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Montgomery County owes stormwater tax credits, judge rules

Montgomery County unlawfully denied stormwater management tax credits to property owners in a Gaithersburg business park because the development’s ponds for handling runoff were not located on their individual properties, the Maryland Tax Court’s chief judge ruled Wednesday.

Walter C. “Clay” Martz II said the county code’s environmental tax credit is not so limited and applies to all members of the Lindbergh Park Owners Association, who paid for upkeep of the stormwater management ponds and have drains on their properties to ensure runoff flows into them for the protection of the Chesapeake Bay.

Of LPOA’s 32 owners, just five received any credit from the county because the ponds were on their property, their counsel said.

Under Martz’s summary judgment ruling, all 32 will receive credits they had been denied for the tax years 2015, 2016 and 2017, counsel added.

The county owes a total of about $113,000 in refunds to the owners, who were denied annual credits ranging from $200 to $5,000 dollars, according to counsel.

The owners argued in court that poor drafting and narrow construction of Montgomery County’s Water Quality Protection Charge — which critics call the “rain tax” — had unintended consequences in Lindbergh Park. The owners said their efforts toward stormwater management were not rewarded with credits for good environmental practices, as county law requires.

“I think it is ridiculous for the county to deny credits to property owners who actually treat their own stormwater,” said the owners’ attorney Maria L. Olsen, of the Pels Law Firm in Bethesda.

“The WQPC credits were designed to incentivize property owners to treat their own stormwater and these property owners do exactly that,” Olsen added Thursday. “Taxpayer funds would be better used going after people who are attempting to evade taxes.”

Montgomery County issued a statement Thursday that it is “considering its options, which include appealing.”

The owners’ legal odyssey began with the Montgomery County Department of Environmental Protection’s denial of the tax credits. The Board of Appeals agreed with the department. but Montgomery County Circuit Judge Ronald B. Rubin remanded the case for further consideration in 2017.

The county appealed Rubin’s decision to the Court of Special Appeals, which ruled the owners had to exhaust their administrative remedies by appealing to the county’s finance director and, if necessary, the state tax court.  When the finance director ruled for the county, the owners sought review by the tax court.

Olsen said she hopes for its taxpayers’ sake that Montgomery County does not seek what she believes would be its unsuccessful appeal of the tax court’s decision to circuit court.

“This is a colossal waste of taxpayer funds,” she said. “Why don’t we put all that money that goes into litigation to actually clean up the bay?”

The Maryland Tax Court rendered its decision in Devin Battley, et al., v. Montgomery County, Maryland, No. 19-MI-OO-0429.


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