# Public Utilities (GPU)

## Title 25. Rates and Charges

### Subtitle 4. System Development Charge

#### Section 25-401

(a) In this subtitle the following words have the meanings indicated.

(b) "Apartment unit" means a single family housing unit that:

  (1) is one of multiple units within a building;

  (2) contains at least one full bath and one full kitchen; and

  (3) does not contain more than two toilets.

(c) "Fixture unit" means the assigned value for a plumbing fixture or group of plumbing fixtures, as set forth in the Commission's plumbing and gas fitting regulations, that is standardized with a common lavatory having an assigned value of one based on its probable discharge into the drainage system or hydraulic demand on the water supply.

(d) "New service" means:

  (1) a first time connection of a property to the Commission water or sewer system, including:

    (i) a direct connection of an improvement or building; or

    (ii) a connection of the improvement or building through an existing on-site system; or

  (2) a new connection or increased water meter size for a property previously or currently served by the Commission if the new connection or increased meter size is needed because of a change in the use of the property or an increase in demand for service at the property.

(e) "Property" means an improvement or a building on a lot or parcel of land that contains plumbing fixtures.

(f) "Toilet" means a water closet, as set forth in the Commission's plumbing and gas fitting regulations.

#### Section 25-402

(a) In addition to any other charges authorized under this division, the Commission may impose a system development charge that shall be paid by an applicant for new service.

(b) The system development charge shall be paid as follows:

  (1) for residential properties:

    (i) 50% at the time the plumbing permit application is filed; and

    (ii) 50% within 12 months after the earlier of the date on which a plumbing permit application is filed or on transfer of title to the property; and

  (2) for other properties, 100% at the time the plumbing permit application is filed.

(c) When the applicant files the plumbing permit application, the applicant shall deposit with the Commission security:

  (1) in the form of an irrevocable letter of credit;

  (2) in the form of a financial guaranty bond; or

  (3) in a form the Commission establishes and approves under its regulations.

#### Section 25-403

(a)

  (1) Each year the Montgomery County Council and the Prince George's County Council shall meet to determine the amount of the system development charge.

  (2) The amount of the system development charge for a particular property:

    (i) shall be based on the number of plumbing fixtures and the assigned values for those fixtures as set forth in the Commission's plumbing and gas fitting regulations;

    (ii) except as provided in item (iii) of this paragraph and subsection (e) of this section, may not exceed $200 per fixture unit; and

    (iii) for residential properties with five or fewer toilets, shall be based on the number of toilets per dwelling unit and:

      (1) for each apartment unit, may not exceed $2,000;

      (2) for dwellings with one or two toilets, may not exceed $3,000;

      (3) for dwellings with three or four toilets, may not exceed $5,000;

      (4) for dwellings with five toilets, may not exceed $7,000; and

      (5) for dwellings with more than five toilets, shall be calculated on a fixture unit basis.

  (3) When determining the system development charge, the county councils shall consider the actual cost of construction of Commission facilities.

(b) When determining the system development charge, under definitions established jointly and agreed on by the county councils, the county councils:

  (1) shall grant a full or partial exemption from the charge for public sponsored or affordable housing as jointly defined and agreed on by the county councils;

  (2) for properties located in Montgomery County only, shall grant a full or partial exemption from the charge for:

    (i)

      (1) revitalization projects;

      (2) property used by a community-based organization that is exempt from taxation under Sec. 501(c)(3) of the Internal Revenue Code and has the primary mission and purpose of providing recreational and educational programs and services to youth, if:

      (A) the property is used primarily for recreational and educational programs and services to youth; and

      (B) the exemption amount is limited to $80,000;

      (3) property used primarily for child care or after-school care; or

      (4) property used primarily for programs and services for developmentally disabled individuals; and

    (ii) under definitions set forth by the county councils:

      (1) residential property located in a planned retirement community as defined in the zoning ordinance of Montgomery County;

      (2) elderly housing other than that included in item 1 of this item; and

      (3) properties used for manufacturing or biotechnology research and development;

  (3) for properties located in Montgomery County only, may not require that an applicant for an exemption own the property for which an exemption is sought; and

  (4) for properties located in Prince George's County only, may grant a full or partial exemption from the charge for:

    (i)

      (1) revitalization projects;

      (2) property owned by a community-based organization that is exempt from taxation under Sec. 501(c)(3) of the Internal Revenue Code and has the primary mission and purpose of providing recreational and educational programs and services to youth, if:

      (A) the property is used primarily for recreational and educational programs and services to youth; and

      (B) the exemption amount is limited to $80,000;

      (3) property used primarily for child care or after-school care; or

      (4) property used primarily for programs and services for developmentally disabled individuals; and

    (ii) under definitions set forth by the county councils:

      (1) residential property located in a mixed retirement development as defined in the zoning ordinance of Prince George's County;

      (2) elderly housing other than that included in item 1 of this item; or

      (3) properties used for manufacturing or biotechnology research and development.

