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House passes development financing bill

ANNAPOLIS — Local governments could pay for more projects by borrowing money against future expected increases in tax revenue under legislation passed by a 114-21 vote by the House of Delegates on Saturday.

House Bill 613 would expand the tax increment financing mechanism – called TIF – to include projects that are categorized as being within a sustainable growth community, such as schools, housing and public facilities such as libraries. Currently, only transit-oriented development projects are eligible to receive tax increment financing.

The bill also lets local governments – including municipalities – transfer debt obligations for any project within a sustainable community to the Maryland Economic Development Corp., preventing that debt obligation from affecting a jurisdiction’s credit rating.

Tax increment financing lets cash-strapped jurisdictions pay for development projects by borrowing against future revenues. If revenues don’t reach expectations, jurisdictions are able to levy a special tax on property owners within the TIF district to repay debt.

Currently, 12 jurisdictions can use tax increment financing for infrastructure improvements within transit oriented locations. In Baltimore, there are eight TIF districts whose projects total $121.6 million.

H.B. 613, introduced by request of the Maryland Sustainable Growth Commission, would allow such special districts to be created across the state.
Del. Maggie McIntosh, a Baltimore Democrat who chairs the House Environmental Matters Committee, told the House that the TIF mechanism is “a great business economic development tool for your county.”

Still, some delegates said expanding TIF usage could put taxpayers on the hook if revenue generation was less than expected.
“We’re accumulating capital debt, and we’re bypassing the state’s limit of capital debt,” said Minority Leader Anthony O’Donnell, R-Calvert.

Some members of O’Donnell’s party crossed lines to vote. Del. Andrew A. Serafini, R-Washington, said TIFs could spur work in areas that otherwise would not be developed.

“The core of your cities, and in my county the core of my city, needs help,” Serafini said.

The bill, crafted by Jon Laria — chairman of the growth commission and a Ballard Spahr LLP attorney — now goes to the Senate. Two weeks remain in the General Assembly’s regular 90-day session.