For the purposes stated in § 21–402 of this subtitle, a municipality may: by ordinance or resolution, establish special taxing districts; and impose ad valorem taxes on all real and personal property in a special taxing district at a rate sufficient to provide adequate annual revenues to pay: the principal of and interest on any bonds or other obligations of the municipality issued for the purpose for which the special taxing district was established, as the principal and interest become due; and the costs of operating and maintaining facilities and activities for which the special taxing district was established.

The purpose of the authority granted under this part is to: finance the establishment, acquisition, design, construction, alteration, improvement, extension, operation, and maintenance of: adequate storm drainage systems; public parking facilities; pedestrian malls; street and area lighting; and ride sharing and bus systems; finance the capital and operating costs to enhance police, fire protection, and rescue services; and provide financing for commercial district management authorities established under § 5–214(b) of this article.

In a special taxing district established for financing a ride sharing or bus system, a municipality shall impose a combination of development impact fees and ad valorem taxes to finance, wholly or partly, the capital and operating costs of the ride sharing or bus system.

Ad valorem taxes imposed under this part shall be imposed in the same manner, on the same assessments, for the same period, and as of the same date of finality as required for municipal property tax purposes in the special taxing district.

In this part the following words have the meanings indicated. “Bond” means a revenue bond, note, or other similar instrument issued by a municipality in accordance with this part. “Cost” includes the cost of: construction, reconstruction, and renovation; acquisition of structures, real or personal property, rights, rights–of–way, franchises, easements, and interests acquired or to be acquired by the Maryland Economic Development Corporation, the State, a unit or political subdivision of the State, or another governmental unit having jurisdiction over the infrastructure improvement; machinery and equipment, including machinery and equipment needed to expand or enhance municipal services to a special taxing district; financing charges and interest before and during construction and, if the municipality considers it advisable, for a limited period after completion of the construction; interest and reserves for principal and interest, including the cost of municipal bond insurance and any other type of financial guaranty and costs of issuance; extensions, enlargements, additions, and improvements; architectural, engineering, financial, and legal services; plans, specifications, studies, surveys, and estimates of costs and revenues; administrative expenses necessary or incident in determining to proceed with infrastructure improvements; and other expenses necessary or incident to acquiring, constructing, and financing infrastructure improvements. “MEDCO obligation” means any debt instrument that the Maryland Economic Development Corporation issues for the purposes stated in § 21–410(a)(2) of this subtitle. “State hospital redevelopment” means any combination of private or public commercial, residential, or recreational uses, improvements, and facilities that: is part of a comprehensive coordinated development plan or strategy involving property that: was occupied formerly by a State facility, as defined in § 10–101 of the Health – General Article, or a State residential center, as defined in § 7–101 of the Health – General Article; or is adjacent or reasonably proximate to property that was occupied formerly by a State facility, as defined in § 10–101 of the Health – General Article, or a State residential center, as defined in § 7–101 of the Health – General Article; in accordance with design development principles, maximizes use of the property by those constituencies it is intended to serve; and is designated as a State hospital redevelopment by: the Sustainable Growth Subcabinet established under § 9–1406 of the State Government Article; and the local government or multicounty agency with land use and planning responsibility for the relevant area. “Transit–oriented development” has the meaning stated in § 7–101 of the Transportation Article.

This part is self–executing and does not require a municipality to amend its charter to exercise the powers granted under this part. The powers granted under this part: are supplemental to any power granted by another law; and do not limit any other power. This part is necessary for the welfare of the State and its residents and shall be liberally construed to effect the purposes stated in § 21–410(a) of this subtitle.

For any purpose stated in § 21–410(a)(1) of this subtitle, a municipality may: establish a special taxing district; impose ad valorem or special taxes; and issue bonds. For any purpose stated in § 21–410(a)(2) of this subtitle, a municipality may: establish special taxing districts; impose ad valorem or special taxes; and pledge funds under an agreement to: secure payment on MEDCO obligations; pay the costs of infrastructure improvements located in or supporting a transit–oriented development or a State hospital redevelopment; and pay the costs of operating and maintaining infrastructure improvements located in or supporting a transit–oriented development or a State hospital redevelopment. An agreement pledging funds as described in paragraph (1)(iii) of this subsection shall: be authorized by an ordinance or resolution of the municipality; be in writing; be executed on behalf of the municipality making the pledge, the Maryland Economic Development Corporation, and any other person or entity that the governing body of the municipality determines; and benefit, and be enforceable on behalf of, the holders of any MEDCO obligation secured by the agreement. Notwithstanding any other provision of law, a municipality may establish a special taxing district, issue bonds, or impose an ad valorem or special tax under this part only if a request to the municipality is made by both: the owners of at least two–thirds of the assessed valuation of the real property located in the special taxing district; and at least two–thirds of the owners of the real property located in the special taxing district. For purposes of paragraph (1)(ii) of this subsection: multiple owners of a single parcel are treated as a single owner; and a single owner of multiple parcels is treated as one owner.

