Historic Revitalization Tax Credit - Alterations

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*sb0946*

SENATE BILL 946
Q3, Q7 6lr2966

By: Senator McCray
Introduced and read first time: February 6, 2026
Assigned to: Budget and Taxation

A BILL ENTITLED

AN ACT concerning 1

Historic Revitalization Tax Credit – Alterations 2

FOR the purpose of altering the definition of “qualified rehabilitation expen diture”, for 3
purposes of the Historic Revitalization Tax Credit, to repeal the exclusion of 4
expenditures fo r a certain rehabilitation that is otherwise funded, financed, or 5
reimbursed by certain State or local expenditures; altering the definition of 6
“substantial rehabilitation” to extend the period during which certain expenditures 7
must occur; expanding certain competitive award criteria for commercial projects to 8
include projects that are located in certain areas and are likely to have a high impact 9
on the economic development of a community; altering the circumstances under 10
which the Director of the Mar yland Historical Trust may accept an application ; 11
requiring each structure of a certain rehabilitation to be treated as a separate 12
rehabilitation for the purpose of a certain limitation on the maximum amount of the 13
credit allowed for a commercial rehabilitation; authorizing the Director to accept and 14
approve certain applications for a supplemental credit certificate subject to certain 15
limitations; requiring the Director to give priority to certain application s subject to 16
a certain limitation; requiring the Comptroller to deposit certain amounts into the 17
Historic Revitalization Tax Credit Reserve Fund for a certain purpose; and generally 18
relating to the Historic Revitalization Tax Credit. 19

BY repealing and reenacting, with amendments, 20
Article – State Finance and Procurement 21
Section 5A–303 22
Annotated Code of Maryland 23
(2021 Replacement Volume and 2025 Supplement) 24

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 25
That the Laws of Maryland read as follows: 26

Article – State Finance and Procurement 27

2 SENATE BILL 946

5A–303. 1

(a) (1) In this section the following words have the meanings indicated. 2

(2) “Affordable housing” means a project or undertaking that has received 3
an allocation of federal low–income housing tax credits by the Department of Housing and 4
Community Development. 5

(3) “Agricultural structure” means a certified historic structure that is used 6
or was used as an agricultural facility or for purposes related to agriculture. 7

(4) (i) “Business entity” means: 8

1. a person conducting or operating a trade or business in the 9
State; or 10

2. an organization operating in Maryland that is exempt 11
from taxation under § 501(c)(3) of the Internal Revenue Code. 12

(ii) “Business entity” includes the governing body of a condominium 13
or cooperative housing corporation. 14

(5) “Certified heritage area” has the meaning stated in § 13 –1101 of the 15
Financial Institutions Article. 16

(6) (i) “Certified historic structure” means a structure that is located in 17
the State and: 18

1. is listed in the National Register of Historic Places; 19

2. is designated as a historic property under local law and 20
determined by the Director to be eligible for listing on the National Register of Historic 21
Places; 22

3. A. is located in a historic district listed on the National 23
Register of Historic Places or in a local historic district that the Director determines is 24
eligible for listing on the National Register of Historic Places; and 25

B. is certified by the Director as contributing to the 26
significance of the district; 27

4. is located in a certified heritage area and certified by the 28
Maryland Heritage Areas Authority as contributing to the significance of the certified 29
heritage area; or 30

5. A. is located on property that is owned by the 31
Department of Natural Resources or one of its units; 32
SENATE BILL 946 3

B. is occupied by a person under an agreement with the 1
Department of Natural Resources under which the person pays for rehabilitation of the 2
structure as a condition of occupancy; and 3

C. meets one of the criter ia listed under item 1, 2, 3, or 4 of 4
this subparagraph or is eligible to be listed in the National Register of Historic Places as 5
determined by the Director. 6

(ii) Except as provided in subparagraph (i)5 of this paragraph, 7
“certified historic structure ” does not include a structure that is owned by the State, a 8
political subdivision of the State, or the federal government. 9

(7) “Certified rehabilitation” means a completed rehabilitation of a 10
certified historic structure that the Director certifies is a substantial rehabilitation in 11
conformance with the rehabilitation standards of the United States Secretary of the 12
Interior. 13

(8) (i) “Commercial rehabilitation” means a rehabilitation of a 14
structure other than a single–family, owner–occupied residence. 15

(ii) “Commercial rehabilitation” does not include a small commercial 16
project. 17

(9) “Common elements” means: 18

(i) all of the condominium except the units, as defined in § 11 –101 19
of the Real Property Article; or 20

(ii) all of the cooperative project except the units, as defined in § 21
5–6B–01 of the Corporations and Associations Article. 22

(10) “Condominium” has the meaning stated in § 11 –101 of the Real 23
Property Article. 24

(11) “Cooperative housing corporation” has the meaning stated in § 25
5–6B–01 of the Corporations and Associations Article. 26

(12) “Cooperative project” has the meaning stated in § 5 –6B–01 of the 27
Corporations and Associations Article. 28

(13) “Director” means the Director of the Maryland Historical Trust. 29

(14) “Financial assistance” means action by the State or a State unit to 30
award grants, loans, loan guarantees, or insurance to a public or private entity to finance, 31
wholly or partly, a project that involves or may result in building construction, b uilding 32
alteration, or land disturbance. 33
4 SENATE BILL 946

(15) “Governing body”, unless the context requires otherwise, has: 1

(i) with respect to a cooperative housing corporation, the meaning 2
stated in § 5–6B–01 of the Corporations and Associations Article; or 3

