COMAR Title 24 — DEPARTMENT OF COMMERCE

24.01.01 Public Information Requests

COMAR 24.01.01.01 Purpose.

These regulations set forth procedures for filing requests with the Department of Commerce (Department) for the inspection or copying of records of the Department under State Government Article, §§10-611—10-628, Annotated Code of Maryland. It is the policy of the Department to facilitate public access to the Department's records when access is allowed by law.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means State Government Article, §§10-611—10-628, Annotated Code of Maryland.

(2) “Custodian” means the head of a Department organizational unit having personal custody and control of the public record that is the subject of a request under the Act.

(3) “Department” means the Department of Commerce, and any of the agencies, boards, commissions, corporations, authorities, trusts, divisions, or offices included within the Department of Commerce under Economic Development Article, §2-117, Annotated Code of Maryland.

(4) “Official custodian” means the person who is responsible for the maintenance, care, and keeping of the public records of the Department. Unless otherwise provided by law, the Secretary is the official custodian.

(5) “Person in interest” means a person or governmental unit that is the subject of a public record, or an authorized designee of the person or governmental unit, or, if the person has a legal disability, a parent or legal representative of the person.

(6) Public Record.

(a) “Public record” means the original or any copy of any documentary material, regardless of physical form or characteristics, made or received by the Department in connection with the transaction of public business.

(b) “Public record” includes a document that contains the salary of an official or employee of the Department.

(7) “Requester” means a person or governmental unit requesting access to public records under the Act.

(8) “Secretary” means the Secretary of or the Secretary's designee.

(9) “Working day” means a day other than Saturday, Sunday, or a State holiday.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.03 Requests to Inspect or Copy.

A. A person or governmental unit may request access to inspect or copy public records of the Department.

B. A requester shall direct the request to the custodian. If the custodian is not known, the requester may direct the request to the official custodian.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.04 Necessity for Written Request.

A. The custodian may make public records available for inspection or copying, or both, to a requester without a written request.

B. Written requests are required when the custodian reasonably believes that:

(1) A written application will facilitate the Department in responding to the request; or

(2) The Act or any other law may prohibit disclosure of the public record or parts of it.

C. The custodian may require a written request when the requester is requesting copies of a public record.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.05 Contents of Written Request.

A written request shall:

A. Contain the requester's name and address;

B. Reasonably identify the public record sought; and

C. Be signed by the requester.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.06 Response to Written Request.

A. If a requested public record is not in the custody or control of the person to whom written request is made, that person shall:

(1) Notify the requester within 10 working days of the receipt of the request;

(2) Relate to the requester the identity or the location of the custodian, if known; and

(3) Forward the request to the known custodian.

B. If the custodian decides to grant a written request, the custodian shall produce the record for inspection within 30 days from the date the custodian receives the written request.

C. If the custodian decides to deny a written request, the custodian shall do so within 30 days from the date the custodian receives the written request. Upon deciding to deny the request, the custodian shall notify the requester of the denial. Within 10 working days of the denial, the custodian shall transmit to the requester a written statement that sets forth the reasons and legal authority for the denial and contains a notice of the remedies for review of the denial.

D. With the consent of the requester, a time limit imposed by §§A—C of this regulation may be extended for an additional period not to exceed 30 days.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.07 Notification of Persons in Interest.

A. The custodian, unless prohibited by law, may notify a person in interest who is the subject of a public record that a request for inspection or copying of that record has been received.

B. In determining whether to notify the person in interest of the pending request, the custodian shall take into account any request from the person in interest, submitted simultaneously with information submitted to the Department, that the information not be disclosed without consultation between the custodian and the person in interest.

C. The custodian may consider the views of the person in interest before deciding whether to disclose the record.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.07-1 Sociological Information.

A. Definition. For purposes of this regulation, “sociological information” means any of the following information requested from the Department:

(1) Social Security number;

(2) Personal address;

(3) Personal phone number;

(4) Information regarding marital status, dependents, or relatives; and

(5) Information regarding employment status, including employment application.

B. Nondisclosure. The Department may not disclose sociological information to a requester except that information may be disclosed:

(1) To public employees in performance of their public duties;

(2) To parties litigating claims for unemployment insurance to the extent the sociological information would be available to private parties in litigation; or

(3) When required by a duly issued subpoena that a judge has signed.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.08 Records Destroyed or Lost.

If the requested record has been destroyed or lost, the custodian to whom the request is made shall notify the requester of this fact within 30 days of receipt of the request. The custodian shall explain in the response the reasons why the record cannot be produced.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.09 Records Temporarily Unavailable.

If the requested record is temporarily unavailable, the custodian shall notify the requester of this fact within 30 days of receipt of the request, and shall explain in the response the reason why the record is temporarily unavailable and relate the date on which the record is expected to become available.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.10 Review of a Denial.

A. If the custodian denies a written request for a reason other than that the record is temporarily unavailable, the requester may, within 30 days after receipt of a notice of denial, request an administrative hearing.

B. If the requester requests a hearing, the hearing shall be conducted by an administrative law judge within the Office of Administrative Hearings. After the hearing, the administrative law judge shall prepare a recommended decision which shall be submitted to the Secretary. The Secretary shall issue the Department's final decision.

C. If the administrative hearing results in a total or partial denial of the written request, the requester may file an appropriate action in the circuit court under State Government Article, §10-623, Annotated Code of Maryland.

D. The requester may file an action for judicial enforcement under State Government Article, §10-623, without exhausting the administrative remedy set forth in this regulation.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.11 Disclosure Against Public Interest.

If, in the opinion of the Secretary, disclosure of any public record which is otherwise required to be disclosed under the Act would do substantial injury to the public interest, the Secretary may temporarily deny the request in writing, and apply within 10 working days of the denial to the appropriate circuit court for an order permitting the Secretary to continue to deny or restrict the disclosure. Notice of the application filed with the circuit court shall be served upon the requester in the same manner provided for service of process by the Maryland Rules of Procedure.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.12 Fees.

A. The Department may charge reasonable fees in accordance with the following fee schedule:

(1) Copies. The fee for each copy is 20 cents per page when reproduction can be made by a photocopying machine within the Department. When records are not reasonably amenable to photocopying, the fee for reproducing the record shall be based on the actual cost of reproduction.

(2) Certification of Copies. When a person requests that a copy of a record be certified as a true copy of the original public record, an additional cost of $1 per page shall be charged.

(3) Searching or Record Preparation. There is no charge for the first 2 hours needed to search for a public record and prepare it for inspection. The Department may charge $20 per hour for any additional time required to search for or prepare public records for inspection or copying.

(4) A charge may not be made when the amount of the fee is less than $2.

B. Notwithstanding §A of this regulation, if the fees for copies, printouts, photographs, or certified copies of a record are specifically prescribed by a law other than the Act or this regulation, the specific fee contained in that law shall determine the amount charged for that record.

C. If the custodian is unable to copy a record within the Department, the custodian shall make arrangements for the prompt reproduction of the record at public or private facilities outside the Department. The custodian shall either collect from the requester a fee which is sufficient to pay the actual cost of reproduction, or direct the requester to pay the cost of reproduction directly to the facility making the copy.

D. Before copying a record, the custodian shall estimate the cost of copying and obtain the agreement of the requester that the cost shall be paid. The custodian may demand prepayment of any estimated fee before copying the record. If prepayment is required, the time limitations contained elsewhere in these regulations may not begin until the payment is made.

E. Upon request, the custodian may waive or reduce a fee charged pursuant to this regulation if the custodian determines that the waiver or reduction is in the public interest. The custodian shall consider, among other relevant factors, the ability of the requester to pay the cost or fee.

F. If the requester requests that copies be mailed or delivered, the custodian may charge the requester for the cost of postage or delivery to the applicant.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.13 Time of Inspection.

A requester may inspect a public record to which access is granted during the normal working hours of the Department.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

COMAR 24.01.01.14 Place of Inspection.

The place of inspection shall be the place where the document is located unless the custodian determines that another place of inspection is more suitable.

History

• Administrative History: Effective date: July 9, 1990 (17:13 Md. R. 1614)
• Administrative History: Regulation .07-1 adopted effective June 8, 1992 (19:11 Md. R. 1017)
• Administrative History: Regulation .07-1 amended as an emergency provision effective May 19, 1995 (22:12 Md. R. 898); amended permanently effective July 31, 1995 (22:15 Md. R. 1122)
• Authority: Economic Development Article, §§2-108; State Government Article, §§10-613 and 10-617(c); Annotated Code of Maryland

24.01.02 Petitions for Adoption of Regulations

COMAR 24.01.02.01 Purpose.

This chapter is promulgated pursuant to State Government Article, §10-122, Annotated Code of Maryland, for the purpose of establishing procedures by which the public may petition the Department of Commerce for the adoption of regulations.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1438)
• Authority: Economic Development Article, §2-108; State Government Article, §10-122; Annotated Code of Maryland

COMAR 24.01.02.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Department” means the Department of Commerce.

(2) “Secretary” means the Secretary of Business Commerce or the Secretary's designee.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1438)
• Authority: Economic Development Article, §2-108; State Government Article, §10-122; Annotated Code of Maryland

COMAR 24.01.02.03 Who May File.

Any interested person may file a petition with the Secretary requesting the promulgation, amendment, or repeal of any regulation.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1438)
• Authority: Economic Development Article, §2-108; State Government Article, §10-122; Annotated Code of Maryland

COMAR 24.01.02.04 Form.

The petition shall:

A. Be in writing; and

B. Contain:

(1) A clear and concise statement of the regulation, amendment, or repeal which is sought;

(2) A statement of reasons in support of the proposed regulation change; and

(3) The name, address, and telephone number of the petitioner.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1438)
• Authority: Economic Development Article, §2-108; State Government Article, §10-122; Annotated Code of Maryland

COMAR 24.01.02.05 Petition Filed.

A. The petition shall be filed with the Secretary for consideration and disposition.

B. The time period for response to a petition begins when the petition is received by the Secretary.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1438)
• Authority: Economic Development Article, §2-108; State Government Article, §10-122; Annotated Code of Maryland

COMAR 24.01.02.06 Disposition.

Within 60 days after receipt of the petition, the Secretary shall either:

A. Deny the petition in writing, stating the reasons for the denial; or

B. Initiate the procedures for adoption of a regulation.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1438)
• Authority: Economic Development Article, §2-108; State Government Article, §10-122; Annotated Code of Maryland

COMAR 24.01.02.07 Agency File.

A. The Department shall maintain a file of all petitions submitted and the responses.

B. This file shall be available for public inspection to the extent permitted by law.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1438)
• Authority: Economic Development Article, §2-108; State Government Article, §10-122; Annotated Code of Maryland

24.01.03 Petition for Declaratory Rulings

COMAR 24.01.03.01 Purpose.

This chapter is promulgated pursuant to State Government Article, §10-304, Annotated Code of Maryland, for the purpose of establishing procedures by which the public may petition the Department of Commerce for a declaratory ruling.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1439)
• Authority: Economic Development Article, §2-108; State Government Article, §10-304; Annotated Code of Maryland

COMAR 24.01.03.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Department” means the Department of Commerce.

(2) “Secretary” means the Secretary of Commerce or the Secretary's designee.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1439)
• Authority: Economic Development Article, §2-108; State Government Article, §10-304; Annotated Code of Maryland

COMAR 24.01.03.03 Who May File.

Any interested person may file a petition for declaratory ruling with respect to the manner in which the Department would apply a regulation or order of the Department or a statute that the Department enforces to a person or property on the facts set forth in the petition.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1439)
• Authority: Economic Development Article, §2-108; State Government Article, §10-304; Annotated Code of Maryland

COMAR 24.01.03.04 Where to File.

A petition shall be filed with the Secretary for consideration and disposition.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1439)
• Authority: Economic Development Article, §2-108; State Government Article, §10-304; Annotated Code of Maryland

COMAR 24.01.03.05 Form.

