In this subtitle the following words have the meanings indicated. “Area” means a geographic area in one or more political subdivisions in the State described by a closed perimeter boundary. “Business entity” means a person that operates or conducts a trade or business. “Enterprise zone” means an area: that meets the requirements of § 5–704(a) of this subtitle and is designated as an enterprise zone by the Secretary under § 5–704(b) of this subtitle; designated as a transit–oriented development under § 7–101 of the Transportation Article; that is served by a rail transit station that receives at least hourly service on average from 8:00 a.m. until 6:00 p.m. Monday through Friday; and designated as an enterprise zone in accordance with § 5–709 of this subtitle; designated as an enterprise zone by the United States government under 42 U.S.C. §§ 11501 through 11505; or designated as an empowerment zone or enterprise community by the United States government under 26 U.S.C. §§ 1391 through 1397F. “Focus area” means an area that meets the requirements of § 5-706 of this subtitle and is designated as a focus area by the Secretary under § 5-706 of this subtitle. “Political subdivision” means a county or municipal corporation. “Submission date” means April 15 or October 15.

The purpose of the enterprise zones authorized under this subtitle is to attract, retain, and encourage commercial development in economically distressed areas of the State, in partnership with political subdivisions, by incentivizing capital investment and job creation through real property and income tax credits. Subject to § 9–103 of the Tax – Property Article, a business entity that owns, operates, develops, constructs, or rehabilitates property intended for use primarily as single or multifamily residential property located in an enterprise zone may not benefit from an incentive or initiative under this subtitle.

The following political subdivisions may apply to the Secretary to designate an enterprise zone: a political subdivision for an area within that political subdivision; with the prior consent of the municipal corporation, a county on behalf of a municipal corporation for an area in the municipal corporation; or two or more political subdivisions jointly for an area astride their common boundaries. The application shall: be in the form and manner and contain the information that the Secretary requires by regulation; contain sufficient information to allow the Secretary to determine if the proposed enterprise zone meets the criteria in § 5-704 of this subtitle; be submitted for a political subdivision by its chief elected officer, or if none, its governing body; state whether the political subdivision has examined the feasibility of creating educational or training opportunities for employers and employees of business entities located or to be located in the proposed enterprise zone; and state the standards established by the political subdivision that a business entity shall meet before receiving the incentives and initiatives under § 5-707 of this subtitle.

The Secretary may designate an area as an enterprise zone only if the area: is in a priority funding area or in a qualified opportunity zone under § 1400Z–1 of the Internal Revenue Code in Allegany County, Garrett County, Somerset County, or Wicomico County or meets an exception under Title 5, Subtitle 7B of the State Finance and Procurement Article; and satisfies at least one of the requirements specified in paragraph (2) of this subsection. An area may be designated as an enterprise zone if: the average rate of unemployment in the area, or within a reasonable proximity to the area but in the same county, for the most recent 18–month period for which data are available is at least 150% of the greater of the average rate of unemployment in either the State or the United States during that period; the population in the area, or within a reasonable proximity to the area but in the same county, qualifies the area as a low–income poverty area; at least 70% of the families in the area, or within a reasonable proximity to the area but in the same county, have incomes that are less than 80% of the median family income in the political subdivision that contains the area; or the population in the area, or within a reasonable proximity to the area but in the same county, decreased by 10% between the most recent two censuses, and the political subdivision can demonstrate to the Secretary’s satisfaction that: chronic abandonment or demolition of property is occurring in the area; or substantial property tax arrearages exist in the area. In determining if an area meets the requirements of this subsection, the Secretary may consider the most recent census data provided by the United States Bureau of the Census or any other reliable data that is acceptable to the Secretary. Before considering data other than the most recent census in making a determination under paragraph (2)(ii) of this subsection, the Secretary shall adopt regulations specifying alternative data that are satisfactory to the Secretary. The Secretary: shall adopt regulations governing the evaluation and prioritization of applications for the designation of new enterprise zones under this section and the expansion of existing enterprise zones under § 5–705 of this subtitle; and may adopt regulations necessary and appropriate to carry out this subtitle. Before designating an enterprise zone, the Secretary shall consult with the appropriate advisors. Within 60 days after a submission date, the Secretary may designate one or more enterprise zones from among the areas described in the applications timely submitted. The designation of an area as an enterprise zone is effective for 10 years. The Secretary may not designate more than six enterprise zones in a calendar year. A county may not receive more than two enterprise zones in a calendar year. The designation of the Secretary is final. At any time, a political subdivision may reapply to the Secretary to designate as an enterprise zone an area that is not designated.

