Chapter 07. Historic Revitalization Tax Credit Certifications
Regulation .01 Scope.LinkCopy Citation
This chapter establishes procedures for certification by the Director of the Maryland Historical Trust of the rehabilitation of a certified historic structure. Certification of the rehabilitation of a certified historic structure is an eligibility requirement for a taxpayer to claim a historic revitalization tax credit.
Regulation .02 Definitions.LinkCopy Citation
A.
In this chapter, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Act” means State Finance and Procurement Article, §5A-303, Annotated Code of Maryland.
(2)
“Affordable housing” means a housing project that has received an allocation of federal low-income housing tax credits by the Department of Housing and Community Development.
(3)
“Agricultural structure” means a certified historic structure that is used or ever was used to directly contribute to the production, conversion, processing, storage, sale, or management of agricultural products such as livestock, horses, poultry, crops, trees, shrubs, plants, other vegetation, or aquaculture.
(4)
“Business entity”:
(a)
Means a person, as defined in State Finance and Procurement Article, §1-101(d), Annotated Code of Maryland, who conducts or operates a trade or business in the State that is:
(i)
Registered to do business and in good standing with the Maryland State Department of Assessments and Taxation; and
(ii)
Subject to State income tax as defined in Tax-General Article, §10-101(n), Annotated Code of Maryland;
(b)
Means an organization conducting or operating a business in the State that is:
(i)
Registered to do business and in good standing with the Maryland State Department of Assessments and Taxation; and
(ii)
Exempt from taxation under §501(c)(3) of the federal Internal Revenue Code; and
(c)
Includes the governing body of a condominium or cooperative housing corporation.
(5)
“Certified historic structure” means a structure that is:
(a)
Located in the State;
(b)
Except as provided in §B(5)(c)(v) of this regulation, not owned by the State, a political subdivision of the State, or the federal government; and
(c)
One of the following:
(i)
Listed on the National Register of Historic Places;
(ii)
Designated as a historic property under local law and determined by the Director to be eligible for listing on the National Register of Historic Places;
(iii)
Located in a historic district listed on the National Register of Historic Places or in a local historic district that the Director determines is eligible for listing on the National Register of Historic Places, and certified by the Director as contributing to the significance of the district;
(iv)
Located in an area established as a certified heritage area under Financial Institutions Article, §13-1101, Annotated Code of Maryland, and certified by the Maryland Heritage Areas Authority as contributing to the significance of the certified heritage area; or
(v)
Located on property that is owned by the Department of Natural Resources or one of its units, occupied by a person under an agreement with the Department of Natural Resources under which the person pays for rehabilitation of the structure as a condition of occupancy, and either meets one of the criteria under §B(5)(c)(i)—(iv) of this regulation or is eligible to be listed in the National Register of Historic Places as determined by the Director.
(6)
“Certified rehabilitation” means the rehabilitation of a certified historic structure that the Director determines was completed in conformance with the Standards for Certified Historic Structure Rehabilitation.
(7)
“Common elements” means:
(a)
All of a condominium except for the condominium units within the condominium; or
(b)
All of a cooperative project except for the portions of the cooperative project that are leased, or are made available for lease, for exclusive occupancy by a stockholder or member of the cooperative housing corporation under a proprietary lease.
(8)
“Condominium” means property subject to the condominium regime established under Real Property Article, Title 11, Annotated Code of Maryland.
(9)
Condominium Unit.
(a)
“Condominium unit” means a three-dimensional space identified as a unit in a declaration and on a condominium plat recorded in accordance with Real Property Article, Title 11, Annotated Code of Maryland, and includes all improvements contained within the space.
(b)
Unless otherwise specified in the declaration or plat for the condominium, for a condominium created after July 1, 1981, “condominium unit” includes:
(i)
If walls, floors, or ceiling are designated as boundaries for the unit, all lath, furring, wallboard, plasterboard, plaster, paneling, tiles, wallpaper, paint, finished flooring, and any other materials constituting any part of the finished surfaces of the unit;
(ii)
If any chute, flue, duct, wire, conduit, or any other fixture lies partially within and partially outside the designated boundaries of the unit, any portion thereof serving only the unit; and
(iii)
All spaces, interior partitions, and other fixtures and improvements within the boundaries of the unit.
(10)
“Cooperative housing corporation” means a domestic or foreign corporation qualified in the State, either stock or nonstock, having only one class of stock or membership, in which each stockholder or member, by virtue of such ownership or membership, has an interest in a cooperative housing corporation, which interest is coupled with a possessory interest in real or personal property or both and evidenced by a membership certificate.
(11)
“Cooperative project” means all real and personal property in the State owned or leased by a cooperative housing corporation for the primary purpose of residential use.
(12)
“Director” means the Director of the Maryland Historical Trust.
(13)
“Governing body” means:
(a)
With respect to a condominium, the council of unit owners, board of directors, or any committee of the council of unit owners or board of directors of the condominium; or
(b)
With respect to a cooperative housing corporation, the board of directors or other entity established to govern the cooperative housing corporation.
(14)
“High performance building” means a building that:
(a)
Meets or exceeds the current version of the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) green building rating system gold rating; or
(b)
Achieves at least a comparable rating according to a nationally recognized, accepted, and appropriate numeric sustainable development rating system, guideline, or standard approved by the Secretaries of Budget and Management and General Services.
(15)
Historic Property.
(a)
“Historic property” means a district, site, building, structure, monument, or object significant to:
(i)
The prehistory or history of the State; or
(ii)
The terrestrial or underwater archeology, architecture, engineering, or culture of the State.
(b)
“Historic property” includes related artifacts, records, and remains.
