# Montgomery County Code — Part II. Local Laws, Ordinances, Resolutions, Etc.

## Chapter 52. Taxation.

### Article Iv. Development Impact Tax for Transportation Improvements.

**Sec. 52-39. Definitions.**

  In this Article the following terms have the following meanings:

  Additional capacity means a new road, adding an additional lane or turn lane to an existing road, or another transportation improvement that:

  (1)   increases the maximum theoretical volume of traffic that a road or intersection can accommodate, or implements or improves transit, pedestrian and bike facilities or access to non-auto modes of travel; and

  (2)   is classified as a minor arterial, arterial, parkway, major highway, controlled major highway, or freeway in the County’s Master Plan of Highways, or is similarly classified by a municipality.  The Director of Transportation may find that a specified business district street or industrial street also provides additional capacity as defined in this provision.

  Additional capacity is sometimes referred to as added “highway capacity,” “transportation capacity,” or “intersection capacity”.

  Adequate Public Facilities Ordinance (APFO) means Section 50-35(k).

  Adequate Public Facilities Ordinance policy area transportation adequacy standards means standards by which the area-wide adequacy of transportation facilities serving a proposed development are judged. APFO policy area transportation adequacy standards do not include requirements for other on-site or off-site transportation improvements that may be separately required or standards relating to local area review which may be independently required.

  Agricultural facility means a building or structure, or portion of a building or structure that is used exclusively for the storage or processing of an agricultural product to prepare the product for market and is located in the Agricultural Reserve, Rural Residential, RE-1 or RE-2 Zones.

  Applicant means the property owner, or duly designated agent of the property owner, of land on which a building permit has been requested for development.

  Bioscience facility means any biological research and development or manufacturing facility that substantially involves research, development or manufacturing of:

  (1)   biologically active molecules,

  (2)   devices that employ or affect biological processes,

  (3)   devices and software for production or management of specific biological information, or

  (4)   products or materials that purify or handle biologically active products;

  Building permit means a building permit issued by the Department of Permitting Services under Chapter 8.

  Capital improvements program (CIP) means the current adopted six-year capital improvements program.

  Charitable, philanthropic institution means a private, tax-exempt organization whose primary function is to provide services, research, or educational activities in areas such as health, social service, recreation, or environmental conservation.

  Clergy House means a single-family dwelling unit provided for the designated religious leader of a place of worship to live.

  Construction means the planning, design, acquisition of land, site improvements, utility relocation, building, and initial furniture and equipment for a capital project.

  Cultural institution means any privately-owned or -operated structure and land where works of art or other objects are kept and displayed, or where books, periodicals, and other reading material are offered for reading, viewing, listening, study, or reference, but not typically offered for sale. Cultural institution includes a museum, cultural or art exhibit, and library.

  Demolish means to tear down or destroy an entire building or structure, or 67 percent or more of first-story exterior walls of a one-family or two-family dwelling unit. Demolish includes the conversion of an exterior wall into an interior wall. Basement and cellar walls are not considered exterior walls.

  Development means the carrying out of any building activity or the making of any material change in the use of any structure or land which requires issuance of a building permit and:

  (1)   Increases the number of dwelling units; or

  (2)   Increases the gross floor area of nonresidential development.

  Development impact tax means a pro rata per unit or per square foot of gross floor area tax imposed before a building permit is issued for development which is intended to defray a portion of the costs associated with impact transportation improvements that are necessary to accommodate the traffic generated by the development.

  Dwelling unit means the definition given to dwelling unit by Chapter 59.

  Farm tenant dwelling means a dwelling unit under the control of the owner or operator of the farm on which the dwelling unit is located and occupied by an agricultural worker actively engaged in farming on a full-time or part-time basis.  Farm Tenant Dwelling includes up to three mobile homes.  A Farm Tenant Dwelling is not restricted by the definition of household.

  General plan refers to “On Wedges and Corridors  . . .  A General Plan for the Maryland- Washington Regional District,” as amended, adopted by the Montgomery County Planning Board and approved by the Montgomery County District Council.

  Gross floor area means the sum of the gross horizontal area of the several floors of a building or structure measured from the exterior faces of the exterior walls or from the center line of party walls.  In a covered but unenclosed area, such as a set of gasoline pumps or a drive-through area, gross floor area means the covered area.  Gross floor area does not include:

  (1)   basement or attic areas with a headroom of less than 7 feet 6 inches;

  (2)   areas devoted to unenclosed mechanical, heating, air conditioning, or ventilating equipment;

  (3)   parking structures; or

  (4)   accessory structures to a residential building.

  Growth policy means the Growth and Infrastructure Policy most recently adopted under Chapter 33A to provide guidelines for the administration of the Adequate Public Facilities Ordinance.

  Hospital means an institution licensed as a hospital under state law.

  Impact tax district means a planning policy area or combination of planning policy areas described under Section 52-41(c).

  Impact tax district transportation program means the transportation improvement program described under Section 52-50.

  Impact transportation improvement means an improvement listed in Section 52-50.

  Improvement means a highway, intersection improvement, transit center, bus, bus shelter, hiker- biker trail, sidewalk connection, or park-and-ride lot, including planning, engineering, design services, right-of-way acquisition, grading, paving, curbs, gutters, drainage, sidewalks, signalization, signage, and all other construction and associated costs.

  Major Activity Center means a commercial site, school, shopping area, transit area, Metro station, or other major employment area that generates pedestrian trips.

  Master plan of highways means the “Master Plan of Highways” adopted by the Planning Board and approved by the District Council, and any similar plan adopted by either Gaithersburg or Rockville.

