The Howard County Council is poised to pass legislation that would raise the school surcharge fee from $1.32 per square foot to $6.80 per square foot, a 415% increase.
The proposed increase of the fee charged to developers building new residential housing could generate more than $150 million in revenue over 10 years, according to a news release. It would help pay for the school system’s construction, renovation and maintenance costs.
Affordable and senior housing units would be exempt. The measure has formal support from the four Democrats on the five-member County Council: Deb Jung, Opel Jones, Christiana Mercer Rigby and Liz Walsh.
“We based our fee on what the school system said they needed,” said Jung, one of the bill’s primary sponsors. “We need to use every means available to fund school construction. Howard County has had one of the fastest-growing school systems in the state for the past 10 years, and there is an anticipated shortfall of tens of millions of dollars in capital funding every year.
“An increase in the school facilities surcharge will help fill that gap and provide relief for our overcrowding crisis,” Jung added.
The County Council will host a public hearing Sept. 16 in the George Howard Building on the bill and other measures. County Executive Calvin Ball, a Democrat, would have to approve the proposed increase.
The cost would be significant. In western Howard County, the average single-family detached unit size is 6,923 square feet. For a house that size, developers would pay $47,076 under the proposed fee increase, up from $9,138 now, according to an analysis of figures provided by Jung. For an average-size single-family detached home of 4,760 square feet in eastern Howard County, developers would pay $32,268 under the proposed increase instead of $6,283 under the current fee.
Though the school surcharge fee is meant to pay for the school system’s construction costs, since 2005 it has been used to pay down debt accrued to pay for construction projects, according to a state Department of Legislative Services analysis of the fiscal impact of the proposal. As of late June 2018, the school system still has $54.3 million in debt service, the analysis showed. The county had a fund balance of $6.6 million in school facilities surcharge revenues at the end of fiscal 2018.
The proposal is likely to draw praise from community activists and objections from the Maryland Building Industry Association, which earlier this year described the state legislation that enabled local lawmakers to propose an increase as “unconscionable.” An MBIA letter to the Howard County’s state delegation said the bill, signed into law by Gov. Larry Hogan in May, would “further disincentive residential building.”
Jung could not immediately provide specifics of the financial impact, but the state fiscal analysis found a rate of $6 would increase the surcharge revenue by $27.3 million. In fiscal 2019, when the fee was $1.32, the county collected $7.3 million in revenue, the fiscal note said.
Howard’s surcharge rate is less than what is levied in neighboring counties.
In Montgomery County, developers are charged $23,062 for each new single-family detached home. Montgomery developers also are charged an additional $2 per square foot surcharge on gross floor area that exceeds 3,500 square feet up to 8,500 square feet.
In Prince George’s County, developers are charged a $9,550 per unit on new structures within the Beltway or near mass transit. Most buildings outside the Beltway are charged $16,371 per unit. In Anne Arundel, single-family detached homes are $12,177 per unit while apartments are charged $6,651 per unit.
Del. Vanessa Atterbeary, a Democrat whose district includes North Laurel and Savage, filed the enabling legislation at the state level earlier this year. She later pulled her support and voted against it after colleagues within Howard County’s state delegation filed amendments.
Atterbeary’s original bill would have allowed the County Council to increase residential fees from the current $1.32 to a maximum of $4. The law was amended to exempt senior and affordable housing.
This bill “does a disservice to the county and the initial purpose of the bill — to generate some funds for the schools,” Atterbeary said.
In March, Jung expressed dismay for the exemption for senior housing, saying that when seniors “move out of their homes, the people who move in are families. There will be an impact on the schools when people move into senior housing.”
Atterbeary and Del. Warren E. Miller, a Republican whose district includes portions of Howard and Carroll counties, were the sole no votes in the General Assembly.
The number of new houses in Howard County has increased steadily in recent years. Between April 2010 and April 2019, there has been a 13% increase in the number of housing units built each year. As of July, 120,575 housing units were under review but not yet approved by the county, according to a Department of Planning and Zoning report.
In 2018, there were 701 units under review by the county. As of last December, there are 701 moderate-income housing units under review, the report said. In 2018, 5% of units built were age-restricted.