Council
Administrator Glenn Orlin proposed a two-year delay of the project that would relieve
Rolling Terrace (reconciliation memo dated April 22). The conditions at Rolling
Terrace cannot wait another two years. We need the money for the CIP projects
now. Please fully fund the BOE requests through the Recordation Tax, the
Property Tax, or whatever else it will take. Our students are the future of this
county and they are in need of your full support.
Sincerely,
~~'¥17
Lisa Seigel
Mom to Auden (in
3rd
grade at RTES) and Juno (incoming Kindergartner at RTES)
Rolling Terrace PTA President
Attached:
Impact of Non-recommended Capacity Project Delays
(MCPS, April
14, 2016)
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Impact of Non-recommended Capacity Project Delays
April 14, 2016
Schools with substantial space deficits are highliated in bold.
Type
of
Project and Length of
Non-recommended Delay
By
School
Space Deficit
at
School in Year Prior
to BOE Requested
Completion Date
Board of Education CIP
Requested Completion Date
Non-recommended
Completion Date
Space Deficit at
School in Year Prior
to Non-recommended
Completion Date
J~_Capacity Proj~cts
Delayed by
two
years
New School:
Clarksburg Cluster ES
-------·---!-------------------
------"~l~IR~e=nev==es~Ce..:=..;d=a=rG=ro'-=ve=.,;-.
_______ :..
=--===-=c.=i---
Auaust 2019
August
..___
c~1-arks-'burg
and
Wims_el_e_m_s~.l+-----------+----
_ _ _ __
Additions:
Pine Crest ES
Forest
Knolls
ES and
August 2020
Auaust 2022
202 seats
at
Cedar Gro
·106 seats
at
Clarksbu
-327 seats at Wilson Wims
·178
seats at Cedar Grove ES
·240
seats at Clarlcsbum
ES
-322
seats at
Wilson Wims ES
--···--·---------t--------~~-~---t
..__-"M=-=o'-"n"'tg"'o:c:m:.:.e=HJA..:.vKn~ol;_;;l'""s-=E=-:S:....&,~·i-------A'-"'-ua.,.1u"'s"-'t-=2:c:o=.20:+-----C..A-"u_a~ust~2__,0-=2-=2i--
·115 seats
at
Pine Crest ES
·221 seats
at
Forest Knolls ES
• 100 seats at Pine Crest ES
-176 seats at Forest Knolls ES
. -·--·-_J_Addltions
_reliev~
--------·----t--·------------Jr------------------1-------·---------t
·-·-·-----·-
_ _ _ _ _• _ _
1
Pine Crest
E:)J
~----·--·---·----·---·---··--
P_in_e~y_B_ra_n_ch_E
__
s.______
_:Au=a~cu""'st~2::002~~1
_____
~A_,,,,,11ni.::::::u~~2::.::=02=3+-------------1-=2_1-=se'-a~ts+-
____
-129seatsin~xthyear
..::.Au=-!Qz.:,u:.::sc::.t.:::20:::2::.:o:.i-_-._---_-_·-'Ac.:u:;,la...,u:::s=t-=2c:.02=2=i------------·.-=-:31i1.c.=sea:=ts=:::1--------·-
-_~:34c.=oc=s.::.ea=ts:::.i
___
__
------waltViihTtimiilHs------·-
p;;;;s,;;,;;;,;.-.;..;.;~;;;,;;;;__
______
CaDacitv Prolects
0!.layed
byone.~--~i----··--·-----+-·--·-·--·-----··-·1-------··-·-----+------··-------
---+-----------·--~-+------------•-·-------··--·--·---··-t--------
.f- _____________
r----·-------+--·------------+-------------·-
August 2021
-------·-----·-'3_1_1-'s~ea'-ts-+--
1
1-Ad~d'-'-lti"''o;..;.n-'s..c.~·c...·------~~i--------=-----1------ ~----=+---··-----------..,...,.---;--------------1
_ _ _ _
Th~mas
W. Pyle
MS~-----·~ust
2020
·293
sea~~
1-----Col.
