EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*hb0027*
HOUSE BILL 27
Q3 2lr0317
(PRE–FILED) CF SB 289
By: Delegates Luedtke and Smith
Requested: June 25, 2021
Introduced and read first time: January 12, 2022
Assigned to: Ways and Means
Committee Report: Favorable with amendments
House action: Adopted
Read second time: March 12, 2022
CHAPTER ______
AN ACT concerning 1
Historic Revitalization Tax Credit and Enterprise Zone Tax Credits – Funding 2
and Extension Alterations and Eligibility 3
FOR the purpose of altering certain limitations on a certain credit against the State income 4
tax for certain commercial rehabilitation projects; establishing the Small 5
Commercial Project Trust Account within the Historic Revitalization Tax Credit 6
Reserve Fund; requiring the Governor, in certain fiscal years, to include in the 7
annual State budget an appropriation of at least a certain amount for the Reserve 8
Fund and the Trust Account; altering the aggregate amount of initial tax credit 9
certificates that may be issued for small commercial projects; extending for a certain 10
number of years the termination date of the tax credit; altering eligibility for and the 11
calculation of a certain credit against the property tax imposed on certain qualified 12
property located in certain enterprise zones; and generally relating to the historic 13
revitalization tax credit tax incentives for improvements to historic and enterprise 14
zone properties. 15
BY repealing and reenacting, with amendments, 16
Article – State Finance and Procurement 17
Section 5A–303(d), 5A–303(c)(2)(i), (d), (e), and (j) 18
Annotated Code of Maryland 19
(2021 Replacement Volume) 20
BY repealing and reenacting, without amendments, 21
Article – Tax – Property 22 2 HOUSE BILL 27
Section 9–103(a)(1) and (6) and (b)(1) 1
Annotated Code of Maryland 2
(2019 Replacement Volume and 2021 Supplement) 3
BY repealing and reenacting, with amendments, 4
Article – Tax – Property 5
Section 9–103(d) and (e)(1) 6
Annotated Code of Maryland 7
(2019 Replacement Volume and 2021 Supplement) 8
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 9
That the Laws of Maryland read as follows: 10
Article – State Finance and Procurement 11
5A–303. 12
(c) (2) (i) For any commercial rehabilitation, the State tax credit allowed 13
under this section may not exceed the lesser of: 14
1. A. [$3,000,000] $5,000,000 for any commercial 15
rehabilitation other than a Level 1 or Level 2 opportunity zone project; 16
B. [$3,150,000] $5,250,000 for a Level 1 opportunity zone 17
project; or 18
C. [$3,300,000] $5,500,000 for a Level 2 opportunity zone 19
project; or 20
2. the maximum amount specified under the initial credit 21
certificate issued for the rehabilitation. 22
(d) (1) (I) In this subsection[,] THE FOLLOWING WORDS HAVE THE 23
MEANINGS INDICATED . 24
(II) “Reserve Fund” means the Historic Revitalization Tax Credit 25
Reserve Fund established under paragraph (2) of this subsection. 26
(III) “TRUST ACCOUNT” MEANS THE SMALL COMMERCIAL 27
PROJECT TRUST ACCOUNT ESTABLISHED U NDER PARAGRAPH (4) OF THIS 28
SUBSECTION. 29
(2) (i) There is a Historic Revitalization Tax Credit Reserve Fund that 30
is a continuing, nonlapsing special fund that is not subject to § 7–302 of this article. 31
HOUSE BILL 27 3
(ii) The money in the Fund shall be invested and reinvested by the 1
Treasurer, and interest and earnings shall be credited to the General Fund. 2
(iii) If the fees paid in any fiscal year are less than the directly related 3
administrative costs of operating the Historic Revitalization Tax Credit Program, funds in 4
the Reserve Fund shall be used for the directly related administrative costs of the Program. 5
(3) (i) Subject to the provisions of this subsection, the Director shall 6
issue an initial credit certificate for each commercial rehabilitation for which a plan of 7
proposed rehabilitation is approved and the fees charged under subsection (b)(7)(i) of this 8
section are paid. 9
(ii) An initial credit certificate issued under this subsection shall 10
state the maximum amoun t of credit under this section for which the commercial 11
rehabilitation may qualify. 12