The petition shall:

A. Be in writing;

B. Contain a detailed statement of the facts on which the petition is based;

C. Fully set forth the regulations or statutes involved;

D. Pose the question of whether, and in what manner, the regulations or statutes apply to the petitioner under the facts contained in the petition;

E. Contain the name, address, and telephone number of the petitioner; and

F. Contain a statement by the petitioner, under oath, that the facts contained in the petition are true.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1439)
• Authority: Economic Development Article, §2-108; State Government Article, §10-304; Annotated Code of Maryland

COMAR 24.01.03.06 Consideration and Disposition.

A. The Secretary:

(1) Shall consider the petition;

(2) May require argument on the petition; and

(3) May issue the declaratory ruling requested or deny the petition.

B. A declaratory ruling is binding upon the agency and the petitioner, to the extent permitted by law, on the facts alleged.

C. Any declaratory ruling issued shall:

(1) Be in writing; and

(2) State the reasons for the decision.

D. A copy of the declaratory ruling shall be delivered to the petitioner.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1439)
• Authority: Economic Development Article, §2-108; State Government Article, §10-304; Annotated Code of Maryland

COMAR 24.01.03.07 Agency File.

A. The Department shall maintain a file of all petitions submitted and the declaratory rulings issued.

B. This file shall be available for public inspection to the extent permitted by law.

History

• Administrative History: Effective date: August 28, 2006 (33:17 Md. R. 1439)
• Authority: Economic Development Article, §2-108; State Government Article, §10-304; Annotated Code of Maryland

24.01.04 Procedure for Hearings in Contested Cases

COMAR 24.01.04.01 General.

This chapter contains procedures for administrative hearings in contested cases. These procedures are required by the Maryland Administrative Procedure Act, State Government Article, Title 10, Subtitle 2, Annotated Code of Maryland.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

COMAR 24.01.04.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Contested case” means a proceeding to determine:

(a) A right, duty, statutory entitlement, or privilege of a person that is required by statute or constitution to be determined only after an opportunity for an agency hearing; or

(b) The grant, denial, renewal, revocation, suspension, or amendment of a license that is required by statute or constitution to be determined only after an opportunity for an agency hearing.

(2) “Decision maker” means the person or persons with authority to decide a contested case.

(3) “Department” means the Department of Commerce.

(4) “Party” means one whose legal rights, duties, statutory entitlements, or privileges will be affected by the outcome of a contested case.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

COMAR 24.01.04.03 Notice and Hearing.

A. In a contested case all parties shall be afforded an opportunity for hearing after reasonable notice.

B. The notice shall:

(1) State the time, place, and nature of the hearing;

(2) State the legal authority under which the hearing is to be held;

(3) Cite the particular sections of the statutes and regulations, including procedural regulations, that are pertinent; and

(4) State concisely and simply:

(a) The facts that are asserted; or

(b) If the facts cannot be stated in detail when the notice is given, the issues that are involved.

Cross References

24.05.03.10E(4)

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

COMAR 24.01.04.04 Hearing Officer.

The decision maker may request that the Office of Administrative Hearings designate an administrative law judge who shall conduct the hearing and submit in writing to the decision maker proposed findings of fact and proposed conclusions of law.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

COMAR 24.01.04.05 Representation.

A. A party may appear in proper person or be represented by counsel.

B. A corporation may be represented by an officer, agent, or attorney.

C. Parties and their attorneys shall give written notice to the hearing officer of their names and addresses in advance of the hearing.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

COMAR 24.01.04.06 Evidence.

A. Probative evidence that reasonable and prudent individuals commonly accept in the conduct of their affairs may be admitted at a hearing and given probative effect.

B. Incompetent, irrelevant, immaterial, or unduly repetitious evidence may be excluded.

C. Documentary evidence may be submitted by parties before and at the hearings and for the period of time that the administrative law judge may designate the record to remain open after the hearing.

D. On a genuine issue in a contested case, a party may call witnesses and cross-examine opposing witnesses.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

COMAR 24.01.04.07 Hearing.

A. The hearing shall be open to the public, unless otherwise provided by law.

B. Upon written notice 7 days before a hearing and upon payment of costs, a party may request that a hearing be transcribed.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

COMAR 24.01.04.08 Ex Parte Communications.

A. Persons other than advisory staff may not communicate ex parte with the administrative law judge or decision maker.

B. Ex parte communications received in violation of §A of this regulation shall be placed in the record and disclosed to all parties, who shall then have 10 days within which to rebut them.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

COMAR 24.01.04.09 Record.

A. In the determination of a contested case, the decision maker may consider only evidence that is in the record.

B. The record in a contested case shall include:

(1) Pleadings and motions;

(2) Documentary evidence;

(3) Statements;

(4) Transcripts;

(5) Staff memoranda, unless privileged;

(6) Proposed findings of fact, proposed conclusions of law, and exceptions to them;

(7) Preliminary and final decisions; and

(8) Other writing germane to the case and not otherwise privileged.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

COMAR 24.01.04.10 Decision.

A. The decision maker may adopt, modify, or rewrite the administrative law judge's proposed findings of fact and proposed conclusions of law.

B. If a decision maker, or a majority of decision makers, has not heard the evidence, a proposed decision, including findings of fact and conclusions of law, shall be served on each party. Parties adversely affected by the proposed decision shall be afforded the opportunity, within 10 days after receipt of the proposed decision, to file exceptions and present argument to the decision maker or the majority of decision makers.

C. Copies of the final decision and findings of fact and conclusions of law shall be delivered or mailed promptly to all parties or their attorneys.

D. Instead of a decision, a contested case may be disposed of by agreed settlement, consent order, or default.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

COMAR 24.01.04.11 Time Periods.

For good cause, the administrative law judge or decision maker may extend or waive time periods provided in these regulations.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

COMAR 24.01.04.12 Appeal.

A. Upon issuance of a final decision, an aggrieved party may proceed to exhaust any remaining administrative remedies or seek judicial review in accordance with applicable law.

B. Upon notice of appeal, the record shall be transmitted promptly to the appropriate appellate tribunal, but within the time period prescribed in the Maryland Rules of Procedure governing appeals from administrative agencies.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

COMAR 24.01.04.13 Interpretation.

These regulations are meant to complement the Maryland Administrative Procedure Act. In the event of conflict, the Act takes precedence over them.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Authority: Economic Development Article, §2-108; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland

24.01.05 Open Meetings

COMAR 24.01.05.01 General.

This chapter contains procedures regarding the conduct of persons attending open meetings, and the recording and broadcasting of open meetings.

History

• Administrative History: Effective date: December 7, 1992 (19:24 Md. R. 2127)
• Authority: Economic Development Article, §2-108; State Government Article, §10-507; Annotated Code of Maryland

COMAR 24.01.05.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Department” means the Department of Commerce, and all boards, commissions, authorities, and councils within the Department, except for the Board of Appeals.

(2) “Open session” means any meeting of the Department required to be open to the public by State Government Article, §§10-501—10-512, Annotated Code of Maryland.

History

• Administrative History: Effective date: December 7, 1992 (19:24 Md. R. 2127)
• Authority: Economic Development Article, §2-108; State Government Article, §10-507; Annotated Code of Maryland

COMAR 24.01.05.03 Public Attendance.

A. At any open session of the Department, the general public is invited to attend and observe.

B. Except in instances when the Department expressly invites public testimony, questions, comments, or other forms of public participation, or when public participation is otherwise authorized by law, a member of the public attending an open session may not participate in the session.

History

• Administrative History: Effective date: December 7, 1992 (19:24 Md. R. 2127)
• Authority: Economic Development Article, §2-108; State Government Article, §10-507; Annotated Code of Maryland

COMAR 24.01.05.04 Disruptive Conduct.

A. An individual attending an open session of the Department may not engage in any conduct, including visual demonstrations such as the waving of placards, signs, or banners, that disrupts the session or that interferes with the right of members of the public to attend and observe the session.

B. The presiding officer may:

(1) Order an individual who engages in conduct prohibited by §A of this regulation or who violates any other regulation concerning the conduct of the open session to be removed from the session;

(2) Request police or other assistance to restore order; and

(3) Recess the session while order is restored.

History

• Administrative History: Effective date: December 7, 1992 (19:24 Md. R. 2127)
• Authority: Economic Development Article, §2-108; State Government Article, §10-507; Annotated Code of Maryland

COMAR 24.01.05.05 Recording, Photographing, and Broadcasting of Open Sessions.

A. A member of the public, including any representative of the news media, may record discussions of the Department at an open session by means of a tape recorder or other recording device if the device does not create noise that disturbs members of the Department or others attending the sessions.

B. A member of the public, including any representative of the news media, may photograph or videotape the proceedings of the Department at an open session if the camera:

(1) Is operated without excessively bright artificial light that disturbs members of the Department or others attending the session; and

(2) Does not create noise that disturbs members of the Department or others attending the session.

C. A representative of the news media may broadcast or televise the proceedings of the Department at an open session if the equipment used:

(1) Is operated without excessively bright artificial light that disturbs members of the Department or others attending the session; and

(2) Does not create noise that disturbs members of the Department or others attending the session.

D. The presiding officer may restrict the movement of an individual who is using a recording device, camera, or broadcasting or televising equipment if this restriction is necessary to maintain the orderly conduct of the session.

History

• Administrative History: Effective date: December 7, 1992 (19:24 Md. R. 2127)
• Authority: Economic Development Article, §2-108; State Government Article, §10-507; Annotated Code of Maryland

COMAR 24.01.05.06 Recordings Not Part of Record.

A recording of an open session made by a member of the public, or any transcript derived from this recording, is not considered a part of the record of any proceeding of the Department.

History

• Administrative History: Effective date: December 7, 1992 (19:24 Md. R. 2127)
• Authority: Economic Development Article, §2-108; State Government Article, §10-507; Annotated Code of Maryland

COMAR 24.01.06 Transfer of Funds [Repealed]

History

• Administrative History: Effective date: November 22, 1993 (20:23 Md. R. 1807)
• Administrative History: ——————
• Administrative History: Chapter repealed effective December 20, 2004 (31:25 Md. R. 1791)

24.01.07 Corporate Diversity

COMAR 24.01.07.01 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Annual Report” means the report submitted to the Department of Assessments and Taxation pursuant to Tax-Property Article, §11-101, Annotated Code of Maryland.

(2) “Entity” means:

(a) A commercial enterprise or business that is required to be in good standing with the State Department of Assessments and Taxation and is:

(i) Formed in the State; or

(ii) Registered to do business in the State; or

(b) A corporation, foundation, school, hospital, or other legal entity for which none of the net earnings inure to the benefit of any private shareholder or individual holding an interest in the entity.

(3) “Person” has the meaning stated in Tax-Property Article, §1-101, Annotated Code of Maryland.

(4) “Secretary” means the Secretary of Commerce.

(5) “Special Secretary” means the Special Secretary of the Governor’s Office of Small, Minority & Women Business Affairs.

(6) “State benefit” has the meaning stated in Business Regulation Article, §19-106, Annotated Code of Maryland.

(7) “Underrepresented community” has the meaning stated in Business Regulation Article, §19-106, Annotated Code of Maryland.

History

• Administrative History: Effective date: September 5, 2022 (49:18 Md. R. 820)
• Authority: Business Regulation Article, §19-106; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.01.07.02 Corporate Diversity Requirements.

A. The Department of Assessments and Taxation shall include a Corporate Diversity Addendum form with the Annual Report form published by that department.

B. If the person submitting the Annual Report is an entity subject to this chapter, that person shall complete, on behalf of the entity, the Corporate Diversity Addendum included with the Annual Report.

C. As more fully described in §D of this regulation, the Corporate Diversity Addendum shall include information on:

(1) Membership of underrepresented communities in the entity’s board or executive leadership; and

(2) The entity’s support for underrepresented communities in the entity’s mission.

