Title 5. State Planning — Subtitle 7B. Priority Funding Areas
Statutes in effect as of October 1, 2026.
Md. Code Ann., State Fin. & Proc. § 5-7B-01 (2026)
Title 5. State Planning
Subtitle 7B. Priority Funding Areas
§ 5–7B-01LinkCopy Citation
(a)
In this subtitle the following words have the meanings indicated.
(b)
“Funding” includes any form of assurance, guarantee, grant payment, credit, tax credit, or other assistance, including a loan, loan guarantee, or reduction in the principal obligation of, or rate of interest payable on, a loan or a portion of a loan.
(c)
(1)
“Growth–related project” means only the items set forth below:
(i)
any major capital project as defined in § 2–103.1(a)(4) of the Transportation Article, except existing transportation facilities projects as defined in § 4–101(h) of the Transportation Article, project planning as defined in § 8–610(i) of the Transportation Article, or initial project planning as defined in § 8–610(e) of the Transportation Article;
(ii)
funding by the Department of Housing and Community Development for:
(1)
construction or purchase of newly constructed single family homes or purchase of loans for newly constructed single family homes under Title 4, Subtitle 2, Subtitle 3, or Subtitle 8 of the Housing and Community Development Article;
(2)
acquisition or construction of newly constructed multifamily rental housing under Title 4, Subtitle 2, Subtitle 4, or Subtitle 15 of the Housing and Community Development Article; or
(3)
State–funded neighborhood revitalization projects under Title 6 of the Housing and Community Development Article;
(iii)
funding by the Department of Commerce under any of the following:
(1)
the Maryland Industrial Development Financing Authority, authorized under Title 5, Subtitle 4 of the Economic Development Article;
(2)
the Maryland Small Business Development Financing Authority, authorized under Title 5, Subtitle 5 of the Economic Development Article;
(3)
the former Maryland Energy Financing Act, authorized under former Article 83A, Title 6, Subtitle 4 of the Code, succeeded by the Maryland Industrial Development Financing Authority;
(4)
the Economic Development Opportunities Program Fund, authorized under § 7–314 of this article;
(5)
the former Maryland Competitive Advantage Financing Fund, authorized under former Article 83A, Title 5, Subtitle 13 of the Code; and
(6)
the Maryland Economic Development Assistance Authority and Fund, authorized under Title 5, Subtitle 3 of the Economic Development Article;
(iv)
funding by the Department of the Environment, for any project under:
(1)
§§ 9–1601 through 9–1605 (Water Quality Revolving Loan Fund) of the Environment Article except for funding nonpoint source pollution projects;
(2)
§§ 9–420 through 9–426 (Water Supply Financial Assistance Program) of the Environment Article; and
(3)
the supplemental assistance program authorized under Title 9, Subtitle 3, Part VI of the Environment Article; and
(v)
except as provided in paragraph (2) of this subsection, procurement or funding of projects by the Department of General Services for:
(1)
leases of property by the State governed by §§ 4–318 through 4–321 of this article; and
(2)
land acquisition governed by §§ 4–411 through 4–416 of this article.
(2)
“Growth–related project” does not include:
(i)
projects by the Department of General Services for maintenance, repair, additions, or renovations to existing facilities, acquisition of land for telecommunications towers, parks, conservation and open space, and acquisition of agricultural, conservation, and historic easements;
(ii)
funding by the Department of Housing and Community Development for any project financed with federal money used to purchase or rehabilitate existing single or multifamily housing or project financed with the proceeds of revenue bonds issued by the Community Development Administration if:
(1)
the Secretary of Housing and Community Development determines that application of this section:
(A)
conflicts with any provision of federal or State law applicable to the issuance or tax–exempt status of the bonds;
(B)
conflicts with any provision of any trust agreement between the Community Development Administration and any trustee; or
(C)
would otherwise prohibit financing of an existing project, or financing provided to cure or prevent any default under existing financing; or
(2)
the revenue bonds are issued under a transfer of the Maryland State ceiling to the Administration by a county under Title 13, Subtitle 8 of the Financial Institutions Article;
(iii)
acquisition of land by the Department of Natural Resources under Title 1, Subtitle 1 of the Natural Resources Article; or
(iv)
any other project, funding, or other State assistance not listed under paragraph (1) of this subsection.
