Program Fills Financing Gaps for Redevelopment of Properties Formerly Owned by State or Federal Government
The Maryland Department of Housing and Community Development announced the second application round of the Catalytic Revitalization Tax Credit program, designed to rehabilitate properties formerly owned by the government for economic and community development purposes. Eligible applicants can apply for the up to $15 million tax credit starting on Monday, October 17.
In 2019 Preservation Maryland’s advocacy team, elected officials, and other stakeholders sought an answer to what to do with large vacant historic complexes in Maryland. A committee was formed and the project team chose three undeveloped historic complexes as case studies. The study included barriers to advance large complex preservation projects and recommendations to begin to overcome them. The Catalytic Revitalization Tax Credit program was created as a direct result of the study’s findings.
More from the Department of Housing and Community Development’s October 11, 2022 press release:
“By bridging the funding gap to redevelop these properties that have often been sitting vacant for a long time, the program allows these large redevelopment projects to bring new life to properties, and in turn serve the communities that surround them,” said Secretary Kenneth C. Holt. “The adaptive reuse of buildings is one of many tools the department deploys to revitalize areas and foster economic growth.”
One project will be chosen to receive the state tax credit, which provides up to 20% of total eligible project costs, with a maximum credit of $15 million for costs in excess of $75 million. Credits may be claimed each year for the first five years after the project has been put into service.
Eligible projects must be a redevelopment of a property or building formerly owned by the state or federal government, including colleges or universities, K-12 schools, hospitals, mental health facilities, or military facilities or institutions, and is no longer in service.
Passed in the 2021 General Assembly session and signed into law by Governor Larry Hogan, Senate Bill 885 created the Catalytic Revitalization Tax Credit. The applicable properties usually have been vacant for a significant time and often require mitigation of a variety of environmental and health hazards.
The tax credit was a recommendation of a study conducted by the Maryland Department of Planning. It is designed to fill financing gaps between the cost of rehabilitation and the market-rate value of the redeveloped property. Proposed revitalization projects related to the rehabilitation of these government-owned properties must foster economic growth, job creation, affordable housing, or other community improvements and services.
The first credit was awarded to redevelop Warfield at Historic Sykesville, a historic mental health facility, and the surrounding area into a mixed-use community.