GO Item 3
February 9, 2017
Worksession 2
MEMORANDUM
February 7, 2017
TO:
FROM:
SUBJECT:
Government Operations and Fiscal Policy Committee
'\
/
Robert H. Drummer, Senior Legislative Attorney
I~.;.
)
V(j
Worksession
2: Bi1l31-16, Taxation - Urban Agricultural Tax Credit - Established
Bill 31-16, Taxation - Urban Agricultural Tax Credit - Established, sponsored by Lead
Sponsor Councilmember Hucker and Co-Sponsor Councilmember EIrich, was introduced on
August 2, 2016. A public hearing was held on September 20 and a Government Operations and
Fiscal Policy Committee worksession was held on November 3.
Md. Tax-Property Code §9-253 provides that:
(b)
The Mayor and City Council of Baltimore City or the governing body of a county
or of a municipal corporation may grant, by law, a tax credit against the county or
municipal corporation property tax imposed on urban agricultural property.
Bill 31-16 would implement this authority by:
(1)
establishing an urban agricultural
tax
credit against real property
tax;
(2)
defining an urban agricultural property and an urban agricultural purpose;
and
(3)
establishing eligibility for an urban agricultural
tax
credit
Background
Bill 31-16 would define an urban agricultural property as real property that is:
(1) at least one-half of an acre and not more than 5 acres;
(2) located in a priority funding area, as defined in Md. State Finance and
Procurement Code §5-7B-02; and
(3) used for urban agricultural purposes.
The Bill would define an urban agricultural purpose as:
(1)
crop production activities, including the use of mulch or cover crops to
ensure maximum productivity and minimize runoff and weed production;
(2) environmental mitigation activities, including stormwater abatement and
groundwater protection;
(3) community development activities, including recreational activities, food
donations, and food preparation and canning classes;
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(4)
(5)
economic development activities, including employment and training
opportunities, and direct sales to restaurants and institutions; and
temporary produce stands used for the sale of produce raised on the
premIses.
A property owner must conduct at least 2 urban agricultural purposes on the property. The
term of the credit would be 5 years. The credit would equal the property tax otherwise due on the
property.
The County Attorney's Office reviewed the Bill and made some suggested amendments to
clarify the intent. See the County Attorney's Bill Review Memorandum at ©9-11.
Public Hearing
All 4 witnesses supported the Bill. Aaron Rosenzweig supported the Bill as a way to help
people learn where food is grown. (©20.) Gabriel Shapiro, representing Chesapeake Climate
Action Network, supported the Bill as a way of making the community more green with urban
agriculture. (©21-22.)
Alyce Ortuzar, representing Well Mind Association of Greater
Washington also supported the Bill, but added a concern about stormwater runoff. Finally, Lynn
Koiner, representing the Koiner Farm in Silver Spring, supported the Bill as a measure to help her
family keep their 40-year old urban farm operating. We also received written testimony in support
ofthe Bill from several employees of lohns Hopkins Center for a Livable Future (©23-24) and the
Montgomery County Agricultural Advisory Committee (©25).
After the public hearing, the Executive submitted comments on the Bill requesting that the
broad scope ofthe Bill be narrowed to limit the potential fiscal impact. (© 18-19)
Issues
1.
What is the fiscal and economic impact of the Bill?
OMB, in the Fiscal and Economic Impact Statement (©12-17) noted that there are
approximately 36,300 taxable properties between 'h and 5 acres that are not zoned as agricultural
properties. However, OMB could not determine how many of these properties are currently used
for "urban agricultural purposes." If each of these properties qualified for the tax credit, which is
unlikely, the total loss of tax revenue could be $436.4 million in FYI7. The large potential tax
credit discussed in the FEIS points out the need to better define and possibly limit the eligibility
for the tax credit. This issue will be discussed below.
2. Should the definition of agricultural purposes be narrowed?
Although the Bill included crop production as an agricultural purpose, it also includes
environmental mitigation activities, community development activities, economic development
activities, and temporary produce stands. The addition of these non-farming activities, though
environmentally desirable, broaden the potential tax credit to many property owners who are not
farming and resulted in the OMB fear of a massive potential loss of property
tax
revenue. In fact,
2
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each of the witnesses at the public hearing supported the Bill to encourage property owners to use
their property for farming. This appears to be the main purpose of the Bill.
After receiving the Executive's request to narrow the Bill, Lead Sponsor, Councilmember
Hucker, and Council staff met with members of the Executive Branch to discuss the broad
definition of agricultural purposes. Councilmember Hucker intends to introduce amendments to
the Bill that would define agricultural purposes using the definition of urban farming in §3.2.9 of
the County Zoning Code, as follows:
Urban agricultural purposes
means
ill
the cultivation of fruits. vegetables. flowers. and ornamental plants;
ill
the limited keeping and raising of fowl or bees; or
ill
the practice of aquaculture.
See proposed Bill 5 at ©26-29. This change in scope would limit the tax credit to urban farming
and significantly reduce the potential fiscal impact of the credit.
Council staff recommendation:
amend the definition of urban agricultural purposes as set forth in proposed Bill 5.
3. Should there be a minimum value of sales from farming to receive the tax credit?
Baltimore City enacted an urban agricultural tax credit based upon the State enabling act.
However, the Baltimore City ordinance requires the property owner to derive at least $5000 each
year from farming on the property. This provision eliminates eligibility for the suburban backyard
tomato garden that produces tomatoes for the family. While it is desirable to encourage backyard
vegetable gardens, the purpose of the tax credit is to encourage working farms on small residential
lots that produce a significant amount of produce for sale. Councilmember Hucker's proposed
amended Bill 5 would add this gross revenue requirement.
Council staff recommendation:
require a property owner to receive at least $5000 in gross revenue from the sale ofproduce raised
on the property to receive the tax credit.
4. Should the tax credit be for 100% of the County property tax owed?
The Bill would provide a 100% tax credit on the County property tax owed. While this
would encourage urban farming, these property owners still receive County services like other
taxpayers. The same result may be derived from a partial credit. Councilmember Hucker's
proposed Bill 5 would limit the credit to 80% of the County property tax owed.
Council staff
recommendation:
limit the tax credit to 80% of the County property tax owed up to $2000 per
property. As requested by the Committee, Council staff worked with Finance to work on a limit
for the amount of the credit for each property and agreed on $2000. As discussed in issue 9 below,
Councilmember Hucker opposes the $2000 limit.
5. What is the proper minimum and maximum size of a lot that should be eligible for the
credit?
The Bill, as introduced, requires an urban agricultural property to be at least
~
acre, but no
more than 5 acres. Councilmember Hucker's proposed Bill 5 would keep the minimum
~
acre
size, but limit the maximum size to 3 acres.
In
addition, a property owner who owns more than
one contiguous lot of less than
~
acre would be permitted to consider both lots together as one to
3
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meet the minimum lot size.
Council staff recommendation:
amend the minimum and maximum
lot size as provided in Councilmember Hucker's proposed Bill 5.
6. Which County department should be responsible for certifying eligibility for the tax
credit?
The Bill, as introduced, would require the Director of the Department of Finance to certify
eligibility for the tax credit. The Executive Branch recommended charging the Office of
Agriculture with the initial task of receiving an application and certifying eligibility to the
Department of Finance. This appears to be within the scope of the duties and expertise of the
Office of Agriculture. Councilmember Hucker's proposed Bill 5 would shift this duty to the Office
of Agriculture and require the Director of Finance to base eligibility on the certification of the
Office of Agriculture.
Council staff recommendation:
amend the Bill to require the property
owner to apply to the Office of Agriculture for certification for the tax credit.
7. When should a property owner be required to apply for the credit?
The Bill, as introduced, would require a property owner to apply at least 90 days before the
beginning of the
tax
year the credit is sought. The Department of Finance requested that the Bill
be clarified that the property owner must apply on or before April 1 of the
tax
year before the tax
year the credit is sought. Although this is the same date, it would make it easier for the
tax
payer
to understand when the application is due. Councilmember Hucker's proposed Bill 5 would make
this change.
Council staff recommendation:
amend the Bill to require an application on or
before April 1 before the tax year the credit is sought.
8. Should the credit be limited to property in a residential zone?
The Bill, as introduced, does not limit the credit to property in a residential zone. The
Department of Finance requested this limitation. This is consistent with the purpose of the tax
credit. Councilmember Hucker's proposed Bill 5 would make this change.
Council staff
recommendation:
amend the Bill to require the property to be in a residential zone.
9. The County Attorney's recommended amendments.
The County Attorney recommended several amendments in the Bill Review memo for
clarity. See ©9-11. Several ofthe recommendations are taken care of if Councilmember Hucker's
Bill 5 is approved. The following recommendations are not:
a.
b.
Add the phrase "In order to receive the credit" at the beginning ofsubsection (e).
Add the word "tax" after the
5
in subsection
(f)
(1).
Council staff recommendation:
make both of these amendments for clarity.
4
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November 3, 2017 GO Worksession
Councilmember Tom Hucker also attended the worksession in addition to the Committee
members. Bonnie Kirkland, ACAO, Alex Espinosa, Finance Director, Mike Coveyou, Finance,
and Jeremy Criss, Office of Agriculture, represented the Executive Branch. Robert Drummer,
Senior Legislative Attorney, represented the Council staff.
The Committee reviewed the Bill, as introduced, the amended Bill proposed by CM Hucker, and
the Executive's recommendation to convert the tax credit to a grant program.
The Committee asked staff to:
1.
redraft the payback provision to ensure that the payback is for the year the property
is no longer eligible for the credit;
2.
work with Finance to reduce the geographical area eligible for the credit to urban
areas (CM Riemer suggested in a CBD or within
~
mile from a CBD); and
3.
work with Finance to prepare options to limit the amount of the tax credit.
9. Proposed amendments based upon the Committee's guidance.
Council staff worked with the Department of Finance to draft 3 additional amendments
based upon the Committee's guidance.
(1)
Amended payback provision
-
this amendment would
clarify
that the payback
would only be for the years that the property was not used for urban agriculture.
Amend lines
57-63
as follows:
(gl
Continuous agricultural use required
!f,
at any time during the tenn of the
credit or the renewal of the credit, the property
agricultural purposes:
~
no longer used for
ill
ill
the credit granted to the property must be tenninated; and
the owner of the property is liable for all property taxes that would
have been due [[during that 5-year tenn]]
if
the credit had not been
granted for any year that the property was not used for agricultural
purposes.
Lead Sponsor, Councilmember Hucker agrees with this amendment.
(II)
geographical area for the credit
-
this amendment would limit eligibility to a
property that is located within 1000 feet of a Metro Station Policy Area.
I
fill
1
The
Definitions.
In
this Section:
Koiner farm discussed at the public hearing is 500 feet outside the Silver Spring Central Business District.
5
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Urban agricultural property
means real property in a residential zone that is:
ill
ill
at least one-half of an acre and not more than
[~]]
J,
acres;
located within 1000 feet of or in
~
[[priority funding area, as defined
in Md. State Finance and Procurement Code §5-7B-02]] Metro Station
Policy Area. as defined in the most recent Subdivision Staging Policy
adopted under Section 33A-15. including the:
~
Bethesda Central Business District;
Friendship Heights:
Glenmont:
Grosvenor:
Rockville Town Center;
Shady Grove;
Silver Spring Central Business District;
Twinbrook:
Wheaton Central Business District; and
White Flint: and
all
~
(Ill
LID
(f)
(Q1
aD
ill
ill
ill
used for urban agricultural purposes.
Lead Sponsor, Councilmember Hucker agrees with this amendment.
(III)
limit on the amount of the credit
-
this amendment would limit the amount of the
credit to a maximum of $2000 per account.
Amend lines
42-43
as follows:
@
Amount
Q[
credit.
The credit must equal 80% of the County property tax
otherwise due on the property up to a maximum credit of $2000 each year.
Lead Sponsor, Councilmember Hucker opposes this amendment.
Councilmember Hucker agrees with limiting the credit to 80% of the County
property tax without a dollar limit.
6
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11. Should the Bill be enacted?
