AGENDA ITEM #6
November 26,2013
Public Hearing
MEMORANDUM
November 22,2013
TO:
County Council
Amanda Mihill, Legislative
FROM:
SUBJECT:
Attorne~
Public Hearing:
Bill 30-13, Taxation - Property Tax Credit - Burtonsville
Enterprise Zone Property
Bill 30-13, Taxation - Property Tax Credit - Burtonsville Enterprise Zone Property, sponsored
by Councilmember Ervin, Council Vice-President Rice, and Councilmembers Berliner and
EIrich, was introduced on November 5, 2013. A Government, Operations and Fiscal Policy
Committee worksession is tentatively scheduled for December 2 at 2:00 p.m.
Bill 30-13 would create a property tax credit for certain property located in the Burtonsville
Crossroads Neighborhood Plan. Materials from the chief sponsor, Councilmember Ervin begin
on ©6. The state law authorizing this tax credit begins on ©7.
This packet contains:
Bill 30-13
Legislative Request Report
Sponsor materials
Memorandum from Councilmember Ervin
State law (HB 675)
Fiscal and Policy Note on HB 675
Testimony on HB 675 from Councilmember Ervin
Circle #
1
5
6
7
10
14
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Bill No.
30-13
Concerning: Taxation - Property Tax
Credit - Burtonsville Enterprise Zone
Property
Revised:
7/15/2013
Draft No. 1
Introduced:
November 5, 2013
Expires:
May 5, 2015
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: _ _ _ _ _ _ _ __
Ch. _ _. Laws of Mont. Co. _ _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmember Ervin, Council Vice-President Rice, and Councilmembers Berliner and EIrich
AN
ACT to:
(1)
(2)
create a property tax credit for certain property located in the Burtonsville Crossroads
Neighborhood Plan; and
generally amend the law relating to property tax credits.
By adding
Montgomery County Code
Chapter 52, Taxation
Section 52-18T
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act;
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BILL
No. 30-13
1
Sec.
1.
Section 52-1ST is added as follows:
52-1ST. Burtonsville Enterprise Zone Property.
2
3
4
W
Definitions.
In this Section, the following words have the meanings
indicated:
Base year
means the taxable year immediately before the taxable year in
which
~
credit under this Section is to be granted.
Base year value
means the value of the property used to determine the
assessment on which the property tax on real property was imposed for
the base year.
Base year value
does not include any new real property
that was first assessed in the base year.
Eligible assessment
means the difference between the base year value
and the actual value as determined
Qy
the Department for the applicable
taxable year in which the tax credit under this Section is to be granted.
Eligible business entity
means
~
5
6
7
8
9
10
11
12
13
14
15
16
person who operates or conducts
~
trade or business on qualified enterprise zone property but does not own
the qualified enterprise zone property.
Qualified property
means real property that:
17
18
19
20
ill
is located within the area encompassed
Qy
the Burtonsville
Crossroads neighborhood Plan developed
Qy
the Montgomery
County Planning Department;
21
ill
ill
is zoned for commercial or commercial/residential mixed use
development; and
is improved after the effective date of this Bill and before January
22
23
24
.L
2020.
Tax-Property Article
means the Tax-Property Article of the MIDland
Code.
25
26
cv
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BILL
No. 30-13
27
{hl
Credit.
28
29
30
31
32
33
ill
Credit authorized.
The Director of Finance must allow
f!
credit,
as authorized
Qy
State law, to
f!
taxpayer against all County
property tax and special area
tax
imposed on:
ill
{hl
improvements made
Qy
an eligible business entity to
qualified property; and
personal property owned
Qy
an eligible business entity
located on qualified property.
34
35
36
37
38
39
ill
Duration
Q[
credit.
A credit under this Section is available to
~
qualified property for no more than
~
consecutive years
beginning with the taxable year following the calendar year in
which the real property initially becomes
f!
qualified property.
ill
Amount
Q[
credit.
