Across Maryland, a number of former government complexes sit vacant, and have become a large expense for Maryland’s taxpayers. In Anne Arundel County, for example, since the Crownsville Hospital Center was closed in 2004, the state has spent more than $2 million annually to keep it mothballed, secure, and mowed — despite the fact that many of the buildings on the campus are ideal candidates for reuse. Without a plan in place or the resources to spur reuse, stories like this are all too common across the state.
Thankfully, this approach is finally about to change. This year we may see the stars align for Maryland’s historic infrastructure. In the context of a $2 billion state surplus and the recently passed federal infrastructure bill, this year we will also see the state Department of Housing and Community Development award the first Catalytic Tax Credit — aimed at spurring private sector investment in these types of resources and reducing long-term government expense. At the same time, state Sen. Cory McCray, Del. Eric Luedtke and myself have introduced legislation to increase funding for the Historic Revitalization Tax Credit Program to meet the statewide need for rehabilitating older structures — which in turn gives local economies a sustainable and long-term boost. Now is the time to invest in Maryland and leverage the embedded value of our historic buildings to catalyze our future economic growth.
Shortly after my election in 2018, I became familiar with Warfield at Historic Sykesville, which is a textbook example of this plight. In 2019, I sponsored legislation requiring the Maryland Department of Planning to study the obstacles to preserving and rehabilitating these properties. Cumulatively, the recommendations in the report from this study create a strategic road map for entrepreneurial historic preservation. The primary issue identified by the study was that the cost of restoring and returning these campuses to service typically exceeds their expected market value upon rehabilitation. Neither the government nor the private sector can do this alone — a partnership is necessary — and this is what the original historic tax credit program was supposed to do.
At the height of the program, Maryland invested nearly $80 million annually. Unfortunately, Maryland capped the historic tax credit program in 2002, requiring an annual appropriation in the state’s PAYGO capital budget. Since then, this program has lost nearly 90% of its funding — last year’s budget provided only $9 million for historic preservation and rehabilitation. With each project capped at $3 million, the amount of support Maryland is able to give is embarrassingly low. For comparison, neighboring Virginia invests nearly $100 million annually in its historic tax credit program, and West Virginia funds its historic tax credit programs at $30 million.
As a result of this study, I sponsored and secured passage of Senate Bill 885 to establish the Catalytic Revitalization Tax Credit — which bridges the gap by enabling the state to issue a tax credit up to $15 million every two years to a qualifying property. Warfield at Historic Sykesville will be the first project to receive this award!
I am thrilled that a community in my district will benefit and serve as a model for other projects around the state. In Warfield’s example, economic projections indicate a fiscal benefit of $29 million over 20 years for our local schools, health department, and the Town of Sykesville. This money represents new revenue that can be reinvested in the local community or directed to keep taxes low. Furthermore, the project is expected to create approximately 233 permanent and 69 temporary jobs and generate roughly $40.8 million in economic output over the next 20 years.
For the first time in nearly 30 years, preservation and restoration of the Warfield complex appears within reach, and I believe that it has the capacity to serve as a statewide model for fiscally responsible state investment in community development. Other deteriorating state properties — like Crownsville Hospital Center, Glenn Dale Hospital in Prince George’s County, or the former Bainbridge naval base in Cecil County — need help transforming into new, vibrant, and socially beneficial local spaces.
Both the Catalytic Revitalization Tax Credit and the historic tax credit are powerful tools for investing in our communities and bolstering our economy. The economic benefits associated with preservation have been well documented. According to a report by the Abell Foundation, every $1 of tax credits issued through the Historic Revitalization Tax Credit program generates $8.13 of economic activity, and a tax credit program funded at just $15 million would spur the creation of nearly 800 jobs over its construction period.
Now is the time to recapitalize our prior investments. We’ve passed the Catalytic Revitalization Tax Credit and we can raise the cap on our historic tax credit. These programs provide a clear path to simultaneously preserve our local history, protect our environment, and revitalize our communities for the benefit of current and future Marylanders.
Sen. Katie Fry Hester, a Democrat, represents District 9 in Carroll and Howard counties.