(16)
“Level 1 opportunity zone project” means a project that qualifies for either the Small Commercial Tax Credit or the Competitive Commercial Tax Credit under Regulation .03 of this chapter and is completed by a qualified opportunity zone business if, at the time of the Part 3 application under Regulation .06 of this chapter, the applicant includes in the application:
(a)
The date of the qualified opportunity fund’s investment in the opportunity zone project and the amount of the investment;
(b)
The total project or business investment, including leverage;
(c)
The address and census tract for both the qualified opportunity zone business and the qualified opportunity fund; and
(d)
An impact report that includes:
(i)
Both qualitative and quantitative data on the qualified opportunity fund’s investment in the opportunity zone project; and
(ii)
The progress of the qualified opportunity fund’s investment.
(17)
“Level 2 opportunity zone project” means a project that qualifies for either the Small Commercial Tax Credit or the Competitive Commercial Tax Credit under Regulation .03 of this chapter and is completed by a qualified opportunity zone business if, at the time of the Part 3 application under Regulation .06 of this chapter, the applicant includes in the application:
(a)
The date of the qualified opportunity fund’s investment in the opportunity zone project and the amount of the investment;
(b)
The total project or business investment, including leverage;
(c)
The address and census tract for both the qualified opportunity zone business and the qualified opportunity fund;
(d)
An impact report that includes:
(i)
Both qualitative and quantitative data on the qualified opportunity fund’s investment in the opportunity zone project; and
(ii)
The progress of the qualified opportunity fund’s investment;
(e)
Information demonstrating that:
(i)
Accountability to residents of the communities within the qualified opportunity zone is maintained through representation on any governing or advisory board of the qualified opportunity zone business; or
(ii)
A community benefits agreement has been negotiated and agreed to by and between the qualified opportunity zone business and community groups or strategic industry partnerships, as defined by Labor and Employment Article, §11-701, Annotated Code of Maryland, within the qualified opportunity zone that specifies a range of community benefits that the qualified opportunity zone business agrees to provide as part of the development project; and
(f)
For an opportunity zone project:
(i)
Located within a municipal corporation, a resolution or letter of the municipal corporation that demonstrates the municipality’s approval of the provision within the municipality of the tax credit; or
(ii)
Not located within a municipal corporation, a resolution or letter of the county that demonstrates the county’s approval of the provision within the county of the tax credit.
(18)
“Local historic district” means a district that has been designated by a county or municipal corporation, or the Mayor and City Council of Baltimore, as historic in accordance with local authority under Land Use Article, §8-105, Annotated Code of Maryland.
(19)
“Opportunity zone project” means a certified rehabilitation that is located within a geographic area of the State designated and in effect as a qualified opportunity zone in the State under §1400Z-1 of the Internal Revenue Code.
(20)
“Political subdivision” means a county or municipal corporation of the State.
(21)
“Program” means the Historic Revitalization Tax Credit Program established under Regulation .03 of this chapter and authorized by the Act.
(22)
“Post-World War II structure” mean a certified historic structure that was built after December 31, 1944, but before January 1, 1970.
(23)
“Qualified opportunity fund” has the meaning stated in Economic Development Article, §6-1001, Annotated Code of Maryland.
(24)
“Qualified opportunity zone” has the meaning stated in Economic Development Article, §6-1001, Annotated Code of Maryland.
(25)
“Qualified opportunity zone business” has the meaning stated in Economic Development Article, §6-1001, Annotated Code of Maryland.
(26)
“Qualified rehabilitation expenditure” means any amount that is:
(a)
Properly chargeable to a capital account;
(b)
Expended on a certified rehabilitation:
(i)
Of a structure that is certified by the Director as a certified historic structure under Regulation .04 of this chapter (Part 1) by no later than the end of the calendar year during which the certified rehabilitation is completed;
(ii)
In compliance with a rehabilitation plan approved by the Director under Regulation .05 of this chapter (Part 2); and
(iii)
For work undertaken after approval by the Director of the rehabilitation plan under Part 2 and during a continuous 24-month period selected by the applicant; and
(c)
Not funded, financed, or otherwise reimbursed by any:
(i)
State or local grant;
(ii)
Grant made from the proceeds of tax-exempt bonds issued by either the State or a political subdivision of the State, or any instrumentality thereof;
(iii)
State tax credit other than the tax credit provided for under the Act; or
(iv)
Other grant, loan, loan guarantee, tax benefit, or insurance made or financed by the State or a State unit, as defined by State Government Article, §11-101, Annotated Code of Maryland, other than a loan that must be repaid at an interest rate that is greater than the interest rate on general obligation bonds issued by the State at the most recent bond sale prior to the time the loan is made.
(27)
“Rehabilitation” means the process of returning a structure to a state of utility, through repair or alteration, which makes possible an efficient use while preserving those portions and features of the structure and its site and environment which make the structure and its site and environment historically, architecturally, or culturally significant, and excludes alteration which is primarily remodeling, landscaping, or interior décor.
(28)
“Reserve Fund” means the Historic Revitalization Tax Credit Reserve Fund established under the Act.
(29)
“Secretary” means the Secretary of the Maryland Department of Planning.
(30)
“Single-family, owner-occupied residence” means:
(a)
A structure or a portion of a structure occupied by the owner and the owner’s immediate family as a primary or secondary residence; or
(b)
A structure that is described under §B(5)(c)(v) of this regulation; or
(c)
A residential unit in a cooperative project owned by or leased to a cooperative housing corporation, as defined in Corporations and Associations Article, §5-6B-01, Annotated Code of Maryland, and leased for exclusive occupancy to, and occupied by, a member of the corporation and the member’s immediate family under a proprietary lease.
(31)
“Standards for Certified Historic Structure Rehabilitation” means the Secretary of the Interior’s Standards for Rehabilitation, 36 CFR §§67.7 and 67.6(b)(1)—(7), as amended, or successor standards.
(32)
“State” means the State of Maryland.
(33)
“Trust” means the Maryland Historical Trust.