The purpose of the authority granted under this part is to: finance, refinance, or reimburse the cost of establishing, acquiring, designing, constructing, altering, or extending adequate infrastructure improvements as necessary for the development and use of land in any defined geographic region in the municipality, including storm drainage systems, sewers, water systems, roads, bridges, culverts, tunnels, sidewalks, lighting, parking, parks and recreation facilities, libraries, and schools; and provide a source of funding for payment of costs of: infrastructure improvements located in or supporting a transit–oriented development or a State hospital redevelopment; and operation and maintenance of infrastructure improvements located in or supporting a transit–oriented development or a State hospital redevelopment. An infrastructure improvement financed under subsection (a)(1) of this section may be located: in the special taxing district; in the municipality, outside the special taxing district if the infrastructure improvement is reasonably related to other infrastructure improvements in the special taxing district; or outside the municipality if: the infrastructure improvement is reasonably related to other infrastructure improvements in the special taxing district; and notice is given to the governmental unit having jurisdiction over the infrastructure improvement. For the purposes of this part and any authority granted by this part, a sustainable community, as defined in § 6–201 of the Housing and Community Development Article, shall be considered the same as a transit–oriented development.

Unless otherwise provided in the charter, bylaws, or code of a municipality, before the governing body of a municipality enacts an ordinance or a resolution that establishes a special taxing district, authorizes the issuance of bonds, or imposes ad valorem or special taxes under this part, the governing body shall: hold a public hearing; and give notice of the public hearing in a newspaper of general circulation in the municipality at least 10 days before the date of the hearing.

By resolution, the governing body of a municipality: may designate an area as a special taxing district; and shall create a special fund with respect to the special taxing district. A resolution creating a special fund under subsection (a) of this section shall: pledge to the special fund the proceeds of the ad valorem or special tax to be imposed as provided under § 21–414 of this subtitle; and require that the proceeds from the tax be paid into the special fund.

If no bonds authorized by this part are outstanding with respect to a special taxing district, the governing body of the municipality may use money in the special fund for: any purpose specified in this part; paying debt service on bonds to be issued later; payment or reimbursement of debt service that the municipality is obligated under a general or limited obligation to pay, or has paid, on MEDCO obligations or any bond, note, or other similar instrument issued by the State or by any unit or political subdivision of the State, the proceeds of which were used for any purpose specified in this part; or payment to the municipality to provide money for any legal purpose as determined by the governing body of the municipality.

The governing body of a municipality may provide for the imposition of an ad valorem or special tax on all real and personal property in a special taxing district at a rate or amount designed to provide adequate revenue: to pay the principal of, interest on, and any redemption premium on any bonds; to replenish any debt service reserve fund; for any other purpose related to the ongoing expenses of or security for bonds; to pay costs of infrastructure improvements located in or supporting a transit–oriented development or a State hospital redevelopment; pay costs of operating and maintaining infrastructure improvements located in or supporting a transit–oriented development or a State hospital redevelopment; or to secure payment by the municipality of its obligations under an agreement described in § 21–409(b) of this subtitle. Ad valorem taxes under this part shall be imposed in the same manner, on the same assessments, for the same period, and as of the same date of finality as required for municipal property taxes in the special taxing district. As an alternative to imposing ad valorem taxes under this part, the governing body of a municipality may impose special taxes in accordance with this subsection on property in a special taxing district. In determining the basis for and amount of a special tax, the cost of an improvement may be calculated and imposed: equally per front foot, lot, parcel, dwelling unit, or square foot; according to the value of the property, with or without regard to improvements on the property; or in any other reasonable manner that results in a fair allocation of the cost of the infrastructure improvements. The governing body of a municipality may enact an ordinance or resolution for: the maximum amount of a special tax to be imposed on any parcel; the tax year or other date after which further special taxes under this part may not be imposed on a parcel; and whether, and the circumstances under which, a special tax on a parcel may be increased because of delinquency or default by the owner of that parcel or by the owner of any other parcel. By ordinance or resolution, the governing body of a municipality may establish procedures allowing for the prepayment of special taxes under this part. A special tax imposed under this part shall: unless otherwise provided in an ordinance or a resolution, be collected and secured in the same manner as general ad valorem taxes; and in the case of delinquency, be subject to the same penalties, procedure, sale, and lien priority as general ad valorem taxes.

