Agenda Items 5B
&
6
February 6, 2018
Action
MEMORANDUM
February 2, 2018
TO:
FROM:
County Council
Robert H. Drummer, Senior Legislative Attom~~--
Glenn Orlin, Deputy Council Administrator
6-c
SUBJECT:
Action:
Expedited Bill 32-17, Taxation - Development Impact Tax for
Transportation and Public School Improvements - Definitions - Senior Residential and
Resolution to implement Expedited Bill 32-17
Government Operations and Fiscal Policy Committee recommendation 2-0, Council
President Riemer absent):
enact the Bill and adopt the Resolution as introduced.
Expedited Bill 32-17, Taxation - Development Impact Tax for Transportation and Public
School Improvements - Definitions - Senior Residential, sponsored by Lead Sponsor
Councilmember Floreen and Co-Sponsor Councilmembers Katz, Rice, and Berliner, was
introduced on October 31, 2017. A public hearing on both the Bill and the Resolution to implement
the Bill was held on December 5 and a Government Operations and Fiscal Policy Committee
worksession was held on January 18.
Bill 32-17 would replace the multifamily-senior residential category used to impose the
development impact
tax
for transportation and public school improvements with a senior
residential category.
Background
Development impact taxes are designed to require an applicant to construct a new
development to pay a portion of the County's cost to build transportation improvements and public
school improvements needed to support the new development. The Council approved the initial
impact fee law in 1986, and at the time, applied it to developments in the fastest areas of growth in
the County (Germantown, Fairland, White Oak, and Cloverly). After the Court of Appeals found in
1990 that the County did not have authority to impose the impact fee it had enacted,
1
the Council
enacted Expedited Bill 33-90, which converted the impact fee to an impact tax.
In
2001, Bill 47-
01 (effective
July
2002) established the transportation impact
tax
countywide.
The Council approved a countywide school impact
tax
in 2003 (effective 2004) which applied
only to residential development. Rates were set for single-family-detached houses, townhouses, low-
1
Eastern Diversified Properties, Inc.
v.
Montgomery County,
39 Md. 45, 570 A.2d 850 (1990).
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rise apartments (up to 4 stories) and high-rise apartments. The rates for single-family-detached houses
and townhouses also included a surcharge for larger homes. Multifamily-senior residential has a $0
school impact tax rate because it is assumed that these housing units would not add many students to
the public school system.
Bill 32-17 would make 2 changes to the impact tax charged to age-restricted senior housing.
First, the Bill would replace the multifamily-senior residential category with a generic senior
residential category. Traditional age-restricted senior housing in the County has been multifamily
units. Recently, the County has received applications for age-restricted senior housing units
comprised of townhouses or villas. Since these age-restricted senior townhouse developments are
also expected to add few students to the public school system, Bill 32-17 would apply the senior
residential rate of $0 for the impact tax for public school improvements to these developments. Bill
32-17 would apply this senior residential tax rate for school impact taxes paid on or after June 22,
2017.
Bill 32-17 would also define the senior residential category for the impact tax for
transportation improvements. The new definition would include "a residential care facility as defined
in Section 59.3.3.2.E used solely for housing seniors or persons with a disability." Under current law,
a residential care facility that has a central kitchen for providing meals to residents and does not
include a kitchen in each housing unit is charged the higher "other non-residential" transportation
impact tax rate instead of the lower multifamily-senior transportation impact tax rate. The current
classification of this type of residential care facility is based upon an assumption that the staff needed
to serve the residents would approximate the impact on the transportation system that results from
other non-residential properties, such as a nursing home. Bill 32-17 would place this type of
residential care facility in the new senior residential category that carries a reduced transportation
impact tax rate.
Resolution to Implement Expedited Bill 32-17 for senior residential units
The Resolution to Implement Expedited Bill 32-17 for senior residential units was
introduced on October 31. The Council held a public hearing on this resolution along with Bill
32-17 on December 5.
Bill 37-16 required the Council to set the impact tax rates by resolution. Therefore, Bill
32-17 was introduced with a resolution that would implement the changes to the categories used
for the development impact tax rate schedules. The attached resolution reflects the changes
proposed by Expedited Bill 32-17 and updates the rates that have been in effect since July 1, 2017.
See ©5-6. If the Council enacts the Bill, this resolution is necessary to implement it.
Public Hearing
Both witnesses at the public hearing supported the Bill. Jody Kline, an attorney with
Miller, Miller, and Canby, representing Friends House and Columbia/Wegman Acquisitions,
supported the creation of a senior residential category for both the school impact tax and the
transportation impact tax.
Mr.
Kline submitted a copy of the development tax rate schedule with
the current multifamily-senior tax rate highlighted. See ©7. Robert Harris, an attorney with Lerch,
Early & Brewer, also supported the Bill as a correction for an inequity in the allocation of the
development impact tax rates for certain senior residential projects. See ©8-9.
2
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GO Committee Worksession
Councilmember Nancy Floreen attended the session in addition to 2 members of the GO
Committee (Council President Riemer was absent). Robert Drummer, Senior Legislative Attorney
and Glenn Orlin, Deputy Council Administrator represented the Council staff. The Committee
discussed the Bill's replacement of the current multifamily senior residential category with a new
senior residential category for impact tax. The Committee also discussed the placement of a senior
residential care facility with a central kitchen in this category due to the Planning Board staffs
estimate of lower trips generated by this type of facility. Finally, the Committee discussed the
fiscal impact of the Bill and the Resolution to Implement the Bill. The Committee recommended
(2-0, Council President Riemer absent) approval of the Bill and the Resolution as introduced.
Issues
1.
What is the fiscal and economic impact of the Bill?
0MB estimated that there would be an average of 4 new developments each year with 10
units each eligible for a lower transportation impact tax rate under the senior residential category.
0MB estimated that these 4 new developments with 10 units each would reduce our transportation
impact tax revenue by $233,000 per year. 0MB also estimated that DPS would need 200 work-
hours to reconfigure Hansen and eServices Apply Online IT systems, but that these costs can be
absorbed within the current appropriation. See
©
10-13.
0MB estimated that, based upon the same estimated number of
40
new senior residential
units each year, the school impact tax would be reduced by $960,000 each year. Therefore, the
total fiscal impact of the Bill would be $1,193,000 per year.
2. Should a senior age-restricted townhouse, villa, or single-family house development pay
a school impact tax?
The development impact
tax
for public school construction is designed to require the
applicant for a new development to pay a portion of the County 's cost of public school
improvements necessary to support the new development. The current rate for the school impact
tax
for a senior multi-family development is $0 based upon the assumption that the occupants
of
age-restricted senior housing do not add children to the local public school.2 However, an age-
restricted senior housing development consisting of townhouses, villas, or single-family houses is
charged a school impact tax rate equal to a similar development that is not age-restricted.
Until recently, almost all senior age-restricted developments in the County were multi-
family developments.
3
There are now at least 2 senior age-restricted developments in the County 's
development pipeline that include townhouses or villas. These new developments are also
expected to have little to no impact on the public schools. Bill 32-17 would remedy this inequity
Although a senior age-restricted development could add some students to the public school system because
a senior
resident could have a child or grandchild living in the
unit,
the actual number of students added in these
developments
is insignificant.
3
Leisure World development includes townhouses and villas, but the development predates the impleme
ntation of the
development impact tax for public school improvements.
2
3
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by replacing the current multi-family senior residential category with a senior residential category
that includes senior age-restricted townhouse, villa, or single-family developments.
Committee
recommendation:
approve the new senior residential category.
3. Should the new senior residential category include a residential care facility with a central
kitchen for the residents?
The development impact tax for transportation improvements is designed to require the
applicant for a new development to pay a portion of the County's cost of providing transportation
improvements necessary to serve the new development. The transportation impact tax is based
upon an estimate of the trips generated by that type of development. Under current law, the
transportation impact tax for an independent living residential care facility with a kitchen in each
unit is less than the transportation impact tax for a residential care facility with a central kitchen.
