Subject
title
Approve the Amended and Restated Memorandum of Understanding with Montgomery County for Transportation Impact Taxes for New Developments in Rockville
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Department
PW - Traffic & Transportation
Recommendation
Staff recommends the Mayor and Council authorize the City Manager to sign the Amended and Restated Memorandum of Understanding with Montgomery County for Transportation Impact Taxes for New Developments in Rockville.
Discussion
Background
Pursuant to Chapter 52 (Taxation), Article IV (Development Impact Tax for Transportation Improvements) of the Montgomery County Code, Montgomery County has established the “Development Impact Tax for Transportation Improvements” (“Impact Tax”) that applies to certain new developments in Montgomery County, Maryland, including within the corporate boundaries of the City of Rockville.
The Impact Tax must be paid to Montgomery County by each owner of an eligible new development located within the City of Rockville before a building permit is issued by the City of Rockville’s Department of Community Planning and Development Services. The County Code limits the use of funds collected through the Impact Tax to certain activities listed in Section 52-50.
Section 52-41(e) of the County Code calls for a Memorandum of Understanding (MOU) to be established and upon approval by the County Council impact Taxes collected from developments located within the City of Rockville to be only used to fund impact transportation improvements listed in the MOU.
On January 12, 2006, the Mayor and Council and Montgomery County entered into a Memorandum of Understanding (Attachment 1), pursuant to which the Parties agreed that the Impact Taxes collected from developments located within the City of Rockville would be used to fund the sixteen (16) impact transportation improvements listed in this MOU.
Current Situation
As of June 30, 2025, the amount of funds in the Rockville Development Impact Tax Fund Account totaled $8,316,252.
In recent years, Montgomery County has approached the city to amend the MOU so it will allow them to spend $1,000,000 on the county’s Bus Rapid Transit (BRT) project and $500,000 on the Great Seneca Transit Network (GSTN) project.
After several years of discussions and negotiations, both parties agreed to present the amended MOU (Attachment 2) to the elected officials for their review and approval. The amended MOU shall supersede the 2006 MOU entered into by the County and City, and the 2006 MOU shall be void and of no further effect upon execution of this proposed MOU.
With the amended MOU, the County Council shall appropriate $6,816,252 (which is the $8,316,252 minus the $1,500,000 requested by the county for the two transit projects) in the Rockville Transportation Impact Fund Account to the Rockville Transportation Improvements Project for use by the Mayor and Council to fund the following city projects:
• Maryland/Dawson Extended
• W. Gude Drive Sidewalk
• Scott-Veirs Drive Shared-Use Path
• Sidewalks (meeting Section 52-50 criteria)
• Twinbrook Pedestrian/Bicycle Bridge
• Bikeshare Stations
• Fleet/Monroe Shared-Used Path
• Martins Lane Shared-Use Path
• Research Blvd. Shared-Use Path
This appropriation list will satisfy the city’s pending request of $965,000 for the W. Gude Sidewalk from the $6,816,252 balance after it is appropriated. It should also satisfy another pending request of $2,650,000 for the Maryland/Dawson Extended CIP project.
With the Amended and Restated MOU, the city and county also agree that the County shall finance, in part, the following transportation improvement projects which are located within the corporate boundaries of City of Rockville or within ¼ mile of the corporate boundaries of the City of Rockville by utilizing the funds that have been appropriated by the County Council from the Rockville Transportation Impact Tax Fund Account:
• Bus Rapid Transit: System Development
• Bus Rapid Transit: MD 355 Central
• Bus Rapid Transit: MD 355 South
• Great Seneca Science Corridor Transit Improvements (limited to the Gray Line, Cobalt Line, and Pink Line)
• Bus Rapid Transit: Veirs Mill Road
This appropriation list will satisfy the county’s request for $1,500,000 for the Bus Rapid Transit and Great Seneca Science Corridor Transit projects.
Funds received after June 30, 2025, will be programmed to projects in accord with this Amended and Restated MOU and Section 52-50 of the Montgomery County Code, following County established procedures for amending the Capital Improvements Program. For any impact taxes collected from development within the City after June 30, 2025, the City and County agree to program such funds with an allocation of 65-percent to the City projects and 35-percent to the County projects. The Listed Projects CIPs shall be amended accordingly within ninety (90) days of a City request to reflect changes in the projects which comply with funding under the Impact Tax Law as well as availability of funds and appropriation by the County Council.
With the Amended and Restated MOU, the city and county also agree that the Rockville City Manager and the Montgomery County Chief Administrative Officer may amend this Amended and Restated MOU from time to time to modify the sixty-five percent (65%) - thirty-five percent (35%) split of the appropriation of funds in the Rockville Transportation Impact Fund Account.
The Rockville Transportation Improvement Projects listed in this Amended and Restated MOU will be updated upon approval of a County Council resolution amending the “Rockville Transportation Improvements” CIP including revisions to the City projects and any changes to the list of County projects supported by these funds. The programming of funds to County projects will occur as amendments to the relevant County projects.
Mayor and Council History
This is the first time this item has been brought to the Mayor and Council
Next Steps
Once the Amended and Restated MOU is signed, the County will concurrently submit for approval a draft Council Resolution approving this Amended and Restated MOU and the City Projects and an amendment to the County’s FY25-30 CIP seeking appropriation for the Rockville Transportation Improvements project totaling $6,816,252.