  Nonresidential means the use of a building that is not a residential use and includes:

  (1)   offices, including general, medical, office parks, research parks, townhouse office buildings, government offices, and other similar uses;

  (2)   industrial uses, including truck terminals, warehouses, light or heavy industrial and manufacturing, industrial parks, and other similar uses;

  (3)   retail uses, including stores or shopping centers engaging in the sale of goods, restaurants, vehicle sales or service, banks or savings and loan institutions, theaters, post offices and other similar uses;

  (4)   places of worship;

  (5)   private elementary, secondary, or post-secondary schools; and

  (6)   other nonresidential uses, including hotels, motels, day care centers, nursing homes, recreational facilities, and other public facilities and similar uses;

  Office-to-residential conversion is when an existing office building is turned into housing through adaptive reuse, renovation, or demolition.

  Operating expense includes reasonable costs of staffing, advertising, marketing, building rental, furniture, supplies and materials, bus fuel, and personnel to operate a trip reduction program.

  Policy area means any geographic area designated as a transportation policy area in the growth policy.

  Programmed transportation improvement means an improvement listed in the current approved county capital improvements program or the state consolidated transportation program or any similar program adopted by either Gaithersburg or Rockville.

  Property owner means any person, group of persons, firm, corporation, or other entity with a proprietary interest in the land on which a building permit has been requested.

  Residential means the use of a building as a dwelling unit.

  (1)   Single-family detached residential includes detached single-family dwelling units.

  (2)   Single-family attached residential includes townhouses, duplexes and other attached single-family dwelling units.

  (3)   Multifamily residential includes:

    (A)   garden apartments;

    (B)   mid-rise and high-rise dwelling unit structures; and

    (C)   mobile homes.

  (4)   Senior residential means:

    (A)   a residential care facility as defined in Section 59.3.3.2.E used solely for housing seniors or persons with a disability;

    (B)   dwelling units located in the age-restricted section of a planned retirement community, as defined in Section 59.8.3.5;

    (C)   an independent living facility for seniors or persons with a disability as defined in Section 59.3.3.2.C; and

    (D)   any household living unit constructed under Section 59.3.3.1 that is restricted by a covenant running with the land for housing persons who are 55 years of age or older.

  (5)   High-rise residential includes any dwelling unit located in a multifamily residential or mixed-use building that is taller than 4 stories.

  Sidewalk connector means a sidewalk that provides a direct link or connection to a major activity center.

  Stacked flats are dwelling units constructed in a stack of 2 or more dwelling units, where each dwelling unit is located either above or below an adjacent unit within a single building that is 4 stories or less.

  Use and occupancy permit means a use and occupancy permit issued by the Department of Permitting Services under Chapter 8.

  (a)  must not require the payment of a transportation mitigation payment or a school facilities payment for the same development; and

  (b)  must refund the payment or give the property owner a credit against the development impact tax for transportation due for the development in the amount of any transportation mitigation payment made for the same development prior to March 1, 2017.

**Sec. 52-40. Findings; purpose and intent.**

  (a)   The master plan of transportation indicates that certain transportation facilities are needed in planning policy areas. Furthermore, the Growth and Infrastructure Policy indicates that the amount and rate of growth projected in certain planning  policy areas will place significant demands on the County for provision of transportation facilities necessary to support and accommodate that growth.

  (b)    Montgomery County, through its adoption of the Capital Improvements Program, indicates its commitment to provide transportation infrastructure.

  (c)    Montgomery County has determined that a combination of approaches will be necessary to fully achieve the level of impact transportation improvements needed to accommodate growth in the County. Thus, Montgomery County proposes to fund a program of transportation improvements through development impact taxes to allow new growth in the County.

  (d)    Imposing a development impact tax that requires new development to pay its pro rata share of the costs of impact transportation improvements necessitated by that development in conjunction with other public funds is a reasonable method of raising the funds to build improvements in a timely manner.

  (e)   The development impact tax funds, in part, the improvements necessary to increase the transportation system capacity, thereby allowing development to proceed. Development impact taxes are used exclusively for impact transportation improvements.

  (f)   In order to assure that the necessary impact transportation improvements are constructed in a timely manner, the County assures the availability of funds sufficient to construct the impact transportation improvements.

  (g)   The County retains the power to determine the types of impact transportation improvements to be funded by development impact taxes and to do all things necessary and proper to effectuate the purpose and intent of this Article.

  (h)   The County intends to further the public purpose of ensuring that an adequate transportation system is available in support of new development.

  (i)   The County intends to impose development impact taxes until the County has attained build-out as defined by the General Plan.

  (a)  must not require the payment of a transportation mitigation payment or a school facilities payment for the same development; and

  (b)  must refund the payment or give the property owner a credit against the development impact tax for transportation due for the development in the amount of any transportation mitigation payment made for the same development prior to March 1, 2017.

**Sec. 52-41. Imposition and applicability of development impact taxes.**

  (a)    A development impact tax must be imposed before a building permit is issued for development in the County.

  (b)   An applicant for a building permit must pay a development impact tax in the amount and manner provided in this Article, unless a credit in the full amount of the applicable tax applies under Section 52-47 or an appeal bond is posted under Section 52-48.

