Clubs in Montgomery County, Md. with a market value of $500,000 per acre would be subject to the fee. The President of one of the potentially affected clubs, Kenwood G&CC, says the added cost could have “a huge negative effect on our employees and members.”
A bill being considered in the Maryland state legislature that would have eliminated a special property tax exemption for country clubs in Montgomery County has been amended to require that four clubs pay $100,000 to the county’s general fund, while others in the county would continue to qualify for the exemption, Bethesda Magazine reported.
An amendment by Del. Vaughn Stewart (D-Derwood) would levy a $100,000 annual fee on four country clubs with a market value of $500,000 per acre, Bethesda Magazine reported. They include Columbia Country Club, Bethesda Country Club, Kenwood Golf and Country Club and Chevy Chase Club.
Sponsored by Del. David Moon (D-Takoma Park), the bill previously would have allowed the state to tax clubs at the property’s market rate instead of the current $1,000-per-acre rate for clubs with more than 50 acres and more than 100 members (https://clubandresortbusiness.com/maryland-legislator-set-to-re-introduce-club-tax-hike-bill/).
The amendment maintains the current exemption for all other clubs in the county, Bethesda Magazine reported.
Moon has said the county is losing $10 million per year in tax revenue because of the decades-old exemption. His bill passed the Montgomery Delegation earlier this month and is scheduled for a hearing in the state House Ways and Means Committee on February 19, Bethesda Magazine reported.
Originally, the bill would have put the issue before Maryland voters in a ballot referendum in 2020, Bethesda Magazine reported. But Stewart’s amendment calls for the tax change to begin in 2021.
The money from the clubs would help to make up the county’s budget shortfall, Stewart said. The Montgomery County Council has passed a savings plan to close a $44 million deficit, Bethesda Magazine reported.
“The county currently has a budget shortfall and is dealing with having to cut county services,” Stewart said.
Stewart acknowledged that an addition $400,000 per year from the clubs wasn’t “an insane amount,” Bethesda Magazine reported, but that “every little bit helps.”
Todd Chamberlain, President of Kenwood G&CC, told Bethesda Magazine that the bill unfairly assumes that golf course land value is worth more based on the hypothetical scenario that buildings are on the property.
“They are asking us to pay a perceived value on our green space as if there are buildings there,” Chamberlain said. “I feel like he’s [Moon] throwing anything against the wall and seeing what will stick. How can you pick out four or five clubs and charge them more?”
Kenwood has hired three new employees in the past year since President Trump’s tax reform law went into effect and put the club in a better financial position, Chamberlain told Bethesda Magazine.
“This $100,000 would take that [benefit] away,” he said. “I’m not saying we would fire people, but it has a huge negative effect on our employees and members.”
Moon’s bill will force clubs like Kenwood to increase their membership fees, Chamberlain told Bethesda Magazine, which will hurt the middle class. Many members of Kenwood, he said, are on fixed incomes.
“No one goes into the country club business to make money. This is a not-for-profit type business,” he said.
Chamberlain testified during a previous hearing in the state capitol of Annapolis, and plans to testify again at the February 19 Ways and Means Committee meeting, Bethesda Magazine reported.
During the last hearing, Chamberlain said, Moon didn’t realize that repealing the exemption would require clubs to pay back taxes to the county at the market rate for the last 10 years. That would likely mean the club would owe millions of dollars and could not continue operating, Chamberlain noted.
Moon contends that club owners are missing the big picture, Bethesda Magazine reported.
“That’s how property taxes work,” he said. “They assess the property on what I’m selling it for. The important aspect is what this use of land is costing the county in revenue.”
Clubs would only owe back taxes if they chose to develop the property, Moon said, noting that clubs such as Kenwood have enjoyed tax exemptions for 30 years.
“One problem with [clubs’ arguments] is that most clubs have agreements in excess of 10 years,” he said.
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