(ii) with respect to a condominium, the meaning stated in § 11 –101 4
of the Real Property Article. 5

(16) “High performance building” means a building that: 6

(i) meets or exceeds the current version of the U.S. Green Building 7
Council’s LEED (Leadership in Energy and Environmental Design) green building rating 8
system gold rating; or 9

(ii) achieves at least a comparable numeric rating according to a 10
nationally recognized, accepted, and appropriate numeric sustainable development rating 11
system, guideline, or standard approved by the Secretaries of Budget and Management and 12
General Services under § 3–602.1 of this article. 13

(17) (i) “Historic property” means a district, site, building, structure, 14
monument, or object significant to: 15

1. the prehistory or history of the State; or 16

2. the upland or underwater archeology, architecture, 17
engineering, or culture of the State. 18

(ii) “Historic property” includes related artifacts, records, and 19
remains. 20

(18) “Level 1 opportunity zone project” means a small commercial project or 21
commercial rehabilitation completed by a qualified opportunity zone business if the 22
following information is provided to the Director: 23

(i) the date of the qualified opportunity fund’s investment in the 24
opportunity zone project and the amount of the investment; 25

(ii) the total project or business investment, including any leverage; 26

(iii) the address and census tract of the qualified opportunity zone 27
business and the qualified opportunity fund; 28

(iv) the North American Industrial Classification System Code for 29
the qualified opportunity zone business; 30

SENATE BILL 946 5

(v) an impact report, including both qualitative and quantitative 1
data on the qualified opportunity fund’s investment in the opportunity zone project and its 2
progress; and 3

(vi) any other information requested by the Director. 4

(19) “Level 2 opportunity zone project” means a small commercial project or 5
commercial rehabilitation completed by a qualified opportunity zone business if: 6

(i) the requirements for a Level 1 opportunity zone project are met; 7

(ii) 1. accountability to residents of the communities in the 8
qualified opportunity zone is maintained through their representation on any governing 9
board or any advisory board of the qualified opportunity zone business; or 10

2. a community benefits agreement is negotiated and agreed 11
to by community groups or strategic industry partnerships, as defined under § 11 –701 of 12
the Labor and Employment Article, in the opportunity zone and the qualified opportunity 13
zone business that specifies a range of community benefits that the business agrees to 14
provide as part of the development project; and 15

(iii) 1. for an opportunity zone project located entirely within a 16
municipal corporation, the municipal corporation, by resolution or by letter, delivered to 17
the Director by the municipal corporation’s authorized designee, approves the provision 18
within the municipal corporation of the enhanced tax credits under this section; or 19

2. for an opportunity zone project that is not located entirely 20
within a municipal corporation, the county, by resolution or by letter, delivered to the 21
Director by the county’s authorized designee, approves the provision within the county of 22
the enhanced tax credits under this section. 23

(20) “Local historic district” means a district that the governing body of a 24
county or municipal corporation, or the Mayor and City Council of Baltimore, has 25
designated under local law as historic. 26

(21) “National register structure” means a structure that is: 27

(i) listed on the National Register of Historic Places; or 28

(ii) located in a historic district listed on the National Register of 29
Historic Places and certified by the Director as contributing to the significance of the 30
district. 31

(22) “Opportunity zone project” means a certified rehabilitation within a 32
geographical area designated and in effect as a qualified opportunity zone in the State 33
under § 1400Z–1 of the Internal Revenue Code. 34

6 SENATE BILL 946

(23) “Political subdivision” means a county or municipal cor poration of the 1
State. 2

(24) “Post–World War II structure” means a certified historic structure that 3
was built after December 31, 1944, but before January 1, 1970. 4

(25) “Qualified opportunity fund” has the meaning stated in § 6–1001 of the 5
Economic Development Article. 6

(26) “Qualified opportunity zone” has the meaning stated in § 6–1001 of the 7
Economic Development Article. 8

(27) “Qualified opportunity zone business” has the meaning stated in § 9
6–1001 of the Economic Development Article. 10

(28) “Qualified rehabilitation expenditure” means any amount that: 11

(i) is properly chargeable to a capital account; 12

(ii) is expended in the rehabilitation of a structure that by the end of 13
the calendar year in which the certified rehabilitation is compl eted is a certified historic 14
structure; AND 15

(iii) is expended in compliance with a plan of proposed rehabilitation 16
that has been approved by the Director[; and 17

(iv) is not funded, financed, or otherwise reimbursed by any: 18

1. State or local grant; 19

2. grant made from the proceeds of tax–exempt bonds issued 20
by the State, a political subdivision of the State, or an instrumentality of the State or of a 21
political subdivision of the State; 22

3. State tax credit other than the tax credit under this 23
section; or 24

4. other financial assistance from the State or a political 25
subdivision of the State, other than a loan that must be repaid at an interest rate that is 26
greater than the interest rate on general obligation bonds issued by the State at the most 27
recent bond sale prior to the time the loan is made]. 28

(29) (i) “Single–family, owner–occupied residence” means a structure or 29
a portion of a structure occupied by the owner and the owner’s immediate family as their 30
primary or secondary residence. 31

(ii) “Single–family, owner–occupied residence” includes: 32
SENATE BILL 946 7

1. a residential unit in a cooperative project owned by or 1
leased to a cooperative housing corporation and leased for exclusive occupancy to, and 2
occupied by, a member of the corporation and the member’s immediate family under a 3
proprietary lease; 4

2. a structure that is described under paragraph (6)(i)5 of 5
this subsection; and 6