  (c)    The following impact tax districts are established:

    (1)   White Flint: The part of the North Bethesda Metro Station Policy Area included in the White Flint Special Taxing District in Section 68C-2;

    (2)   Red Policy Areas: Bethesda CBD, Chevy Chase Lake, Forest Glen, Friendship Heights, Grosvenor, Glenmont, Lyttonsville, Medical Center, North Bethesda Metro Station, Purple Line East, Rockville Town Center, Shady Grove, Silver Spring CBD, Takoma, Twinbrook, Wheaton CBD, and Woodside Metro Station Policy Areas;

    (3)   Orange Policy Areas: Aspen Hill, Bethesda/Chevy Chase, Burtonsville Town Center, Clarksburg East, Clarksburg Town Center, Derwood, Fairland/Briggs Chaney, Gaithersburg, Germantown East, Germantown Town Center, Germantown West, Great Seneca Communities, Great Seneca Life Science Center, Kensington/Wheaton, Montgomery Village/Airpark, North Bethesda, Olney Town Center, Rock Spring, Rockville City, Silver Spring/Takoma Park, White Oak, and White Oak Downtown Policy Areas;

    (4)   Yellow Policy Areas: Clarksburg West, Cloverly, Damascus, Colesville, North Potomac, Olney, and Potomac Policy Areas; and

    (5)   Green Policy Areas: Rural East and Rural West Policy Areas.

  (d)   A Clergy House must pay the impact tax rate that applies to a place of worship if the house:

    (1)   is on the same lot or parcel, adjacent to. or confronting the property on which the place of worship is located; and

    (2)   is incidental and subordinate to the principal building used by the religious organization as its place of worship.

The place of worship tax rate does not apply to any portion of a Clergy House that is nonresidential development.

  (e)   Development impact taxes collected from developments located in the cities of Gaithersburg and Rockville must be accounted for separately according to the municipality where the funds originated.  These tax revenues must be used only to fund transportation improvements listed in a memorandum of understanding between the County and the respective City, which must be approved by the County Council.  If the County and the respective City do not agree on a memorandum of understanding regarding the use of impact tax revenues, the County Council may appropriate funds to improvements which are consistent with the master plan of the respective City after holding a separate hearing on any specific improvement if the City so requests.

  (f)    A development impact tax must not be imposed on any building owned, and used primarily, by any agency or instrumentality of federal, state, County, or municipal government.

  (g)    A development impact tax must not be imposed on:

    (1)   any Moderately Priced Dwelling Unit built under Chapter 25A or any similar program enacted by either Gaithersburg or Rockville;

    (2)   any other dwelling unit built under a government regulation or binding agreement that limits for at least 15 years the price or rent charged for the unit in order to make the unit affordable to households earning less than 60% of the area median income, adjusted for family size;

    (3)   any Personal Living Quarters unit built under Section 59-3.3.2.D, which meets the price or rent eligibility standards for a moderately priced dwelling unit under Chapter 25A;

    (4)   any dwelling unit in an Opportunity Housing Project built under Sections 56-28 through 56-32, which meets the price or rent eligibility standards for a moderately priced dwelling unit under Chapter 25A;

    (5)   any development located in an enterprise zone designated by the State;

    (6)   except for a development located in the City of Rockville, any development located in a Qualified Opportunity Zone certified by the United States Treasury Department or in an area previously designated as an Opportunity Zone, including a development located in the following census tracts as defined by their 2010 Census Boundaries: Silver Spring – 25.00, 26.01; Takoma Park – 17.03, 20.00, 23.01; White Oak – 15.05, 15.09, 14.21; Wheaton – 38.00; Rockville – 9.04; Gaithersburg – 7.24, 7.23, 7.13, 8.13; and Germantown – 8.30;

    (7)   a house built by high school students under a program operated by the Montgomery County Board of Education;

    (8)   a farm tenant dwelling;

    (9)   a bioscience facility;

    (10)   a multifamily dwelling unit with 3 or more bedrooms in a multifamily structure;

    (11)   any single-family attached or detached dwelling units with a gross floor area of 1,800 square feet or less, or a gross floor area of 2,200 square feet or less including an attached garage; or

    (12)   any development that is within one-half mile of a Metro station, within a Parking Lot District, and that provides no onsite parking.

  (h)   The development impact tax does not apply to:

    (1)   any reconstruction or alteration of an existing building or part of a building that does not increase the gross floor area of the building;

    (2)   any ancillary building in a residential development that:

      (A)   does not increase the number of dwelling units in that development; and

      (B)   is used only by residents of that development and their guests, and is not open to the public; and

    (3)   any building that replaces an existing building on the same site or in the same project (as approved by the Planning Board or the equivalent body in Rockville or Gaithersburg) to the extent of the gross floor area of the previous building, if:

      (A)   an application for a building permit is filed within four years after demolition or destruction of the previous building was substantially completed;

      (B)   the Director of the Department of Permitting Services or the Director’s designee finds that the applicant was unable to apply for a building permit or commence construction within four years after demolition or destruction of the previous building was substantially completed due to circumstances beyond the control of the applicant or the applicant’s agents; or

      (C)   the previous building is demolished or destroyed, after the replacement building is built, by a date specified in a phasing plan approved by the Planning Board or equivalent body.

    (4)   office-to-residential conversions when the building is adaptively reused or renovated for multifamily housing; and

    (5)   the conversion of office to multifamily, single-family detached, or single-family attached housing when demolition is involved.

However, if in any case the development impact tax that would be due on the new, reconstructed, or altered building is greater than the tax that would have been due on the previous building if it were taxed at the same time, the applicant must pay the difference between those amounts.

  (a)  must not require the payment of a transportation mitigation payment or a school facilities payment for the same development; and

  (b)  must refund the payment or give the property owner a credit against the development impact tax for transportation due for the development in the amount of any transportation mitigation payment made for the same development prior to March 1, 2017.

