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Gaithersburg council authorizes manager to execute transportation-impact-tax MOU with Montgomery County
Summary
At its July 21 regular meeting, the Gaithersburg Mayor and City Council authorized the city manager to execute a memorandum of understanding with Montgomery County that aims to resolve a long-running dispute over the use of transportation impact tax revenues generated by projects in the city; the council vote was 4–0 with one abstention.
The Gaithersburg Mayor and City Council on July 21, 2025 authorized the city manager to execute a memorandum of understanding with Montgomery County that settles how transportation impact tax revenue from city projects will be held and spent, a move city officials said will allow the city to begin programming funds for local transportation projects.
The agreement matters because, according to council remarks, the account holding impact-tax revenues from city projects has been dormant amid years of negotiation and now contains what the mayor described as “just over $15,000,000 in it.” The MOU is intended to release funding to projects the city and county agree on; council members said the deal would allow multiple “shovel-ready” transportation, bike and pedestrian projects to move forward.
Mayor Ashman summarized the history: Montgomery County enacted a transportation impact tax in February 2006 to charge new development for transportation impacts, and the county’s ordinance included projects in the cities of Gaithersburg and Rockville. Because the cities retain local planning and zoning, Gaithersburg officials questioned the county’s authority to levy the tax on city projects, and the county offered a memorandum of understanding at the time to ensure revenues from city projects would be held in a separate account and used only for projects both jurisdictions approved. Negotiations over eligible projects stalled for years, the mayor said, and “the money has sat in an account, while the 2 parties have been negotiate at the negotiating table.”
Council members praised the negotiated settlement and the staff work behind it. Council member Jamil said, “Yes to all of that and to more than $10,000,000 going into shovel ready projects that are gonna be able to be funded fully now and get completed.” Council member Jim said the negotiation took “over 15 years” and asked the public to recognize the work that went into the agreement; Jim also noted that Council member Henderson recused herself because the item involved the county. Council member Neil thanked the Transportation Committee and public works staff for identifying candidate projects for the funds.
The council moved and seconded the resolution and approved it by voice vote; one council member abstained, producing a final tally the mayor announced as 4–0 with one abstention. The motion authorizes the city manager to execute the MOU; the mayor said the executed agreement would then be sent to Montgomery County Executive Mark Elrich for signature and to the Montgomery County Council for ratification.
City staff and council did not identify in the meeting a final project list or an exact schedule for the release of funds. The mayor and other council members said earlier attempts to reach agreement had been stalled or “scuttled” at various points by county officials in the past, and they credited Montgomery County Council member Sydney A. Katz and county and city staff for recent progress. Officials also acknowledged significant staff time and past participation by multiple city managers and staff in the negotiations.
Next steps described by council members and staff: the city manager is authorized to execute the MOU; the mayor expects County Executive Mark Elrich to sign the agreement and then the County Council to ratify it. Council members said staff will bring forward candidate projects for programming once the intergovernmental approvals are complete.
Details referenced in the July 21 discussion included the mayor’s statement that the account “has just over $15,000,000 in it” and a council member’s reference to “11 and a half million dollars” from the fund in the context of projects and staff effort; the council did not present a finalized, itemized allocation of those funds during the meeting.
The council’s authorization does not itself appropriate funds for specific construction contracts; it directs the manager to execute the intergovernmental agreement that, if ratified by the county, will govern how impact-tax revenues from city projects are held and spent.