The difference is based upon an expectation that the extra staff necessary for a central kitchen
would add to the trips generated by the facility similar to a nursing home.
After receiving complaints from 2 applicants for these developments, Council staff asked
the Planning Board staff to determine if the current trip generation estimate for a residential care
facility with a central kitchen remains accurate. Eric Graye of the Montgomery County Planning
Department Transportation staff provided the following response in an email:
We agree that a residential care facility that has a central kitchen for providing meals to residents and
does not include a kitchen in each housing unit has a travel impact that is similar to independent senior-
restricted dwelling units. Many residents at facilities with a central kitchen tend to eat their meals at the
centralized kitchen (assuming this amenity is provided). Therefore, typically the staff (not the residents)
generate AM and PM peak trips. That said, as shown below there is a slight difference between
"typical" senior residential facilities (with centralized dining) and other types of senior residences where
some of the residents are still working full or part-time.
According to the 9
th
Edition of the ITE Trip Generation Manual, the six land use categories for "senior
residence" have varying trip generation rates, from AM=0.06 to 0.22
&
PM=0.17 to 0.27:
Senior Residential developments
lacking
centralized dining facilities
AM=0.22 trips/DU
&
PM=0.27 trips/DU
ITE Land Code 251 Senior Adult Housing Detached
AM=0.20 trips/DU & PM=0.25 trips/DU
ITE Land Code 252 Senior Adult Housing Attached
Average= AM=0.21 trips/DU
&
PM=0.26 trips/DU
Senior Residential developments
providing
centralized dining facilities
AM=0.06 trips/DU & PM=0.17 trips/DU
ITE Land Code 253 Congregate Care Facility
AM=0.14 trips/DU & PM=0.22 trips/DU
ITE Land Code 254 Assisted Living
ITE Land Code 255 Continuing Care Retirement Facility AM=0.15 trips/DU
&
PM=0.20 trips/DU
AM=0.17 trips/DU
&
PM=0.22 trips/DU
ITE Land Code 620 Nursing Home
Average= AM=0.13 trips/DU
&
PM=0.20 trips/DU
The difference in travel impact is that senior residential developments
providing
centralized dining
facilities have a lower trip generation rate per unit than senior residential developments
lacking
centralized dining facilities. Therefore, Bill 32-17 should reflect this difference in site-generated traffic
and not require senior residential care facilities with a centralized dining facility to be charged the higher
"non-residential" transportation impact tax rate if they are not generating as much traffic as the
4
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multifamily senior residential buildings (with kitchens in each housing unit) that pay lower
transporta tion impact tax rates.
Mont. County Planning Dep't transporta tion staff
Ed Axler, Eric Graye & Laura Hodgson
These trip generation estimates support taxing a residentia l care facility with a central kitchen the
same transporta tion impact tax rate as senior residentia l developm ent with a kitchen in each unit.
Committee recommendation:
approve the new senior residentia l rate as defined in the Bill.
4. Should the Bill be retroactive
to
June 22, 2017?
The Bill, as introduced , would take effect on June 22, 2017. This retroactive effective date
was added to the Bill at the request of the County Attorney' s office to resolve an ongoing Tax
Court appeal from an applicant who paid a school impact tax for a senior residential developm ent
that included townhouse s or villas on June 22, 2017 and on July 13, 2017. The total amount of the
refund would be $137,556. Although the County has a reasonabl e defense based upon the current
tax rates, the same argument that supports the change in the law described in Issue 2 would also
support making the change retroactive to make refunds in this case.
DPS would need to make some changes to their workflow and informatio n technolog y
system to accommod ate the revised developm ent impact tax category and implemen t this Bill.
Although DPS cannot change the system immediate ly after the Bill is enacted, Ms. Jones told
Council staff that, due to the limited number of applicatio ns for senior residential developm ents
expected, DPS can manually implemen t the changes until the system can be updated.
Committee recommendation:
enact the Bill with the retroactive effective date, and
continue to have it apply to payments made on or after June 22, 2017.
This packet contains:
Expedited Bill 32-1 7
Legislativ e Request Report
Resolutio n to Implemen t Bill 32-17
Public Hearing Testimony
Jody Kline
Robert Harris
Fiscal and Economic Impact Statement - Amended
F:\LAW\BILLS\1732 Development Impact Tax For Trans. And School Improvement\Action Memo.Docx
Circle#
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5
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Expedited Bill No. =32=---' -17~-----
Concerning: Taxation - Development
Impact Tax for Transportation and
Public School Improvements -
Definitions - Senior Residential
Revised: December 7, 2017 Draft NoJQ_
Introduced:
October 31, 2017
Expires:
May 1, 2019
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: _N_on_e_ _ _ _ _ __
Ch. _ _ , Laws of Mont. Co. _ _ __
COUNT Y COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council.member Floreen
Co-Sponsors: Councilmembers Katz, Rice, and Berliner
AN EXPEDITED ACT
to:
(1)
replace the multifamily-senior residential category used to impose the development
impact tax for transportation and public school improvements with a senior residential
category;
(2)
define senior residential; and
(3)
generally amend the law governing the categories of residential dwelling units used
to impose the development impact tax for transportation and public school
improvements.
By amending
Montgom ery County Code
Chapter 52, Taxation
Section 52-39
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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EXPEDITED BILL NO. 32-17
1
2
Sec.
1.
Section 52-39 is amended as follows:
52-39. Definitions.
In this Article the following terms have the following meanings:
*
3
4
5
*
*
Property owner
means any person, group of persons, firm, corporation, or other
entity with a proprietary interest in the land on which a building permit has been
requested.
6
7
8
9
Residential
means the use of a building as a dwelling unit.
(
1)
Single-family detached residential
includes detached single-family
dwelling units.
10
11
12
13
14
15
16
17
18
19
(2)
Single-family attached residential
includes townhouses, duplexes
and other attached single-family dwelling units.
(3)
Multifamily residential
includes:
(A)
(B)
(C)
garden apartments;
mid-rise and high-rise dwelling unit structures; and
mobile homes.
( 4)
[Multifamily-senior] Senior residential
means:
(A)
[multifamily housing and related facilities for elderly or
handicapped persons, as defined in Section 59-1.4.2, with
occupancy restricted as provided in Section
59-3.3.2.C]
fl:
residential care facility as defined in Section
59 .3 .3 .2.E
used
solely for housing seniors or persons with
fl:
disability~
20
21
22
23
24
25
(B)
[multifamily housing] dwelling units located in the age-
restricted section of a planned retirement community, as
defined in Section
[59-8.3.5] 59.8.3.5;
[and]
26
27
(C)
[a domiciliary care home, as defined in Section
59-1.4.2
and
subject to Section
59-3.3.2.E,
which consists of separate
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EXPEDITED BILL
No. 32-17
28
assisted living units] an independent living facility for
seniors or persons with
59.3.3.2.C; and
(D)
any household living unit constructed under Section
59.3.3.1 that is restricted by a covenant running with the
land for housing persons who are 55 years of age or older.
( 5)
High-rise residential
includes any dwelling unit located in a
multifamily residential or mixed use building that is taller than 4
stories, and any I -bedroom garden apartment.
Use and occupancy permit
means a use and occupancy permit issued by the
Department of Permitting Services under Chapter 8.
*
~
29
30
31
32
33
34
35
36
disability as defined in Section
37
38
39
40
41
*
*
Sec. 2. Effective Date.
The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on June 22, 2017. The
amendments in Section I must apply to development impact tax for public school
improvements paid on or after June 22, 2017. The development impact tax rate for
public school improvements imposed for a senior residential development, as defined
in Section 1, payable between June 22, 2017 and July 1, 2017, must be $0.
