Area country clubs have asked state legislators not to alter an exemption many clubs use to lower their tax bills.
The statewide tax exemption lets private country clubs and privately owned public courses have their golf course properties taxed at $1,000 per acre if they don’t discriminate in their membership and if they sign agreements with the state to not develop the property.
The agreements enable the clubs and courses to significantly cut their property tax payments to Montgomery County—sometimes more than $100,000 per year when compared to neighboring properties' assessment rates.
Fifteen golf courses in the county—including Chevy Chase, Columbia, Congressional and Woodmont Country clubs—have agreements in place, according to Del. David Moon (D-Takoma Park), who wants to get rid of the exemptions by changing state law. The bill he’s introducing in the 2018 General Assembly would honor current agreements in Montgomery County until they expire. Afterward, the exemption would be removed and the land reassessed.
Moon’s bill calls for the exemption to end in just Montgomery County, but he also plans to introduce a bill to try to alter the exemption statewide.
During a public hearing with Montgomery County state legislators Monday, Maryland lobbyist P.J. Hogan, of Cornerstone Government Affairs, represented the Maryland Coalition of Concerned Clubs and spoke out against the bill.
Hogan is a former state senator from Montgomery County. He was state Senate sponsor of a 2002 bill that the General Assembly passed expanding the country club tax exemption in the state. The bill lowered the assessment rate for golf courses and country clubs from $5,000 per acre to $1,000 per acre.
He noted the bill at the time passed through a Legislature controlled by Democrats and was signed into law by Democratic Gov. Parris Glendening.
“This was a statewide statute and it really was about open space,” Hogan said. “In Montgomery County alone, we’re talking about 3,300 acres of land—that is a lot of land—that is being kept open, that is not being developed. This is not land that’s out in underdeveloped areas. This is some prime land, in densely populated, very congested areas.”
A preliminary fiscal analysis for Moon’s bill found that if the tax exemption were removed and the clubs assessed at a normal rate, the properties would generate about $10 million in additional revenue for the county by 2030.
Moon said that given an estimated $120 million Montgomery County budget shortfall this year and the prospect of cuts to social services, his bill could raise much needed additional revenue.
“I think it’s time we revisit this issue,” Moon told his colleagues Monday. “The bill before you simply repeals these tax breaks in the future.”
Del. Sheila Hixson (D-Silver Spring) said she was the House sponsor of the 2002 bill that lowered the assessment rate for clubs and courses.
“The times have changed,” she said. “I’m sure we can look at and review it. We were dealing primarily with open space in Montgomery County and protecting it to the best of our ability. That was the intent behind the bill.”
Moon expressed skepticism that lucrative country clubs such as Columbia or Congressional—both of which reported more than $15 million in annual revenue on federal tax forms as nonprofit 501(c)7s—would close if faced with higher tax bills.
Some legislators expressed concerns that private clubs that don’t have as much income as wealthy clubs could close without the exemption. Moon said he would ensure the bill wouldn’t hurt them.
“As we get into the weeds, I’m probably going to narrow it so it targets super wealthy clubs,” Moon said in an interview Thursday. “In times we’re seeing historic wealth and income inequality, which seems to be getting worse even as the economy improves, country clubs are probably the last people I would have chosen to receive preferential tax treatment.”
Kathleen Boucher, of the county’s Office of Intergovernmental Affairs, told Montgomery County Council members at a meeting last week that County Executive Ike Leggett opposes the bill. She said Leggett believes that since it’s focused on Montgomery County, it could make golf courses and country clubs in the county less competitive than in other area jurisdictions.
Moon said Thursday he doesn’t believe country club members would leave their club and join one in another county if the club’s taxes were raised.
Council member George Leventhal also was skeptical during last week’s meeting about Leggett’s opposition. He said he’d like to see an analysis of the revenue the county might lose if golfers went to another county to play compared to the revenue the county stands to gain by ending the tax exemption.
The council deferred voting on whether to support or oppose the bill during the Nov. 28 meeting.
Moon said Thursday he doesn’t know whether he could get statewide support for the change. He said the county has a disproportionate number of courses receiving the exemption compared to the rest of the state, which is why he’s focusing the legislation on the county.
He’s also not sure whether Montgomery County legislators will support the measure. Two of his colleagues, Del. Andrew Platt (D-Gaithersburg) and Del. Shane Robinson (D-Montgomery Village), signed on as co-sponsors.
“I’m optimistic that at a minimum, we’ll be able to change this one-size-fits-all tax break for private country clubs into a needs-based tax break for those that are small or struggling,” Moon said.
County resident Ben Ross testified in favor of Moon’s bill on Monday.
“I think the principle here is very simple,” Ross said. “If you own a backyard, have a gym set, sandbox, you pay taxes on your land. But if you’re a member of an expensive country club, you don’t pay taxes on the land. And so it simply is a matter of fairness and that’s it.”