3. a small commercial project. 7

(30) “Small commercial project” means a rehabilitation of a structure if: 8

(i) the qualified rehabilitation expenditures do not exceed $500,000; 9
and 10

(ii) 1. the structure is primarily used for commercial, 11
income–producing purposes; 12

2. the structure: 13

A. is a residential unit in a consecutive series of similar 14
residential units that are arranged in a row, side by side; and 15

B. is sold as part of a development project for exclusive 16
occupancy to, and occupied by, the resident; 17

3. the structure is a targeted project; or 18

4. the structure is a condominium or cooperative project and 19
the rehabilitation targets only the common elements of the condominium or cooperative 20
project. 21

(31) “Sustainable Growth Subcabinet” means the Sustainable Growth 22
Subcabinet established under Title 9, Subtitle 14 of the State Government Article. 23

(32) “State unit” has the meaning stated in § 11 –101 of the State 24
Government Article. 25

(33) “Substantial rehabilitation” means rehabilitation of a structure for 26
which the qualified rehabilitation expenditures, during the [24–month] 60–MONTH period 27
selected by the individual or business entity ending with or within the taxable year, exceed: 28

(i) for single–family, owner–occupied residential property, $5,000; 29
or 30

(ii) for all other property, the greater of: 31
8 SENATE BILL 946

1. the adjusted basis of the structure; or 1

2. $25,000. 2

(34) “Targeted project” means a rehabilitation of: 3

(i) an agricultural structure; or 4

(ii) a post–World War II structure. 5

(b) (1) The Director, in consultation with the Sustainable Growth Subcabinet, 6
shall adopt regulations to: 7

(i) establish procedures and standards for certifying historic 8
structures and rehabilitations under this section; 9

(ii) for commercial rehabilitations, establish an application process 10
for the award of initial cr edit certificates for historic revitalization tax credits consistent 11
with the requirements of this subsection; 12

(iii) for commercial rehabilitations, establish criteria, consistent with 13
the requirements of this subsection, for evaluating, comparing, and rating plans of proposed 14
rehabilitation that have been determined by the Director to conform with the rehabilitation 15
standards of the United States Secretary of the Interior; 16

(iv) for commercial rehabilitations, establish a competitive award 17
process for the award of initial credit certificates for historic revitalization tax credits that 18
favors the award of tax credits for rehabilitation projects that: 19

1. are consistent with and promote current growth and 20
development policies and programs of the State; 21

2. are located in areas targeted by the State for additional 22
revitalization and economic development opportunities due to the focusing of State 23
resources and incentives; 24

3. are located in areas where the political subdivision has 25
implemented regulatory streamlining or other development incentives that foster 26
redevelopment and revitalization in priority funding areas, as defined in Title 5, Subtitle 27
7B of this article, and the appropriate local governing body or the planning board or 28
commission, if designated by the local governing body, has certified to the Sustainable 29
Growth Subcabinet those regulatory streamlining or other development incentives; [and] 30

4. include affordable and workforce housing options; AND 31

SENATE BILL 946 9

5. ARE LIKELY TO HAVE A HIGH IMPACT ON THE 1
ECONOMIC DEVELOPMENT OF A COMMUNITY AND ARE LOCATED IN: 2

A. A SUSTAINABLE COMMUN ITY DESIGNATED UNDER 3
TITLE 6 OF THE HOUSING AND COMMUNITY DEVELOPMENT ARTICLE; 4

B. A TRANSIT–ORIENTED DEVELOPMENT, AS DEFINED 5
UNDER § 7–101 OF THE TRANSPORTATION ARTICLE; 6

C. AN ENTERPRISE ZONE DESIGNATED UNDER TITLE 5, 7
SUBTITLE 7 OF THE ECONOMIC DEVELOPMENT ARTICLE; 8

D. AN ARTS AND ENTERTAI NMENT DISTRICT 9
DESIGNATED UNDER TITLE 4, SUBTITLE 7 OF TH E ECONOMIC DEVELOPMENT 10
ARTICLE; OR 11

E. A MAIN STREET MARYLAND COMMUNITY 12
DESIGNATED BY THE DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT; 13

(v) for commercial rehabilitations, establish procedures to announce 14
to the public the selection of a rehabilitation project for an award of an initi al credit 15
certificate not later than 60 days after the selection is made; 16

(vi) for commercial rehabilitations, determine whether the certified 17
rehabilitation: 18

1. is a high performance building; or 19

2. qualifies as affordable housing or a Level 1 or Level 2 20
opportunity zone project; 21

(vii) for commercial rehabilitations, establish a required external 22
marker or, at a minimum, an internal marker for the rehabilitation project that identifies 23
that the rehabilitation was funded by historic revitalization tax credits; 24

(viii) as provided in paragraph (7) of this subsection, charge 25
reasonable fees to certify historic structures and rehabilitations under this subtitle; 26

(ix) for commercial rehabilitations, require documentation that the 27
applicant has ownership or site control of the structure in order to demonstrate the ability 28
to meet the requirement to begin work as required under subsection (c)(3)(i)1 of this section; 29

(x) for commercial rehabilitations, provide a time limit for app roval 30
of the additional tax credit for high performance buildings, affordable housing, or Level 1 31
or Level 2 opportunity zone projects provided for in subsection (c)(1)(ii) of this section; 32
10 SENATE BILL 946

(xi) for commercial rehabilitations, establish procedures for the 1
transfer of the tax credit under subsection (c)(6) of this section; 2

