This bill adds a new section to Maryland’s Tax‑Property article permitting Baltimore City to exempt certain newly built or rehabilitated commercial and multifamily projects in a specified downtown RISE district from city real property taxes if the project owner and the Baltimore City Board of Estimates enter a payment in lieu of taxes (PILOT) agreement. The exemption is conditional: the city must have performed an economic analysis and the parties must agree on an annual payment amount to replace city property taxes.
The measure creates a targeted incentive tool for downtown redevelopment while requiring annual reporting on project analyses, jobs, tax impacts, and other benefits. For developers, it offers a predictable alternative to standard property taxation; for city officials and budget officers, it creates a demand for project‑level economic justifications and ongoing monitoring of what the PILOTs deliver in practice.
At a Glance
What It Does
The bill authorizes Baltimore City to partially or fully exempt eligible downtown projects from city property taxes through negotiated PILOT agreements that set an annual payment in lieu of taxes for the term of the agreement. Eligibility requires a city economic analysis and a signed agreement between the project owner and the Board of Estimates.
Who It Affects
Owners and developers of hotels, office buildings, retail, multifamily, and mixed‑use projects within specified precincts of downtown Baltimore’s RISE district; Baltimore City agencies that perform economic analyses, issue building permits, or negotiate and monitor PILOTs; and city budget officials who will account for foregone property tax revenue.
Why It Matters
PILOTs change the revenue profile of redevelopment projects and can make marginal projects financeable by lowering near‑term tax burdens. The bill formalizes Baltimore City’s ability to use PILOTs downtown, but attaches only procedural safeguards (an economic analysis and annual reporting) rather than a prescriptive payment formula or clawback.
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What This Bill Actually Does
The bill inserts a new statutory option into Maryland’s property tax law that applies only inside a narrowly drawn Downtown RISE district in Baltimore. It defines an "economic development project" as newly constructed or rehabilitated commercial or multifamily real estate that includes at least one of: a hotel, office, retail, multifamily residential, or mixed‑use facility.
Those definitions matter because they limit PILOT eligibility to projects that fit conventional downtown redevelopment types.
To qualify, a project owner must first satisfy the city that the city or its designated agency has conducted an economic analysis demonstrating the financial need for an exemption. That analysis is a threshold condition the Board of Estimates must accept before entering a PILOT agreement; the statute does not prescribe the analysis format or standards, leaving room for local procedures.
If the city agrees, the owner and the Board of Estimates negotiate a written PILOT agreement that establishes the annual payment amount the owner will remit in lieu of city property tax for the agreement’s term.The bill imposes a practical deadline: owners must apply for a PILOT agreement, have building permits issued, and have financing conditions either satisfied or waived by June 30, 2036, to be eligible. Once projects are under PILOT agreements and construction or rehabilitation is complete, the city must report annually (by January 1) to the City Council President and, subject to state confidentiality rules, to the General Assembly.
The report must describe each project, include the economic analysis that justified the PILOT, and for completed projects detail jobs created, estimated tax generation (direct and indirect), and other economic benefits the project produced or is expected to produce.Taken together, the bill creates a narrowly circumscribed but flexible incentive: the city gains a negotiated tool to attract downtown development, developers gain tax predictability, and the public gains an annual reporting mechanism to track job and tax outcomes—while key analytic standards, payment formulas, term limits, and enforcement or clawback mechanisms remain matters for local negotiation and administrative practice.
The Five Things You Need to Know
The statute limits eligible projects to newly constructed or rehabilitated commercial or multifamily developments that include a hotel, office, retail, multifamily housing, or mixed‑use combination.
The Downtown RISE district is identified by specific ward/precincts: Ward 4 (precincts 1–3), Ward 22 (precincts 1–2), and Ward 21 (precinct 5).
A PILOT is available only after the project owner demonstrates that the City of Baltimore or its designated agency performed an economic analysis showing financial necessity and the Board of Estimates agrees to enter a written PILOT agreement.
To be eligible for a PILOT the owner must, by June 30, 2036, apply for the agreement, have building permits issued, and have financing conditions for construction either satisfied or waived.
The city must deliver an annual report (by January 1) describing each PILOT project and, for completed projects, reporting jobs created, estimated direct and indirect taxes generated, and other economic benefits.
Section-by-Section Breakdown
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Definitions: scope of an 'economic development project'
This subsection defines the class of projects that may qualify for PILOT treatment: newly constructed or rehabilitated commercial or multifamily property that falls inside the Downtown RISE district and contains one or more enumerated uses (hotel, office, retail, multifamily, or mixed‑use). Practically, that limits the policy to traditional downtown redevelopment types and excludes industrial, single‑family, and largely non‑revenue producing uses.
