Country clubs all over Maryland benefit from a special property tax break that saves them millions of dollars every year. Here’s how it works.
Decades ago, the General Assembly passed legislation intended to prevent the sale of golf clubs and country clubs for subdivision. In § 8-212 through 8-218 of Maryland’s code, the State Department of Assessments and Taxation (SDAT) is permitted to strike agreements lasting ten years or more with golf courses and some country clubs specifying discount land assessment rates. A country club is eligible for these agreements if it:
(1) has at least 100 members, who pay dues averaging $50 or more annually for each member;
(2) restricts use of its facilities primarily to members, families, and guests; and
(3) is located on at least 50 acres of land, on which is maintained:
(i) a regular or championship golf course of at least 9 holes; and
(ii) a clubhouse.
In practice, SDAT provides a land assessment rate of $1,000 per acre to clubs with agreements. If a club sells its land for subdivision, it must pay back taxes equivalent to what it would have been paying without an agreement. The club can also lose the tax break if it discriminates on race, color, creed, sex or national origin.
Many country clubs take advantage of this tax break. The Bethesda Country Club, for example, has a 142.79-acre property. Its land is assessed at only $142,700. See the notation, “Preferential Land Value Included in Land Value” in its property record below.
Manor Country Club in Rockville is another beneficiary. It has a 176.96-acre property with a land assessment of just $176,900.
How much money can a country club save? Let’s look at one example: the Columbia Country Club in Chevy Chase. Its 44.01-acre property has a land assessment of $44,000. Curiously, this club’s property falls below the 50-acre threshold in state law. Legally, it may not even be eligible for an agreement with SDAT.
Due to the undervaluation of its land, the club’s total property assessment is now $7,147,266. It owes $73,574.06 in county and state property taxes this year.
The National 4-H Council is right down Connecticut Avenue from the Columbia Country Club. Its 12.28-acre commercial property has a land assessment of $9,628,500 – or $784,079.80 per acre.
If we applied the same per-acre assessment value to the Columbia Country Club, its 44.01-acre land parcel would be assessed at $34,507,352. Its total property value including its $7,129,800 in improvements would be $41,593,152. At its current state property tax rate of 0.112 and its current county property tax rate of 0.916, the club would be paying $427,577.60 in property taxes – about six times its current amount. So the Columbia Country Club’s agreement with SDAT (which may not even be allowed by state law) is cutting 83% off its property tax bill. And the club’s agreement enables it to realize those savings as long as it does not sell its land for subdivision.
This law is both extremely expensive and totally unnecessary. All county governments have zoning and subdivision rules that limit development. For example, the Columbia Country Club’s current zoning is R-90 (single-family housing with minimum 9,000-SF lots). If the club did sell its land, under current zoning a developer would only be allowed to build 150 or so homes there. The county could hinder development there even more by installing even less-dense zoning. The point is that other land use management tools can be used to preserve open space – which is not truly “open” when it lies behind country club gates – without giving away millions of dollars to the super-rich.
The state government will be rapidly cutting health care, education and services to the poor. If that is indeed necessary, then the Great Country Club Tax Break must also be repealed.
Wednesday, January 06, 2010
The Great Country Club Tax Break
Thursday, July 17, 2008
Africa Against the Purple Line
As regular MPW readers know, the Purple Line has many opponents, including residents of Chevy Chase, supporters of SSTOP and a few homeowners with “No Trains on Wayne” signs in Silver Spring. But now a new combatant enters the field of battle… an entity based on the tiny African island of Madeira?!??!!
In case you missed it, a new anti-Purple Line website has recently popped up, this one run anonymously. When Action Committee for Transit reported that it was registered to a firm based on the autonomous Portuguese island Madeira, I checked it out. Sure enough, whois.com gave the following information about the registrant:
Now, the bikini-clad residents of Madeira have little obvious reason to protest the Purple Line (unless ACT plans to relocate after MoCo’s project is done). Most Purple Line opponents, including MPW blog-father David Lublin, denounce the project openly. Activist Pam Browning owns the domain savethetrailpetition.org under her own name. So who would have the incentive to start an anonymous anti-Purple Line website through the ultra-secretive Domain Discreet registrant service?
