Maisel v. Montgomery County

GARRITY, Judge. Appellants, Harvey B. Maisel et al., bring this appeal from a judgment in the Circuit Court for Montgomery County (Beard, J.) affirming the Maryland Tax Court’s decision to deny appellants’ claim for refund of rezoning transfer taxes. They contend that the Circuit Court erred ³³ in affirming the Tax Court’s findings that the property at issue was rezoned to a “more intensive use” and was therefore subject to a six percent rezoning transfer tax. Statement of Facts The facts are undisputed.

The subject property, purchased by appellants in December 1986, consists of 4.5 acres and is located in Silver Spring. At appellants’ request, the property was rezoned from the R-60 Zone (Residential, single-family) to the RT-8 Zone (Residential, townhouses) by the County Council on July 11, 1989. The R-60 Zone generally permits a maximum of 5 dwelling units per acre, but allows a maximum of 6 units per acre with moderately priced dwelling units (MPDU’s). The RT-8 Zone permits a maximum of 8 dwelling units per acre.

Appellants submitted a schematic development plan in conjunction with their application for rezoning. The original plan showing 36 townhouse units, the maximum permitted in the RT-8 Zone, was rejected by the Maryland-National Capital Park and Planning Commission, as was a subsequent plan calling for 32 townhouse units on the site. The Commission eventually approved a development plan containing 27 townhouse units. In April 1990, appellants sold the property.

A six percent rezoning transfer tax of $105,300 was collected by the Division of Revenue, Department of Finance (Montgomery County) on the transfer based upon the purchase price of $1,755,000. Appellants filed a claim for refund in the amount of $87,750, or five percent of the consideration, alleging that the regular one percent transfer tax, rather than the six percent rezoning transfer tax, was due. They based this on their decision to limit development on the property to no more than the number of townhouse units that could have been constructed under the pre-existing zoning. Montgomery County denied the claim for refund, and appellants appealed to the Maryland Tax Court. ³⁴ Following a hearing, the Tax Court affirmed Montgomery County’s denial of appellants’ claim for refund, and appellants appealed to the Circuit Court for Montgomery County.

That Court affirmed the decision of the Tax Court and this appeal followed. Analysis Md.Tax-General Code Ann., § 13-532(a)(2) (1988, 1992 Cum.Supp.), provides that final orders of the Tax Court may be appealed to a circuit court. Such judicial review is, however, severely limited. CBS v. Comptroller, 319 Md. 687 , 575 A.2d 324 (1990); Comptroller v. Diebold, Inc., 279 Md. 401 , 369 A.2d 77 (1977).

A reviewing court must affirm the Tax Court if its order “is not erroneous as a matter of law” and if the order “is supported by substantial evidence appearing in the record.” CBS v. Comptroller, supra at 697, 575 A.2d 324 , quoting Ramsay, Scarlett & Co. v. Comptroller, 302 Md. 825, 834 , 490 A.2d 1296 (1985). The Court of Appeals held in Fairchild Hiller Corp. v. Supervisor of Assessments, 267 Md. 519, 521 , 298 A.2d 148 (1973), that the standard of review of a Tax Court decision is whether a reasoning mind reasonably could have reached the factual conclusion that that agency reached. Comptroller v. Diebold, Inc., 279 Md. at 407 , 369 A.2d 77 . Since administrative agency decisions are prima facie correct and carry a presumption of validity, we must review the Tax Court’s decision in the light most favorable to that court.

Cox v. Prince George’s County, 86 Md.App. 179, 187 , 586 A.2d 43 (1991); Terranova v. Board, 81 Md.App. 1, 9 , 566 A.2d 497 (1989). Our role is essentially to repeat the task of the circuit court; that is, to be certain the circuit court did not err in its review. Mortimer v. Howard Research, 83 Md.App. 432 , 575 A.2d 750 (1990); Cox v. Prince George’s County, 86 Md.App. at 187 , 586 A.2d 43 (1991). Appellants argue that the six percent rezoning transfer tax provided for in § 52-21(e) of the Montgomery County Code does not apply with reference to the sale and ³⁵ transfer of the instant property because, under the requirements of the Montgomery County Zoning Ordinance (Chapter 59, Montgomery County Code, 1984 ed., as amended), the subject property was not rezoned to a “more intensive use,” as that term is defined in the Code.

Appellants contend that the maximum number of dwelling units developable on the property before and after the rezoning is 27 units and that, therefore, as there has not been a rezoning to a more intensive use, a one percent tax should have been applied. Appellants further asseverate that when a rezoning of property occurs through a local map amendment, the law with respect to the use and development of that property changes, particularly where, as here, an optional method rezoning occurs pursuant to § 59-H-2.5 of the Montgomery County Code (1984, as amended) and additional restrictions are imposed as to the density of development. By failing to look at the text of the RT-8 Zone, appellants contend, the County ignored the binding restrictive elements contained in the Council’s approval of the rezoning amendment. The appellee avers that the statute in issue is silent regarding any voluntary limitation, which may have in fact occurred in connection with the rezoning of the subject property, nor does it refer to the total number of dwelling units that may eventually be constructed on the rezoned property.

The only comparison permitted by § 52-21(e), the appellee contends, is between the statutorily permitted densities in the various zones, not the eventual densities that can actually be constructed on the property. A comparison of the statutorily permitted densities in the R-60 and RT-8 Zones reveals that the R-60 Zone with an MPDU density bonus arguably permits a maximum of 6 dwelling units per acre, while the RT-8 Zone without any density bonus permits 8 dwelling units per acre. Appellee alleges that by allowing the construction of townhouses where none were permitted before, the rezoning of appellants’ property to RT-8 intensified the use and development of the property by definition, since townhouses are inherently a more inten ³⁶ sive form of development than single-family detached homes. The rezoning tax therefore applies, according to appellees, since the “change in zone” from R-60 to RT-8 clearly permits a greater number of dwelling units.

The issue of law in this case focuses upon the proper interpretation and application of § 52-21(e) of the Montgomery County Code, which provides that the transfer tax on rezoned property is (6) percent of the value of the