A special taxing district established under this part shall be terminated if: no bonds authorized by this part are outstanding with respect to the special taxing district; no MEDCO obligations to which a municipality has pledged revenues under this part are outstanding with respect to the special taxing district; and the governing body of the municipality determines not to use money in the special fund for payment of costs of: infrastructure improvements located in or supporting a transit–oriented development or a State hospital redevelopment; or operating and maintaining infrastructure improvements located in or supporting a transit–oriented development or a State hospital redevelopment. Any money remaining in the special fund on the date of termination of the special taxing district may be paid to the general fund of the municipality.

The special fund and any sinking fund established by a municipality under this part are subject to § 19–102 of this article. The proceeds of bonds issued under this part are subject to §§ 17–101 and 17–102 of this article.

Notwithstanding any other law, a municipality may issue bonds as provided under this part for the purposes stated in § 21–410(a)(1) of this subtitle. To issue bonds under this part, the governing body of a municipality shall adopt an ordinance or resolution that: describes the proposed undertaking; states: that the governing body has complied with §§ 21–412 and 21–414 of this subtitle; the maximum principal amount of bonds to be issued; and the maximum rate of interest for the bonds; and establishes a covenant to impose ad valorem or special taxes on all real and personal property in the special taxing district at a rate or in an amount sufficient to provide for the payment of the principal of and interest on the bonds in each year that the bonds are outstanding. For bonds to be issued to finance the proposed undertaking, the ordinance or resolution may specify: the principal amount; the rate of interest; the manner and terms of sale; the time of execution, issuance, and delivery; the form, purpose, and denominations; the manner in which and the times and places at which the principal of and interest on the bonds shall be paid; conditions for payment of principal of and interest on the bonds before maturity; or other provisions consistent with this part that the governing body of the municipality determines are necessary or desirable. The ordinance or resolution may specify the items listed in paragraph (1) of this subsection or may authorize: the municipality’s finance board or other appropriate financial officer to specify those items by resolution; or the municipality’s chief executive officer to specify those items by executive order. The following may not be subject to a referendum because of any State or local law: an ordinance or a resolution authorizing the bonds; an ordinance, a resolution, or an executive order passed or adopted in furtherance of the ordinance or resolution authorizing the bonds; the bonds; the designation of a special taxing district; or the imposition of ad valorem or special taxes.

A bond issued under this part: may be in bearer form or coupon form; may be registrable as to principal alone or as to both principal and interest; and is a security under § 8–102 of the Commercial Law Article, whether the bond is one of a class or series or is divisible into a class or series of instruments. A bond shall be signed manually or in facsimile by the chief executive officer of the municipality. The clerk or other similar administrative officer of the municipality shall attest to and affix the seal of the municipality to each bond. An officer’s signature or countersignature on a bond remains valid if the officer ceases to be an officer before delivery of the bond. A bond shall mature not later than 30 years after the date of issuance. A municipality may sell bonds: at a public or private sale; and in any manner and on any terms that the governing body of the municipality considers best. A contract to acquire property may provide that payment shall be made in bonds. Bonds are exempt from §§ 19–205 and 19–206 of this article.

Bonds issued under this part are securities: that may be deposited with and received by a unit of the State or a political subdivision for any purpose for which the deposit of bonds or obligations of the State is authorized by law; and in which any of the following persons or entities may invest money: an officer or a unit of the State or a political subdivision of the State; a bank, a trust company, a savings and loan association, or an investment company; an insurance company; and a personal representative, trustee, or other fiduciary.

Bonds are payable from the special fund required under § 21–412 of this subtitle. The governing body of a municipality that issues bonds under this part may: establish a sinking fund; establish a debt service reserve fund; pledge other assets and revenues toward the payment of the principal of and interest on the bonds; or provide for municipal bond insurance or any other financial guaranty of the bonds.

Bond proceeds shall be used only to pay the cost of infrastructure improvements, including: the cost of establishing, acquiring, designing, constructing, extending, or altering infrastructure improvements; the cost of issuing bonds; payment of the principal of and interest on loans, money advances, or indebtedness incurred by the municipality for any purpose stated in § 21–410(a) of this subtitle, including refunding of bonds previously issued; and funding of a debt service reserve fund or payment of interest before, during, or for a limited period of time after constructing the infrastructure improvements.

The principal amount of bonds, interest payable on bonds, the transfer of bonds, and any income from bonds, including profit made in the sale or transfer of bonds, are exempt from State and local taxes.