This story has been corrected and updated. An explanation of the changes appears at the end.
A bill being considered in the state legislature that would have eliminated a special property tax exemption for Montgomery County country clubs has been amended to require that four clubs pay $100,000 to the county’s general fund, and the rest continue qualify for the exemption.
An amendment by Del. Vaughn Stewart, A Derwood Democrat, would levy a $100,000 annual fee on four country clubs with a market value of $500,000 per acre. They include Columbia Country Club, Bethesda Country Club, Kenwood Golf and Country Club and Chevy Chase Club.
Sponsored by Democratic Del. David Moon (Takoma Park), the bill previously would have allowed the state to tax clubs at the property’s market rate instead of the current $1,000-per-acre rate for clubs with with more than 50 acres and more than 100 members. The amendment maintains the current exemption for all other clubs.
Moon said the county is losing $10 million per year in tax revenue because of the decades-old exemption.
His bill passed the Montgomery Delegation earlier this month and is schedules for a hearing in the House Ways and Means Committee on Tuesday.
Originally, the bill would have put the issue before voters in referendum on the 2020 ballot. But Stewart’s amendment calls for the tax change to begin in 2021.
Stewart said the money from the clubs would help aid in making up the county’s budget shortfall. The County Council has passed a savings plan to close a $44 million deficit.
“The county currently has a budget shortfall and is dealing with having to cut county services,” Stewart said.
Stewart acknowledged that an addition $400,000 per year from the clubs wasn’t “an insane amount” but that “every little bit helps.”
Kenwood President Todd Chamberlain said the bill unfairly assumes that golf course land value is worth more based, on the hypothetical scenario that buildings are on the property.
“They are asking us to pay a perceived value on our green space as if there are buildings there,” he said. “I feel like he’s [Moon] throwing anything against the wall and seeing what will stick. How can you pick out four or five clubs and charge them more?”
Kenwood has hired three new employees in the past year since President Trump’s tax reform law went into effect and put the club in a better financial position.
“This $100,000 would take that [benefit] away. I’m not saying we would fire people, but it has a huge negative effect on our employees and members,” he said.
Moon said club owners are missing the big picture.
“That’s how property taxes work. They assess the property on what I’m selling it for. The important aspect is what this use of land is costing the county in revenue,” he said.
Chamberlain said Moon’s bill will force clubs like Kenwood to increase their membership fees, which will hurt the middle class. Many members of Kenwood, he said, are on fixed incomes.
“No one goes into the country club business to make money. This is a not-for-profit type business,” he said.
Chamberlain testified during a previous hearing in Annapolis, and plans to testify again Tuesday. He said during the last hearing, Moon didn’t realize that repealing the exemption would require clubs to pay back taxes to the county at the market rate for the last 10 years. That would likely mean the club would owe millions of dollars and could not continue operating, he said.
Moon said clubs would only owe back taxes if they chose to develop the property, and clubs such as Kenwood have enjoyed tax exemptions for 30 years.
“One problem with his argument is that most clubs have agreements in excess of 10 years,” he said.
Dan Schere can be reached at Daniel.firstname.lastname@example.org
An initial version of this story mischaracterized the amendment and reported a $100,000 fee would be in addition to a change in the way golf courses are taxed, which could have raised property taxes substantially for some private clubs. The amended legislation requires only that four clubs pay a $100,000 fee. Bethesda Beat regrets the error.