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Embryonic plans for a property tax break for small apartment buildings are dead because of vaguely-specified legal obstacles that would take an act of the state legislature to overcome, according to new Mayor Celina Benitez.
During the May 19, 2021, Mount Rainier City Council meeting discussion of legislative priorities, Benitez said she was “scratching it off the list,” and asked if everyone was okay with that.
The announcement is a sudden about-face on a high-profile policy Benitez promised she would develop. During a February City Council meeting, as a City Council member weighing a run for mayor, Benitez announced her intention to create a new property tax class that would permit City Council to tax small apartment properties at different rates than other classes of real estate in the city. The goal would be to lower their tax rate below that charged for larger apartment complexes.
Responding to a request for background on the topic from new City Councilor Jarrett Stoltzfus, Benitez said state officials advised her the city could not create a sixth property tax bracket just for small apartment buildings.
Benitez said a property tax class for small apartments would require the state and the county to overhaul their tax codes, a possibility she said was unrealistic in the near future. Even if that did happen, the resulting changes are out of their hands, could affect everyone in the state, and could go against the city’s goals for such a policy.
“When I reached out to Maryland taxation, they said a sixth one cannot happen unless the county and the state create one,” said Benitez. “At that point…we will have an opinion, but it might not be what we were thinking of.”
Expanding slightly on her explanation later in the discussion, Benitez said a key legal obstacle was the attempt to distinguish apartment buildings by size or form rather than by use.
“To be clear, it’s not just creating it. It’s the fact that we are trying to do it for smaller apartment buildings,” said Benitez.
City Councilor Scott Cecil said he still wanted to lobby state officials on the matter.
“I’m going to continue working on this issue no matter what,” said Cecil.
Councilor Luke Chesek, who has also bandied the idea of a small-apartment tax bracket, said “he didn’t see a way forward for now” on the issue.
The goal of a sixth tax class is an outgrowth of Mount Rainier’s controversial 2019 decision to split its property tax rates into five different classes, including one for apartment properties and one for single-family homes.
Aside from unsettled questions about how such a policy would impact the predominantly lower-income and minority tenants of those apartment complexes, objections also came from the owners of smaller apartment buildings, who felt they were being hurt by a tax classification scheme designed to generate revenue from larger apartment complexes that city officials said generate a disproportionate amount of police calls. A Route 1 Reporter analysis found most police activities take place in the city’s commercial corridors along Rhode Island Avenue and Queens Chapel Road.