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Local Tax Assessment Bill Goes Statewide: Potential New Legal Trend Targeting Clubs

Continuing our work to defend the private club industry, the National Club Association (NCA) has created a coalition of clubs, state leaders and a local lobbying firm, to combat a Montgomery County, Md., bill that would dramatically increase the property tax assessments of clubs in the county. This bill was originally introduced to only impact clubs in Montgomery County, however, after being recently defeated 17-7 by the Montgomery County House delegation, a new bill has surfaced that could impact clubs statewide.

Why We Are Here

For most Maryland clubs, the assessment process was based on a state law created to protect open spaces, reduce overdevelopment and protect jobs. Under that law, clubs are entitled to enter into an agreement with the Maryland State Department of Assessment and Taxation (SDAT) that prohibits them from selling their land for development in return for a minimal assessed value of the club’s land.

In an effort to raise taxes on clubs, House of Delegates member David Moon (D), introduced legislation that first targeted just a handful of facilities located in Montgomery County. Nearly all those clubs had entered into one of these agreements with the SDAT. Due to our coalition’s work, the initiative was defeated.

What’s Happening Now
Del. Moon has now altered his legislation to make it applicable statewide. His bill, HB1340, now proposes that any private club may still enter into an SDAT agreement, but the new assessed value will be 1 percent of that fair market value. For most clubs, this would be an exponential increase in assessed value and property tax liability—a five- to ten-fold increase in their assessed value per acre—inhibiting a club’s ability to keep and develop its staff, offer programming and in some cases, remain open. Also, the bill would end all current SDAT agreements regardless of their current end date and limit new agreements to five-year terms.

As the new bill gets considered, NCA and our collation will continue to lobby to stop the legislation from ever becoming law. With allies on both sides of the aisle, we are hopeful that the success at stopping the county-level bill will translate to the statewide level.

Bigger Picture

Maryland is not the only state dealing with a tax assessment law that targets private clubs. In New York, State Assemblywoman Sandra Galef (D) has introduced a bill similar to Maryland’s that would allow local taxing units the right to assess a club’s property at its highest and best use rather than assessing it at a recreational or commercial use. NCA has been working to stop this harmful legislation as well.

In both New York and Maryland, our efforts have allowed local clubs to be informed, engaged and active in the fight to stop anti-club legislation. While tax assessments have remained an issue for clubs, in particular on a case-by-case basis, these two proposed laws potentially signal a new trend in lawmaking that attacks our industry.

Join the Fight

NCA continues to shield private clubs from these and other efforts that hinder our industry. As an ally in this fight, we encourage you and your club to stay informed about state and local issues impacting your club and to communicate them to NCA so that we can most effectively address them. For any assistance on these or other issues, please call us at 202-822-9822 or contact NCA’s Vice President of Government Relations & General Counsel Brad Steele at [email protected].