(d)
“Limited peripheral development” means development that is contiguous to an existing community and does not increase the size of the existing community or village by more than 10% of the existing number of dwelling units.
(e)
“Locally designated growth area” means an area determined by the county to be suitable for development in compliance with Title 1, Subtitle 4 or Title 3 of the Land Use Article.
(f)
“Rural village” means a rural village, village center, or other unincorporated area that is primarily residential, including an area with historic qualities, that is located in an otherwise rural or agricultural area and for which new growth, if any, would derive primarily from in–fill development or limited peripheral expansion.
(g)
“Technical assistance” means the provision of advice, consultation, training, information, or design, or architectural, organizational, or management assistance.
Md. Code Ann., State Fin. & Proc. § 5-7B-02 (2026)
Title 5. State Planning
Subtitle 7B. Priority Funding Areas
§ 5–7B-02LinkCopy Citation
The following areas shall be considered priority funding areas under this subtitle:
(1)
a municipal corporation, including Baltimore City, except that:
(i)
those areas annexed by a municipal corporation after January 1, 1997 but before October 1, 2006 shall satisfy requirements relating to density and service by water and sewer set forth in § 5–7B–03 of this subtitle; and
(ii)
those areas annexed by a municipal corporation after September 30, 2006, shall satisfy all of the requirements set forth in § 5–7B–03 of this subtitle;
(2)
an enterprise zone as designated under Title 5, Subtitle 7 of the Economic Development Article, or by the United States government;
(3)
a certified heritage area as defined in §§ 13–1101 and 13–1111 of the Financial Institutions Article that is located within a locally designated growth area;
(4)
those areas of the State located between Interstate Highway 495 and the District of Columbia;
(5)
those areas of the State located between Interstate Highway 695 and Baltimore City; and
(6)
an area designated by the governing body of a county or municipal corporation under § 5–7B–03 of this subtitle.
Md. Code Ann., State Fin. & Proc. § 5-7B-03 (2026)
Title 5. State Planning
Subtitle 7B. Priority Funding Areas
§ 5–7B-03LinkCopy Citation
(a)
(1)
The governing body of a county or of a municipal corporation may designate priority funding areas as provided in this section.
(2)
The governing bodies of two or more adjoining counties, two or more municipal corporations, or any combination of adjoining counties and municipal corporations may designate, as provided in this section and in accordance with the regulations adopted by the Department of Planning, a priority funding area that combines two or more contiguous areas located in each of the local governments.
(b)
(1)
An area zoned or, if applicable, classified by January 1, 1997 principally for industrial use may be designated as a priority funding area.
(2)
An area zoned or, if applicable, classified after January 1, 1997, as industrial may be designated as a priority funding area if the area is served by a public or community sewer system.
(c)
(1)
An area where the principal uses of the area are for employment may be designated as a priority funding area if:
(i)
the area is served by public or community sewer systems; or
(ii)
public or community sewer systems are planned in the approved 10-year water and sewer plan.
(2)
An area zoned or, if applicable, classified after January 1, 1997 as industrial, or where the principal uses are for employment, in addition to meeting the criteria set forth in paragraph (1) of this subsection, shall be located within a locally designated growth area.
(d)
(1)
A community in existence prior to January 1, 1997 that is within a locally designated growth area may be designated as a priority funding area if the community:
(i)
is served by a public or community sewer system and in that part of the community designated by the local government for residential use or development:
(1)
there is an average density of at least 2.0 units per acre; or
(2)
if a portion of the community is undeveloped, the permitted average density is not less than 2.0 units per acre; or
(ii)
except as provided in paragraph (2) of this subsection, is served by a public or community water system and in that part of the community designated by the local government for residential use or development there is an average density of at least 2.0 units per acre.
(2)
(i)
The provisions of paragraph (1)(ii) of this subsection do not apply to mobile home parks or communities with less than 10 units.
(ii)
Funding for a growth-related project under paragraph (1)(ii) of this subsection is to be provided only if the project serves to maintain the character of the community and does not serve to increase the growth capacity of the community except for limited peripheral or in-fill development.
(3)
(i)
If an existing community receives a public or community sewer system, an area beyond the periphery of the developed portion of the existing community may be designated as a priority funding area if the development of the area beyond the periphery:
(1)
has a permitted average density of at least 3.5 units per acre; and
(2)
the area is served by a public or community sewer system.
