The Baltimore County Council voted this week to raise impact fees on developers and collect them earlier in the process.

Council members voted 6-0 on Monday night to approve the change in hopes of collecting the millions of dollars neighboring counties have used for schools and roads instead of the paltry sums the county collects now. Councilman Julian Jones was absent.

The new law requires developers to pay $6 per square foot before obtaining a building permit, which will allow the county to collect the revenue even if a property doesn’t get to settlement. The fees offset the “impacts” of new development, and counties often use them to build new schools, fix roads, or invest in sewer and water infrastructure.

Pete Gutwald, the county’s director of permits, approvals and inspections, said other counties’ shares of fees from development are “significantly higher” than what Baltimore County takes in.

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An old, abandoned shopping center with a large, empty parking lot.
Developments such as this one in Lutherville did not have to pay impact fees when they were constructed. Impact fees from developers offset issues that new construction brings, such as more traffic and the need for more schools. The new legislation ensures that future projects will have to pay, though the council will need to fix numerous loopholes, as almost all developments now are exempt. (Daniel Zawodny)

Counties like Anne Arundel bring in millions of dollars a year and are able to keep their school enrollments at 100% capacity, as opposed to Baltimore County, which considers a school overcrowded only when it reaches 115%. Passage of the impact fee legislation came on the same night that the council overrode County Executive Johnny Olszewski Jr.’s veto of a school overcrowding bill. That legislation limits the number of new construction units in overcrowded districts and reduces the threshold for an overcrowded district to 105% over several years.

The current impact fee law was passed in 2019, and included exemptions for senior housing, affordable housing and schools. Unlike other jurisdictions, Baltimore County charges a flat fee of 1.5% of a new building’s gross sales price, and allows the developer to pay before residents move in, as opposed to when the developer builds.

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That can mean the county never receives the funds if the building is not occupied. The law also included so many exemptions that the county barely collected any funds. According to The Baltimore Sun, the county collected no impact fees in 2023 because nearly all of the 687 building permits issued were exempt. In 2022, the newspaper reported, it collected only $14,000 in fees — far short of the $6 million it had expected.

Three Republicans and three Democrats voted in favor of the measure, which Chairman Izzy Patoka introduced on behalf of the Olszewski administration.

But Wade Kach, a Republican representing the northern part of the county, struggled with his decision, asking to vote last so he could have more time to think about it.

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“This legislation really causes me heartburn,” he said, citing the additional cost of construction due to the fees he expected would be passed on to buyers. “I just wish that the county had enacted this 20 or 30 years ago.”

Republican David Marks of Perry Hall agreed. He wrote his master’s thesis on impact fees in 1997, looking at Montgomery and Anne Arundel counties. “If we had impact fees at that time, they would have been more gradual and more reliable. And I think it would have improved our business climate because people value reliability.”

A fiscal note attached to the bill illustrated how much money Baltimore County has left on the table for the past 30 years. The Office of Budget and finance said that, under the current structure, 41 out of 1,674 structures would be subject to impact fees, and the county would collect $242,287. Under the new structure, the county would collect $1,587,114.

The county executive’s office praised the council’s decision.

“This administration was the first to pass impact fees in Baltimore County and this technical bill takes important steps forward to better align Baltimore County with best practices and our peer jurisdictions,” said Erica Palmisano, a spokeswoman.

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The new law does not address the exemptions to the impact fees, which a previous council passed after Marks introduced the impact fee legislation. The council will have to close any loopholes they created in the law; Patoka said he plans to introduce such legislation in the coming weeks.

The impact fee legislation will take effect in 44 days.