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Council committee hears Bill 5-25: proposed demolition tax to boost housing production fund
Summary
Bill 5-25 would levy an excise tax (a $20,000 fee in the draft) on profit-driven demolitions and replacements that increase gross floor area, routing revenues to the Housing Innovation Fund and the Housing Production Fund; staff outlined exemptions and bond-related uses for revenues.
The Government Operations and Fiscal Policy Committee reviewed Bill 5-25, a sponsorship proposal from Councilmember Mink that would create an excise tax on certain demolition-and-replacement projects to finance Montgomery County's Housing Innovation Fund and the housing production fund. "This is a bill that will increase the funding that we have for affordable housing construction ... by levying a demolition tax," Mink said, describing the fee as targeted at profit-driven flips rather than owner-occupied repairs.
Staff explained the draft's mechanics: the tax would apply to certain total demolitions (67%+ under existing code) or partial demolitions (more than 50%) of a single-family home when the replacement home exceeds the original's gross floor area. The draft includes multiple exemptions such as unsafe/condemned original homes, replacement moderately priced dwelling units, an owner-occupancy covenant of five years, medical-necessity replacements, and disaster-related rebuilds. Staff also noted language clarifications to permit demolition-tax revenues to support bonds issued by HOC for the housing production fund and to allow council-authorized use under the Montgomery Housing Initiative if revenues exceed bond needs.