D. Required Information.

(1) In providing information about membership of underrepresented communities in an entity’s board or executive leadership in the Corporate Diversity Addendum, the entity shall report whether it has individuals on its board or in executive leadership from any of the following underrepresented communities, although the content of the response does not affect eligibility for a State benefit pursuant to Regulation .03A of this chapter:

(a) Alaska Native;

(b) Asian-Pacific Islander;

(c) Black or African-American;

(d) Hispanic or Latino;

(e) Native American;

(f) Native Hawaiian;

(g) One or more of the racial or ethnic groups listed above; or

(h) None of the above.

(2) In providing information about its support for underrepresented communities in its mission, an entity shall report whether it engages in any of the following activities, also known as diversity indicators:

(a) Maintains written workforce diversity, equity, and inclusion (DEI) policies;

(b) Offers DEI training to its workforce;

(c) Assigns a senior-level employee as responsible for oversight and direction of the entity’s DEI efforts;

(d) Reports performance of workforce DEI programs on the entity’s website;

(e) Includes DEI objectives in performance plans of its managers;

(f) Publishes information about DEI commitments and efforts on the entity’s website;

(g) Provides career advancement training and opportunities for its employees, which include members of underrepresented communities;

(h) Collaborates with educational institutions, or is an educational institution, serving significant or predominant student populations or affinity groups from underrepresented communities;

(i) Has a supplier diversity policy that provides business opportunities to diverse suppliers, including businesses owned by members of underrepresented communities, such as State-certified minority business enterprises (MBEs);

(j) Publicizes procurement opportunities to encourage participation from businesses owned by members of underrepresented communities;

(k) Measures the percentage of contract dollars awarded to businesses owned by members of underrepresented communities, including MBEs; and

(l) Provides support and outreach to underrepresented communities or organizations that represent underrepresented communities.

Cross References

24.01.07.03A(1)

24.01.07.03C

History

• Administrative History: Effective date: September 5, 2022 (49:18 Md. R. 820)
• Authority: Business Regulation Article, §19-106; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.01.07.03 Qualification for a State Benefit.

A. A State agency shall deny a State benefit to an entity unless the entity:

(1) Completes the Corporate Diversity Addendum described in Regulation .02 of this chapter and satisfies §C of this regulation; or

(2) Provides to the State agency providing a State benefit the affidavit described in §B of this regulation, affirming that the entity is not required to submit the Corporate Diversity Addendum.

B. To affirm that an entity is not required to submit the Corporate Diversity Addendum, the entity shall submit to the State agency providing a State benefit an affidavit signed by a corporate officer or principal of the entity, stating under penalties of perjury, with the name and title of the individual submitting the affidavit, that the entity for which the affidavit is submitted is:

(1) A sole proprietor;

(2) A limited liability company owned by a single member;

(3) A privately held company if at least 75 percent of the company’s shareholders are family members; or

(4) An entity that:

(a) Has an annual operating budget or annual sales less than $5,000,000; and

(b) Does not qualify for a State benefit.

C. An entity satisfies this section if it reports that it engages in at least 33 percent of the diversity indicators listed in Regulation .02 of this chapter.

D. To the extent that an entity qualifies for State tax credits totaling $1,000,000 or more but for the entity’s failure to meet the requirement in §C of this regulation, a State agency may not deny the entity tax credits available under Tax-General Article, §§8-207, 8-208, 8-303, 8-406(a), 9-214, 9-315, 10-701, 10-701.1, 10-703, 11-105, and 12-303, Annotated Code of Maryland.

E. The affidavit required in §B of this regulation shall be submitted in the form and manner prescribed by the State agency conferring the State benefit.

Cross References

24.01.07.02D(1)

24.01.07.04B

24.01.07.04C

24.01.07.04D

24.01.07.04E

24.01.07.04F(1)

24.01.07.06A

24.01.07.06C

History

• Administrative History: Effective date: September 5, 2022 (49:18 Md. R. 820)
• Authority: Business Regulation Article, §19-106; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.01.07.04 Administration of Chapter.

A. This chapter applies to a State benefit for which application, which includes a bid or proposal for a competitively bid procurement contract that is not federally funded in any way, is made after June 30, 2022.

B. If a State agency receives an application from an entity for a State benefit after June 30, 2022, but before the entity files the Annual Report first due by April 15, 2023, the State agency shall require that the entity provide directly to the State agency either the information required under Regulation .03A of this chapter or the affidavit described in of Regulation .03B of this chapter.

C. Except as provided in §D of this regulation, after the filing deadline of the 2023 Annual Report, a State agency that receives an application from an entity for a State benefit shall require the entity to provide either the information required under Regulation .03A of this chapter or the affidavit described in Regulation .03B of this chapter .

D. An entity that has been formed or registered, but which has not yet reached an Annual Report filing deadline and seeks to be considered for a State benefit, shall be permitted to satisfy the requirements of Regulation .03A of this chapter by providing information directly to the State agency providing the benefit.

E. An entity that was not required to complete the Corporate Diversity Addendum for a prior fiscal year because it was one of the types of entities described in Regulation .03B of this chapter, but to which the corporate diversity requirements become applicable before an Annual Report filing deadline in a subsequent fiscal year, shall be permitted to satisfy the requirements of Regulation .03A of this chapter by providing information directly to the State agency providing the benefit.

F. An entity may file an Annual Report or an amended Annual Report:

(1) To file the Corporate Diversity Addendum necessary to satisfy the requirements of Regulation .03A of this chapter; or

(2) To update or correct information on the Annual Report or the Corporate Diversity Addendum.

History

• Administrative History: Effective date: September 5, 2022 (49:18 Md. R. 820)
• Authority: Business Regulation Article, §19-106; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.01.07.05 Calculation of State Benefit.

In the case of a State benefit disbursed over more than 1 fiscal year, only the amount disbursed in 1 fiscal year shall count toward the $1,000,000 threshold.

History

• Administrative History: Effective date: September 5, 2022 (49:18 Md. R. 820)
• Authority: Business Regulation Article, §19-106; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.01.07.06 Audit; Cancellation or Repayment of State Benefit.

A. An entity shall keep complete and accurate records supporting any information or statement provided to an agency by the entity in the Corporate Diversity Addendum or the affidavit described in Regulation .03B of this chapter for a period of 5 years from the date of submission.

B. A State agency that has provided a State benefit to an entity subject to this chapter may at any time before or up to 5 years after the provision of the State benefit require any information provided to the agency by the entity in the Corporate Diversity Addendum be audited by the State.

C. If the State agency that has provided a State benefit to an entity subject to this chapter determines that any representation made by the entity in its Corporate Diversity Addendum or the affidavit described in Regulation .03B of this chapter in connection with its application for the State benefit is false when made, the agency may:

(1) Cancel the award of the State benefit, in whole or in part as the agency may determine;

(2) Require repayment of any capital grant or recapture of any tax credit;

(3) Initiate a State debarment proceeding against an entity that has received a State contract; and

(4) Seek any other remedy available at law.

History

• Administrative History: Effective date: September 5, 2022 (49:18 Md. R. 820)
• Authority: Business Regulation Article, §19-106; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.01.07.07 Waiver.

The Secretary and the Special Secretary may jointly waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with the provisions of Business Regulation Article, §19-106, Annotated Code of Maryland, or Economic Development Article, §2-108, Annotated Code of Maryland, if:

A. Conformance to the requirement of any federal, State, or local program necessitates waiver or variance of a regulation; or

B. In the joint determination of the Secretary and the Special Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Acts.

History

• Administrative History: Effective date: September 5, 2022 (49:18 Md. R. 820)
• Authority: Business Regulation Article, §19-106; Economic Development Article, §2-108; Annotated Code of Maryland

24.05 ECONOMIC DEVELOPMENT

24.05.01 Enterprise Zones

COMAR 24.05.01.01 Objective.

The objective of the Enterprise Zones Program is to focus local and State resources on the encouragement of economic growth in economically distressed areas and employment of the chronically unemployed in the State.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.02 Purpose.

These regulations describe the procedures that will be used by the Secretary of Commerce to designate enterprise zones and focus areas in enterprise zones and establish the requirements an area shall meet in order to be designated an enterprise zone or a focus area.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.03 Administration and Scope.

The Enterprise Zones Program shall be administered by the Secretary of Commerce. Certain activities shall be subject to approval by both the Secretary of Commerce and the Board of Public Works. Activities relating to revenue and taxes shall be administered by the Department of Assessments and Taxation and the Comptroller. The procedures set forth in these regulations are applicable to the designation of enterprise zones and focus areas in enterprise zones and the administration of the State Enterprise Zones Program. The State Enterprise Zones Program is independent of any federal enterprise zone program or designation.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.04 Definitions.

A. For purposes of designating enterprise zones and focus areas in enterprise zones within the State, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Area” means a geographic area within one or more political subdivisions within the State described by a closed perimeter boundary.

(2) Business Entity.

(a) “Business entity” means a person operating or conducting a trade or business.

(b) Except as provided in Tax-Property Article, §9-103, Annotated Code of Maryland, “business entity” does not include a person owning, operating, developing, constructing, or rehabilitating property intended for use primarily as a single or multifamily residential property located within an enterprise zone.

(3) “Census” means the United States Census of Population.

(4) “Chronic abandonment” means a condition where there is frequent giving up of land or buildings, or both, with no intent to return or reclaim.

(5) “Department” means the Department of Commerce.

(6) “Enterprise zone” means an area:

(a) Meeting certain specific requirements and so designated by the Secretary; or

(b) So designated by the United States Government, subject however to Regulation .07D of this chapter.

(7) “Enterprise zone incentives” means the financial incentives described in Economic Development Article, §5-707, Annotated Code of Maryland, for a business entity locating, investing, or expanding in an enterprise zone.

(8) “Focus area” means an area:

(a) Meeting the requirements of Economic Development Article, §5-706, Annotated Code of Maryland, and this chapter; and

(b) Designated as a focus area by the Secretary pursuant to Economic Development Article, §5-706, Annotated Code of Maryland, and this chapter.

(9) “Fund” means the Enterprise Zone Venture Capital Guarantee Fund.

(10) “Political subdivision” means any county or municipal corporation.

(11) “Secretary” means the Secretary of Commerce.

(12) “Submission date” means April 15 and October 15 of any calendar year.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.05 Eligible Applicants for Enterprise Zone Designation.

Eligible applicants include all political subdivisions.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.06 Designation of Enterprise Zones.

A. Any political subdivision may individually apply for designation of an area within its corporate or political boundaries as an enterprise zone.

B. County Designation.

(1) A county may apply to obtain a designation of an area in the county as an enterprise zone, but if any portion of the area is within the boundaries of a municipal corporation in the county, the county shall obtain the consent of the governing body of the municipal corporation.

(2) The required consent of the municipal corporation shall be obtained before submission of the application for designation and the consent document shall be included as part of the application.

(3) The required consent document shall be in the form required by local law or the governing body of the municipal corporation, or both.

C. Two or more political subdivisions may jointly apply for designation of an area as an enterprise zone if portions of the proposed area are within each of their common boundaries.

D. All applications shall be complete, meet all stated requirements, and be properly signed by the chief elected officer or officers in the case of a joint application or, if none, by the governing body of each of the political subdivisions. Except as noted in §B of this regulation, an application signed by the chief elected officer shall include a written expression of sentiment of the local elected governing body or bodies regarding the filing of an application for designation. The expression of sentiment may be in the form of a letter or a resolution at the discretion of the local jurisdiction.

E. The Secretary may permit any political subdivision to amend its application at any time before the Secretary acts upon the application.

F. All applications are to be received in the Office of the Secretary, Department of Commerce, on or before any submission date.

G. The Secretary shall prioritize applications from political subdivisions that do not have an existing Enterprise Zone designation.

H. Within 60 days following any submission date, the Secretary may designate one or more enterprise zones from among the applications submitted.

I. Before a designation of an enterprise zone, the Secretary shall consult with and ask the advice of the appropriate individuals and advisors.