Approved:
42
43
44
45
46
47
48
Hans D. Riemer, President, County Council
49
Date
Approved:
50
Isiah Leggett, County Executive
Date
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LEGISLATIVE REQUEST REPORT
Expedited Bill 32-17
Taxation
-
Development Impact Tax for Transportation and Public School Improvements
-
Definitions
-
Senior Residential
DESCRIPTION:
Bill 32-17 would replace the multifamily-senior residential category
used to impose the development impact tax for transportation and
public school improvements with a senior residential category.
Traditional age-restricted senior housing in the County has been
multifamily units. Recently, the County has received applications for
age-restricted senior housing units that is a townhouse development.
Since these age-restricted senior townhouse developments are also
expected to add few students to the public school system.
The current classification of a residential care facility is based upon an
assumption that the staff needed to serve the residents would
approximate the impact on the transportation system that results from
other non-residential properties, such as a nursing home. Bill 32-17
would place this type of residential care facility in the new senior
residential category that carries a reduced transportation impact
tax
rate
based upon analysis of the impact on the transportation system.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
The goal is to properly classify age-restricted senior housing units for
the development impact tax for both public school and transportation
improvements.
Planning Board, County Attorney, Permitting Services
To be requested.
To be requested.
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
To be requested.
To be researched.
Robert H. Drummer, Senior Legislative Attorney
To be researched.
None.
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Resolution No.:
Introduced:
Adopted:
October 31, 2017
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember Floreen
Co-Sponsors: Councilmembers Katz, Rice and Berliner
SUBJECT:
Development Impact Tax Rates for Transportation and Public School
Improvements.
Background
1.
Under County Code §52-49(a), the County Council may, by resolution, after a public hearing
advertised at least 15 days in advance, increase or decrease the development impact tax rates
for transportation.
Under County Code §52-55(a), the County Council may, by resolution, after a public hearing
advertised at least 15 days in advance, increase or decr~ase the development impact tax rates
for public school improvements.
A public hearing was held on this resolution on December 5, 2017.
This amendment is necessary to update the impact tax rates necessary for transportation and
public school improvements.
Action
2.
3.
4.
The County Council for Montgomery County, Maryland approves the following
resolution:
1.
The development impact
tax
rates for transportation, effective July 1, 201 7
are:
Red Policy
Areas
(Metro
Stations)
Orange
Policy
Areas
Yellow
Policy
Areas
Green
Policy
Areas
Land Use
Residential Uses (per unit)
Single-family detached
Single-family attached
Multi-family, except high-rise
Multi-family high-rise
$7,072
$5,786
$4,499
$3,213
$17,677
$14,464
$11,247
$8,034
$22,097
$18,080
$14,059
$10,042
$22,097
$18,080
$14,059
$10,042
®
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Senior residential
Commercial Uses (per sfGFA)
Office
Industrial
Bioscience facility
Retail
Place of worship
Private elementary and
secondarv school
Hospital
Social service agencies
Charitable, philanthropic
institution
Other non-residential
$1,285
$6.45
$3.25
$0.00
$5.75
$0.00
$0.50
$0.00
$0.00
$0.00
$3.25
$3,214
$16.45
$8.05
$0.00
$14.45
$0.00
$1.30
$0.00
$0.00
$0.00
$8.05
$4,017
$20.20
$10.10
$0.00
$18.00
$0.00
$1.65
$0.00
$0.00
$0.00
$10.10
$4,017
$20.20
$10.10
$0.00
$18.00
$0.00
$1.65
$0.00
$0.00
$0.00
$10.10
2.
The development impact tax rates for public school improvements, effective
July 1, 2017 are:
Tax per dwelling unit
Dwelling type
Single-family detached
Single-family attached
Single-family surcharge
Farm tenant house
Multi-family, except high-rise
Multi-family high-rise
Senior residential
$23,062
$24,227
$2.00 per square foot of gross floor area that exceeds 3,500
square feet, to a maximum of 8,500 square feet
$23,062
$19,937
$6,791
$0
This is a correct copy of Council action.
Megan Davey Limarzi, Esq., Clerk of the Council
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NEW AND REVISED TRANSPORTATION IMPACT AND SCHOOL IMPACT TAXES
EFFECTIVE JULY 1, 2017
\
Questions concerning impact-tax collections may be directed to MC311 at 240-777-0311.
Please note that these
rates
are subject
to
change
by
the
Nlontgomery
County Council. The
rate of the tax or payment due is the rate in effect on the date the tax or payment is paid.
(Montgomery County Code
-
Section 52-42(1))
Applicants for building permits for residential development fees paid on and after July 1, 2017, will
be assessed the tax rates below:
Dwelling Type
Single-family detached
Single-family attached
Single Family house surcharge
School Impact Tax Per Dwelling Unit
$23,062
$24,227
$2 per square foot of gross floor area that exceeds 3,500 square
feet, to a maximum of 8,500 square feet)
$23,062
$19,937
$6,791
$0.00
Farm-Tenant House
Multifamily Low Rise
Multifamily High Rise
Multifamily senior
In addition to the School Impact Tax, applicants for building permits in a residential development
must also pay the applicable Transportation Impact Tax.
Building Type
Red Policy
Areas
(Metro
Stations)
Orange
Policy
Areas
Yellow
Policy
Areas
Green
Policy
Areas
Residential Uses
Single-Family detached (per dwelling unit)
Single-Family attached (per dwelling unit)
Multifamily Low Rise (per dwelling unit)
Multifamily High Rise (per dwelling unit)
Multifamily-senior (per dwelling unit)
Student-Built Houses (per dwelling unit)
Commercial Uses
Office (per sq.
ft.
GFA)
Industrial (per sq.
ft.
GFA)
Bioscience facility (per sq.
ft.
GFA)
Retail (per sq. ft. GFA)
Place of worship (per sq. ft. GFA)
Clergy House (per dwelling unit)
Private elementary and secondary school (per sq.
ft.
GFA)
Hospital (per sq.
ft.
GFA)
Charitable, Philanthropic Institution (per sq.
ft.
GFA)
Other nonresidential (per sq.
ft.
GFA)
$7,072
$5,786
$4,499
$3,213
$1,285
$0.00
$6.45
$3.25
$0.00
$5.75
$0.00
$0.00
$17,677
$14,464
$11,247
$8,034
$3,214
$0.00
$16.15
$8.05
$0.00
$14.45
$0.00
$0.00
$22,097
$18,080
$14,059
$10,042
$4,017
$0.00
$20.20
$10.10
$0.00
$18.00
$0.00
$0.00
$22,097
$18,080
$14,059
$10,042
$4,017
$0.00
$20.20
$10.10
$0.00
$18.00
$0.00
$0.00
$0.50
$0.00
$0.00
$3.25
$1.30
$0.00
$0.00
$8.05
$1.65
$0.00
$0.00
$10.10
$1.65
$0.00
$0.00
$10.10
Use this link to determine your policy area
http://montgomeryplanning.org/resources/subdivision-staging-policy-area-rnap/
Last Update 06/19/17
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/)
Testimony of Robert R Harris
Before the
Montgomery County Council
Bill No.
32-17 -
Taxation - Development Impact Tax for Senior Residential
December 5,
2017
Good afternoon. For the record I am Bob Harris of Lerch, Early & Brewer speaking in support
of this Bill. I want to thank Councilmember Floreen for sponsoring it and Councilmember Katz
for his co-sponsorship, as well as Council Staff for their efforts to help draft it. This legislation
is designed to correct an inequity in the current impact tax provisions related to senior housing.
By way of background, County impact taxes are designed to have new development pay part of
the cost of public infrastructure for transportation and schools related to that development. The
tax classifications and rates are intended to reflect the relative burden that new development
places on those systems, with higher impact uses paying higher rates, and lower impact uses like
senior housing paying lower rates. Some uses, such as hospitals, bio-science enterprises and
social service facilities do not pay any impact taxes because of the public benefits they provide.
