The Montgomery County Council is considering a plan to tax new construction to help pay for roads and other transportation services needed to accommodate the growth, a proposal that even in its early stages business leaders view as the latest in a series of hostile council measures.
Under a proposal by council staff, Montgomery would begin charging developers $3,500 per house, $2,500 per town house and $1,500 per apartment to raise money for roads for the affected neighborhoods. The tax on commercial construction would range from 75 cents to $2.50 per square foot, depending on the use.
Montgomery already charges a "development impact tax" on projects in two areas--Germantown and Eastern Montgomery--and the fees tend to increase housing prices because developers pass on the additional costs to home buyers.
The new proposal would extend the tax across the county, while exempting areas "within easy walking distance" of public transportation. That could exempt projects in Montgomery's most urban neighborhoods, including the Bethesda and Silver Spring business districts.
The proposed rates are higher for most residential construction and commercial development than those charged in Germantown and Eastern Montgomery.
A staff analysis released yesterday estimated that Montgomery would collect $6 million a year through a countywide tax. The staff recommendation, which will form the basis of a bill to be introduced Aug. 3, suggests that the county match those funds to achieve $12 million in new transportation spending each year.
The proposal will come before the council's management and fiscal policy committee on Monday. Committee members say the countywide tax is only a point of discussion now and meant to be part of a broader review of county growth policy scheduled for the fall.
"We need to provide more funding, and we need the development community to contribute its fair share to the cost of new infrastructure," said council member Philip Andrews (D-Rockville), who is a committee member. "But I have not come to any conclusion on any details on the tax itself."
But word of the proposal has circulated through a fearful business community. Since November, the county's fractured business lobby has unsuccessfully fought a total ban on restaurant smoking and a county tax on all tobacco products except cigarettes. And it has been trying to defeat so-called living-wage legislation, which would raise the minimum wage paid by companies doing business with the county.
County Executive Douglas M. Duncan (D), who fought the "living wage" measure, worries that a development tax could harm the business climate.
"Let's not undo the progress we've made in growing the county's tax base," Duncan said. "We've become much more competitive and I would hate to see all those years be undone."