Business Leaders Decry Effects Of ‘Rain Tax’

Most people don’t look forward to getting their annual property tax bill but the invoices that arrived on Ron Gates’ desk were particularly shocking to the Baltimore County contractor.

Gates, who also owns a number of commercial properties, said the recently enacted stormwater management fee, some times called the rain tax, caused the tax bills for some of his properties to increase by 60 to 80 percent. His total bill increased by more than $30,000, he said. 

“How are they coming up with these numbers to put them on the property tax bills?” Gates said.

Gates is one of a number of business owners who have taken their complaints about the new fee to county officials in hopes of some relief. 

Baltimore County assesses a fee on commercial properties of $69 per 2,000 square feet of impervious surfaces—roads, gravel lots, rooftops and parking lots. That’s more than double the rate paid by owners of single-family homes and more than triple the rate applied to owners of townhouses and to nonprofit institutions.

“So basically what [the county is] saying is that 1 acre of commercial property is equivalent to 71 homes,” Gates said. “I can’t see the math in that. It just doesn’t make sense." 

Gates and other business leaders spoke to reporters Tuesday at a news conference held by Del. Pat McDonough, a Middle River Republican.

“This tax was thrown together in the last days of the General Assembly session without much thought,” McDonough said.

McDonough is attempting to spearhead what he called a grassroots effort to overturn the stormwater management fee in the 2014 General Assembly session. He compared the effort to the successful appeal of the computer sales tax in 2008.

Vince Gardina, director of the County Department of Environmental Protection and Sustainability, said overall there have been “a small number of complaints” from business owners about the new fee. Over the last few weeks, he has met with Gates and other business owners who say they are concerned about the new fee.

In most cases, the complaints stem from confusion over how the county uses mapping programs and state tax records to calculate the amount of impervious surface.

“We have the maps and all the records that show it and we have the ability to email those,” Gardina said. “Once they see those they understand.”

But those records have their limits, Gardina acknowledged.

Bob Palmer, owner of Tradewinds Marina in Middle River, said his bill inaccurately assessed him the commercial fee on his home at the marina even though the state assesses taxes at the residential rate. He also believes he’s being assessed a fee on a gravel road and lot he built several years ago to comply with state regulations limiting the amount of black top near coastal areas. 

“It’s loose stone,” Palmer said. “Years ago I wanted to black top that area but the state didn’t like that. I know state law defines gravel as a pervious surface.”

Those who still disagree with the county after meeting with county officials can file for an appeal before the end of July. Palmer said he has already filed. 

The fees on commercial properties can be in the tens and sometimes hundreds of thousands of dollars. The former RG Steel plant in Sparrows Point was assessed a fee of more than $770,000, according to Gardina.

The Towson Town Center will pay $31,137.98 for its more than 873,000 square feet of impervious surfaces. Hunt Valley Town Center, with more than 493,000 square feet of impervious surfaces, will pay $4,424.62—a 74 percent reduction after the county applied a number of credits for storm water treatment efforts.

The fees appearing on county tax bills mailed out July 1 are part of a mandate created in 2012 by the Maryland General Assembly. Legislators said at the time that they were forced to create the fund because of requirements imposed by the federal Environmental Protection Agency.

Ten jurisdictions, including Baltimore County, are required to pay for stormwater management improvements that are meant to reduce the amounts of sediment and phosphorous and other pollutants that are flushed into the Chesapeake Bay. 

Each jurisdiction was left to determine on its own how it would pay for the projects. 

In May, the Baltimore County Council approved a law assessing an annual flat fee of $21 and $39 to owners of townhouses and single-family houses, respectively.

“One reason the residential rates were kept low was because it was a fixed-rate based on a countywide average taking into account available credits rather than making homeowners apply for credits,” Gardina said, adding that sending county inspectors to check each application for credits on a residential property would have been difficult to administer.

Nonprofits and commercial properties are respectively assessed at annual rates of $20 and $69 per 2,000 square feet. Those same properties are allowed to apply for offsets and credits for stormwater remediation efforts.

The county expects to collect more than $23 million from the fee assessed to more than 283,000 county residential and business properties. Gardina, speaking in May, acknowledged that the bulk of those fees would be collected from an estimated 16,000 nonresidential property owners.

Both Gates and Palmer said they and other business owners will eventually have no choice but to pass the fees on to their tenants who will in turn pass it on to consumers.

“It’s not like this stuff stops here with me,” Gates said. “It all filters down to the general public.”