Developers Get the Tax Break. Planning Gets Higher Fees. Residents Pick Up the Tab.

In April 2025, the Montgomery County Council approved a 100% property tax abatement for 20 years for qualifying office to housing conversions. The County Executive vetoed the legislation, but the Council overrode his veto, allowing the tax break to move forward.

Now, Montgomery Planning has increased the fees charged to developers using the expedited conversion process. Beginning September 1, the main application fee increased from: $10,600 plus $250 per housing unit to $15,000 plus $425 per housing unit

For a 100 unit project, the fee rises from $35,600 to $57,500 an increase of $21,900, or approximately 62%.

Montgomery Planning says the increases are necessary because expedited applications require substantial staff work within a compressed 60 to 65 day review schedule. Planning also says the previous fees did not adequately recover the agency’s costs.

Follow the Money

Planning’s explanation may justify collecting more from developers to cover the cost of reviewing their applications. But it does not answer the larger question: Who ultimately pays?

Montgomery Planning receives more money through higher application fees. Qualifying developers receive a 20 year property tax break. Developers can also treat application fees as project expenses, which may ultimately be reflected in higher rents or home prices.

Meanwhile, residents will have to pick up the tab for the property tax revenue the County gives away. Public services: schools, transportation, public safety, libraries, parks, and emergency services, must still be funded.

This comes after a recent property-tax increase and the elimination of the $692 Income Tax Offset Credit. With additional state and County tax increases possible next year, residents must pay close attention to how much public revenue is being given away and who will be expected to replace it.

What Residents Should Watch

The 20 year tax abatement has already passed, but the public’s role is not over. Residents should closely monitor which projects receive it and ask:

• Which developers and properties are receiving the tax break?

• How much property-tax revenue is being waived for each project?

• What will the total public cost be over 20 years?

• How many new homes will each project produce?

• How many will be genuinely affordable to current residents?

• Will developers pass their higher Planning fees to renters or buyers?

• Would these projects have happened without the tax abatement?

• How will the County replace the lost property-tax revenue?

• Will residents face higher taxes or reduced services?

• Who will publicly track and report the program’s results?

The decision has been made, but its financial consequences will unfold over many years. Residents must stay informed, follow the money, and keep asking questions.

When developers receive tax breaks and government agencies collect higher fees, taxpayers deserve to know what they are receiving in return.

Sources: Montgomery Planning’s fee-change analysis and final fee schedule effective September 1.