Credit is due

December 03, 2006

One of state government's most valuable contributions to the revival of Baltimore has been a tax credit program with an unwieldy name. The Maryland Heritage Structure Rehabilitation Tax Credit has in 10 years generated an estimated $2.3 billion in economic activity statewide with much of it going to the city. The benefits of providing a financial incentive for the commercial rehabilitation of historic properties are numerous: They include stronger and safer neighborhoods, preservation of open space, and a boost for commercial districts and tourism.

But the program is flawed. A cap imposed by the General Assembly in 2004 has meant that no jurisdiction in the state can receive more than 50 percent of the benefits. That hurts only one community -- Baltimore. That's where most of the eligible historic properties are located and where economic investment is most keenly needed.

This year, for instance, at least $4 million in proposed Baltimore historic renovations did not qualify because of the cap. Yet the program's budget has more than enough to pay for them - as well as for every single qualified project elsewhere. Indeed, there are 28 unfunded city projects that received higher marks in the evaluation process than projects that were awarded credits this year in Prince George's, Washington, Allegany, Talbot, Frederick and Kent counties.

Unfortunately, projects that don't qualify for tax credits often don't go forward. And that's not just a loss for the city but for the state's economy. A University of Maryland study found that every dollar spent on tax credits generates $8.79 of economic activity.

The time has come to lift the cap. The key player in the upcoming legislative session is likely to be Del. Sheila E. Hixson, chair of the House Ways and Means Committee and a cap supporter. Complaints that the program is a handout to the city are simply wrongheaded (although the city's case would certainly be helped if Baltimore's own historic tax credit program is extended past next month's scheduled expiration).

Canton, Federal Hill, Fells Point, all benefited from the tax credit program and are in much better shape because of it. With an election past (and Baltimore-bashing no longer in fashion), this arbitrary limit on commercial investment in the city should be seen for what it is - counterproductive.

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