Geographic boundary: Downtown RISE district precincts
The bill lists the specific wards and precincts that comprise the Downtown RISE district. Because eligibility hinges on these precinct lines, any developer considering a PILOT must confirm parcel‑level inclusion; small changes in project location could be dispositive. The statute ties the program to an explicit downtown footprint rather than leaving boundaries to administrative rulemaking.
PILOT condition: city analysis plus Board of Estimates agreement
This clause makes two things mandatory before a tax exemption: (1) the project owner must convince the Board of Estimates that the city (or its designated agency) performed an economic analysis that assessed the financial necessity of the exemption, and (2) the owner and the Board of Estimates must enter a written PILOT agreement specifying the annual in‑lieu payment. The statute vests discretion in the Board to accept the analysis and negotiate payment terms rather than prescribing a statutory formula for PILOT amounts.
Eligibility timing and construction/financing conditions
This subsection creates a hard eligibility cutoff: owners must have applied for a PILOT, obtained building permits, and resolved financing conditions (satisfied or waived) by June 30, 2036. That deadline creates a long runway for development but also introduces a temporal constraint that determines which projects can access the incentive. Requiring permits and financing demonstrates the bill’s intent to reserve PILOTs for projects past the conceptual stage.
Annual reporting requirements
The city or its designated agency must report annually by January 1 to the City Council President and, with confidentiality caveats, to the General Assembly. Reports must describe each PILOT project, include the underlying economic analysis, and, for completed projects, quantify jobs created, estimated taxes generated (direct and indirect), and other economic benefits. This establishes a public record for assessing whether PILOTs deliver intended outcomes, although the statute limits what must be disclosed to these prescribed categories.
Effective date
The act takes effect July 1, 2026. Any municipal procedures, administrative capacity, or interagency coordination necessary to implement the PILOT program must be in place after that date to begin processing applications toward the June 30, 2036 eligibility cutoff.
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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 property owners: They gain the option to exchange uncertain property tax liabilities for a negotiated, potentially lower, fixed annual payment—improving project cash‑flow and debt service coverage during early years of operation.
- Lenders and equity investors in eligible projects: A negotiated PILOT creates a predictable tax expense schedule that lenders can underwrite, which can lower perceived revenue volatility and ease financing terms for marginal projects.
- Baltimore City economic development officials: They obtain an additional bargaining tool to recruit and structure downtown redevelopment that city staff can tailor through negotiated PILOT terms and the required economic analysis.
- Local workforce in proximity to projects: Completed projects that meet the bill’s reporting thresholds must disclose jobs created, which can indicate real employment opportunities for residents and inform workforce planning.
Who Bears the Cost
- Baltimore City general fund and current taxpayers: The city forgoes some or all property tax revenue that the project would otherwise generate; unless PILOT payments and indirect economic activity fully offset that loss, the cost shifts to general revenues or other taxpayers.
- Non‑RISE district neighborhoods: If the program draws development downtown that might otherwise have occurred elsewhere in the city, other neighborhoods could lose prospective investment and job creation.
- City administrative agencies (Board of Estimates, designated agency): These entities bear negotiation, review, monitoring, and reporting responsibilities, which may require additional staff time or budget to produce defensible economic analyses and to track covenant compliance.
- Competing developers outside the eligibility footprint: Projects just outside the specified precincts will be excluded despite potentially similar characteristics, creating locational winners and losers based solely on statutory lines.
Key Issues
The Core Tension
The central dilemma is between competitiveness and fiscal accountability: the city needs flexible, negotiable PILOTs to attract downtown investment, but the same flexibility—unstructured analyses, negotiable payment terms, and no statutory clawbacks—risks eroding the property tax base and delivering weaker net public benefits than promised.
The bill centers accountability on an economic analysis requirement and an annual report, but it leaves critical design choices to local practice. The statute does not define what constitutes a sufficient "economic analysis" or set minimum thresholds for job creation, taxable revenue replacement, or return on public investment.
That discretion allows flexibility but creates implementation risk: weak or inconsistent analyses could produce PILOTs that underdeliver relative to foregone property tax revenue. The lack of a statutory payment formula or term limit likewise means PILOT amounts and durations will vary by negotiation, making program comparability and aggregate fiscal forecasting difficult for city budget officers.
Another practical tension is enforcement. The bill requires reporting but does not include explicit clawbacks, performance milestones, or repayment obligations if a project fails to meet promised outcomes.
Without contractual clawbacks baked into every PILOT, the city could find itself locked into below‑market arrangements with limited statutory remedies. Finally, the precinct‑based eligibility creates sharp geographic boundaries that simplify administration but can arbitrarily exclude nearby projects; absent a mechanism to adjust boundaries, the statute risks encouraging artificially drawn project footprints or incentivizing developers to chase addresses rather than optimal urban design.
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