J. The designation of an enterprise zone by the Secretary shall constitute the State approval that may be required for designation as an enterprise zone under federal law.

K. With respect to any designated enterprise zone, a political subdivision may not, without the prior approval of the Secretary, modify the standards with which it requires a business entity located in that zone to comply as a precondition to receiving any incentives.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.07 Designation of Focus Areas in Enterprise Zones.

A. A political subdivision may individually apply for designation of an area within its corporate or political boundaries as a focus area in an enterprise zone.

B. County Designation.

(1) A county may apply to obtain a designation of an area as a focus area in an enterprise zone, but if any portion of the area is within the boundaries of a municipal corporation in the county, the county shall obtain the consent of the governing body of the municipal corporation.

(2) The required consent of the municipal corporation shall be obtained before submission of the application for designation, and the consent document shall be included as part of the application.

(3) The required consent document shall be in the form required by local law or the governing body of the municipal corporation, or both.

C. Two or more political subdivisions may jointly apply for designation of an area as a focus area in an enterprise zone if portions of the proposed focus area are within each of their boundaries.

D. All applications shall be complete, meet all stated requirements, and be properly signed by the chief elected officer or officers in the case of a joint application, or, if none, by the governing body of each of the political subdivisions. Except as noted in §B of this regulation, an application signed by the chief elected officer shall include a written expression of sentiment of the local elected governing body or bodies regarding the filing of an application for designation. The expression of sentiment may be in the form of a letter or a resolution at the discretion of the local jurisdiction.

E. The Secretary may permit any political subdivision to amend its application at any time before the Secretary acts upon the application.

F. All applications are to be received in the Office of the Secretary, Department of Commerce, on or before any submission date.

G. Within 60 days following any submission date, the Secretary may designate one or more focus areas in enterprise zones from among the applications submitted.

H. Before a designation of a focus area in an enterprise zone, the Secretary shall consult with and ask the advice of the appropriate individuals and advisors.

Cross References

24.05.01.04B(6)(b)

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.08 Expansion of Enterprise Zones.

A. Upon application, the Secretary may permit the expansion of a designated enterprise zone.

B. The political subdivision or subdivisions that originally obtained the zone designation shall apply for the expansion.

C. The application for expansion of a designated enterprise zone shall set forth the basis for the request for expansion but need not duplicate data submitted for the original designation.

D. The designation period for the expansion area of the zone runs simultaneously with the period of the original zone designation and expires at the same time as the original zone designation.

E. The Secretary may grant an extraordinary expansion of an enterprise zone into any area that:

(1) Meets the requirements of Economic Development Article, §5-704, Annotated Code of Maryland, and this chapter;

(2) In the determination of the Secretary, has suffered a significant loss of economic base; and

(3) Merits inclusion as an Enterprise Zone for a compelling economic reason as determined by the Secretary.

F. The Secretary shall prioritize applications for the expansion of an Enterprise Zone.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.09 Redesignation of Enterprise Zones.

A. Upon application, the Secretary may permit redesignation of all or a portion of a designated enterprise zone.

B. Application Procedure.

(1) To apply for redesignation, the appropriate political subdivision shall file a complete application showing that the proposed zone meets all the requirements for a new zone.

(2) A redesignation application shall also include the following information:

(a) An evaluation of the history and benefits of the existing zone;

(b) An explanation of why portions of the existing enterprise zones are included in the redesignation request; and

(c) A comparison of the economic development strategy for the redesignation application with that of the existing zone.

C. A political subdivision may request redesignation of all or a portion of the designated zone before the end of the 10-year designation period. The new 10-year designation period shall, however, begin immediately upon the redesignation by the Secretary, within 60 days following the submission date, rather than at the end of the original 10-year term.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.10 Limit on Designation of Enterprise Zones.

A. The Secretary may not designate more than six enterprise zones in any calendar year. For the purpose of this limitation, a calendar year begins January 1 of each year and ends December 31 of the same year beginning in the year 2007.

B. Limit on Number of Zones.

(1) A county may not receive more than one designation of an area as an enterprise zone in any calendar year.

(2) Joint applications by two or more counties count as one designation of an area as an enterprise zone for each county.

(3) Joint applications by two or more municipalities within the same county count as one designation of an area as an enterprise zone within the county.

(4) Joint applications by a county and a municipality located within an adjoining county count as one designation of an area as an enterprise zone for each county.

(5) Except as provided in §B(6) of this regulation, an application for expansion of a designated enterprise zone is considered a new zone request and is counted as one additional designation of an area as an enterprise zone for the appropriate county or counties.

(6) If the geographic area of a proposed expansion area does not exceed 25 percent of the existing geographic area of the enterprise zone, the application for expansion is not considered a new zone request and is not counted as an additional designation of area as an enterprise zone for the appropriate county or counties.

(7) A redesignation request is considered a new zone request and is counted as one additional designation of an area as an enterprise zone.

(8) An area that is designated an enterprise zone under federal law is designated an enterprise zone, without regard to any limitation as to the number of enterprise zones that may be designated by the Secretary, automatically and without any additional action by the political subdivision or the Secretary.

(9) The extraordinary expansion of an enterprise zone may not count toward the limit set forth in §A of this regulation.

(10) The Secretary may not grant more than one extraordinary expansion of an enterprise zone throughout the State in any calendar year.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.11 Designation and Notice.

A. A. A determination by the Secretary as to the area designated an enterprise zone or a focus area in an enterprise zone is final.

B. The Secretary shall give written notice of a designation to both a political subdivision that receives a designation and the State agencies that will provide tax credits and other incentives and initiatives.

C. The Secretary shall notify a political subdivision that does not receive a requested designation in writing. The jurisdiction may reapply for a designation at any time by resubmitting the previously filed application or a revised application.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.12 Federal Designation.

A. If an area without a prior State designation is designated an enterprise zone under federal law, the incentives and initiatives provided for in the State Enterprise Zones Program are not available to business entities located in the federally designated enterprise zone unless, upon request by the appropriate political subdivision and submission of a copy of the federal application, the Secretary and the Board of Public Works consent to the federal designation.

B. After consent by the Secretary and the Board of Public Works to a federal designation, each business entity in the federal zone shall meet the conditions and requirements applicable to each incentive or initiative and comply with the standards submitted by the political subdivision.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.13 Clearinghouse or Alternate Review.

The political subdivision requesting an enterprise zone designation shall file, simultaneously with the submission of an application to the Secretary, a copy or copies of the application or application information, in accordance with established procedure, with the Priority Funding Area specialist in the Maryland Office of Planning and the State Clearinghouse or alternate review process that may be established by the Department.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.14 Application Requirements for Designation of an Enterprise Zone.

A. Requirements. The Secretary may not designate any area an enterprise zone unless the area:

(1) Is designated as a priority funding area or meets an exception under State Finance and Procurement Article, Subtitle 7B, Annotated Code of Maryland; and

(2) Satisfies at least one of the following requirements:

(a) The average rate of unemployment in the area, or within a reasonable proximity within the county to the area, for the most recent 18-month period for which data is available, shall be at least 150 percent of the average rate of unemployment in either the State of Maryland or the United States, whichever average rate is greater during that same period;

(b) The population in the area, or within a reasonable proximity within the county to that area, is, on the basis of the most recent census, a low-income poverty area in which the proportion of families with less than poverty level incomes is at least 1.25 times the national proportion;

(c) At least 70 percent of the families living in the area, or within a reasonable proximity within the county to that area, based on the most recent census, have incomes that are less than an amount equal to 80 percent of the median family income within the political subdivision in which the area is located; or

(d) The population in the area, or within a reasonable proximity within the county to that area, decreased by 10 percent between the date of the most recent census and the date of the immediately preceding census and the political subdivision can demonstrate to the Secretary's satisfaction that either chronic abandonment or demolition of the property is occurring in that area or substantial property tax arrearages exist within the area.

B. A political subdivision which chooses to generate statistics or use those of others to support compliance with §A of this regulation shall, at least 60 days before the submission date, deliver to the Secretary the statistics in detail including all background data, source, methodology, and certification by the person or persons responsible for preparation.

C. Other Requirements. In addition to §§A and B of this regulation, each political subdivision shall submit the following elements:

(1) A vicinity map and plan of the proposed zone indicating existing improvements and, if known, their historic significance and any proposed State capital improvements projects that affect the proposed zone.

(2) A tax map or block plat identifying those properties that are within the proposed zone, an indication as to those publicly or privately held, an analysis of current building use or uses and employment levels, and such other information as shall be established by the Secretary.

(3) A statement whether the political subdivision has examined the feasibility of creating educational or training opportunities for employers and employees of business enterprises located or to be located in the proposed zone. If these opportunities are to be established, indicate the nature, type and sponsorship of the educational or training opportunities. If these opportunities are not to be established, indicate the reason.

(4) A plan covering the responsibility for management of the zone.

(5) Standards to be imposed by the political subdivision with which a business entity shall comply, either initially or continuously, as a precondition to receiving the Enterprise Zones Program incentives and initiatives. A political subdivision may require a business entity to provide an annual report containing information required by the Secretary as a precondition to the business entity receiving an eligibility certification for the Enterprise Zones Program incentives and initiatives.

(6) Additional incentives and initiatives the applicant jurisdiction may provide or establish to encourage business entities to locate within the proposed zone.

(7) Evidence and certification that the political subdivision, before submission, held a public hearing with adequate notice and publicity on the application.

(8) A written narrative to explain the goals and strategy for the zone.

(9) If the size of the proposed zone exceeds 160 acres, a written justification of the size of the proposed zone.

(10) Either a certification that all properties proposed for inclusion in the enterprise zone are priority funding areas under State Finance and Procurement Article, §5-7B-03, Annotated Code of Maryland, or a justification as to why any property that is not in a priority funding area should be included in the enterprise zone.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.15 Application Requirements for Designation of a Focus Area.

A. A request for designation of a focus area may be made on or before any submission date, either at the time the political subdivision applies for the designation of a new enterprise zone or after an enterprise zone has been designated by the Secretary.

B. The Secretary may designate an area as a focus area if the area is located in an enterprise zone designated by the Secretary and meets at least three of the following criteria:

(1) The average rate of unemployment in the area, or within a reasonable proximity to the area but within the same county, for the most recent 18-month period for which data are available, is at least 150 percent of the average rate of unemployment in either the State or the United States, whichever average rate is greater during the same period;

(2) The population in the area or within a reasonable proximity to the area but within the same county has an incidence of poverty that is 150 percent of the national average;

(3) The crime rate in the area or within a reasonable proximity to the area but within the same county is at least 150 percent of the crime rate in the political subdivision in which the area is located, based on crime statistics that:

(a) Conform with standards set forth under the F.B.I. Uniform Crime Reporting Program or the National Crime Victimization Survey, and

(b) Are “aggregated categories” that include both violent crimes and crimes against property;

(4) The percentage of substandard housing in the area or within a reasonable proximity to the area but within the same county is at least 200 percent of the percentage of housing units in the State that are substandard, according to data from the U.S. Bureau of the Census, or other State or federal government data considered appropriate by the Secretary, including any of the following measures developed from the Decennial Census of Population and Housing, Bureau of the Census, U.S. Department of Commerce:

(a) The proportion of housing units without complete kitchen facilities,

(b) The proportion of housing units without complete bathroom facilities,

(c) The proportion of boarded-up units, or

(d) The number of occupants per occupied housing unit;

(5) The percentage of square footage of commercial property that is vacant in the area or within a reasonable proximity of the area but within the same county is at least 20 percent, according to data from the U.S. Bureau of the Census, or other State or federal government data considered appropriate by the Secretary, including data collected by a county or municipality and approved by a unit of State government.

C. A political subdivision that chooses to generate statistics or use those of others to support compliance with §B of this regulation shall, at least 60 days before any submission date, deliver to the Secretary the statistics in detail, including all background data, source, methodology, and certification by the person or persons responsible for preparation.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.16 Annual Report.