Urban fanning can be a benefit to the community. The Bill may create opportunities for
farming in down County areas where most of our County residents live and work. Urban fanning
in these areas may also encourage the production of locally grown fresh food that is both healthy
and desirable. However, the Bill, as introduced, is potentially too costly because it is too broad.
Councilmember Hucker's proposed Bill 5 narrows the tax credit to promote urban fanning yet not
overburden County taxpayers. The Committee may want to consider further limiting the amount
of the credit by placing an upper limit on the dollar amount ofthe credit or lowering the percentage
of the County property tax that is forgiven.
Council staff recommendation:
enact the Bill with
the amendments in Bill 5 and the additional amendments described above.
This packet contains:
Bill 31-16
Legislative Request Report
Md. Tax-Property Code §9-253
County Attorney Bill Review Memorandum
Fiscal and Economic Impact statement
Executive's September 21 Memorandum
Testimony
Aaron Rosenzweig
Gabriel Shapiro
Anne Palmer
Agricultural Advisory Committee
Council member Hucker's Proposed Bill 5
Circle #
1
5
6
9
12
18
20
21
23
25
26
F:\LAW\BILLS\163 I Urban Agricultural Tax Credit\OO Memo WKS 2.Docx
7
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Bill No.
31-16
Concerning: Taxation
Urban
Agricultural Tax Credit - Established
Revised: August 15. 2016 Draft No.
L
Introduced:
August 2.2016
Expires:
February 2.2018
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
_N:...:;o~n.!!Oe:....._
_ _ _ _ __
ChI _ _ Laws of Mont. Co. _ __
I
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember Hucker and Co-Sponsor: Councilmember EIrich
AN
ACT to:
(1)
(2)
(3)
(4)
establish an urban agricultural tax credit against real property tax;
defme an urban agricultural property and an urban agricultural purpose;
establish eligibility for an urban agricultural tax credit; and
generally amend the law governing urban agricultural tax credits.
By adding
Montgomery County Code
Chapter 52, Taxation
Section 52-lID
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The
County Council for Montgomery County, Maryland approves thefollowing Act:
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BILL
No. 31-16
1
Sec. 1. Section 52-lID is added as follows:
52-lID. Urban Aericultural Tax Credit.
2
3
ill
Definitions.
In
this Section:
Urban agricultural property
means real property that is:
4
5
6
7
8
9
10
11
12
ill
ill
ill
ill
at least one-half of an acre and not more than
~
acres;
located in
~
priority funding area, as defmed in Md. State Finance
and Procurement Code §5-7B-02; and
used for urban agricultural purposes.
Urban agricultural purposes
means:
crop production activities, including the use of mulch or cover
crops to ensure maximum productivity and minimize runoff and
weed production;
13
ill
environmental
mitigation
activities,
including
stormwater
14
15
16
17
18
19
abatement and groundwater protection;
ill
community
classes;
development
activities,
including
recreational
activities, food donations, and food preparation and canmng
ill
econonnc
development activities, including employment and
training opportunities, and direct sales to restaurants and
institutions; and
20
21
22
ill
temporary produce stands used for the sale of produce raised on
the premises.
23
24
®
Credit required
The Director of Finance must allow each eligible
taxpayer
~
credit against County real property taxes due in each tax year
in which the taxpayer is eligible for the credit.
(£)
Eligibility.
An
eligible taxpayer must conduct at least
~
urban agricultural
25
26
27
purposes on urban agricultural property. The property must be used
f:\law\bills\1631 urban agricultural tax credit\bill3.docx
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BILL
No. 31-16
28
29
30
31
32
33
34
solely for urban agricultural purposes, except an individual engaged in
crop production on the property may also reside on the property.
@
Amount
Q[
credit.
The credit must equal the property tax otherwise due
on the property.
UU
Application.
A property owner must .@Ply for the credit at least 90 days
before the beginning of the first year the tax credit is sought on
~
form
containing the information required
by
the Director. A property owner
must .@Ply to continue the credit at least 90 days before the beginning of
each subsequent tax year.
35
36
37
ill
Term
Q[
credit.
38
39
40
41
42
43
44
45
46
ill
ill
{g}
The term ofthe credit is
~
years, unless renewed.
A taxpayer may .@Ply to renew the credit no later than 90 days
before the expiration of the credit for another
~
tax years.
Continuous agricultural use required
It:.
at any time during the term of
the credit or the renewal of the credit, the property is no longer used for
agricultural purposes:
ill
ill
the credit granted to the property must beterminated; and
the owner ofthe property is liable for all property taxes that would
have been due during that 5-year term if the credit had not been
granted.
47
48
49
50
ili)
The Director must take all actions necessary to.@Ply the credit to each
eligible taxpayer who applies for the credit. A taxpayer may appeal
~
fmal decision
by
the Director denying or terminating the credit to the
Maryland Tax Court within 30 days after receiving
~
notice of denial or
termination
- - - -
Director.
from the
51
52
(9
f:\law\bills\1631 urban agricultural tax credit\bill3.docx
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BILL No. 31-16
53
54
55
56
Sec.2. Evaluation.
The Director must submit a report to the Executive and the
Council on or before January 1,2020 evaluating the effectiveness of the tax credit
in
promoting urban agricultural purposes.
Approved:
57
58
Nancy Floreen, President, County Council
Date
59
Approved:
60
Isiah Leggett, County Executive
Date
61
This is a correct copy o/Council action.
62
Linda M. Lauer, Clerk ofthe Council
Date
f:\law\bills\1631 urban agricultural tax credit\bill 3.docx
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LEGISLATIVE REQUEST REPORT
Bill 31-16
Taxation
-
Urban Agricultural Tax Credit
-
Established
DESCRIPTION:
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Bill 31-16 would establish an urban agricultural tax credit against
real property tax.
Using property for urban agricultural purposes is becoming less
common in the County.
Encourage urban agricultural purposes in the County.
Finance, County Attorney
To be requested.
To be requested.
To be requested.
To be researched.
Robert
H.
Drummer, Senior Legislative Attorney
To be researched.
None.
F:\LA w\BILLS\163 I Urban Agricultural Tax Credit\LRR.Docx
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§
9-253. Urban agricultural property; tax credits, MD TAX PROPERTY
§
9-253
IWest's Annotated Code of Maryland
ITax-Property
ITitle 9. Property Tax Credits and PropertyTax Relief
ISubtitle
2.
Statewide Optional
MD Code, Tax - Property,
§
9-253
§
9-253. Urban agricultural property; tax credits
Effective: June
1, 2014
Currentness
(a)(1) In this section the following words have the meanings indicated.
(2) "Urban agricultural property" means real property that is:
(i) at least one-eighth of an acre and not more than 5 acres;
(ii) located in a priority funding area, as defined in
§
5-78-02 of the State Finance and Procurement Al1icle; and
(iii) used for urban agricultural purposes.
(3) "Urban agricultural purposes" means:
(i) crop production activities, including the use of mulch or cover crops to ensure maximum productivity and minimize
runoff and weed production;
(ii) environmental mitigation activities, including stormwater abatement and groundwater protection;
(iii) community development activities, including recreational activities, food donations, and food preparation and canning
classes;
...
_._
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_-_._
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§
9-253. Urban agricultural property; tax credits, MD TAX PROPERTY
§
9-253
(iv) economic development activities, including employment and training opportunities, and direct sales to restaurants and
institutions; and
(v) temporary produce stands used for the sale of produce raised on the premises.
(b) The Mayor and City Council of Baltimore City or the governing body of a county or of a municipal corporation may grant,
by law, a tax credit against the county or municipal corporation property tax imposed on urban agricultural property.
(c)(l) Except as provided in paragraph (2) of this subsection, a tax credit under this section shall be granted for 5 years.
(2)(i) If the Mayor and City Council of Baltimore City or the governing body of a county or ofa municipal corporation grants
a tax credit under this section, the jurisdiction granting a tax credit shall evaluate the effectiveness of the credit after 3 years.
(ii) If the jurisdiction granting the tax credit determines that the tax credit is ineffective in promoting urban agricultural
purposes, the jurisdiction granting a tax credit may terminate the tax credit.
(iii) The jurisdiction granting a
tax
credit under this section may extend the tax credit for an additional 5 years.
(d) The Mayor and City Council of Baltimore City or the governing body of a county or of a municipal corporation may
provide, by law, for:
(1)
the amount of the tax credit under this section;
(2) additional eligibility criteria for the
tax
credit under this section;
(3) regulations and procedures for the application and uniform processing of requests for the
tax
credit; and
(4) any other provision necessary to carry out the credit under this section.
(e) At any time during the period for which a property
tax
credit under this section is granted for urban agricultural property, if
WESl1.AW
© 2016 Thoinson Reuters
i-Jo
claim
to
oriqinal
U.S. Government Works.
2
(j)
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§
9-253. Urban agricultural property; tax credits, MD TAX PROPERTY
§
9-253
the property ceases to be used for urban agricultural purposes, the owner of the property shall be liable for all property taxes
that would have been imposed if a property tax credit for urban agricultural property had not been granted.
Credits
Added by Acts 2010, c. 721, § 1, eff. June 1,2010. Amended by Acts 2013, c. 660,
§
1, eff. June 1,2013; Acts 2014, c. 390, §
l,eff.June 1,2014.
MD Code, Tax - Property,
§
9-253, MD TAX PROPERTY
§
9-253
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(If
the
Tax­
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of
Maryland.
Iha:ve
severalcoinmeIits
concerning the
tax
credit bill.
,
,
ljirst; utldetihedejinitions
secUon of
urban
agrict:lltilraipurp9ses;
ifis,
difficult
to
d~t~ineinbesep\.irpo~$can"econsideredirtdjvidual1y.
or
propettymust
comply
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of
the
purposes to
qualltY for the
ctedit, because between
No.4 and
5
there
is
~
;'and."
lpelieve
this
w()rd shotUd
be
"oc;
",
"
1.
line 23,
it
ditectstheDirector ofFinance to
allow each
eligible taxpayer:a cte4it
agflirtstCoQ1ltyreal
property. taxes due in each
'Up(
yearin
whjchthe
2:.Un<ler,thecr¢dilrequit~
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FAX(~4Q)717470S
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Ale~andre.A.EspinoSa
August 11;2016
Pa~e2
tax,payeris
eligiblefot
the
ctedit.TIteverynextsubsection,subsection
(c).
iine.26.d¢.s~ri~~
eligibility and
stateS
that anindividUal engaged. in crop
prodv:ctiOll,lllAyat!J9
I'eSjde
on.tbt
improvements.
ontlie
land
that
maybe
used
for residentialpurposes.
pr()~. Itisn9~ ~lear tQm~wheth¢rt}tetaxereditappliestojust
the land ott also the
3~Nso,
tbeblU
does
ri.ot.deflne a
taXpayer
ina
way
w.hich would
limit
the
tax
credit
to
justindivid~s thato:wnpl'operti~
oy:whe'thertlle
~cl'editisavailabl~ to.pro~e.stbat
1,'na}{
be
o~edljya cPrPOiat¢~ntity.
LL<;a
partnership;
Or.atrust.
In
subsection
(c)~
line 28,. the
bill
refetsto
an
~~dividualengagedin'cropprpduction",
vvhichtypicaUy
denQte$Jl
Peirlg,
an
n.otfirt erttit,y.
.. .
human
4. .
The
.biUmentiottS,·U\efermofthecr¢ditis fiVC);eiUsand
can
be
ienewedfor
another
five
yeats
(line
39). It
isnotclear
iftenyears
is lhemaximum
tennorif
itcanbe
renewed
~rpetuallY.
5.
lw()uld
recomm;endth~foUoVting ~eJldmf!nts~o
aill31-16t6
help
clarify
the
bill
and
~e it~Qnsi~I1twiUt
SUit¢
~aw.
~thati!
a.
:usetifur,
Line.9
wQ~d read~
follows:
urban agfieultUral ]?itrpqses
means
.
