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'This legislation simply creates a more fair system' | MOGO considers tax on teardown houses

The proposed bill would add a tax when developers tear down a home to put a new one up in its place.

MONTGOMERY COUNTY, Md. — A new Montgomery County proposal would tax developers who buy older homes with the plan to demolish and develop a new home on the existing site.

This new proposal is called the Housing Impact Fairness Act. 

According to the proposed bill, it would tax developers before the demolition, and aims to close a loophole so that all new residential construction fairly contributes to the jurisdiction’s infrastructure needs.

"Legislation that will close the teardown loophole here in Montgomery county so that all new residential development contributes to our growing impact and infrastructure needs," Montgomery County Council member Even Glass said.

"The housing impact Fairness Act will add an estimated $5.7 million toward our school construction and $4.3 million toward our housing affordable housing initiatives, every year," Glass said.

Over the course of 10 years, Glass estimates the tax would bring in an additional $100 million.

When you take a look at how much the current homes cost, the council member said the average home that is torn down was built in 1948 and was 1,700 square foot.

As for the newly built homes, Glass said the replacement homes are approximately 4,200 square feet and sell for $1.75 million.

"This legislation simply creates a more fair system where new homes are assessed and impact fee to help with our growing infrastructure, just like we treat all other housing," Glass said.

RELATED: Montgomery County bans new housing developments due to school overcrowding

People living in Montgomery said they’ve noticed dozens of houses in their neighborhood come and go over the last decade, and it’s something they said they’re not happy about.

Credit: WUSA
Hendricks said about ten new 'teardown' homes go up in her neighborhood every year. While walking down the street, she pointed out one new home that is still under construction.

"The developers in in our area I believe have decided on a formula the formula works," Juanita Hendricks said. "Some of the lots have been sort of maximized, but you know, as the county laws currently are that is perfectly legal."

RELATED: HUD Secretary Ben Carson wants more landlords to take housing vouchers

When it comes to people building the homes, a Montgomery County builder said he doesn’t agree with the proposed legislation. Todd Wood with Castlewood Builders said the houses that are torn down already had families in them, therefore not adding roads, water or sewers.

Wood said he doesn’t think the tax is fair because they’re not adding any cost to the county by doing this, and that if anything, they're increasing the tax base and adding a more energy efficient home.

Some people living in neighborhoods where 'teardown' homes are taking over said it takes a toll.

"The way it affects me is in the construction the loss of the character to the neighborhoods and mostly the loss of trees and creating drainage problems," Laura Greenberg said.

There will be a public hearing on the Housing Impact Fairness Act on Dec. 3 at 7:30 p.m.

RELATED: $828M Montgomery County project aimed to ease congestion 'officially deleted'

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