Maryland's historic tax credit program would be capped at $50 million under a proposal given preliminary approval yesterday by the House of Delegates, the first limit on a tool described as crucial for the redevelopment of Baltimore's older neighborhoods.
But the compromise legislation represents a far less stringent restraint than the $20 million limit first sought by some lawmakers, who are concerned that the increasing use of the credit is eating into state revenues.
If the proposal is approved as expected by the House tomorrow, it will move to the Senate - where it is not clear whether it would win passage. The sponsor of a Senate bill, Sen. Barbara A. Hoffman, said she's generally supportive of the House plan but isn't comfortable with a cap on the program.
The House compromise - reached yesterday morning in committee - also ensures that all projects that had been approved for tax credits by the Maryland Historical Trust by Feb. 1 will be exempt from the new restraints.
"It's a wonderful program, and I'm proud that I put in the legislation that created it," said House Speaker Casper R. Taylor Jr., an Allegany County Democrat. "But you can't just have a completely unlimited swinging door."
Under current law, developers can claim a tax credit worth 25 percent of the cost of the rehabilitation of buildings in historic areas. If their tax liabilities are less than the credit, the developers receive money back from the state as a refund.
Over the past few years, use of the tax credit has grown, particularly as older Baltimore neighborhoods have become a more popular target for redevelopment. Legislative analysts estimate that unless limits are imposed, the potential cost to the state could grow to $50 million to $84 million a year, with most of the credits going to city projects.
The escalating costs alarmed some lawmakers, who proposed capping the program at $20 million a year and scaling back the tax credit from 25 percent of the cost of rehabilitation to 20 percent. The proposal also would have limited the maximum tax credit for any one project to $1 million.
Developers and top Baltimore officials told both House and Senate committees that such limits would damage the city's efforts to improve older neighborhoods - a key part of Gov. Parris N. Glendening's Smart Growth program.