(34)
“Trust Account” means the Small Commercial Project Trust Account established within the Reserve Fund.
Regulation .03 The Historic Revitalization Tax Credit Program.LinkCopy Citation
A.
There is a Historic Revitalization Tax Credit Program in the Trust that includes three separate tax credits for certified rehabilitations known as:
(1)
The Homeowner Tax Credit;
(2)
The Small Commercial Tax Credit; and
(3)
The Competitive Commercial Tax Credit.
B.
To claim a Historic Revitalization Tax Credit, a business entity or individual shall:
(1)
Own or have site control of a certified historic structure as determined by the Part 1 application process under Regulation .04 of this chapter;
(2)
Have an approved Part 2 application under Regulation .05 of this chapter for the rehabilitation of the certified historic structure; and
(3)
Have the completed rehabilitation approved as a certified rehabilitation by the Part 3 application process under Regulation .06 of this chapter.
C.
The Homeowner Tax Credit.
(1)
A rehabilitation will qualify as a certified rehabilitation eligible for the Homeowner Tax Credit if:
(a)
The rehabilitation is of a certified historic structure that is a single-family, owner-occupied residence;
(b)
The rehabilitation includes only qualified rehabilitation expenditures; and
(c)
During a continuous 24-month period selected by the applicant that ends during the taxable year in which the applicant claims the tax credit, the qualified rehabilitation expenditures exceed $5,000.
(2)
The Homeowner Tax Credit shall equal the lesser of:
(a)
20 percent of the qualified rehabilitation expenditures incurred by the applicant; or
(b)
$50,000.
(3)
The Homeowner Tax Credit may be claimed only for the taxable year during which the certified rehabilitation was completed.
D.
The Small Commercial Tax Credit.
(1)
A rehabilitation will qualify as a certified rehabilitation eligible for the Small Commercial Tax Credit if:
(a)
The rehabilitation is of a certified historic structure;
(b)
The rehabilitation includes only qualified rehabilitation expenditures;
(c)
The qualified rehabilitation expenditures do not exceed $500,000;
(d)
The structure:
(i)
Is, immediately following completion of the rehabilitation, primarily used for commercial, income-producing purposes;
(ii)
After completion of the rehabilitation, is a residential unit located within a consecutive series of similar residential units that are arranged side by side in a row and has been sold by a developer who undertook the rehabilitation to an individual or individuals for residential use;
(iii)
Is either an agricultural structure or a post-World War II structure; or
(iv)
Is a condominium or cooperative project and the rehabilitation impacts only common elements of the condominium or cooperative project; and
(e)
During a continuous 24-month period selected by the applicant that ends during the taxable year in which the applicant claims the tax credit, the qualified rehabilitation expenditures exceed $5,000.
(2)
The Small Commercial Tax Credit:
(a)
Shall equal the sum of:
(i)
The lesser of 20 percent of the qualified rehabilitation expenditures either incurred by the applicant or as identified in the Part 2 application for the rehabilitation; and
(ii)
If applied for in the Part 2 application, an additional 5 percent of those qualified rehabilitation expenditures if the certified rehabilitation results in a project that qualifies as a level 1 opportunity zone project or an additional 7.5 percent of the qualified rehabilitation expenditures if the certified rehabilitation results in a project that qualifies as a level 2 opportunity zone project; and
(b)
May not exceed:
(i)
$50,000 for a project other than a project that qualifies as either a level 1 or level 2 opportunity zone project;
(ii)
$55,000 for a project that qualifies as a level 1 opportunity zone project; or
(iii)
$60,000 for a project that qualifies as a level 2 opportunity zone project.
(3)
The Small Commercial Tax Credit may be claimed only for the taxable year during which the certified rehabilitation was completed.
E.
The Competitive Commercial Tax Credit.
(1)
A rehabilitation will qualify as a certified rehabilitation for the Competitive Commercial Tax Credit if:
(a)
The rehabilitation is to a certified historic structure;
(b)
The rehabilitation includes only qualified rehabilitation expenditures;
(c)
The plans for rehabilitation are ranked competitively and qualify for an award of available tax credits as determined by the Director under Regulation .05 of this chapter;
(d)
During a continuous 24-month period selected by the applicant that ends during the taxable year in which the applicant claims the tax credit, the qualified rehabilitation expenditures exceed the greater of:
(i)
The adjusted basis of the certified historic structure, as determined under the provisions of Tax-General Article, Annotated Code of Maryland; or
(ii)
$25,000; and
(e)
A sign or marker is located on the property either external or internal to the certified historic structure that identifies the certified historic structure as having been rehabilitated with funds provided by the Program.
(2)
The Commercial Tax Credit shall equal the sum of:
(a)
The lesser of 20 percent of the qualified rehabilitation expenditures either incurred by the applicant or as identified in the Part 2 application for the rehabilitation; and
(b)
If applied for in the Part 2 application:
(i)
5 percent of those qualified rehabilitation expenditures if the certified rehabilitation results in a high performance building, a project that qualifies as affordable housing, or a project that qualifies as a level 1 opportunity zone project; or
(ii)
7.5 percent of the qualified rehabilitation expenditures if the certified rehabilitation results in a project that qualifies as a level 2 opportunity zone project.
(3)
The Commercial Tax Credit may not exceed the lesser of:
(a)
$5,000,000 for any project that does not qualify as either a level 1 or level 2 opportunity zone project;
(b)
$5,250,000 for a project that qualifies as a level 1 opportunity zone project;
(c)
$5,500,000 for a project that qualifies as a level 2 opportunity zone project; or
(d)
The maximum amount specified under the initial credit certificate awarded to a competitive Commercial Tax Credit Project.
Regulation .04 Certification of Structures as Certified Historic Structures (Part 1).LinkCopy Citation
A.
A business entity or individual may request that a structure be certified by the Director as a certified historic structure by filing a Part 1 application with the Director on the standard application forms available on the Trust’s website.