Although senior housing of various sorts certainly provides public benefits to the County, we
accept the legislative conclusion that these facilities should pay some impact tax relative to the
impact they create. Unfortunately, within the last year, an unintended distinction has arisen
within the various types of senior housing, such that some senior housing has been required to
pay the same impact taxes as non-senior housing, despite the recognition that senior housing has
a limited impact on public infrastructure. More specifically, senior housing residential units with
kitchens are deemed "dwelling units" and pay a lower transportation impact tax and no school
impact tax. On the other hand, if the senior housing facility operates from a central dining area,
2776405.1
88483.001
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and the residential units do not have kitchens in them, they are not deemed to be dwelling units
under the Zoning Ordinance and recently have been required to pay a commercial impact tax rate
significantly higher than the senior rate. Similarly, senior villa units, as opposed to multifamily
units, have been required to pay school impact tax even when they are age restricted without
children.
Our discussions with the Department of Permitting Services led to this legislation and our
meetings with various County officials, including
Mr.
Katz and Ms. Floreen, resulted in a
general understanding that this is an unfair distinction that should be corrected. With their
assistance, Council Staff helped to develop the legislation now before you. On behalf of senior
housing providers in the county, we ask that you approve this legislation.
2776405.1
88483.001
(jJ
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Fiscal Impact Statement- Amended
BILL 32-17, Taxati on - Development Impact Tax for Transportation and Public School
Improvements - Definitions - Senior Residential
1. Bill Summa ry
Bill 32-17 replaces the multifamily-senior residential category used to impose the
development impact tax for transportation and public school improvements with a senior
residential category. This change addresses the transition from traditional multi-family
age-restricted senior housing to townhouses and villas.
2. An estimate of changes in County revenues and expenditures regardless of whether the
revenues or expenditures are assumed in the recommended or approved budget. Includes
source of information, assumptions, and methodologies used.
The Depart ment of Finance estimates a reduction in transportation impact taxes of
$233,00 per year and in school impact taxes of $960,000 per year for a total combined
reduction annuall y of $1,193,000. (See Economic Impact Statement: Bill 32-17).
Estimates are based on current permitting data.
If
the prevalence or size of age restricted
senior townho uses and villas increases, estimated transportation and school impact taxes
could be further reduced.
The Depart ment of Permitting Services (DPS) expects 200 work-hours will be needed to
reconfigure Hansen and eServices Apply Online IT systems. These costs will be absorbed
within current appropriations.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
impact taxes
transportation
school
total
FY18
FY19
FY20
FY21
FY22
FY23
$
(233,000)
$
(233,000)
$
(233,000)
$
(233,000)
$
(233,000)
$
(233,000)
$
(960,000)
$
(960,000)
$
(960,000)
$
(960,000)
$
{960,000)
$
(960,000)
$
(1,193,000)
$
(1,193,000)
$
(1,193,000)
$
{1,193,000)
$
{1,193,000)
$
(1,193,000)
negative six year total:
$
(7,158,000)
4.
An actuarial analysis through the entire amortization period for each bill/regulation that
would affect retiree pension or group insurance costs.
Not applicable.
5. Later actions that may affect future revenue and expenditures if the bill/regulation
authorizes future spending.
Not applicable.
®
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6. An estimate of the staff time needed to implement the bill/regulation.
DPS expects 200 work-hours will be needed to reconfigure Hansen and eServices Apply
Online IT systems.
7. An explanation of how the addition of new staff responsibilities would affect other duties.
The reconfiguration of Hansen and eServices Apply Online will require DPS to
reprioritize existing work.
8. An estimate of costs when an additional appropriation is needed.
No additional appropriation needed.
9.
A description of any variable that could affect revenue and cost estimates.
Not applicable.
10. Ranges ofrevenue or expenditures that are uncertain or difficult to project.
Not applicable.
11. If a Bill is likely to have no fiscal impact, why that is the case.
See #2.
12. Other fiscal impacts or comments.
Not applicable.
13. The following contributed to and concurred with this analysis:
Tom Laycock, Gail Lucas, and Barb Suter; Department of Permitting Services
Alison Dollar,
0MB
Date
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Jl~conomic Impact Statement
Bill 32-17, Taxation
-
Development Impact Tax for Transportation and Public
School Improvements
-
Definitions
-
Senior Residential
Background:
Bill 32-17 would replace the multifamily-senior residential category used to impose the
development impact tax for transportation and public school improvements with a senior
residential category. Traditional age-restricted senior housing in the County has been
multifamily units. Recently, the County has received applications for age-restricted senior
housing units comprised of townhouses or villas. Since these age-restricted senior townhouse
developments are also expected to add few students to the public school system, Bill 32-17
would apply the senior residential rate of $0 for the impact tax for public school improvements to
these developments.
The current classification of a residential care facility is based upon an assumption that the
staff needed to serve the residents would approximate the impact on the transportation system
that results from other non-residential properties, such as a nursing home. Bill 32-17 would
place this type of residential care facility in the new senior residential category that carries a
reduced transportation impact tax rate based upon analysis of the impact on the transpoiiation
system. The goal is to properly classify age-restricted senior housing units for the development
impact tax for both public school and transportation improvements.
1.
The sources of information, assumptions, and methodologies used.
Department of Finance, School and Transportation Impact Tax forecasting model
Department of Permitting Services, historical permit data
2. A description of any variable that could affect the economic impact estimates.
Variables that could affect the economic impact estimates for this bill include the number and
size of current and proposed age-restricted senior housing units comprised of townhouses and
villas. Currently, there are two known properties under development that land use attorneys have
submitted requests for the consideration of a proposed classification change. The Department of
Permitting Services' historical impact tax data estimates that a reasonable assumption for current
and additional properties over the four policy zones eligible for this bill would be four annually
with an average of ten townhouses or villas per property or 40 units in total. Assuming 40 units,
equally distributed across the four policy zones, are now eligible for lower transportation taxes
applied at the senior residential rate yields an approximate reduction in estimated transportation
impact taxes of $233,000 per year. The FY18 budget assumes $19.1 million in transportation
impact taxes. The transportation impact tax rate for multifamily senior dwellings is
approximately 70% less than the estimated rate for multifamily garden dwellings and 60% less
than the estimated rate for multifamily high-rise units in FYI 8.
As noted in the bill, the residential rate is $0 for senior developments for school impact taxes.
Assuming the same four properties (or 40 units) are now eligible annually for the lower senior
residential rate in the school impact tax policy zones yields an approximate reduction in
Page 1 of2
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Economic Impact Statement
Bill 32-17, Taxation-De velopment Impact Tax for Transportation and Public
School Improvements
-
Definitions
-
Senior Residential
estimated school impact taxes of $960,000 per year. The school impact tax rate for a single
family attached unit in FY18 is $24,227 versus $0 for multi-family senior dwellings. The FY18
budget assumes $46. 7 million in school impact taxes. If the prevalence or size of age restricted
senior townhouses and villas increases, estimated transportation and school impact taxes could
be further reduced.
3. The Bill's positive or negative effect, if any on employment, spending, savings,
investment, incomes, and property values in the County.
The bill is expected to have an annual impact on the combined estimate for transportation
and school impact taxes of$1,193,000 or 2% of an estimated $65.8 million total in FY18. This
estimate is anticipated to fluctuate marginally on an annual basis and depend on the number and
size of newly classified age-restricted senior housing townhouses and villas. Reduced impact
taxes directly affect the available spending for transportation capital improvement projects and
school infrastructure. The bill will not influence employment, savings, investment, incomes, and
property values in the County.
4.
If
a Bill is likely to have no economic impact, why is that the case?
See number 2.
5. The following contributed to or concurred with this analysis:
David Platt, Dennis IIetman, and Robert Hagedoorn, Finance.
Alexandre
A.