A. A political subdivision receiving an enterprise zone designation from the Secretary shall submit an annual report on a calendar year basis to the Secretary by April 15 of the following year, in the form and containing the information established by the Secretary.

B. If the enterprise zone contains one or more focus areas, the annual report shall contain a separate discussion about each focus area.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.17 Period of Availability.

A. Except as provided in Tax-General Article, §10-702, and Tax-Property Article, §9-103, Annotated Code of Maryland, the Enterprise Zones Program incentives and initiatives shall be available for a period of 10 years following the data on which the area is designated an enterprise zone.

B. Except as provided in Tax-General Article, §10-702, and Tax-Property Article, §9-103, Annotated Code of Maryland, the focus area incentives and initiatives shall be available for the lesser of:

(1) 5 years from the date of designation; or

(2) The remainder of the 10-year term of the applicable enterprise zone.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.18 Economically Disadvantaged Individual.

The Secretary has designated the Maryland Department of Labor to certify persons as “economically disadvantaged individuals” for eligibility under Tax-General Article, §10-702(a)(5), Annotated Code of Maryland.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

COMAR 24.05.01.19 Waiver.

The Secretary may waive or vary particular provisions of these regulations to the extent that a waiver is not inconsistent with the law.

History

• Administrative History: Effective date: September 13, 1982 (9:18 Md. R. 1798)
• Administrative History: Regulation .05I adopted effective April 25, 1983 (10:8 Md. R. 1798)
• Administrative History: Regulations .05D, E and .08C amended effective April 25, 1983 (10:8 Md. R. 1724)
• Administrative History: Regulation .09 amended effective July 2, 1984 (11:13 Md. R. 1175)
• Administrative History: ——————
• Administrative History: Chapter recodified from COMAR 05.04.04 to COMAR 24.05.01
• Administrative History: Chapter revised effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Chapter revised effective June 26, 2000 (27:12 Md. R. 1142)
• Administrative History: Regulation .06 amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08E amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .08F adopted effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .10 amended effective August 13, 2007 (34:16 Md. R. 1433)
• Administrative History: Regulation .10B amended effective March 16, 2026 (53:5 Md. R. 246)
• Administrative History: Regulation .14A amended effective December 25, 2000 (27:25 Md. R. 2284)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 7, Annotated Code of Maryland

24.05.02 Film Production Activity—Employer Wage Rebate Grant Program

COMAR 24.05.02.01 Purpose.

This chapter describes the policies, procedures, and authorizations for providing grant rebates in connection with a film production activity from the Film Production Activity—Employer Wage Rebate Grant Program.

History

• Administrative History: Effective date: February 27, 2006 (33:4 Md. R. 354)
• Authority: Economic Development Article, §4-406, Annotated Code of Maryland

COMAR 24.05.02.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, Title 4, Subtitle 4, Annotated Code of Maryland.

(2) “Applicant” means an individual, partnership, corporation, limited liability company, not-for-profit entity, or other form of entity permitted to do business in the State seeking a grant from the Department.

(3) “Department” means the Department of Commerce.

(4) Film Production Activity.

(a) “Film production activity” means the production, including preproduction, of a film or video project:

(i) For which the total direct costs incurred in the State are at least $500,000;

(ii) For which more than half of the principal photography will be done in the State; and

(iii) Which upon completion, will be distributed nationwide.

(b) “Film production activity” does not include:

(i) Student films;

(ii) Noncommercial personal videos or films;

(iii) Sports broadcasts;

(iv) Broadcasts or filming of live events;

(v) Talk shows;

(vi) Reality television programs or films; or

(vii) Any activity which is not necessary to and undertaken directly and exclusively for the making of a master film, tape, or image.

(5) “Fund” means the Film Production Employer Wage Rebate Fund, which is administered by the Department.

(6) “Grant” means a grant made by the Department from the Fund under the provisions of the Act and this chapter.

(7) Qualified Employee Wages.

(a) “Qualified employee wages” means the first $25,000 of an employee's wages that are:

(i) Directly attributable to the employee's work in the film production activity in the State; and

(ii) Paid directly by the qualified film production employer to the employee.

(b) “Qualified employee wages” does not include:

(i) Any portion of the wages of an employee whose wages in connection with the film production activity equal or exceed $1,000,000;

(ii) The value of fringe benefits (whether paid by the employer or the employee), required payments by the employer such as social security contributions and payroll taxes, or deferred compensation; or

(iii) Any wages paid to, or earned by, an employee prior to the date the qualified film production employer opens a film production office in the State.

(8) “Qualified film production employer” means an employer:

(a) That is carrying out a film production activity; and

(b) That the Secretary has agreed to extend a grant from the Fund.

(9) Total Direct Costs of a Film Production Activity.

(a) “Total direct costs of a film production activity” means the total of costs incurred that are necessary to carry out a film production activity.

(b) “Total direct costs of a film production activity” includes costs incurred for:

(i) Employee wages and benefits;

(ii) Fees for services;

(iii) Acquiring or leasing real property or tangible or intangible personal property; or

(iv) Any other expense necessary to carry out a film production activity.

History

• Administrative History: Effective date: February 27, 2006 (33:4 Md. R. 354)
• Authority: Economic Development Article, §4-406, Annotated Code of Maryland

COMAR 24.05.02.03 Film Production Activities Financed by the Fund.

The Fund shall be used to provide grants to reimburse a qualified film production employer for a portion of the qualified employee wages incurred by the qualified film production employer in connection with a film production activity.

History

• Administrative History: Effective date: February 27, 2006 (33:4 Md. R. 354)
• Authority: Economic Development Article, §4-406, Annotated Code of Maryland

COMAR 24.05.02.04 Eligible Applicants.

A. An applicant may apply for a grant under the Act as set forth in this regulation.

B. The applicant shall:

(1) Apply to the Department for a grant from the Fund before photography on the film production activity occurs;

(2) If applicable, be in good standing in the jurisdiction in which it is organized and in the State;

(3) Be the expected qualified film production employer; and

(4) Expect to begin filming of the qualified film production activity within a reasonable period of time, not to exceed 120 days after the date of submission of the application.

History

• Administrative History: Effective date: February 27, 2006 (33:4 Md. R. 354)
• Authority: Economic Development Article, §4-406, Annotated Code of Maryland

COMAR 24.05.02.05 Application and Processing Procedures.

A. Grant Application.

(1) Grant applications shall be made on standard forms prescribed by the Department.

(2) Each application shall include:

(a) The information required by Economic Development Article, §4-403(c), Annotated Code of Maryland; and

(b) Any other information the Secretary requires related to the film production activity and the employer seeking the rebate.

B. Processing Procedures.

(1) Application Review. The Department shall review each application to determine whether an applicant will be awarded a grant from the Fund and the amount of that grant. In making the determination whether to award a grant or the amount of a grant to be awarded, the Secretary may consider any of the following factors:

(a) Whether the applicant is a qualified film production employer and the proposed project is a film production activity;

(b) The economic impact of the film production activity on the State;

(c) The financial resources of the qualified film production employer;

(d) The amount of wages to be paid to employees of the qualified film production employer; and

(e) The expected value to the State resulting from the film production activity.

(2) Grant Agreement.

(a) The Department shall prepare and provide the applicant with a copy of a grant agreement which shall contain the provisions the Department determines are necessary to reflect the terms of the grant.

(b) In addition to any other requirements of the Department, the grant agreement shall require that any version of the film production activity which is distributed for viewing by the public shall contain a screen acknowledgement in form and content acceptable to the Department.

History

• Administrative History: Effective date: February 27, 2006 (33:4 Md. R. 354)
• Authority: Economic Development Article, §4-406, Annotated Code of Maryland

COMAR 24.05.02.06 Completion of Principal Photography.

Upon completion of principal photography in the State, or in the case of a film production activity which is serial in nature, upon completion of principal photography for the season, the qualified film production employer shall deliver any information or certifications concerning the film production activity required by the Department.

Cross References

24.05.02.07

History

• Administrative History: Effective date: February 27, 2006 (33:4 Md. R. 354)
• Authority: Economic Development Article, §4-406, Annotated Code of Maryland

COMAR 24.05.02.07 Disbursement of Grant Funds.

The Department shall only disburse grant funds to a qualified film production employer after the Department has reviewed and accepted all materials submitted to the Department under Regulation .06 of this chapter.

History

• Administrative History: Effective date: February 27, 2006 (33:4 Md. R. 354)
• Authority: Economic Development Article, §4-406, Annotated Code of Maryland

COMAR 24.05.02.08 Limitations on Grants.

A. Maximum per Film Production Activity. A grant from the Fund for a film production activity may not exceed the lesser of:

(1) 50 percent of the qualified employee wages incurred by the qualified film production employer in connection with a film production activity; or

(2) $2,000,000.

B. Limit on Seasonal Productions. Film production activities which reoccur on a seasonal basis, such as a television series, shall only be eligible for up to two grants from the Fund. Each grant shall be for a separate and distinct season.

History

• Administrative History: Effective date: February 27, 2006 (33:4 Md. R. 354)
• Authority: Economic Development Article, §4-406, Annotated Code of Maryland

COMAR 24.05.02.09 Drug-Free and Alcohol-Free Workplace.

The applicant shall:

A. Comply with the State's policy concerning drug-free and alcohol-free workplaces, as set forth in COMAR 01.01.1989.18; and

B. Make a good-faith effort to eliminate illegal drug use and alcohol and drug abuse from places at which work is performed in accordance with the terms of the Department's financial assistance.

History

• Administrative History: Effective date: February 27, 2006 (33:4 Md. R. 354)
• Authority: Economic Development Article, §4-406, Annotated Code of Maryland

COMAR 24.05.02.10 Waiver.

The Secretary or the Secretary's designee may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with the Act if:

A. Conformance to the requirement of any federal, State, or local program in connection with financial assistance necessitates waiver or variance of a regulation; or

B. In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: February 27, 2006 (33:4 Md. R. 354)
• Authority: Economic Development Article, §4-406, Annotated Code of Maryland

24.05.03 Biotechnology Investment Incentive Tax Credit

COMAR 24.05.03.01 Purpose.

A. This chapter describes the:

(1) Requirements for a qualified investor to receive a certificate allowing it to claim a credit against the State income tax for an investment in a qualified Maryland biotechnology company;

(2) Criteria to be applied by the Department of Commerce to determine whether a company will be certified as a qualified Maryland biotechnology company; and

(3) Procedures to be used by the Department of Commerce to:

(a) Receive, review, and approve or disapprove applications by investors claiming eligibility for the tax credit;

(b) Determine whether investors are qualified investors;

(c) Perform a criteria-referenced assessment and evaluation of companies to determine eligibility for certification as a qualified Maryland biotechnology company;

(d) Issue initial and final tax credit certificates;

(e) Issue certificates that a company is a qualified Maryland biotechnology company;

(f) Monitor and audit investments in qualified Maryland biotechnology companies;

(g) Monitor, audit, and make inquiries about:

(i) The continued eligibility of tax credit certificate holders for tax credits;

(ii) The continued eligibility for certification as a qualified Maryland biotechnology company; and

(iii) The continued presence of a qualified Maryland biotechnology company, and the continued maintenance by it of its headquarters and the base of its biotechnology activities, in the State;

(h) Rescind or revoke initial or final tax credit certificates; and

(i) Rescind or revoke certificates that a company is a qualified Maryland biotechnology company.

B. The Comptroller of the Treasury administers the tax credit, any recapture or assessment procedures in connection with the tax credit, and the Reserve Fund.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Tax-General Article, §10-725, Annotated Code of Maryland.

(2) “Active business” has the meaning stated in Regulation .14D(5)(c) of this chapter.

(3) Actual Amount of an Investment.

