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Program to stimulate homebuilding extended in Washington County

March 05, 2013|By DON AINES | dona@herald-mail.com
  • Washington County Attorney John Martirano makes point Tuesday during a discussion about the countys excise tax on residential construction.
By Kevin G. Gilbert/Staff Photographer

HAGERSTOWN — A program to stimulate homebuilding by granting exemptions from Washington County’s excise tax on residential construction has been expanded and extended.

The county commissioners later this month are to hold a public hearing on reducing the tax permanently.

The board unanimously voted Tuesday to approve a resolution extending the stimulus, which was set to expire June 30, to Sept. 30. The stimulus allows the first 3,000 square feet of residential construction to be exempt from the $3 per square foot excise tax.

Commissioner Jeffrey Cline’s motion also expanded the stimulus exemption from the first 30 units constructed by a builder to 40 units. When the issue was raised last week, a developer said his company was ready to build more units, but was about to run up against the 30-unit limit.

“It would be my suggestion to extend the stimulus one more time,” Cline said.

“I believe the excise tax should be reflective of the economy we’re in,” Commissioner William B. McKinley said in seconding Cline’s motion to extend the stimulus.

The board also reached consensus on holding a public hearing March 26 to discuss reducing the excise tax from $3 per square foot to $1 per square foot. The $1 would apply to all residential and commercial construction, although once a commercial retail project exceeded 15,000 square feet, the tax would be $3 for each additional square foot.

Because it would be a change in the ordinance, a public hearing will have to be advertised and held, County Attorney John Martirano told the board.

“I think it was a great step. It's going to put guys back to work and it's going to get permits filed,” said Corey Linthicum, president of the Home Builders Association of Washington County. He expects some developers to soon file permits, now that they have another 10 houses they can build until they hit the 40-unit ceiling.

“It’s a great compromise,” Linthicum said of the decision to hold a hearing on reducing the excise tax. “I know the tax is valuable to the county. Our goal is not to strip the county of the tax, but to help people go back to work.”

“I think it’s a tremendous step in the right direction for development in residential, commercial and retail  ... and, of course, the big thing — jobs, jobs, jobs,” said Ron Bowers, the vice chairman of the Hagerstown-Washington County Economic Development Commission.

Last week Bowers asked the board to suspend the tax to spur new construction. Despite the tax not being suspended, he said he was pleased with the decisions the board made Monday and did not discount some other kind of relief measures being taken after the public hearing.

Neighboring counties in West Virginia and Pennsylvania do not have an excise tax, while Frederick County (Md.) does have an impact fee on new construction.

Linthicum said the sluggish economy has resulted in housing starts declining from 600 or 700 a year before the recession to fewer than 200 a year. The excise tax and other regulatory requirements in Maryland add significantly to the cost of building a home, with some developers choosing to build in West Virginia or Pennsylvania instead, he said.

The tax was adopted by the county in 2003 and the residential stimulus program was first introduced in 2009.

The excise tax brought in $432,413 last year, County Budget and Finance Director Debra Murray said last week. In planning the 10-year capital improvement program, the county was already anticipating lowering the excise tax to $1 per square foot in figuring its future revenues, she said.

Seventy percent of the tax collected goes to school projects, 23 percent to roads, 2 percent to libraries and 5 percent in a category listed as other, she said.

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