  (a)  Except as provided in paragraph (b) or (c), County Code Section 52-41(g)(5), formerly 52-49(g)(5), and Section 52-54(c)(5), formerly 52-89(c)(5), both inserted by Section 1 of this Act, do not apply to any development which received preliminary subdivision plan approval or site plan approval (or a similar approval in a municipality) before October 22, 2015.

  (b)  If a development approved before October 22, 2015 is amended any time thereafter to include additional dwelling units and at least 25% of the additional dwelling units are exempt under paragraph (1), (2), (3), or (4) of Section 52-54(c), or any combination of them, then Section 52-41(g)(5) and Section 52-54(c)(5), apply to the additional units.

  (c)  If the relevant preliminary subdivision plan was approved before January 1, 2008, Sections 52-41(g)(5) and 52-54(c) apply to building permit applications for the unbuilt portion of the development.

**Sec. 52-42. Collection of development impact taxes.**

  (a)    The Department of Permitting Services must determine the amount of the applicable development impact tax.

  (b)    Each applicant for a building permit for development that is not exempt from the development impact tax must supply to the Department of Permitting Services for each requested building permit:

    (1)   The number and type of dwelling units for residential development; and

    (2)   The gross floor area and type of development for nonresidential development.

    The applicant must submit for inspection relevant support documentation as the Department requires.

  (c)    The Department of Permitting Services must not issue a building permit for development that is not exempt from the development impact tax unless:

    (1)   the applicant has paid the applicable development impact tax;

    (2)   the applicant is entitled to a credit under Section 52-47 in the amount of the applicable development impact tax;

    (3)   an appeal has been taken and a bond or other surety posted under Section 52-48; or

    (4)   payment is deferred under Section 52-42(l).

  (d)   When a person applies to a municipality in the County for a building permit for a building or dwelling unit, the applicant must show that all payments due under this Section with respect to the building or unit have been paid unless payment is deferred under Section 52-42(l).  If payment is deferred under Section 52-42(l), the applicant must submit proof of payment to the municipality once payment has been made.  The Director of Finance must promptly refund any payment made for any building or part of a building for which a building permit is not issued by the municipality.

  (e)    Nothing in this Article changes or supercedes any other requirement of City, County, state or federal law that may apply to the development, including county zoning and subdivision regulations that may impose on-site and off-site transportation improvement requirements and local area review requirements implemented by the Planning Board.

  (f)   If any person fails to pay the tax due under Section 52-43, that person is liable for:

    (1)   interest on the unpaid tax at the rate of one percent per month for each month or part of a month after the date for payment of the tax; and

    (2)   a penalty of 5 percent of the amount of the tax per month or part of a month after the date for payment of the tax, not to exceed 25 percent of the tax.

The Director of Finance must collect any interest and penalty as a part of the tax.

  (g)    If any person fails to pay the tax when due, the Director of Finance must obtain information on which to calculate the tax due.  As soon as the Director obtains sufficient information to calculate any tax due, the Director must assess the tax and penalties against the person.  The Director must notify the person by mail sent to the person's last known address of the total amount of the tax, interest, and penalties.  The total amount must be paid within 10 days after the notice is mailed.

  (h)    Every person liable for any tax under this Article must preserve for 2 years all records necessary to determine the amount of the tax.  The County may inspect the records at any reasonable time.

  (i)    Any failure to pay the tax due under this Article, and any violation of this Section, is a Class A violation.  Each violation is a separate offense.  A conviction does not relieve any person from payment of the tax.

  (j)   Section 52-21 applies to this tax.  The lien imposed under this Article has the same priority and may be enforced in the same manner as a lien imposed in case of nonpayment of County real property taxes.

  (k)    If, within 10 years after a building permit is issued, any person changes the use of all or part of a building to a use for which a higher tax would have been due under this Article when the building permit was issued (including a change from a status, use, or ownership that is exempt from payment to a status, use, or ownership that is not so exempt), the owner of the building must within 10 days after the change in status, use, or ownership pay all additional taxes that would have been due if the building or part of the building had originally been used as it is later used.  If the building owner does not pay any additional tax when due, each later owner is liable for the tax, and any interest or penalty due, until all taxes, interest, and penalties are paid.

  (l)   Notwithstanding any other provisions of this Chapter, an applicant for a building permit need not pay any development impact tax, Transportation Mitigation Payment, or School Facilities Payment due until the applicant schedules the final inspection of the building by the Department of Permitting Services.  Final inspection will not be scheduled until payment is received.

The rate of the tax or Payment due is the rate in effect when the tax or Payment is paid.  A permittee may appeal the imposition or calculation of the tax or Payment under Section 52-48. If the Department of Permitting Services or a municipality revokes or suspends a building permit or issues a stop-work order solely because the permittee did not pay any tax or Payment due under this Article, the permittee or any other party must not appeal the permit revocation or suspension or the stop work order issuance, or any modification of either, under Chapter 8. If the appealing party posts a bond or other sufficient surety satisfactory to the County Attorney as provided in Section 52-48, the Department or municipality must reissue or reinstate the building permit or revoke the stop-work order..

**Sec. 52-43. Calculation of development impact tax.**

  (a)    The Department of Permitting Services must calculate the amount of the applicable development impact tax due for each building permit by:

    (1)   determining the applicable impact tax district and whether the permit is for development that is exempt from the tax under Section 52-41(f);

    (2)   verifying the number and type of dwelling units and the gross floor area and type of nonresidential development for which each building permit is sought;

    (3)   determining the applicable tax under Section 52-49; and

    (4)   multiplying the applicable tax by:

      (A)   the appropriate number of dwelling units; and

      (B)   the gross floor area of nonresidential development.