(a) “Actual amount of an investment” means the amount expressed in United States currency of an investment that is:

(i) Paid in exchange for an equity interest or other ownership interest in a qualified Maryland biotechnology company;

(ii) Immediately available to the qualified Maryland biotechnology company for the purpose of engaging in its primary biotechnology activities; and

(iii) Substantially used to engage in the primary biotechnology activities.

(b) “Actual amount of an investment” does not include start up or organization expenses not deductible as current business expenses of the qualified Maryland biotechnology company.

(4) “Applicant” means a qualified investor that has filed an application for a certificate.

(5) “Biotechnology” has the meaning stated in Regulation .14C of this chapter.

(6) “Biotechnology company” means a company that is primarily engaged in the research, development, or commercialization of innovative and proprietary biotechnology.

(7) “Certificate” means an initial certificate or a final certificate of eligibility for tax credit under this chapter.

(8) Company.

(a) “Company” means any entity duly organized and existing under the law of any jurisdiction for the purpose of conducting business for profit.

(b) “Company” does not include an individual or a sole proprietorship.

(9) “Comptroller” means the Maryland Comptroller of the Treasury, or the Comptroller’s designee.

(10) “Convertible Debt” means a debt, bond, or loan issued by a qualified Maryland biotechnology company to a qualified investor for a contemporaneous exchange of cash or cash equivalents expressed in United States dollars, at a risk of loss, convertible into a specified amount of stock, partnership or membership interests, or other ownership interest.

(11) “Credit amount” means the amount of money expressed as United States currency approved by the Department with respect to an investment and set out in an initial certificate or a final certificate.

(12) “Department” means the Department of Commerce.

(13) Entity.

(a) “Entity” means an individual or a legal or juridical person which is:

(i) Created, organized, and existing under the laws of any jurisdiction; and

(ii) Subject to any express exclusions or limitations of particular entities set forth in the Act or this chapter.

(b) “Entity” includes a corporation, a limited liability company, a partnership, a limited partnership, a limited liability partnership, or a trust.

(14) “Final certificate” means a certificate issued by the Department stating the final credit amount approved by the Department.

(15) “Headquarters and base of operations” means the facility or facilities located in the State, where the qualified Maryland biotechnology company’s financial, personnel, planning, management, administrative, biotechnology research, biotechnology development, and biotechnology production activities are primarily handled.

(16) “Initial certificate” means a certificate issued by the Department stating a maximum credit amount for which the applicant is eligible based on an application.

(17) Investment.

(a) “Investment” means the contribution of money in cash or cash equivalents expressed in United States dollars, at a risk of loss, to a qualified Maryland biotechnology company in exchange for stock, a partnership or membership interest, or other ownership interest, title to which equity or ownership interest vests in the qualified investor applying for an initial certificate of eligibility for tax credit.

(b) Investment includes convertible debt created on or after July 1, 2015, if the convertible debt is:

(i) Created by the qualified investor applying for an initial certificate of eligibility for tax credit;

(ii) Created within 1 year prior to the date that the qualified investor applies for an initial certificate of eligibility for tax credit; and

(iii) Converted to an interest described in §B(17)(a) within 30 days after the issuance of an initial certificate of eligibility for tax credit and prior to the issuance of a final certificate for tax credit.

(c) Investment does not include any other form of debt.

(18) “Investment notice” means the notice submitted by an applicant that the applicant has made an investment in a qualified Maryland biotechnology company.

(19) “Invests” means to pay money in cash or cash equivalents in exchange for an equity or other ownership interest in a qualified Maryland biotechnology company with a view to profit and financial return or the growth in value of the equity interest acquired, as a result of the qualified Maryland biotechnology company’s use of the investment to carry on its biotechnology research, biotechnology development, and commercialization of biotechnology.

(20) “Ownership interest” means the equity interest in a qualified Maryland biotechnology company owned and held directly by an applicant free of any encumbrances.

(21) Qualified investor.

(a) “Qualified investor” means any entity that:

(i) Invests at least $25,000 in a qualified Maryland biotechnology company; and

(ii) Is required to file an income tax return in any jurisdiction.

(b) “Qualified investor” does not include a qualified pension plan, individual retirement account, or other qualified retirement plan as defined by the Employee Retirement Income Security Act of 1974, as amended, or fiduciaries or custodians under these plans, or similar tax-favored plans or entities under the laws of other countries.

(22) Qualified Maryland Biotechnology Company (QMBC).

(a) “Qualified Maryland biotechnology company (QMBC)” means a biotechnology company:

(i) That has its headquarters and base of operations in the State;

(ii) That has fewer than 50 full-time employees;

(iii) That except as provided in §B(21)(b) of this regulation, been in active business not longer than 10 years;

(iv) Whose securities are not publicly traded on any exchange; and

(v) That has been certified as a qualified Maryland biotechnology company by the Department under this chapter.

(b) “Qualified Maryland biotechnology company (QMBC)” includes a company that has been in active business for up to 12 years if the Department determines that the company requires additional time to complete the process of regulatory approval of a biotechnology product.

(23) “QMBC certificate” means a certificate issued by the Department certifying that a company is a qualified Maryland biotechnology company.

(24) “QMBC certificate holder” means a company that has been certified by the Department as a qualified Maryland biotechnology company and has received from the Department a QMBC certificate evidencing that determination.

(25) “Recapture” means the process by which the Comptroller will recover all or part of any tax credit claimed by, or refund made to, an applicant.

(26) “Rescission” means the process by which the Secretary may rescind, make void, cancel, or render ineffective an initial certificate.

(27) “Rescission notice” means the notice issued by the Department to inform an applicant that an initial certificate has been rescinded.

(28) “Reserve Fund” means the Biotechnology Investment Tax Credit Reserve Fund which is administered by the Treasurer and the Comptroller.

(29) “Revocation” means the process by which the Department may revoke a final tax credit certificate or a QMBC certificate.

(30) “Risk of loss” means when repayment of an investment entirely depends upon the success of the business operations of the qualified company.

(31) “Secretary” means the Secretary of Commerce, or the Secretary’s designee.

(32) “Tax credit” means the credit against Maryland income tax for an investment in a qualified Maryland biotechnology company equal to the credit amount approved by the Secretary in a final certificate.

(33) “Tax credit certificate holder” means an entity that has received an initial certificate or a final certificate from the Department under this chapter.

(34) “Treasurer” means the State Treasurer of Maryland, or the Treasurer’s designee.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.03 Applications for Certificate of Eligibility for Tax Credit.

A. Biotechnology Investment Incentive Tax Credit Application. To claim eligibility for a tax credit and to be initially certified as eligible for a tax credit, an applicant shall submit to the Department, not less than 30 days before making an investment in a qualified Maryland biotechnology company, an application on a form approved by the Department.

B. An applicant may not file an application earlier than June 1 of the State fiscal year immediately preceding the State fiscal year in which the applicant intends to make the investment and claim eligibility for a tax credit.

C. Each application shall include the following:

(1) The legal name of the applicant;

(2) The street address of the principal place of business of the applicant, or the street addresses of the principals of the applicant, and the applicant’s email address and telephone number;

(3) Except in the case of an individual applicant, the business mailing address, telephone number, and email address of an individual with authority to act on behalf of the applicant;

(4) The federal employer identification number of the applicant or, if the applicant is an individual, the Social Security number of the applicant; and

(5) Any other information required or requested by the Department.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.04 Applications for Certificate of Eligibility for Tax Credit — Required Supporting Documents and Statements.

An applicant shall submit to the Department an application that includes:

A. If the applicant is a corporation or limited liability company:

(1) Its legal name and the street and mailing address of its principal place of business and the applicant’s email address and telephone number;

(2) A certified copy of its articles of incorporation, articles of organization, or other organizational documents, and all amendments to them;

(3) A certificate of good standing from the Maryland Department of Assessments and Taxation dated within 30 days of the date the application is filed, unless the applicant is not required to qualify or register to do business in the State of Maryland;

(4) The names and business addresses of its officers and directors; and

(5) The names and addresses of each of its shareholders or members who hold shares directly or indirectly or ownership interests of any class representing 5 percent or more of the total equity capital of the applicant.

B. If the applicant is a foreign entity in the nature of a stock corporation or limited liability company:

(1) All of the information required under §A of this regulation; and

(2) A certificate or other similar document, translated if necessary into standard English, from the appropriate official of the jurisdiction under the laws of which it is organized, attesting that it is duly organized, legally existing, and in good standing under the laws of that jurisdiction, and dated within 30 days before the date on which the application is filed.

C. If the applicant is a partnership, limited liability partnership, or limited partnership, or similar entity:

(1) A copy of its partnership agreement, and all amendments to it, certified as to completeness and accuracy by a general partner or a managing member;

(2) If applicable, a certified copy of its certificate of limited partnership or other similar publicly filed organizational document and all amendments or supplements to it; and

(3) The names and business addresses of its general partners or managing members.

D. If applicable, and if the applicant is a foreign limited partnership, limited liability partnership, or similar entity:

(1) All of the information required under §C of this regulation; and

(2) A certificate or other similar document, translated if necessary into standard English, from the appropriate official of the jurisdiction under the laws of which it is organized, attesting that it is duly organized, legally existing, and in good standing under the laws of that jurisdiction, and dated within 30 days before the date on which the application is filed;

E. The full legal name of the qualified Maryland biotechnology company in which an investment is proposed to be made;

F. The federal employer identification number of the qualified Maryland biotechnology company in which an investment is proposed to be made;

G. A conformed copy of the Certificate of the Department that the qualified Maryland biotechnology company in which an investment is proposed to be made is a qualified Maryland biotechnology company; and

H. If the qualified Maryland biotechnology company in which an investment is proposed to be made has not been certified by the Department as a qualified Maryland biotechnology company, a verified application for certification as a qualified Maryland biotechnology company by and on behalf of the company in which the proposed investment is to be made, on a form approved by the Department under Regulation .13 of this chapter, setting forth the information and accompanied by the documents required by the Department in Regulation .13 of this chapter and in the instructions to that application.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.05 Tax Credit Certification Procedures — Initial Certificate.

A. Initial Certificate.

(1) Order of Approval of Applications.

(a) The Department shall review applications on a first-come, first-served basis.

(b) The Department shall disapprove:

(i) Incomplete applications;

(ii) Applications that fail to establish that the applicant is a qualified investor or otherwise eligible to claim a tax credit under this chapter; or

(iii) Applications that fail to establish that the company in which the proposed investment is to be made is a QMBC on the date on which the application is filed.

(c) Disapproved applications shall be treated as not having been filed for the purposes of assigning priority to other applications.

(2) Approval. Subject to the limitations set forth in §B of this regulation and the eligibility restrictions set forth in §C of this regulation, the Department shall approve and issue an initial certificate to the applicant by regular mail at the address contained in the application with a copy by regular mail to the QMBC at the address contained on the QMBC’s application if:

(a) An applicant satisfies the definition of qualified investor; and

(b) The biotechnology company to which the investment is proposed to be made is certified by the Department as a qualified Maryland biotechnology company.

(3) Tax Credit Amount.

(a) The tax credit allowed in an initial certificate is 50 percent of the investment in a qualified Maryland biotechnology company, not to exceed $250,000.

(b) The maximum amount of the tax credit shall be stated in the initial certificate.

B. Limitations on Issuance.

(1) For the purposes of this section, the Department will review, process, and make allocations of available tax credit on a first come, first served basis in the order in which individual applications are received.

(2) Fiscal Year Appropriation Limitation.

(a) For any State fiscal year, the Department may not issue initial certificates for credit amounts that in the aggregate total more than a maximum credit amount calculated separately at the time each application is ready for the Secretary’s approval or disapproval and in the order in which applications are received, taking into account the effect of rescinded certificates and revoked certificates, as follows:

(i) The sum of the amount appropriated to the Reserve Fund for the State fiscal year in question, and any excess amounts appropriated in prior State fiscal years and carried forward;

(ii) Reduced by the amount of any funds transferred from the Reserve Fund under the authority of any provision of law other than Tax General Article, §10-725 (g)(4), Annotated Code of Maryland; and

(iii) Increased by the amount of tax credit appearing on the face of any initial certificate issued in that State fiscal year and subsequently rescinded.

