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Commissioners want program to boost housing

Incentives could waive or reduce excise tax rates

Incentives could waive or reduce excise tax rates

September 22, 2009|By HEATHER KEELS

WASHINGTON COUNTY -- The Washington County Commissioners agreed Tuesday they were interested in offering a short-term incentive program to boost housing starts and bolster the local economy.

Such an incentive program could either reduce the excise tax rate that builders pay per square foot or waive the excise tax for up to a certain square footage, said county permits and inspections director Daniel F. DiVito, who agreed to draft some options for the commissioners to consider at their Oct. 6 meeting. The program also could waive permit fees, DiVito said.

DiVito said he would recommend the program apply only to single-family homes, two-family homes and additions.

The purpose of the incentives would be to reduce unemployment in the county, which is especially high in the construction trades, DiVito said.

Commissioner Terry Baker said he heard building one house can keep five people employed for a year, and DiVito said that figure could actually be as high as 10 or 12 people.

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In addition, the incentives could be a lifeline for some of the county's small construction companies that are struggling to stay in business, DiVito said.

"If this money can provide just a little bridge to keep them going till maybe the economy starts to come back, I think it's money well spent," DiVito said.

If the commissioners decided to waive the $3-per-square-foot excise tax for the first 3,000 square feet of each new home, plus waive building permit fees, that would translate into about $10,000 in upfront savings on a home of 3,000 square feet or more, DiVito said.

He said many contractors he has talked to indicated they would pass that discount directly on to the homeowner.

The commissioners indicated they wanted the incentive to be short-term -- lasting six months or through the end of this fiscal year -- rather than a permanent change to the excise tax structure.

County Administrator Gregory B. Murray said the county has not met its excise tax targets for July and August, the first two months of this fiscal year, which are normally some of the prime building months.

Commissioners President John F. Barr said he thought the $3-per-square-foot rate was "excessive" in today's economy.

"I'd rather have a dollar and a half per square foot for something versus three dollars per square foot for something that's not happening," Barr said.

The current excise tax rate was set in July 2008, when the commissioners changed the excise tax structure for residential construction from a flat rate to a rate based on square footage.

Excise tax is levied on new construction and is meant to offset the impacts of development. Residential excise tax revenues are used primarily for schools and roads, with small amounts also available for public libraries, parks and recreational facilities, public safety, water and sewer infrastructure, and agricultural land preservation, according to the county's excise tax ordinance.

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