Smart, Green, and Growing - The Sustainable Communities Act of 2010

House Bill 475 (Chapter 487, Acts of 2010)

This Act creates programs focused on creating, enhancing, supporting and revitalizing sustainable communities consistent with the Obama Administration's interagency partnership announced in June 2009.

This Act creates the Smart Growth Subcabinet (Subcabinet) in Section 9-1406 of the State Government Article. The Subcabinet shall work together to create, enhance, support, and revitalize sustainable communities across the State. The Subcabinet will make recommendations to the Department of Business and Economic Development, the Department of Housing and Community Development and the Department of Planning.

The Act makes changes to the Heritage Structure Rehabilitation Tax Credit found in Title 5A of the State Finance and Procurement Article. The Act replaces the word "heritage" with "historic" and amends the definition of "certified rehabilitation" to include a qualified rehabilitated structure as well as the existing certified historic structure.

The Act adds many new definitions such as Financial Assistance, High Performance Building, Historic Property, Main Street Maryland Community, Main Street Maryland Program, Qualified Rehabilitated Structure, and Smart Growth Subcabinet.

The Act amends the definition of "substantial rehabilitation" to mean rehabilitation of a structure for which qualified rehabilitation expenditures, during the 24-month period selected by the individual or entity ending with or within the taxable year, exceed:

• $5,000 for the rehabilitation of a single-family, owner-occupied residential structure;
• the greater of $25,000 or 50 percent of the adjusted basis for a qualified rehabilitated structure located in a Main Street Maryland Community; and
• for all other property the greater of the adjusted basis or $25,000.

The Act requires the Director of the Maryland Historical Trust, in connection with the Smart Growth Subcabinet, to adopt regulations that establish procedures and standards for certifying structures and to establish an application process for initial credit certificates for Maryland Sustainable Communities Tax Credits. The application process shall favor the award of tax credits for rehabilitation projects that are located the areas as set forth in Section 5A-303(b)(1)(iv).

Not more than 10 percent of the total credit amounts under initial credit certificates in any fiscal year may be issued for the rehabilitation of qualified rehabilitation structures.

The Act provides that if a fee charged for a commercial rehabilitation is not received by the Trust within 120 days after the Trust sends notice that the fee is due, the initial credit certificate shall expire.

For a building to be a qualified rehabilitated structure, after rehabilitation:

• 50 percent of the existing external walls must be remaining external walls;
• 75 percent or more of the existing external walls must be external or internal walls; and
• 75 percent or more of the existing internal framework must remain.

The Act provides that for the taxable year in which a certified rehabilitation is completed, an individual or business entity may claim a tax credit as follows:

• an amount equal to 20 percent of the individual's or business entity's qualified rehabilitation expenditures for the rehabilitation;
• an amount equal to 25 percent of the individual's or business entity's qualified rehabilitation expenditures for a rehabilitation that is a qualified historic structure and high performance building;
• an amount equal to 10 percent of the individual's or business entity's qualified rehabilitation expenditures for the rehabilitation if the building is a qualified rehabilitated structure.

The Act provides that the Director may not issue any initial credit certificates for any fiscal year after fiscal year 2014. The Act also provides for recapture based on the structure and time disqualifying work was performed or the structure was disposed. Disposal means to transfer legal title and includes, but is not limited to, a sale, gift, or foreclosure.

This Act takes effect June 1, 2010.