(iii) 1. Except as otherwise provided in this subparagraph and in 13
subsection (b)(7)(v) of this section, for any fiscal year, the Director may not issue initial 14
credit certificates for credit amounts in the aggregate totaling more than the amount 15
appropriated to the Reserve Fund for that fiscal year in the State budget as approved by 16
the General Assembly. 17
2. If the aggregate credit amounts under initial credit 18
certificates issued in a fiscal year total less than the amount appropriated to the Reserve 19
Fund for that fiscal year as a result of the limitation under subsection (b)(6) of this section, 20
any excess amount may be issued under initial credit certificates for projects in a county or 21
Baltimore City in the same fiscal year, without regard to the limitation under subsection 22
(b)(6) of this section. 23
3. Subject to subsubparagraph 2 of this subparagraph, if the 24
aggregate credit amounts under initial credit certificates issued in a fiscal year total less 25
than the amount appropriated to the Reserve Fund for that fiscal year, any excess amount 26
shall remain in the Reserve Fund and may be issued under initial credit certificates for the 27
next fiscal year. 28
4. For any fiscal year, if funds are transferred from the 29
Reserve Fund under the authority of any provision of law other than paragraph [(4)] (5) of 30
this subsection, the maximum credit amounts in the aggregate for which the Director may 31
issue initial credit certificates shall be reduced by the amount transferred. 32
5. In each fiscal year, the Director shall estimate the amount 33
of fees to be collected based on the amount appropriated to the Reserve Fund and reserve 34
the difference between the estimated fees and estimated directly related administrative 35
costs of the Program to be used to administer the Program. 36
6. If the reservation of funds to administer the Program 37
under subsubparagraph 5 of this subparagraph is not necessary to cover the directly related 38 4 HOUSE BILL 27
administrative costs of the Program, any excess amount shall remain in the Reserve Fund 1
and may be issued under initial credit certificates for the next fiscal year. 2
(iv) 1. Subject to [subsubparagraph 2] SUBSUBPARAGRAPHS 2 3
THROUGH 5 of this subparagraph, for each of fiscal years 2018 through [2024] 2031, the 4
Governor shall include in the budget bill an appropriation to the Reserve Fund. 5
2. For each of fiscal years 2023 and 2024, the Governor shall 6
include in the budget bill an appropriation to the Reserve Fund of at least $12,000,000. 7
3. FOR EACH OF FISCAL YE ARS 2025 AND 2026, THE 8
GOVERNOR SHALL INCLUD E IN THE BUDGET BILL AN APPROPRIATION TO THE 9
RESERVE FUND OF AT LEAST $24,000,000 $16,000,000. 10
4. FOR EACH OF FISCAL YE ARS 2027 THROUGH 2031, 11
THE GOVERNOR SHALL INCLUD E IN THE BUDGET BILL AN APPROPRIATION TO THE 12
RESERVE FUND OF AT LEAST $36,000,000 $20,000,000. 13
5. THE AMOUNTS DESCRIBED UNDER 14
SUBSUBPARAGRAPHS 2 THROUGH 4 OF THIS SUBPARAGRAPH SHALL BE IN ADDITION 15
TO THE APPROPRIATION S TO THE TRUST ACCOUNT REQUIRED UNDE R PARAGRAPH 16
(4) OF THIS SUBSECTION . 17
(v) Notwithstanding the provisions of § 7–213 of this article, the 18
Governor may not reduce an appropriation for the Reserve Fund in the State budget as 19
approved by the General Assembly. 20
(vi) The Director may not issue an initial credit certificate for any 21
fiscal year after fiscal year [2024] 2031. 22
(4) (I) WITHIN THE RESERVE FUND, THERE IS A SMALL 23
COMMERCIAL PROJECT TRUST ACCOUNT. 24
(II) 1. THE TRUST ACCOUNT IS ESTABLISHE D FOR THE 25
ISSUANCE OF TAX CRED IT CERTIFICATES FOR SMALL COMMERCIAL PRO JECTS. 26
2. FUNDS IN THE TRUST ACCOUNT SHALL BE USED 27
ONLY FOR TRANSFERS F ROM THE RESERVE FUND TO THE GENERAL FUND IN 28
ACCORDANCE WITH PARA GRAPH (5) OF THIS SUBSECTION WITH RESPECT TO TAX 29
CREDIT CERTIFICATES ISSUED FOR SMALL COM MERCIAL PROJECTS . 30
(III) THE TRUST ACCOUNT CONSISTS OF : 31
1. MONEY APPROPRIATED I N THE STATE BUDGET FOR 32
THE TRUST ACCOUNT; AND 33 HOUSE BILL 27 5
2. ANY OTHER MONEY FROM ANY OTHER SOURCE 1
ACCEPTED FOR THE BEN EFIT OF THE TRUST ACCOUNT. 2
(IV) FOR EACH OF FISCAL YE ARS 2024 THROUGH 2031, THE 3
