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