(b) Upon request of the Secretary, the Comptroller shall certify to the Secretary the amount of the available funds in the Reserve Fund as of a date certain. The request shall be accompanied by a certification of the Secretary of the aggregate amount of initial certificates issued in the State fiscal year in question through the date of the request.

(3) Fiscal Year Aggregate Tax Credit Limitation for Single QMBC.

(a) During any fiscal year of the State, the Department may not certify eligibility for tax credits for investments in a single qualified Maryland biotechnology company that in the aggregate exceed 15 percent of the total appropriations to the Reserve Fund for that fiscal year.

(b) The Department may not issue an initial certificate for a credit amount with respect to a single qualified Maryland biotechnology company that when aggregated with previously issued initial certificates issued with respect to the same qualified Maryland biotechnology company in the same fiscal year total more than the maximum credit amount for that company under §B(3)(a) of this regulation, calculated separately at the time each application is ready for the Department’s approval or disapproval and taking into account the effect of rescinded certificates and revoked certificates with respect to the same single qualified Maryland biotechnology company.

(c) If there is any remaining balance of fiscal year aggregate tax credit under §B(3)(a) of this regulation with respect to a single qualified Maryland biotechnology company, and the amount of tax credit claimed in the next application in order with respect to that single qualified biotechnology company would exhaust or exceed that remaining balance of fiscal year aggregate tax credit under §B(3)(a) of this regulation with respect to that single qualified Maryland biotechnology company, then the Department shall issue an initial certificate for a credit amount that will exhaust the remaining available annual maximum credit amount for that company although less than the amount of the investment requested in that application.

C. Eligibility Restrictions.

(1) To be eligible for a tax credit, a qualified investor that is a company as opposed to an entity:

(a) Shall be duly organized, existing and in good standing in the jurisdiction under the laws of which it is organized;

(b) Shall be current in the payment of all tax obligations to the State or any unit or subdivision of the State; and

(c) May not be in default or arrears under the terms of any contract with, indebtedness to, or grant from the State or any unit or subdivision of the State.

(2) To be eligible for a tax credit under this chapter, a qualified investor, determined by application of the ownership attribution rules of Regulation .15 of this chapter, may not, after making the proposed investment, own or control more than 25 percent of the equity interests in the qualified Maryland biotechnology company in which the investment is made.

D. Date of Issuance or Disapproval. The Secretary shall approve the application and issue the initial certificate, or disapprove the application, within 30 calendar days after the applicant submits a completed application and any other information requested by the Department.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.06 Investment.

A. Investment. Within 30 calendar days after the date of an initial certificate, the applicant shall make the investment in the qualified Maryland biotechnology company.

B. Investment Notice. Within 10 calendar days after the date on which a qualified investor makes the investment in the qualified Maryland biotechnology company, the applicant shall provide to the Department a notice and proof of the making of the investment on a form or forms prescribed by the Department.

C. Evidence of Investment.

(1) The investment notice shall be supported by evidence of the investment and of the equity interest issued or acquired in consideration of the investment. This evidence shall include an affidavit, in a form approved by the Department, of the applicant or its principals affirming under penalty of perjury the facts constituting the making of the investment including:

(a) The date of the investment;

(b) The amount of the investment;

(c) Proof of the receipt of the investment by the qualified Maryland biotechnology company;

(d) A complete description of the nature of the ownership interest in the equity of the qualified Maryland biotechnology company acquired in consideration of the investment; and

(e) For convertible debt, acceptable evidence that the convertible debt instrument has been canceled and proof of conversion of the convertible debt into an investment.

(2) The Department may require additional documentation reasonably necessary to satisfy the Department as to the making of the investment and the nature of the ownership interest, including but not limited to cancelled checks, deeds, affidavits of officers or partners of the qualified Maryland biotechnology company, stock certificates, assignments, copies of amendments or supplements to shareholder or partnership agreements, executed investment agreements, securities law compliance filings, certifications of book entries, and reports of auditors.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.07 Tax Credit Certification — Final Certificate.

A. The Secretary shall issue a final certificate based on the actual amount of the investment as set forth in the investment notice.

B. The final certificate shall be issued within 30 calendar days after the applicant files the investment notice with the Department.

C. The issuance of the final certificate is subject to the Department’s determination that the applicant made the investment and that the information in the application, the investment notice, and other documents is accurate and complete.

D. The final certificate shall include the following:

(1) The information provided under Regulation .03C(1)—(5) of this chapter;

(2) The actual amount of the investment;

(3) The exact date of the investment;

(4) The amount of the credit that can be claimed by the applicant; and

(5) The date of issuance of the final certificate.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.08 Audits and Inquiries.

A. Audits.

(1) The Department may require at any reasonable time before or after the issuance of a certificate that any information provided to the Department by an applicant be audited at the applicant’s expense by an independent auditor selected by the applicant and reasonably satisfactory to the Department.

(2) The Department may require at any reasonable time an audit of any information submitted to the Department:

(a) By any company that applies for certification by the Department as a qualified Maryland biotechnology company; or

(b) By any company that has been certified by the Department as a qualified Maryland biotechnology company within the immediate past 4 calendar years.

(3) An audit under §A(2) of this regulation shall include, but is not limited to, the company’s ownership, location, finances, capital structure, operations, facilities, equipment, contracts, research, development, and products.

(4) An audit under §A(2) of this regulation shall be conducted at the company’s expense by an independent auditor selected by the company and reasonably satisfactory to the Department

(5) The Department may initiate an audit by delivering to the applicant or company a written request, for the performance of an audit stating the scope of the audit to be undertaken and the matters to be examined in the course of the audit.

(6) Within 10 business days after an applicant or company receives a request from the Department for the performance of an audit under §A(1) or (2) of this regulation, the applicant or company shall submit to the Department a written response naming the independent auditor selected by the applicant or company.

(7) If the Department approves the auditor, it shall give written notice to the applicant or company that the Department approves the auditor and shall provide instructions to the auditor for the scope and conduct of the audit. If the Department disapproves of the selected auditor, the Department shall give written notice to the applicant or company of the disapproval and of the reasons for it. The applicant or company shall, within 5 business days, select an alternative auditor and submit to the Department a written response naming the alternate independent auditor selected by the applicant or company.

(8) The auditor shall proceed to conduct the audit with due diligence and dispatch, and in accordance with the Department’s instructions. Within 90 days of the Department’s notice accepting the selection of an auditor, the auditor shall submit to the Department, and to the applicant or company a full report of its audit procedures, tests, matters examined, and findings.

B. Inquiries; Duty of Applicants and Companies to Respond.

(1) The Department may make written inquiry, including a request for the production, inspection, or copying of documents specified in the inquiry, of any applicant for or holder of a certificate to obtain information bearing on the eligibility or continuing eligibility of the applicant or holder. This inquiry may include, but may not be limited to, whether a qualified investor has sold, transferred, or otherwise disposed of the ownership interest in a QMBC based on which the certificate was issued.

(2) The Department may make written inquiry, including a request for the production, inspection, or copying of documents specified in the inquiry, of any company that makes an application to the Department for certification as a qualified Maryland biotechnology company, or that the Department has already determined to be a qualified Maryland biotechnology company, as to the facts and circumstances that affect the company’s eligibility or continued eligibility for certification as a qualified Maryland biotechnology company. This inquiry may include, but may not be limited to the company’s:

(a) Ownership;

(b) Location;

(c) Finances;

(d) Capital structure;

(e) Facilities;

(f) Equipment;

(g) Contracts,

(h) Biotechnology research activities;

(i) Biotechnology development activities;

(j) Biotechnology production and manufacturing activities;

(k) Intellectual property; and

(l) Whether the company has or continues to have its headquarters and base of operations in the State.

(3) An applicant or company to which a written inquiry from the Department is directed under §B(1) or (2) of this regulation shall submit a full and complete written response, with copies of all requested documents, within 45 days of the date of the inquiry. The response shall be verified as true and correct by oath or affirmation made under penalty of perjury by an individual or by an individual officer, partner, or member of the applicant or company.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.09 Rescission of Initial Tax Credit Certificate.

A. Rescission of Initial Certificate. The Secretary shall rescind an initial certificate if the applicant does not file the required notice and proof of the making of the investment within 40 calendar days after the date on which the Department issues an initial certificate. The Department shall notify the applicant and the Comptroller of the rescission.

B. Rescission Notice. The rescission notice shall:

(1) Identify the applicant;

(2) State the applicant’s federal taxpayer identification number;

(3) Identify the initial certificate that is rescinded;

(4) State the reason for the rescission; and

(5) State the date on which the rescission is effective.

C. Delivery of Rescission Notice. The Department shall send:

(1) By regular mail, the rescission notice to the applicant at the address stated in the application;

(2) By regular mail, a copy of the rescission notice to the QMBC at the address stated in the application; and

(3) A copy of the rescission notice to the Comptroller.

D. Effect of Rescission. The credit amount allocated to the rescinded certificate shall revert to the Reserve Fund and shall be available in the applicable fiscal year for allocation by the Department to other initial certificates in accordance with the Act and this chapter.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.10 Revocation of Tax Credit Certificate.

A. The Department may revoke an initial or final certificate if the Department determines that any representation in connection with the application for the certificate was false when made. The revocation may be in full or in part as the Department may determine.

B. The Department shall notify the applicant of the revocation. The revocation notice shall:

(1) Identify the applicant;

(2) State the applicant’s federal taxpayer identification number;

(3) Identify the certificate that is revoked;

(4) State the reason for the revocation;

(5) State that the certificate is revoked;

(6) State whether the revocation is in whole or in part;

(7) If the revocation is in part, state what part of the credit amount has been revoked; and

(8) State the date on which the revocation is effective.

C. The Department shall send:

(1) By regular mail, the revocation notice to the applicant at the address stated in the application;

(2) By regular mail, a copy of the revocation notice to the QMBC at the address stated in the application; and

(3) A copy of the revocation notice to the Comptroller, after the expiration of any applicable period to file an appeal or for the resolution of any appeal under §E of this regulation.

D. After receiving a copy of the revocation notice under §C(2) of this regulation, the Comptroller shall make an assessment against the applicant to recapture.

E. Appeal.

(1) The applicant may appeal a revocation to the Department under COMAR 24.01.04.

(2) The applicant shall initiate a contested case by filing a notice of appeal with the Secretary within 30 days of the date of the revocation notice.

(3) The applicant’s notice of appeal shall state the facts on which its appeal is grounded and state the relief sought by the applicant.

(4) Within 10 days of the receipt of a timely notice of appeal, the Secretary shall issue a notice of hearing pursuant to COMAR 24.01.04.03.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.11 Claiming the Tax Credit.

A. Only the applicant is eligible to claim the tax credit, or so much of the tax credit as is allocable to the permitted taxpayer.

B. The applicant may not claim the tax credit until the date of the issuance of the final certificate issued to the applicant.

C. The applicant shall claim the tax credit on the income tax return for the taxable year in which the applicant makes the investment in the qualified Maryland biotechnology company.

D. The date the applicant makes the investment in the qualified Maryland biotechnology company is the exact date of the investment as provided in the final certificate issued to the applicant.

E. The applicant shall claim the tax credit against the State income tax for the amount of the credit as provided in the final certificate issued to the applicant. If the amount of the credit exceeds the total tax otherwise payable for that taxable year, the applicant may claim a refund in the amount of the excess.

F. The applicant shall claim the tax credit by filing the required income tax return, with the following attachments:

(1) A copy of the final certificate issued to the applicant;

(2) An affidavit, in a form approved by the Comptroller, of the applicant or its principals, as provided in §G of this regulation; and

(3) If applicable, a Schedule K-1 or other similar schedule filed with the applicant’s federal income tax return showing the items of income, deduction, and credit allocated by the applicant to the owners of interests in the equity of the applicant.

