The O'Malley administration wants to expand and "revitalize" the state tax credit for renovating historic buildings, giving a boost to an incentive program that in past years spurred significant redevelopment in Baltimore's blighted neighborhoods.
Gov. Martin O'Malley announced at an Annapolis news conference that he would seek to reauthorize the historic tax credit as part of his "green, smart and growing" legislative agenda. He called it "one of our state's strongest and most valuable tools" for redeveloping existing communities and one that benefited Baltimore greatly while he was mayor.
The governor provided few details, but officials said the administration was considering expanding the credits to as much as $100 million to $150 million over five years. The program had been slated for $15 million this year, but that was slashed to $10 million in budget cuts made last fall - while developers were seeking $42 million in credits.
The tax credit in the 1990s had been unlimited, but lawmakers capped it several years ago and have reduced funding for it since, with caps also placed on how many credits can go to any one locality. More than 90 percent of the tax credits went to projects in Baltimore at one time, but lawmakers, seeking to spread the credits statewide, capped the amount going to any one place at 50 percent in 2004, later raising that cap to 75 percent.
Because of the caps and other changes, officials say the number and type of renovations being done in Maryland have declined. In 2003, there were 147 applications for credits statewide, compared with 61 after the program was revised a year later. Officials say developers who specialize in historic rehab projects have focused their work in other states with less restrictive tax credits.
"We're trying to revitalize the program to bring back some of the strengths it had prior to substantial changes in 2004," said J. Rodney Little, director of the Maryland Historical Trust, which administers the credits.
Officials hope to increase the credit in a tight budget year by changing the way it is financed. Instead of appropriating funds for the credits as they are awarded, the administration wants to account for the credits as the projects are finished, usually a couple of years later.
The administration also wants to loosen some of the conditions put on the program in hopes of restoring the tax credit's role in financing renovations in rundown neighborhoods, where redevelopment might not otherwise happen. Tax credits would be awarded as they are applied for, rather than via competitive scoring. Moreover, the cap on a locality's credits would be eased. The administration bill would maintain the 75 percent limit for the first three years but lift it in the final two.