Good morning, everyone, and welcome to the session of the Government Operations and Fiscal Policy Committee.

We have two items before us this morning.

Our colleague Councilmember Evans, due to an illness will not be joining us this morning.

But we are joined for the first item by Councilmember Andrew Friedsen.

And so our first item today is Bill 15-26 taxation property tax credit, Habitat for Humanity.

This would create a tax credit for properties owned by Habitat with the purpose of rehabilitating and transferring to a new owner in the near future and generally amend the law regarding property tax credits.

It puts in place enabling legislation that we got from the state uh here in Montgomery County.

And I will first turn it over to Mr.

Gorslek to go through the packet and then to my colleagues.

Absolutely.

Thank you, Councilmember.

So the the bill is actually relatively simple insofar as the legality.

The actual implement implementation is uh fairly complicated, but we've we've worked closely with uh the staff at Habitat for Humanity Metro Maryland as well as the very capable staff in the Department of Finance's tax credits team to make sure they understand how the implementation will actually occur starting July 1st, 2027.

Um essentially what the bill does as uh the chair indicated is it implements uh Maryland Code Tax Property Section 9252, uh, which creates a tax credit for properties owned by uh Habitat for Humanity Metro Maryland.

It's it's possible it might be by some subentities or maybe another Habitat for Humanity entity operating for whatever reason in Montgomery County.

Um, and during dependency of Habitat for Humanities ownership of the property while it rehabilitates or builds or what have you, the property until the conveyance to the ultimate owner of that property, it creates a 100% tax credit for that period.

It's not for the entire tax year, and and we've already sort of created a process that's set forth within statute, as well as just conversations with the Department of Finance for how this will be implemented.

Um the bill also requires an annual report from Habitat for Humanity.

That's sort of a belts and suspenders approach to make sure that the dates when the conveyances occur align and the tax uh credits given are appropriate.

It also happens to be required under the state enabling legislation.

Um the summary of the impact statements is set forth on page two of the report.

Uh very briefly uh the racial equity and social justice impact uh indicated the small positive impact, um little to no impact on climate, uh positive impact on economic conditions, and the fiscal impact would be a decline in property tax revenues by an estimated amount of about 458,000 over the first horizon, the first five-year horizon that uh the uh Office of Management budget looks at.

Uh the flip side of that is the sole public testimony received was from the President's CEO of Habitat for Humanity, who indicated that they would uh be able to recoup about 70 to 80,000 dollars per year.

That aligns almost perfectly with the declined revenues, obviously, to the county, which would be invested in future um projects that they could uh pursue.

Thank you very much for that overview.

I'll first turn to my colleagues on the committee and see if you have any comments.

Councilmember Katz.

Thank you very much.

I really don't have much of a comment.

I was saying before that it's so impressive that they that the state of Maryland did this for habitat.

That they did the right thing, but it to be this specific for habitat was pretty impressive.

But I'm certainly in favor of it.

I think it's the right thing to do, and I think it that home ownership is the way that people can can get themselves into uh to a better situation, and habitat certainly does that for people, so uh and families.

So I'm certainly in favor of it.

Thank you.

Thank you very much, Councilmember Katz, and I'll turn it now to Councilmember Friedsen, who is the lead.

And I just will note that all the council members are co-sponsors on this, so I think it shows our uh great support uh for the work of Habitat for Humanity and increasing home ownership uh in our community.

But I'll turn it over to Councilmember Friedson.

Uh thank you, Madam Chair.

Uh it's good to be here with the the old uh government operations and fiscal policy uh committee.

And I'm not referring to my good friend Councilmember Katz.

I want to note, I'm referring to the full committee here.

Uh but uh just want to express my appreciation to all council members uh for their support of this effort.

Just want to note uh Cecil, Carroll, Talbot, Dorchester, Harford, St.

Mary's, and Caroline County have already implemented uh this.

Uh so we're not on the bleeding edge.

Uh we're frankly barely uh on the cutting edge.

But we are making a meaningful impact in trying to provide pathways to homeownership and to address the huge challenge that we face in housing affordability, which is a broad-based issue, but specifically we lack very many meaningful tools to provide pathways to homeownership in the 30 to 80 percent area meeting income realm.

Habitat for Humanity has this very specific carve-out in state law and enabling legislation because they're frankly the only organization that is doing this and that has done this and has been the most reliable partner for the county in providing these pathways to homeownership.

I've been proud to work very closely with them.

Appreciate uh Sarah being here today, Jeff D for testifying and their uh collective work, uh, as well as the commitment that the organization has had in Montgomery County.

They raise a lot of money uh in order to offset these costs.

This is you know similar to what we did at Randolph Road, except we had to pay the money on the back end, it made it much more expensive for taxpayers, more expensive for donors, uh philanthropic uh donors uh to the organization.

Uh and much like we did with the nonprofit pilot bill, where we were funding those rental housing affordable units on the back end, if we could provide relief on the front end foregoing the property tax, uh it is a better deal for everybody.

It's more predictable and more reliable, it allows them to have better financing tools in the private market.

I've been able to work with them to provide some uh outside financing options and opportunities, and this just gives them more options, more opportunities in a more uh cost-effective way.

And when we think about you know, how do we address racial equity, how do we provide opportunities and address the affordability crisis in our community, providing meaningful pathways to homeownership is a key uh part of that, and by reducing construction costs, this you know, and carrying costs during the process of construction, which is really what this is doing, uh it really allows uh for this to move forward and more projects like it uh to move forward.

So we're helping some projects move forward, but more importantly, we're essentially helping the next project happen because so much money is not you know buried into one project that the next projects and opportunities uh can happen.

And I'll just note there is uh one project across the street that some of us joined in uh breaking ground, and the goal is to have scattered sites like that providing homeownership opportunities to more residents at a broader breadth of the affordability spectrum all across the county.

And this is one step in that direction.