E. Brooke
Lee
MS
··=-=-=---·-AIJ9USt202o-~~~-----_-_-_-A-u--g-ust-2~0~2~1~::::::~.~.~=---_-
_ _ _ _
---=r.akom~ar!<~
______
-----1
__·_-__
-:::::::::·-'~"'"1~86~-=s-.::.e-a;;';ts,;:~~-~~~:_-~::~-~~=:·::~-2;:s~2:.::-sea::::·~-ts~--1
~
... •pQ?
-:::>.
c::n
August
20.!~i------· Au_sust~~!
__ _
------·- -------=
.2s,2..,.-="':"=ats==-+-----·-----------·-=-=330c...~sea~ts
<tea.cs.
_fae
~
4
:;~ ~;r.~
ver
1---1-a.L•,---=E:.::a=st::.,S:o-:ic.;lv=:e'-rS.::.p""n-':'n""-'gE:::S+-------'-August 2020
_.
(Addition reiie.""ve.::.:s=o-i--·-----------1--
1
Rolling Terrace ES
~··-----=G:.:..re::.:e:.:.n;.;;ca::::s:::tlo.::e..::.E:::S:+--··---·---'-Au=ig.._·u:::st=20.::.:2=0:.,-_··_·
_
_:_R.::.emo.;.;.;;.o~ve:::d:..;frc.;o:c.mc:...::C.:.:.IP-+----------·1;..::3:.::2-=se=at=s;-.
__________
~1:.::34:...:.c.:s:.::e::::ats=i
i.;R,,.e.,,,v;;,;i,;;ta:;;l,;;;lz.a"'ti=o=n;;;/E"'x"'pan._s i""o""n""P~r"'o""jec.,,ts"'---------1-----------l-----···--------·---1----
___________,
55 5
5
One vear delay for elementa1rschools
-·-'--------
!!!!!!!'ifJh
schoo_~.------+-·---------+~
Cold Sprina ES
Auaust 2021
~·------c:-c--,.,,+------,.-----+-----~·---,-+------------+------------4
Auaust 2022
no soace deficit
no soace deficit
~·~-------"D;..;;u:.:.F~ief::.;..;:;E~S4--------=.A~u~1g~u~s~t=20=2:..:1:.i------'A~~ua~1u:::s~t..:;;2~02=2=i-
_ _ _
_::·331seatsatC_a_rs_o_n_E_S-+-----~-2_3_s_e_a_tsatCarsonES
~··
(relieves
Carson
ES~i)t-----------1---------+-------------+------------1
August 2021
August 2022
no snace deficit
no soace deficit
=----
-----'-S!_o_n_ea_1a_te~E~S+-----··_August=2c::02::.1:..i··'=.-=.-=.:::=====7:A.::u=a1us:::t:..:2:.::0=22=l-------------'-'-48:..:s=eat=s+
__________ s;..;;e..:;;ats.:;;;.i
-4c.::5-'
,___ _ _
---=D=-a...,.m_a,_s_cu-,s_,E"'S:cr------J,..a_n_ua_H~'Y2
77
3::-1
_____
J a_nu!_~
__________
02
·9..,se_a_ts-:i_n_si:-xth:::--<v_ie_ar-;-------9 seats in sixth vear
7
Twinbrook ES
Januarv 2023
Januf!~
·-··
-1 seat in sixth
~r+----
:1
seat in sixth vear
Summit
Hall~=ES~+-----J~an.uarv
2023
January 2024
·191 seats in sixth year
-191 seats in sixth vear
1
-··--.======R=:_ose"".""m.:.:.a.;.;.1ry~Hcill"'-s-=Ec.cS+-·---
January 2023
January__
20_2_4,_____
no space deficit
no space deficit
1
---·
Belmont ES
,_____ ·----=-W-:-o_ott-=o=-n-:H-::S:cr-----__,,.,A--'ugust
202=-2+------Au=-~ia~u_st_,2""'0-=2=3
1
__
-70 seats
ins~~
• 70 seats
in
slxth
year
_ ._____
P_o_o_tesv_.~il,_le_H_S-+------"-'-A-=ugust
2;,.;;0.=24-+-------'August
20~ ---·-----·=-2_5=-se,=a=ts:..ciiC.:n-=~=.:..L
-t-----:-2:'::5::-s.:oe-.:ats=:in:.:.:.:si:::.xth:=,v'-",ear=!
