Good Evening Ward 1,
I’m looking forward to tonight’s second Public Forum on the Proposed Tax Credits and more council discussion. I hope some of you will be joining us.
Best,
Shana
City Council Meeting Agenda - Wednesday, October 16, 2024
Public Hearing on Tax Credits
General Public Comments
WORK SESSION
It is very impressive that our Grants Coordinator, Patti Mallin, and our Grants Review Committee work on such a diversity of projects. Since we have a high percentage of affordable housing, it is important to provide extra services to our residents that they need in order to thrive.
This type of fiscal analysis costs the City $29,500 and took about a month to complete. I understand that some residents were hoping to see an analysis of additional cost per resident, but to get the type of detail would be difficult on our limited budget.
I have heard a wide range of views about whether now is the right time to proceed. The need for more housing has been an intensely discussed issue since the current council was elected in 2022. HCD Staff was working from the direction of this council’s priorities when they proposed these credits in July. The nation is experiencing a housing crisis. A major roadblock to economic growth in Maryland and in our city is the cost and insufficiency of housing. After the rezoning of Ward 6’s Takoma Langley Crossroads sector plan in 2012, there has been no new development of housing.
Residential development supports other economic development in the City and throughout Maryland. We may forgo taxes for 15 years on those properties, but if our commercial properties are better supported with higher density population, we could increase our tax revenue with a higher commercial tax rate. These “tax credits” are targeted at providing denser multi-family housing in order to maximize the likelihood of that type of housing being built. The City also receives revenue from residents’ income as well, which we will not forgo.
The City does not own the properties we are considering developing. They are privately owned. They will have to manage their own projects, not City Staff. Permitting is the County’s responsibility as are inspections.
Forgone Revenue and Expenses
The “tax credits” we are considering will only affect the taxes paid to the City.
Some of the City’s revenue comes from tax duplication from the County. If our population increases, so would the money from tax duplication.
Most of our tax duplication is for Police and Public Works services
The Police Department also receives revenue from:
Fines/ticketing
The State
The Recreation Department charges for many of its services
The City does not provide waste management services for apartments over 12 units, which it is most likely all of the “tax credit” supported builds would be.
In addition, multi-family buildings are responsible for snow removal, sidewalk infrastructure, and the vegetation management on their properties, even within common areas.
Most of our City Staff numbers wouldn’t need to be increased, as the footprint of the City would stay the same:
For example: vegetation management, urban forest management, city engineer, senior level staff
Infrastructure Capacity
During the Site Plan Review Process, Montgomery County would consider the plan to decide if any increase of infrastructure was necessary to support additional homes. Development doesn't always take resources from a city.
Montgomery Planning would at this time consider schools, waste management, transportation issues, traffic loads
We have not had any added meaningful capacity to our elementary schools–added development could benefit us if more students were added and a new school was finally built.
This is also the point in the planning process at which a developer may choose to or be directed to provide other public benefits such as:
Green space, traffic infrastructure improvements, pedestrian infrastructure improvements
Stormwater & Tree Protectio
Stormwater fees are not included in the “tax credit,” properties must still pay their entire stormwater fee.
construction will have to meet stormwater management requirements for the site will require treatment
50% of the run-off from the existing impervious area
treatment of 100% of run-off from the new impervious area
Our City’s Tree ordinances are still in place.
Other thoughts on this report
The maximalist numbers are included in order to show maximum amount of forgone tax revenue
assumes that without policy change, there will be zero development at the WAH site.
This is what we have seen since the Takoma Langley Crossroads Plan. No development.
The criticism that nothing will be built without the “tax credits” is valid, but I do think that the assumption that little would be built is backed by evidence.
The criticism that we are unlikely to max build the hospital seems even stronger since no new multi-family has been built in Takoma Park for so long.
This report assumes a constant tax rate.
Our current tax rate is .$0.5522 per $100 of assessed value.
this is average for our tax rate which has been between .5-.6 over the last 10 years
There are many factors that account for the absence of new construction
Current building market
Developing companies going out of business is a national problem
Reluctance of banks to lend money to developers building in Takoma Park
It is not a question of whether developers are able to make a high enough profit, they are unable to secure financing with banks to get a project started. .
There are a few changes to our ARPA fund in this budget amendment. Some of our projects planned for this year are more difficult to expend before the ARPA deadline. We will still likely do those projects, but out of our General Fund instead. There are also a few grants that Public Works has been awarded that are being taken into consideration in this budget.
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