Could it be… the Columbia Country Club? Regular readers will remember how the club vowed to start a “grass roots campaign” to protect its lovely golf course from those awful Purple Line trains (and their uncouth riders). This follows a long history of cooperation with former Republican Governor Robert “I Love Golf” Ehrlich to block the rail project. After being outed by the Post, the club finally admitted responsibility for the new website. Eric Luedtke covered ACT’s wine-soaked reply outside the club gates. And just to throw gasoline on the fire, Silver Spring trail activist Wayne Phyillaier noted the club’s squatting on nearly three acres of Capital Crescent Trail right-of-way to add to their already-luxurious golf course. Does the county even know about the club’s erection of a giant, hideous fence on public land?
Picture from Finish the Trail Blog.
As you can see from the following excerpts from its 2005 filing with the IRS, the club can draw on significant amounts of resources to fight the Purple Line. In the year ended September 30, 2006, the club reported revenues of $13.3 million, net income of $2.5 million and net assets of $25.5 million (of which $5.7 million is in cash). The club has minimal liabilities of $2.3 million and its property is not encumbered by a mortgage.
But all of this hugely understates the club’s influence. Its members are among the wealthiest people in the Washington metro area and have donated thousands of dollars to politicians, including Ehrlich. Club President J. Paul McNamara even had his employer, United Bankshares, pay his club dues for years.
For all of its wealth and power, the club’s Madeira affiliate has constructed a truly sorry website. It has just five pages, stock graphics, no contact names and no actual pictures of the Capital Crescent Trail. Considering that in its most recent reporting year the club spent $165,452 on laundry and linen, $25,110 on uniforms, $38,325 on decorations and $65,093 on china and silverware, we would expect it to offer more than a bargain-basement website.
Neighborhood residents have every right to oppose the Maryland Transit Administration’s proposed Purple Line alignments if they wish. But any participation by the country club will hurt their cause. No non-club members will see protection of their golf course as a legitimate reason to block a transit project. If the Columbia Country Club really wants to help the Purple Line opponents, it should give its members one-way tickets to Madeira.
Friday, April 25, 2008
Millionaires Offered Discount to Move to Virginia
Dear readers, I promise that this is not one of my much-ridiculed spoof posts. Everything that you are about to read is 100% true.
MPW friend and occasional spoof victim Dana Beyer forwarded us an online ad posted by a Virginia real estate agent enticing MoCo millionaires to move. The ad says:April 09, 2008
So I emailed this agent the following inquiry:
Virginia Welcomes Migration of Maryland Millionaires
New Millionaire Tax in Maryland May Cause some to Migrate to Virginia
It's mid-April. Are taxes on your mind?
If you're wealthy and live in Maryland, say hello to the first in the nation, Millionaire's Tax. Signed into law yesterday by Governor Martin O'Malley, the legislation created a new tax bracket for those who earn over $1 million per year. Approximately 6,000 Maryland households fall into this new tax bracket and are subject to a 6.25% tax rate.
According to The Baltimore Sun newspaper, more than 40 percent of these wealthy households are in Montgomery County. While Montgomery County is a great place to live and Maryland is a great state, many of those being hit with this new tax may decide to vote with their feet.
Let me be the first to WELCOME YOU TO VIRGINIA.
As you know, Virginia is just across the Potomac River from Maryland. Northern Virginia offers wonderful amenities, parks, schools, history, culture, and an easy commute to D.C. Homes in the upper brackets are plentiful throughout the area, especially in popular communities like McLean, Great Falls, Arlington, Alexandria, Fairfax Station, and more. Another bonus of moving to Virginia -- how about in-state tuition at some of the best public colleges and universities in the country, including University of Virginia, James Madison University, and George Mason University.
Virginia has consistently ranked as the Best State for Business by Forbes Magazine year after year.
Best of all -- Virginia does not have a Millionaire's Tax. (Virginia's highest income tax bracket is 5.75%).
Maybe it's time to contact your Maryland Realtor (I can offer some great suggestions) about selling your Maryland home and moving to Virginia.
I'd be happy to help you find a Northern Virginia home and welcome you to our side of the river.Brian, I am disturbed about Maryland's new millionaire tax and am considering moving to Virginia. I have a few friends who are thinking along the same lines. If we all decided to move together, could we work out a discount? - Adam Pagnucco, Silver Spring, Maryland.
The agent replied:Thanks for your e-mail. I certainly understand being disturbed by the Millionaire Tax in Maryland. We can certainly talk about a discount if you and several others decided to work with me to purchase homes in Virginia.
So what are you waiting for, country club members? I actually got a discount for you to move out. Does this mean we get to build the Purple Line now?