  (b)    If the development for which a building permit is sought contains a mix of uses, the Department must separately calculate the development impact tax due for each type of development.

  (c)   If the type of proposed development cannot be categorized under the definitions of nonresidential and residential in Section 52-39, the Department must use the rate assigned to the type of development which generates the most similar traffic impact characteristics.

  (d)    The Department must calculate the amount of the development impact tax due under this Article in effect when the building permit application is submitted to the Department, or before a building permit is issued by a municipality.

  (e)    A building permit application, or if the property is located in a municipality with authority to issue building permits, a request to determine the amount of the impact tax, must be resubmitted to the Department if the applicant changes the project by:

    (1)   increasing the number of dwelling units;

    (2)   increasing the gross floor area of nonresidential development; or

    (3)      changing the type of development so that the development impact tax would be increased.

  (f)   A 1-bedroom garden apartment must be calculated using the high-rise residential rate if the preliminary plan was approved before January 1, 2025.

  The Department must recalculate the development impact tax based on the plans contained in the resubmitted building permit application.

**Sec. 52-44. Annual report.**

  The County Executive must submit a report to the Council on the development impact tax not later than April 1 of each year.  The report must include:

  (a)   a summary of the revenue collected from the tax in the previous calendar year in each impact tax district;

  (b)   a list of each building exempted from the tax during the previous calendar year under Section 52-41(g) or taxed at a rate of $0 under Section 52-49, and the tax that otherwise would have been paid for that building; and

  (c)   any other information that the Executive finds relevant.

**Sec. 52-45. Restrictions on use and accounting of development impact tax funds.**

  (a)   The funds collected by the development impact tax must be used solely to fund County or municipal transportation improvements of the types listed in Section 52-50 located anywhere in the County, except as provided in subsections (c) and (h).  In appropriating funds collected by the development impact tax, the Council should, to the extent feasible, designate funds to be used for transportation improvements in the policy area from which the funds were collected or an adjacent policy area.

  (b)   Upon receipt of development impact taxes, the Department of Permitting Services must transfer the taxes to the Department of Finance for crediting to the appropriate account.

  (c)    The Department of Finance must establish separate accounts for the City of Gaithersburg and the City of Rockville, and must maintain records for each account so that development impact tax funds collected can be segregated by each city.

  (d)   The Department of Finance must maintain and keep adequate financial records for each account that must:

    (1)   Show the source and disbursement of all revenues;

    (2)   Account for all monies received; and

    (3)   Ensure that the disbursement of funds from each account is used exclusively for the financing of the transportation improvements listed in Section 52-50.

  (e)   Interest earned by each account must be credited to that account and must be used solely for the purposes specified for funds of the account.

  (f)   The Department of Finance must annually issue a statement for each account.

  (g)   Development impact taxes must be disbursed from an account only for the purposes for which the tax has been imposed, including reimbursement to the County or Gaithersburg or Rockville of advances made for these purposes from other available funds.

  (a)  must not require the payment of a transportation mitigation payment or a school facilities payment for the same development; and

  (b)  must refund the payment or give the property owner a credit against the development impact tax for transportation due for the development in the amount of any transportation mitigation payment made for the same development prior to March 1, 2017.

**Sec. 52-46. Refunds.**

  (a)    Any person who has paid a development impact tax may apply for a refund of the impact tax if:

    (1)   the County has not appropriated the funds for impact transportation improvements of the types listed in Section 52-50, or otherwise formally designated a specific improvement of a type listed in Section 52-50 to receive funds, by the end of the twelfth fiscal year after the tax is collected;

    (2)   the building permit has been revoked or has lapsed because construction did not start; or

    (3)   the project has been physically altered, resulting in a decrease in the amount of impact tax due.

  (b)    Only the current owner of property may petition for a refund of the impact tax. A petition for refund of the impact tax must be filed within the time established for filing a claim for refund of a local tax under state law.

  (c)    The petition for refund of the impact tax must be submitted to the Director of Permitting Services on a form provided by the County. The petition must contain at least:

    (1)   A statement that petitioner is the current owner of the property;

    (2)   A copy of the dated receipt for payment of the development impact tax issued by the Department of Permitting Services;

    (3)   A certified copy of the latest recorded deed for the subject property; and

    (4)   The reasons why a refund of the impact tax is sought.

  (d)   The Director of Permitting Services must investigate each claim and hold a hearing if the petitioner requests a hearing. Within 3 months after receiving a petition for refund of the impact tax, the Director of Permitting Services must provide the petitioner, in writing, with a decision on the impact tax refund request. The decision must include the reasons for the decision, including, as appropriate, a determination of whether impact tax funds collected from the petitioner, calculated on a first-in-first-out basis, have been appropriated or otherwise formally designated for impact transportation improvements of the types listed in Section 52-50 within 12 fiscal years. If a refund of the impact tax is due the petitioner, the Director of Permitting Services must notify the Department of Finance and, if the property is located in Gaithersburg or Rockville, the finance director of that city.

  (e)    The Department of Finance must not pay a refund of the impact tax unless the petitioner has paid all other state, county, or municipal taxes, fees, or charges that the Department is responsible for collecting.

  (f)    The petitioner may appeal the determination of the Director of Permitting Services in accordance with Article 24, Title 9, of the Maryland Code or any successor law.

