Recommendation
Staff recommends that this ordinance be introduced and adopted at the meeting of May 18, 2009. If the Mayor and Council wish to introduce the ordinance and proceed to adoption at the same meeting, the ordinance should first be introduced, then a motion should be made to waive the layover period. If the motion to waive the layover period is approved by an affirmative vote of four members of the Mayor and Council, the Council may then proceed to move to adopt the ordinance.

Discussion
The Homeowners' Tax Credit Program is a State administered program that provides real property tax credits to residents for property taxes due on their principal residence. Under the City's current Homeowners' Tax Credit Program as presented in Chapter 22 "Taxation" of the Rockville City Code, Article III "Local Supplement to the State Homeowners' Property Tax Credit," households with gross incomes up to $70,000 per year and a household net worth of less than $200,000 (not including the value of the home or qualified retirement savings) could qualify for tax relief on the first $300,000 of their home's assessed value.

The attached ordinance expands the City's Homeowner's Tax Credit Program by increasing the income requirement to $85,000 per year, with a maximum qualifying assessment of $400,000 (*note: the $200,000 parameter value for net worth cannot be changed programmatically at the State level).

The City has offered a Homeowner's Tax Credit Program for the past four fiscal years. In FY 2006, 366 households participated and received an average credit of $200. In FY 2007, 630 residents received an average credit of $308, and in FY 2008, 660 residents received an average credit of $296. In FY 2009, the City expanded the Homeowner's Tax Credit program by establishing an additional senior credit (*note: FY 2009 statistics are not yet available). The senior credit equals an additional 25 percent credit for seniors 70 years or older who are primary homeowners. The FY 2010 program will continue to offer this senior credit.

Mayor and Council History
June 5, 2006: Adoption of Ordinance to Amend the City's Supplement to the Homeowner's Tax Credit
July 21, 2008: Changes to the Homeowners' Tax Credit Program Parameter Values
October 27, 2008: FY 2010 Budget Preview / Worksession - Part I
November 3, 2008: FY 2010 Budget Preview / Worksession - Part II
February 23, 2009: Final FY 2010 Budget Preview
March 23, 2009: Fiscal Year 2010 Proposed Operating Budget and Capital Improvements Program
Introduction of Ordinance to Appropriate Funds and Levy Taxes for Fiscal Year 2010
Introduction of Ordinance to establish a $42 Tax Credit through the Income Tax Offset Program
March 30, 2009: Public Hearing on the Fiscal Year 2010 Constant Yield Tax Rate
First General Budget Public Hearing on the Fiscal Year 2010 Proposed Operating Budget and Capital Improvements Program
April 13, 2009: Second General Public Hearing on the Fiscal Year 2010 Proposed Operating Budget and Capital Improvements Program
April 20, 2009: First Mayor and Council Budget Worksession - Operating Budget
April 27, 2009: Second Mayor and Council Budget Worksession - CIP Budget, Other
May 4, 2009: Final FY 2010 General Budget Public Hearing on the Fiscal Year 2010 Proposed Operating Budget and Capital Improvements Program

Public Notification and Engagement
The FY 2010 Proposed Operating and Capital Improvements Program budgets are available on the City's Web site, and hard copies are available at City Hall and the Twinbrook and Rockville libraries. Public hearings were held on March 30, April 13, and May 4, 2009. FY 2010 Adopted Operating and Capital Improvements budgets will be available to the public in July 2009.

Fiscal Impact
With the expanded Homeowners' Tax Credit Program, the City will receive approximately $500,000 less in real property tax revenue for FY 2010.

Next Steps
Budget staff will submit the new parameter values to the State Department of Assessments and Taxation, which will be used in calculating the property tax credits for the July 1, 2009 tax bills.

Attachments
Attachment A - Ordinance

Department Head:



Gavin Cohen, Director of Finance
Approved on: 05/05/2009

City Manager:

Scott Ullery, City Manager
Approved on: 05/06/2009