HoCo Has a Rain Tax Calculator

Thanks to a new web-based impervious surface estimator created by Howard County’s Geographic Information Services, county residents and businesses can now calculate how much Maryland’s new storm water management fees or the “rain tax” as it is known, will cost them on their July property tax bills.  

Approved by the General Assembly in 2012 the Storm Water Management-Watershed Protection and Restoration Program implements a set of fees to fund watershed restoration and protection programs for the Chesapeake Bay as mandated by the U.S. Environmental Protection Agency.  

The law requires Maryland’s 10 largest jurisdictions to generate revenue to pay for the projects through collecting fees on “impervious surfaces” i.e., roofs, driveways and parking lots.  Legislative analysts pegged the cost of the law at $14.8 billion.  State and local government and volunteer fire company property are exempt from the law.

While the Howard County site gives the disclaimer that it provides only an estimate of the amount of impervious surface fee, it is illuminates just how significant the fees will be for not just for homeowners but for businesses of all sizes.   

Steve Kendall, owner of Kendall’s Hardware in Clarksville says the fees will add “roughly another 10 percent to my $43,000 property tax bill.”  In addition to assessing a fee on the roof of the 37,000 square foot building, which houses the hardware store, Kendall will also be assessed for the parking lot and driveway. In all, the county will assess the storm water fees for 114,000 square feet of impervious surface according to the impervious surface estimator. 

“Howard County is not the cheapest place to do business,” Kendall said, and the added cost of the rain tax certainly shaves his bottom line, which may force him to make price adjustments.

Kendall said that he was already taxed once in the form of incorporating storm water and sediment control when he originally constructed the building.  

For Robb Merritt, President of Merritt Properties, which has the largest privately owned commercial real estate portfolio in the region, the rain tax has created uncertainty.  “Somebody is going to bear the cost,” Merritt said. “We just don’t know who, we haven’t been able to calculate the cost yet.” 

In addition to its 28 properties in Howard County, Merritt owns another 121 properties in the 10 jurisdictions affected by the rain tax.  Each jurisdiction has implemented their own tax meaning Merritt has to account for different fee structures for its properties across several counties. 

Even large companies like General Growth Properties, which owns The Mall in Columbia, and six other malls throughout Maryland, would see a significant fee assessment.  The impervious surface calculator estimates an annual rain tax bill of $63,480 for the mall property.

Tom Ballentine, a lobbyist for the Maryland Chapter of NAIOP Commercial Real Estate Development Association, called the rain tax “the biggest impact fee in the state of Maryland,” and said the it has created “a good deal of uncertainty,” because not all of the jurisdictions have approved their fee structures, and there are complexities in calculating credits for existing storm water management practices.  

Also Ballentine said the rain tax has caused “difficult friction” in the commercial real estate industry between new developers and managers of existing properties.  “If the 10 counties fail to meet progress” Ballentine said.  “The consequences fall on new developers.”  That would have a significant impact on any new development in the Chesapeake watershed.

The Howard County Council approved the fee structure last March.  The county sets the fee at $15 per 500 square feet for three years, with increases in the fourth and fifth years.  The county must raise $130 million over the next five years to pay for mandated watershed and restoration projects.  Even though the fee will continue after five years, the county admits it cannot predict the cost of the fees after that. 

The fees will appear as a line item on county property tax bills.

Several state legislators from Howard County predicted the General Assembly would revisit the rain tax during the next legislative session in 2014.