B.
The Director may not accept or review a Part 1 application until the Trust receives all information required by the application form.
C.
Upon receipt of a complete Part 1 application, the Director shall:
(1)
Determine whether the structure is a certified historic structure;
(2)
Approve the application if the structure is a certified historic structure;
(3)
Deny the application if the structure is not a certified historic structure; and
(4)
Promptly send the applicant written notice that the application has been either approved or denied.
Regulation .05 Procedures for Application for and Review of Certifications of Eligibility of Certified Historic Structure Rehabilitations (Part 2).LinkCopy Citation
A.
Part 2 Application Process.
(1)
A business entity or individual may file a Part 2 application with the Director requesting the Director to determine that a rehabilitation of a certified historic structure proposed by the applicant will, if completed in accordance with the requirements of the Program, qualify as a certified rehabilitation.
(2)
The Trust shall post and maintain on its website separate and distinct Part 2 applications forms for the Homeowner Tax Credit, Small Commercial Tax Credit, and Competitive Commercial Tax Credit, and all Part 2 applications shall be filed on the forms that correspond to the tax credit sought by the applicant.
(3)
A Part 2 application shall be deemed incomplete, and may not be accepted or reviewed by the Trust, if the application does not:
(a)
Include all information required by the application form;
(b)
State the applicant’s estimated cost of rehabilitation for the proposed rehabilitation project;
(c)
Include a nonrefundable administrative fee payable to the Trust of:
(i)
$10 for either a Homeowner Tax Credit or a Small Commercial Tax Credit; or
(ii)
$250 for a Competitive Commercial Tax Credit; or
(d)
Otherwise comply with a requirement of this regulation.
(4)
An incomplete application received by the Trust shall be returned to the applicant if all required information or the administrative fee is not received by the Trust within a reasonable time as determined by the Director.
(5)
At any time before completion of the rehabilitation, an applicant may file with the Director an amendment to a Part 2 application in form and substance as instructed on the Trust’s website.
B.
Homeowner Tax Credit.
(1)
A Part 2 application for the Homeowner Tax Credit must be filed by the individual or individuals who, with respect to the structure or portion thereof that is the subject of the proposed rehabilitation:
(a)
Is either:
(i)
The owner; or
(ii)
Lessee for purposes of Regulation 02B(24)(b) of this chapter; and
(b)
Occupies the structure at the time of the application, or will occupy the structure upon completion of the rehabilitation, as a primary or secondary residence.
(2)
Upon receipt of either a complete Part 2 application or an amendment to an application for the Homeowner Tax Credit, the Director shall review the application or amendment and determine whether:
(a)
The proposed rehabilitation is of a certified historic structure;
(b)
The plan for the rehabilitation as described in the application or amendment meets the Standards for Certified Historic Structure Rehabilitation; and
(c)
The estimated qualified rehabilitation expenditures will exceed $5,000.
(3)
The Director shall approve the Part 2 application or amendment and promptly send written notice of the approval to the applicant if the Director determines that each of the criteria set forth in §B(2) of this regulation is satisfied.
(4)
The Director shall deny the Part 2 application or amendment and promptly send written notice of the denial to the applicant if the Director determines that any of the criteria set forth in §B(2) of this regulation is not satisfied.
C.
Small Commercial Tax Credit.
(1)
For the rehabilitation of a condominium or cooperative housing project, a Part 2 application for the Small Commercial Tax Credit shall be submitted by the governing body of the condominium or cooperative housing project.
(2)
In addition to information required under §A(3) of this regulation, a Part 2 application for the Small Commercial Tax Credit shall include a request that the rehabilitation be eligible for:
(a)
The additional 5 percent tax credit available under Regulation .03E(2)(a)(ii) of this chapter if the applicant anticipates at the time of the application that the rehabilitation will result in a project that qualifies as a level 1 opportunity zone project; or
(b)
The additional 7.5 percent tax credit available under Regulation .03E(2)(a)(iii) of this chapter if the applicant anticipates at the time of the application that the rehabilitation will result in a project that qualifies as a level 2 opportunity zone project.
(3)
Upon receipt of either a complete Part 2 application or an amendment to an application for the Small Commercial Tax Credit, the Director shall review the application or amendment and determine whether:
(a)
The proposed rehabilitation is of a certified historic structure;
(b)
The plan for the rehabilitation as described in the application or amendment meets the Standards for Certified Historic Structure Rehabilitation; and
(c)
If requested in the application, the structure is either an agricultural structure or a post-World War II structure.
(4)
If the Director determines that the criteria set forth in §C(3)(a) and (b) of this regulation are satisfied, the Director shall:
(a)
Determine the allowable qualified rehabilitation expenditures for the proposed rehabilitation, which must exceed $5,000 and cannot exceed $500,000;
(b)
Determine the maximum amount for an award of an initial credit certificate for the rehabilitation based upon the limitations established under Regulation .03D(2) of this chapter;
(c)
Reserve an award of an initial credit certificate for the rehabilitation;
(d)
Send written notification to the applicant:
(i)
Informing of the reservation of the award of an initial credit certificate and the maximum amount of the award;
(ii)
Charging the applicant an administrative fee in an amount equal to 3 percent of the maximum amount of the award, less the $10 paid with the Part 2 application; and
(iii)
Informing the applicant that if the fee is not received by the Trust within the 90 days of notice of the fee the Director will not issue the initial credit certificate for the rehabilitation; and
(e)
Promptly after the on-time receipt from an applicant of the administrative fee send the initial credit certificate to the applicant.
(5)
If the Director determines that any of the criteria set forth in §C(3)(a) and (b) of this regulation is not satisfied, the Director shall deny the Part 2 application or amendment and promptly send written notice of the denial to the applicant.
