Businesses and nonprofits in Montgomery County soon will have to pay a fee to control stormwater pollution, a change that county officials say will reduce what most residents already pay to the county.
As required by state law, the Montgomery County Council unanimously passed a bill Tuesday that expands its “water quality protection charge” — dubbed by some as the “rain tax” — to all nongovernmental properties in an effort to more evenly distribute the burden of meeting federal mandates to improve water quality. The expanded charge will take effect July 1.
The stormwater fee is paid primarily by residential property owners when they pay their property tax bill.
Early county estimates show some homeowners paying as little as $28 or as much as $170 next year. Businesses with large buildings or parking lots could pay thousands.
To ease the transition, the county will phase in the charge for nonresidential property owners over a three-year period and provide mechanisms of relief for nonprofits, homeowners associations and low-income residents.
Councilman George L. Leventhal (D-At large) of Takoma Park said the county would still collect approximately the same amount of revenue from the fee; the only change would be who pays it.
In his proposed fiscal 2014 budget, County Executive Isiah Leggett estimated the county will collect about $22.34 million from the charge. The county is expected to collect $23 million from the charge in fiscal 2013.
All revenue from the charge — as well as money collected by Montgomery’s five-cent bag tax — goes into the Water Quality Protection Fund and pays for projects that mitigate stormwater pollution.
But Councilman Roger Berliner said the fee works as a zero-sum game: the more players, the less each player pays.
By expanding the charge to businesses and nonprofits — some already pay the fee through various regulations — Berliner (D-Dist. 1) of Bethesda said that in the first year of phase-in, about 90 percent of residents actually will pay a lower fee.
Currently, the county charges the fee based on what it calls equivalent residential units. The rate paid per ERU is set annually during the budget. In fiscal 2013, the charge for one ERU was $92.60.
Expanding the charge to nonresidential properties drops the rate to between $86 and $88 per ERU next year; however, relief passed by the council for nonprofits will affect the final rate, which has yet to be set for next year.
Under the new law, the amount paid by property owners would vary based on the amount of impervious surface on their property and any credits for existing stormwater mitigation or hardship relief they might receive.
Homeowners would be charged the fee on a seven-tier scale; nonprofits on a three-tier scale. For businesses, their fee would be based on the actual amount of impervious surface on their property.
Early numbers show a property with 624,000 square feet, or about 14 acres, of impervious surface could pay as much as $23,000, once the charge is fully phased in.
Churches, homeowners associations and other nonprofits took issue with the charge and the burden it would place on their organizations.
Using its formulas, the council capped how much nonprofits would pay, possibly at about $2,000.
Berliner noted that those caps allow nonprofits to pay only a fraction of what they would owe otherwise.
But just in case some nonprofits might not find the caps adequate relief, the council also included a provision that would allow a hardship waiver for nonprofits based on their gross revenue.
Residential owners also would be eligible for hardship relief from the charge, based on their income. Those who make 170 percent federal poverty guidelines or less would be eligible.
To further reduce the burden on those who never before paid the charge, the council passed an amendment to create a grant in the Water Quality Protection Fund for homeowners associations with private roads that are open to the public.
Councilman Craig L. Rice (D-Dist. 2) of Germantown proposed the grant to provide relief to the Montgomery Village Foundation.
About 99 percent of all roads that would meet the grant’s criteria are in Montgomery Village, Deputy Council Staff Director Glenn Orlin said.
The council has the latitude to determine each budget session how much it will pay out through the grant, and for fiscal 2014 that amount has yet to be set.
While the grant will provide relief to Montgomery Village and other eligible homeowners associations, Senior Legislative Attorney Mike Faden noted that it would also slightly increase what others will pay into the charge.