Governor Martin O’Malley has proposed legislation that would extend and greatly strengthen Maryland’s tax credit program for rehabilitating historic buildings and make needed adjustments to a key statewide economic development incentive that the GBC strongly supports.
The administration bill, SB258/HB309 — The Maryland Heritage Structure Tax Credit Rehabilitation Program — will be heard next week on March 4 in the Senate Budget and Taxation Committee and on March 5 in the House Ways and Means Committee.
“Passage of this legislation would be a significant step forward for revitalization advocates and for developers, whose interest in commercial historic rehab projects in Maryland have waned in the last few years because of limitations that the program acquired,” said GBC president and CEO Donald C. Fry.
The governor’s proposal, part of his “Smart, Green and Growing” package, would restore the program to a pure tax credit and make $100 million in credits available over the next five years.
“The Greater Baltimore Committee, developers, and preservation advocates know first-hand that this program has been a major factor in commercial revitalization projects in Baltimore City and in towns across the state from Snow Hill to Cumberland,” Fry said. “The governor’s bill would restore this rehabilitation incentive to its best and highest use as a straightforward tax-credit incentive.”
The legislation would grant of up to $100 million in historic rehabilitation tax credits over the next five years. It would reauthorize the tax credit, which is set to expire this July 1, and would include an added incentive for “green” building projects. In addition to a 20 percent tax credit for historic building rehabilitation, it would provide a 5 percent “bonus” credit for commercial projects that meet LEED certification of Gold rating or higher.
This tax credit consistently generates revenue to government that exceeds the amount of the credit. Every dollar in state tax credits for a commercial project returns tax revenue of $1.02 in the first year and $3.31 by the fifth year after the project’s completion, according to a governor’s task force study.
First passed by the General Assembly in 1996, Maryland’s historic building rehabilitation tax credit was widely regarded as the most effective program of its type in the nation as an incentive for Smart Growth, economic development and community revitalization. However, demand for the credits led to changes that converted the program to a format that was, in effect, a restrictive annual grant competition.
Among other things, this bill would replace the annual competitive rating of projects with an ongoing project review process and an approval or denial decision on tax-credit applications within 30 days. This would return predictability and reliability to the program, luring developers back to Maryland.