(ii)
The Department of the Environment may provide funding for a sewer system in an existing community beyond the periphery of the developed portion of the community if the expansion has a permitted average density of at least 3.5 units per acre.
(e)
An area, other than an existing community under subsection (d) of this section, may be designated as a priority funding area if:
(1)
the area:
(i)
is within a locally designated growth area of the local government; and
(ii)
is planned to be served under the approved 10-year water and sewer plan;
(2)
the designation represents a long-term development policy for promoting an orderly expansion of growth and an efficient use of land and public services; and
(3)
in that part of the area designated by the local government for residential use or development, there is permitted an average density of not less than 3.5 units per acre.
(f)
(1)
A rural village may be designated as a priority funding area under this section if:
(i)
the village is designated in the county comprehensive plan as of July 1, 1998; and
(ii)
the boundary of the priority funding area is the periphery of the developed portion of the village as of July 1, 1998.
(2)
Funding for a growth-related project under this subtitle is to be provided only if the project serves to maintain the character of the community and does not serve to increase the growth capacity of the village except for limited peripheral or in-fill development.
(g)
The designation by a county, municipal corporation, or multiple local governments as provided in subsection (a)(2) of this section, of a priority funding area under this section shall be based on:
(1)
an analysis of the capacity of land areas available for development, including in-fill and redevelopment; and
(2)
an analysis of the land area needed to satisfy demand for development at densities consistent with the master plan.
(h)
For the purposes of this section, average density shall be calculated based on the total acreage of all parcels in the area for which the principal permitted use is residential, excluding land:
(1)
(i)
dedicated for public use by easement in perpetuity or fee acquisition; or
(ii)
dedicated recreational use;
(2)
subject to an agricultural easement under § 2-508 of the Agriculture Article;
(3)
subject to an agricultural easement under a county agricultural land preservation program certified under § 5-408 of this title;
(4)
used for cemetery purposes;
(5)
identified by a local government as:
(i)
(1)
streams and their buffers;
(2)
100-year flood plains;
(3)
habitats of threatened and endangered species; and
(4)
steep slopes; and
(ii)
on which development is prohibited by local law or ordinance; or
(6)
identified by a local government as delineated nontidal wetlands on which development is prohibited by State or local law or ordinance.
Md. Code Ann., State Fin. & Proc. § 5-7B-04 (2026)
Title 5. State Planning
Subtitle 7B. Priority Funding Areas
§ 5–7B-04LinkCopy Citation
(a)
Except as otherwise provided in this subtitle, beginning October 1, 1998, the State may not provide funding for a growth-related project if the project is not located within a priority funding area.
(b)
In a priority funding area established under § 5-7B-03(c) or (e) of this subtitle in which water and sewer service is planned, a commitment for funding for a growth-related project shall be contingent upon nonstate funding for planned water and sewer service moving forward in advance of or concurrent with the State funding.
(c)
(1)
A growth-related project may not be funded by the State in a municipal corporation exercising zoning authority unless the municipal corporation has first adopted residential development standards relating to public school adequacy. These standards shall be substantially similar to:
(i)
the State rated capacity standards established by the public school interagency committee on school construction; or
(ii)
the school capacity standards established in its county’s adequate public facilities ordinance.
(2)
The requirement contained in paragraph (1) of this subsection does not apply:
(i)
in a municipal corporation exercising zoning authority located in a county in which no adequate school capacity standards have been established by the county governing body; or
(ii)
to a residential development project where an impact fee has been paid or other monetary or nonmonetary contributions have been provided that defray the local cost of school construction attributable to the project.
(3)
After October 1, 1997, prior to establishing or changing the school capacity standards in a county’s adequate public facilities ordinance, the county shall confer with the governing bodies of the municipal corporations that exercise zoning authority located within the county.
(4)
For planning purposes, each county board of education shall annually provide to the county and each municipal corporation exercising zoning authority in the county:
(i)
a list of projected student enrollments for a 5-year period for each school serving students in or near that municipal corporation; and
(ii)
information relating to the student capacity of each school.