The amount of the credit is equal to 80% of the
40
41
amount of property tax imposed on the eligible assessment of the
qualified property in each of the first
~
taxable years following
42
the calendar year in which the property initially becomes
f!
qualified property.
43
44
45
46
ill
Nonresidential portions
Q[
qualified property.
The Department
must allocate the eligible assessment to the nonresidential part of
the qualified property at the same percentage as the square
footages of the nonresidential part is to the total square footage of
the building.
47
48
49
50
51
52
ill
For purposes of calculating the amount of the credit allowed
under this Section, the amount of property tax imposed on the
eligible assessment must be calculated without reduction for any
credits allowed under the Tax-Property Article.
o
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BILL
No. 30-13
53
54
55
56
(£)
Regulations.
The County Executive may adopt regulations under
Method
ill
to administer this Section.
@
False orfraudulent applications.
ill
A person must not knowingly file
~
false or fraudulent
57
58
59
application to obtain
~
tax credit under this Section. A violation
ofthis subsection is
~
Class A violation.
ill
In addition to the penalties provided under paragraph
person who violates this subsection must
~
ill
~
60
61
62
the County any
taxes, together with interest and penalties, offset
.!2y
the credit,
any other penalty due, and the County's fees and costs in any
action to enforce this subsection.
Approved:
63
64
65
Nancy Navarro, President, County Council
Date
66
67
Approved:
Isiah Leggett, County Executive
Date
68
This is a correct copy ofCouncil action.
69
Linda M. Lauer, Clerk of the Council
Date
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LEGISLATIVE REQUEST REPORT
Bill 30-13
Taxation
-
Property Tax Credit Burtonsville Enterprise Zone Property
DESCRIPTION:
PROBLEM:
Bill 30-13 would create a property tax credit for certain property
located in the Burtonsville Crossroads Neighborhood Plan
Changing traffic patterns and the departure of well-known stores
resulted in sales reduction for many stores in Burtonsville.
To provide incentives to invest in and improve properties throughout
the Burtonsville area.
Finance
To be requested.
To be requested.
To be requested.
To be researched.
Amanda Mihill, Legislative Attorney 240.777.7815
To be researched.
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
N/A
F:\LAW\BILLS\ 1330 Burtonsville Enterprize Zone\LEGISLATIVE REQUEST REPORT. Doc
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MONTGOMERY COUNTY COUNCIL
ROCKVILLE, MARYLAND
VALERIE ERVIN
COUNCILMEMBER
DISTRICT 5
Memorandum
Councilmembers
To:
From: Valerie Ervin
\j&­
Date: October 24,2013
Re:
Burtonsville Enterprise Zone
In December, the Council approved the Burtonsville Crossroads Neighborhood
Plan, which establishes the vision we all agree on for this area; however, a sector plan is
only one piece of the puzzle. To put all of the pieces together to create Burtonsville's full
picture, which includes a main street, public green space, and a village center, we need to
encourage private investment. The attached bill would incentivize investment and help
improve properties throughout the Burtonsville area, including the Burtonsville Crossing
Shopping Center and the strip of commercial space along Old Columbia Pike/Route 198.
As many of you know, the realignment of Route 29, which sent traffic past
Burtonsville, capped the area's commercial growth and had a dramatic impact on local
businesses. Changed traffic patterns, coupled with the relocation of the Amish Market
and the departure of Giant from Burtonsville Crossing, resulted in sales reductions for
many in the commercial area. Burtonsville Crossing is nearly empty while Burtonsville
Town Square, which opened across the street in 2010, slowly occupies empty commercial
space.
This bill creates a tax credit against the personal property tax of any eligible
business entity located within the Burtonsville Crossroads Neighborhood Plan, which
would provide assistance to small business O\vners. House Bill 675, which passed during
the 2013 Maryland General Assembly Session and became Chapter 134 of the Laws of
Maryland, gives the County authority to create this tax credit in Burtonsville.
I believe that this is one example of how we can work together to improve the
quality of life for residents in the eastern portion of Montgomery County. I stand ready
to work with you in support of this bill. Let me know if you would like to be added as a
cosponsor.
