Montgomery County property owners and homebuyers came close to seeing another increase in the outrageously high closing costs due to a bill introduced by Councilmember Michael Subin in March. The bill proposed to increase the Maryland Recordation Tax in the County by 50%. But, thanks to GWCAR's grassroots efforts, on May 16th the Montgomery County Council voted unanimously to disapprove Bill 14-01, entitled "Recordation Tax - Rates and Exemptions." The full Council agreed to accept the Management and Fiscal Policy Committee's recommendation, which opposed any increase in the recordation tax this year.

The Council bill would have increased the County's recordation tax from $4.40 to $6.60 per $1,000 and exempt the first $40,000 on property from the tax. Although the bill proposed to earmark the monies generated for projects like school and road construction, and affordable housing, GWCAR firmly believed that this stealth tax would only stifle the County's commitment to make housing more affordable and soften the commercial marketplace.

This proposal was especially remarkable in light of the fact that County Executive Duncan had increased the budget by 7.3% overall - the second largest increase of the Executive's tenure.

In response to the bill’s introduction, GWCAR launched an intense grassroots campaign by asking REALTORS^® to contact their Councilmembers and explain how any increase in the recordation tax runs counter to the county's goal of increasing affordable housing and expanding our commercial marketplace. "For purposes of commercial investment, this huge increase would certainly have added significant costs to those that wish to transact business in Montgomery County. Although many of our commercial brokers have seen an increase in the supply of office space, the demand for it has considerably diminished," stated GWCAR President Scott Johnston. In December of 2000 the availability of sublet office space fell to around 1.9 million square feet. Yet by the end of March 2001, that number soared to 3.1 million square feet.

At the Council's public hearing on April 24th, the associations assembled two panels that included REALTORS^®, property owners, GWCAR and GCAAR staff and a representative from the Mortgage Bankers Association, to testify on the bill.

GWCAR President Scott Johnston and Charles Vance of the Mortgage Bankers Association of Metropolitan Washington, DC offered important testimony that explained how $150-$400 really impacts buyers at closing. "For our clients who wish to relocate to our region, Montgomery County is barely competitive with Northern Virginia. We wish to see a more balanced region. Our clients are relocating corporations that pay the huge cost of moving their employees and will look at every possible savings opportunity," stated Johnston. "There is no question that for some families, this proposed increase will play a significant factor in their ultimate ability to purchase a home," concluded Vance.

Despite the insightful testimony, the tax still looked like the most viable tax on the table for passage. And even after Councilmembers Praisner and Denis voted against the bill in the Management and Fiscal Policy Committee work session, the stealth tax was still far from dead. Any member of the council could have resuscitated the bill at anytime before the full Council voted on the budget. Therefore, GWCAR continued its grassroots campaign, which included meeting with members of the Council and the County Executive.

Finally, on May 16th the full Council voted to disapprove the bill after concluding that this was not the year for a tax increase. Councilmember Howard Denis pointed out how an increase in the recordation tax could have a detrimental effect on the County's real estate market. "Right now, the real estate market is experiencing a downturn. Any increase in the recordation tax will only force sales to decrease and have significant negative effects on the entire market," stressed Councilmember Denis.

Councilmember Subin, who originally proposed the bill, stated that he would be willing to bring it back next year. "Although we can pass a budget this year that will meet the critical priorities of the County, we may not be able to next year," stated Subin. "The original bill should be amended so that the tax can be made far more progressive to generate additional funds for the County's educational needs."

However, defeating the proposed tax increase this year is a major victory for REALTORS^® and commercial brokers throughout Montgomery County! "The County Council has shown that they understand our concerns and are not willing to diminish opportunities for new homeowners," stated Johnston. "It would have been difficult to engender any substantially new economic development in the County, if our government continued to increase barriers to homeownership for incoming employees and prospective buyers."

GWCAR, WDCAR Host Successful Fundraiser for DC Councilmember David Catania

GWCAR joined WDCAR in hosting a fundraiser honoring DC Councilmember David Catania. The event was held May 23rd at the office of Brian Logan Real Estate in Washington, DC and attracted both residential and commercial real estate professionals. Councilmember Catania's successful passage of the New E-conomy legislation and the recently drafted Homestart Regulatory Improvements Act of 2001 are examples of his efforts to improve business development in the District.

Councilmember Catania's E-Conomy legislation, which recently became law, provides targeted assistance to Qualified High Technology Companies in three key areas: Workforce Development; Affordable Facilities; and Financial Incentives.

The HomeStart Regulatory Improvements Act of 2001, recently introduced by Mr. Catania, attempts to improve the process regulating building construction and rehabiliation. The law would establish an electronic database containing the DC Construction Codes Supplement and reform building permit and inspection practices with an expedited building review process and 3rd party inspections, respectively.

“This bill is a solid step in the right direction as it addresses GWCAR’s goal to streamline the permitting process,” said GWCAR President-Elect Phillip Thomas. The legislation would also require the adoption of a DC Building Rehabilitation Code modeled on the Nationally Applicable Recommended Rehabilitation Provisions (similar to Maryland's SmartCodes) and establish a Building Rehabilitation Code Advisory Council. For a copy of the bill, visit www.dchomestart.com/billa.html.

Help Us Protect Your Business

GWCAR’s public policy efforts are paying off. The defeat of the increase in the Recordation Tax in Montgomery County and the introduction of incentives to homeownership in DC are examples of what we can do with your support. A simple way for you to help us protect your business is by supporting RPAC.

Visit www.gwcar.org/rpac.html to take a look at some of our legislative and regulatory achievements and to access the form to make a contribution. Contact Meredith Mirman at mmirman@gcaar.com or 202-887-6211 for more information.

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