2020 | Government

Compromise reached on increasing property tax assessments on country club land

Deal resolves three-year debate within Montgomery delegation

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Columbia Country Club photo

Columbia Country Club in Chevy Chase

Photo from Columbia Country Club website

Montgomery County’s state legislators have reached a compromise on a long-running debate over how much country clubs should pay in property taxes.

The agreement was attached Friday to the annual budget bill moving through the General Assembly in the closing weeks of the 2020 session.

The deal — added to the budget bill in the House of Delegates’ Appropriations Committee — would open the way for a limited increase on property tax assessments for country clubs and private golf courses throughout Maryland.

It comes in the wake of proposals pushed by Del. David Moon (D-Silver Spring) since 2017 that would have applied only to country clubs in Montgomery County. The most recent version of Moon’s legislation targeted four of the county’s most prominent and well-heeled clubs.

“We went with a much smaller increase in tax bills, but applied it to many more clubs. That was sort of the overall structure of this compromise,” Moon said in an interview. He cited Del. Marc Korman (D-Bethesda), who opposed Moon’s Montgomery-only approach in recent years, as the “prime mover in brokering this deal.”

Korman said in an interview: “Going into this session, there was a desire by advocates of Moon’s bill, opponents of Moon’s bill [and] the [golf] courses themselves, just to come up with a solution that would allow this to be put to bed for a while. So we worked over the interim to figure out if there was a way to do that.”

While attached to the House version of the annual budget bill, the provision on increasing assessments on country club and golf course property still must be accepted in the state Senate — which passed a version of the budget bill that does not include the hike on assessments.

Since 2002, private clubs and courses throughout the state with at least 50 acres and 100 members can qualify for property tax assessments of just $1,000 per acre if they agree not to restrict membership based on gender, race, nationality or religion.

The proposed deal would raise this assessment to $5,000 per acre over a three-year period. That level would increase further in subsequent years based on the rate of inflation. The additional revenue would be split proportionately among the county and state share of property tax payments.

“It is still a favorable rate for these clubs, but it will grow over time and allows them to contribute a little bit more to the state and the county,” Korman said.

Moon agreed. “We’re not going to capture the big revenue with a change like this, but I think this is a pretty reasonable [move] in terms of having reached a compromise,” he said.

Data provided by Moon’s staff indicate that, once the assessment reaches $5,000 per acre, it would generate $120,800 in additional annual revenue from Montgomery County-based clubs and courses, compared to what they pay under the current $1,000-per-acre assessment.

The assessment rate for golf courses — which does not apply to other country club assets, such as clubhouses and tennis courts — stood at $5,000 per acre until 2002, when it was lowered to the $1,000 level. The change was made to preserve open space that might otherwise have been sold for development, according to former state Sen. P.J. Hogan, who pushed for the change at the time while representing a district in northern Montgomery County.

“The State Department of Assessments and Taxation was looking at going beyond the $5,000 per acre towards assessing the course properties at higher levels, and a number of clubs were saying, ‘We  can’t afford to keep this open,’” Hogan recalled Friday in an interview. “So it was done to maintain those clubs in existence because of the open space that’s provided.”

Hogan is an Annapolis-based lobbyist who represents the Maryland Coalition of Concerned Clubs, which primarily involves clubs and golf courses in Montgomery County. A majority of coalition members were said to have acceded to returning the assessment level to $5,000 per acre during negotiations to come up with a compromise.

Moon, who was first elected in 2014, has proposed a so-called “local bill” over the past three years to do away with the low assessments for Montgomery County-based country clubs. In 2018, he proposed taxing country club property at market rates, arguing that it could yield an additional $10 million in annual tax revenue.

“To the extent that the state has allowed country clubs to be assessed artificially low, all of the other Montgomery County taxpayers are making up that $10 million difference,” Moon complained in February 2018 after the 24-member Montgomery County House delegation voted 17-7 to kill his bill.

Moon’s legislation at the time was opposed by Korman and other delegation members representing districts containing many of the clubs. Those legislators argued that it was unfair to single out only clubs and courses based in Montgomery County.

Moon’s initial approach would have required a constitutional amendment to permit property in Montgomery County to be taxed at a rate different than the rest of the state.

In 2019, he returned with a modified approach that would not require a constitutional amendment. Moon’s proposal, as amended by Del. Vaughn Stewart (D-Derwood), would have imposed a $100,000 annual fee on each of four country clubs in Montgomery County with land values in excess of $500,000 per acre.

That bill — which the Montgomery House delegation killed 13-11 — would have levied the fees on the Bethesda Country Club and Kenwood Golf and Country Club, both in Korman’s district. It also would have affected the Chevy Chase Club and the Chevy Chase-based Columbia Country Club.

Another well-known Bethesda area club, the Burning Tree Club, does not qualify for the low assessments enjoyed by the other clubs due to its males-only membership policy.

Initially, Moon introduced a local bill similar to the 2019 proposal just before this year’s General Assembly session, but withdrew it in mid-February amid a consensus on a statewide strategy for raising the assessments.

“This is a complete 180,” Moon acknowledged of the plan now moving forward. “It’s going away from the targeted approach and back to picking a number that can be a fit for everybody.”

Korman said: “The clubs and their lobbying team recognized there was a way to approach things here, so great credit to them for being willing to come to the table — as well as Del. Moon and Del. Stewart, who feel very strongly about this and were willing to give a little bit as well.”