EspoBa,Dire ctor
Department of Finance
I
I
I/
2/':k!f
Date
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Agenda Items 5B
&
6
February 6, 2018
Action
MEMORANDUM
February 2, 2018
TO:
FROM:
County Council
Robert H. Drummer, Senior Legislative Attom~~--
Glenn Orlin, Deputy Council Administrator
6-c
SUBJECT:
Action:
Expedited Bill 32-17, Taxation - Development Impact Tax for
Transportation and Public School Improvements - Definitions - Senior Residential and
Resolution to implement Expedited Bill 32-17
Government Operations and Fiscal Policy Committee recommendation 2-0, Council
President Riemer absent):
enact the Bill and adopt the Resolution as introduced.
Expedited Bill 32-17, Taxation - Development Impact Tax for Transportation and Public
School Improvements - Definitions - Senior Residential, sponsored by Lead Sponsor
Councilmember Floreen and Co-Sponsor Councilmembers Katz, Rice, and Berliner, was
introduced on October 31, 2017. A public hearing on both the Bill and the Resolution to implement
the Bill was held on December 5 and a Government Operations and Fiscal Policy Committee
worksession was held on January 18.
Bill 32-17 would replace the multifamily-senior residential category used to impose the
development impact
tax
for transportation and public school improvements with a senior
residential category.
Background
Development impact taxes are designed to require an applicant to construct a new
development to pay a portion of the County's cost to build transportation improvements and public
school improvements needed to support the new development. The Council approved the initial
impact fee law in 1986, and at the time, applied it to developments in the fastest areas of growth in
the County (Germantown, Fairland, White Oak, and Cloverly). After the Court of Appeals found in
1990 that the County did not have authority to impose the impact fee it had enacted,
1
the Council
enacted Expedited Bill 33-90, which converted the impact fee to an impact tax.
In
2001, Bill 47-
01 (effective
July
2002) established the transportation impact
tax
countywide.
The Council approved a countywide school impact
tax
in 2003 (effective 2004) which applied
only to residential development. Rates were set for single-family-detached houses, townhouses, low-
1
Eastern Diversified Properties, Inc.
v.
Montgomery County,
39 Md. 45, 570 A.2d 850 (1990).
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rise apartments (up to 4 stories) and high-rise apartments. The rates for single-family-detached houses
and townhouses also included a surcharge for larger homes. Multifamily-senior residential has a $0
school impact tax rate because it is assumed that these housing units would not add many students to
the public school system.
Bill 32-17 would make 2 changes to the impact tax charged to age-restricted senior housing.
First, the Bill would replace the multifamily-senior residential category with a generic senior
residential category. Traditional age-restricted senior housing in the County has been multifamily
units. Recently, the County has received applications for age-restricted senior housing units
comprised of townhouses or villas. Since these age-restricted senior townhouse developments are
also expected to add few students to the public school system, Bill 32-17 would apply the senior
residential rate of $0 for the impact tax for public school improvements to these developments. Bill
32-17 would apply this senior residential tax rate for school impact taxes paid on or after June 22,
2017.
Bill 32-17 would also define the senior residential category for the impact tax for
transportation improvements. The new definition would include "a residential care facility as defined
in Section 59.3.3.2.E used solely for housing seniors or persons with a disability." Under current law,
a residential care facility that has a central kitchen for providing meals to residents and does not
include a kitchen in each housing unit is charged the higher "other non-residential" transportation
impact tax rate instead of the lower multifamily-senior transportation impact tax rate. The current
classification of this type of residential care facility is based upon an assumption that the staff needed
to serve the residents would approximate the impact on the transportation system that results from
other non-residential properties, such as a nursing home. Bill 32-17 would place this type of
residential care facility in the new senior residential category that carries a reduced transportation
impact tax rate.
Resolution to Implement Expedited Bill 32-17 for senior residential units
The Resolution to Implement Expedited Bill 32-17 for senior residential units was
introduced on October 31. The Council held a public hearing on this resolution along with Bill
32-17 on December 5.
Bill 37-16 required the Council to set the impact tax rates by resolution. Therefore, Bill
32-17 was introduced with a resolution that would implement the changes to the categories used
for the development impact tax rate schedules. The attached resolution reflects the changes
proposed by Expedited Bill 32-17 and updates the rates that have been in effect since July 1, 2017.
See ©5-6. If the Council enacts the Bill, this resolution is necessary to implement it.
Public Hearing
Both witnesses at the public hearing supported the Bill. Jody Kline, an attorney with
Miller, Miller, and Canby, representing Friends House and Columbia/Wegman Acquisitions,
supported the creation of a senior residential category for both the school impact tax and the
transportation impact tax.
Mr.
Kline submitted a copy of the development tax rate schedule with
the current multifamily-senior tax rate highlighted. See ©7. Robert Harris, an attorney with Lerch,
Early & Brewer, also supported the Bill as a correction for an inequity in the allocation of the
development impact tax rates for certain senior residential projects. See ©8-9.
2
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GO Committee Worksession
Councilmember Nancy Floreen attended the session in addition to 2 members of the GO
Committee (Council President Riemer was absent). Robert Drummer, Senior Legislative Attorney
and Glenn Orlin, Deputy Council Administrator represented the Council staff. The Committee
discussed the Bill's replacement of the current multifamily senior residential category with a new
senior residential category for impact tax. The Committee also discussed the placement of a senior
residential care facility with a central kitchen in this category due to the Planning Board staffs
estimate of lower trips generated by this type of facility. Finally, the Committee discussed the
fiscal impact of the Bill and the Resolution to Implement the Bill. The Committee recommended
(2-0, Council President Riemer absent) approval of the Bill and the Resolution as introduced.
Issues
1.
What is the fiscal and economic impact of the Bill?
0MB estimated that there would be an average of 4 new developments each year with 10
units each eligible for a lower transportation impact tax rate under the senior residential category.
0MB estimated that these 4 new developments with 10 units each would reduce our transportation
impact tax revenue by $233,000 per year. 0MB also estimated that DPS would need 200 work-
hours to reconfigure Hansen and eServices Apply Online IT systems, but that these costs can be
absorbed within the current appropriation. See
©
10-13.
0MB estimated that, based upon the same estimated number of
40
new senior residential
units each year, the school impact tax would be reduced by $960,000 each year. Therefore, the
total fiscal impact of the Bill would be $1,193,000 per year.
2. Should a senior age-restricted townhouse, villa, or single-family house development pay
a school impact tax?
The development impact
tax
for public school construction is designed to require the
applicant for a new development to pay a portion of the County 's cost of public school
improvements necessary to support the new development. The current rate for the school impact
tax
for a senior multi-family development is $0 based upon the assumption that the occupants
of
age-restricted senior housing do not add children to the local public school.2 However, an age-
restricted senior housing development consisting of townhouses, villas, or single-family houses is
charged a school impact tax rate equal to a similar development that is not age-restricted.
Until recently, almost all senior age-restricted developments in the County were multi-
family developments.
3
There are now at least 2 senior age-restricted developments in the County 's
development pipeline that include townhouses or villas. These new developments are also
expected to have little to no impact on the public schools. Bill 32-17 would remedy this inequity
Although a senior age-restricted development could add some students to the public school system because
a senior
resident could have a child or grandchild living in the
unit,
the actual number of students added in these
developments
is insignificant.
3
Leisure World development includes townhouses and villas, but the development predates the impleme
ntation of the
development impact tax for public school improvements.
2
3
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by replacing the current multi-family senior residential category with a senior residential category
that includes senior age-restricted townhouse, villa, or single-family developments.
Committee
recommendation:
approve the new senior residential category.
3. Should the new senior residential category include a residential care facility with a central
kitchen for the residents?
The development impact tax for transportation improvements is designed to require the
applicant for a new development to pay a portion of the County's cost of providing transportation
improvements necessary to serve the new development. The transportation impact tax is based
upon an estimate of the trips generated by that type of development. Under current law, the
transportation impact tax for an independent living residential care facility with a kitchen in each
unit is less than the transportation impact tax for a residential care facility with a central kitchen.
The difference is based upon an expectation that the extra staff necessary for a central kitchen
would add to the trips generated by the facility similar to a nursing home.
