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Commissioners OK program offering excise tax credits toward new homes

Just hours before decision, citizens packed hearing to oppose relaxing the tax requirements

February 23, 2011|By HEATHER KEELS | heather.keels@herald-mail.com
  • Henryetta Livelsberger spoke to the Washington County Commissioners Tuesday afternoon about the excise tax. Livelsberger said the county put a lot of work into putting controls in place to ensure developers were held accountable for the infrastructure costs associated with their projects.
By Joe Crocetta, Staff Photographer

Just hours after citizens packed a public hearing in opposition to relaxing excise tax requirements, the Washington County Commissioners voted unanimously Tuesday to approve an eight-month stimulus program offering excise tax credits toward new homes.

The public hearing was related to the separate issue of whether to continue a policy of doubling the excise tax in fast-growing subdivisions.

At that hearing, builders urged the commissioners to end the doubling of the taxes, calling it a "punitive roadblock," while a string of citizens asked them not to risk out-of-control growth for the sake of temporary construction jobs or to appease developers.

The commissioners said they needed more time to consider the doubling issue, but later in the meeting voted in favor of temporary excise tax relief for residential construction in an attempt to alleviate unemployment by creating construction jobs.

The stimulus program will run from March 1 through Oct. 31 and will provide builders with a credit for the excise tax due on up to 3,000 square feet on the construction of homes and residential additions.

Each builder will be able to apply the credit on up to six homes.

The program is similar to one that the county offered for four months in late 2009 and early 2010. During that period, the county approved permits for 78 new homes, compared to 25 the year before, said Daniel DiVito, director of county permits and inspections.

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



Lowering housing costs

Eliminating excise tax costs reduces the up-front cost of a home, which can be a major obstacle in a family's ability to afford to build, DiVito has said.

Tim Fields, a local builder and member of the Home Builders Association of Washington County, said after the meeting that excise tax makes up about 5 percent of the cost of the average home.

He said he expects the excise tax credit to make a significant difference in his business over the coming months.

"It will help me put my guys back to work," he said.

Fields was also one of two builders who testified in favor of removing the doubling provision.

The other, Jeremy Holder, of the Westfields development off of Sharpsburg Pike, said the continuation of the doubling provision would "dramatically" affect the future of that 773-home project.

"Frankly, a $10,000 to $15,000 price spike on a house today makes it impossible to sell at market," Holder said.

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

So far, Westfields is the only development in which that requirement has applied, Holder said.

Jason Divelbiss, an attorney representing several local developers, also argued the commissioners should remove the doubling provision from the excise tax ordinance.

The provision was meant to control the pace of growth in the county, and the appropriate ordinance for that purpose is the Adequate Public Facilities ordinance, Divelbiss said.



Retaining the tax

Six citizens spoke in favor of retaining the doubled tax.

"We think the doubling rule is doing no harm to the economy or to developers and, therefore, should be kept as a tool that may again be needed some time in the future," said Jim Laird, president of Citizens for the Protection of Washington County.

Henryetta Livelsberger said the county put a lot of work into putting controls in place to ensure developers were held accountable for the infrastructure costs associated with their projects.

"The controls put in place should be kept so that when the next surge of development comes, we will be prepared and the taxpayers will not be left holding the infrastructure bag," she said.

Joe Lane, a Smithsburg resident who ran unsuccessfully for county commissioner last year, said creating excess housing inventory was not the right way to reduce unemployment in the county.

"If you're going to do that, create jobs building something you need, not more residential construction," Lane said.

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(Editor's note: This story was edited Feb. 23, 2011, to correctly identify the speaker in the next-to-last paragraph)

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