This bill adds §7‑504.5 to Maryland’s Tax‑Property article to allow newly constructed or rehabilitated commercial or multifamily developments within a narrowly defined Downtown RISE District in Baltimore City to be exempt, or partially exempt, from Baltimore City real property tax when the project owner and the Baltimore City Board of Estimates enter into a payment in lieu of taxes (PILOT) agreement. Eligible projects must be hotels, office, retail, multifamily, or mixed‑use developments and satisfy specified application, permitting, and financing milestones by June 30, 2036.
The measure requires the city (or its designated agency) to conduct an economic analysis that demonstrates the financial need for an exemption and to report annually to the President of the City Council and, subject to state confidentiality rules, the General Assembly on projects subject to PILOT agreements, including job creation and tax impact estimates. The law creates a structured—but negotiable—mechanism for targeted incentives in downtown Baltimore while imposing data and reporting obligations intended to justify the foregone tax revenue.
At a Glance
What It Does
The bill authorizes negotiated PILOT agreements that can fully or partially replace Baltimore City property tax for qualifying new or rehabilitated commercial and multifamily projects located inside specified wards/precincts of the Downtown RISE District. The owner must demonstrate financial necessity via a city analysis and complete key milestones (apply, obtain permits, secure financing) by June 30, 2036.
Who It Affects
Developers and owners of hotels, office buildings, retail centers, multifamily housing, and mixed‑use projects within the listed wards and precincts of downtown Baltimore; the Baltimore City Board of Estimates, which must negotiate and sign PILOT agreements; and Baltimore City government units that perform economic analyses and annual reporting.
Why It Matters
This creates a local statutory route for tax‑reducing incentives targeted at downtown redevelopment, shifting the decision from ad hoc practice to a legislated framework with defined eligibility criteria, reporting duties, and a long application window—factors that affect deal structuring, municipal budgeting, and competitive positioning for projects in Baltimore’s core.
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What This Bill Actually Does
The bill defines an "economic development project" as new or rehabilitated commercial or multifamily real estate—specifically hotels, offices, retail, multifamily housing, or mixed‑use projects—located inside a narrowly drawn Downtown RISE District composed of six named ward/precincts in Baltimore City. It does not create automatic tax relief; instead, it makes those projects eligible for either full or partial exemption from Baltimore City real property tax only when a PILOT agreement is negotiated and executed with the City’s Board of Estimates.
To obtain a PILOT under the new section, a project owner must first persuade the Board of Estimates that the City or its designated agency has carried out an economic analysis showing the financial necessity of an exemption. The owner must also apply to enter into a PILOT, secure building permits, and have satisfied or waived all financing conditions for construction by June 30, 2036.
The statute leaves the exact PILOT payment level to the agreement between the owner and the Board of Estimates; the agreement will specify the annual in‑lieu payment for the term negotiated.The bill imposes annual reporting obligations on the City or its designated agency. Each January 1 the city must provide the President of the City Council and, subject to applicable State Government Article limitations, the General Assembly with a description of each project for which the city entered a PILOT during the prior fiscal year, including the underlying economic analysis.
For completed projects with an executed PILOT, the report must list jobs created and projected, estimated direct and indirect tax revenues generated, and other economic benefits. The reporting requirement creates a public record intended to show whether the PILOTs deliver the promised economic returns.Finally, the bill becomes effective July 1, 2026, and is added as section 7‑504.5 of the Tax‑Property Article.
The law therefore establishes eligibility, procedural checkpoints, and accountability reporting—but it leaves many substantive negotiation points (term length, dollar amount of PILOT payments, escalation, enforcement) to the Board of Estimates and the parties to each agreement.
The Five Things You Need to Know
The Downtown RISE District is defined by six specific ward/precincts: Ward 4 (Precincts 1–3), Ward 22 (Precincts 1–2), and Ward 21 (Precinct 5).
Eligible projects must be new or rehabilitated hotels, office buildings, retail facilities, multifamily residential facilities, or mixed‑use developments that include one of those uses.
Project owners must apply, have building permits issued, and satisfy or waive financing conditions by June 30, 2036 to be eligible for a PILOT agreement.
A PILOT is available only after the City or its designated agency performs an economic analysis demonstrating the financial necessity for the exemption and the owner signs a PILOT agreement with the Board of Estimates specifying annual in‑lieu payments.
The City or its designated agency must file an annual report by January 1 to the President of the City Council and, subject to State Government Article constraints, the General Assembly with project descriptions, the economic analyses, job counts/projections, estimated taxes generated, and other economic benefits.
Section-by-Section Breakdown
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Definitions and eligible project types
This subsection sets the baseline definitions: an "economic development project" must be newly constructed or rehabilitated commercial or multifamily real estate and must include at least one enumerated use (hotel, office, retail, multifamily, or mixed‑use containing one of those uses). Practically, that focuses the statute on development types that are typically seen as drivers of downtown foot traffic and taxable activity, rather than on single‑use industrial or lower‑density projects.
