FY 26 Harford County Proposed Capital Budget Book

DEDICATED CAPITAL FUNDING

TRANSFER TAX Harford County's Transfer Tax was instituted in response to a recommendation from the 1991 Blue Ribbon Committee on School Construction. As a result the County Executive requested the local delegation to the Maryland General Assembly introduce legislation in the 1992 General Session to allow the County the ability to establish by local law a Transfer Tax. The Maryland General Assembly enacted House Bill No. 1481, effective July 1, 1992, authorizing the Harford County Council to impose a Transfer Tax. Subsequently, the County Council enacted Bill No. 93-3 to add new Article IV, Transfer Tax to Chapter 123, Finance and Taxation, of the Harford County Code which imposes a 1% Transfer Tax on any instruments of writing that convey title to, or a leasehold interest in, real property, effective July 1, 1993. The Transfer Tax rate is 1% of the consideration payable and the proceeds are to be distributed as follows: Agricultural Land Preservation Program 50.0% Public School Construction Program 50.0% 100.0% For FY 26 Transfer Tax revenues are appropriated as follows: Harford County's FY 26 Operating Budget From FY 26 Estimated Transfer Tax Receipts: $18,000,000 Agricultural Preservation Fund $9,000,000 Board of Education Debt Service $9,000,000 Principal Payments $6,960,503 Interest Payments 2,039,497 $9,000,000 PUBLIC SCHOOL DEVELOPMENT IMPACT FEE The Maryland General Assembly adopted House Bill 965 (Article 24, Subtitle 10A, Harford County School Construction Financing, Section 9-10A-01) in 2004. The bill states, "the County Council of Harford County, by ordinance, may fix, impose, and provide for the collection of a development impact fee not to exceed $10,000 for new construction or development." The revenue from the development impact fee may only be used for: (1) School site acquisition;

(2) School construction; (3) School renovation; (4) School debt reduction; or (5) School capital expenses."

On June 10, 2005, The County Council of Harford County, Maryland enacted, as amended, Bill No. 05-21, that added Article VI, Public School Development Impact Fee, to Chapter 123, Finance and Taxation, of the Harford County Code. This legislation assures that new development contributes its fair share towards the costs of public schools reasonably necessitated by such new development, and to ensure that new development is reasonably benefited by the construction of new public schools built in whole or in part with the proceeds of development impact fees. In 2009, the County Council enacted Bill No. 09-37 which lowered the impact fee charge. In light of the fact that the cost of school construction had increased by 281% since the enactment of the original impact fees in 2005, a workgroup was formed and a consultant retained to review the fees to ensure that the amounts reflected the true cost of development. Bill 24-33 (2024) established an updated fee schedule, as listed below:

Type of Residential Development

Impact Fee per Dwelling Unit

Single Family Detached Townhouse / Duplex

$10,000 $10,000 $7,989

Multi-family Mobile home

$7,989 The development impact fee per dwelling unit shall increase each year on January 1 to match the percentage increase per square foot for construction costs as established by the State of Maryland Interagency Commission on School Construction (IAC) for the previous fiscal year up to a maximum increase of five (5) percent per year. In the event that the increase in the IAC cost per square foot is higher than five (5) percent in any year, the deficit shall be made up in the subsequent year(s) until the total percentage increase in the development impact fee since January 1, 2025, matches the total percentage increase in the IAC cost per square foot since January 1, 2025. At no time shall the development impact fee for any dwelling unit exceed the statutory cap set forth in state code, currently set at $10,000. Development Impact Fee revenues for the last four completed fiscal years and the projected amount for Fiscal Year 2026 are presented in the following table: Fiscal Year Public Schools 2021 4,000,200 2022 2,579,400 2023 1,779,600 2024 2,805,000 2025* 2,100,000 2026** 6,000,000 *Budget **Estimate

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