. .
b.
tt
LiIle20 would
he
modified
todeletetbe
word "and"
~dadd.the
wQrd
Sectkm{c), beginning
at
line 26
would
be
amended as follows:
EligIbility,
TQF~!hs·¥redit!P1eligibletaxplYermY§1~~cW»lWllJ:'1!UcQnductllat)eastiQftJls
utbanagrisu1turalp1ltJlosesUon urban wculfui'al
propettynduri11~~tmngf~91:edit.The
nropertymusthe. used$olelyfor
urball
ag:QculturalpYmQses,exceptan
individual
engaged 'in .
cron production ,on
the property rnay
also
teside.
ontheptoperty.
infonnatioIlregriire.<ln~.DitOOttir.inQ.mm ~S .ili¥·~£~itanroperty
owner must
.~.
J2 COntlnuethe creditaileast90daysbefore
the beginning
of
each subsequent
tax
year.
beginning
at
Iin.e
34
w:o~ldbearnt."nded
as folloW's!
Ap,plieqji(m.
b.1cord¢r1tl~~credit ~
property
owner
triustrumlY
for the credit
alleast
90
days befott}
the.
begi~of:thefitst
year
the tax
credit
is
sought.on
g {orin containiilg
the
d.
S~iiQn (~)~
e.
the words years.
Section(f) at line 41 would
add the
word
"ta~"
between the
numper
5
.and
Secti()n(gh})egintring
atline44would beameniied
asJollows:
ContinU()us
agricuitwttlffJAB
regulred,
Jt,matlxtinle•
.durifigi~t¢m!ofthecredit
ot' the
renewal.ofJh§credit.
tbe.prt>perty
is.nolonger
~li&l.h1emrtb~ciredit()r
•.
used
for.·.~ ~J.rban
t
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i\l~dre
A,p:spinpsa
August
11~.
2016'
l>ag~3
~cultural£uipOse!t
.attachJ~~::·.~~e()~O::~ti;~!:~~~~~~tf:;n::!~~~~~J·::S~Q~=~~n·the
Jillthority9fth¢
C()1.IIl~il8JlQ iSQlllel'vvisel¢gallys~ffi¢jent
ce.
.
=i;.ti~s:~~~~:::~efAdmihistmtiVe
officer
Amanda Mihilli
t~glativ¢Attomey
Bob
DrutIll:ner,I:..~~ljtiyeAttQrney·
SRF
1~7J"9.-ni1l re,vi~w
@)
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ROCKVILLE, MARYLAND
MEMORANDUM
September 16, 2016
TO:
FROM:
Nancy Floree
p
.County Council
. sident,
Jennifer
A.
Alexandre
Es·
tor, Office of Management and Budget
a, Director, Department of Finance
.
SUBJECT:
FEIS for Council Bill 31-16, Taxation - Urban Agricultural Tax Credit­
Established
Please fmd attached the fiscal and economic impact statements for the above­
referenced legislation.
JAH:mc
cc: Bonnie Kirkland, Assistant Chief Administrative Officer
Lisa Austin, Offices of the County Executive
Joy Nunni, Special Assistant
to
the County Executive
Patrick Lacefield, Director, Public Information Office
Alexandre A. Espinosa, Director, Department of Finance
Mike Coveyou, Department ofFinance
Jane Mukira, Office ofManagement and Budget
Naeem Mia, Office ofManagement and Budget
@
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Fiscal Impact Statement
Bill 31-16, Taxation - Urban Agricultural Tax Credit - Established
1. Legislative Summary
Provides for a real property tax credit for "urban agricultural" property, defined as
properties that
are
not agriculturally zoned, that are between
Y2
and
5
acres, that are used
for ''urban agricultural purposes" and that are in State-defined Priority Funding Areas.
2.
An
estimate ofchanges in County revenues and expenditures regardless of whether the
revenues or expenditures are assumed in the recommended or approved budget. Includes
source ofinformation, assumptions, and methodologies used.
Using the
2016
billing data from the County's property tax database, there are over
36,300
real property tax accounts that are:
(1)
taxable;
(2)
between
~
and
5
acres; and
(3)
are
not zoned as agricultural properties. Most ofthese properties are likely located in
Priority Funding
Areas,
as most ofthe County's parcels are located in Priority Funding
Areas. There is no data on how many ofthese properties are currently used for ''urban
agricultural purposes." Additionally, the bill does not articulate whether each property
must
be
used in whole for agricultural purposes, or
if
the bill applies to a property
if
any
part ofthat property is used for agricultural purposes. The total amount ofCounty taxes
billed for these
36,300+
accounts is over
$436.4
million dollars for FYI7. Some portion
ofthis amount of tax will be credited, but it is not possible
to
reliably estimate how many
properties will be eligible for the credit.
Since the bill is vague
as
to what is defined as urban agricultural purpose, a very broad
level and array ofactivities could qualify a property for this proposed tax credit.
Therefore, the potential FIS, is the total tax revenue associated with these properties ­
$436.4
million.
This legislation requires that the Department ofFinance (Finance) administer the bill.
However, Finance does not have expertise to determine whether a property is used for an
"urban agricultural purpose." Therefore, Finance would have to hire additional staffwith
expertise in ''urban agricultural purposes" including crop production activities,
environmental mitigation activities, and community development activities. Further,
Finance would have to hire addition81
staff
to
make site visits to determine ifa property
has
a temporary produce stand on it. The required number ofnew Finance
staff
cannot
be
determined at this time because it is unknown how many property owners would be
eligible and apply for the credit. However, with
36,300
eligible properties, the workload
would
be
significant since it would require not only initial verification, but periodic
checks to ensure the agricultural use continues.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
See #2 above. As noted above, there is the potential for a broad array ofactivities to
be
eligible for this tax credit. Ifall
36,300+
properties qualified, the annual fiscal impact
could be approximately
$436.4
million annually or
$2.6
billion over six years.
Additionally, there will be more personnel expenditures for additional County staff in the
Department of Finance, but that cannot be estimated at this time.
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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.
Not Applicable.
6.
Later actions that may affect future revenue and expenditures if the bill authorizes future
spending.
Not Applicable.
.
7.
An
estimate of the
staff
time needed to implement the bill.
Unknown at this time, but significant due to the number of potential properties eligible.
8.
An
explanation ofhow the addition of new staff responsibilities would affect other duties.
This bill cannot not be administered by current Finance staff. Additional staff would be
required.
9.
An
estimate ofcosts when an additional appropriation is needed.
See #2 above.
10. A description ofany variable that could affect revenue and cost estimates.
See #2 and #3 above.
11. Ranges of revenue or expenditures that are uncertain or difficult to project.
All revenue and expenditures are uncertain for this legislation.
12.
If
a bill is likely to have no fiscal impact, why that is the case.
Not Applicable.
13. Other fiscal impacts or comments.
None.
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14. The following contributed to and concurred
with
this analysis:
Mike Coveyou, Finance
Jane Mukira, Office ofManagement and Budget
Date
2/t5/
[b
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Economic Impact Statement
Bill 31-16, Taxation - Urban Agricultural Credit - Established
Background:
Bill 31-16 provides for a real property tax credit for "urban agricultural" property, defined as
properties that are not agriculturally zoned, that are between
~
and 5 acres, that are used for
"urban agricultural purposes" and that are in Priority Funding Areas.
A property owner must conduct at least 2 urban agricultural purposes on the property. The
tenn of the credit would be 5 years. The credit would equal the property tax otherwise due on
the property.
1. The sources of information, assumptions, and methodologies used.
Finance estimated for the fiscal impact of the bill that there are over 36,300 real property tax
accounts that are
(1)
taxable; (2) between Y2 and 5 acres; and (3) are not zoned as agricultural
properties using 2016 billing data from the County's property tax database. Most of these
properties are likely located in Priority Funding Areas, as most of the County's parcels are
located in Priority Funding Areas.
Since there are no data on how many of these properties are used for ''urban agricultural
purposes" it is not possible to estimate with specificity the total potential loss of property
taxes to the County. The total amount of County taxes billed for these 36,300 plus accounts is
over $436.4 million dollars for FYI7. Some portion of this amount of tax will be credited,
but it is not possible to reliably estimate how many properties will be eligible for the credit.
Finance estimates the average County-only tax for the 36,300 plus properties in question is
slightly more than $12,000 for FY17-the median tax is over $5,800 for FYI7. For each 1
%
of participation, based on the average tax, the credit would cost approximately $4.4 million.
As noted in the fiscal impact statement for the bill, since the proposed language is vague as to
what is defined as urban agricultural purpose, a very broad range of activities could qualify a
property for this credit. Therefore, the potential fiscal impact, according to the Fiscal Impact
Statement, is $436.4 million or the total
tax
revenue associated with these properties.
2. A description of any variable that could affect the economic impact estimates.
Urban agricultural land potentially benefits the County through eliminating blight and
improving access to healthy food. The primary variables that would affect the County's
economy positively would be potential increases in property values as neighborhoods are
improved. Given the limited scope ofthe bill from an acreage perspective, sites with large
assessed value will be excluded from the credit. Since the current language ofthe bill
includes such a broad range of activities that could qualify for the credit, the primary variable
in detennining the economic impact of the bill is the number of properties that ultimately
qualify for the credit.
Page lof2
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Economic Impact Statement
Bill 31-16, Taxation - Urban Agricultural Credit - Established
3. The Bill's positive or negative effect,
if
any on employment, spending, savings,
investment, incomes, and property values in the County.
Given a lack of specificity of data regarding both current properties used for urban
agricultural purposes and those intended to be used in the future, it is difficult to accurately
quantify with any degree of precision the total economic impact to the County as a result of
this bill.
4.
If
a Bill
is
likely to have no economic impact, why is that the case?
This legislation will have an economic impact. See paragraph #3
5. The following contributed to or concurred with this analysis:
David Platt, Dennis
Hetman, and Robert Hagedoorn, Finance.
Alexandre
A.
Espinosa, Director
Department of Finance
Page 20f2
@
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:
.
i
OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE, MARYLAND 20850
Isiah Leggett
County Executive
MEMORANDUM
September 21, 2016
TO:
Tom Hucker, COWlcilmember
COWlty Council
i
~
Isiah
COWlty Executive
FROM:
Leggett...-fJ(~
-
!
0
SUBJECT:
Bill 31-16, Taxation - Urban Agricultural Tax Credit - Established
I have reviewed Bi1l 31-16, Taxation - Urban Agricultural Tax Credit ­
Established. The bill creates an urban agricultural real property tax credit for COWlty real
property taxes, provided the real property is used for two of the five listed urban agricultural
purposes or activities, and the property is between
Y:z
acre and five acres in size.
The tax credit is authorized by an enabling State law in Section 9-253 of the Tax
Property Article, of the Annotated Code of Maryland.
As
drafted, the bill is vague in its
definition of "urban agricultural purposes." Due to this lack of specificity, the definition of urban
agricultural purposes - particularly, environmental mitigation activities, cOlmmmity development
activities, and economic development activities - could encompass a potentially Wllimited range
of activities eligible for the credit. Because the eligible uses are so open-ended, the Department
of Finance would be in the position of approving virtually every application.
Further, it is Wlclear what the bill is intended to achieve. Unlike many other
jurisdictions in the State, Montgomery County has numerous programs designed to address
environmental, community development, and economic development goals. To
try
to further
address these goals through our
tax
policy must be considered
in
that broader context. The
impact on the County's tax revenues and taxpayers must also be considered. Given the current
definition of "urban agricultural purposes" under this bill the impact would be very costly to the
County
in
terms of lost property
tax
revenue.
Specifically, the following areas of the bill should be addressed:
• Urban agriCUltural purposes - Identify a clear purpose of what the bill is intended to
achieve and clearly define urban agricultural purposes in a manner that can be effectively
administered.
montgomerycountymd.gov/311
ei)
:'-{ . .
301-251-4850 TTY
@
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.,'.-"'''-'.-,.... -.;. -.-.-., ,.: ..: ··:-:::-:·'··1
:
:
~.-.'-
..
Tom Hucker, Councilmember
September 21, 2016
Page 2
• Application and certification ofurban agricultural purposes - The Department of Finance
does not have the subject matter expertise to accept applications and certify urban
agricultural purposes for the tax credit.
• Amount of the credit - The bill should clearly specify that it is only the land that is
eligible for the credit, not any improvements on the land. The bill does not provide a
compelling reason to credit the
full
property tax amount. Additionally, there should be
some minimum agricultural use test applied to the property.