Md. Code Ann., State Fin. & Proc. § 5-7B-05 (2026)
Title 5. State Planning
Subtitle 7B. Priority Funding Areas
§ 5–7B-05LinkCopy Citation
(a)
(1)
The State may provide funding for a growth–related project not in a priority funding area if:
(i)
the Board of Public Works determines that extraordinary circumstances exist in accordance with the requirements of paragraph (2) of this subsection; or
(ii)
the Board of Public Works approves the project as a transportation project that meets the requirements of paragraph (3) of this subsection.
(2)
In order to determine that extraordinary circumstances exist under paragraph (1) of this subsection, the Board shall determine by a majority vote that:
(i)
the failure to fund the project in question creates an extreme inequity, hardship, or disadvantage that clearly outweighs the benefits from locating a project in a priority funding area; and
(ii)
there is no reasonable alternative for the project in a priority funding area in another location within the county or an adjacent county.
(3)
The Board of Public Works may approve a transportation project under paragraph (1)(ii) of this subsection if the transportation project:
(i)
maintains the existing transportation system, if the Department of Transportation and the Department of Planning determine the project does not serve to significantly increase highway capacity;
(ii)
serves to connect priority funding areas, if:
(1)
the Department of Transportation and the Department of Planning determine that adequate access control or other measures are in place to:
(A)
prevent development that is inconsistent with § 5–7A–01 of this title; and
(B)
maintain the viability of the project while concomitantly constraining development which potentially detracts from main street business areas; and
(2)
the Department of Transportation and the Department of Planning have first determined whether alternative transportation modes, such as mass transit and transportation demand management, provide a reasonable alternative to the project and that no reasonable alternative exists;
(iii)
has the sole purpose of providing control of access by the Department of Transportation along an existing highway corridor; or
(iv)
due to its operational or physical characteristics, must be located away from other development.
(b)
(1)
A request for approval by the Board under subsection (a) of this section may be made at the request of the governing body of the local jurisdiction in which the project is located or the Secretary with approval authority over the project.
(2)
When making a request to the Board of Public Works, the applicant shall:
(i)
identify the extraordinary circumstances that require State funds for the project; and
(ii)
demonstrate that no feasible alternatives exist to making an exception to the requirements of this subtitle.
(3)
The Board of Public Works, at its discretion, may require remedial actions to mitigate any negative impacts of the proposed project.
(c)
(1)
When a request is made to the Board of Public Works for an exception under this section, the Board of Public Works may request from the Department of Planning an advisory opinion on the request for the exception.
(2)
Upon receiving a request for an advisory opinion under this subsection, the Department, if requested by a member of the public, shall hold a public meeting to gather information relevant to the advisory opinion.
Md. Code Ann., State Fin. & Proc. § 5-7B-06 (2026)
Title 5. State Planning
Subtitle 7B. Priority Funding Areas
§ 5–7B-06LinkCopy Citation
(a)
The State may provide funding for a growth–related project not in a priority funding area without receiving approval from the Board of Public Works as provided under § 5–7B–05 of this subtitle for:
(1)
a project that is required to protect public health or safety;
(2)
a project involving federal funds, to the extent compliance with this subtitle would conflict or be inconsistent with federal law;
(3)
a growth–related project related to a commercial or industrial activity which, due to its operational or physical characteristics, shall be located away from other development, including:
(i)
a natural resource based industry;
(ii)
an industry relating to:
(1)
agricultural operations, as defined in § 7–101 of the Labor and Employment Article;
(2)
forestry activities; or
(3)
mineral extraction;
(iii)
an industry that is proximate to:
(1)
an airport facility;
(2)
a port facility;
(3)
a railroad facility;
(4)
a transit facility; or
(5)
a major highway interchange; or
(iv)
a tourism facility or museum that is required to be located away from other development due to necessary proximity to specific historic, natural, or cultural resources; or
(4)
a growth–related project involving funding for a project under:
(i)
§ 7–314 of this article;
(ii)
Title 5, Subtitle 3, Subtitle 4, or Subtitle 5 of the Economic Development Article; or
(iii)
Title 6, Subtitle 2 or Subtitle 3 of the Housing and Community Development Article.
(b)
A procedure for notification, review, and comment on exceptions proposed under this section shall be established jointly by the applicable State agency and the Department of Planning.
