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New construction needed to avoid tax increases

(6/15)  Next year, all of Thurmont's road resurfacing - the senior center parking lot, Tippin Court, Tippin Drive to Gateway Drive, Shipley Avenue and Boundary Avenue from North Church Street to Carroll Street - will be paid for by the construction of homes in Jermae Estates.

This is just one example of how Thurmont's budget is growing dependent on fees generated by growth. The town commissioners instituted impact fees on new development last year. Between this year's budget and next year's budget, nearly 19 percent of the capital budgets for roads, parks, sewer and water come from impact fees. Each new home pays $7,660 in impact fees.

"Those impact fees go a long way," said Mayor Martin Burns during a recent town meeting. "Let those people who want to come to town pay a little more to offset costs to current residents."

Additionally, more than seven percent of the water and sewer operating budgets come from connections fees paid for by new growth. Sewer and water connections are $5,000 per pair.

The town's budget estimates $316,500 from impact and connection fees. This equates to 25 new homes, according to clerk/treasurer Rick May. Jermae Estates is the only place in town where this amount of new construction can occur.

"We can also see some growth from infill and new business, but it won't be significant," May said.

Once the approved lots are built out, the town will be left to find another way to make up the lost revenue, said Commissioner Ron Terpko.

County planner Denis Superczynski told the planning and zoning commission in May that 25 new housing units per year per development is a "safe" number of homes to grow by each year.

"Twenty-five is not a problem for some of the developers and builders in town," said Superczynski.

The planning and zoning commission has been allowing new developments to grow at 25 units a year. Superczynski said the rate is "roughly based on some number profitable to the developer while not putting a strain on infrastructure."

The problem comes with multiple developments. Town officials are now expecting three annexation requests sometime this year and a rezoning request for a property in town. If each of the expected developments were to grow at 25 units a year, the total would be 100 units a year for the town.

If all the expected developments were approved, it would allow for more than 1,000 housing units to be built in the town, which would cover Thurmont's growth needs for about 20 years at the current rate of growth (54 units/year) and more than 40 years if growth were allowed at the current budgeted growth amount (25 units/year).

"We're running out of homes. Period. And if we do not grow, we'll have a problem," Burns said.

In the town's recent master plan survey of 658 residents, 60.5 percent said 54 homes a year was too many and 31.2 percent said it was just right. During the planning and zoning commission's May meeting, Chairman John Ford said based on the results of the survey the town's optimal growth might need to be around 35 homes a year. This would be total, not per development.

"If growth doesn't continue … taxes will increase to offset the loss or water and sewer rates will go up," Burns said. He added that if residents are okay with the result of a zero-growth policy, the commissioners would be willing to support it, but residents need to understand the consequences of no growth as well as too much growth.

A third option besides new construction and tax increases would be for the commissioners to cut services.

The amount of money the town collects in impact fees and connection fees equals about 7.5 cents of the property tax rate. All of the lost fees wouldn't be recouped through the property tax but through a combination of water and sewer rates and property tax rates.

"If you're okay with that, we're okay with that," Burns said.

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