As
currently drafted, even
the most minimal agricultural plots could qualify a property for this credit.
As noted above, I am concerned the bill is too broad and is not the most
appropriate and direct way of encouraging urban agriculture in the County. If the intent is to
promote agricultural activities in the urban areas of the County, the bill should be more narrowly
focused on incentivizing agricultural activities. The other implied goals of the bill ­
environmental, community development, and economic development - should be addressed
either through existing programs or more direct initiatives. The benefit of providing an urban
agricultural tax credit should be weighed against the increased burden this places on other
taxpayers in the County, the cost to the County to administer the credit, and any unintended
consequences it may create.
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::>
I
Aaron Rosenzweig
1 Thorburn Road, Gaithersburg MD 20878
240-421-2520
September 16, 2016
Councilmembers,
I support Hucker and his bill to widen the scope of tax credits to encourage urban farming on lots less than
5 acres in size.
This bill:
https:llwww.montgomerycountymd.gov/COUI\lC ILlResources/Files/bill/20 16/Packets/20 160802_7
A.
pdf
What can you produce on
1/2
an acre? Quite a lot.
The "Dervaes" family produce 6,000 Ibs of food per year on
1/10
of an acre:
https:llwww.youtube.com/watch?v=NCmTJkZyOrM
http://inhabitat.com/this-family-produces-6000-pounds-of-food-per-year-on-4000-square-feet-of-landl
http://tinyhousetalk.com/family-grows-6000-lbs-of-food-on-11 Oth-acre-u rban-farml
http://urbanhomestead.org
They are not alone nor or they unique.
"What we found, bottom line, is that organic vegetable production on a small plot of land can be profitable,"
he said. "It's a lot of work, but one family can earn a $45,000 annual salary on a 3-acre plot."
http://today. ag ri life.
org/20121061
13/0rgan ic-vegeta ble-econom icsl
Certainly growing food is not for everyone but for those who do it is immensely rewarding. The benefits
don't stop there. Neighbors learn the value of where food comes from without having to leave their
neighborhoods. One of the best things Montgomery County has done is in creating the Agricultural
Reserve. Within a short driving distance we are connected with nature and we don't have the sprawl that
Virginia has as a result. This bill is simply the next step. Instead of a drive, a simple walk can take you to
where food is grown.
It is important to encourage diversity in all its forms but in food production it is particularly smart. We don't
want to have to ship our food across the country nor do we want to be dependent on large scale
production. This bill will help encourage citizens to reconnect with nature and inspire neighbors to start by
simply growing tomatoes and potatoes on lots less than
1/2
acre in size. Anyone can do it!
My family moved out of Montgomery County jurisdiction and into the City limits of Gaithersburg simply so
we could legally raise a handful of chickens. They are pets with benefits but more than that, they help build
community spirit. Children and families love visiting the chickens just like they will thoroughly enjoy urban
farms on
1/2
acre or more as this bill proposes.
Please encourage this bill and others like it. Let's even develop new HOA communities with a farm at its
core as a shared community resource such as the 8elward Farm on Route 28:
http://www.teamgaithersburg.org/assets/8elward-agrihood-FINAL.pdf
http://thefarmatagritopia.com
Thank you,
Aaron Rosenzweig
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s:e::
CLIMATE
CHESAPEAKE
ACTION
I
NETWORK
Bill 31-16,
Taxation - Urban Agricultural Tax Credit
Montgomery County Council
Date: September 20, 2016
Position:
Support
Comments:
CCAN supports tax incentives for urban agriculture projects because land use is a critical aspect of a
municipality's response to the climate emergency we are currently facing. This bill provides
Montgomery County with an opportunity to become a nation-wide leader on green city planning and
development.
Urban agriculture would make the community more green. Green space in urban settings has an
immediate effect on residents, consumers and tourists visiting the area. The space provided by urban
agricultural projects allows for community growth; renewal and health, through food preparation and
canning classes, harvest days, farm stands and ongoing collaboration, cooperation, dialogue and
collective management.
On a technical level, urban agriculture provides many tangible benefits for the city itself.
C"limate change brings unpredictable and extreme weather events, and we have just seen the
beginning of it. Stormwater infrastructure is only capable of diverting a certain amount of the runoff that
results from heavy rain during severe storms. Soil used in urban farming improves in quality over time,
due to composting and tilling. This soil becomes increasingly effective at trapping and storing
rain-water. It also acts as a filter for the water, addressing growing concerns over water contamination
in urban spaces.
The list of green stormwater infrastructure strategies promoted by the EPA also includes downspout
disconnection, rain-water harvesting, rain gardens, planter boxes, bio-swales, permeable pavements,
green streets and alleys, green roofs, urban tree canopy, and land conservation. 1
Additionally, cities experience much higher temperatures than rural and suburban settings because of
the amount of solar heat that gets trapped in buildings and pavement and in between buildings because
1"Urban Agriculture as a Green Stormwater Management Strategy."
The Freshwater Society
(2013): n. pag.
Web. 19 Sept. 2016.
6930 Carroll Ave, Suite 720, Takoma Park, MD 20912
I
240-396-1981
I
www.chesapeakeclimate.org
2/
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of radiation, an effect known as the Urban Heat Island. Green roofs and urban farming have been
proven to combat the effects of overheating cities. A single degree of COOling thanks to urban farming
can directly affect a city's electricity consumption during increasingly hot summer months, due a
decrease in air conditioner use.
2
Other positive climate and environmental impacts associated with urban farming include: decreased
food transportation miles, decreased household waste through composting and fewer packaged items,
decreased energy consumption and cost spent on storing food, improval of the localized green
economy, improved air quality, increased plant and animal biodiversity and much more.
CCAN supports this bill wholeheartedly and looks forward to a greener and cleaner Montgomery
County.
2
Knizhnik, Heather
L.
"The Environmental Benefits of Urban Agriculture on Unused, Impermeable and
Semi-Permeable Spaces in Major Cities With a Focus on Philadelphia, PA." (n.d.): n. pag.
University
of
Pennsylvania
-
Department
of
Earth and Environmental Science.
Web. 19 Sept. 2016.
6930 Carroll Ave, Suite 720, Takoma Park, MD 20912
I
240-396-1981
I
www.chesapeakeclimate.org
@
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October 27,2016
Government Operations Committee
Montgomery County Council
100 Maryland Avenue, MD 20850
The opinions expressed herein are our own and do not necessarily reflect the views of The Johns
Hopkins University.
My name is Anne Palmer and I direct the Food Communities and Public Health program at
the Johns Hopkins Center for a Livable Future (CLF) at the Bloomberg School of Public
Health as well as a Research Associate in the Health, Behavior and Society Department. The
CLF is an interdisciplinary academic center that conducts research, educates students, and
directs programs that focus on the relationships among diet, food production, the
environment and public health. I direct a project called Food Policy Networks that seeks to
build the capacity of new and existing food policy councils and similar organizations to
advance state and local food system policies. In addition, I work with several food policy
councils in the Chesapeake region, including the Montgomery Count Food Council.
The Montgomery County Council is considering a legislation that would provide a tax credit
to promote urban agriculture (UA) for land between one-half and five acres .. In light of the
proposed legislation, I am writing to provide information and analysis on what I have
learned about urban agriculture, the well-established benefits it provides, and the areas of
promise. I have several years of experience working with urban agriculture projects in
Baltimore City - non-profit, for profit and hybrid models. In addition, I am a co-author on a
recently released review of peer-reviewed literature entitled "Vacant Lots to Vibrant Plots:
A Review of the Benefits and Limitations of Urban Agriculture."
Our literature review noted several evidence-based benefits - social, health and
environmental - that stem from UA activities. By creating green space where neighbors
can gather to grow food, exercise, and socialize, UA increases social capital, community
wellbeing, and civic engagement with the food system. It serves as a catalyst for
community organizing and larger community improvement, including a place for young
people to engage in a constructive activity while learning job skills. Green space is also
associated wither lower crime rates and a greater sense of neighborhood pride. UA
activities have been used to teach youth about science, environmental stewardship,
cultural heritage, and healthy eating, while also offering valuable lessons in interpersonal
skills, responsibility, and delayed gratification.
The evidence suggests that urban agriculture provides numerous health benefits, as well.
People engaged in UA report greater access to fresh, organic, or culturally appropriate
produces for gardeners and community members; cost savings on groceries and access to
foods otherwise unaffordable in supermarkets; and increased consumption of produce.
Harder to measure but equally important are the mental health benefits including reducing
stress, providing purposeful activity, stimulating cognitive function, creating a sense of
pride and accomplishment, and connecting to nature in an urban environment
615 N. Wolfe Street, W7010 1Baltimore, MD 212051410-502-75781 www.jhsph.edu/clf
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1'--41
~w
JOHNS HOPKINS
....."
CF..Nl'ERfo, A
LIVABLE
FUTURE
.
The evidence of environmental benefits includes increased biodiversity (supporting
environments with a greater variety of flora and fauna species, which provides habitats and
forage for pollinators such as bees and other beneficial organisms); reduced air pollution;
increased rainwater drainage; reduced risk of flooding, ground water contamination, and
depleted groundwater levels; and composting organic matter.
In addition, some studies have found that UA contributes to measurable economic gains
such as employment and workforce training opportunities, particularly for low-income and
SOCially excluded popUlations; and an increase in property values surrounding community
gardens, particularly in economically disadvantaged neighborhoods.
The CLF commends the Montgomery County Council government for assuming a leadership
role in using urban agriculture as a vehicle for making the County an even more desirable
place to live. Supporting UA activities is one of many steps toward improving public health,
enhancing the environment, and providing opportunities for communities to grow their
own food.
For more information, please contact me at apalmer6@jhu.edu or at 410-502-7577.
Sincerely,
Anne Palmer
Program Director
Johns Hopkins Center for a Livable Future
Research Associate
Department of Health, Behavior, and Society
Bloomberg School of Public Health
Keeve Nachman
Assistant Professor
Department of Environmental Health and Engineering
Bloomberg School of Public Health
Director, Food Production and Public Health Program
Johns Hopkins Center for a Livable Future
Brent Kim
Program Officer
Johns Hopkins Center for a Livable Future
Bloomberg School of Public Health
RaychelSanto
Program Coordinator
Johns Hopkins Center for a Livable Future
Bloomberg School of Public Health
615 N. Wolfe Street, W7010 1Baltimore, MD 212051410-502-75781 www.jhsph.edulclf
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AGRICULTURAL ADVISORY COMMITTEE
September 19,2016
The Honorable Nancy Floreen
Montgomery County Council President
100 Maryland Avenue
Rockville, MD 20850
Dear Council President Floreen:
Bill 31-16- Taxation-Urban Agricultural Tax
Credit-Established
On behalf of the Montgomery County Agricultural Advisory Committee-AAC, please accept this
letter as our comments for Bill 31-16 Taxation-Urban Agricultural Tax Credit-Established.
The AAC believes the Bill 31-16 may create opportunities to encourage farming in down County
areas where a majority of our citizens live and work. Encouraging farming down County can
also help to promote the production of locally grown fresh food that continues to be important
and a popular trend for many residents in the County.
When the County Council approved ZTA 13-04 Zoning Rewrite- Revisions in October of2014,
the Council recommended the use of farming be continued as a use in most of the zones down
county. Both the AAC and the Montgomery County Farm Bureau were very appreciative of this
outcome because we stated that the County should always encourage farming especially if the
property owners desired to continue farming.
The AAC recognizes that Bill 31-16 may also have a negative impact on the collections of
property taxes at a time when the County's economy is still recovering from the Great Recession.
The AAC thanks the County Council for this opportunity to present our views on Bill 31-16 and
please let us know if you have any questions.
Sincerely,
David Weitzer, Chairman
Department of Economic Development-Agricultural Services Division
18410 Muncaster Road·
Derwood. Maryland 20855
. 30li590-2823, FAX 301/590-2839
@
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Bill No.
31-16
Conceming: Taxation
Urban
Agricultural Tax Credit - Established
Revised: October 31.2016 Draft No.
