Montgomery County has appealed a decision by the state’s tax court that grants thousands of dollars in tax credits for stormwater runoff improvements to more than 20 property owners near Gaithersburg.
The county’s Water Quality Protection Charge, known by many as a “rain tax,” is assessed on every property countywide, to pay for projects to mitigate stormwater runoff. The charge is calculated by the type of property, and how much impervious surface area is on a property, including building area, patio area, driveway surface area and other similar surfaces.
A typical property owner has about 2,406 square feet of impervious area, or one “Equivalent Residential Unit,” and pays $107.60 annually, according to the county website.
Property owners can get a credit for the charge if they do improvement projects on their own or have measures in place, like stormwater retention ponds, culverts, rain gardens, rain barrels and other improvements.
Montgomery County was ordered in June to pay credits for 80% of the water quality protection charge to the Lindbergh Park Owners Association in 2015, and 100% of the charge in 2016 and 2017.
Since 2016, Devin Battley, president of the Lindbergh Park Owners Association, off Woodfield Road, has been involved in a legal battle with the county over the tax. The most recent decision in favor of Battley and the business park association occurred in the state’s tax court, but the fight has involved multiple courts and county divisions or agencies:
- Battley and the Lindbergh Park Owners Association appealed to the county’s Department of Environmental Protection for the credits, but were denied in May 2016.
- The county’s Board of Appeals upheld that decision in October 2016. Battley then appealed to the county’s Circuit Court.
- Circuit Court Judge Ronald B. Rubin ruled in April 2017 that the county “made an erroneous conclusion of law” by stating the stormwater management system was only the three stormwater retention ponds at Lindbergh Park. Because the business park had those ponds and other improvements that were part of an overall system, the credits must be granted to the business owners, Rubin wrote.
- The county appealed the Circuit Court’s decision in 2017 to the Court of Special Appeals, the second highest court in Maryland. Then, during this appeal, the county changed the appeals process through legislation in 2018, so that anybody who appealed water quality protection act charges needed to appeal to the county’s director of finance, then the state’s tax court, to get relief. Previously, the appeals process for property owners went through the county’s Department of Environmental Protection, then the county’s Board of Appeals, the county’s Circuit Court and state appellate courts.
- The Court of Special Appeals ruled in favor of the county in July 2018, stating Battley and the Lindbergh Park Owners Association did not use all of their administrative remedies, meaning appeals to the county’s director of finance and state tax court.
- The county’s director of finance upheld the Department of Environmental Protection’s original decision from May 2016.
- The state tax court reversed that decision last month, after hearing the case last September. The county appealed the tax court’s decision last week to the county’s Circuit Court.
Battley and one of his attorneys, Maria Olsen of The Pels Law Firm in Bethesda, said in interviews Friday that three stormwater retention ponds — and the piping and grading of impervious surfaces — mean business owners at Lindbergh Park should be getting a credit for the county’s “rain tax.”
But the county attorney’s office argued in its recent appeal to the county’s circuit court that it would be improper to pay credits to the Lindbergh Park Owners Association during the appeals process.
If an appellate court rules in favor of the county after it pays the tax credits, county officials argue that they would be in an “untenable position” of trying to collect back the “rain tax,” for 2016 and 2017, which business owners might have spent, according to court documents.
None of the county attorneys assigned to the case responded to an email request for comment on Friday. Scott Peterson, manager of media relations and communications strategies in County Executive Marc Elrich’s office, said the county couldn’t comment on ongoing litigation.
Olsen called the county’s decision to appeal the tax court’s decision to the circuit court “ludicrous,” as that court had already ruled in Lindbergh Park Owners Association’s favor in April 2017.
Olsen added that the county changing the appeals process in 2018, while the case was being litigated, is something she and her colleagues at Pels haven’t seen in more than three decades of legal practice.
She said many other county residents don’t know they could be receiving credits for the rain tax, and would appeal if they realized it.
“I believe the county thinks the floodgate of appeals [is] going to open if they lose this case,” Olsen said.
Battley said the “rain tax” costs him and property owners various amounts each year, depending on the size of the property. But winning the case would save each business owner thousands of dollars annually, he said.
He said he’s optimistic about future proceedings, given that the tax court’s judge cited the circuit court’s ruling from 2017.
According to the court transcript from September 2020, tax court Judge Walter C. Martz told Associate County Attorney Walter Wilson he agreed with Circuit Court Judge Ronald B. Rubin’s assessment in 2017 that the three stormwater retention ponds are part of a system that serves the entire business park.
That 2017 ruling stated that since stormwater ponds at Lindbergh Park serve all businesses in the park, they all are eligible for water quality protection charge credits — even if the ponds are only on certain properties.
Battley said of the county’s most recent appeal: “My point of view is it’s kind of like committing legal suicide.”
Steve Bohnel can be reached at steve.bohnel@moco360.media
