Montgomery County is set to rework the law behind its water quality protection charge, derisively referred to by opponents as the “rain tax,” after a Germantown-based developer successfully challenged the fee earlier this year in county Circuit Court.
Last week, County Executive Ike Leggett sent the County Council a revised version of the law that establishes the fee. County attorneys said it will address the legal issue identified by Circuit Court Jude Nelson Rupp Jr.’s July decision in favor of the Minkoff Development Corp.
Paul Chod, president of Minkoff, brought the legal action against the county’s Board of Appeals after the county hit him with a more than $11,000 stormwater charge for Minkoff’s 34-acre Shady Grove Development Park property in Gaithersburg.
The county imposes the charge on property tax bills. It’s calculated based on the potential for a property to contribute to stormwater runoff, meaning larger and more densely developed properties typically receive a higher charge.
The county uses the fees to restore polluted and eroded streams, to monitor streams, to clean storm drains and for other stormwater prevention initiatives.
The county, which has appealed Rupp’s decision, said the water quality protection charge produces about $32 million in revenue per year that goes toward the stormwater programs mandated by the state and in accordance with the Federal Clean Water Act.
The state law allowing counties to assess the water quality protection charge applies to “the share of stormwater management services related to the property and provided by the county or municipality.”
Rupp agreed with Chod’s argument that the Shady Grove Development Park’s stormwater retention ponds meant his company had already managed stormwater pollution generated from the property and that the state law didn’t permit Montgomery County to charge a fee greater than its out-of-pocket costs.
In a memo to council President George Leventhal, Leggett wrote that while the county still hopes to win the case on appeal, it can’t issue revenue bonds predicated on the collection of the fee.
With the county planning to issue those revenue bonds in early 2016, Leggett said the county “will be unable to implement a significant portion of its stormwater management program that is mandated by the Clean Water Act and is necessary to address cleanup of local water bodies and the restoration of the Anacostia River and Chesapeake Bay.”
So Leggett proposed a new version of the water quality protection charge that designates the fee as an excise tax under the county’s authority to levy excise taxes.
The fee would have a retroactive date of July 1, 2013.
“All property owners who have paid the water quality protection charge have benefited from water quality protection and restoration measures made possibly by the revenues generated from the stormwater management charges imposed under current County law,” Leggett wrote.
Leventhal introduced the newly proposed law Tuesday and it will be the subject of a council public hearing on Nov. 17 at 1:30 p.m.