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Montgomery changes tax law to refund art museum

ROCKVILLE — The Montgomery County Council has revised its tax law to reduce the burden on new cultural institutions after a private art museum owned by a Potomac billionaire was charged $445,000 in taxes for building a new exhibit space.

The Washington Post reports that the foundation that operates Mitchell Rales’ art museum is being given a $373,000 tax refund after the change to the county’s transportation impact tax on new projects. The council’s unanimous passage of a bill reduced the tax to about $72,000. The tax is meant to help pay the cost of handling increased traffic on congested roads.

Rales is building a 150,000-square-foot addition to house a leading private collection of modern art. It includes pieces by Alexander Calder, Henri Matisse and Mark Rothko.

Rales’ foundation had appealed the tax bill, arguing that it hosts groups of Montgomery County public school students, but the appeal was denied last year. The foundation paid the tax bill. Later, a county official thought the tax payment seemed high and suggested that officials create a “cultural institution” category for the county’s transportation impact tax.

Rales has not commented on the tax issue.

The council approved the change last week as an amendment to another bill on the impact tax.

“This is a social benefit we don’t want to create barriers to,” said Councilmember Hans Riemer before the vote.

But the change was made without holding a public hearing on the introduction of a new “cultural institution” category for building projects. That drew concern from Michael Faden, the county’s senior legislative attorney.

“It’s a new concept, and it hasn’t had a public vetting at all,” Faden said at a Jan. 29 committee meeting.

Some activists have also criticized the lack of transparency and public debate on the issue.