Tax Increment Financing
The Maryland Tax Increment Financing Act, enacted in 1980, authorizes Maryland counties and municipalities to use TIF for the purposes of financing certain development/redevelopment projects. Under this authority, local governments may issue TIF bonds to finance development or infrastructure to support development. The first step in that process requires the government to create a TIF “development district” and a “special fund.” The TIF development district is the area where the TIF public improvements are constructed and designates the properties that will contribute the incremental increased tax revenues toward paying off the debt associated with the public improvements. The “special fund” is created to receive the incremental tax revenue payments from properties within the tax district. The special fund is considered a “sinking fund,” meaning the accrued tax revenues go to pay off the TIF bonds or otherwise used as directed in the transaction documents. Maryland TIF law authorizes counties and municipalities to issue bonds to “finance development of industrial, commercial or residential areas.” Maryland TIF bonds have a maximum maturity of no later than 40 years after the date of issue. Maryland’s general TIF enabling law is place-neutral and does not restrict use to redevelopment areas/activities. Therefore, TIF could be used either for “greenfield development” or redevelopment in Maryland. However, Maryland’s TIF Act does include additional listing of purposes for TIF bonds in Prince George’s County and municipalities to encourage redevelopment.
Local Government; For-Profit Business
Eligible Recipients Detail:
Counties and municipalities to issue bonds to finance development of industrial, commercial or residential areas.
General Infrastructure; Last Mile Infrastructure; Building Infrastructure; Anchor Institution Infrastructure
Eligible Purpose Detail:
Generally, TIF funds are eligible to be used to: buy, lease, condemn or otherwise acquire related property; site removal; surveys and studies; relocation of businesses or residents; installation of utilities, parks and playgrounds, roads, streets, parking and lighting; construction or rehabilitation of buildings for a governmental purpose or use. For communities with a Sustainable Community designation, eligible uses have been broadened to include historic preservation or rehabilitation; environmental remediation; demolition and site preparation; parking lots, facilities or structures of any type, public or private; highways; schools; and affordable or mixed-income housing.
Other Eligibility Criteria:
Additional flexibility is available for areas that have been designated as BRAC Zones, Transit-Oriented Districts (TOD), RISE Zones, or Sustainable Communities.