Are city homeowners allowed to double up on tax credits?

Last week while reporting on the latest tax credit mess, we learned about an obscure 1999 Baltimore law that appeared to have potentially big consequences. It seemed to bar city homeowners from getting both a historic rehab tax credit and a homestead credit on the same house at the same time.

If that were the case, it’d be an issue for the 280 owners who currently enjoy both tax breaks.

The law states that “the historic property tax credit does not apply to any property for which any other tax subsidy from the City, whether in the form of a tax credit, payment in lieu of taxes, or otherwise, is being received or has been applied for.”

Here’s the key question: Is the homestead credit a “city subsidy” in this context? The city didn’t have a ready answer, and these exchanges show how officials processed the information.

I started by asking the city’s top lawyer, George Nilson, for his impression. At first blush he thought there could indeed be a problem. “A homestead tax credit is a subsidy from the city in the form of a tax credit,” he reasoned. “This language certainly suggests the historic property tax credit shouldn’t apply and shouldn’t be given to a property already given a homestead property tax credit.”

Next I asked mayoral spokesman Ryan O’Doherty. If Nilson’s initial impression held, what would happen? Would MayorStephanie Rawlings-Blakeseek a change in the law?

Here is O’Doherty’s response:

To: Calvert, Scott

Cc: Raymond, Henry; Smith Hopkins, Jamie; Ian Brennan

Subject: Re: FW: Following up

haha! Really?

Guess what, and I know you are loathe to admit it, the homestead tax credit program is a state credit, not a city credit, so, this language, which clearly says “city” doesn't apply. So no, the Mayor won't be amending the law in this case.

After seeing Nilson’s comment, O’Doherty responded,“Interesting ... but not an official legal opinion formed by the solicitor as would be required before seeking any legislative remedy.”

True enough. The next day, Nilson and Finance Director Harry Black concluded that the law did not bar both credits. While the city subsidizes the homestead credit to the tune of $120 million this year, they pointed out that it’s a statewide law. As such it’s not a city subsidy, they wrote in a joint memo, but “a credit mandated by the State of Maryland.”

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