(xii) for small commercial projects: 3

1. establish conditions regarding the percentage of the 4
structure that may be used for residential rental purposes if the structure is use d for both 5
commercial and residential rental purposes; 6

2. establish application procedures for governing bodies of 7
condominiums and cooperative housing corporations and conditions regarding the 8
rehabilitation of common elements of condominiums and cooperative projects; 9

3. specify criteria for determining whether a certified historic 10
structure is: 11

A. an agricultural structure; or 12

B. a post–World War II structure; and 13

4. specify criteria and procedures for the issuance of initial 14
credit certificates under subsection (e) of this section; and 15

(xiii) specify criteria and procedures for approval of enhanced benefits 16
under this section for Level 1 and Level 2 opportunity zone projects. 17

(2) The Director may not certify that a rehabili tation is a certified 18
rehabilitation eligible for a tax credit provided under this section unless the individual or 19
business entity seeking certification states under oath the amount of the individual’s or 20
business entity’s qualified rehabilitation expenditures. 21

(3) Each year, the Director may accept applications for approval of plans of 22
proposed commercial rehabilitations and for the award of initial credit certificates for the 23
fiscal year that begins July 1 of that year. 24

(4) (i) Except as provided in subsection (e) of this section, a small 25
commercial project shall be treated as a single –family, owner –occupied residential 26
property, including the limitation on the amount of the tax credit provided in subsection 27
(c)(2)(ii) of this section. 28

(ii) A s mall commercial project is subject to the credit recapture 29
provision in subsection (f) of this section. 30

(5) [(i)] For commercial rehabilitations, the Director may not accept an 31
application for approval of plans of proposed rehabilitation if: 32

SENATE BILL 946 11

[1.] (I) [any substantial part of the proposed ] THE 1
rehabilitation work [has begun] HAS BEEN COMPLETED; or 2

[2.] (II) the applicant for a commercial rehabilitation has 3
previously submitted three or more applications FOR AN INITIAL CREDIT CERTIFICATE 4
for commercial rehabilitations with total proposed rehabilitations exceeding $500,000 in 5
that year. 6

[(ii) For commercial rehabilitations, the Director may accept an 7
application for approval of plans of a proposed rehabilitation for which a substantial part 8
of the proposed rehabilitation work has begun if the rehabilitation work has been approved 9
under the federal historic tax credit.] 10

(6) Except as provided in subsection (d)(3)(iii) of this section, not more than 11
60% of the total credit amounts unde r initial credit certificates issued for any fiscal year 12
may be issued for projects in a single county or Baltimore City. 13

(7) (i) The Director shall adopt regulations to charge reasonable fees to 14
certify historic structures and rehabilitations under this section which shall include: 15

1. a minimum fee for the second phase of the application 16
process; 17

2. for a commercial rehabilitation project, a final fee that 18
may not exceed 3% of the amount of the award of an initial OR SUPPLEMENTAL credit 19
certificate; and 20

3. for any other rehabilitation project, a final fee that may 21
not exceed 3% of the amount of the credit for which the rehabilitation would be eligible 22
based on the greater of the estimated or final qualified rehabilitation expenditures for the 23
rehabilitation. 24

(ii) The Director shall set the level of the fees so that the projected 25
proceeds from the fees will cover the costs to the Trust of administering the credit under 26
this section and the federal historic tax credit. 27

(iii) If a fee charged for a commercial rehabilitation is not received by 28
the Trust within 90 days after the Trust sends notice to the applicant that the fee is due, 29
the Trust may not: 30

1. issue an initial OR SUPPLEMENTAL credit certificate for 31
the commercial rehabilitation; or 32

2. accept an application for a commercial rehabilitation from 33
the applicant during the 3 fiscal years following the fiscal year in which the fee was not 34
received. 35
12 SENATE BILL 946

(iv) The proceeds from the fees shall be deposited in a special fund, 1
to be used only for the purposes of paying the costs of administering the credit under this 2
section and the federal historic tax credit. 3

(v) Any unused balance of the fund at the end of each fiscal year 4
shall be transferred to the Reserve Fund establishe d under subsection (d) of this section 5
and shall increase the amount of the initial OR SUPPLEMENTAL credit certificates that 6
the Trust may issue for the following fiscal year. 7

(8) If an initial OR SUPPLEMENTAL credit certificate expires or is 8
otherwise unclaimed as provided for under this section, the amount of the credit certificate 9
shall: 10

(i) remain in the Reserve Fund established under subsection (d) of 11
this section; and 12

(ii) increase the amount of the initial OR SUPPLEMENTAL credit 13
certificates that the Trust may issue for the following fiscal year. 14

(c) (1) (i) Except as otherwise provided in this section, for the taxable year 15
in which a certified rehabilitation is completed, an individual or business entity may claim 16
a tax credit in an amou nt equal to 20% of the individual’s or business entity’s qualified 17
rehabilitation expenditures for the rehabilitation. 18

(ii) For a commercial rehabilitation, an individual or business entity 19
may claim an additional tax credit in an amount equal to 5% of the individual’s or business 20
entity’s qualified rehabilitation expenditures if the certified rehabilitation is a certified 21
historic structure and: 22

1. is a high performance building; or 23

2. qualifies as affordable housing or a Level 1 opportunity 24
zone project. 25

(iii) For a commercial rehabilitation, a business entity may claim an 26
additional tax credit in an amount equal to 7.5% of the business entity’s qualified 27
rehabilitation expenditures if the certified rehabilitation is a certified historic structure 28
and qualifies as a Level 2 opportunity zone project. 29