GOVERNOR SHALL INCLUD E IN THE BUDGET BILL AN APPROPRIATION TO THE 4
TRUST ACCOUNT OF AT LEAST $4,000,000 $2,000,000. 5
[(4)] (5) (i) Except as provided in this paragraph, money appropriated 6
to the Reserve Fund shall remain in the Fund. 7
(ii) 1. Within 15 days after the end of each calendar quarter, the 8
Trust shall notify the Comptroller as to each commercial rehabilitation completed and 9
certified during the quarter: 10
A. the maximum credit amount stated in the initial credit 11
certificate for the project; and 12
B. the final certified credit amount for the project. 13
2. On notification that a project has been certified, the 14
Comptroller shall transfer an amount equal to the maximum credit amount stated in the 15
initial credit certificate for the project from the Reserve Fund to the General Fund. 16
(iii) 1. On or before October 1 of each year, the Trust shall notify 17
the Comptroller as to the maximum credit amount stated in the initial credit certificate for 18
each commercial rehabilitation for which the initial credit certificate has expired under 19
subsection (c)(3) of this section as of the end of the prior fiscal year. 20
2. On notification that the initial credit certificate for a 21
project has expired under subsection (c)(3) of this section, the Comptroller shall transfer an 22
amount equal to the maximum credit amount stated in the initial credit certificate for the 23
project from the Reserve Fund to the General Fund. 24
(e) (1) Subject to the provisions of this subsection, the Director shall issue an 25
initial credit certificate for each approved small commercial project on a first–come, 26
first–served basis. 27
(2) An initial credit certificate issued under this subsection shall state the 28
maximum amount of tax credit for which the applicant is eligible. 29
(3) (i) [The] BEFORE FISCAL YEAR 2024, THE Director may not issue 30
an initial credit certificate under this subsection after the aggregate amount of initial credit 31
certificates issued for small commercial projects totals $5,000,000. 32
6 HOUSE BILL 27
(ii) [For] BEFORE FISCAL YEAR 2024, FOR a targeted project, the 1
Director may not issue an initial credit certificate under this subsection: 2
1. after the aggregate amount of initial credit certificates 3
issued for agricultural structures totals $1,000,000; or 4
2. after the aggregate amount of initial credit certificates 5
issued for post–World War II structures totals $1,000,000. 6
(III) BEGINNING FISCAL YEAR 2024 AND EACH FISCAL YEAR 7
THEREAFTER , THE DIRECTOR MAY NOT ISSU E INITIAL CREDIT CER TIFICATES FOR 8
SMALL COMMERCIAL PRO JECTS UNDER THIS SUB SECTION FOR CREDIT A MOUNTS IN 9
THE AGGREGATE TOTALI NG MORE THAN THE AMO UNT OF FUNDS IN THE SMALL 10
COMMERCIAL PROJECT TRUST ACCOUNT ESTABLISHED UNDER SUB SECTION (D)(4) 11
OF THIS SECTION. 12
(j) (1) Subject to the provisions of this subsection, the provisions of this section 13
and the tax credit authorized under this section shall terminate as of July 1, [2024] 2031. 14
(2) On and after July 1, [2024] 2031: 15
(i) the tax credit authorized under this section may be claimed for: 16
1. a rehabilitation project, other than a commercial 17
rehabilitation, for which an application for approval of a plan of proposed rehabilitation 18
was received by the Director on or before June 30, [2024] 2031; or 19
2. a commercial rehabilitation for which an initial credit 20
certificate has been awarded under subsection (d) of this section; and 21
(ii) the Director shall continue to report to the Governor and the 22
General Assembly as required under subsection (i) of this section for as long as any 23
rehabilitation project for which the tax credit may be claimed remains incomplete. 24
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 25
as follows: 26
Article – Tax – Property 27
9–103. 28
(a) (1) In this section the following words have the meanings indicated. 29
(6) (i) “Qualified property” means real property that is: 30
1. not used for residential purposes; 31 HOUSE BILL 27 7
2. used in a trade or business by a business entity that meets 1
the requirements of § 5–707 of the Economic Development Article; and 2
3. located in an enterprise zone that is designated under 3
