# Economic Development (GEC)

## Title 5. Economic Development and Financial Assistance Programs

### Subtitle 1. General Provisions

#### Section 5-108

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "Extraordinary economic development opportunity" means the:

    (i) attraction of a new private sector enterprise to the State or retention or expansion of an existing private sector enterprise in the State that:

      (1) maintains a strong financial condition and minimal credit risk profile;

      (2) is capable of accessing alternative sources of financing through financial institutions or capital markets;

      (3) is consistent with the strategic plan of the State for economic development; and

      (4) creates or retains substantial employment;

    (ii) retention or expansion of an existing public institution, private institution, or federal research and development institute that:

      (1) is consistent with the strategic plan of the State for economic development; and

      (2) creates or retains substantial employment; or

    (iii) establishment or attraction of a public institution, a private institution, or a federal research and development institute new to the State that:

      (1) is consistent with the strategic plan of the State for economic development; and

      (2) creates or retains substantial employment.

  (3) "Fund" means the Strategic Closing Fund.

  (4)

    (i) "Performance requirement" means a contractual agreement between an executive agency and a Fund recipient that requires the Fund recipient to meet minimum economic development outcomes in exchange for a grant or a loan under this section.

    (ii) "Performance requirement" includes claw-back, penalty, rescission, and recalibration clauses that utilize job creation, capital investment, and other measures of economic development.

  (5) "Private sector enterprise" means any commercial, industrial, educational, or research organization which is not a part of or controlled by a federal, State, or local government agency.

(b) Subject to the provisions of this section, the Strategic Closing Fund is established within the Department to maximize extraordinary economic development opportunities.

(c) The Governor may provide an appropriation in the budget bill to the Fund for a specific or general purpose or purposes.

(d) After notice to and approval by the Legislative Policy Committee, the Governor may transfer funds by budget amendment to the Fund.

(e)

  (1) The Fund is a continuing, nonlapsing fund which is not subject to Sec. 7-302 of the State Finance and Procurement Article.

  (2) The Treasurer shall separately hold, and the Comptroller shall account for, the Fund.

  (3) The Fund shall be invested and reinvested in the same manner as other State funds.

  (4) Any investment earnings shall be credited to the General Fund of the State.

(f)

  (1) Money appropriated or credited to the Fund does not revert to the General Fund of the State.

  (2) Repayments of principal or interest on any loan from the Fund shall be retained to the credit of the Fund.

(g)

  (1) The Department shall include the following information in the report that is required under Sec. 2.5-109 of this article:

    (i) the financial status of the program and a summary of its operations for the preceding fiscal year;

    (ii) for the previous 3 fiscal years, the status of Fund disbursements for economic development projects reviewed by the Legislative Policy Committee under this section;

    (iii) for the previous 3 fiscal years, the status of job creation, capital investment, and other measures of economic development for each economic development project reviewed by the Legislative Policy Committee under this section; and

    (iv) an explanation if the job creation, capital investment, and other measures of economic development described in items (i) through (iii) of this paragraph are lower than negotiated according to subsection (h)(1) of this section.

  (2) On receipt of the information that is required to be reported under this subsection, the Legislative Policy Committee shall have 60 days to review and comment on the information provided by the Department under paragraph (1) of this subsection, during which time the Department shall provide any additional information regarding the Fund as requested by the Legislative Policy Committee.

(h)

  (1) Except as provided in paragraph (2) of this subsection and in subsection (i) of this section, any funds transferred from the Fund shall be used only for extraordinary economic development opportunities that:

    (i) meet the criteria provided in this section;

    (ii) include performance requirements; and

    (iii) in addition to the performance requirements under item (ii) of this paragraph, include a performance requirement that utilizes a claw-back provision.

  (2) The Department may utilize the Fund to pay for administrative, legal, or actuarial expenses incurred by the Department.

(i)

  (1) The Legislative Policy Committee may approve an economic development opportunity that is not an extraordinary economic development opportunity if the executive agency requesting the transfer of funds offers a detailed justification for the exception.

  (2) The Legislative Policy Committee shall give particular consideration to an exception that would provide a significant economic development opportunity for an area of the State that has a relatively high unemployment rate or relatively low per capita income.

(j)

  (1) The Department may modify the guidelines for the kinds of performance requirements that may be negotiated with the loan or grant as needed, upon approval of the Legislative Policy Committee.