~
Introduced:
August 2. 2016
Expires:
Februarv 2.2018
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: -:-----:-:--_ _ _ _ _ __
Sunset Date: --=..:.N=on::-.:e=--_:--_ _ __
Ch. _ _ Laws of Mont. Co. _ __
I
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilrhember Hucker and Co-Sponsor: Councilmember EIrich
AN
ACT to:
(1)
(2)
(3)
(4)
establish an urban agricultural
tax
credit against real property
tax;
define an urban agricultural property and an urban agricultural purpose;
establish eligibility for an urban agricultural tax credit; and
generally amend the law governing urban agricultural
tax
credits.
By adding
Montgomery County Code
Chapter 52, Taxation
Section 52-lID
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No. 31-16
1
Sec.
I.
Section
52-lID
is added as follows:
2
52-lID.
Urban Agricultural Tax Credit.
3
4
.cru
Definitions.
In
this Section:
Urban agricultural property
means real property in a residential zone that
IS:
5
6
7
8
ill
ill
ill
ill
ill
ill
ill
at least one-half of an acre and not more than
[[2]]
l
acres;
located in
~
priority funding area, as defined in Md. State Finance
and Procurement Code §5-7B-02; and
used for urban agricultural purposes.
9
10
11
12
13
14
Urban agricultural purposes
means
the cultivation of fruits. vegetables. flowers. and ornamental
plants;
the limited keeping and raising of fowl or bees: or
the practice of aquaculture.
[t
crop production activities, including the use of mulch or cover
crops to ensure maximum productivity and minimize runoff and
weed production;
15
16
17
18
19
ill
environmental
mitigation
activities,
including
stormwater
abatement and groundwater protection;
20
ill
community
classes;
development
activities,
including
recreational
21
22
activities, food donations, and food preparation and canning
23
ill
economIC
development activities, including employment and
24
25
training opportunities, and direct sales to restaurants and
institutions; and
26
27
ill
temporary produce stands used for the sale of produce raised on
the premises.]]
-2-
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BILL
No. 31-16
28
29
30
31
32
33
34
35
36
37
38
39
@
Credit required.
The Director of Finance must allow each eligible
taxpayer
~
credit against County real property taxes due in each tax year
in which the taxpayer is eligible for the credit.
(£)
Eligibility.
[[An eligible taxpayer must conduct at least
2:
urban
agricultural purposes on urban agricultural property.]] A property owner
is eligible for the tax credit each year:
ill
[[The]] the urban agricultural property [[must be]] is used solely
for urban agricultural purposes, except an individual [[engaged in
crop production on the property]] may also reside on the property;
(Zl
the property owner has more than $5000 in gross income from the
sale ofproducts grown or raised on the urban agricultural property;
and
40
41
42
43
44
45
ill
@
the property owner files a timely application for the credit with
proof of eligibility.
Amount gfcredit.
The credit must equal 80% ofthe County property tax
otherwise due on the property.
W
Application.
A property owner must
mmlY
for the credit with the Office
ofAgriculture
[[ill
least 90 days]] on or before Aprill ofthe tax year [[the
beginning ot]] before the first tax year the tax credit is sought on
~
fonn
containing the information required
Qy
the [[!2irector]] Office of
Agriculture. A property owner must
mmlY
to continue the credit
[@!
least
90 days]] on or before [[the]] April 1 of the tax year before [[beginning
oft] each subsequent
tax
year. The Director of Finance must determine
taxpayer eligibility for the credit based upon the recommendation from
the Office of Agriculture.
46
47
48
49
50
51
52
53
54
ill
Term gfcredit.
ill
The term ofthe credit is
~
years, unless renewed.
-3-
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tax
credit\bill 5.docx
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BILL
No. 31-16
55
56
57
58
59
60
61
ill
(g)
A taxpayer may
rumlY
to renew the
credit no later than
90
days
before the expiration ofthe credit for another
.2.
tax years.
Continuous agricultural use required.
Ih
at any time during the tenn of
the credit or the renewal ofthe 'credit, the property is no longer used for
agricultural purposes:
ill
ill
the credit granted to the property must be terminated; and
the owner ofthe property is liable for all property taxes that would
have been due during that 5-year term if the credit had not been
granted.
62
63
64
{h}
Contiguous lots.
A property owner may combine 2 or more contiguous
subdivision lots under common ownership into one property to satisfy the
minimum lot size for an urban agricultural property in subsection Ca).
65
66
67
68
69
70
71
72
73
74
75
76
ill
Appeal.
The Director must take all actions necessary to.rum1Y the credit
to each eligible taxpayer who applies for the credit and is certified as
eligible by the Office of Agriculture. A taxpayer may appeal
~
final
decision
Qy
the Director denying or terminating the credit to the Maryland
Tax Court within 30 days after receiving
~
notice ofdenial or termination
from the
- - - ­
Director.
Sec. 2.
Evaluation.
The Director must submit a report to the Executive and the
Council on or before January
1,2020
evaluating the effectiveness of the tax credit in
promoting urban agricultural purposes.
Approved:
77
78
Nancy Floreen, President, County Council
Date
-4-
f:\law\bills\1631 urban agricultural tax credit\billS.docx
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GO Item 3
February 9, 2017
Worksession 2
MEMORANDUM
February 7, 2017
TO:
FROM:
SUBJECT:
Government Operations and Fiscal Policy Committee
'\
/
Robert H. Drummer, Senior Legislative Attorney
I~.;.
)
V(j
Worksession
2: Bi1l31-16, Taxation - Urban Agricultural Tax Credit - Established
Bill 31-16, Taxation - Urban Agricultural Tax Credit - Established, sponsored by Lead
Sponsor Councilmember Hucker and Co-Sponsor Councilmember EIrich, was introduced on
August 2, 2016. A public hearing was held on September 20 and a Government Operations and
Fiscal Policy Committee worksession was held on November 3.
Md. Tax-Property Code §9-253 provides that:
(b)
The Mayor and City Council of Baltimore City or the governing body of a county
or of a municipal corporation may grant, by law, a tax credit against the county or
municipal corporation property tax imposed on urban agricultural property.
Bill 31-16 would implement this authority by:
(1)
establishing an urban agricultural
tax
credit against real property
tax;
(2)
defining an urban agricultural property and an urban agricultural purpose;
and
(3)
establishing eligibility for an urban agricultural
tax
credit
Background
Bill 31-16 would define an urban agricultural property as real property that is:
(1) at least one-half of an acre and not more than 5 acres;
(2) located in a priority funding area, as defined in Md. State Finance and
Procurement Code §5-7B-02; and
(3) used for urban agricultural purposes.
The Bill would define an urban agricultural purpose as:
(1)
crop production activities, including the use of mulch or cover crops to
ensure maximum productivity and minimize runoff and weed production;
(2) environmental mitigation activities, including stormwater abatement and
groundwater protection;
(3) community development activities, including recreational activities, food
donations, and food preparation and canning classes;
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(4)
(5)
economic development activities, including employment and training
opportunities, and direct sales to restaurants and institutions; and
temporary produce stands used for the sale of produce raised on the
premIses.
A property owner must conduct at least 2 urban agricultural purposes on the property. The
term of the credit would be 5 years. The credit would equal the property tax otherwise due on the
property.
The County Attorney's Office reviewed the Bill and made some suggested amendments to
clarify the intent. See the County Attorney's Bill Review Memorandum at ©9-11.
Public Hearing
All 4 witnesses supported the Bill. Aaron Rosenzweig supported the Bill as a way to help
people learn where food is grown. (©20.) Gabriel Shapiro, representing Chesapeake Climate
Action Network, supported the Bill as a way of making the community more green with urban
agriculture. (©21-22.)
Alyce Ortuzar, representing Well Mind Association of Greater
Washington also supported the Bill, but added a concern about stormwater runoff. Finally, Lynn
Koiner, representing the Koiner Farm in Silver Spring, supported the Bill as a measure to help her
family keep their 40-year old urban farm operating. We also received written testimony in support
ofthe Bill from several employees of lohns Hopkins Center for a Livable Future (©23-24) and the
Montgomery County Agricultural Advisory Committee (©25).
After the public hearing, the Executive submitted comments on the Bill requesting that the
broad scope ofthe Bill be narrowed to limit the potential fiscal impact. (© 18-19)
Issues
1.
What is the fiscal and economic impact of the Bill?
OMB, in the Fiscal and Economic Impact Statement (©12-17) noted that there are
approximately 36,300 taxable properties between 'h and 5 acres that are not zoned as agricultural
properties. However, OMB could not determine how many of these properties are currently used
for "urban agricultural purposes." If each of these properties qualified for the tax credit, which is
unlikely, the total loss of tax revenue could be $436.4 million in FYI7. The large potential tax
credit discussed in the FEIS points out the need to better define and possibly limit the eligibility
for the tax credit. This issue will be discussed below.
2. Should the definition of agricultural purposes be narrowed?
Although the Bill included crop production as an agricultural purpose, it also includes
environmental mitigation activities, community development activities, economic development
activities, and temporary produce stands. The addition of these non-farming activities, though
environmentally desirable, broaden the potential tax credit to many property owners who are not
farming and resulted in the OMB fear of a massive potential loss of property
tax
revenue. In fact,
2
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each of the witnesses at the public hearing supported the Bill to encourage property owners to use
their property for farming. This appears to be the main purpose of the Bill.
After receiving the Executive's request to narrow the Bill, Lead Sponsor, Councilmember
Hucker, and Council staff met with members of the Executive Branch to discuss the broad
definition of agricultural purposes. Councilmember Hucker intends to introduce amendments to
the Bill that would define agricultural purposes using the definition of urban farming in §3.2.9 of
the County Zoning Code, as follows:
Urban agricultural purposes
means
ill
the cultivation of fruits. vegetables. flowers. and ornamental plants;
ill
the limited keeping and raising of fowl or bees; or
ill
the practice of aquaculture.
See proposed Bill 5 at ©26-29. This change in scope would limit the tax credit to urban farming
and significantly reduce the potential fiscal impact of the credit.
Council staff recommendation:
amend the definition of urban agricultural purposes as set forth in proposed Bill 5.
3. Should there be a minimum value of sales from farming to receive the tax credit?
Baltimore City enacted an urban agricultural tax credit based upon the State enabling act.
However, the Baltimore City ordinance requires the property owner to derive at least $5000 each
year from farming on the property. This provision eliminates eligibility for the suburban backyard
tomato garden that produces tomatoes for the family. While it is desirable to encourage backyard
vegetable gardens, the purpose of the tax credit is to encourage working farms on small residential
lots that produce a significant amount of produce for sale. Councilmember Hucker's proposed
amended Bill 5 would add this gross revenue requirement.
Council staff recommendation:
require a property owner to receive at least $5000 in gross revenue from the sale ofproduce raised
on the property to receive the tax credit.
4. Should the tax credit be for 100% of the County property tax owed?
The Bill would provide a 100% tax credit on the County property tax owed. While this
would encourage urban farming, these property owners still receive County services like other
taxpayers. The same result may be derived from a partial credit. Councilmember Hucker's
proposed Bill 5 would limit the credit to 80% of the County property tax owed.
Council staff
recommendation:
limit the tax credit to 80% of the County property tax owed up to $2000 per
property. As requested by the Committee, Council staff worked with Finance to work on a limit
for the amount of the credit for each property and agreed on $2000. As discussed in issue 9 below,
Councilmember Hucker opposes the $2000 limit.
5. What is the proper minimum and maximum size of a lot that should be eligible for the
credit?
The Bill, as introduced, requires an urban agricultural property to be at least
~
acre, but no
more than 5 acres. Councilmember Hucker's proposed Bill 5 would keep the minimum
~
acre
size, but limit the maximum size to 3 acres.
In
addition, a property owner who owns more than
one contiguous lot of less than
~
acre would be permitted to consider both lots together as one to
3
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meet the minimum lot size.
Council staff recommendation:
amend the minimum and maximum
lot size as provided in Councilmember Hucker's proposed Bill 5.
6. Which County department should be responsible for certifying eligibility for the tax
credit?
