Washington Co. excise tax changes considered

July 03, 2010|By HEATHER KEELS

WASHINGTON COUNTY -- The Washington County Commissioners are considering changing part of the county's excise tax ordinance that can trigger doubling of the excise tax rate for fast-growing subdivisions.

Currently, if building permits are issued for 25 homes in one fiscal year in a subdivision with school capacity or road capacity problems, subsequent permits issued that same fiscal year are charged double the excise tax.

Based on a discussion with the commissioners in June, county attorneys are drafting some possible alternatives to that provision, Assistant County Attorney Andrew F. Wilkinson said.

One alternative is to provide for no doubling if a developer agrees to a phasing schedule approved by the commissioners, Wilkinson said. Another alternative is to double the excise tax for permits after a certain number of permits are issued countywide rather than per subdivision, he said.


Excise tax, a base rate of $3 per square foot on residential construction, is used to help fund schools, roads, parks and other infrastructure.

During a discussion of the issue June 8, Commissioner James F. Kercheval said the doubling provision was put in place in "a different time," when the pace of growth was much faster and school crowding issues were worse. Now, new home construction has slowed due to the economy and new school construction is easing capacity problems, he said.

The slowdown in new homes has resulted in less revenue, but also less need, for many planned infrastructure projects, causing projects such as a new high school to be pushed back in the Capital Improvement Plan, County Administrator Gregory B. Murray said.

Meanwhile, the excise tax doubling provision still is coming into play, Wilkinson said.

"There are developers out there now that are bumping up against the 25th house," he said.

A list distributed to the commissioners at the June 8 meeting identified 13 subdivisions that could create more than 25 units per year.

Commissioner Kristin B. Aleshire summed up the problem with the 25-unit doubling provision as follows:

"We're building a fraction of the homes we planned for in our CIP, but we're telling some developer out there that they've exceeded some arbitrary number -- even though we're doing a fraction of what we planned for, thus moving our projects back -- we're still going to double the cost.

"That certainly works in a time of growth outpacing service, but it really is not applicable in these."

Kercheval, who sits on the county planning commission, said he would support removing the doubling requirement as long as a developer agrees to an approved phasing schedule, which helps the county plan for the needed infrastructure.

"Some of the bigger developments that are already approved, it kind of gives them an incentive to go back and do a phasing schedule," Kercheval said.

Aleshire said a problem with phasing schedules is if units scheduled, but not actually built, in one year are allowed to be carried over to the next. He said developers probably would not agree to phasing without a carryover allowance, but he would not support phasing with that type of allowance.

Aleshire said he thought it was more logical to trigger doubling only when the number of residential building permits issued countywide exceeds the number projected in the CIP.

Kercheval said he agreed with that principle, but because the projections in the CIP are conservative, he thought the cap should be a certain percentage above that figure.

Wilkinson said he would draft an alternative, but leave the details about the level of the cap open for further discussion.

If approved, the change would be the seventh amendment to the excise tax ordinance since it was created in 2003.

Subdivisions that could create more than 25 units per year:

With phasing schedules

o Westfields (Sharpsburg Pike) -- 766 lots

o Clagett's Mill (Poffenberger Road east of Md. 65) -- 238 lots

o Elmwood Farms (Md. 68 near Williamsport) -- 174 lots

No phasing schedules

o Maple Valley (Longmeadow Road) -- 71 vacant lots

o Seneca Ridge (Maugans Avenue) -- 286 vacant lots

o Rosewood (Robinwood Drive) -- 510 lots

o Cobblestone (College Road west of Md. 65) -- 66 lots

o Emerald Point (Marsh Pike and Md. 60) -- 266 lots

o Freedom Hills (Garden View Road) -- 163 lots

o Williamsview (Kendle Road north of Md. 68) -- 508 lots

o Black Rock PUD (Mount Aetna Road) -- 589 lots

o Towns at Rock Springs (Massey Boulevard/U.S. 11) -- 136 lots

o Harp property (Paradise Church Road) -- 85 lots

Source: June 8 agenda report from Assistant County Attorney Andrew F. Wilkinson

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