Montgomery County Executive Charles W. Gilchrist yesterday proposed a 4 percent condominium conversion tax and said the revenue from it would be used to help needy tenants in the county.
Gilchrist's plan, which he sent to the County Council one week before the expiration of a 120-day moratorium on converting apartments into condominiums, is designed to ease what he called "desperate hardships" imposed on tenants forced to move out of their apartments when buildings are sold to developers for resale as condominiums.
The proposed one-time transfer tax, to be paid by the initial seller of a condominium unit -- after the conversion of an apartment building into separate, for-sale units -- would require approval by the Maryland General Assembly as well as the County Council. It is unlikely it could go into effect before next spring.
Gilchrist said his tax plan was designed as a long-range solution to the county's rental housing crisis and predicted it would slow the rate of conversions as well as help displaced low-income and elderly tenants.
Part of the $4.8 million he said it would raise next year would be spent to expand the county's rent-subsidy program to help more tenants pay for their apartments.
The tax would amount to $2,400 on the average Montgomery County condominium unit, which officials said is now selling for $60,000.
Asked at a news conference whether the seller would not just add the tax expense to the selling price of a new unit, Gilchrist said some of the tax undoubtedly would be passed on but market conditions would prevent major increases in sales prices.
The current moratorium, which is being challenged in court as unconstitutional, was imposed July 13 after more than 2,500 rental units had been converted to condominiums, and 4,000 more conversions were anticipated by the end of the year.
While praising Gilchrist's program for "moving in the right direction," Montgomery County Council President Neal Potter said in an interview yesterday that he did not think 4 percent was enough. Potter said he is prepared to ask for a 10 percent transfer tax, a rate he called "extremely modest . . ., peanuts" in light of the huge profits enjoyed by condominium converters.
Asked if the tax proposal would be controversial, Potter said with a hint of sarcasm in his voice, "I can't wait until we have our public hearings."
Meanwhile, the council is expected to pass three stopgap bills on Tuesday that are designed to prevent wholesale conversions after the moratorium. Those measures would require that the converter own a property before filing the complex report required before sales can proceed. They also would insist that sellers offer warranties on the buildings and give tenants a longer time to decide whether or not they want to purchase units in the condominium.
County real estate developers have argued that the measures designed to curb conversions would only increase prices.
In addition to the transfer tax, Gilchrist's personal calls for spending $500,000 in county funds in emergency lump sum payments to displaced elderly and handicapped tenants. Gilchrist estimated that such assistance eventually will cost the county $2 million a year, even if the transfer tax is rejected.
Condominium units that sell for less than $35,000 would be exempt from Gilchrist's proposed tax. The measure also would attempt to encourage developers to sell some units to low- and moderate-income families at discounted prices or to tenant cooperatives by exempting projects from the tax if they meet certain quotas.
"I have tried," he said, "to respond to the needs and desires of tenants without undue interference with the rights of property owners."
Property rights have been central to the dispute between tenants who want to continue to rent or be given the right to buy their homes and apartment owners and developers who want to be free to dispose of rental property they claim is no longer profitable.
The father of a man whose death prompted two investigations of the Fairfax County jail yesterday sued the county and 10 Fairfax officials for $1.5 million, blaming them for an "extraordinary series of callous activities" that caused his son to die.
The suit, filed in federal court in Alexandria, was the latest repercussion from the controversial death of Donald Ferguson, a 28-year-old construction worker. He died Dec. 8, 1978, after being held in shackles at the jail.