(2) (i) For any commercial rehabilitation, the State tax credit allowed 30
under this section may not exceed the lesser of: 31

1. A. $5,000,000 for any commercial rehabilitation other 32
than a Level 1 or Level 2 opportunity zone project; 33

B. $5,250,000 for a Level 1 opportunity zone project; or 34
SENATE BILL 946 13

C. $5,500,000 for a Level 2 opportunity zone project; or 1

2. the maximum amount specified under the initial credit 2
certificate issued for the rehabilitation. 3

(ii) For a rehabilitation other than a commercial rehabilitation, the 4
State tax credit allowed under this section may not exceed: 5

1. $50,000 for a rehabilitation other than a Level 1 or Level 6
2 opportunity zone project; 7

2. $55,000 for a Level 1 opportunity zone project; or 8

3. $60,000 for a Level 2 opportunity zone project. 9

(iii) For the purposes of the limitation under subparagraph (i) of this 10
paragraph[,]: 11

1. the following shall be treated as a single commercial 12
rehabilitation: 13

[1.] A. the phased rehabilitation of the same structure or 14
property; or 15

[2.] B. the separate rehabilitation of different components 16
of the same structure or property; AND 17

2. EACH STRUCTURE THAT IS PART OF A PHASED 18
REHABILITATION OF A CAMPUS WITH MULTIPLE STRUCTURES SHALL BE TREATED 19
AS A SEPARATE COMMERCIAL REHABILITATION. 20

(3) (i) Subject to subparagraph (ii) of this paragraph, the initial AND 21
SUPPLEMENTAL credit certificate for a proposed commercial rehabilitati on shall expire 22
and the credit under this section may not be claimed if: 23

1. within 18 months after the initial OR SUPPLEMENTAL 24
credit certificate was issued, the applicant has not notified the Trust, in writing, that the 25
commercial rehabilitation has begun; 26

2. the commercial rehabilitation is not completed within 30 27
months after the initial OR SUPPLEMENTAL credit certificate was issued; or 28

3. the applicant does not submit to the Trust a request for 29
final certification of the commercial rehabilitation within 12 months after: 30

14 SENATE BILL 946

A. the 30 –month expiration date under item 2 of this 1
subparagraph; or 2

B. the date to which the Director postponed the expiration 3
date under subparagraph (ii) of this paragraph. 4

(ii) For reasonable cause, the Director may postpone: 5

1. the 30–month expiration date under subparagraph (i)2 of 6
this paragraph for an initial OR SUPPLEMENTAL credit certificate for a commercial 7
rehabilitation; or 8

2. if the commercial rehabilitation was completed prior to the 9
expiration of the initial OR SUPPLEMENTAL credit certificate, the deadline under 10
subparagraph (i)3 of this paragraph for submission of a request for final certification. 11

(4) If the tax credit allowed under this section in any taxable year exceeds 12
the total tax otherwise payable by the business entity or the individual for that taxable 13
year, the individual or business entity may claim a refund in the amount of the excess. 14

(5) The State credit allowed under this section may be allocated among the 15
partners, members, or shareholders of an entity in any manner agreed to by those persons 16
in writing. 17

(6) (i) In accordance with regulations adopted by the Director under 18
this section, the amount of the State tax credit allowed but not used for commercial 19
rehabilitations under this section may be transferred in whole or in part to any individual 20
or business entity. 21

(ii) 1. For the taxable year of any transfer under this paragraph, 22
the transferee under subparagraph (i) of this paragraph may apply the ta x credit against 23
the total tax otherwise payable by the transferee in that taxable year. 24

2. If the tax credit exceeds the State income tax of the 25
transferee in any taxable year, the transferee: 26

A. may claim a refund in the amount of the excess; or 27

B. may transfer the remainder of the tax credit to any 28
individual or business entity. 29

(7) (I) THE DIRECTOR MAY ACCEPT A PPLICATIONS FOR 30
APPROVAL OF A SUPPLE MENTAL CREDIT CERTIF ICATE FOR A COMMERCIAL 31
REHABILITATION IF THE COSTS FOR THE COMMERCIAL REHAB ILITATION HAVE 32
INCREASED DUE TO THE INFLATION OF CONSTRUCTION COSTS. 33

SENATE BILL 946 15

(II) SUBJECT TO THE LIMITATIONS UNDER PARAGRAPH (2)(I)1 1
OF THIS SUBSECTION AND THE AVAILABILITY OF FUNDS IN THE RESERVE FUND, ON 2
APPROVAL OF AN APPLICATION FOR A S UPPLEMENTAL CREDIT CERTIFICATE, THE 3
AMOUNT OF THE INITIAL CREDIT CERTIFICATE MAY BE INCREASED. 4

(III) THE DIRECTOR SHALL GIVE P RIORITY TO ISSUING A 5
SUPPLEMENTAL CREDIT CERTIFICATE OVER ISS UING AN INITIAL CRED IT 6
CERTIFICATE. 7

(d) (1) (i) In this subsect ion the following words have the meanings 8
indicated. 9

(ii) “Reserve Fund” means the Historic Revitalization Tax Credit 10
Reserve Fund established under paragraph (2) of this subsection. 11

(iii) “Trust Account” means the Small Commercial Project Trust 12
Account established under paragraph (4) of this subsection. 13

(2) (i) There is a Historic Revitalization Tax Credit Reserve Fund that 14
is a continuing, nonlapsing special fund that is not subject to § 7–302 of this article. 15