After receiving complaints from 2 applicants for these developments, Council staff asked
the Planning Board staff to determine if the current trip generation estimate for a residential care
facility with a central kitchen remains accurate. Eric Graye of the Montgomery County Planning
Department Transportation staff provided the following response in an email:
We agree that a residential care facility that has a central kitchen for providing meals to residents and
does not include a kitchen in each housing unit has a travel impact that is similar to independent senior-
restricted dwelling units. Many residents at facilities with a central kitchen tend to eat their meals at the
centralized kitchen (assuming this amenity is provided). Therefore, typically the staff (not the residents)
generate AM and PM peak trips. That said, as shown below there is a slight difference between
"typical" senior residential facilities (with centralized dining) and other types of senior residences where
some of the residents are still working full or part-time.
According to the 9
th
Edition of the ITE Trip Generation Manual, the six land use categories for "senior
residence" have varying trip generation rates, from AM=0.06 to 0.22
&
PM=0.17 to 0.27:
Senior Residential developments
lacking
centralized dining facilities
AM=0.22 trips/DU
&
PM=0.27 trips/DU
ITE Land Code 251 Senior Adult Housing Detached
AM=0.20 trips/DU & PM=0.25 trips/DU
ITE Land Code 252 Senior Adult Housing Attached
Average= AM=0.21 trips/DU
&
PM=0.26 trips/DU
Senior Residential developments
providing
centralized dining facilities
AM=0.06 trips/DU & PM=0.17 trips/DU
ITE Land Code 253 Congregate Care Facility
AM=0.14 trips/DU & PM=0.22 trips/DU
ITE Land Code 254 Assisted Living
ITE Land Code 255 Continuing Care Retirement Facility AM=0.15 trips/DU
&
PM=0.20 trips/DU
AM=0.17 trips/DU
&
PM=0.22 trips/DU
ITE Land Code 620 Nursing Home
Average= AM=0.13 trips/DU
&
PM=0.20 trips/DU
The difference in travel impact is that senior residential developments
providing
centralized dining
facilities have a lower trip generation rate per unit than senior residential developments
lacking
centralized dining facilities. Therefore, Bill 32-17 should reflect this difference in site-generated traffic
and not require senior residential care facilities with a centralized dining facility to be charged the higher
"non-residential" transportation impact tax rate if they are not generating as much traffic as the
4
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multifamily senior residential buildings (with kitchens in each housing unit) that pay lower
transporta tion impact tax rates.
Mont. County Planning Dep't transporta tion staff
Ed Axler, Eric Graye & Laura Hodgson
These trip generation estimates support taxing a residentia l care facility with a central kitchen the
same transporta tion impact tax rate as senior residentia l developm ent with a kitchen in each unit.
Committee recommendation:
approve the new senior residentia l rate as defined in the Bill.
4. Should the Bill be retroactive
to
June 22, 2017?
The Bill, as introduced , would take effect on June 22, 2017. This retroactive effective date
was added to the Bill at the request of the County Attorney' s office to resolve an ongoing Tax
Court appeal from an applicant who paid a school impact tax for a senior residential developm ent
that included townhouse s or villas on June 22, 2017 and on July 13, 2017. The total amount of the
refund would be $137,556. Although the County has a reasonabl e defense based upon the current
tax rates, the same argument that supports the change in the law described in Issue 2 would also
support making the change retroactive to make refunds in this case.
DPS would need to make some changes to their workflow and informatio n technolog y
system to accommod ate the revised developm ent impact tax category and implemen t this Bill.
Although DPS cannot change the system immediate ly after the Bill is enacted, Ms. Jones told
Council staff that, due to the limited number of applicatio ns for senior residential developm ents
expected, DPS can manually implemen t the changes until the system can be updated.
Committee recommendation:
enact the Bill with the retroactive effective date, and
continue to have it apply to payments made on or after June 22, 2017.
This packet contains:
Expedited Bill 32-1 7
Legislativ e Request Report
Resolutio n to Implemen t Bill 32-17
Public Hearing Testimony
Jody Kline
Robert Harris
Fiscal and Economic Impact Statement - Amended
F:\LAW\BILLS\1732 Development Impact Tax For Trans. And School Improvement\Action Memo.Docx
Circle#
1
4
5
7
8
10
5
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Expedited Bill No. =32=---' -17~-----
Concerning: Taxation - Development
Impact Tax for Transportation and
Public School Improvements -
Definitions - Senior Residential
Revised: December 7, 2017 Draft NoJQ_
Introduced:
October 31, 2017
Expires:
May 1, 2019
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: _N_on_e_ _ _ _ _ __
Ch. _ _ , Laws of Mont. Co. _ _ __
COUNT Y COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council.member Floreen
Co-Sponsors: Councilmembers Katz, Rice, and Berliner
AN EXPEDITED ACT
to:
(1)
replace the multifamily-senior residential category used to impose the development
impact tax for transportation and public school improvements with a senior residential
category;
(2)
define senior residential; and
(3)
generally amend the law governing the categories of residential dwelling units used
to impose the development impact tax for transportation and public school
improvements.
By amending
Montgom ery County Code
Chapter 52, Taxation
Section 52-39
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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EXPEDITED BILL NO. 32-17
1
2
Sec.
1.
Section 52-39 is amended as follows:
52-39. Definitions.
In this Article the following terms have the following meanings:
*
3
4
5
*
*
Property owner
means any person, group of persons, firm, corporation, or other
entity with a proprietary interest in the land on which a building permit has been
requested.
6
7
8
9
Residential
means the use of a building as a dwelling unit.
(
1)
Single-family detached residential
includes detached single-family
dwelling units.
10
11
12
13
14
15
16
17
18
19
(2)
Single-family attached residential
includes townhouses, duplexes
and other attached single-family dwelling units.
(3)
Multifamily residential
includes:
(A)
(B)
(C)
garden apartments;
mid-rise and high-rise dwelling unit structures; and
mobile homes.
( 4)
[Multifamily-senior] Senior residential
means:
(A)
[multifamily housing and related facilities for elderly or
handicapped persons, as defined in Section 59-1.4.2, with
occupancy restricted as provided in Section
59-3.3.2.C]
fl:
residential care facility as defined in Section
59 .3 .3 .2.E
used
solely for housing seniors or persons with
fl:
disability~
20
21
22
23
24
25
(B)
[multifamily housing] dwelling units located in the age-
restricted section of a planned retirement community, as
defined in Section
[59-8.3.5] 59.8.3.5;
[and]
26
27
(C)
[a domiciliary care home, as defined in Section
59-1.4.2
and
subject to Section
59-3.3.2.E,
which consists of separate
f:\law\bills\1732~1opment impact tax for trans. and school improvement\bill 1O.docx
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EXPEDITED BILL
No. 32-17
28
assisted living units] an independent living facility for
seniors or persons with
59.3.3.2.C; and
(D)
any household living unit constructed under Section
59.3.3.1 that is restricted by a covenant running with the
land for housing persons who are 55 years of age or older.
( 5)
High-rise residential
includes any dwelling unit located in a
multifamily residential or mixed use building that is taller than 4
stories, and any I -bedroom garden apartment.
Use and occupancy permit
means a use and occupancy permit issued by the
Department of Permitting Services under Chapter 8.
*
~
29
30
31
32
33
34
35
36
disability as defined in Section
37
38
39
40
41
*
*
Sec. 2. Effective Date.
The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on June 22, 2017. The
amendments in Section I must apply to development impact tax for public school
improvements paid on or after June 22, 2017. The development impact tax rate for
public school improvements imposed for a senior residential development, as defined
in Section 1, payable between June 22, 2017 and July 1, 2017, must be $0.
