Government Incentives

 

Summary of City, State and Federal Incentive Programs

 

Program Name	Program Description	Approximate Annual Amount	Recent Examples
City Programs
Financing Programs
Economic Development Bond Funds	Subject to voter approval on an annual basis, BDC receives economic development general obligation bonds to use for loans, grants, property acquisition, and studies.  The funds can only be used for capital expenses.		Citifinancial Ernst & Young Sylvan Learning Systems H&S Bakeries
Empowerment Zone (EZ) Loan Fund	The EZ Fund provides low interest loans of up to $200,000 to businesses located in the federally designated Empowerment Zones.  EZ loan funds may be used for equipment purchases or working capital needs.		Under Armour Sports    Apparel Baltimore Public Markets    Koldkiss, Inc.
Infrastructure Grants	City provides financial assistance to reduce the cost of public infrastructure improvements such as roads and utilities.		Belvedere Square Home Depot
Loan Guarantees	In a few instances, BDC has provided loan or lease guarantees to businesses or developers.		Montgomery Park Senator Theater
Payment in Lieu of Taxes (PILOT)	State enabling legislation allows the City to offer an abatement of real estate taxes for up to 20 years on new commercial construction (office, multi-family residential, parking garages, and hotels) in selected downtown urban renewal areas.		Harborview Apartments Lockwood Place Marriott Inner Harbor    East Hotel
Parking Subsidies	The City can finance parking garages with parking revenue bonds.  These revenue bonds are secured by the Parking Enterprise Fund, which pulls in all revenue from garages, parking tickets, parking meters, and parking taxes.  Broadening the revenue base of the Enterprise Fund to include non-garage revenues makes the bonds more attractive to investors.  Although not preferred by the Department of Finance, the enhanced revenue sources make it possible to reduce parking rates in certain garages for economic development purposes without hurting the attractiveness of the Enterprise Fund.		Whitman Requardt RTKL Citifinancial
Revolving Loan Fund (RFL) West Side Revolving Loan Fund (WSRLF)	The RLF, originally capitalized by a federal Economic Development Administration (EDA) grant, offers low interest loans to eligible businesses.   RLF loan funds may be used for equipment purchases or working capital needs.		Barcelona Nut Company LCM Associates Vangel Paper, Inc. E. Magination Network
Tax Increment Financing (TIF)	City issues bonds to pay for eligible infrastructure costs associated with major real estate development projects.  The debt service on the bonds is paid from the incremental property taxes generated from the project.		Belvedere Square Harborview Pier Townhomes
Tax Credit Programs
Enterprise Zone Real Estate Credit	The real property tax credit is a 10-year credit against local real property tax improvements. The property tax credit is a reduction in the amount of taxes that would have been due on the increased value or assessment of property in which capital investments have been made.  The amount of the credit is 80 percent of the taxes due on the assessed value of an expansion, renovation or capital improvement in the property over the first five years. The credit then decreases 10 percent annually thereafter to 30 percent in year 10.		Inner Harbor East - Parcel C Montgomery Park H&S Bakeries
Enterprise Zone Wage Tax Credit	One- or three-year credit for wages paid to new employees. The general credit is a one-time $1,000 credit per new worker. For economically disadvantaged employees, the credit increases to a total of $6,000 per worker distributed over three years.  When located in a Focus Area, the general credit is a one-time $1,500 credit per new worker. In a Focus Area, for economically disadvantaged employees, the credit increases to a total of $9,000 per worker distributed over three years.
Focus Area Personal Property Tax Credit	Much of the Carroll Camden Business Park is designated a State Focus Area.  Businesses locating with a Focus Area receive a 10-year credit against local personal property taxes.  The amount of the credit is 80 percent of the personal property taxes due on new investment for first five years. The credit then decreases 10 percent annually thereafter to 30 percent in year 10.		Available to companies moving into Montgomery Park.
Historic Property Real Estate Tax Credit	A ten-year credit against local real property taxes is offered for substantial rehabilitation of historic structures.  For projects greater than $3.5 million, the credit is applied to 80 percent of the increased assessment for five years, declining 10 percent a year for an additional five years.		The Can Company Tide Point Northern District Police Station Hampton Inn & Suites
Land Resources
Emerging Technologies Center	BDC operates two (soon to be, three) incubators:  the ETC in Canton; Bard Labs downtown; and the proposed ETC @ Eastern in Waverly.  The development of these incubators was subsidized with local, state and federal funds, which enables BDC to provide below market rate rents to qualified tenants.		D-Fusion Alexander and Tom BioFortis, Inc.
Land/Lease Write-down (including Purchase Money Mortgages)	Sale or lease of city owned land or buildings for less than market value or at more favorable than market terms.    Below market rate leases are available, subject to the "but-for", in the BDC managed business centers: Raleigh Building, Park Circle Business Center, and 7 E. Redwood.		Centerpoint Bank One Whitman Requardt
Workforce
Workforce Training Grants	Grants equal to the lesser of 50 percent of employee training costs or $1,500.		Bank One Sierra Military Health                     Services
State Programs
Financing Programs
Sunny Day Fund	This fund promotes Maryland's participation in extraordinary economic development opportunities that provide significant returns to the State through creating and retaining employment as well as the creation of significant capital investments.		Morgan Stanley Bank One, N.A. DAP, Inc.
Maryland Industrial Development Financing Authority (MIDFA)	Encourages private sector financing in economic development projects through the use of insurance, the issuance of tax-exempt and taxable revenue bonds and linked deposits. The use of insurance reduces the lender's risk in the project to an acceptable level. The project must be in a Priority Funding Area.
