Sec. 52-41. Imposition and applicability of development impact taxes.
Montgomery County, Md., Code § 52-41 (2026)
Sec. 52-41. Imposition and applicability of development impact taxes.LinkCopy Citation
(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.