Approved:
42
43
44
45
46
47
48
Hans D. Riemer, President, County Council
49
Date
Approved:
50
Isiah Leggett, County Executive
Date
t\law\bills\1731Ulopment impact tax for trans. and school improvement\bill 1O.docx
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LEGISLATIVE REQUEST REPORT
Expedited Bill 32-17
Taxation
-
Development Impact Tax for Transportation and Public School Improvements
-
Definitions
-
Senior Residential
DESCRIPTION:
Bill 32-17 would replace the multifamily-senior residential category
used to impose the development impact tax for transportation and
public school improvements with a senior residential category.
Traditional age-restricted senior housing in the County has been
multifamily units. Recently, the County has received applications for
age-restricted senior housing units that is a townhouse development.
Since these age-restricted senior townhouse developments are also
expected to add few students to the public school system.
The current classification of a residential care facility is based upon an
assumption that the staff needed to serve the residents would
approximate the impact on the transportation system that results from
other non-residential properties, such as a nursing home. Bill 32-17
would place this type of residential care facility in the new senior
residential category that carries a reduced transportation impact
tax
rate
based upon analysis of the impact on the transportation system.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
The goal is to properly classify age-restricted senior housing units for
the development impact tax for both public school and transportation
improvements.
Planning Board, County Attorney, Permitting Services
To be requested.
To be requested.
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
To be requested.
To be researched.
Robert H. Drummer, Senior Legislative Attorney
To be researched.
None.
f:\law\bills\1732 development impact tax for trans. and school improvement\lrr.docx
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Resolution No.:
Introduced:
Adopted:
October 31, 2017
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember Floreen
Co-Sponsors: Councilmembers Katz, Rice and Berliner
SUBJECT:
Development Impact Tax Rates for Transportation and Public School
Improvements.
Background
1.
Under County Code §52-49(a), the County Council may, by resolution, after a public hearing
advertised at least 15 days in advance, increase or decrease the development impact tax rates
for transportation.
Under County Code §52-55(a), the County Council may, by resolution, after a public hearing
advertised at least 15 days in advance, increase or decr~ase the development impact tax rates
for public school improvements.
A public hearing was held on this resolution on December 5, 2017.
This amendment is necessary to update the impact tax rates necessary for transportation and
public school improvements.
Action
2.
3.
4.
The County Council for Montgomery County, Maryland approves the following
resolution:
1.
The development impact
tax
rates for transportation, effective July 1, 201 7
are:
Red Policy
Areas
(Metro
Stations)
Orange
Policy
Areas
Yellow
Policy
Areas
Green
Policy
Areas
Land Use
Residential Uses (per unit)
Single-family detached
Single-family attached
Multi-family, except high-rise
Multi-family high-rise
$7,072
$5,786
$4,499
$3,213
$17,677
$14,464
$11,247
$8,034
$22,097
$18,080
$14,059
$10,042
$22,097
$18,080
$14,059
$10,042
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Senior residential
Commercial Uses (per sfGFA)
Office
Industrial
Bioscience facility
Retail
Place of worship
Private elementary and
secondarv school
Hospital
Social service agencies
Charitable, philanthropic
institution
Other non-residential
$1,285
$6.45
$3.25
$0.00
$5.75
$0.00
$0.50
$0.00
$0.00
$0.00
$3.25
$3,214
$16.45
$8.05
$0.00
$14.45
$0.00
$1.30
$0.00
$0.00
$0.00
$8.05
$4,017
$20.20
$10.10
$0.00
$18.00
$0.00
$1.65
$0.00
$0.00
$0.00
$10.10
$4,017
$20.20
$10.10
$0.00
$18.00
$0.00
$1.65
$0.00
$0.00
$0.00
$10.10
2.
The development impact tax rates for public school improvements, effective
July 1, 2017 are:
Tax per dwelling unit
Dwelling type
Single-family detached
Single-family attached
Single-family surcharge
Farm tenant house
Multi-family, except high-rise
Multi-family high-rise
Senior residential
$23,062
$24,227
$2.00 per square foot of gross floor area that exceeds 3,500
square feet, to a maximum of 8,500 square feet
$23,062
$19,937
$6,791
$0
This is a correct copy of Council action.
Megan Davey Limarzi, Esq., Clerk of the Council
F:\LAW\BILLS\1732 Development Impact Tax For Trans. And School Improvement\Resolution To Implement Bill 32-17.Docx
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NEW AND REVISED TRANSPORTATION IMPACT AND SCHOOL IMPACT TAXES
EFFECTIVE JULY 1, 2017
\
Questions concerning impact-tax collections may be directed to MC311 at 240-777-0311.
Please note that these
rates
are subject
to
change
by
the
Nlontgomery
County Council. The
rate of the tax or payment due is the rate in effect on the date the tax or payment is paid.
(Montgomery County Code
-
Section 52-42(1))
Applicants for building permits for residential development fees paid on and after July 1, 2017, will
be assessed the tax rates below:
Dwelling Type
Single-family detached
Single-family attached
Single Family house surcharge
School Impact Tax Per Dwelling Unit
$23,062
$24,227
$2 per square foot of gross floor area that exceeds 3,500 square
feet, to a maximum of 8,500 square feet)
$23,062
$19,937
$6,791
$0.00
Farm-Tenant House
Multifamily Low Rise
Multifamily High Rise
Multifamily senior
In addition to the School Impact Tax, applicants for building permits in a residential development
must also pay the applicable Transportation Impact Tax.
Building Type
Red Policy
Areas
(Metro
Stations)
Orange
Policy
Areas
Yellow
Policy
Areas
Green
Policy
Areas
Residential Uses
Single-Family detached (per dwelling unit)
Single-Family attached (per dwelling unit)
Multifamily Low Rise (per dwelling unit)
Multifamily High Rise (per dwelling unit)
Multifamily-senior (per dwelling unit)
Student-Built Houses (per dwelling unit)
Commercial Uses
Office (per sq.
ft.
GFA)
Industrial (per sq.
ft.
GFA)
Bioscience facility (per sq.
ft.
GFA)
Retail (per sq. ft. GFA)
Place of worship (per sq. ft. GFA)
Clergy House (per dwelling unit)
Private elementary and secondary school (per sq.
ft.
GFA)
Hospital (per sq.
ft.
GFA)
Charitable, Philanthropic Institution (per sq.
ft.
GFA)
Other nonresidential (per sq.
ft.
GFA)
$7,072
$5,786
$4,499
$3,213
$1,285
$0.00
$6.45
$3.25
$0.00
$5.75
$0.00
$0.00
$17,677
$14,464
$11,247
$8,034
$3,214
$0.00
$16.15
$8.05
$0.00
$14.45
$0.00
$0.00
$22,097
$18,080
$14,059
$10,042
$4,017
$0.00
$20.20
$10.10
$0.00
$18.00
$0.00
$0.00
$22,097
$18,080
$14,059
$10,042
$4,017
$0.00
$20.20
$10.10
$0.00
$18.00
$0.00
$0.00
$0.50
$0.00
$0.00
$3.25
$1.30
$0.00
$0.00
$8.05
$1.65
$0.00
$0.00
$10.10
$1.65
$0.00
$0.00
$10.10
Use this link to determine your policy area
http://montgomeryplanning.org/resources/subdivision-staging-policy-area-rnap/
Last Update 06/19/17
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/)
Testimony of Robert R Harris
Before the
Montgomery County Council
Bill No.
32-17 -
Taxation - Development Impact Tax for Senior Residential
December 5,
2017
Good afternoon. For the record I am Bob Harris of Lerch, Early & Brewer speaking in support
of this Bill. I want to thank Councilmember Floreen for sponsoring it and Councilmember Katz
for his co-sponsorship, as well as Council Staff for their efforts to help draft it. This legislation
is designed to correct an inequity in the current impact tax provisions related to senior housing.
By way of background, County impact taxes are designed to have new development pay part of
the cost of public infrastructure for transportation and schools related to that development. The
tax classifications and rates are intended to reflect the relative burden that new development
places on those systems, with higher impact uses paying higher rates, and lower impact uses like
senior housing paying lower rates. Some uses, such as hospitals, bio-science enterprises and
social service facilities do not pay any impact taxes because of the public benefits they provide.