STELLA
B,
WERNER OFFICE BUILDING •
100
MARYLAND AVENUE, ROCKVILLE, MARYLAND
20850
FAX
240/777-7960
OR
240/777-7900 • TTY 240/777-7914 •
:t~
PRINTED ON RECYCLED PAPER
240/777-7989
WWW,MONTGOMERYCOU'HYMDGOV/COU"lCIL
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MARTIN O'MALLEY, Governor
Ch.134
Chapter 134
(House Bill 675)
AN ACT concerning
Montgomery County - Property Tax Credit for Qualified Enterprise Zone
Property - Burtonsville
MC 14-13
FOR the purpose of altering a certain definition of "qualified enterprise zone property"
as it relates to a certain property tax credit granted by the governing body of
Montgomery County or of a municipal corporation in Montgomery County to
include certain property zoned for certain uses located in the area encompassed
by the Burtonsville Crossroads Neighborhood Plan; providing for the application
of this Act; and generally relating to a property tax credit granted by
Montgomery County or a municipal corporation in Montgomery County against
county or municipal property tax imposed on an eligible business entity on
qualified enterprise zone property.
BY repealing and reenacting, with amendments,
Article - Tax - Property
Section 9-317
(f)
Annotated Code of Maryland
(2012 Replacement Volume)
SECTION
1.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:
Article - Tax - Property
9-317.
(f)
(1)
(i)
In this subsection the following words have the meanings
indicated.
(ii)
"Eligible business entity" means a person who operates or
conducts a trade or business on qualified enterprise zone property but does not own
the qualified enterprise zone property.
(iii)
that:
1.
"Qualified enterprise zone property" means real property
A
is not used for residential purposes;
-1­
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Ch.134
2013 LAWS OF MARYLAND
[2.]
business entity;
B.
IS
used
III
a trade or business by an eligible
[3.]
C.
is located in an enterprise zone that
designated under Title 5, Subtitle 7 of the Economic Development Article; and
IS
[4.]
9-103 ofthis title;
OR
D.
A.
is eligible for the property tax credit under
§
IS
LOCATED
\VITHIN
THE
AREA
ENCOMPASSED BY THE BURTONSVILLE CROSSROADS NEIGHBORHOOD PLAN
DEVELOPED BY THE MONTGOMERY COUNTY PLANNING DEPARTMENT;
ZONED
FOR
COMMERCIAL
IS
COMMERCIAL/RESIDENTIAL MIXED USE DEVELOPMENT; AND
C.
BEFORE JANUARY
1,
2020.
2.
B.
OR
HAS HAD IMPROVEMENTS MADE ON IT ON OR
(2)
Subject to paragraphs (4) and (5) of this subsection, the governing
body of Montgomery County or of a municipal corporation in Montgomery County may
grant, by law, a property tax credit against the county or municipal corporation
property tax imposed on:
(i)
improvements made by an eligible business entity to
qualified enterprise zone property; and
(ii)
personal property owned by an eligible business entity
located on qualified enterprise zone property.
(3)
(i)
The governing body of Montgomery County or of a municipal
corporation in Montgomery County may provide, by law, for:
1.
the amount and duration of a credit under this
subsection;
2.
subsection; and
3.
under this subsection.
any other provision necessary to carry out a credit
additional eligibility criteria for a credit under this
-2­
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MARTIN O'l\lALLEY, Governor
Ch.134
(ii)
The governing body of Montgomery County or of a municipal
corporation in Montgomery County shall define, by law, the improvements eligible for
a credit under this subsection.
(4)
The lessor of real property granted a credit under paragraph (2)(i)
of this subsection shall reduce the amount of taxes for which an eligible business
entity is contractually liable under the lease agreement by the amount of any credit
granted under paragraph (2)(i) of this subsection for improvements made by the
eligible business entity.
(5)
The lessor of real property that receives a credit under
§
9-103 of
this title may not be granted a credit under this subsection.
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
June 1, 2013, and shall be applicable to all taxable years beginning after June 30,
2013.