(6)
The Director may not approve any Part 2 applications or amendments and may not issue any initial credit certificates for Small Commercial Tax Credit projects for credit amounts in the aggregate totaling more than the amount of funds in the Small Commercial Project Trust Account.
D.
Competitive Commercial Tax Credit.
(1)
For every State fiscal year that funds are available in the Reserve Fund, the Director shall establish and publish on the Trust’s website a date by which Part 2 applications for the Competitive Commercial Tax Credit shall be received by the Trust.
(2)
In addition to information required under §A(3) of this regulation, a Part 2 application for the Competitive Commercial Tax Credit shall include:
(a)
Documentation that establishes that the applicant has received letters of intent for all rehabilitation project funding not included in the amount of the tax credit for which the rehabilitation may qualify;
(b)
If the applicant is not at the time of the application the fee-simple owner of the property proposed for rehabilitation:
(i)
A written statement from the fee-simple owner that the owner is aware of the application and has no objection to the application or to the proposed rehabilitation; and
(ii)
Documentation or evidence satisfactory to the Director that the applicant will have ownership or site control of the property within 18 months of the approval of the Part 2 application;
(c)
A statement from the applicant that:
(i)
No substantial part of the rehabilitation has begun, unless the rehabilitation was previously approved under the federal historic tax credit; and
(ii)
Upon completion of the rehabilitation, a sign or marker will be located on the property either external or internal to the rehabilitated structure identifying the structure as having been rehabilitated with funds provided by the Program;
(d)
A request that the rehabilitation be eligible for the additional 5 percent tax credit available under Regulation .03E(2)(a)(ii) of this chapter if the applicant anticipates at the time of the application that the rehabilitation will result in:
(i)
A high performance building;
(ii)
A project that qualifies as affordable housing; or
(iii)
A project that qualifies as a level 1 opportunity zone project; and
(e)
A request that the rehabilitation be eligible for the additional 7.5 percent tax credit available under Regulation .03E(2)(a)(iii) of this chapter if the applicant anticipates at the time of the application that the rehabilitation will result in a project that qualifies as a level 2 opportunity zone project.
(3)
The Director shall reject a Part 2 application received from an applicant who in the same fiscal year submitted three or more other Part 2 applications for the Competitive Commercial Tax Credit that, together, exceed $500,000 in estimated qualified rehabilitation expenditures.
(4)
The Director shall review and consider only those complete Part 2 applications received by the Trust by the date established under §D(1) of this regulation.
(5)
The Director shall competitively rank all complete Part 2 applications received annually by the date established under §D(1) of this regulation based on the following criteria:
(a)
The extent to which the certified historic structure is:
(i)
A rare example of an architectural style; or
(ii)
A structure designed by a noted architect;
(b)
Whether the certified historic structure is:
(i)
Protected by a historic preservation easement held by the Trust; or
(ii)
Subject to preservation conditions or restrictions through a Memorandum of Understanding or Programmatic Agreement with the Trust or some other instrument acceptable in form and substance to the Trust;
(c)
Whether the certified historic structure is located in an area:
(i)
Where the political subdivision has implemented regulatory streamlining or other development incentives that foster redevelopment and revitalization in priority funding areas, as defined in State Finance and Procurement Article, Title 5, Subtitle 7B, Annotated Code of Maryland, and has certified those regulatory streamlining or other development incentives to the Smart Growth Subcabinet established under State Government Article, Title 9, Subtitle 14, Annotated Code of Maryland; or
(ii)
Targeted by the State for additional revitalization and economic development opportunities due to the focusing of State resources and incentives;
(d)
Whether the rehabilitation project will include affordable and workforce housing options;
(e)
Whether the rehabilitation is consistent with and advances current growth and development policies and programs of the State, as identified by the Director in consultation with the Secretary;
(f)
The extent to which the rehabilitation:
(i)
Sustains the existing form, integrity, and material of the certified historic structure; or
(ii)
Accurately recovers the form and details of the certified historic structure as it appeared during the structure’s period of historic significance;
(g)
The extent to which the qualified rehabilitation expenditures for the rehabilitation will exceed the assessed value of the certified historic structure;
(h)
The extent to which the need for rehabilitation of the certified historic structure is of an urgent or emergency nature;
(i)
The amount of private investment that will be leveraged by the rehabilitation project; and
(j)
Such other criteria as the Trust may determine from time to time.
(6)
Based on the competitive ranking under §D(5) of this regulation, the Director shall:
(a)
Select those rehabilitation projects that will be awarded an initial credit certificate for the Competitive Commercial Tax Credit and the maximum amounts of each award;
(b)
Promptly notify each applicant selected for an award that the application was selected and of the maximum amount of the award;
(c)
Promptly notify each applicant not selected for an award that the application was not selected; and
(d)
Not later than 60 days following the selections, post on the Trust’s website information regarding each competitive commercial rehabilitation project selected.
(7)
The maximum amount of an award of an initial credit certificate for a rehabilitation under §D(6) of this regulation may not exceed the lesser of:
(a)
The sum of 20 percent of the estimated qualified rehabilitation expenditures identified in the Part 2 application and, if requested in the application, one of the following additional credits:
(i)
A 5 percent credit for achieving a high performance building;
(ii)
A 5 percent credit for a project that qualifies as affordable housing;
(iii)
A 5 percent credit for a project that qualifies as a level 1 opportunity zone project; or
(iv)
A 7.5 percent credit for achieving a project that qualified as a level 2 opportunity zone project; or
(b)
The limits established under Regulation .03E(3) of this chapter.
(8)
For purposes of calculating the limitation on the credit for qualified rehabilitation expenditures under §D(7) of this regulation, a rehabilitation project shall include:
(a)
Phased rehabilitation of a single certified historic structure;
(b)
Rehabilitation of multiple certified historic structures located on a single property; or
(c)
Separate rehabilitations of different components of a single certified historic structure.
