Legislative Alert: Updated Montgomery County Development Impact Tax Rates Take Effect July 1, 2019
Developers with eligible projects should consider paying development impact taxes before the rates increase.
The Montgomery County Council recently adopted new development impact tax rates, which will be effective July 1 through June 30, 2021.
Because the applicable tax rate is calculated as of the date that payment is made, not when the permit was issued, it will be important for development projects with outstanding development impact taxes to pay any amounts currently due before July 1 in order to avoid increased payment obligations.
The County released a development impact tax table (found on Montgomery County’s website) that compares the existing and new rates. The chart shows transportation impact tax rates will increase by about 11% from the rates two years ago. School impact tax rates will increase between 10% and 14%, with the exception of high-rise units, which are slated to decrease by about 10%.
Of additional potential relevance:
- Impact taxes generally apply to all new development and additions with certain exemptions for affordable housing and certain uses for which the rate is zero. A project also may be eligible for impact tax credits.
- Commercial projects are assessed a transportation impact tax; residential projects are assessed both a transportation and a school impact tax. The school impact tax rate depends on the type of residential unit. The transportation impact tax rate depends on the type of project and which of the four County policy areas (red, orange, yellow, green) applies based on the location of the project within the County.
- Development impact taxes generally are payable at building permit, but can be deferred for six months after a residential permit is issued or for 12 months after a commercial permit is issued. Taxes must be paid before a final inspection and occupancy.
- The Council reviews County development impact tax rates at least every two years.
For more information about Montgomery County development impact taxes, please contact a Lerch Early land use attorney. You can find more information on the impact tax rate increase by checking out the Montgomery County Register’s notice: https://montgomerycountymd.gov/exec/register/regs/2019/May19Notices.html.