(c)

  (1) Montgomery County shall approve applications for the exemptions from the system development charge required under subsection (b) of this section on a first-come, first-served basis until the maximum annual limit, including any unused amounts carried over from a prior fiscal year, is reached.

  (2) On or before October 1 each year, Montgomery County shall report to the members of the Montgomery County Delegation to the General Assembly, in accordance with Sec. 2-1257 of the State Government Article, on the exemptions from the system development charge in Montgomery County required under:

    (i) subsection (b)(1) of this section for the immediately preceding fiscal year, including:

      (1) the process used to identify publicly sponsored and affordable housing projects;

      (2) the number of publicly sponsored and affordable housing projects granted exemptions; and

      (3) the number of publicly sponsored or affordable housing units included in each project; and

    (ii) subsection (b)(2) of this section for the immediately preceding fiscal year, including:

      (1) the application process for each exemption; and

      (2) for each exemption:

      (A) the total number of exemption applications received; and

      (B) the total number and amount of exemptions granted.

(d) On or before October 1 each year, Prince George's County shall report to the members of the Prince George's County Delegation to the General Assembly, in accordance with Sec. 2-1257 of the State Government Article, on the exemptions from the system development charge in Prince George's County described under:

  (1) subsection (b)(1) of this section for the immediately preceding fiscal year, including:

    (i) the process used to identify publicly sponsored and affordable housing projects;

    (ii) the number of publicly sponsored and affordable housing projects granted exemptions; and

    (iii) the number of publicly sponsored or affordable housing units included in each project; and

  (2) subsection (b)(4) of this section for the immediately preceding fiscal year, including:

    (i) the application process for each exemption; and

    (ii) for each exemption:

      (1) the total number of exemption applications received; and

      (2) the total number and amount of exemptions granted.

(e) On July 1, 1999, and July 1 of each succeeding year, the maximum charge, as established in subsection (a)(2) of this section, may be changed by an amount equal to the prior calendar year's change in the Consumer Price Index published by the Bureau of Labor Statistics of the United States Department of Labor for urban wage earners and clerical workers for all items for the Washington, D.C. metropolitan area, or the successor index.

(f) If the county councils do not agree on the amount of the system development charge, the system development charge imposed during the previous year shall continue in effect for the following fiscal year.

(g) If the system development charge established by the county councils is less than the amount necessary to recover the full cost of constructing growth related facilities, the Commission shall identify the part of the cost of that growth that will be paid by current ratepayers as:

  (1) a percentage of any rate increase; and

  (2) the annual monetary amount on a typical residential customer's annual water and sewer bill.

#### Section 25-404

(a)

  (1) The Commission shall deposit all funds collected under the system development charge into a system development charge fund.

  (2) The system development charge fund is a special fund that may not revert to general funds of the Commission.

(b) The Commission may use the funds collected from the system development charge only to:

  (1) pay for new treatment, transmission, and collection facilities, the need for which is directly attributable to the addition of new service and the construction of which began after July 1, 1993; or

  (2) amortize any bond that is issued in connection with the construction of those new facilities.

(c) Other costs of enhancement, maintenance, or environmental regulation on existing or new systems shall be borne equally by all ratepayers.

#### Section 25-405

(a) The Commission may allow a developer to design and construct any on-site or off-site facility necessary for the developer's project if the facility is:

  (1) in the Commission Capital Improvement Program and the 10-year Comprehensive Water Supply and Sewerage System Plan adopted by one of the county councils;

  (2) a major project included in the Commission Capital Improvement Program; or

  (3) a project that includes a sewer main or water main that:

    (i) provides only local service;

    (ii) is 2,000 feet or less;

    (iii) has a diameter of:

      (1) 15 inches or more if it is a sewer main; or

      (2) 16 inches or more if it is a water main; and

    (iv) is built to avoid unnecessary and uneconomical duplication when a major project is constructed.

(b) A facility constructed under this section shall be designed, constructed, and inspected in accordance with:

  (1) the standards used by the Commission; and

  (2) all applicable laws, regulations, and written policies of the Commission.

(c) After the Commission approves a facility constructed by a developer under this section, the Commission shall:

  (1) accept the facility as part of the Commission system; and

  (2) subject to subsection (d) of this section, grant the developer a credit against any charge imposed under this subtitle in an amount equal to the cost of constructing the facility.

(d) The Office of the Inspector General shall review and approve the costs incurred by the developer.

(e) The Commission and the developer shall enter into an agreement that incorporates the provisions of this section.

(f) If the Commission rejects a developer's request to design and construct facilities under this section, the Commission shall explain in writing to the developer the reasons for the rejection.

(g)

  (1) The Commission shall submit a report at the end of each fiscal year to the Montgomery County and Prince George's County Delegations to the General Assembly and to the county councils of Montgomery County and Prince George's County.

  (2) The report shall state the number of requests made by developers under this section, including:

    (i) the number of acceptances and rejections by the Commission; and

    (ii) the justification for any rejections.

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Md. Code Ann., Pub. Util. (as displayed at mgaleg.maryland.gov, October 16, 2026)