(9)
Following the selection of an award of an initial credit certificate under §D(6)(a) of this regulation, the Director shall:
(a)
Charge the applicant an administrative fee in an amount equal to 3 percent of the amount of the award of the initial credit certificate, less the $250 paid with the Part 2 application;
(b)
Send written notice to the applicant of the amount of the administrative fee; and
(c)
Inform the applicant that if the fee is not received by the Trust within the 90 days of notice of the fee the Director will not:
(i)
Issue the initial credit certificate for the rehabilitation; or
(ii)
Accept a Part 2 application for the Competitive Commercial Tax Credit from the applicant during any of the 3 fiscal years that immediately follow the fiscal year in which the fee is not received.
(10)
Promptly after the on-time receipt from an applicant of the administrative fee charged under §D(9) of this regulation, the Director shall issue to the applicant an initial credit certificate for the rehabilitation project in the amount awarded for the rehabilitation under §D(6) of this regulation.
(11)
An initial credit certificate issued under §D(10) of this regulation shall expire, and the Director may not certify the rehabilitation project as a certified rehabilitation under Regulation .06 of this chapter, if:
(a)
For an applicant who was not the fee-simple owner of the property at the time the Part 2 application was submitted, the applicant fails within 18 months after the Director issues the initial credit certificate to provide to the Trust documentation or evidence satisfactory to the Director that the applicant is the fee-simple owner or has site control of the property;
(b)
Within the 18 months after the Director issues the initial credit certificate, the applicant fails to notify the Trust, in writing, that the rehabilitation has commenced;
(c)
The rehabilitation is not completed within 30 months after the Director issues the initial credit certificate; or
(d)
The applicant does not submit to the Trust, in accordance with Regulation .06 of this chapter, a Part 3 application for the rehabilitation within 12 months after the 30-month expiration date under §D(11)(c) of this regulation.
(12)
The Director may extend to a later specified date the 30-month expiration date under §D(11)(c) of this regulation if:
(a)
The applicant requests an extension in writing which is received by the Director prior to the expiration; and
(b)
The Director finds reasonable cause in the written request for the extension.
(13)
The Director may extend to a later specified date the deadline for submitting the Part 3 application established under §D(11)(d) of this regulation if:
(a)
The applicant requests an extension in writing;
(b)
The rehabilitation was completed prior to the 30-month expiration date under §D(11)(c) of this regulation or as extended by the Director under §D(12) of this regulation; and
(c)
The Director finds reasonable cause in the written request for the extension.
Regulation .06 Procedures for Certification of Completed Rehabilitation (Part 3).LinkCopy Citation
A.
Following completion of a rehabilitation approved by the Director under Regulation .05 of this chapter (Part 2) or for which the Director issued an initial credit certificate under Part 2, the Part 2 applicant may file a Part 3 application with the Director requesting that the Director determine that the completed rehabilitation is a certified rehabilitation.
B.
A Part 3 application shall be filed:
(1)
For either the Homeowner Tax Credit or the Small Commercial Tax Credit, not later than the end of the second calendar year that follows the calendar year during which the rehabilitation was completed; and
(2)
For the Competitive Commercial Tax Credit, within the time limit set forth in Regulation .05D(11)(d) of this chapter as may have been extended by the Director under Regulation .05D(13) of this chapter.
C.
A Part 3 application shall:
(1)
Be filed on the standard application forms available on the Trust’s website;
(2)
Include:
(a)
A statement made under oath by the applicant that the amount of the qualified rehabilitation expenditures as stated in the application is true and correct; and
(b)
Financial statements, in form and content satisfactory to the Director, certified by a certified public accountant that demonstrate that the qualified rehabilitation expenditures stated in the application were expended on the rehabilitation approved by the Director under Part 2, if the application is for:
(i)
A Competitive Commercial Tax Credit; or
(ii)
A Small Commercial Tax Credit that is based on qualified rehabilitation expenditures of $100,000 or more; and
(3)
For the Homeowner Tax Credit, include an administrative fee in an amount that is equal to the greater of 0.6 percent of either the estimated cost of rehabilitation stated in the Part 2 application for the rehabilitation or the qualified rehabilitation expenditures stated in the Part 3 application, less $10 paid with the Part 2 application.
D.
The Director may not accept or review a Part 3 application until the Trust receives the administrative fee, if applicable, and all information required by the application form.
E.
Upon receipt of a timely filed and complete Part 3 application, the Director:
(1)
May inspect the completed rehabilitation; and
(2)
Shall:
(a)
Determine whether the rehabilitation as completed is a certified rehabilitation;
(b)
As may be appropriate for an application for the Competitive Commercial Tax Credit, determine whether the rehabilitation resulted in either:
(i)
A high performance building; or
(ii)
A housing project that qualifies as affordable housing;
(c)
As may be appropriate for an application for either the Small Commercial Tax Credit or the Competitive Commercial Tax Credit, determine whether the rehabilitation resulted in either:
(i)
A level 1 opportunity zone project; or
(ii)
A level 2 opportunity zone project;
(d)
Determine the tax credit amount, if any, based upon the applicant’s accurately reported qualified rehabilitation expenditures; and
(e)
Promptly send written notice to the applicant of the Director’s determinations.
F.
An applicant that has completed a competitive commercial rehabilitation approved under Part 2 may file a second Part 3 application for a determination by the Director of the applicant’s qualification for either the additional 5 percent tax credit available under Regulation .03E(2)(a)(ii) of this chapter or the additional 7.5 percent credit available under Regulation .03E(2)(a)(iii) of this chapter if:
(1)
The Director previously determined under §E(2)(a) of this regulation that the rehabilitation project is a certified rehabilitation;
(2)
The additional 5 percent tax credit or 7.5 tax credit was not included within the tax credit amount determined by the Director under §E(2)(c) of this regulation; and
(3)
The second Part 3 application is received by the Trust within 18 months following the completion of the rehabilitation.
