The Voice of Montgomery County Business

The Voice of Montgomery County Business

Tom McElroy, Chairman

Georgette “Gigi” Godwin, President & CEO

MONTGOMERY COUNTY COUNCIL

OCTOBER 4, 2011

TESTIMONY BY GUS BAUMAN

MONTGOMERY COUNTY CHAMBER OF COMMERCE

ON IMPACT TAX REFORM BILL

Good Afternoon.

My name is Gus Bauman, speaking for the Montgomery County Chamber of Commerce to voice our strong support for Bill 26-11, Taxation-Development Impact Taxes-Payment. This bill, which applies to both residential and commercial construction, is an important step in our County’s economic development efforts as we endure a miserable, prolonged economic period in which capital is very hard to come by.

Economic development at the County level is fundamentally about attracting and retaining companies and enhancing economic activity and opportunity. Today, firms have many options about where to locate. The goal is to have them choose to do business here, in Montgomery County.

The delaying of the County impact tax payment to a date that is manifest common sense – the Use and Occupancy Permit stage – accomplishes two essential objectives: 1) it increases a company’s chance to secure construction financing, and 2) it enhances the borrower’s ability to preserve scarce and needed capital. And what does the County get? Increased private investment.

Our County must be competitive with neighboring jurisdictions in terms of economic growth. Montgomery County suffers from a lack of available, needed office space to attract companies and to retain expanding companies. As Fairfax County continues to aggressively expand its economic base, Montgomery County must be at least equally competitive. When those four Metrorail stations open in Tysons Corner and that Metrorail line goes on to Reston, Herndon, and Dulles Airport, the east-west axis comprised of downtown Washington, Arlington, Fairfax, and Dulles Airport, all tied together by major highways and rapid transit, will create a giant sucking sound in this region.

Not only that, the current impact tax structure here is not competitive with any other jurisdiction in Maryland. Montgomery County’s tax is over $10,000 more than the next highest jurisdiction per dwelling unit. While the bill before you does not change the amount of the tax, it does make access to capital easier by moving the financial burden to the Use and Occupancy Permit stage, when one at least has committed tenants and income can begin to flow.

This bill may be a relatively small step, but it is a vitally needed step, and it’s in the right direction.