MEDAAF	There are five financing capabilities offered through this incentive program, with assistance being provided to the business community and political jurisdictions. To qualify for assistance from MEDAAF, applicants are restricted to businesses located within a priority funding area and an eligible industry sector. With a few exceptions, assistance cannot exceed 70 percent of the total project costs unless the recipient is the Maryland Economic Development Corp. (MEDCO), which can request 100 percent assistance.		Whitman Requardt Waverly Giant
One Maryland Infrastructure Grants	This fund promotes the creation of industrial parks and other needed infrastructure in qualified distressed counties though direct funding of projects identified in the local strategic plan for economic development. The eligible recipients include a local government and MEDCO.		St. Paul Place Parking Garage Fleet/Eden Parking Garage
Tax Credit Programs
One Maryland Tax Credit	One Maryland Tax Credit.  Qualified businesses located in Baltimore City or Allegany, Caroline, Dorchester, Garrett, Somerset or Worcester County are eligible for up to $5.5 million in tax credits.   Tax credits may be claimed against State income, insurance premium, or financial institution franchise tax. Project tax credits of up to $5,000,000 are based on qualifying costs and expenses incurred by the business entity in connection with the acquisition, construction, rehabilitation, installation, and equipping of an eligible economic development project. The business entity must incur at least $500,000 in eligible project costs and must create at least 25 new qualified positions. Start-up tax credits of up to $500,000 are based on a business' cost to furnish and equip a new location for ordinary business functions and to move to a qualified distressed county from outside Maryland. (50 qualified new positions are required to qualify for the full $500,000 credit.) A business entity has up to 14 years after the tax-year in which the project is placed in service to take the credit: If the full start-up tax credit has not been taken against the business' state tax during the first 4 years after the taxable year in which the project was placed in service, the business may also claim a refund, up to the amount of State taxes that the business is required to withhold from the wages of qualified employees at the project. If the full project tax credit has not been taken against the state tax arising out of or generated by the project during the first 4 years after the taxable year in which the project was placed in service, the business may take the credit against State tax for other income and claim a refund, up to the amount of State taxes that the business is required to withhold from the wages of qualified employees at the project.  The business entity must notify DBED before hiring any qualified employees or incurring any costs intended to earn tax credit. The project must be approved and certified by the Secretary of DBED.
Job Creation Tax Credit	Corporate income tax credits are granted to a business that will create at least 60 new permanent full-time jobs within a two-year period. In designated priority areas, the minimum number is 25 new permanent full-time jobs. N/A
Commuter Choice Tax Credit	Commuter Choice.  A Maryland state tax credit gives Maryland employers a 50 percent tax credit for every dollar spent on employee transit expenses, worth up to $30 per employee per month in tax savings.  The tax credit can be taken against the state income tax, financial institution franchise tax, and insurance premium tax.
Maryland Historic Tax Credit	Provides a 20 percent dollar-for-dollar state income tax credit (up to $3 million) of eligible costs associated with the substantial rehabilitation of a certified historic structure.  Rehabilitation must conform to the Secretary of the Interior's Standards for Rehabilitation and must be certified by the Maryland Historical Trust.		Montgomery Park Can Company Tide Point The Standard
Workforce
Workforce Training Grants	DBED offers a new number of programs to assist employers in remaining competitive in today's global economy, including: The Maryland Industrial Training Program (MITP) which provides reimbursement grants for training new employees in start-up or expanding businesses, the Partnership for Workforce Quality (PWQ) which reimburses 50% of training costs for eligible employers in manufacturing and technology companies, the Maryland ISO Consortium Program that helps companies achieve ISO certification, and the World Class manufacturing status.
Federal Programs
Tax Credit Programs
Commuter Choice Tax Credit	Federal Commuter Tax Credit. The federal government allows payroll tax savings on amounts up to $100 per employee per month to employers and employees with Commuter Choice Maryland programs. Federal law allows employers to offer three different types of transit/vanpool benefits: employer-paid, employee-paid pre-tax deduction, and combination (for example, the employer and employee share costs). Qualified first-year wages are qualified wages you pay or incur for work performed by a targeted group employee during the 1-year period beginning on the date the individual begins work for you. Qualified wages are generally wages subject to the Federal Unemployment Tax Act (FUTA) without regard to the FUTA dollar limit, but not more than $6,000 each tax year for each employee ($3,000 each tax year for a summer youth employee).
Empowerment Zone Wage Tax Credit	Empowerment Zone.  Employers that operate in the Empowerment Zone are eligible for up to $3,000 in wage tax credits per Empowerment Zone resident working for your business through 2009.  The credit is 20 percent of the qualified zone wages paid or incurred during a calendar year. The amount of qualified zone wages you can use to figure the credit cannot be more than $15,000 for each employee for each calendar year. As a result, the credit can be as much as $3,000 (20 percent of $15,000) per qualified zone employee each year.
Welfare to Work Tax Credit.	The Taxpayer Relief Act of 1997 includes a Welfare To Work (WTW) tax credit that provides employers a tax credit on the first $20,000 of eligible wages paid to qualified job seekers during their first two years of employment. This tax credit is equal to 35 percent of the first $10,000 of wages earned in the employee's first year of employment and 50 percent of the first $10,000 of wages earned in the employee's second year of employment. The maximum credit for the first year is $3,500 per qualified employee, and the maximum credit for the second year is $5,000 for a maximum total credit of $8,500 per qualified new hire.