Title 5, Subtitle 7 of the Economic Development Article. 4
(ii) “Qualified property” includes personal property on real property 5
that is located in a focus area as defined in § 5–701 of the Economic Development Article. 6
(b) (1) The governing body of a county or of a municipal corporation shall grant 7
a tax credit under this section against the property tax imposed on the eligible assessment 8
of qualified property. 9
(d) (1) [The] EXCEPT AS PROVIDED IN PARAGRAPH (2) OF THIS 10
SUBSECTION, THE appropriate governing body shall calculate the amount of the tax credit 11
under this section equal to a percentage of the amount of property tax imposed on the 12
eligible assessment of the qualified property, as follows: 13
(i) 80% in each of the 1st 5 taxable years following the calendar year 14
in which the property initially becomes a qualified property; 15
(ii) 70% in the 6th taxable year; 16
(iii) 60% in the 7th taxable year; 17
(iv) 50% in the 8th taxable year; 18
(v) 40% in the 9th taxable year; and 19
(vi) 30% in the 10th taxable year. 20
(2) FOR NEWLY CONSTRUCTED QUALIFIED PROPERTY T HAT BECAME 21
ELIGIBLE FOR THE CRE DIT UNDER THIS SECTI ON ON OR AFTER JANUARY 1, 2019, 22
BUT BEFORE JANUARY 1, 2022, THE APPROPRIATE GOVE RNING BODY SHALL 23
CALCULATE THE AMOUNT OF THE TAX CREDIT UN DER THIS SECTION EQU AL TO A 24
PERCENTAGE OF THE AM OUNT OF PROPERTY TAX IMPOSED ON THE ELIGI BLE 25
ASSESSMENT OF THE QU ALIFIED PROPERTY AS FOLLOWS: 26
(I) 80% IN EACH OF THE 1ST 8 TAXABLE YEARS FOLLOW ING 27
THE CALENDAR YEAR IN WHICH THE PROPER TY INITIALLY BECOMES A QUALIFIED 28
PROPERTY; 29
(II) 70% IN THE 9TH TAXABLE YEAR ; 30
(III) 60% IN THE 10TH TAXABLE YEAR ; 31 8 HOUSE BILL 27
(IV) 50% IN THE 11TH TAXABLE YEAR ; 1
(V) 40% IN THE 12TH TAXABLE YEAR ; AND 2
(VI) 30% IN THE 13TH TAXABLE YEAR . 3
[(2)] (3) The Department shall allocate the eligible assessment to the 4
nonresidential part of the qualified property at the same percentage as the square footage 5
of the nonresidential part is to the total square footage of the building. 6
[(3)] (4) For purposes of calculating the amount of the credit allowed 7
under this section, the amount of property tax imposed on the eligible assessment shall be 8
calculated without reduction for any credits allowed under this title. 9
[(4)] (5) For qualified property located in a focus area, the appropriate 10
governing body shall calculate the amount of the tax credit under this section equal to 80% 11
of the amount of property tax imposed on the eligible assessment of the qualified property: 12
(I) FOR NEWLY CONSTRUCTE D QUALIFIED PROP ERTY THAT 13
BECAME ELIGIBLE FOR THE CREDIT UNDER THI S SECTION ON OR AFTE R JANUARY 14
1, 2019, BUT BEFORE JANUARY 1, 2022, FOR EACH OF THE 13 TAXABLE YEARS 15
FOLLOWING THE CALEND AR YEAR IN WHICH THE PROPERTY INITIALLY B ECOMES A 16
QUALIFIED PROPERTY ; OR 17
(II) FOR ANY OTHER QUALIFIED PROPERTY, for each of the 10 18
taxable years following the calendar year in which the property initially becomes a qualified 19
property. 20
(e) (1) A tax credit under this section is available to a qualified property for no 21
more than 10 consecutive years OR, IN THE CASE OF NEWLY CONSTRUCTED QUALIFIE D 22
PROPERTY THAT BECAME ELIGIBLE FOR THE CRE DIT UNDER THIS SECTI ON ON OR 23
AFTER JANUARY 1, 2019, BUT BEFORE JANUARY 1, 2022, NO MORE THAN 13 24
CONSECUTIVE YEARS , beginning with: 25
(i) the taxable year following the calendar year in which the real 26
property initially becomes a qualified property; or 27
(ii) the taxable year in which the real property initially becomes a 28
qualified property, subject to the approval of the appropriate local governing body and the 29
Secretary of Commerce. 30
SECTION 3. AND BE IT FURTHER ENACTED, That Section 1 of this Act shall be 31
applicable to all taxable years beginning after December 31, 2021. 32
HOUSE BILL 27 9
SECTION 4. AND BE IT FURTHER ENACTED, That Section 2 of this Act shall be 1
applicable to all taxable years beginning after June 30, 2022. 2
SECTION 2. 5. AND BE IT FURTHER ENACTED, That this Act shall take effect 3
July June 1, 2022. 4
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.