  (2) The Department may depart from these guidelines as needed, upon approval of the Legislative Policy Committee.

(k) Money from the Fund may be loaned, granted, or invested for:

  (1) assisting in the retention or expansion of existing private sector enterprises, public or private institutions, or federal research and development institutes;

  (2) assisting in the establishment or attraction of private sector enterprises, public or private institutions, or federal research and development institutes new to this State; or

  (3) providing assistance where existing State or local programs lack sufficient resources or are constrained by timing or program design from being utilized.

(l)

  (1) Before funds from the Fund may be loaned, granted, or invested in accordance with subsection (k) of this section, the Department shall provide, subject to Sec. 2-1257 of the State Government Article, to the Legislative Policy Committee:

    (i) a detailed description of:

      (1) the proposed use of the funds;

      (2) the manner in which the proposed use meets the criteria as set forth in this section;

      (3) the degree to which the proposed use of funds will advance statewide or local economic development strategies and objectives; and

      (4) the degree to which available sources of federal, State, local, and private financial support have been sought and will be utilized;

    (ii) the terms, conditions, and performance requirements of any grant or loan for which the funds are to be used;

    (iii) a comprehensive economic analysis of the proposed use of the funds which estimates:

      (1) the economic impact to the State and the local jurisdictions affected;

      (2) a minimum level of net economic benefits to the public sector;

      (3) the number of jobs expected to be created as a result of the proposed economic development project and the percentage of those jobs that are expected to be held by Maryland residents;

      (4) the wage rates and benefit packages for the jobs expected to be created as a result of the proposed economic development project; and

      (5) any other appropriate financial or economic benefits;

    (iv) any other analysis or information that is requested by the Legislative Policy Committee; and

    (v) the date on which the executive agency expects to disburse the funds to the proposed recipient.

  (2) The Legislative Policy Committee shall have 60 days to review the information provided under paragraph (1) of this subsection and approve the proposed use of funds before funds from the Fund may be loaned, granted, or invested in accordance with subsection (k) of this section.

(m) Funds appropriated to the Fund may not be loaned, granted, or invested for:

  (1) substituting for funds from other State or local programs for which a project may be eligible and sufficient resources exist;

  (2) projects which are not likely to attract or retain employment opportunities;

  (3) funding projects located outside the State;

  (4) construction or land acquisition by the Maryland Stadium Authority; or

  (5) funding for any sports activity or facility.

(n) The Department may approve changes to a transaction approved by the Legislative Policy Committee as long as the changes do not materially and adversely affect the overall position of the Department in the transaction or the economic development benefits to be derived by the State in the transaction.

(o)

  (1)

    (i) In this subsection the following words have the meanings indicated.

    (ii) "Financial assistance" means a grant, loan, or investment provided under this subsection that exceeds $100,000.

    (iii) "Political subdivision" includes an agency or other instrumentality of the political subdivision.

  (2) This subsection does not apply to financial assistance used solely for the purpose of acquiring real property or structures on real property.

  (3) With respect to financial assistance under this section to a political subdivision:

    (i) if the political subdivision has a program for promoting procurement opportunities among minority businesses that is acceptable to the Department, the political subdivision shall apply the requirements of that program to the procurement of goods or services made with the proceeds from the financial assistance; but

    (ii) if the political subdivision does not have a program that is acceptable to the Department under item (i) of this paragraph, the political subdivision is subject to paragraph (4) of this subsection.

  (4)

    (i) In this paragraph, "minority business enterprise" has the meaning stated in Sec. 14-301 of the State Finance and Procurement Article.

    (ii) With respect to financial assistance under this section to an entity other than a political subdivision, the entity shall agree to include in the agreement providing the financial assistance a provision acceptable to the Department that would encourage the procurement from minority business enterprises of goods or services purchased with the proceeds from the financial assistance.

    (iii) In negotiating the provision required under subparagraph (ii) of this paragraph, the Department shall take into account relevant factors, including:

      (1) the intended use of the proceeds from the financial assistance; and

      (2) the feasibility of obtaining the required goods or services from minority business enterprises.

  (5) The Department may require that a recipient of financial assistance under this section submit to the Department a list, or an updated list, of the minority business enterprises from which goods or services were procured and the nature and dollar amount of the goods or services.

---

Md. Code Ann., Econ. Dev. (as displayed at mgaleg.maryland.gov, October 16, 2026)