The Montgomery County Council unanimously passed a bill that delays the collection of impact taxes from the start of a housing project to its completion, aiming to reduce upfront construction costs while maintaining funding for schools and transportation infrastructure.
Per the news release: “The County Council unanimously passed legislation today making it easier to finance and build new housing projects. Introduced by Councilmember Evan Glass, the measure changes the time at which impact taxes are collected, which are used to fund infrastructure projects like roads and schools, from the beginning of a project to the end.
“We are experiencing a nationwide housing shortage, and Montgomery County is no exception,” said Councilmember Glass. “By changing the time at which impact taxes are collected, we will be able to reduce the overall cost of new housing by millions of dollars. Those cost savings will be shared with renters and buyers. If we want to build more housing that is affordable, we need to make it more affordable to build housing. This legislation does exactly that.”
Under current law, an applicant for a building permit is required to pay an impact tax within 6-12 months of the building permit being issued. Because final building inspections rarely occur within 12 months of the permit issuance, the current policy results in higher upfront housing construction costs, with developers including the cost of impact taxes into their initial loans, costing hundreds of thousands to millions of dollars in interest payments on impact taxes. This legislation amends the law so that payment is not required until final inspection of the building by DPS, regardless of the type of building.
Expedited Bill 22-24, Taxation – Collection of Development Impact Taxes, was introduced by Councilmember Glass in October 2024. Councilmembers Dawn Luedtke, Natali Fani-González, Sidney Katz, Gabe Albornoz and Andrew Friedson all co-sponsored the legislation.”