G.
Allocation and Transfer of Tax Credit.
(1)
The tax credit amount determined under §E of this regulation by the Director upon review of a Part 3 application:
(a)
That is filed by a business entity, may be allocated among the partners, members, or shareholders of the entity as may be agreed to by the partners, members, or shareholders; or
(b)
For a Competitive Commercial Tax Credit, may be transferred in whole or part by the Part 3 applicant to any one or more individuals or business entities as may be agreed to by the applicant and the individual or business entity.
(2)
The tax credit amount allocated or transferred under this section to an individual or business entity may be applied against the total tax otherwise payable by the individual or business entity for the taxable year during which the certified rehabilitation was completed.
(3)
If the tax credit amount allocated or transferred under this section to an individual or business entity exceeds the total tax payable by the individual or business entity:
(a)
The individual or business entity may claim a refund in the amount of the excess; or
(b)
As to the transferee of all or a portion of the Competitive Commercial Tax Credit, the transferee may transfer any amount not claimed as a refund to any other individual or business entity.
(4)
Any agreement concerning the allocation or transfer of a tax credit amount under this section shall be in writing and executed by all parties to the agreement.
Regulation .07 Administrative Review.LinkCopy Citation
A.
An applicant may request that the Director reconsider any written determination made by the Director under Regulation .04, .05, or .06 of this chapter. A request under this section shall be in writing and received by the Trust within 30 days after the Director’s written determination was sent to the applicant.
B.
Within 60 days of the Trust’s receipt of a request for reconsideration made pursuant to §A of this regulation, the Director shall:
(1)
Review the request;
(2)
Determine whether the standards and requirements set forth in this chapter or otherwise applicable to the request warrant either a denial of the request or a modification of the Director’s determination; and
(3)
Send written notification to the applicant of the Director’s determination on the request.
C.
An applicant whose request for reconsideration has been denied in whole or part by the Director under §B of this regulation may file a request that the Board of Trustees of the Trust reconsider the Director’s denial. A request made under this section shall be in writing and received by the Trust within 30 days after the written notice of the Director’s denial is sent to the applicant.
D.
The Board of Trustees of the Trust shall, within 60 days of the Trust’s receipt of the request made pursuant to §C of this regulation or at the next regularly conducted meeting of the Board following the Trust’s receipt of the request, whichever is later:
(1)
Review the request;
(2)
Determine whether the standards and requirements set forth in this chapter or otherwise applicable to the request warrant either a denial of the request or a modification of the Director’s determination;
(3)
If the Board determines that the Director’s determination shall be modified, articulate the applicable standard and factual basis that warrant the modification; and
(4)
Notify the applicant in writing of the Board’s determination.
E.
The Board of Trustees of the Trust may establish from time to time guidelines or procedures for processing and reviewing requests for reconsideration made under §C of this regulation.
F.
Actions or determinations taken or made by the Board of Trustees under §D of this regulation shall be in accordance with the bylaws of the Board of Trustees of the Trust.
G.
A determination of the Board of Trustees of the Trust made under §D of this regulation shall be final and is not a contested case within the meaning of State Government Article, Title 10, Subtitle 2, Annotated Code of Maryland.
Regulation .08 Determining Disqualifying Work; Recapture of Tax Credits.LinkCopy Citation
A.
Definitions.
(1)
In this regulation, the following words have the meanings indicated.
(2)
Defined Terms.
(a)
Disposition.
(i)
“Disposition” means the transfer of legal title in real property or, in the case of a leasehold, the transfer of a leasehold interest in the property, or any portions thereof, and includes, without limitation, a sale–and–leaseback transaction, a transfer on the foreclosure of a security interest, or a transfer by gift.
(ii)
“Disposition” does not include a transfer of title or of a leasehold interest to a creditor on creation of a security interest lien, mortgage, or deed of trust.
(b)
“Disqualifying work” means work performed at any time prior to the expiration of the recapture period for a certified rehabilitation that, if performed during the rehabilitation would have made the rehabilitation ineligible for certification as a certified rehabilitation.
(c)
“Recapture period” means the taxable year in which a rehabilitation is certified by the Director as a certified rehabilitation under Regulation .06 of this chapter (Part 3) and the next 4 taxable years that succeed that taxable year.
B.
Upon the request of the Comptroller or on the Director’s own initiative, the Director shall determine whether any disqualifying work has occurred during a certified rehabilitation or during the recapture period that would make the rehabilitation ineligible for a tax credit under the Program, and shall promptly notify the Comptroller of the Director’s determination.
C.
A tax credit awarded and claimed through the Program shall be recaptured if during either the rehabilitation or the recapture period:
(1)
Any disqualifying work is performed on the structure that was the object of the certified rehabilitation; or
(2)
For a certified rehabilitation awarded a Competitive Commercial Tax Credit, there is a disposition of the structure that was the object of the certified rehabilitation.
D.
A tax credit shall be recaptured as follows:
(1)
If disqualifying work or disposition occurs during the taxable year in which the certified rehabilitation was completed, 100 percent of the tax credit shall be recaptured;
(2)
If disqualifying work or disposition occurs during the first full year after the taxable year in which the certified rehabilitation was completed, 80 percent of the credit shall be recaptured;
(3)
If disqualifying work or disposition occurs during the second full year after the taxable year in which the certified rehabilitation was completed, 60 percent of the credit shall be recaptured;
(4)
If disqualifying work or disposition occurs during the third full year after the taxable year in which the certified rehabilitation was completed, 40 percent of the credit shall be recaptured; or
(5)
If disqualifying work or disposition occurs during the fourth full year after the taxable year in which the certified rehabilitation was completed, 20 percent of the credit shall be recaptured.
E.
The business entity that claimed the tax credit shall pay the recaptured amount of the tax credit as taxes payable to the State for the taxable year in which the disqualifying work or disposition occurred.
