Developers in Montgomery County would have to pay a new tax on residential and commercial construction under a County Council proposal that comes a week after a primary election in which growth and its costs were a motivating issue.
Democratic County Council member Michael L. Gudis, defeated in his bid for reelection, proposed yesterday that the council impose a tax of $2.50 a square foot on residential, office, retail and industrial construction. The money raised would be spent on roads, schools and other projects in the areas where the growth is taking place.
The measure is similar to a council proposal that failed last spring because of strong opposition from County Executive Sidney Kramer, who also was defeated last week.
The proposal by Gudis, who had opposed previous attempts to impose a development tax, stands a better chance of passage because of his support as well as major changes in Montgomery's political leadership.
Council member Neal Potter, whose upset of Kramer in last week's Democratic primary makes him a favorite to become county executive, has been a strong advocate of taxing developers. Potter said that at first glance the proposal by Gudis "makes sense," but that the amount of the tax seemed low. The proposal debated last spring would have imposed a tax of $3.25 a square foot.
That proposal, offered by council member Bruce Adams, would have spent the proceeds of the tax countywide. Gudis said he didn't think it was fair for taxes from one part of the county to be used to benefit another. Some opponents of a development tax said it would be passed on to the consumer, worsening the county's shortage of moderately priced housing. Gudis's proposal tries to deal with that by exempting the first 1,500 square feet of residential development, roughly equivalent to a single-family starter house.
Gudis said he had been working for the last several months on the legislation and he decided to go ahead with it even though his defeat last week might mean he won't be on the council when the measure comes up for a vote. The council will first hold a public hearing on the measure.
"I just think members of the council should be asking whether an overall development tax makes any sense at all," said James Soltesz, vice president of the Suburban Maryland Building Industry Association, noting that building permits issued for commercial and residential housing are down 50 percent this year.
"If they are looking at taxing developers as a way to raise money, it might be a while before they realize any benefit," he said. Soltesz said that members of the development community want to work with the new council members and executive to come up with solutions.
He said, for instance, that the development community was interested in a proposal by council President William E. Hanna Jr. for special development districts.
Montgomery already has a limited system of impact taxes that requires some developers in the fast-growing upcounty area and eastern Montgomery to share in the cost of building roads.