(ii) The money in the Reserve Fund shall be invested and reinvested 16
by the Treasurer, and interest and earnings shall be credited to the General Fund. 17

(iii) If the fees paid in any fiscal year are less than the directly related 18
administrative costs of operating the Historic Revitalization Tax Credit Program, funds in 19
the Reserve Fund shall be used for the directly related administrative costs of the Program. 20

(3) (i) Subject to the provisions of this subsection, the Director shall 21
issue an initial OR SUPPLEMENTAL credit certificate for each commercial rehabilitation 22
for which a plan of proposed rehabilitation is approved and the fees charged under 23
subsection (b)(7)(i) of this section are paid. 24

(ii) An initial OR SUPPLEMENTAL credit certificate issued under 25
this subsection shall state the maximum amount of credit under this section for which the 26
commercial rehabilitation may qualify. 27

(iii) 1. Except as otherwise provided in this subparagraph and in 28
subsection (b)(7)(v) of this section, for any fiscal year, the Director may not issue initial OR 29
SUPPLEMENTAL credit certificates for credit amounts in the aggregate totaling more than 30
the amount appropriated to the Reserve Fund for that fiscal year in the State budget as 31
approved by the General Assembly. 32

2. If the ag gregate credit amounts under initial OR 33
SUPPLEMENTAL credit certificates issued in a fiscal year total less than the amount 34
appropriated to the Reserve Fund for that fiscal year as a result of the limitation under 35
16 SENATE BILL 946

subsection (b)(6) of this section, any exc ess amount may be issued under initial OR 1
SUPPLEMENTAL credit certificates for projects in a county or Baltimore City in the same 2
fiscal year, without regard to the limitation under subsection (b)(6) of this section. 3

3. Subject to subsubparagraph 2 of this subparagraph, if the 4
aggregate credit amounts under initial OR SUPPLEMENTAL credit certificates issued in a 5
fiscal year total less than the amount appropriated to the Reserve Fund for that fiscal year, 6
any excess amount shall remain in the Reserve Fu nd and may be issued under initial OR 7
SUPPLEMENTAL credit certificates for the next fiscal year. 8

4. For any fiscal year, if funds are transferred from the 9
Reserve Fund under the authority of any provision of law other than paragraph (5) of this 10
subsection, the maximum credit amounts in the aggregate for which the Director may issue 11
initial OR SUPPLEMENTAL credit certificates shall be reduced by the amount transferred. 12

5. In each fiscal year, the Director shall estimate the amount 13
of fees to be collected based on the amount appropriated to the Reserve Fund and reserve 14
the difference between the estimated fees and estimated directly related administrative 15
costs of the Program to be used to administer the Program. 16

6. If the reservation of funds t o administer the Program 17
under subsubparagraph 5 of this subparagraph is not necessary to cover the directly related 18
administrative costs of the Program, any excess amount shall remain in the Reserve Fund 19
and may be issued under initial OR SUPPLEMENTAL credit certificates for the next fiscal 20
year. 21

(iv) 1. Subject to subsubparagraphs 2 and 3 of this 22
subparagraph, for each of fiscal years 2018 through 2031, the Governor shall include in the 23
budget bill an appropriation to the Reserve Fund. 24

2. For eac h of fiscal years 2023 through 2025 and 2029 25
through 2031, the Governor shall include in the budget bill an appropriation to the Reserve 26
Fund of at least $20,000,000. 27

3. For each of fiscal years 2026 through 2028, the Governor 28
shall include in the bud get bill an appropriation to the Reserve Fund of at least 29
$16,500,000. 30

4. The amounts described under subsubparagraphs 2 and 3 31
of this subparagraph shall be in addition to the appropriations to the Trust Account 32
required under paragraph (4) of this subsection. 33

(v) Notwithstanding the provisions of § 7 –213 of this article, the 34
Governor may not reduce an appropriation for the Reserve Fund in the State budget as 35
approved by the General Assembly. 36

SENATE BILL 946 17

(vi) The Director may not issue an initial OR SUPPLEMENTAL credit 1
certificate for any fiscal year after fiscal year 2031. 2

(4) (i) Within the Reserve Fund, there is a Small Commercial Project 3
Trust Account. 4

(ii) 1. The Trust Account is established for the issuance of tax 5
credit certificates for small commercial projects. 6

2. Funds in the Trust Account shall be used only for transfers 7
from the Reserve Fund to the General Fund in accordance with paragraph (5) of this 8
subsection with respect to tax credit certificates issued for small commercial projects. 9

(iii) The Trust Account consists of: 10

1. money appropriated in the State budget for the Trust 11
Account; and 12

2. any other money from any other source accepted for the 13
benefit of the Trust Account. 14

(iv) For each of fiscal years 2024 through 2031, the Governor shall 15
include in the budget bill an appropriation to the Trust Account of at least $2,000,000. 16

(5) (i) Except as provided in this paragraph, money appropriated to the 17
Reserve Fund shall remain in the Fund. 18

(ii) 1. Within 15 days after the end of each calendar quarter, the 19
Trust shall notify the Comptroller as to each commercial rehabilitation completed and 20
certified during the quarter: 21

A. the maximum credit amount stated in the initial OR 22
SUPPLEMENTAL credit certificate for the project; and 23

B. the final certified credit amount for the project. 24

2. On notification that a project has been certified, the 25
Comptroller shall transfer an amount equal to the maximum credit amount stated in the 26
initial OR SUPPLEMENTAL credit certificate for the project from the Reserve Fund to the 27
General Fund. 28

