TIF use could grow in Maryland with new legislation

Legislation to expand the use of tax increment financing in certain growth areas of the state is expected to be introduced in the General Assembly next week, according to Jon Laria, chair of the Maryland Sustainable Growth Commission.

During a hearing before the House Environmental Matters Committee on Tuesday, Laria said the bill would allow for “more tools in the toolkit” to attract development and help promote smart growth with TIFs.

He also told lawmakers that another possible incentive, a “state infrastructure bank,” was also being considered by the commission. That would be a revolving loan fund to finance infrastructure improvements, but with state resources tight, funding such a venture is uncertain and the plan has not yet been developed, Laria said.

“Our job is to get the issues on the table,” Laria said of the work of the commission, which meets six times a year.

Laria gave lawmakers an hour-long update on several growth initiatives being studied by the 36-member commission including housing, education, concentrating growth and Plan Maryland, Gov. Martin O’Malley’s newly minted smart growth plan. But he declined to reveal any details about the proposed legislation.

Plan Maryland, Laria said, is a critical first step in helping to streamline growth in the state in designated areas. Criticized by many rural legislators as too heavy-handed, the controversial plan drew questions during the hearing.

“A lot of people don’t view Plan Maryland as a first step,” said Del. Anthony J. O’Donnell, R-Calvert and St. Mary’s. “They view it as a nuclear bomb. People have real concerns with Plan Maryland.”

Laria said the commission is helping the state Department of Planning implement and develop Plan Maryland, and told the committee “we’re taking it one step at a time.”

“The state is going to create a series of geographic distinctions,” he said of the plan, adding that the debate was “a good and healthy sign of the future of smart growth and sustainable growth in Maryland.”

TIF bonds have been used to help pay for infrastructure for new developments in areas including Baltimore City and Anne Arundel County. The incentives work through the sale of bonds to private investors, which are repaid over decades through property taxes that are diverted to repay  investors and not to public coffers.

East Baltimore Development Inc. has a TIF, along with other developments including Mondawmin Mall, Clipper Mill, Belvedere Square and Harbor East. In Anne Arundel County, a TIF has been used to help build the business and commercial area located on West Nursery Road near Baltimore-Washington International Thurgood Marshall Airport.

Del. Anne Healey, a Prince George’s County Democrat, questioned Laria about the wisdom of expanding the legal use of TIFs in Maryland, particularly for some smaller local governments that may need stronger fiscal guidance.

“It can be used indiscriminately by small local governments that may give away more than they need to,” Healey said, suggesting that Laria’s committee draw up guidelines for TIFs.

“This tool may be a double-edge sword,” she said.