Council disagrees on possible change upcounty impact taxes on housing

Council disagrees on potential change in upcounty impact taxes on new housing units

Proposed growth policy calls for removing residential building moratorium

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This story was updated at 7:34 p.m. on Oct. 21, 2020, to clarify a quote from Council Member Hans Riemer.

A new Montgomery County growth policy could remove residential building moratoriums and divide the county into zones with different impact taxes related to housing and student growth.

Impact fees — potentially tens of thousands of dollars — would be added to new housing units based on the growth in that area and the project e ffect on school system enrollment.

But the County Council disagreed on Tuesday on the details of a potential change that would place higher impact taxes on certain areas in Clarksburg.

The county’s subdivision staging policy determines when school service areas have a building moratorium, which restricts development projects in certain school neighborhoods.

The moratorium has been used because of schools becoming too crowded. It prohibits approval of residential development projects for at least a year, or until school crowding problems are resolved , whichever comes first. It is automatically placed in areas where schools have enrollments exceeding 120% of their capacity.

The county’s Planning Board must review the policy every four years. This year, the county is considering removing the moratorium in favor of allowing housing development in areas that need more of it, as well as creating three impact zones with corresponding impact taxes, among other changes.

The Planning Board recommended eliminating the moratorium in all areas — except for the “greenfield impact areas.”

“Greenfield” refers to areas that have higher enrollment because of increases in new single-family housing.

Clarksburg is home to the county’s greenfield impact areas .

A County Council committee previously did not recommend having a moratorium on the greenfield areas.

During a work session on the growth policy on Tuesday, council members disagreed whether there should be two or three zones of school impact areas, each with a different tax.

The three zones are:
● Greenfield: areas with high enrollment growth largely because of high housing growth that is predominantly single-family units
● Turnover: areas with low housing growth where enrollment is largely because of turnover of existing single-family units
● Infill: areas with high housing growth that is predominantly multifamily units, which generate fewer students on a per-unit basis

The council’s Government Operations Committee recommended impact tax rates for the greenfield areas are up to $33,809 for a single-family home and up to $11,753 for a multifamily home.

Comparatively, the “infill” areas’ proposed impact taxes are up to $20,130 for single-family homes and $6,448 for multifamily homes.

“Turnover” areas could have impact taxes of up to $23,884 for single-family homes and $11,555 for multifamily homes.

Currently, one set of school impact tax rates is applied countywide.

The current rates are:
• $26,207 (detached) and $27,598 (attached) for single-family homes
• $6,113 (high-rise) and $21,961 (low-rise) for multifamily homes.

For the proposed rates for the greenfield areas, single-family detached homes go up about $7,600 — or 29% — from the current rate and single-family attached homes would increase around $1,000 – or 4%.

All other proposed rates would be a decrease from the current rates.

Jason Sartori, chief of the county’s Planning and Policy Division, wrote in an email to Bethesda Beat on Wednesday afternoon that if the council decided to eliminate the greenfield distinction, development in the greenfield areas would be charged at the lower turnover rates.

“Some argue that development in each area should pay for their respective impact, based on how development trends are impacting student generation,” he wrote. “Others contend that having such high impact taxes in an area where new family-sized housing is relatively affordable (compared to similar housing elsewhere in the county) runs the risk of decreasing the affordability of homes there.”

Pam Dunn, a senior legislative analyst for the county, wrote in an email to Bethesda Beat on Wednesday afternoon that the recategorization of the greenfield area would mean an increase in the student generation for turnover areas.

“This would increase the school impact tax for new development in the Turnover area,” she wrote.

The council had more than 40 recommendations to review related to the subdivision staging policy, but only got through a few of them, as the impact division went on for more than two hours.

The council is expected to continue its discussion of the policy on Oct. 27.

Council Member Hans Riemer said Tuesday that the county’s housing market isn’t producing enough to meet the need. Historically, the county has produced “well over 4,000 units of housing every,” he said, which has slowed down in the last 10 years.

“The hard truth is that a moratorium does not slow enrollment growth. It’s really the neighborhoods that generate enrollment growth,” he said. “But when we hold back a development that we’re seeking , we end up with a less appealing, less enjoyable, a lower quality of life for everyone. A moratorium does more harm than good.”

Council President Sidney Katz and Council Members Craig Rice, Will Jawando and Evan Glass said they did not feel that it was entirely fair to have Clarksburg, which has the greenfield impact areas, pay for all of its own needs in the community.

Rice said the zone would have hurt affordability in the Clarksburg area. Much of the county’s new affordable housing is in Clarksburg, he said.

“From that perspective, it really doesn’t make a lot of sense for us to treat this area in this kind of manner that would drive up the cost of housing and one of the last places that folks go that are disconnected from mass transit,” Rice said. “They’re disconnected from some roadways. … They don’t have all of the amenities, including a library. And oh, on top of that, we also want to make it more expensive for housing.”

The county needs to be careful about the message it sends to Clarksburg and the upcounty area about making it more expensive than other areas, Rice said.

“We need to have additional revenue, but the council has always been creative about how to make sure we’re spreading that equitably throughout the entire county, not just relying on one area of the county to make payment for itself.”

Jawando said the impact tax would set up an “unequal playing field” for people looking to move around the county. He previously suggested in a committee meeting that the zones be taken down to just the turnover and infill zones, eliminating greenfield. Four other committee members rejected that idea.

“If you make it more expensive and you have a higher rate in Clarksburg, you could actually disincentivize the very growth and housing that you want,” Jawando said. “Compound the revenue challenges of an already lowered tax rate that we’re doing for the turnover and infill areas.”

Council Member Andrew Friedson said the new impact tax rates for Clarksburg cover the impact that new development has — a reasonable cost for student generation that is being created by new development based on the county’s data.

“If we went in the other direction, it would be the opposite,” he said. “It would be the rest of the county subsidizing student generation that is happening by that building type. That’s fine if we go in that direction, but it would be counter to many of the decisions elsewhere in this policy that we try to do to be as consistent as possible and to charge for the actual student generation that we have.”

Sartori said Tuesday that during an analysis of housing and student generation, the county found that Clarksburg’s school cluster stood out from every other area.

“It was a lot of new units being built. Almost predominantly single-family and generating a ton of students,” he said.

Riemer said Clarksburg will get more students.

“[The greenfield impact tax revenue] is for all the people who live in Clarksburg. It’s so that they can — it’s only a small fraction of the money that is needed in Clarksburg, to be very clear,” Riemer said. “Most of the money in Clarksburg comes from the rest of the county. It’s a margin to help fund the significant school needs that they have that are felt very deeply there.”

Briana Adhikusuma can be reached at

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