**Sec. 52-47. Credits.**

  (a)   A property owner is entitled to a credit if the owner, before July 1, 2002, entered into a participation agreement, or a similar agreement with the state or a municipality, the purpose of which was to provide additional transportation capacity. A property owner is also entitled to a credit if the owner receives approval before July 1, 2002 of a subdivision plan, development plan, or similar development approval by the County or a municipality that requires the owner to build or contribute to a transportation improvement that provides additional transportation capacity.  The Department of Transportation must calculate the credit.  The credit must equal the amount of any charge paid under the participation agreement.  The Department may give credit only for building permit applications for development on the site covered by the participation agreement.

  (b)   Except as provided in subsection (l), a property owner must receive a credit for constructing or contributing to an improvement of the type listed in Section 52-50, including the cost of an improvement in a Unified Mobility Program or the White Oak Local Area Transportation Improvement Program, if the improvement reduces traffic demand or provides additional transportation capacity and to the extent the cost of the improvement exceeds the property owner’s fee under a Unified Mobility Program or the White Oak Local Area Transportation Improvement Program.

    (1)   If the property owner elects to make the improvement, the owner must enter into an agreement with a municipality or the County or receive a development approval based on making the improvement, before any building permit is issued.  The agreement or development approval must contain:

      (A)   the estimated cost of the improvement, if known then;

      (B)   the dates or triggering actions to start and, if known then, finish the improvement;

      (C)   a requirement that the property owner complete the improvement according to applicable municipal or County standards; and

      (D)   any other term or condition that the municipality or County finds necessary.

    (2)   The Department of Transportation must:

      (A)   review the improvement plan;

      (B)   verify costs and time schedules;

      (C)   determine whether the improvement is an impact transportation improvement;

      (D)   determine the amount of the credit for the improvement that will apply to the development impact tax; and

      (E)   certify the amount of the credit to the Department of Permitting Services before that Department or a municipality collects the applicable impact tax.

    (3)   An applicant for subdivision, site plan, or other development approval from the County, Gaithersburg, or Rockville, or the owner of property subject to an approved subdivision plan, development plan, floating zone plan, or similar development approval, may seek a declaration of allowable credits from the Department of Transportation.  The Department must decide, within 30 days after receiving all necessary materials from the applicant, whether any transportation improvement which the applicant has constructed, contributed to, or intends to construct or contribute to, will receive a credit under this subsection.  If, during the initial 30-day period after receiving all necessary materials, the Department notifies the applicant that it needs more time to review the proposed improvement, the Department may defer its decision an additional 15 days.  If the Department indicates under this paragraph that a specific improvement is eligible to receive a credit, the Department must allow a credit for that improvement when taking action under paragraph (2).

    (4)   Any credit that was certified under this subsection on or after March 1, 2004, and before December 31, 2015, expires 6 years after the Department certifies the credit.  Any credit that was certified under this subsection on or after January 1, 2016, expires 12 years after the Department certifies the credit, except that any credit certified between January 1, 2016, and January 1, 2022, in the amount of at least $3 million expires 16 years after the Department certifies the credit.

    (5)   The property owner must notify the Department of Transportation of the actual cost of each improvement for which a credit was certified within 180 days after the improvement is completed.  Any cost of dedicating land or another right-of-way is not eligible unless the owner shows that the improvement resulted in a loss of density for the development.

    (6)   If the actual cost of an improvement for which a credit was certified differs from its estimated cost:

      (A)   if the actual cost is greater than the estimate, the amount of the credit must be increased to cover the actual cost of the improvement;

      (B)   if the actual cost is less than the estimate:

        (i)   the amount of any credit that has not been used must be reduced by the difference between the estimate and the actual cost; and

        (ii)   if any impact tax on the development is owed, the property owner must pay the additional tax.

  (c)   Any property owner who, before May 1, 2001, built all or part of a project in the Clarksburg policy area which is listed in the impact tax transportation program (including building any road which would be widened under the program) is entitled to a credit equal to the reasonable cost of the improvement.  The Department of Transportation must calculate the credit.

  (d)   Any credit for building or contributing to an impact transportation improvement does not apply to any development that has been previously approved under the Alternative Review Procedure for Metro Station Policy Areas in the Growth and Infrastructure Policy.

  (e)   A refund must not be granted when any credit certified under this Section exceeds the applicable tax.

  (f)

    (1)   If an improvement has not been completed and the impact tax credit is based on an estimated cost, the property owner must post a surety bond or similar instrument for the estimated cost of the improvement unless the owner has already filed a bond in at least that amount with the County for the same improvement.

    (2)   If the property owner does not construct or complete the improvement for which a credit has been issued, the County may use the bond as necessary to construct or complete the improvement.

    (3)   The Department may revoke a credit when the property owner does not build the improvement for which a credit was certified.

  (g)   Any credit certified for an improvement located in a municipality must be applied to impact tax payable on development in the same municipality.

  (h)   Any road or other transportation improvement that primarily serves the residents or occupants of one development or a small number of developments is not eligible for a credit under this Section.

  (i)   Any contribution to a transportation improvement must be to a specific project that is fully funded in the County capital improvement program or the similar program of a municipality to be eligible for a credit under this Section, except a credit issued under subsection (a).

  (j)

    (1)

      (a)   A property owner must receive a credit for constructing or contributing to the cost of building a new single family residence that meets Level I Accessibility Standards, as defined in Section 52-107(a).

    (2)   The credit allowed under this Section must be as follows:

      (A)   If at least 5% of the single family residences built in the project meet Level I Accessibility Standards, then the owner must receive a credit of $250 per residence.

      (B)   If at least 10% of the single family residences built in the project meet Level I Accessibility Standards, then the owner must receive a credit of $500 per residence.