Approved
by
the Governor,
April 9,
2013.
-3
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HB675
Department of Legislative Services
Maryland General Assembly
2013 Session
FISCAL AND POLICY NOTE
House Bill 675
Ways and Means
(Montgomery County Delegation)
Budget and Taxation
Montgomery County - Property Tax Credit for Qualified Enterprise Zone
Property - Burtonsville
MC 14-13
This bill alters the definition of qualified enterprise zone property for purposes of a
specified local property tax credit in Montgomery County to include property that (1) is
located within the area encompassed by the Burtonsville Crossroads Neighborhood Plan
developed by the Montgomery County Planning Department; (2) is zoned for commercial
or commercial/residential mixed use development; and (3) has had improvements made
on it on or before January 1,2020.
The bill takes effect June 1, 2013, and applies to taxable years beginning after
June 30, 2013.
Fiscal Summary
State Effect:
None.
Local Effect:
Montgomery County has not enacted a local enterprise zone property tax
credit. The county currently provides tax credits to qualifying businesses that locate
within an enterprise zone through an existing State tax credit program. Pursuant to this
bill, qualifying businesses in the Burtonsville area would be eligible for a local property
tax credit depending upon whether the county enacts the local option property tax credit.
Small Business Effect:
None.
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Analysis
Current Law:
Montgomery County or a municipality in the county is authorized to
provide a property tax credit for improvements made by an eligible business entity to
qualified enterprise zone property; and for personal property owned by an eligible
business entity located on qualified enterprise zone property. The jurisdiction may
provide for the amount and duration of the tax credit, qualifications for eligibility, and
other provisions for the tax credit.
In
addition, a business entity that receives an
enterprise zone property tax credit must provide to a tenant under a lease agreement an
amount equivalent to the enterprise zone property tax credit.
An eligible business entity is defined as a person who operates or conducts a trade or
business on qualified enterprise zone property but does not own the property. Qualified
enterprise zone property is defined as real property that
(1)
is used in a trade or business
by an eligible business entity; (2) is not used for residential purposes; and (3) is located in
an enterprise zone and eligible for an enterprise zone property tax credit.
State Tax Credit Program
Businesses located within a Maryland enterprise zone are eligible for local property tax
credits and State income tax credits for 10 years after the designation of the enterprise
zone. Any business moving in after the designation qualify for the tax credits, if the
business meets all applicable eligibility standards, is certified as being in compliance by
the appropriate local government, and creates new or additional jobs or makes capital
investments. Any business that is already located in an area that is designated an
enterprise zone can qualify for the credit for the capital investment and labor force
expansion occurring after designation of the enterprise zone.
Real property tax credits are IO-year credits against local real property taxes on a portion
of the qualifying real property improvements in the enterprise zone. The State
Department of Assessments and Taxation reimburses local governments for one-half of
the cost of the property tax credit. The income tax credit is based on wages paid to newly
hired employees and can be taken over a one- to three-year period. The credits are based
on the wages paid during the taxable year to each qualified employee and vary in value
and length of time depending on whether the employee is certified from the Department
of Labor, Licensing, and Regulation as being economically disadvantaged and if the
business is located in a focus area.
Background:
Maryland's enterprise zone program is ajoint effort between the State and
local governments to provide tax incentives to businesses and property owners located in
economically distressed areas. The program was created in 1982 and there are currently
30 enterprise zones in Maryland, of which three (Gaithersburg, Long Branch/Takoma
HB
6751
Page 2
@
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Park, and Wheaton) are located in Montgomery County. In fiscal 2011, 78 businesses
were located within enterprise zones in Montgomery County and these businesses
received $1.6 million in property tax credits from the county as shown in
Exhibit 1.
