The Sustainable Communities Act of 2010
On May 20, 2010, Governor O'Malley signed into law the Maryland Sustainable Communities Act of 2010 ("SCA"). This new law, a major piece of Governor O'Malley's Smart, Green and Growing Initiative, renames, replaces, and expands the former Maryland Heritage Structure Rehabilitation Tax Act ("Tax Act"), which offered income tax credits to further the related goals of encouraging the renovation of historic buildings and of driving development to high-density areas. The tax credit, which was due to expire on June 30, 2010, is extended for four years by the new law. In addition to providing tax credits, the new law is intended to be a means of channeling state and federal funds to preferred areas. Additionally, the law favors construction in "Sustainable Communities." Click here for a complete copy of the new law.
To qualify as a "Sustainable Community," a community must be in a Priority Funding Area. Priority Funding Areas are those areas that Maryland state and local governments have designated for fostering economic growth and development. Such locations include the entire areas inside the Washington and Baltimore Beltways and a variety of urban and dense suburban locations throughout the state. For a map of the Priority Funding Areas, click here.
The SCA contains a new initiative to open up the credit to non-historic buildings in order to encourage growth in designated Main Street districts, Transit-Oriented Development zones, and areas under the Base Realignment and Closure Act ("BRAC") Revitalization and Incentive Zone, or those areas otherwise determined to be eligible for reinvestment by the Smart Growth Subcabinet ("SGSC"). Non-historic commercial rehabilitations in these designated areas can receive up to 10% of the total tax credit allocation.
Historic residential and commercial properties are eligible for a 20% tax credit. In addition, the new tax credit law includes a green building bonus: if a commercial project achieves LEED Gold certification or higher, it is eligible for a 25% tax credit, as opposed to 20% for all other historic commercial projects.
Other highlights of the new law include the following:
- The total amount of the Tax Credit Program is $10 million in FY 2011 with ten percent of that total available to certain non-historic properties.
- The new law coordinates the review of the State revitalization programs through the SGSC and requires the subcabinet to weigh in on BRAC and Transit-Oriented Development zone designations.
- The law allows grants and loans for nonprofit organizations, local governments, and small businesses to work together in one clear revitalization investment area.
As stated in Maryland Department of Planning's Smart, Green & Growing Planning Guide (updated for 2010), the SCA is part of Maryland's movement toward renewing and sustaining investment in local established communities.