Geographic boundary—Downtown RISE District
The bill specifies the district by listing six exact ward/precinct combinations. That approach creates a clear eligibility map for dealmakers and municipal planners but excludes projects immediately outside those precinct lines—so small boundary differences will determine whether a project can even seek a PILOT under this statute.
PILOT eligibility and required city analysis
This provision makes PILOTs contingent on two things: (1) a demonstration to the Board of Estimates that the City or its designated agency has performed an economic analysis including a financial necessity assessment, and (2) the execution of a PILOT agreement that specifies the annual payment in lieu of property taxes. That structure signals that exemptions are discretionary and negotiated rather than statutory grants, and it embeds an evidentiary step intended to justify any foregone tax revenue.
Application, permit, and financing milestones (deadline)
Subsection (D) imposes a substantive timing rule: to be eligible a project owner must have applied for a PILOT, obtained building permits, and satisfied or waived all financing conditions on or before June 30, 2036. This deadline creates a long but finite window for projects and will shape deal schedules, permitting priorities, and lender requirements; missing those milestones forecloses eligibility under this statutory route.
Annual reporting requirements
The City or its designated agency must report every January 1 to the President of the City Council and, subject to §2‑1257 of the State Government Article, to the General Assembly. Reports must describe PILOT projects and include the economic analyses, and for completed projects provide jobs created/projections, estimated tax generation, and other economic benefits. The reference to §2‑1257 means the city must observe state limitations on disclosure when transmitting information to the General Assembly, which has practical implications for what data becomes public.
Effective date
The act takes effect July 1, 2026. That immediate effective date means projects that meet the statutory milestones after that date may pursue PILOTs under the new code section; municipal processes for analysis and negotiation will need to be stood up promptly.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Downtown developers and project owners — They gain a legislated pathway to reduce property tax liability through negotiated PILOTs, improving project pro‑formas and making certain marginal projects financially viable.
- Investors and lenders financing eligible projects — A PILOT can stabilize tax expense profiles and improve debt service coverage ratios, increasing the attractiveness of financing downtown redevelopment.
- Businesses and prospective tenants in redeveloped buildings — New hotels, offices, retail, and housing can expand customer bases and occupancy options in the downtown core, potentially lowering vacancy risk and increasing commercial activity.
- Baltimore City administration and redevelopment agency staff — The statute legitimizes a formal incentive tool and, if used transparently, gives administrators data and a framework for deploying incentives strategically.
Who Bears the Cost
- Baltimore City taxpayers broadly — Foregone property tax revenue from PILOTs reduces funds available for municipal services unless offset by higher payments or new revenues from the projects.
- Other property owners in Baltimore — If PILOT‑funded projects displace tax revenue, the city may face pressure to raise rates or seek revenue elsewhere, potentially shifting burdens onto non‑PILOT properties.
- City budgeting and analysis units — Preparing robust economic analyses and annual reports imposes staff time, data collection, and possibly consultant costs on city agencies or designated entities.
- Competing developers outside the Downtown RISE District — Firms with projects just outside the specified precincts cannot access these statutory PILOTs and may face competitive disadvantages in attracting tenants or capital.
Key Issues
The Core Tension
The central dilemma is between using targeted tax incentives to spur downtown redevelopment—accepting near‑term reductions in property tax revenue to attract projects that promise jobs and broader economic activity—and preserving a broad and stable municipal tax base and fiscal transparency; the bill hands negotiators discretion to balance these goals, but that discretion can undermine comparability and public accountability.
The statute creates a negotiable, evidence‑backed pathway for tax relief but leaves key economic and contractual details to the parties and the Board of Estimates. It requires a city economic analysis showing "financial necessity," but it does not set standards for that analysis (methodology, discount rates, baseline assumptions) or mandate public review of the models used—creating room for inconsistent justifications across projects.
The PILOT amount, term, escalation clauses, enforcement mechanisms, and remedies for nonperformance are not codified; those material financial terms will be determined project‑by‑project during negotiation, which preserves flexibility but raises transparency and comparability concerns.
The reporting requirement is a meaningful accountability tool, but the statute qualifies disclosure to the General Assembly by reference to §2‑1257 of the State Government Article—meaning certain information may be withheld under state confidentiality rules. That reduces the degree to which external stakeholders can scrutinize the economic analysis and the City's rationale.
Finally, the fixed geographic eligibility and a long but firm June 30, 2036 milestone create winners and losers: projects within the lines get a special channel for incentives, while nearby projects do not, and the deadline may incentivize rushed permitting or financing decisions to preserve eligibility.
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