The Bill, as introduced, would require the Director of the Department of Finance to certify
eligibility for the tax credit. The Executive Branch recommended charging the Office of
Agriculture with the initial task of receiving an application and certifying eligibility to the
Department of Finance. This appears to be within the scope of the duties and expertise of the
Office of Agriculture. Councilmember Hucker's proposed Bill 5 would shift this duty to the Office
of Agriculture and require the Director of Finance to base eligibility on the certification of the
Office of Agriculture.
Council staff recommendation:
amend the Bill to require the property
owner to apply to the Office of Agriculture for certification for the tax credit.
7. When should a property owner be required to apply for the credit?
The Bill, as introduced, would require a property owner to apply at least 90 days before the
beginning of the
tax
year the credit is sought. The Department of Finance requested that the Bill
be clarified that the property owner must apply on or before April 1 of the
tax
year before the tax
year the credit is sought. Although this is the same date, it would make it easier for the
tax
payer
to understand when the application is due. Councilmember Hucker's proposed Bill 5 would make
this change.
Council staff recommendation:
amend the Bill to require an application on or
before April 1 before the tax year the credit is sought.
8. Should the credit be limited to property in a residential zone?
The Bill, as introduced, does not limit the credit to property in a residential zone. The
Department of Finance requested this limitation. This is consistent with the purpose of the tax
credit. Councilmember Hucker's proposed Bill 5 would make this change.
Council staff
recommendation:
amend the Bill to require the property to be in a residential zone.
9. The County Attorney's recommended amendments.
The County Attorney recommended several amendments in the Bill Review memo for
clarity. See ©9-11. Several ofthe recommendations are taken care of if Councilmember Hucker's
Bill 5 is approved. The following recommendations are not:
a.
b.
Add the phrase "In order to receive the credit" at the beginning ofsubsection (e).
Add the word "tax" after the
5
in subsection
(f)
(1).
Council staff recommendation:
make both of these amendments for clarity.
4
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November 3, 2017 GO Worksession
Councilmember Tom Hucker also attended the worksession in addition to the Committee
members. Bonnie Kirkland, ACAO, Alex Espinosa, Finance Director, Mike Coveyou, Finance,
and Jeremy Criss, Office of Agriculture, represented the Executive Branch. Robert Drummer,
Senior Legislative Attorney, represented the Council staff.
The Committee reviewed the Bill, as introduced, the amended Bill proposed by CM Hucker, and
the Executive's recommendation to convert the tax credit to a grant program.
The Committee asked staff to:
1.
redraft the payback provision to ensure that the payback is for the year the property
is no longer eligible for the credit;
2.
work with Finance to reduce the geographical area eligible for the credit to urban
areas (CM Riemer suggested in a CBD or within
~
mile from a CBD); and
3.
work with Finance to prepare options to limit the amount of the tax credit.
9. Proposed amendments based upon the Committee's guidance.
Council staff worked with the Department of Finance to draft 3 additional amendments
based upon the Committee's guidance.
(1)
Amended payback provision
-
this amendment would
clarify
that the payback
would only be for the years that the property was not used for urban agriculture.
Amend lines
57-63
as follows:
(gl
Continuous agricultural use required
!f,
at any time during the tenn of the
credit or the renewal of the credit, the property
agricultural purposes:
~
no longer used for
ill
ill
the credit granted to the property must be tenninated; and
the owner of the property is liable for all property taxes that would
have been due [[during that 5-year tenn]]
if
the credit had not been
granted for any year that the property was not used for agricultural
purposes.
Lead Sponsor, Councilmember Hucker agrees with this amendment.
(II)
geographical area for the credit
-
this amendment would limit eligibility to a
property that is located within 1000 feet of a Metro Station Policy Area.
I
fill
1
The
Definitions.
In
this Section:
Koiner farm discussed at the public hearing is 500 feet outside the Silver Spring Central Business District.
5
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Urban agricultural property
means real property in a residential zone that is:
ill
ill
at least one-half of an acre and not more than
[~]]
J,
acres;
located within 1000 feet of or in
~
[[priority funding area, as defined
in Md. State Finance and Procurement Code §5-7B-02]] Metro Station
Policy Area. as defined in the most recent Subdivision Staging Policy
adopted under Section 33A-15. including the:
~
Bethesda Central Business District;
Friendship Heights:
Glenmont:
Grosvenor:
Rockville Town Center;
Shady Grove;
Silver Spring Central Business District;
Twinbrook:
Wheaton Central Business District; and
White Flint: and
all
~
(Ill
LID
(f)
(Q1
aD
ill
ill
ill
used for urban agricultural purposes.
Lead Sponsor, Councilmember Hucker agrees with this amendment.
(III)
limit on the amount of the credit
-
this amendment would limit the amount of the
credit to a maximum of $2000 per account.
Amend lines
42-43
as follows:
@
Amount
Q[
credit.
The credit must equal 80% of the County property tax
otherwise due on the property up to a maximum credit of $2000 each year.
Lead Sponsor, Councilmember Hucker opposes this amendment.
Councilmember Hucker agrees with limiting the credit to 80% of the County
property tax without a dollar limit.
6
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11. Should the Bill be enacted?
Urban fanning can be a benefit to the community. The Bill may create opportunities for
farming in down County areas where most of our County residents live and work. Urban fanning
in these areas may also encourage the production of locally grown fresh food that is both healthy
and desirable. However, the Bill, as introduced, is potentially too costly because it is too broad.
Councilmember Hucker's proposed Bill 5 narrows the tax credit to promote urban fanning yet not
overburden County taxpayers. The Committee may want to consider further limiting the amount
of the credit by placing an upper limit on the dollar amount ofthe credit or lowering the percentage
of the County property tax that is forgiven.
Council staff recommendation:
enact the Bill with
the amendments in Bill 5 and the additional amendments described above.
This packet contains:
Bill 31-16
Legislative Request Report
Md. Tax-Property Code §9-253
County Attorney Bill Review Memorandum
Fiscal and Economic Impact statement
Executive's September 21 Memorandum
Testimony
Aaron Rosenzweig
Gabriel Shapiro
Anne Palmer
Agricultural Advisory Committee
Council member Hucker's Proposed Bill 5
Circle #
1
5
6
9
12
18
20
21
23
25
26
F:\LAW\BILLS\163 I Urban Agricultural Tax Credit\OO Memo WKS 2.Docx
7
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Bill No.
31-16
Concerning: Taxation
Urban
Agricultural Tax Credit - Established
Revised: August 15. 2016 Draft No.
L
Introduced:
August 2.2016
Expires:
February 2.2018
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
_N:...:;o~n.!!Oe:....._
_ _ _ _ __
ChI _ _ Laws of Mont. Co. _ __
I
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember Hucker and Co-Sponsor: Councilmember EIrich
AN
ACT to:
(1)
(2)
(3)
(4)
establish an urban agricultural tax credit against real property tax;
defme an urban agricultural property and an urban agricultural purpose;
establish eligibility for an urban agricultural tax credit; and
generally amend the law governing urban agricultural tax credits.
By adding
Montgomery County Code
Chapter 52, Taxation
Section 52-lID
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The
County Council for Montgomery County, Maryland approves thefollowing Act:
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BILL
No. 31-16
1
Sec. 1. Section 52-lID is added as follows:
52-lID. Urban Aericultural Tax Credit.
2
3
ill
Definitions.
In
this Section:
Urban agricultural property
means real property that is:
4
5
6
7
8
9
10
11
12
ill
ill
ill
ill
at least one-half of an acre and not more than
~
acres;
located in
~
priority funding area, as defmed in Md. State Finance
and Procurement Code §5-7B-02; and
used for urban agricultural purposes.
Urban agricultural purposes
means:
crop production activities, including the use of mulch or cover
crops to ensure maximum productivity and minimize runoff and
weed production;
13
ill
environmental
mitigation
activities,
including
stormwater
14
15
16
17
18
19
abatement and groundwater protection;
ill
community
classes;
development
activities,
including
recreational
activities, food donations, and food preparation and canmng
ill
econonnc
development activities, including employment and
training opportunities, and direct sales to restaurants and
institutions; and
20
21
22
ill
temporary produce stands used for the sale of produce raised on
the premises.
23
24
®
Credit required
The Director of Finance must allow each eligible
taxpayer
~
credit against County real property taxes due in each tax year
in which the taxpayer is eligible for the credit.
(£)
Eligibility.
An
eligible taxpayer must conduct at least
~
urban agricultural
25
26
27
purposes on urban agricultural property. The property must be used
f:\law\bills\1631 urban agricultural tax credit\bill3.docx
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BILL
No. 31-16
28
29
30
31
32
33
34
solely for urban agricultural purposes, except an individual engaged in
crop production on the property may also reside on the property.
@
Amount
Q[
credit.
The credit must equal the property tax otherwise due
on the property.
UU
Application.
A property owner must .@Ply for the credit at least 90 days
before the beginning of the first year the tax credit is sought on
~
form
containing the information required
by
the Director. A property owner
must .@Ply to continue the credit at least 90 days before the beginning of
each subsequent tax year.
35
36
37
ill
Term
Q[
credit.
38
39
40
41
42
43
44
45
46
ill
ill
{g}
The term ofthe credit is
~
years, unless renewed.
A taxpayer may .@Ply to renew the credit no later than 90 days
before the expiration of the credit for another
~
tax years.
Continuous agricultural use required
It:.
at any time during the term of
the credit or the renewal of the credit, the property is no longer used for
agricultural purposes:
ill
ill
the credit granted to the property must beterminated; and
the owner ofthe property is liable for all property taxes that would
have been due during that 5-year term if the credit had not been
granted.
47
48
49
50
ili)
The Director must take all actions necessary to.@Ply the credit to each
eligible taxpayer who applies for the credit. A taxpayer may appeal
~
fmal decision
by
the Director denying or terminating the credit to the
Maryland Tax Court within 30 days after receiving
~
notice of denial or
termination
- - - -
Director.
from the
51
52
(9
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BILL No. 31-16
53
54
55
56
Sec.2. Evaluation.
The Director must submit a report to the Executive and the
Council on or before January 1,2020 evaluating the effectiveness of the tax credit
in
promoting urban agricultural purposes.
Approved:
57
58
Nancy Floreen, President, County Council
Date
59
Approved:
60
Isiah Leggett, County Executive
Date
61
This is a correct copy o/Council action.
62
Linda M. Lauer, Clerk ofthe Council
Date
f:\law\bills\1631 urban agricultural tax credit\bill 3.docx
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LEGISLATIVE REQUEST REPORT
Bill 31-16
Taxation
-
Urban Agricultural Tax Credit
-
Established
DESCRIPTION:
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Bill 31-16 would establish an urban agricultural tax credit against
real property tax.
Using property for urban agricultural purposes is becoming less
common in the County.
Encourage urban agricultural purposes in the County.
Finance, County Attorney
To be requested.
To be requested.
To be requested.
To be researched.
Robert
H.
Drummer, Senior Legislative Attorney
To be researched.
None.
F:\LA w\BILLS\163 I Urban Agricultural Tax Credit\LRR.Docx
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§
9-253. Urban agricultural property; tax credits, MD TAX PROPERTY
§
9-253
IWest's Annotated Code of Maryland
ITax-Property
ITitle 9. Property Tax Credits and PropertyTax Relief
ISubtitle
2.
Statewide Optional
MD Code, Tax - Property,
§
9-253
§
9-253. Urban agricultural property; tax credits
Effective: June
1, 2014
Currentness
(a)(1) In this section the following words have the meanings indicated.
(2) "Urban agricultural property" means real property that is:
(i) at least one-eighth of an acre and not more than 5 acres;
(ii) located in a priority funding area, as defined in
§
5-78-02 of the State Finance and Procurement Al1icle; and
(iii) used for urban agricultural purposes.
(3) "Urban agricultural purposes" means:
(i) crop production activities, including the use of mulch or cover crops to ensure maximum productivity and minimize
runoff and weed production;
(ii) environmental mitigation activities, including stormwater abatement and groundwater protection;
(iii) community development activities, including recreational activities, food donations, and food preparation and canning
classes;
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§
9-253. Urban agricultural property; tax credits, MD TAX PROPERTY
§
9-253
(iv) economic development activities, including employment and training opportunities, and direct sales to restaurants and
institutions; and
(v) temporary produce stands used for the sale of produce raised on the premises.