(iii) 1. On or before October 1 of each year, the Trust shall notify 29
the Comptroller as to the maximum credit amount stated in the initial OR 30
SUPPLEMENTAL credit certificate for each commercial rehabilitation for which the initial 31
OR SUPPLEMENTAL credit certificate has expired under subsection (c)(3) of this section as 32
of the end of the prior fiscal year. 33
18 SENATE BILL 946

2. On notification that the initial OR SUPPLEMENTAL credit 1
certificate for a project has expired under subsection (c)(3) of this section, the Comptroller 2
shall transfer an amount equal to the maximum credit amount stated in the initial OR 3
SUPPLEMENTAL credit certificate for the project from the Reserve Fund to the General 4
Fund. 5

(e) (1) Subject to the provisions of this subsection, the Director shall issue an 6
initial credit certificate for each approved small commercial project on a first –come, 7
first–served basis. 8

(2) An initial credit certificate issued under this subsection shall state the 9
maximum amount of tax credit for which the applicant is eligible. 10

(3) (i) Before fiscal year 2024, the Director may not issue an initial 11
credit certificate under this subsection after the aggregate amount of initial credit 12
certificates issued for small commercial projects totals $5,000,000. 13

(ii) Before fiscal year 2024, for a targeted project, the Director may 14
not issue an initial credit certificate under this subsection: 15

1. after the aggregate amount of initial credit certificates 16
issued for agricultural structures totals $1,000,000; or 17

2. after the aggregate amount of initial credit certificates 18
issued for post–World War II structures totals $1,000,000. 19

(iii) Beginning fiscal year 2024 and each fiscal year the reafter, the 20
Director may not issue initial credit certificates for small commercial projects under this 21
subsection for credit amounts in the aggregate totaling more than the amount of funds in 22
the Small Commercial Project Trust Account established under s ubsection (d)(4) of this 23
section. 24

(f) (1) (i) In this subsection the following words have the meanings 25
indicated. 26

(ii) 1. “Dispose of” means to transfer legal title or, in the case of 27
a leasehold, the leasehold interest. 28

2. “Dispose of” includes to sell in a sale –and–leaseback 29
transaction, to transfer on the foreclosure of a security interest, or to transfer by gift. 30

3. “Dispose of” does not include to transfer title or the 31
leasehold interest to a creditor on creation of a security interest. 32

(iii) “Disqualifying work” means work that: 33

SENATE BILL 946 19

1. is performed on a certified rehabilitation; and 1

2. if performed as part of the rehabilitation certified under 2
this section, would have made the rehabilitation ineligible for certification. 3

(2) The credit allowed under this section shall be recaptured as provided in 4
paragraph (3) of this subsection if, during the taxable year in which a certified 5
rehabilitation is completed or any of the 4 taxable years succeeding the taxable year in 6
which the certified rehabilitation is completed: 7

(i) any disqualifying work is performed on the certified 8
rehabilitation; or 9

(ii) for a commercial rehabilitation, the certified rehabilitation is 10
complete and has been disposed of. 11

(3) (i) 1. If the disqualifying work is performed or the certified 12
rehabilitation is disposed of during the taxable year in which the certified rehabilitation 13
was completed, 100% of the credit shall be recaptured. 14

2. If the disqualifying work is performed or the certif ied 15
rehabilitation is disposed of during the first full year succeeding the taxable year in which 16
the certified rehabilitation was completed, 80% of the credit shall be recaptured. 17

3. If the disqualifying work is performed or the certified 18
rehabilitation is disposed of during the second full year succeeding the taxable year in 19
which the certified rehabilitation was completed, 60% of the credit shall be recaptured. 20

4. If the disqualifying work is performed or the certified 21
rehabilitation is disposed of during the third full year succeeding the taxable year in which 22
the certified rehabilitation was completed, 40% of the credit shall be recaptured. 23

5. If the disqualifying work is performed or the certified 24
rehabilitation is disposed of during the fourth full year succeeding the taxable year in which 25
the certified rehabilitation was completed, 20% of the credit shall be recaptured. 26

(ii) 1. The individual or business entity that claimed the tax 27
credit shall pay the amount to be recaptured as determined under subparagraph (i) of this 28
paragraph as taxes payable to the State for the taxable year in which the disqualifying 29
work is performed or the certified rehabilitation is disposed of. 30

2. THE COMPTROLLER SHALL DEP OSIT AMOUNTS 31
RECAPTURED AND PAID UNDER SUBSUBPARAGRAP H 1 OF THIS SUBPARAGRAPH 32
INTO THE RESERVE FUND AND THOSE AMOUNTS MAY BE ISSUED AS INI TIAL OR 33
SUPPLEMENTAL CREDIT CERTIFICATES FOR THE NEXT FISCAL YEAR. 34

20 SENATE BILL 946

(g) (1) The Comptroller may determine, under the process for return 1
examination and audit under §§ 13–301 and 13–302 of the Tax – General Article: 2

(i) the amount of rehabilitation expenditures used in calculating the 3
credit; 4

(ii) whether such expenditures are qualified re habilitation 5
expenditures under this section; and 6

(iii) whether the credit is allowable as claimed. 7

(2) The authority of the Comptroller to examine and audit a tax return does 8
not limit the authority of the Director to determine whether a rehabilita tion qualifies as a 9
certified rehabilitation or whether a certificate of certified rehabilitation has been properly 10
issued. 11

(3) The Comptroller may adopt regulations to require that an entity other 12
than a corporation claim the tax credit on the tax return filed by that entity. 13