Although senior housing of various sorts certainly provides public benefits to the County, we
accept the legislative conclusion that these facilities should pay some impact tax relative to the
impact they create. Unfortunately, within the last year, an unintended distinction has arisen
within the various types of senior housing, such that some senior housing has been required to
pay the same impact taxes as non-senior housing, despite the recognition that senior housing has
a limited impact on public infrastructure. More specifically, senior housing residential units with
kitchens are deemed "dwelling units" and pay a lower transportation impact tax and no school
impact tax. On the other hand, if the senior housing facility operates from a central dining area,
2776405.1
88483.001
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and the residential units do not have kitchens in them, they are not deemed to be dwelling units
under the Zoning Ordinance and recently have been required to pay a commercial impact tax rate
significantly higher than the senior rate. Similarly, senior villa units, as opposed to multifamily
units, have been required to pay school impact tax even when they are age restricted without
children.
Our discussions with the Department of Permitting Services led to this legislation and our
meetings with various County officials, including
Mr.
Katz and Ms. Floreen, resulted in a
general understanding that this is an unfair distinction that should be corrected. With their
assistance, Council Staff helped to develop the legislation now before you. On behalf of senior
housing providers in the county, we ask that you approve this legislation.
2776405.1
88483.001
(jJ
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Fiscal Impact Statement- Amended
BILL 32-17, Taxati on - Development Impact Tax for Transportation and Public School
Improvements - Definitions - Senior Residential
1. Bill Summa ry
Bill 32-17 replaces the multifamily-senior residential category used to impose the
development impact tax for transportation and public school improvements with a senior
residential category. This change addresses the transition from traditional multi-family
age-restricted senior housing to townhouses and villas.
2. An estimate of changes in County revenues and expenditures regardless of whether the
revenues or expenditures are assumed in the recommended or approved budget. Includes
source of information, assumptions, and methodologies used.
The Depart ment of Finance estimates a reduction in transportation impact taxes of
$233,00 per year and in school impact taxes of $960,000 per year for a total combined
reduction annuall y of $1,193,000. (See Economic Impact Statement: Bill 32-17).
Estimates are based on current permitting data.
If
the prevalence or size of age restricted
senior townho uses and villas increases, estimated transportation and school impact taxes
could be further reduced.
The Depart ment of Permitting Services (DPS) expects 200 work-hours will be needed to
reconfigure Hansen and eServices Apply Online IT systems. These costs will be absorbed
within current appropriations.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
impact taxes
transportation
school
total
FY18
FY19
FY20
FY21
FY22
FY23
$
(233,000)
$
(233,000)
$
(233,000)
$
(233,000)
$
(233,000)
$
(233,000)
$
(960,000)
$
(960,000)
$
(960,000)
$
(960,000)
$
{960,000)
$
(960,000)
$
(1,193,000)
$
(1,193,000)
$
(1,193,000)
$
{1,193,000)
$
{1,193,000)
$
(1,193,000)
negative six year total:
$
(7,158,000)
4.
An actuarial analysis through the entire amortization period for each bill/regulation that
would affect retiree pension or group insurance costs.
Not applicable.
5. Later actions that may affect future revenue and expenditures if the bill/regulation
authorizes future spending.
Not applicable.
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6. An estimate of the staff time needed to implement the bill/regulation.
DPS expects 200 work-hours will be needed to reconfigure Hansen and eServices Apply
Online IT systems.
7. An explanation of how the addition of new staff responsibilities would affect other duties.
The reconfiguration of Hansen and eServices Apply Online will require DPS to
reprioritize existing work.
8. An estimate of costs when an additional appropriation is needed.
No additional appropriation needed.
9.
A description of any variable that could affect revenue and cost estimates.
Not applicable.
10. Ranges ofrevenue or expenditures that are uncertain or difficult to project.
Not applicable.
11. If a Bill is likely to have no fiscal impact, why that is the case.
See #2.
12. Other fiscal impacts or comments.
Not applicable.
13. The following contributed to and concurred with this analysis:
Tom Laycock, Gail Lucas, and Barb Suter; Department of Permitting Services
Alison Dollar,
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Jl~conomic Impact Statement
Bill 32-17, Taxation
-
Development Impact Tax for Transportation and Public
School Improvements
-
Definitions
-
Senior Residential
Background:
Bill 32-17 would replace the multifamily-senior residential category used to impose the
development impact tax for transportation and public school improvements with a senior
residential category. Traditional age-restricted senior housing in the County has been
multifamily units. Recently, the County has received applications for age-restricted senior
housing units comprised of townhouses or villas. Since these age-restricted senior townhouse
developments are also expected to add few students to the public school system, Bill 32-17
would apply the senior residential rate of $0 for the impact tax for public school improvements to
these developments.
The current classification of a residential care facility is based upon an assumption that the
staff needed to serve the residents would approximate the impact on the transportation system
that results from other non-residential properties, such as a nursing home. Bill 32-17 would
place this type of residential care facility in the new senior residential category that carries a
reduced transportation impact tax rate based upon analysis of the impact on the transpoiiation
system. The goal is to properly classify age-restricted senior housing units for the development
impact tax for both public school and transportation improvements.
1.
The sources of information, assumptions, and methodologies used.
Department of Finance, School and Transportation Impact Tax forecasting model
Department of Permitting Services, historical permit data
2. A description of any variable that could affect the economic impact estimates.
Variables that could affect the economic impact estimates for this bill include the number and
size of current and proposed age-restricted senior housing units comprised of townhouses and
villas. Currently, there are two known properties under development that land use attorneys have
submitted requests for the consideration of a proposed classification change. The Department of
Permitting Services' historical impact tax data estimates that a reasonable assumption for current
and additional properties over the four policy zones eligible for this bill would be four annually
with an average of ten townhouses or villas per property or 40 units in total. Assuming 40 units,
equally distributed across the four policy zones, are now eligible for lower transportation taxes
applied at the senior residential rate yields an approximate reduction in estimated transportation
impact taxes of $233,000 per year. The FY18 budget assumes $19.1 million in transportation
impact taxes. The transportation impact tax rate for multifamily senior dwellings is
approximately 70% less than the estimated rate for multifamily garden dwellings and 60% less
than the estimated rate for multifamily high-rise units in FYI 8.
As noted in the bill, the residential rate is $0 for senior developments for school impact taxes.
Assuming the same four properties (or 40 units) are now eligible annually for the lower senior
residential rate in the school impact tax policy zones yields an approximate reduction in
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Economic Impact Statement
Bill 32-17, Taxation-De velopment Impact Tax for Transportation and Public
School Improvements
-
Definitions
-
Senior Residential
estimated school impact taxes of $960,000 per year. The school impact tax rate for a single
family attached unit in FY18 is $24,227 versus $0 for multi-family senior dwellings. The FY18
budget assumes $46. 7 million in school impact taxes. If the prevalence or size of age restricted
senior townhouses and villas increases, estimated transportation and school impact taxes could
be further reduced.
3. The Bill's positive or negative effect, if any on employment, spending, savings,
investment, incomes, and property values in the County.
The bill is expected to have an annual impact on the combined estimate for transportation
and school impact taxes of$1,193,000 or 2% of an estimated $65.8 million total in FY18. This
estimate is anticipated to fluctuate marginally on an annual basis and depend on the number and
size of newly classified age-restricted senior housing townhouses and villas. Reduced impact
taxes directly affect the available spending for transportation capital improvement projects and
school infrastructure. The bill will not influence employment, savings, investment, incomes, and
property values in the County.
4.
If
a Bill is likely to have no economic impact, why is that the case?
See number 2.
5. The following contributed to or concurred with this analysis:
David Platt, Dennis IIetman, and Robert Hagedoorn, Finance.
Alexandre
A.
EspoBa,Dire ctor
Department of Finance
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2/':k!f
Date
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