Anne Arundel is looking to other counties for a little help on increasing its impact fees

By Jason Flanagan, The Examiner
Originally published March 14, 2008

Anne Arundel has one of the lowest and least flexible development fees in central Maryland, leaving officials looking for successful methods to model.

“In looking at those counties, you have to take their rationale behind it and see if it is delivering an intended outcome,” said Bob Burdon, a member of Anne Arundel’s Impact Fee Advisory Committee.

The county is debating how to raise its impact fees — money a developer pays to expand roads, schools and public safety — which have been “artificially low” and causing taxpayers to subsidize development, Anne Arundel County Executive John R. Leopold has said.

Officials are looking at other governments such as Montgomery, which recently raised its fees to cover the costs of construction — the crux of Leopold’s argument to substantially raise the impact fees by 200 percent to 800 percent.

Although Anne Arundel’s economics might be unique, parts of other counties’ fee structures have what Anne Arundel lawmakers want in their plans.

For example, council members say impact fees do not address school capacity issues in developed communities because the money can be used only near new development, leading to a $1 billion school construction backlog.

But several other counties use their school impact fee anywhere in the county to help restore aging school buildings.

PRINCE GEORGE’S

Anne Arundel’s southern neighbor has just that kind of system. Prince George’s fees are called surcharges because they are levied on permits regardless of the project’s impact.

The school surcharge is significantly higher than Anne Arundel’s, but Prince George’s has more schools.

Yet the flexibility of the fee has allowed a steady source of revenue, said Alan Hirsch, a planning supervisor with the Maryland-National Capital Park and Planning Commission.

“You can plan on that money and use it for renovations, or use it to consider who to retire debt service on new school facilities,” he said.

MONTGOMERY

Another county with flexible school fees is Montgomery, whose fees are higher than Anne Arundel’s.

Last year, Montgomery raised its fees by 70 percent, which officials believe covers the cost of construction in one of the richest counties in the nation.

“The planning board felt new development needed to pay for itself,” said Valerie Berton, spokeswoman for Montgomery’s planning board.

Montgomery also charges more for its road impact fee but charges less to developments built near Metrorail stations, as it is assumed more people would use mass transit over roads.

But some such as Burdon caution against comparing one’s county to Montgomery and other high-developed counties.

“We have totally different demographics and budgets,” he said.

HOWARD

Instead of an impact fee, Howard uses an excise tax based on square footage — the bigger the house, the more you pay.

Howard follows a philosophy used in other counties by giving incentives to smaller development in areas designed for growth.

Anne Arundel has taken notice, and the County Council is considering setting a fee schedule based on square footage.

Leopold’s proposed fees would increase with the number of bedrooms, but developers say they can be creative enough to build a 4,000-square-foot “two-bedroom” house.

BALTIMORE COUNTY

Some counties don’t even charge fees, taxes or surcharges for development.

Baltimore County claims that it uses Smart Growth planning, such as moratoriums, to keep development paced with revenues instead of fees.

Baltimore County’s Smart Growth plans have worked well in checking infrastructure problems that stem from overdevelopment, said Fronda Cohen, marketing director for Baltimore County’s Economic Development Department.

Officials say 80 percent of the county’s population lives on 30 percent of the land.

“It’s the county’s belief that impact fees would not raise enough revenues for them to be effective,” said Don Mohler, spokesman for the Baltimore County Executive Jim Smith.

CARROLL AND HARFORD

Carroll doesn’t issue a road impact fee, but its charges for schools and parks expansion exceed Anne Arundel’s fees for road, school and public safety improvements.

Harford has a similar situation to Anne Arundel — a mounting school construction debt and little money to fix the problems.

Harford tried last year to raise its real estate transfer tax rate — fees collected on the transaction of property — but its request was denied by the General Assembly, which must approve such tax increases.

Anne Arundel tried the same feat and got the same result.

But given the downturn in the housing market and slowing of the economy, officials wonder if raising fees would have a backward effect of deterring growth and reducing revenue — a fear shared by some Anne Arundel lawmakers.

“An increase in impact fees isn’t going to generate money needed for school construction. ... It’s a moot point here,” said Billy Boniface, president of the Harford County Council.

Anne Arundel officials say the answer to the impact fee debate is a long way off, but are confident that through hearings and committees an acceptable solution can be found by harshly opposing factions.

“There is no one correct answer,” Cohen said. “That’s the due diligence of local government to the put those ideas out there, and as elected officials, have a good debate.”

Copyright © 2008, The Baltimore Newspaper Publishing Company LLC