Some execs say they can handle ‘rain tax’ -- Gazette.Net


A new stormwater pollution-control fee for businesses and nonprofits approved this week by the Montgomery County Council will cause some initial concerns, but those should be smoothed out throughout time, some executives with commercial property companies said.

The fee — fueled by a state law passed last year in response to an order by the U.S. Environmental Protection Agency to clean up the Chesapeake Bay — is being phased in during the next three years in the county. Montgomery, which has assessed a stormwater fee called a “water quality protection charge” on residents for about a decade, is one of 10 Maryland jurisdictions dealing with the issue.

“I think eventually we will be able to incorporate [a new fee] into our future planning for projects,” said Evan Goldman, vice president of development for Rockville-based Federal Realty Investment Trust. Among the development firm’s projects is replacing the Mid-Pike Plaza shopping center in North Bethesda with a mixed-use project called Pike & Rose.

Numerous developers have expressed concerns about how much the fee will be, said Stacy Plotkin Silber, principal with Bethesda law firm Lerch, Early & Brewer and a member of the Sustainable Development Committee with the National Association of Industrial and Office Properties’ Maryland/Washington, D.C. chapter.

“We’ve been hearing that some properties could be charged thousands of dollars,” said Silber, who focuses on land use and zoning issues in Montgomery and Prince George’s counties for clients such as developers of mixed-use projects and private schools. “That has caused a certain level of fear.”

Dubbed by some as a “rain tax,” the charge is based on the average square footage of impervious surface a property has, such as roofs, sidewalks and driveways. Montgomery’s fiscal 2013 rate is $92.60 per equivalent residential unit, which is roughly 2,400 square feet of impervious surface.

‘Big concern’

When Peter Kitzmiller, president of the Maryland Automobile Dealers Association, monitored the state law last year, there was no indication of how much the fee would be, he said. With indications that some dealers could pay thousands of dollars, “It’s a big concern to us,” Kitzmiller said.

Grants will be available to homeowners associations with private roads that are open to the public, while nonprofits’ charges will be capped through a tiered system. Most residents will see their charges decline, county officials say.

Property owners who mitigate stormwater runoff through green rooftops and other practices will be eligible for credits. The Pike & Rose project is employing a good number of green rooftops and taking other steps to reduce runoff, Goldman said.

The project’s first phase is planned to open next year with 150,000 square feet of retail, 80,000 square feet of office and about 500 residential units.

“We’re working on fitting stormwater management into the design,” he said. The project calls for as much as 3.5 million square feet of office, retail and residential, as well as a hotel, on the 24 acres.

The close of the 2013 General Assembly session was less than a month ago, but legislators are already talking about scaling back the fee.

“Sometimes we do things that we have to go back and look at [again],” said Sen. Nancy J. King (D-Dist. 39) of Montgomery Village. “This could be one of them.”

Sen. Edward J. Kasemeyer (D-Dist. 12) of Columbia, who chairs the Senate Budget and Taxation Committee, said he supports the goal of the fees — to support the health of the Chesapeake Bay — but the cost to businesses with large parking lots, for example, could be astronomical.

“There hasn’t been much notice. People are not aware this charge is coming their way,” Kasemeyer said.

In the meantime, Washington is building a massive, 13-mile long tunnel beneath the Potomac River to hold stormwater runoff, which comes from parts of Montgomery.

Similar tunnels are planned in the region, Peter Ensign, executive director of environmental nonprofit DC Greenworks, said during a forum on stormwater regulations Wednesday at the Bethesda Blues and Jazz Supper Club.

Cleaning up the Chesapeake Bay should not just fall on Maryland, said Gigi Godwin, president and CEO of the Montgomery County Chamber of Commerce. The District, Virginia, Delaware and others need to be working on plans, as well, she said.

“I haven’t heard much about what other states are doing about this,” Godwin said.

Frederick County is among the counties that have not yet passed a stormwater charge, with the state bill set to take effect in July. Officials there tried to get an exemption from state legislators this session, but those bills received unfavorable reports in committees. Baltimore, Harford and Howard counties have approved stormwater fees.

Staff writer Daniel Leaderman contributed to this story.