A political subdivision may apply to the Secretary to expand an existing enterprise zone in the same manner as the political subdivision would apply to designate a new enterprise zone. The Secretary may grant an expansion of an enterprise zone into an area that meets the requirements of § 5–704 of this subtitle. For purposes of § 5–704(b) of this subtitle, an expansion of an enterprise zone that does not exceed 25% of the existing geographic area of the enterprise zone does not count towards the limit on the number of enterprise zones that: the Secretary may designate in a calendar year; or a county may receive in a calendar year. The Secretary may grant one extraordinary expansion of an enterprise zone in the State each calendar year for an area that: meets the requirements of § 5–704 of this subtitle; and in the determination of the Secretary, has suffered a significant loss of economic base or merits inclusion in an enterprise zone for a compelling economic reason. For purposes of § 5–704(b) of this subtitle, an extraordinary expansion of an enterprise zone does not count towards the limit on the number of enterprise zones that: the Secretary may designate in a calendar year; or a county may receive in a calendar year.

A political subdivision may request the Secretary to designate all or part of an enterprise zone as a focus area for the lesser of: 5 years; or the remainder of the 10-year term of the applicable enterprise zone. The request may be made on or before a submission date when the political subdivision applies for the designation of a new enterprise zone or after the Secretary has designated an enterprise zone. The Secretary may grant the request if the area is located in an enterprise zone and meets at least three of the following criteria: the average unemployment rate in the area, or within a reasonable proximity to the area but in the same county, for the most recent 18-month period for which data are available is at least 150% of the greater of the average rate of unemployment in either the State or the United States during that same period; the population in the area, or within a reasonable proximity to the area but in the same county, has an incidence of poverty that is at least 150% of the national average; the crime rate in the area, or within a reasonable proximity to the area but in the same county, is at least 150% of the crime rate in the political subdivision where the area is located; the percentage of substandard housing in the area, or within a reasonable proximity to the area but in the same county, is at least 200% of the percentage of housing units in the State that are substandard, according to data from the United States Bureau of the Census or other State or federal government data the Secretary considers appropriate; or at least 20% of the square footage of commercial property in the area, or within a reasonable proximity to the area but within the same county, is vacant, according to data from the United States Bureau of the Census or other State or federal government data the Secretary considers appropriate.

To the extent provided for in this section, a business entity is entitled to: the special property tax credit in § 9–103 of the Tax – Property Article; the income tax credits in § 10–702 of the Tax – General Article; and consideration for financial assistance from programs in Subtitle 1 of this title. A business entity that moves into or locates in an enterprise zone on or after the date that the enterprise zone is designated under § 5–704 of this subtitle may benefit from the incentives and initiatives in this section if: the business entity meets the requirements and conditions of the Code section applicable to each incentive or initiative; the respective political subdivision certifies that the business entity has complied with the standards that the subdivision submitted under § 5–703(b)(5) of this subtitle; the business entity creates new or additional jobs or makes a capital investment to qualify for the property tax credit under § 9–103 of the Tax – Property Article and the income tax credits under § 10–702 of the Tax – General Article; and in considering whether the business entity qualifies for financial assistance from the programs in Subtitle 1 of this title, the Secretary determines that the business entity will create new or additional jobs. The incentives and initiatives provided for in this section are not available to a business entity that: was in an enterprise zone before the date that the enterprise zone is designated, except for a capital investment or expansion of its labor force that occurs on or after the enterprise zone is designated; or is located in an enterprise zone that was designated under federal law unless the Secretary and the Board of Public Works consent to the designation. Except as provided in § 10–702 of the Tax – General Article and § 9–103 of the Tax – Property Article, the incentives and initiatives set forth in this section are available for 10 years after the date that an area is designated an enterprise zone. A law enacted after the enactment of this section that eliminates or reduces the benefits available to a business entity under this section does not apply to a business entity that was in an enterprise zone before the effective date of the law. Notwithstanding subsection (d) of this section, except for a business entity certified to receive a property tax credit under § 9–103 of the Tax – Property Article for a tax year beginning before July 1, 2008, a business entity located in an enterprise zone may not receive the incentives and initiatives set forth in subsection (a)(1) and (2) of this section if the entity is located on land or within improvements owned by the federal government, the State, a county, or a municipal corporation unless the business entity has first utilized all applicable property tax exemptions under Title 7 of the Tax – Property Article, including entering into any available payment in lieu of tax agreement. Subparagraph (i) of this paragraph does not apply to a business entity leasing land or improvements owned by the Maryland Economic Development Corporation or the Maryland Department of Transportation. Notwithstanding subsection (d) of this section, a business entity located in a BRAC Revitalization and Incentive Zone established under Subtitle 13 of this title may not receive the property tax credit under § 9–103 of the Tax – Property Article unless: the business entity qualified for the property tax credit before the date that the BRAC Revitalization and Incentive Zone is designated; or the political subdivision where the business entity is located expressly grants the property tax credit to the business entity.

