Closing construction loophole could bring in big money for Montgomery Co.

Could a construction loophole closure bring in big money for Montgomery County, Maryland?

Council member Evan Glass thinks it could. He proposed the Housing Impact Fairness Act as a way to raise $10 million a year for school construction and affordable housing projects.

He said currently the county is not charging construction impact fees fairly.

“When a studio apartment is built, an impact fee is assessed. The same for a one-bedroom or a town house. But newly rebuilt homes are currently exempt,” Glass said, in his presentation to the council.

Those newly rebuilt homes — called “teardowns” — are cases in which a smaller, old homes are torn down and new, bigger homes are built in its place.

Glass said this needs to be changed, especially given the county’s data showing that student generation rates.

Student generation rate is the ratio of the number of students enrolled to the total number of dwellings. In Montgomery County, the student generation rate of newly built homes is 20% higher than other older, single-family homes.

“Yet, we charge impact fees on studio and one-bedroom apartments that have the lowest student generation rates,” he said.

Glass said the money lost by not charging the impact fee is immense.

“Had these fees been fairly applied to the 2,000 homes that got demolition permits in the last decade, the county would have received $100 million to support our growing infrastructure demands.”

Glass said it is also important to note what this act will not do.

“It does not charge an impact fee for anyone who wants to build an addition, an extension, a dormer or a bump out,” he said.

Nor would it charge a fee for any home that has already paid one since the county impact fees were initiated in 1986.

There will be public hearing on the legislation on Dec 3.

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