(4) (i) Except as otherwise provided in this paragraph, the credit under 14
this section may be claimed for the year a certified rehabilitation is completed, only if the 15
Director has, by the time the return is filed, issued a certificate of completion for the 16
certified rehabilitation. 17

(ii) A taxpayer claiming the credit may amend a return for the year 18
the certified rehabilitation was completed to account for a certificate issued subsequent to 19
the filing of the original return. 20

(iii) An amended return shall be filed within the period allowed under 21
the Tax – General Article for filing refund claims. 22

(iv) The provisions of this paragraph do not extend the period in 23
which a certified rehabilitation must be completed to be eligible for a tax credit under this 24
section. 25

(v) An amended return may account for an amended certification 26
issued by the Director for a certified rehabilitation. 27

(h) A refund payable under subsection (c) of this section: 28

(1) operates to reduce the income tax revenue from corporations if the 29
person entitled to the refund is a corporation subject to the income tax under Title 10 of the 30
Tax – General Article; 31

(2) operates to reduce insurance premium tax revenues if the person 32
entitled to the refund is subject to taxation under Title 6 of the Insurance Article; and 33

SENATE BILL 946 21

(3) operates to reduce the income tax revenue from individuals if the 1
person entitled to the refund is: 2

(i) an individual subject to the income tax under Title 10 of the Tax 3
– General Article; or 4

(ii) an organization exempt from taxation under § 501(c)(3) of the 5
Internal Revenue Code. 6

(i) (1) On or before December 15 of each fiscal year, the Director shall report 7
to the Governor and, subject to § 2 –1257 of the State Governm ent Article, to the General 8
Assembly, on: 9

(i) the initial AND SUPPLEMENTAL credit certificates awarded for 10
commercial rehabilitations and small commercial projects under this section for that fiscal 11
year; 12

(ii) the tax credits awarded for certified rehabilitations completed in 13
the preceding fiscal year; 14

(iii) whether the tax credits awarded for certified rehabilitations 15
completed in the preceding fiscal year were located in: 16

1. a local historic district; or 17

2. a national register district; and 18

(iv) the estimated amount of directly related administrative costs 19
reserved in the Reserve Fund, the estimated amount of fees to be collected, the actual 20
directly related administrative costs, and the actual amount of fees collected. 21

(2) The report required under paragraph (1) of this subsection shall include 22
for each initial credit certificate awarded for the fiscal year for a commercial rehabilitation: 23

(i) the name of the owner or developer of the commercial 24
rehabilitation; 25

(ii) the name and address of the proposed or certified rehabilitation 26
and the county where the project is located; 27

(iii) the dates of receipt and approval by the Director of all 28
applications regarding the project, including applications: 29

1. for certification that a structure or property will qualify as 30
a certified historic structure; and 31

2. for approval of the proposed rehabilitation; and 32
22 SENATE BILL 946

(iv) the maximum amount of the credit stated in the initial credit 1
certificate for the project and the estimat ed rehabilitation expenditures stated in the 2
application for approval of the plan of proposed rehabilitation. 3

(3) The report required under paragraph (1) of this subsection shall include 4
for each certified commercial rehabilitation completed during the preceding fiscal year: 5

(i) the name of the owner or developer of the commercial 6
rehabilitation; 7

(ii) the name and address of the certified rehabilitation and the 8
county where the project is located; 9

(iii) the dates of receipt and approval by the Director of all 10
applications regarding the project; and 11

(iv) 1. the maximum amount of the credit stated in the initial OR 12
SUPPLEMENTAL credit certificate for the project and the estimated rehabilitation 13
expenditures stated in the application for ap proval of the plan of proposed rehabilitation; 14
and 15

2. the actual qualified rehabilitation expenditures and the 16
final amount of the credit for which the project qualified. 17

(4) The report required under paragraph (1) of this subsection shall 18
summarize for each category of certified rehabilitations: 19

(i) the total number of applicants for: 20

1. certification that a structure or property will qualify as a 21
certified historic structure; 22

2. approval of plans of proposed rehabilitations; or 23

3. certification of the completed rehabilitations; 24

(ii) the number of proposed projects for which plans of proposed 25
rehabilitation were approved; and 26

(iii) the total estimated rehabilitation expenditures stated in 27
approved applications for approval of plans of proposed rehabilitation and the total 28
qualified rehabilitation expenditures for completed rehabilitations certified. 29

(5) The information required under paragraph (4) of this subsection shall 30
be provided in the aggregate and separately for each of the following categories of certified 31
rehabilitations: 32
SENATE BILL 946 23

(i) owner–occupied single family residential structures; 1

(ii) small commercial projects; and 2

(iii) commercial rehabilitations. 3

(j) (1) Subject to the provisions of this subsection, the provisions of this section 4
and the tax credit authorized under this section shall terminate as of July 1, 2031. 5

(2) On and after July 1, 2031: 6

(i) the tax credit authorized under this section may be claimed for: 7

1. a rehabilitation project , other than a commercial 8
rehabilitation, for which an application for approval of a plan of proposed rehabilitation 9
was received by the Director on or before June 30, 2031; or 10

2. a commercial rehabilitation for which an initial OR 11
SUPPLEMENTAL credit certificate has been awarded under subsection (d) of this section; 12
and 13

(ii) the Director shall continue to report to the Governor and the 14
General Assembly as required under subsection (i) of this section for as long as any 15
rehabilitation project for which the tax credit may be claimed remains incomplete. 16

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 17
1, 2026, and shall apply to tax credit certificates issued after June 30, 2026. 18