      (C)   If at least 25% of the single family residences built in the project meet Level I Accessibility Standards, then the owner must receive a credit of $750 per residence.

      (D)   If at least 30% of the single family residences built in the project meet Level I Accessibility Standards, then the owner must receive a credit of $1,000 per residence.

    (3)   Application for the credit and administration of the credit must be in accordance with Subsections 52-107(e) and (f).

    (4)   A person must not receive a tax credit under this Section if the person receives any public benefit points for constructing units with accessibility features under Chapter 59.

  (k)   After a credit has been certified under this Section, the property owner or contract purchaser to whom the credit was certified may transfer all or part of the credit to any successor in interest of the same property.  However, any credit transferred under this subsection must only be applied to the tax due under this Article with respect to the property for which the credit was originally certified.

  (l)   The Department must not certify a credit for the cost of a project in a Unified Mobility Program or the White Oak Local Area Transportation Improvement Program up to the property owner’s fee under a Unified Mobility Program or the White Oak Local Area Transportation Improvement Program.

  (a)  must not require the payment of a transportation mitigation payment or a school facilities payment for the same development; and

  (b)  must refund the payment or give the property owner a credit against the development impact tax for transportation due for the development in the amount of any transportation mitigation payment made for the same development prior to March 1, 2017.

  (a)    This Act takes effect on July 1, 2002, and applies to any development for which an application for a building permit is filed on or after that date.

  (b) Each taxpayer in the County District must pay the development impact tax at 25% of the rates set in Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1), as amended by Section 1 of this Act, for building permit applications filed between July 1, 2002 and December 31, 2002; 50% of the rates set in Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1) for building permit applications filed between January 1, 2003, and June 30, 2003; 75% of the rates set in Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1) for building permit applications filed between July 1, 2003 and December 31, 2003; and 100% of the rates set in Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1) for building permit applications filed on or after January 1, 2004.  To the extent that any taxpayer pays a lower rate than that set in Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1) because this subsection applies, any credit claimed under Section 52-55 (now Section 52-47, 2016 L.M.C., ch. 7, §1) must be reduced by the same ratio.

  (c)    In the County District, the development impact tax does not apply to any building if:

    (1)    a subdivision plan, project plan, or an equivalent development approval mechanism in Gaithersburg or Rockville, which includes that building was approved before July 1, 2002, and

    (2)    a building permit is issued before July 1, 2003.

**Sec. 52-48. Appeals.**

  After determination of the amount of the development impact tax or credit due, an applicant for a building permit or a property owner may appeal to the Maryland Tax Court to the extent permitted by state law or, if the Maryland Tax Court does not have jurisdiction, to the Circuit Court under the Maryland Rules of Procedure that regulate administrative appeals.  If the appealing party posts a bond or other sufficient surety satisfactory to the County Attorney in an amount equal to the applicable development impact tax as calculated by the Department of Permitting Services, the Department or municipality must issue the building permit if all other applicable conditions have been satisfied.  The filing of an appeal does not stay the collection of the development impact tax until a bond or other surety satisfactory to the County Attorney has been filed with the Department of Permitting Services.

**Sec. 52-49.  Tax rates.**

  (a)   The Council must establish the tax rates for each impact tax district, except as provided in subsection (b), by resolution, after a public hearing advertised at least 15 days in advance.

  (b)   For any development located in the White Flint Impact Tax District, the tax rates are $0.

  (c)   Any Productivity Housing unit, as defined in Section 25B-17(j), must pay the tax at 50% of the applicable rate calculated in subsection (a).

  (d)   Any building that would be located within one-half mile of the Germantown, Metropolitan Grove, Gaithersburg, Washington Grove, Garrett Park, or Kensington MARC stations must pay the tax at 85% of the applicable rate calculated in subsection (a).

  (e)   The County Council by resolution, after a public hearing advertised at least 15 days in advance, may increase or decrease the rates established under this Section.

  (f)   Biennial tax rate adjustment. The Director of Finance, after advertising and holding a public hearing as required by Section 52-17(c), must adjust the tax rates set in or under this Section on July 1 of each odd-numbered year by the cumulative increase or decrease in a published construction cost index specified by regulation over the prior two calendar years.  The Director must calculate the adjustment to the nearest multiple of 5 cents for rates per square foot of gross floor area or one dollar for rates per dwelling unit.  The Director must publish in the County Register the amount of this adjustment not later than May 1 of each odd-numbered year.

    (1)   Inflation cap on biennial tax rate increases. Notwithstanding subsection (f), the Director must cap the biennial tax rate adjustment not to exceed 20%.

    (2)   Carryover of biennial tax rate adjustments in excess of 20%. If the biennial tax rate adjustment exceeds 20%, the excess dollar amount must be carried over and added to the tax rate before calculating the next biennial adjustment. If this total adjustment, including any carried over value, again exceeds 20%, the excess dollar amount must be carried over and added to the tax rate before calculating the biennial adjustment.

  (g)   Any non-exempt dwelling unit in a development in which at least 25% of the dwelling units are exempt under Section 52-41(g)(1) must pay the tax discounted by an amount equal to the impact tax rate applicable in the Red Policy Area for that unit type.

  (h)   Except for a development located in the City of Rockville, any development located in a Desired Growth and Investment Area, as defined in the 2020-2024 Growth and Infrastructure Policy (Subdivision Staging Policy), that has an accepted preliminary plan application, or equivalent plan acceptance in the City of Gaithersburg, before January 1, 2025, must pay the tax at:

    (1)   60 percent of the otherwise applicable rate if located in an Orange Policy Area; or

    (2)   68 percent of the otherwise applicable rate if located in a Yellow Policy Area.

