On March 3, 2025, Maryland's General Assembly introduced House Bill 698, a legislative proposal aimed at reforming the collection and expenditure of development impact fees, surcharges, and excise taxes imposed by local governments. This bill emerges in the wake of the Supreme Court's ruling in Sheetz v. County of El Dorado, which established that local government permit conditions must have a clear connection to land use interests and be proportionate to the impact of development.

House Bill 698 specifically targets charter counties, code counties, and commission counties that impose such fees. It mandates that these counties report annually to the Governor and the General Assembly on the total amount collected from new construction projects, as well as how these funds are utilized. This requirement aims to enhance transparency and accountability in local government financial practices related to development.

The bill has sparked discussions among lawmakers and stakeholders regarding its implications for local governance and development practices. Proponents argue that it will ensure that fees collected are used effectively to mitigate the impacts of new developments on communities. Critics, however, express concerns that the reporting requirements may impose additional administrative burdens on local governments, potentially hindering their ability to respond swiftly to development needs.

The economic implications of House Bill 698 could be significant, as it seeks to balance the interests of developers with the needs of local communities. By ensuring that development fees are directly linked to the impacts of new construction, the bill aims to foster responsible growth while safeguarding public resources.

As the legislative process unfolds, experts suggest that the bill could set a precedent for how development impact fees are managed across the state, potentially influencing future legislation and local government practices. The outcome of House Bill 698 will be closely monitored by both supporters and opponents, as it could reshape the landscape of development regulation in Maryland.