Regulation .09 General Provisions.LinkCopy Citation
A.
Program Administration.
(1)
Any action, determination, decision, or certification to be taken or permitted by the Director under the Act or this chapter may be delegated by the Director to a designee and any delegated action, determination, decision, or certification taken by the Director’s designee shall be considered an action, determination, decision, or certification of the Director.
(2)
The Director may establish operational handbooks or manuals governing matters relating to administration of this chapter including descriptive statements of procedures which do not directly affect the rights of the public or procedures otherwise available to the public.
(3)
The Program may adopt a handbook containing internal guidelines or policies related to the administration of the Program or establishing other requirements relating to the Program. The handbook shall be available for public examination at the Trust or on the Trust’s website.
(4)
An applicant shall retain all records concerning a certified rehabilitation for a period of 7 years from completion of the rehabilitation or for 2 years from the date the recapture period ends, whichever is shorter.
(5)
The Trust makes no representation and accepts no responsibility as to any tax or other consequences to an entity, a person, an individual, or any other party arising out of the approval or certification, or allocation of credits for a project.
B.
Waiver. The Secretary may waive or vary a provision of this chapter if:
(1)
The waiver or variance is not inconsistent with the Act or otherwise unlawful;
(2)
The Secretary determines in writing that application of the provision in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act; and
(3)
The Office of the Attorney General approves the waiver for form and legal sufficiency.
C.
False Statements.
(1)
Any action, determination, decision, or certification made by the Director or the Secretary under the Act or this chapter that was based in whole or part in reliance upon a false statement knowingly made or caused to be made by the applicant is subject to revocation by the Director or the Secretary.
(2)
The Director or the Secretary may revoke an action, determination, decision, or certification §C(1) of this regulation even if the action, determination, decision, or certification could have been made absent reliance upon the false statement.
Chapter annotations
Authority: State Finance and Procurement Article, §5A-303, Annotated Code of Maryland
History: Effective date: January 14, 1999 (26:1 Md. R. 23)
History: Regulation .01 amended as an emergency provision effective January 3, 2005 (32:4 Md. R. 404); amended permanently effective April 11, 2005 (32:7 Md. R. 676)
History: Regulation .02B amended as an emergency provision effective June 1, 2004 (31:16 Md. R. 1249); emergency status expired December 1, 2004
History: Regulation .02B amended as an emergency provision effective January 3, 2005 (32:4 Md. R. 404); amended permanently effective April 11, 2005 (32:7 Md. R. 676)
History: Regulation .04 amended as an emergency provision effective November 24, 2003 (30:25 Md. R. 1841); emergency status expired May 22, 2004
History: Regulation .04 amended as an emergency provision effective June 1, 2004 (31:17 Md. R. 1249); emergency status expired December 1, 2004
History: Regulation .04 amended as an emergency provision effective January 3, 2005 (32:4 Md. R. 404); amended permanently effective April 11, 2005 (32:7 Md. R. 676)
History: Regulation .04E amended as an emergency provision effective June 29, 2005 (32:15 Md. R. 1313); amended permanently effective October 10, 2005 (32:20 Md. R. 1655)
History: Regulation .05 amended as an emergency provision effective January 3, 2005 (32:4 Md. R. 404); amended permanently effective April 11, 2005 (32:7 Md. R. 676)
History: Chapter recodified from COMAR 05.08.08 to COMAR 34.04.07
History: Chapter revised as an emergency provision effective August 4, 2010 (37:18 Md. R. 1212); revised permanently effective October 4, 2010 (37:20 Md. R. 1396)
History: Regulation .04E amended as an emergency provision effective October 5, 2011 (38:23 Md. R. 1418); amended permanently effective November 28, 2011 (38:24 Md. R. 1504)
History: Regulations .01—.07 repealed and new Regulations .01—.08 adopted as an emergency provision effective January 1, 2015 (42:1 Md. R. 16); adopted permanently effective February 16, 2015 (42:3 Md. R. 318)
History: Regulations .01—.08 repealed and new Regulations .01—.09 adopted effective September 12, 2016 (43:18 Md. R. 1019)
History: Regulation .01 amended effective December 16, 2019 (46:25 Md. R. 1132)
History: Regulation .02B amended effective February 12, 2018 (45:3 Md. R. 159); March 25, 2019 (46:6 Md. R. 347); December 16, 2019 (46:25 Md. R. 1132); September 21, 2020 (47:19 Md. R. 850); December 13, 2021 (48:25 Md. R. 1082); March 2, 2026 (53:4 Md. R. 186)
History: Regulation .03 amended effective December 16, 2019 (46:25 Md. R. 1132)
History: Regulation .03C—E amended effective March 25, 2019 (46:6 Md. R. 347)
History: Regulation .03D amended effective September 21, 2020 (47:19 Md. R. 850)
History: Regulation .032E amended effective March 2, 2026 (53:4 Md. R. 186)
History: Regulation .04C amended effective December 16, 2019 (46:25 Md. R. 1132)
History: Regulation .05 amended effective March 25, 2019 (46:6 Md. R. 347); December 16, 2019 (46:25 Md. R. 1132)
History: Regulation .05A—C amended effective February 12, 2018 (45:3 Md. R. 159)
History: Regulation .05C amended effective September 21, 2020 (47:19 Md. R. 850) March 2, 2026 (53:4 Md. R. 186)
History: Regulation .05D amended effective March 2, 2026 (53:4 Md. R. 186)
History: Regulation .06 amended effective December 16, 2019 (46:25 Md. R. 1132)
History: Regulation .06C, E amended effective March 25, 2019 (46:6 Md. R. 347)
History: Regulation .06G adopted effective September 21, 2020 (47:19 Md. R. 850)
History: Regulation .08 amended effective December 16, 2019 (46:25 Md. R. 1132)