Thursday, April 10, 2008
Columbia Country Club Promises “Grass Roots Campaign” to Defeat Purple Line
In a letter to members of the Columbia Country Club in Chevy Chase, club President J. Paul McNamara promises to launch a “grass roots campaign” to defeat the Purple Line.
Part of the Purple Line transit project is planned to run along an abandoned CSX right-of-way that stretches from Silver Spring to Bethesda. The right-of-way is currently used as a popular pedestrian and bicycle route known as the Capital Crescent Trail but was originally intended to be used at least partially for transit. The right-of-way runs through the country club’s golf course and thus defeat of a rail line is one of the club’s top priorities. Just Up the Pike ran an epic series on the issues surrounding the Purple Line and the trail last year and Silver Spring resident Wayne Phyillaier covers the trail-rail relationship regularly on his Finish the Trail blog.
In his letter, McNamara tells the country club members:Regarding the issue of the Purple Line and the proposed light rail connecting Bethesda, Silver Spring and New Carrollton, as I indicated at our annual meeting, this is a very critical issue for our Club. As a result, we have increased our community and government relations effort at both the state and federal level and will be working on several different fronts to promote the Club’s position and protect our long term interests. Specifically, we will be helping to launch a grassroots campaign to identify and organize a broad and diverse coalition of opponents to the current proposal for the Purple Line. Once organized, we will be partnering with neighborhood associations, citizens groups including those working to save the trail, as well as businesses and elected officials who will be impacted by this issue.
As you would expect, the implementation of this effort requires a commitment of financial resources. The Board of Governors believes that it is in the best interest of the Club to fund this effort. However, we are doing so within the context of a balanced budget for the fiscal year. We do not expect that this expenditure will have a material impact on the long term finances of the Club. We will keep a tight control on the spending for this effort and all funds will be allocated from our capital budget.
The Columbia Country Club has a long history of fighting the Purple Line. Between 2001 and 2006, four of the club’s current officers – President McNamara, First Vice President Joseph J. Brigati, Second Vice President Eugene A. Carlin and Secretary Martin Wiegand II – collectively contributed $4,600 to former Governor Robert Ehrlich and $550 to Senate Budget and Taxation Committee Chairman Ulysses Currie. (One can only imagine how much more was donated by the club’s full membership.) In September 2003, Ehrlich reciprocated, declaring that the Purple Line “will not go through the Country Club.” Robert Flanagan, his Transportation Secretary, explained, “The Governor happens to love golf.”
At the same time, then-District 18 Delegate and Chevy Chase resident John Hurson struck a deal with Ehrlich to route buses along Jones Bridge Road as a substitute for the Purple Line. In return, Hurson reversed his position on slots from opposition to support, matching Ehrlich’s agenda, and was promptly rewarded with a fundraiser by racetrack owner William Rickman Sr. Hurson and Ehrlich’s arrangement infuriated many Montgomery County politicians but no doubt delighted the country club’s members. The club’s announcement promises the potential for more events like the above.
To evaluate the club’s letter fairly, MPW readers need to remember three facts.
1. There is plenty of genuine grass-roots opposition to a Purple Line alignment on the trail. Whatever the country club’s membership, it is surely less than the 10,000 signatures collected by rail opponents.
2. Non-grass-roots interests exist on both sides. Ed Asher, President of the Chevy Chase Land Company, serves openly on the board of Purple Line Now. Asher is no mere train enthusiast – his company seeks to develop the land around a proposed Purple Line station on Connecticut Avenue. Asher is a prolific contributor to politicians, giving $12,000 to state and local candidates since 2000. The Chevy Chase Land Company gave $5,950 more.
3. The truth is that while the country club and Asher participate in Purple Line campaigns, neither controls them. Organizational leaders like the heads of the Greater Bethesda-Chevy Chase Coalition and Action Committee for Transit are the true strategists and seek suitable allies when they are available. This is a reasonable approach for anyone seeking to organize a civic (or labor) coalition.
But the universal rule of coalitions is this: you are judged based on your associations with other coalition members. If Purple Line opponents publicly (or even privately) embrace funding from the Columbia Country Club, they will damage their credibility in the long run. No Democratic Party or civic activist from outside Chevy Chase will harbor any sympathy for an effort they perceive to be connected to wealthy country club members – or through them, to former Republican Governor Robert Ehrlich.