Note: Enrollment projections in the CIP extend six years, to the 2021-2022. In cases where a capacity project is delayed beyond the six years, the space
available or deficit in the sixth year of the projection is shown.
2j)
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~1
TESTIMONY IN OPPOSITION
Bill 15-16, "Recordation Tax -Rates -Allocations-Amendments"
Tuesday, May 10, 2016
Susann Haskins
Council President Floreen and members of the Montgomery County Council, thank
you for the opportunity to present before you today. My name is Susann Haskins
and I am a concerned Montgomery County resident. I have lived here since 1985
and worked in real estate for the last 30 years. Prior to that, I taught children with
learning disabilities. I have a Master's degree in Special Education and a deep
· commitment to public education. In fact, three of my children attended
Montgomery County Public Schools.
Based on my experience managing a large residential real estate office in the
County, I caution you against haphazardly increasing real estate recordation taxes.
We cannot afford to add any more barriers to homeownership.
When working to put together a down payment on a home, even a few thousand
.dollars in added costs can have a major impact.
For example, if you were to buy a $450,000 home
1
and put 5% down with a 95%
mortgage, your charges at settlement--closing costs plus down payment-would
be just under $40,000
2•
$40,000 is a lot to have in cash!
Please see GCAAR average home prices for 201512016, as well as recent MRJS listings in Montgomery County. It is important to note, that for
the same purchase price, one could see a marked difference in the home they would be purchasing in Howard County, which currently ranks even
higher in schools than Montgomery County, with lower tax rates.
2
The
95/5%
down loan has a slightly higher interest rate to offset private mortgage insurance for buyers with excellent credit. Less than
excellent credit would likely pay the private mortgage insurance in addition monthly.
If
the loan is FHA, the buyer can put down only 3.5% and
finance 96.5%, but there will be a monthly mortgage insurance premium for the life of the loan.
1
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Now, it is deeply troubling to know that our public servants would consider
imposing yet another tax barrier to homeownership with hardly any focus on its
long-term effects. I wholly agree with GCAAR that we need a thoughtful
discussion on developing a
predictable and equitable
plan to support our youth.
It
would be beyond unconscionable to push this measure through without
considering all of the negative ramifications, as well as possible alternatives.
There has to be a better way.
Thank.you.
@
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Housmg
St
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f
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f
1cs:
M
arc
h
2
0
16
Units
2016
2015
37
556
641
688
93
34
158
74
172
38
276
26
219
270
21
836
705
52
24
91
45
131
84
146
%Chg
-13.5%
22.1%
-0.2%
10.0%
21.5%
-41.2%
17.1% .
5.4%
18.6%
-13.2%
7.6%
19.2%
25.1%
4.1%
-33.3%
0.6%
2.0%
-11.5%
-20.8%
12.1%
4.4%
6.1%
7.1%
-10.3%
Average Price
2016
$76,720
$341,773
$148,063
$248,847
$315,234
$143,641
$324,636
$213,869
$270,034
$112,551
$292,458
$251,966
$235,286
$425,222
$150,056
$473,902
$240,076
$409,604
$140,847
$281,435
$357,817
$167,606
$140,321
$253,766
2015
$69,787
$355,516
$146,683