Md. Code Ann., State Fin. & Proc. § 5-7B-07 (2026)
Title 5. State Planning
Subtitle 7B. Priority Funding Areas
§ 5–7B-07LinkCopy Citation
(a)
It shall be the policy of the State that the emphasis of funding for public school construction projects shall be to target the rehabilitation of existing schools to ensure that facilities in established neighborhoods are of equal quality to new schools.
(b)
This section may not be construed to prohibit the provision of school construction funding outside a priority funding area.
(c)
The Interagency Commission on School Construction shall review and approve school funding projects.
Md. Code Ann., State Fin. & Proc. § 5-7B-08 (2026)
Title 5. State Planning
Subtitle 7B. Priority Funding Areas
§ 5–7B-08LinkCopy Citation
(a)
To be eligible for funding for growth-related projects, a local government or two or more county governments shall certify to the Department of Planning any area designated by the local government or county governments as a priority funding area under § 5-7B-03 of this subtitle, which shall be consistent with the local comprehensive plan and the criteria set forth in § 5-7B-03 of this subtitle.
(b)
Prior to certification of a priority funding area or areas, the local government or county governments may submit the proposed priority funding areas and any relevant information to the Department of Planning for:
(1)
technical assistance, review, and comment; and
(2)
the opportunity for public review.
(c)
Upon certification of a priority funding area, the local government or county governments shall provide to the Department of Planning all information necessary to demonstrate the precise location of the area, including a map of the area showing planning and zoning characteristics, and existing and planned water and sewer services as appropriate.
(d)
The Department of Planning, as appropriate, shall provide to each State agency that funds growth-related projects copies of maps illustrating:
(1)
priority funding areas certified by the local government or county governments; and
(2)
any comments by the Department of Planning on the areas certified.
(e)
Prior to funding a growth-related project, the State funding agency shall obtain from the affected local government or county governments a written statement that the proposed growth-related project is located within a certified priority funding area.
Md. Code Ann., State Fin. & Proc. § 5-7B-09 (2026)
Title 5. State Planning
Subtitle 7B. Priority Funding Areas
§ 5–7B-09LinkCopy Citation
(a)
(1)
In this section the following words have the meanings indicated.
(2)
“Infill development” means new development in a priority funding area on vacant, bypassed, and underutilized lands within existing developed areas.
(3)
“Smart neighborhood development” means a comprehensively planned, compact mixed use development within a priority funding area that integrates residential, commercial, open space, and public uses.
(b)
The Department of Planning shall:
(1)
establish a process for the review of projects by the appropriate State agencies and the Department of Planning for compliance with this subtitle;
(2)
provide to each State agency and unit of State government the location of priority funding areas; and
(3)
make available to each county, and to the public for review, copies of maps illustrating:
(i)
priority funding areas certified by the local governments; and
(ii)
any comments by the Department of Planning on the areas certified.
(c)
By October 1, 1998, the Department of Planning shall complete surveys of municipal, county, and State governments for infrastructure needs and shall maintain a list of needed projects that includes information relating to the financial capacity of the affected unit of government to undertake such projects.
(d)
Repealed.
(e)
The Department of Planning shall:
(1)
draft model land–use codes for infill development and smart neighborhood development;
(2)
draft guidelines to provide local governments with information on innovative planning and implementation techniques to encourage and facilitate infill development and smart neighborhood development;
(3)
circulate the models and guidelines to other State agencies and departments; and
(4)
work with local governments, State agencies, and departments to develop incentives to encourage the voluntary adoption and implementation by local governments of models and guidelines implementing the intent of the models and guidelines required to be developed by the Department of Planning under this section.
(f)
Each State agency subject to this subtitle shall report annually to the Department of Planning on the implementation of this subtitle in a form approved by the Department of Planning.
Md. Code Ann., State Fin. & Proc. § 5-7B-10 (2026)
Title 5. State Planning
Subtitle 7B. Priority Funding Areas
§ 5–7B-10LinkCopy Citation
(a)
This section may not be construed to create a private cause of action for any person or local government.
(b)
A decision to fund a project or not to fund a project as required under this subtitle shall not be subject to Title 10, Subtitle 2 (Administrative Procedure Act - Contested Cases) of the State Government Article.
(c)
This subtitle may not be construed to prevent an agency from providing technical assistance in an area that is not a priority funding area.