The Montgomery County Council is putting final touches on a proposed development excise tax it is expected to adopt in September, despite intense opposition from the construction industry.
The tax, a one-time fee for all new construction in this county of about 757,000 people just north of Washington D.C., would be the first of its kind locally. The council estimates that it will raise more than $6 million in its first year.
Money raised from the tax will be used for infrastructure improvements such as roads, schools and libraries. The 500-square-mile county needs such improvements in part because of the phenomenal growth of the past decade, said Michael Faden, senior legislative attorney for the County Council.
According to Drew Dedrick of the county planning board`s research division, half of the county`s total office inventory, about 48 percent of its total industrial space and 21 percent of its retail space was built in the
`80s.
During the peak construction years of 1985 and 1986, 13 million square feet of nonresidential space was completed, he said.
As currently proposed, the tax would be levied on a per-square-foot rate for all new construction. For example, residential units would be taxed at $3.75 per square foot, general commercial property at $4 and warehouse, manufacturing and research and development facilities at $2.40. Council members decided to vary the rates because some types of development require more county services.
The first 1,200 square feet of all development is exempted from the tax. For multifamily housing developments, the exemption is granted to 1,200 square feet of each unit.
Building permit applications filed over a three-year period beginning July 1, 1992, will be subject to the tax as it is currently proposed.
Eliminating the tax is exactly the action local developers hope county officials will take.
More than 110 developers, real estate brokers, building contractors, architects and others wrote to the council to oppose the tax. Developers argue the cost of the tax will simply be passed on to buyers or renters and already expensive housing will end up costing even more.
