Cover memo for Senate Bill 190, December 10, 2003

2004 Legislative Initiatives: Cover Memo with Draft Bill 12/1 0/03 Heritage Structure Rehabilitation Tax Credit Program (Joe Gem'. Lori Valentine) Bill Status On September 24, 2003, Governor Ehrlich named seventeen individuals to the Task Force on the Heritage Structure Rehabilitation Tax Credit Program, with Comptroller William Donald Schaefer as the Chairman. The main purpose of the Task Force was to evaluate the strengths and weaknesses of the Program and submit recommendations to the Governor. The primary recommendation is for legislation that would not only extend the program beyond its June 1, 2004 sunset, but would propose certain changes to the existing statute that would make the program more effective. The Task Force examined the seven-year legislative and administrative history of the Tax Credit Program in terms of its performance in promoting economic development through historic rehabilitations. This evaluation addressed whether the Tax Credit Program generated a revenue loss or gain to the State and, if so, to what extent; the direct and indirect economic benefits of the Program; and whether the Program could proceed under a direct grant program. After consideration of available data on the Program’s direct and indirect economic benefits to the State, the Task Force determined that projects receiving tax credits generally returned the State’s investment of tax credits within one year. It was also determined that projects continued to generate revenue to the State and local governments well after the project was completed. The Task Force rejected the retention of the existing aggregate cap on commercial projects, and replacement of tax credits with a grant program. They determined that these options would have a negative impact on the use of the Program and stall the current economic development and community revitalization activity occurring throughout the State where it is needed most. Secretary DiPaula believes that the aggregate cap needs to remain in place. He will be meeting with Comptroller Schaefer on December 17 to discuss these options. Elements of the Legislation 1. Removes the $15 million aggregate limitation on commercial rehabilitation credits in 2004. 2. Permits the Board of Public Works to waive the $3 million per project cap on commercial rehabilitations - on a case-by-case basis. 3. Makes minor changes to improve the efficiency of the Program. 4. Authorizes the Maryland Historical Trust to adopt reasonable fees for application reviews. ~ 5. Extends the Program from June 1, 2004 to January I, 2010.