Federation of Connecticut Taxpayer Organizations

When 210 square feet of Freda Mitchem�s side yard were seized by Maryland to add a turn lane on Connecticut Avenue, she was shocked to learn her reimbursement was subject to state and federal taxes.

A bill sponsored by Sen. Richard Madaleno (D-Dist. 18) of Kensington would change that, modifying state tax code to exempt properties acquired by the state for transportation projects. An amendment that Madaleno is expected to introduce Thursday would expand the bill to exempt all partial properties purchased by the state.

Madaleno did not return calls for comment. Senate Bill 807 is scheduled for a hearing Thursday in Annapolis.

�You could say, �Freda, if you're looking at $8,000, why do you care?�� said Mitchem of Chevy Chase. �For many people, $1,840 is a lot of money.�

The bill was sparked by the experiences of no more than seven or eight homeowners. But projects such as the Purple Line � a $1.9 billion light rail that would connect Bethesda to New Carrollton via Silver Spring � could affect more Montgomery residents in the future, she said.

About 500 parcels might be needed to build the rail, including about 170 that would be temporarily condemned during construction, according to a January report in The Washington Post.

The list of properties was based on years old information and a new list will not be generated until 2013, said Mike Madden, Purple Line project manager for the Maryland Transit Authority

Freda Mitchem and her husband, Arnold, have lived in their home for 26 years. Their land was seized to add a turn lane to Connecticut Avenue from Capital Beltway Exit ramp 33 to Jones Bridge Road.

The project is intended to relieve congestion in the wake the Sept. 15 merger of Walter Reed Medical Center in Washington, D.C., and the National Naval Medical Center in Bethesda, into the Walter Reed National Military Medical Center in Bethesda.

The merger was part of the 2005 federal Base Realignment and Closure Act, which calls for closing and consolidating hundreds of military facilities nationwide. It brought 2,500 employees to the military campus and is expected to double the number of annual visits to 1 million.

For Mitchem, the seizure was personal. The side yard was a place to for the grandchildren to play and adults to talk, but without that 210 feet it is too small.

�It's just the principal of the thing,� she said. �It just strikes me as unfair. You didn't voluntarily sell anything, it was taken for the public good. By the way, you are going to be taxed on the taking.�

Before the Maryland State Highway Administration initiates negotiations with a landowner, the property is appraised by a qualified real estate appraiser, whose appraisal is reviewed by the SHA�s Appraisal Review Division

Paying taxes on their compensation is a problem faced only by people who lost part of their property. Maryland tax code follows federal rules, which allow individuals who lost their entire property to exclude as much as $250,000 from income taxes and couples to exclude as much as to $500,000.

The change would cause the state�s general fund to decrease an about $373,700 in fiscal 2013, and remain steady through fiscal 2017, according to the bill�s fiscal analysis. The state would also experience a one time loss of $22,000 in fiscal 2013 for tax form changes and computer programming modifications.

The bill is supported by the Maryland Chamber of Commerce, the Chevy Chase Valley Citizens Association and other local organizations.

�I�m sure some people will think this is a sleeper, but if it is your property that is being taken then it becomes a big deal,� said Greg Humes, vice president of the Chevy Chase Valley Citizens Association.