An area that is designated an enterprize zone, empowerment zone, or enterprise community under federal law shall automatically be designated as an enterprise zone notwithstanding the limit on the number of enterprise zones that the Secretary may designate under § 5-704(b) of this subtitle. An application by a political subdivision and the designation by the Secretary of an area as an enterprise zone constitutes the State approval that may be required to designate an area as an enterprise zone under federal law.

Subject to paragraph (2) of this subsection, an area designated as a transit–oriented development under § 7–101 of the Transportation Article before October 1, 2026, that is served by a rail transit station that receives at least hourly service on average from 8:00 a.m. until 6:00 p.m. Monday through Friday is eligible to automatically be designated as an enterprise zone under the provisions of this subtitle notwithstanding the limit on the number of enterprise zones that the Secretary may designate under § 5–704(b) of this subtitle. The local government or multicounty agency with land use and planning responsibility for the area that requested the area be designated as a transit–oriented development may elect, by ordinance, resolution, or similar action, to designate the area as an enterprise zone. Subject to paragraph (2) of this subsection, an area designated as a transit–oriented development under § 7–101 of the Transportation Article on or after October 1, 2026, that is served by a rail transit station that receives at least hourly service on average from 8:00 a.m. until 6:00 p.m. Monday through Friday shall automatically be designated as an enterprise zone notwithstanding the limit on the number of enterprise zones that the Secretary may designate under § 5–704(b) of this subtitle. At the time a transit–oriented development area is designated, the local government or multicounty agency with land use and planning responsibility for the area that requested the area be designated as a transit–oriented development may elect not to designate the area as an enterprise zone. An election made under subparagraph (i) of this paragraph shall be done, in writing, to the Sustainable Growth Subcabinet established under § 9–1403 of the State Government Article.

In accordance with § 2.5–109 of this article, the Department shall submit a report on the effectiveness of the tax credits provided under § 5–707(b) of this subtitle. On or before September 15 each year, the State Department of Assessments and Taxation shall submit to the Department a report that includes the following information for the immediately preceding taxable year: the number of properties claiming a property tax credit under § 9–103 of the Tax – Property Article calculated in accordance with § 9–103(d)(1) of the Tax – Property Article; the number of properties claiming a property tax credit under § 9–103 of the Tax – Property Article calculated in accordance with § 9–103(d)(4) of the Tax – Property Article; the number of properties newly certified as qualified properties eligible for the property tax credit under § 9–103 of the Tax – Property Article; and for each taxpayer claiming or receiving a property tax credit under § 9–103 of the Tax – Property article: the name of the taxpayer; the location of the qualified property for which the credit was claimed; and the amount of tax savings received by each qualified property. On or before September 15 each year, the Comptroller shall submit to the Department a report that includes the following information for the immediately preceding taxable year: the name and address of each business entity that claimed an income tax credit under § 10–702 of the Tax – General Article; the business activity code or North American Industry Classification System (NAICS) code of the business entity; the number of qualified employees and focus area employees employed by the business entity; the number of economically disadvantaged individuals employed by the business entity and the number of years for which those economically disadvantaged individuals have been employed by the business entity; and the total amount of the income tax credit claimed by the business entity. On or before September 15 each year, each county within which an enterprise zone is located shall submit to the Department a detailed report on each enterprise zone in the county to assist the Department in the assessment required under subsection (a) of this section. The county shall include in the report required under subparagraph (i) of this paragraph the following information for the immediately preceding fiscal year: the number of properties newly certified as qualified properties; notable examples of redevelopment or new businesses relocating or expanding in the enterprise zone due to the tax credits provided under this subtitle; and a description of future economic development projects that might claim a tax credit provided under this subtitle, including with respect to each project: whether the project is located within a focus area; whether the project may qualify for a credit under this subtitle against the tax imposed on real property, personal property, or income; and anticipated capital or personal property expenditures for the project. If a county fails to provide the report required under paragraph (1) of this subsection, the Department shall notify the county that the report is due. If, after the Department has provided a county the notice described under subparagraph (i) of this paragraph, the county fails to promptly provide the overdue report, the Secretary may not designate a new enterprise zone in the county or grant the expansion of an existing enterprise zone in the county until the report is received by the Department. The Department shall develop formal metrics and a framework for analyzing: the cost–effectiveness of each enterprise zone; and the effectiveness of each enterprise zone in attracting businesses and increasing employment.