Montgomery County officials are looking to remove the cap on commercial building fees, a move that would shore up county coffers but alienate businesses forced to fork over millions of dollars more just to start construction.
The examination of permits comes in the wake of a new report from Montgomery’s oversight program, CountyStat, that found the cap cost the county $13 million in lost revenue during a recent three-year stretch.
However, if implemented, the steeper fees could heighten criticism that the affluent suburb is less accommodating to businesses than its counterparts across the Potomac River. Businesses ?– and residents — are paying significantly higher energy taxes this year to help close the county’s $1 billion shortfall.
“We’d certainly need to know more about the specifics, but it stands to reason that any move that would drive construction costs up and place additional economic strain on the industry is going to be troublesome,” said Steve Simon, spokesman for the Montgomery County Chamber of Commerce.
The county’s Department of Permitting Services receives compensation for buildings up to three stories high, with a cap on all stories beyond that level.
The permit office was designed to operate exclusively through its own revenue, but low demand for new construction projects left the department $2 million in the red last fiscal year.
And $3.7 million worth of permit fees were waived last fiscal year for Montgomery County Public Schools, the Maryland-National Capital Park and Planning Commission and Montgomery College, a growing trend likely to keep the department from self-sufficiency under current standards, the report found.
“Minimal filing fees inadequately cover services rendered between application filing and plan review and issuance of the permit,” the report says.
For example, a 15-story, $66 million site was charged $250,000 in fees in fiscal 2008, according to the CountyStat report. Without the cap, the business would have paid nearly $2 million in building fees. Its fee was identical to that paid for a two-story building, valued at $13.2 million, during the same year.
Some county officials point to neighboring jurisdictions, such as Prince George’s, Fairfax and Arlington counties, which don’t have caps on commercial building fees. Montgomery has not increased its commercial building fees for the past two fiscal years.
Officials in the county’s budget and permitting departments are developing a recommendation on the fees to present to the County Council.
County Executive Ike Leggett has yet to endorse the proposal, according to spokesman Patrick Lacefield, saying he is waiting to hear “from stakeholders before coming to any conclusion.”