(b) The Mayor and City Council of Baltimore City or the governing body of a county or of a municipal corporation may grant,
by law, a tax credit against the county or municipal corporation property tax imposed on urban agricultural property.
(c)(l) Except as provided in paragraph (2) of this subsection, a tax credit under this section shall be granted for 5 years.
(2)(i) If the Mayor and City Council of Baltimore City or the governing body of a county or ofa municipal corporation grants
a tax credit under this section, the jurisdiction granting a tax credit shall evaluate the effectiveness of the credit after 3 years.
(ii) If the jurisdiction granting the tax credit determines that the tax credit is ineffective in promoting urban agricultural
purposes, the jurisdiction granting a tax credit may terminate the tax credit.
(iii) The jurisdiction granting a
tax
credit under this section may extend the tax credit for an additional 5 years.
(d) The Mayor and City Council of Baltimore City or the governing body of a county or of a municipal corporation may
provide, by law, for:
(1)
the amount of the tax credit under this section;
(2) additional eligibility criteria for the
tax
credit under this section;
(3) regulations and procedures for the application and uniform processing of requests for the
tax
credit; and
(4) any other provision necessary to carry out the credit under this section.
(e) At any time during the period for which a property
tax
credit under this section is granted for urban agricultural property, if
WESl1.AW
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U.S. Government Works.
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§
9-253. Urban agricultural property; tax credits, MD TAX PROPERTY
§
9-253
the property ceases to be used for urban agricultural purposes, the owner of the property shall be liable for all property taxes
that would have been imposed if a property tax credit for urban agricultural property had not been granted.
Credits
Added by Acts 2010, c. 721, § 1, eff. June 1,2010. Amended by Acts 2013, c. 660,
§
1, eff. June 1,2013; Acts 2014, c. 390, §
l,eff.June 1,2014.
MD Code, Tax - Property,
§
9-253, MD TAX PROPERTY
§
9-253
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~i~Leggett
Marc}>,
C¢ttnty,ExC:¢Hti:vt
C6~fl:tyAtt6;fieJi
Hansen,
1\1
EM
OR-ANDUM
TO;:
A1c.x~dI'e .A,pspio,()sa~
Pitectqr
pepaftlricnt'bfF'irtartce
'Pivisi~tlofQqvqmneI1t ~@1iQns
Et.t'Mit4
B~4ttnet~Chi'e~
,~,
=!:=:~~~~t~
A~gt,lst
lO.Z(U!)
Bi1l3.tA6,
Taxatloll- Ur!?ap.AgtiCQ,1hlt:a1
T~xC:~dit
..
EstabFsp¢ti
1
haverevi~We<lBi1l31-Hi.
Ti:!Xl;itj611-
(Jt~
Agriculfural TaxCtedit
-Established.
This bHl
createSan~an
agI'iculturafteal,
pro~tax
credit
lOfCQuntY!ea1
prqpertyJa,XCs,
provided fherca1
property
i~~S¢d
for
twa
:()fthe·fi.~eljst¢d
'UtoanagrlculturrupUIJ>Osesot
activitics~
l'hetaxct¢dit
isfoif1vet.:p{
yeats
With a
possible
renewal
for
anaddlti9ualfive
YC:;tTS.
The bill alsoeontainsJanguagethat
alb:rWs.
theCoUIltyt()
IcGaPtute
t~~Jotthefive.;year
peciodof
time,
if
the
property
is
no
longeru$¢4
for
,urban
agricultural
;purposes, or
is
no
longcrcHgible
for
thecteditdurii1g that five-year period.
'
The
taxcreditls<cteated
pursuant
toaneriahlingSUite
law
in
Seqtlpn
9~253
(If
the
Tax­
PiQpe~y Arti¢lc~"
of the
Anno~ted
COde
of
Maryland.
Iha:ve
severalcoinmeIits
concerning the
tax
credit bill.
,
,
ljirst; utldetihedejinitions
secUon of
urban
agrict:lltilraipurp9ses;
ifis,
difficult
to
d~t~ineinbesep\.irpo~$can"econsideredirtdjvidual1y.
or
propettymust
comply
,vithall
of
the
purposes to
qualltY for the
ctedit, because between
No.4 and
5
there
is
~
;'and."
lpelieve
this
w()rd shotUd
be
"oc;
",
"
1.
line 23,
it
ditectstheDirector ofFinance to
allow each
eligible taxpayer:a cte4it
agflirtstCoQ1ltyreal
property. taxes due in each
'Up(
yearin
whjchthe
2:.Un<ler,thecr¢dilrequit~
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- - , , . ' ­
lQl
M()nrQeS~ihi~~¥iue~M:ai')'BU1d
20SS0-258Q
(240)T17-6195TrD
t24(i}'717~2s4S
..
FAX(~4Q)717470S
.scotLfoncanru:in@montgomerycOllllt)'lTIl.lg9V
,,
'
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Ale~andre.A.EspinoSa
August 11;2016
Pa~e2
tax,payeris
eligiblefot
the
ctedit.TIteverynextsubsection,subsection
(c).
iine.26.d¢.s~ri~~
eligibility and
stateS
that anindividUal engaged. in crop
prodv:ctiOll,lllAyat!J9
I'eSjde
on.tbt
improvements.
ontlie
land
that
maybe
used
for residentialpurposes.
pr()~. Itisn9~ ~lear tQm~wheth¢rt}tetaxereditappliestojust
the land ott also the
3~Nso,
tbeblU
does
ri.ot.deflne a
taXpayer
ina
way
w.hich would
limit
the
tax
credit
to
justindivid~s thato:wnpl'operti~
oy:whe'thertlle
~cl'editisavailabl~ to.pro~e.stbat
1,'na}{
be
o~edljya cPrPOiat¢~ntity.
LL<;a
partnership;
Or.atrust.
In
subsection
(c)~
line 28,. the
bill
refetsto
an
~~dividualengagedin'cropprpduction",
vvhichtypicaUy
denQte$Jl
Peirlg,
an
n.otfirt erttit,y.
.. .
human
4. .
The
.biUmentiottS,·U\efermofthecr¢ditis fiVC);eiUsand
can
be
ienewedfor
another
five
yeats
(line
39). It
isnotclear
iftenyears
is lhemaximum
tennorif
itcanbe
renewed
~rpetuallY.
5.
lw()uld
recomm;endth~foUoVting ~eJldmf!nts~o
aill31-16t6
help
clarify
the
bill
and
~e it~Qnsi~I1twiUt
SUit¢
~aw.
~thati!
a.
:usetifur,
Line.9
wQ~d read~
follows:
urban agfieultUral ]?itrpqses
means
.
. .
b.
tt
LiIle20 would
he
modified
todeletetbe
word "and"
~dadd.the
wQrd
Sectkm{c), beginning
at
line 26
would
be
amended as follows:
EligIbility,
TQF~!hs·¥redit!P1eligibletaxplYermY§1~~cW»lWllJ:'1!UcQnductllat)eastiQftJls
utbanagrisu1turalp1ltJlosesUon urban wculfui'al
propettynduri11~~tmngf~91:edit.The
nropertymusthe. used$olelyfor
urball
ag:QculturalpYmQses,exceptan
individual
engaged 'in .
cron production ,on
the property rnay
also
teside.
ontheptoperty.
infonnatioIlregriire.<ln~.DitOOttir.inQ.mm ~S .ili¥·~£~itanroperty
owner must
.~.
J2 COntlnuethe creditaileast90daysbefore
the beginning
of
each subsequent
tax
year.
beginning
at
Iin.e
34
w:o~ldbearnt."nded
as folloW's!
Ap,plieqji(m.
b.1cord¢r1tl~~credit ~
property
owner
triustrumlY
for the credit
alleast
90
days befott}
the.
begi~of:thefitst
year
the tax
credit
is
sought.on
g {orin containiilg
the
d.
S~iiQn (~)~
e.
the words years.
Section(f) at line 41 would
add the
word
"ta~"
between the
numper
5
.and
Secti()n(gh})egintring
atline44would beameniied
asJollows:
ContinU()us
agricuitwttlffJAB
regulred,
Jt,matlxtinle•
.durifigi~t¢m!ofthecredit
ot' the
renewal.ofJh§credit.
tbe.prt>perty
is.nolonger
~li&l.h1emrtb~ciredit()r
•.
used
for.·.~ ~J.rban
t
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i\l~dre
A,p:spinpsa
August
11~.
2016'
l>ag~3
~cultural£uipOse!t
.attachJ~~::·.~~e()~O::~ti;~!:~~~~~~tf:;n::!~~~~~J·::S~Q~=~~n·the
Jillthority9fth¢
C()1.IIl~il8JlQ iSQlllel'vvisel¢gallys~ffi¢jent
ce.
.
=i;.ti~s:~~~~:::~efAdmihistmtiVe
officer
Amanda Mihilli
t~glativ¢Attomey
Bob
DrutIll:ner,I:..~~ljtiyeAttQrney·
SRF
1~7J"9.-ni1l re,vi~w
@)
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ROCKVILLE, MARYLAND
MEMORANDUM
September 16, 2016
TO:
FROM:
Nancy Floree
p
.County Council
. sident,
Jennifer
A.
Alexandre
Es·
tor, Office of Management and Budget
a, Director, Department of Finance
.
SUBJECT:
FEIS for Council Bill 31-16, Taxation - Urban Agricultural Tax Credit­
Established
Please fmd attached the fiscal and economic impact statements for the above­
referenced legislation.
JAH:mc
cc: Bonnie Kirkland, Assistant Chief Administrative Officer
Lisa Austin, Offices of the County Executive
Joy Nunni, Special Assistant
to
the County Executive
Patrick Lacefield, Director, Public Information Office
Alexandre A. Espinosa, Director, Department of Finance
Mike Coveyou, Department ofFinance
Jane Mukira, Office ofManagement and Budget
Naeem Mia, Office ofManagement and Budget
@
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Fiscal Impact Statement
Bill 31-16, Taxation - Urban Agricultural Tax Credit - Established
1. Legislative Summary
Provides for a real property tax credit for "urban agricultural" property, defined as
properties that
are
not agriculturally zoned, that are between
Y2
and
5
acres, that are used
for ''urban agricultural purposes" and that are in State-defined Priority Funding Areas.
2.
An
estimate ofchanges in County revenues and expenditures regardless of whether the
revenues or expenditures are assumed in the recommended or approved budget. Includes
source ofinformation, assumptions, and methodologies used.
Using the
2016
billing data from the County's property tax database, there are over
36,300
real property tax accounts that are:
(1)
taxable;
(2)
between
~
and
5
acres; and
(3)
are
not zoned as agricultural properties. Most ofthese properties are likely located in
Priority Funding
Areas,
as most ofthe County's parcels are located in Priority Funding
Areas. There is no data on how many ofthese properties are currently used for ''urban
agricultural purposes." Additionally, the bill does not articulate whether each property
must
be
used in whole for agricultural purposes, or
if
the bill applies to a property
if
any
part ofthat property is used for agricultural purposes. The total amount ofCounty taxes
billed for these
36,300+
accounts is over
$436.4
million dollars for FYI7. Some portion
ofthis amount of tax will be credited, but it is not possible
to
reliably estimate how many
properties will be eligible for the credit.
Since the bill is vague
as
to what is defined as urban agricultural purpose, a very broad
level and array ofactivities could qualify a property for this proposed tax credit.
Therefore, the potential FIS, is the total tax revenue associated with these properties ­
$436.4
million.
This legislation requires that the Department ofFinance (Finance) administer the bill.
