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Tax Is Deemed Legal but Unwise

By Miranda S. Spivack
Washington Post Staff Writer
Wednesday, September 12, 2007

A special tax designed to repay developers for roads, green space and other amenities at Clarksburg Town Center is legal but could lead to overpaying developers who may be able to seek repayment more than once for the same project, a Montgomery County report said yesterday.

The nearly 1,000-page report, issued after a five-month internal study, also said there is at least one instance in which residents are at risk of being asked to repay a developer, Newland Communities, for roadwork that was partly the responsibility of another development, apparently because council staffers did not realize that the road was in another section of Clarksburg.

Taxpayers might be asked to pay twice for some amenities because developers who have been reimbursed for projects are allowed to try to include them in the special taxing district, known as a development district. Council staff members said yesterday that no developer has been paid twice.

Council Vice President Michael Knapp (D-Upcounty), whose district includes Clarksburg Town Center, said the report's findings are emblematic of larger problems about county management of growth and development.

"Nice plan, interesting policy, really bad implementation," he said. "This fits in with exactly what we have seen in the past three years. There continues to be a lack of coordination. The root causes that presented all these issues have never really gone away."

The report from the council staff comes a few days after the county's independent inspector general said county officials failed to carefully oversee at least $10 million in road projects in Clarksburg Town Center by ignoring competitive bidding rules and casually monitoring contractor expenses. County officials disputed the claims, saying they had obeyed the law and competitive bidding was not required.

The council analysis is the third in a series of studies by public officials trying to answer complaints from two residents' groups that the development district tax illegally shifts expenses from developers to residents. Many in Clarksburg Town Center, a new community in northern Montgomery, said they were unaware that they were buying a house in a special taxing district and might someday have to pay an additional $1,500 or more per year.

The report released yesterday echoed findings this summer by County Attorney Leon Rodriguez that the development districts, which have been used only once in Montgomery, are legal. Both Rodriguez's and the council's staff helped write the law, which they are defending.

But yesterday's report went further than Rodriquez's by raising questions about the wisdom of the tax system. The development district allows developers to be repaid for building infrastructure they agreed to construct when they won development rights, which residents have protested is an unfair giveaway.

Many of the disputes about county regulation of development have arisen at Clarksburg Town Center, where it has been widely acknowledged in recent years that government oversight of construction and design was lax. The 1,300-home development is part of a larger community under construction in what planners envision as a model town.

Some on the council said yesterday that even if the development district tax is legal, the council could decide not to impose it. The council has approved two of three needed steps.

"The council has the discretion not to go for it," said Kathleen Boucher, a principal author of the report, responding to a question from a council member. Boucher works for the council staff.

Legislative analyst Sue Richards, the other chief author of the report, raised several questions about the wisdom of asking residents to shoulder the cost of something that a developer had agreed to build to obtain the development rights.

"Why would you create a development district to provide something they had already agreed to give you anyway?" she said in an interview after testifying before the council. But she stopped short of saying the council should drop the idea of imposing the tax, saying that's up to the council.

"They know what to do," she said.

County Council member Marc Elrich (D-At large), who was not on the council when the tax was approved in 2003, said he was dismayed by the report. "The best thing you can say is that what happened might be legal but it's bad policy," he said. "Homeowners were totally blindsided."

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