Exhibit 1
Enterprise Zone Tax Credit - Montgomery County
Tax Year 2000 - 2011
Credit
Amount
Credit Amount
Per
Reci~ient
Tax Year
Reci~ients
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
$162,747
354,503
428,204
532,275
1,406,975
1,752,704
1,742,777
2,059,801
2,204,755
1,992,053
1,209,611
1,588,492
13
$12,519
8,057
8,739
10,437
19,274
21,117
23,237
24,233
25,054
23,715
14,751
20,365
44
49
51
73
83
75
85
88
84
82
78
Local Fiscal Effect:
Montgomery County has not enacted the local enterprise zone
property tax credit. The county currently provides tax credits to qualifying businesses
that locate within an enterprise zone through an existing State tax credit program.
Pursuant to this bill, qualifying businesses in the Burtonsville area would be eligible for
the local property tax credit assuming that the county enacts such a program. The total
cost for the additional property tax credits will depend on the number of businesses
qualifying for the local property tax credit and the tax credit amount provided under the
local program. As shown in Exhibit 1, the tax credit amount received by qualifying
businesses in Montgomery County under an existing enterprise zone State tax credit
program has ranged from $8,000 per recipient to over $25,000 per recipient.
HB
6751
Page 3
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Additional Information
Prior Introductions:
None.
Cross File:
None.
Information Source(s):
Montgomery County, Department of Legislative Services
Fiscal Note History:
ncslhlb
First Reader - February 26,2013
Analysis by: Michael Sanelli
Direct Inquiries to:
(410) 946-5510
(301) 970-5510
HB 675/ Page 4
©
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MONTGOMERY COUNTY COUNCIL
ROCKVILLE, MARYLAND
VALERIE ERVIN
Cou
NCI LM EMBE R
DISTRICT
5
Testimony
of Montgomery
County Councilmember Valerie Ervin
Supporting
MC
14-13,
Montgomery County -Property Tax Credit/or Qualified
Enterprise Zone Property
-
Burtonsville
Montgomery County House Delegation Local Bill Hearing
December 3, 2012
Chairwoman Kaiser, Vice-Chair Lee and members of the House Delegation, I
appreciate the opportunity to testify in support of MC 14-13, Montgomery County ­
Property Tax Credit for Qualified Enterprise Zone Property - Burtonsville. As the
Councilwoman who represents this area, I can assure you that designating Burtonsville as
a "qualified enterprise zone" will help this area receive the tax credits it needs to spur
revitalization.
As many of you know, the realignment of Route 29, which sent traffic past
Burtonsville, capped the area's commercial growth and had a dramatic impact on local
businesses. Changed traffic patterns, coupled with the relocation of the Amish Market
and the departure of Giant from Burtonsville Crossing, resulted in sales reductions for
many in the commercial area. Burtonsville Crossing is nearly empty while Burtonsville
Town Square, which opened across the street in 2010, slowly occupies empty commercial
space.
Tomorrow the County Council is scheduled to approve the Burtonsville
Crossroads Neighborhood Plan, which establishes the vision we all agree on for this area;
however, a sector plan is only one piece of the puzzle. To link all of the pieces together
to create Burtonsville's full picture, which includes a main street, public green space, and
a village center, we need to encourage private investment. This bill would incentivize
investment and improve properties throughout the Burtonsville area, including the
Burtonsville Crossing Shopping Center and the strip of commercial space along Old
Columbia Pike/Route 198.
In addition, MC 14-13 creates a tax credit against the personal property tax of any
eligible business entity located within the Burtonsville Crossroads Neighborhood Plan,
STELLA B. WERNER OFFICE BUILDING·
100 MARYLAND AVENUE, ROCKVILLE, MARYLAND 20850
TTY 240/777-7914
240/777-7960 OR 240/777-7900
FAX
240/777-7989
c.;/
!l4l
WWW.MONTGOMERYCOUNTYMD.GOV/COUNCIL
-t..
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which would provide assistance to small business owners during this difficult economic
time.
I want to especially thank Delegates Luedtke, Kaiser, and Zucker and Senator
Montgomery for sponsoring this legislation. I believe that this is a prime example of how
state and county officials work together to improve the quality of life for the residents of
Montgomery County. I stand ready to work with you in support of this bill. Thank you
for considering my testimony.