However, Finance does not have expertise to determine whether a property is used for an
"urban agricultural purpose." Therefore, Finance would have to hire additional staffwith
expertise in ''urban agricultural purposes" including crop production activities,
environmental mitigation activities, and community development activities. Further,
Finance would have to hire addition81
staff
to
make site visits to determine ifa property
has
a temporary produce stand on it. The required number ofnew Finance
staff
cannot
be
determined at this time because it is unknown how many property owners would be
eligible and apply for the credit. However, with
36,300
eligible properties, the workload
would
be
significant since it would require not only initial verification, but periodic
checks to ensure the agricultural use continues.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
See #2 above. As noted above, there is the potential for a broad array ofactivities to
be
eligible for this tax credit. Ifall
36,300+
properties qualified, the annual fiscal impact
could be approximately
$436.4
million annually or
$2.6
billion over six years.
Additionally, there will be more personnel expenditures for additional County staff in the
Department of Finance, but that cannot be estimated at this time.
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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.
Not Applicable.
6.
Later actions that may affect future revenue and expenditures if the bill authorizes future
spending.
Not Applicable.
.
7.
An
estimate of the
staff
time needed to implement the bill.
Unknown at this time, but significant due to the number of potential properties eligible.
8.
An
explanation ofhow the addition of new staff responsibilities would affect other duties.
This bill cannot not be administered by current Finance staff. Additional staff would be
required.
9.
An
estimate ofcosts when an additional appropriation is needed.
See #2 above.
10. A description ofany variable that could affect revenue and cost estimates.
See #2 and #3 above.
11. Ranges of revenue or expenditures that are uncertain or difficult to project.
All revenue and expenditures are uncertain for this legislation.
12.
If
a bill is likely to have no fiscal impact, why that is the case.
Not Applicable.
13. Other fiscal impacts or comments.
None.
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14. The following contributed to and concurred
with
this analysis:
Mike Coveyou, Finance
Jane Mukira, Office ofManagement and Budget
Date
2/t5/
[b
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Economic Impact Statement
Bill 31-16, Taxation - Urban Agricultural Credit - Established
Background:
Bill 31-16 provides for a real property tax credit for "urban agricultural" property, defined as
properties that are not agriculturally zoned, that are between
~
and 5 acres, that are used for
"urban agricultural purposes" and that are in Priority Funding Areas.
A property owner must conduct at least 2 urban agricultural purposes on the property. The
tenn of the credit would be 5 years. The credit would equal the property tax otherwise due on
the property.
1. The sources of information, assumptions, and methodologies used.
Finance estimated for the fiscal impact of the bill that there are over 36,300 real property tax
accounts that are
(1)
taxable; (2) between Y2 and 5 acres; and (3) are not zoned as agricultural
properties using 2016 billing data from the County's property tax database. Most of these
properties are likely located in Priority Funding Areas, as most of the County's parcels are
located in Priority Funding Areas.
Since there are no data on how many of these properties are used for ''urban agricultural
purposes" it is not possible to estimate with specificity the total potential loss of property
taxes to the County. The total amount of County taxes billed for these 36,300 plus accounts is
over $436.4 million dollars for FYI7. Some portion of this amount of tax will be credited,
but it is not possible to reliably estimate how many properties will be eligible for the credit.
Finance estimates the average County-only tax for the 36,300 plus properties in question is
slightly more than $12,000 for FY17-the median tax is over $5,800 for FYI7. For each 1
%
of participation, based on the average tax, the credit would cost approximately $4.4 million.
As noted in the fiscal impact statement for the bill, since the proposed language is vague as to
what is defined as urban agricultural purpose, a very broad range of activities could qualify a
property for this credit. Therefore, the potential fiscal impact, according to the Fiscal Impact
Statement, is $436.4 million or the total
tax
revenue associated with these properties.
2. A description of any variable that could affect the economic impact estimates.
Urban agricultural land potentially benefits the County through eliminating blight and
improving access to healthy food. The primary variables that would affect the County's
economy positively would be potential increases in property values as neighborhoods are
improved. Given the limited scope ofthe bill from an acreage perspective, sites with large
assessed value will be excluded from the credit. Since the current language ofthe bill
includes such a broad range of activities that could qualify for the credit, the primary variable
in detennining the economic impact of the bill is the number of properties that ultimately
qualify for the credit.
Page lof2
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Economic Impact Statement
Bill 31-16, Taxation - Urban Agricultural Credit - Established
3. The Bill's positive or negative effect,
if
any on employment, spending, savings,
investment, incomes, and property values in the County.
Given a lack of specificity of data regarding both current properties used for urban
agricultural purposes and those intended to be used in the future, it is difficult to accurately
quantify with any degree of precision the total economic impact to the County as a result of
this bill.
4.
If
a Bill
is
likely to have no economic impact, why is that the case?
This legislation will have an economic impact. See paragraph #3
5. The following contributed to or concurred with this analysis:
David Platt, Dennis
Hetman, and Robert Hagedoorn, Finance.
Alexandre
A.
Espinosa, Director
Department of Finance
Page 20f2
@
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:
.
i
OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE, MARYLAND 20850
Isiah Leggett
County Executive
MEMORANDUM
September 21, 2016
TO:
Tom Hucker, COWlcilmember
COWlty Council
i
~
Isiah
COWlty Executive
FROM:
Leggett...-fJ(~
-
!
0
SUBJECT:
Bill 31-16, Taxation - Urban Agricultural Tax Credit - Established
I have reviewed Bi1l 31-16, Taxation - Urban Agricultural Tax Credit ­
Established. The bill creates an urban agricultural real property tax credit for COWlty real
property taxes, provided the real property is used for two of the five listed urban agricultural
purposes or activities, and the property is between
Y:z
acre and five acres in size.
The tax credit is authorized by an enabling State law in Section 9-253 of the Tax
Property Article, of the Annotated Code of Maryland.
As
drafted, the bill is vague in its
definition of "urban agricultural purposes." Due to this lack of specificity, the definition of urban
agricultural purposes - particularly, environmental mitigation activities, cOlmmmity development
activities, and economic development activities - could encompass a potentially Wllimited range
of activities eligible for the credit. Because the eligible uses are so open-ended, the Department
of Finance would be in the position of approving virtually every application.
Further, it is Wlclear what the bill is intended to achieve. Unlike many other
jurisdictions in the State, Montgomery County has numerous programs designed to address
environmental, community development, and economic development goals. To
try
to further
address these goals through our
tax
policy must be considered
in
that broader context. The
impact on the County's tax revenues and taxpayers must also be considered. Given the current
definition of "urban agricultural purposes" under this bill the impact would be very costly to the
County
in
terms of lost property
tax
revenue.
Specifically, the following areas of the bill should be addressed:
• Urban agriCUltural purposes - Identify a clear purpose of what the bill is intended to
achieve and clearly define urban agricultural purposes in a manner that can be effectively
administered.
montgomerycountymd.gov/311
ei)
:'-{ . .
301-251-4850 TTY
@
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.,'.-"'''-'.-,.... -.;. -.-.-., ,.: ..: ··:-:::-:·'··1
:
:
~.-.'-
..
Tom Hucker, Councilmember
September 21, 2016
Page 2
• Application and certification ofurban agricultural purposes - The Department of Finance
does not have the subject matter expertise to accept applications and certify urban
agricultural purposes for the tax credit.
• Amount of the credit - The bill should clearly specify that it is only the land that is
eligible for the credit, not any improvements on the land. The bill does not provide a
compelling reason to credit the
full
property tax amount. Additionally, there should be
some minimum agricultural use test applied to the property.
As
currently drafted, even
the most minimal agricultural plots could qualify a property for this credit.
As noted above, I am concerned the bill is too broad and is not the most
appropriate and direct way of encouraging urban agriculture in the County. If the intent is to
promote agricultural activities in the urban areas of the County, the bill should be more narrowly
focused on incentivizing agricultural activities. The other implied goals of the bill ­
environmental, community development, and economic development - should be addressed
either through existing programs or more direct initiatives. The benefit of providing an urban
agricultural tax credit should be weighed against the increased burden this places on other
taxpayers in the County, the cost to the County to administer the credit, and any unintended
consequences it may create.
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::>
I
Aaron Rosenzweig
1 Thorburn Road, Gaithersburg MD 20878
240-421-2520
September 16, 2016
Councilmembers,
I support Hucker and his bill to widen the scope of tax credits to encourage urban farming on lots less than
5 acres in size.
This bill:
https:llwww.montgomerycountymd.gov/COUI\lC ILlResources/Files/bill/20 16/Packets/20 160802_7
A.
pdf
What can you produce on
1/2
an acre? Quite a lot.
The "Dervaes" family produce 6,000 Ibs of food per year on
1/10
of an acre:
https:llwww.youtube.com/watch?v=NCmTJkZyOrM
http://inhabitat.com/this-family-produces-6000-pounds-of-food-per-year-on-4000-square-feet-of-landl
http://tinyhousetalk.com/family-grows-6000-lbs-of-food-on-11 Oth-acre-u rban-farml
http://urbanhomestead.org
They are not alone nor or they unique.
"What we found, bottom line, is that organic vegetable production on a small plot of land can be profitable,"
he said. "It's a lot of work, but one family can earn a $45,000 annual salary on a 3-acre plot."
http://today. ag ri life.
org/20121061
13/0rgan ic-vegeta ble-econom icsl
Certainly growing food is not for everyone but for those who do it is immensely rewarding. The benefits
don't stop there. Neighbors learn the value of where food comes from without having to leave their
neighborhoods. One of the best things Montgomery County has done is in creating the Agricultural
Reserve. Within a short driving distance we are connected with nature and we don't have the sprawl that
Virginia has as a result. This bill is simply the next step. Instead of a drive, a simple walk can take you to
where food is grown.
It is important to encourage diversity in all its forms but in food production it is particularly smart. We don't
want to have to ship our food across the country nor do we want to be dependent on large scale
production. This bill will help encourage citizens to reconnect with nature and inspire neighbors to start by
simply growing tomatoes and potatoes on lots less than
1/2
acre in size. Anyone can do it!
My family moved out of Montgomery County jurisdiction and into the City limits of Gaithersburg simply so
we could legally raise a handful of chickens. They are pets with benefits but more than that, they help build
community spirit. Children and families love visiting the chickens just like they will thoroughly enjoy urban
farms on
1/2
acre or more as this bill proposes.
Please encourage this bill and others like it. Let's even develop new HOA communities with a farm at its
core as a shared community resource such as the 8elward Farm on Route 28:
http://www.teamgaithersburg.org/assets/8elward-agrihood-FINAL.pdf
http://thefarmatagritopia.com
Thank you,
Aaron Rosenzweig
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CLIMATE
CHESAPEAKE
ACTION
I
NETWORK
Bill 31-16,
Taxation - Urban Agricultural Tax Credit
Montgomery County Council
Date: September 20, 2016
Position:
Support
Comments:
CCAN supports tax incentives for urban agriculture projects because land use is a critical aspect of a
municipality's response to the climate emergency we are currently facing. This bill provides
Montgomery County with an opportunity to become a nation-wide leader on green city planning and
development.
Urban agriculture would make the community more green. Green space in urban settings has an
immediate effect on residents, consumers and tourists visiting the area. The space provided by urban
agricultural projects allows for community growth; renewal and health, through food preparation and
canning classes, harvest days, farm stands and ongoing collaboration, cooperation, dialogue and
collective management.
On a technical level, urban agriculture provides many tangible benefits for the city itself.
C"limate change brings unpredictable and extreme weather events, and we have just seen the
beginning of it. Stormwater infrastructure is only capable of diverting a certain amount of the runoff that
results from heavy rain during severe storms. Soil used in urban farming improves in quality over time,
due to composting and tilling. This soil becomes increasingly effective at trapping and storing
rain-water. It also acts as a filter for the water, addressing growing concerns over water contamination
in urban spaces.
The list of green stormwater infrastructure strategies promoted by the EPA also includes downspout
disconnection, rain-water harvesting, rain gardens, planter boxes, bio-swales, permeable pavements,
green streets and alleys, green roofs, urban tree canopy, and land conservation. 1
Additionally, cities experience much higher temperatures than rural and suburban settings because of
the amount of solar heat that gets trapped in buildings and pavement and in between buildings because
1"Urban Agriculture as a Green Stormwater Management Strategy."
The Freshwater Society
(2013): n. pag.
Web. 19 Sept. 2016.
6930 Carroll Ave, Suite 720, Takoma Park, MD 20912
I
240-396-1981