• Montgomery County Adopts Significant Changes to Water Quality Protection Charge (aka the Rain Tax)
  • July 17, 2013 | Authors: Stuart R. Barr; William Kominers
  • Law Firm: Lerch, Early & Brewer, Chartered - Bethesda Office
  • Attention all property owners in Montgomery County, Maryland! The county has made significant changes to the Water Quality Protection Charge (commonly known as the "Rain Tax")  that will affect most property owners beginning with this year’s July 2013-June 2014 property tax bill.

    Water Quality Protection Charge Now Applies to All Property Owners

    The Water Quality Protection Charge has been a line item on the annual property tax bill for the past 10 years, but until now, has applied only to residential property owners and some “associated non-residential” property owners (associated non-residential properties are non-residential properties from which stormwater drains into a stormwater facility that primarily serves one or more residential properties). The charge now applies to all property owners (residential and non-residential), regardless of the size of the property, the amount of impervious surface, or whether the property has a stormwater management facility on-site. Unless exempt, all property owners now will be assessed the Water Quality Protection Charge.

    Other Important Changes

    The county assessed the Water Quality Protection Charge on all residential and associated non-residential property tax bills beginning in 2002. All single family detached homes received the same charge, regardless of size (one “Equivalent Residential Unit” or “ERU”, which is based on 2,406 square feet of impervious surface). All townhouses received the same charge, regardless of size (1/3 of one ERU). Now all single family properties (detached and townhouses) will fall into one of seven tiers based on the amount of actual impervious surface on the property. Properties with little impervious surface will pay 1/3 of an ERU (Tier 1) and properties with significant impervious surface will pay 300 percent of an ERU (Tier 7), with an additional 5 tiers in between. The amount of impervious surface is determined by the Montgomery County Department of Environmental Protection (DEP) through GIS mapping (and may or may not be correct).

    For other properties - multifamily residential and non-residential properties - the Water Quality Protection Charge is based on the amount of actual impervious surface on the property (calculated as multiples of ERUs). Nonprofits are charged based on total actual impervious surface also, but within three different tiers that are capped.

    Amount of Charge

    The County Council adjusts the amount of the Water Quality Protection Charge each year. The amount of the charge for Fiscal Year 2014 is $88.40 per ERU, slightly lower than last year, which was $92.60 per ERU. When it was initially created in 2002, the charge was $12.75 per ERU. DEP estimates that the Charge is projected to increase steadily into the future.

    Exemptions

    Residential property owners with limited household income and qualifying nonprofits may seek a financial hardship exemption. A hardship exemption application must be submitted by April 1 annually.

    Credits

    Property owners with on-site stormwater management systems may apply for a 50% credit against the charge. Property owners with on-site environmental site design practices may apply for a 60% credit. For the 2013-2014 tax year, the deadline to apply is September 30, 2013. Thereafter, the deadline to apply is October 31 of the year before the payment is due. Credits are good for a three year period.

    Phase-in Period

    A three year phase-in period will apply for any property owners who receive an increase in the Water Quality Protection Charge or receive the charge for the first time with the July 2013 tax bill.

    Appeals

    Property owners may challenge the denial of exemption status, the denial of credits, the amount of impervious surface calculation or the tier in which the property falls. An appeal must be submitted by September 30th of the year the charge is due.