Capital Op-Ed: “Development doesn’t pay for itself”

Capital Gazette: December 7, 2016

By: Fred Gregory

Much has been made of the city needing to allow new developments to increase its tax base and benefit city taxpayers. The developers and their attorneys use this fallacious logic to argue that residents who would be affected by such developments as at Crystal Spring and Parkside Preserve but who live outside the city limits should not have a voice in this matter.

Let’s examine the hard facts: Adding more people in such residential developments actually increases the cost to city government for capital construction and services more than it will increase revenue. New and enlarged schools; roads; water and sewer systems; and police and fire protection must be paid for.

For decades, local governments in Maryland and around the U.S. have had to charge development impact fees in recognition of the fact that increased property taxes from new development does not cover the costs of such increased construction and services. Such new construction imposes increased costs on existing taxpayers in the form of increased property taxes.

To offset some of these taxpayer costs, Anne Arundel County gained approval in 1986 to enact impact fees, documenting the need for them from studies from around the country to gain the approval of the county General Assembly delegation and the legislature. The County Council then enacted its development impact fee law, imposing such fees on new housing and commercial developments. The city found it necessary to do the same.

All of these state and county elected officials voted for substantial tax increases on new development, which developers argued would raise the price of new homes. As Maryland’s population and the development of land grew significantly, 16 of Maryland’s 23 counties have imposed impact fees or building excise taxes — which are the same thing, using a different mechanism. Collectively, these jurisdictions took in more than $115 million in impact fees in fiscal 2015. How does this assist affordable housing?

For residential units like the 130 non-age-restricted homes planned for Crystal Spring and the 152 new homes at Parkside Preserve, the county would charge $13,233 for residential units from 2,500 to 2,999 square feet, to cover the extra cost beyond increased assessments for property taxes. The charge would be and $11,064 for a unit of from 1,500 to 1,999 square feet.

The county would charge impact fees of $5,392 per room for the 80-room hotel planned for Crystal Spring. That comes to $431,360.

New developments do not pay their own way and existing taxpayers were or are shouldering much of the cost of this development.

Further, if more development was a net gain so far as property taxes go, how does one explain the fact that taxpayers in the city pay a local property tax rate 30 percent greater than that of their neighbors in the county — despite much denser development in the city?

Baltimore — the most densely populated, most developed and largest city in the state — charges a rate 2.4 times that of the adjoining Anne Arundel County. The more residential development there is, the more costly it is to service it.

Now the argument is being advanced by developers and their shills that we need to facilitate development to assure more affordable housing. At Crystal Spring, the smallest senior apartment will sell for $450,000, with a $3,000 monthly fee. A single-family cottage will go for $1 million, with a $7,000 monthly fee. Besides eliminating land for affordable housing, such developments drive up the cost for all housing.

Such developments also result in traffic overloads, school overcrowding and environmental destruction. Enough is enough!

Fred Gregory, whose roots in the Annapolis community go back more than 56 years, is a retired U.S. Air Force colonel and a former astronaut and deputy administrator of NASA. He lives past the Crystal Spring site in Wild Rose Shores. Contact him at

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