  (i)   Stacked flats must pay the multifamily low-rise applicable rate.

  (a)  must not require the payment of a transportation mitigation payment or a school facilities payment for the same development; and

  (b)  must refund the payment or give the property owner a credit against the development impact tax for transportation due for the development in the amount of any transportation mitigation payment made for the same development prior to March 1, 2017.

  (a) This Act takes effect on March 1, 2004.  The development impact tax imposed under Article VII (now Article IV, 2016 L.M.C., ch. 7, § 1) of Chapter 52, as amended by Section 1 of this Act, applies to any building for which an application for a building permit is filed on or after that date.

  (b) The development impact tax rates imposed under Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1), as amended by Section 1 of this Act, do not apply to any building located in a Metro Station Policy Area or Town Center Policy Area if:

  (1) a site plan which includes that building was approved by vote of the County Planning Board, or the equivalent body in any municipality, before May 1, 2003; and

  (2)

    (A)   a building permit is issued for that building before September 1, 2006; or

  (B) if the building is part of a mixed use project, a building permit is issued for any building or structure in that project before March 1, 2005.

  Any building to which this subsection applies is liable for the tax at the rates in effect on February 29, 2004.

  (a) This Act takes effect on July 1, 2002, and applies to any development for which an application for a building permit is filed on or after that date.

  (b) Each taxpayer in the County District must pay the development impact tax at 25% of the rates set in Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1), as amended by Section 1 of this Act, for building permit applications filed between July 1, 2002 and December 31, 2002; 50% of the rates set in Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1) for building permit applications filed between January 1, 2003, and June 30, 2003; 75% of the rates set in Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1) for building permit applications filed between July 1, 2003 and December 31, 2003; and 100% of the rates set in Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1) for building permit applications filed on or after January 1, 2004.  To the extent that any taxpayer pays a lower rate than that set in Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1) because this subsection applies, any credit claimed under Section 52-55 (now Section 52-47, 2016 L.M.C., ch. 7, §1) must be reduced by the same ratio.

  (c) In the County District, the development impact tax does not apply to any building if:

  (1) a subdivision plan, project plan, or an equivalent development approval mechanism in Gaithersburg or Rockville, which includes that building was approved before July 1, 2002, and

  (2) a building permit is issued before July 1, 2003.

  “Sec. 3. The tax rates in Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1), as amended by Section 1 of this Act, that apply to the Eastern Montgomery County impact tax district take effect on August 1, 1992, and apply to each development for which an application for a building permit is filed on or after that date. The tax rates in Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1), as amended by Section 1 of this Act, that apply to the Germantown impact tax district take effect on July 1, 1993, and apply to each development for which an application for a building permit is filed on or after that date.

  “Sec. 4.  Notwithstanding the provisions of Section 52-57 (now Section 52-49, 2016 L.M.C., ch. 7, § 1), before its amendment by Section 1 of this Act, the tax rates that apply in the Germantown impact tax district to any development for which an application for a building permit is filed between August 1, 1992, and June 30, 1993, are as follows:

**Sec. 52-50. Use of impact tax funds.**

  Impact tax funds may be used for any:

  (a)   new road or total reconstruction of all or part of an existing road that adds an additional lane or turn lane or improves transit service or bicycle commuting, such as bus lanes or bike lanes;

  (b)   new or expanded transit center or park-and-ride lot,

  (c)   bus added to the Ride-On bus fleet, but not a replacement bus;

  (d)   new bus shelter, but not a replacement bus shelter;

  (e)   hiker-biker trail and protected bike lanes used primarily for transportation;

  (f)   bicycle locker that holds at least 8 bicycles;

  (g)   bikesharing station (including bicycles) approved by the Department of Transportation;

  (h)   sidewalk connector in a public right-of-way to or within a major activity center or along an arterial or major highway; or

  (i)   element of bus rapid transit, including exclusive bus lanes, shelters, and buses.

  (a)  must not require the payment of a transportation mitigation payment or a school facilities payment for the same development; and

  (b)  must refund the payment or give the property owner a credit against the development impact tax for transportation due for the development in the amount of any transportation mitigation payment made for the same development prior to March 1, 2017.

**Sec. 52-51. Local Area Transportation Review Mitigation Payment.**

  (a)   In addition to the tax due under this Article, an applicant for a building permit for any building must pay to the Department of Finance a Mitigation Payment if this payment is required for a building included in a preliminary plan of subdivision that was approved under the Local Area Transportation Review provisions in the Growth and Infrastructure Policy.

  (b)   The Council, by resolution after a public hearing advertised at least 15 days in advance, must establish the rates for the Mitigation Payment required in this Section.

  (c)   The Payment must be paid at the same time and in the same manner as the tax under this Article, and is subject to all provisions of this Article for administering and collecting the tax.

  (d)   The Department of Finance must retain funds collected under this Section in an account to be appropriated for transportation improvements that result in added transportation capacity or improved mobility in the area where the development for which the funds were paid is located.

  (e)   A property owner must receive a credit against the Local Area Transportation Review Mitigation Payment authorized by this Section for the cost of constructing or contributing to an improvement listed in a Unified Mobility Program for that area or for the White Oak Local Area Transportation Improvement Program up to the cost of the improvement listed in that program.

  (a)  must not require the payment of a transportation mitigation payment or a school facilities payment for the same development; and

  (b)  must refund the payment or give the property owner a credit against the development impact tax for transportation due for the development in the amount of any transportation mitigation payment made for the same development prior to March 1, 2017.