G. An affidavit under §F(2) of this regulation shall state that, if within 2 years after the close of the taxable year in which a final certificate is issued to the applicant, the applicant sells, transfers, or disposes of the ownership interest in the qualified Maryland biotechnology company for which the tax credit was approved, the applicant shall give notice to the Comptroller on a form approved by the Comptroller.

H. If the applicant is subject to recapture, the applicant shall report the applicable amount on its Maryland income tax return for the taxable year in which the event causing the recapture occurred.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.12 Monitoring Continued Eligibility.

A. At any time before the expiration 4 years after the close of the taxable year for which a tax credit is certified under this chapter, the Department may require an applicant or holder of a certificate to produce and deliver to the Department for inspection any information specified in a written directive from the Department, for the purpose of determining the initial or continuing eligibility of the holder or applicant for tax credits.

B. At any time before the expiration of 4 years after the close of any taxable year for which a tax credit is approved with respect to an investment in a qualified Maryland biotechnology company, the Department may require the biotechnology company to produce and deliver to the Department for inspection any information for the purpose of determining the company’s initial or continuing eligibility for certification as a qualified Maryland biotechnology company.

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.13 Procedures for Certification of Qualified Maryland Biotechnology Companies.

A. To be certified by the Department as a qualified Maryland biotechnology company, a biotechnology company shall file with the Department a verified application for certification as a qualified Maryland biotechnology company made under oath or affirmation subject to penalty of perjury. An application may be filed at any time.

B. Application.

(1) The application shall be in a form approved from time to time by Department.

(2) The biotechnology company’s application shall be complete and shall provide the information and documents required by this chapter and the application form, and in the instructions to the application form.

C. Information and Documents to be Provided. The biotechnology company shall provide the information and documents required, requested, described, or listed in the application form and in the instructions to the application form, including but not limited to:

(1) The full legal name of the company;

(2) The street address of the principal place of business of the company, the mailing addresses of the officers, principals, or managing members of the company, and the company’s web page URL, email address, and telephone number;

(3) The mailing address, email address, and telephone number of an individual with authority to act on behalf of the company;

(4) The company’s federal employer identification number;

(5) The company’s Maryland State Department of Assessments and Taxation entity identification number;

(6) The company’s Maryland Unemployment Insurance account number assigned by the Maryland Department of Labor;

(7) The company’s most recent annual, quarterly, and monthly financial statements prepared in accordance with generally accepted accounting principles showing:

(a) Contributed owners’ equity of at least $100,000; or

(b) Noncurrent debt consisting of non-demand, non-callable loans, with terms of not less than 3 years, aggregating at least $100,000;

(c) Noncurrent debt in the form of notes or other instruments with terms of not less than 3 years, convertible to equity securities of the QMBC, aggregating at least $100,000;

(d) A capital structure including a combination of any of contributed owners’ equity, noncurrent debt consisting of non-demand, non-callable loans, with terms of not less than 3 years, or noncurrent debt in the form of notes or other instruments with terms of not less than 3 years, convertible to equity securities of the QMBC, the total of all types of capital aggregating at least $100,000; or

(e) Evidence of an award of non-dilutive grants (including SBIRs, STTRs or other grants) of $100,000 or more;

(8) If the company will rely to any extent on noncurrent debt or noncurrent convertible debt to establish that its capital structure meets the requirements set forth in §C of this regulation, a statement of an independent certified public accountant certifying that under generally accepted accounting principles the company’s debt so relied upon is correctly classified as noncurrent liabilities and has terms of not less than 3 years;

(9) If the applicant is a corporation or a limited liability company:

(a) Its full legal name and the street and mailing addresses of its principal place of business;

(b) A certified copy of its articles of incorporation, articles of organization, or other organic organizational document, with all amendments through the date of the application;

(c) A certificate of good standing from the Maryland State Department of Assessments and Taxation dated not more than 90 days before the date on which the application is filed;

(d) If the applicant is a foreign entity, a certificate, translated if necessary into standard English, of the appropriate official of the jurisdiction under the laws of which it is organized attesting that it is duly organized, existing, and in good standing under the laws of that jurisdiction, dated within 90 days of the date on which the application is filed;

(e) The names and business addresses of all of its officers and directors or managing members; and

(f) The names and addresses of each of its shareholders or members who own or hold, directly or indirectly, shares or ownership interests of any class representing 5 percent or more of the aggregate equity capital of the applicant;

(10) If the applicant is a partnership, limited partnership, limited liability partnership, or similar entity:

(a) A copy of its partnership agreement, and all amendments to it, certified as to completeness and accuracy by a general partner;

(b) If applicable, a certified copy of its certificate of limited partnership or other similar publicly filed organizational document and all amendments or supplements to it;

(c) The names and business addresses of its general partners or managing members;

(d) If applicable, a certificate of good standing from the Maryland State Department of Assessments and Taxation dated not more than 90 days before the date on which the application is filed; and

(e) If the applicant is a foreign limited partnership, limited liability partnership, or similar entity, a certificate, translated if necessary into standard English, from the appropriate official of the jurisdiction under the laws of which it is organized, attesting that it is duly organized, existing, and in good standing under the laws of that jurisdiction, dated not more than 90 days before the date on which the application is filed;

(11) Copies of any shareholder agreement, subscription agreement, investor agreement, operating agreement, voting trust agreement, private placement memorandum, Regulation D disclosure document, or other instrument concerning or affecting the offer, issuance, or ownership of equity interests in the company which has been or will be delivered to investors or to which investors in the company are or will be parties;

(12) The company’s business plan, which shall contain:

(a) A description of the company in sufficient detail to establish that the company is actually and actively engaged in activities constituting biotechnology as defined in Regulation 14C of this chapter and that it meets the criteria for a qualified Maryland biotechnology company stated in this chapter;

(b) A factual narrative describing the company from its inception through the date of the application in sufficient detail to establish that it is organized, is actively engaged in the conduct of a biotechnology business in the State, and in fact operates as a biotechnology company in the State as of the date of the filing of the application, and that it will continue to do so in the future; and

(c) Statements or descriptions of the company’s

(i) Strategy;

(ii) Product descriptions and highlights;

(iii) Management;

(iv) Board of directors or equivalent management;

(v) Financing plans including potential exit strategies;

(vi) Intellectual property assets;

(vii) Plans for the predictable progression of its innovative product as research;

(viii) Development, and production milestones;

(ix) Contingency provisions for experimental or clinical failure;

(x) Commercialization plans;

(xi) Contracts for the performance of biotechnology activities on behalf of the company by third persons; and

(xii) Full-time and part-time employees employed in the State and outside of the State and the numbers of such employees;

(13) Copies of any private placement memorandum, prospectus, or similar disclosure and information documents, and any filings with securities regulatory agencies, prepared or made by the qualified Maryland biotechnology company as issuer in connection with the investment;

(14) A description of the uses and purposes to which the investment will be applied by the qualified Maryland biotechnology company;

(15) A signed statement of the applicant made under penalty of perjury that the contents of the application are true to the best of the knowledge, information, and belief of the applicant and of its officer or other duly authorized representative making the statement on behalf of the applicant, and attesting that the applicant is:

(a) In good standing and authorized to do business in the State;

(b) Current in the payment of all tax obligations to the State or to any unit or subdivision of the State; and

(c) Not in default under the terms of any contract with, indebtedness to, or grant from the State, or any unit or subdivision of the State;

(16) Affirmative evidence by certification in a form prescribed and approved by the Department and made under oath or affirmation subject to penalty of perjury by an officer or other person duly authorized to make statements on behalf of the biotechnology company attesting that the biotechnology company is:

(a) In good standing and authorized to do business in the State;

(b) Current in the payment of all tax obligations to the State or to any unit or subdivision of the State; and

(c) Not in default under the terms of any contract with, indebtedness to, or grant from the State, or any unit or subdivision of the State; and

(17) A statement by an officer or duly authorized representative of the qualified Maryland biotechnology company describing the qualified Maryland biotechnology company’s intended use or application of the investment.

D. Other Documents and Information. The following documents are not required at the time of submission of the QMBC application but may be requested by the Department to substantiate or expand upon information provided in the QMBC application:

(1) Descriptions of the biotechnology intellectual property owned by or assigned to the company or in which the company has rights under license or other agreements listed as invention disclosures or patents by title with dates of application and expiration;

(2) Copies of patents, intellectual property license and use agreements, and new product clinical testing studies, reports, and related governmental approval proceedings to which the company is a party may be requested by the Department on an as needed basis;

(3) A description of the sites, buildings, and facilities owned, leased, used, or occupied by the company in the State and outside of the State, including:

(a) The street address of each site, building, or facility;

(b) A tax parcel map for each site, building, or facility identifying the location of each site, building, or facility;

(c) A copy of the most recent real property tax assessment and property tax bill for each parcel of real property that the company occupies as owner of the property;

(d) A copy of any lease with respect to each site, building, or facility that the company occupies under a lease of the real property;

(e) Copies of contracts for the performance of biotechnology activities on behalf of the company by third parties;

(f) The number of full-time and part-time employees of the applicant employed in the State as well as those outside of the State shall be stated in the business plan;

(g) A statement of the number of employees at each site, building, or facility and the titles, job descriptions, and duties of each employee; and

(h) A detailed description of the company’s biotechnology research, development, or production activities and the company’s business, financial, and administrative operations carried on at each site, building, or facility;

(4) A full physical description of the company’s headquarters site, building, or facility;

(5) A full physical description, including installed machinery and equipment for biotechnology activities, of the sites, buildings, and facilities constituting the company’s base of operations; and

(6) A description of the company’s plans or intentions to purchase, lease, or otherwise acquire sites, buildings, or facilities at any time and in any location with 36 months of the date on which the application is filed.

E. Issuance or Denial of Certificate.

(1) Based on the information set forth in the company’s application, the Department may issue:

(a) A certificate that a company is a qualified Maryland biotechnology company; or

(b) A written determination that a company is not a qualified Maryland biotechnology company.

(2) The issuance of a certificate that a company is a qualified Maryland biotechnology company is subject to the Department’s determination that:

(a) The information in the application and other documents submitted by the company is accurate;

(b) The company maintains its headquarters and base of biotechnology operations in the State as required by the Act and this chapter; and

(c) The company is eligible for certification as a qualified Maryland biotechnology company under the Act and this chapter.

(3) The Department’s decision to issue or not to issue a certificate that a company is a qualified Maryland biotechnology company is final and not subject to further administrative review. The Department may revoke a certificate upon a determination by the Department that the company has become ineligible for certification.

Cross References

24.05.03.04H

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.14 Criteria for Certification of Qualified Maryland Biotechnology Companies.

A. The Department shall assess the merits of a company’s application for certification as a qualified Maryland Biotechnology company according to:

(1) The criteria set forth in this chapter;

(2) The definition of biotechnology stated in §C of this regulation; and

(3) Other metrics and measures that the Secretary may adopt for uniform application under this chapter.

B. The Department shall apply a facts and circumstances analysis on a case by case basis to determine whether a company meets the criteria of this chapter.

C. Biotechnology.

(1) Definition.

(a) “Biotechnology” means innovative and proprietary technology that comprises, interacts with, or analyzes biological material including biomolecules (DNA, RNA, or protein), cells, tissues, or organs and includes the application of scientific and technical advances to develop commercial products.

(b) “Biotechnology” includes the following:

(i) DNA/RNA: Genomics, pharmacogenomics, gene probes, genetic engineering, DNA/RNA sequencing/synthesis/amplification, gene expression profiling, and use of antisense technology;

(ii) Proteins and other biomolecules including sugars, lipids, vitamins and metabolics; sequencing, synthesis, or engineering of molecules; improved delivery methods for drugs; isolation; purification, and identification of cell receptors;

(iii) Cell and tissue culture and engineering: Cell/tissue culture, tissue engineering (including tissue scaffolds and biomedical engineering), cellular fusion, vaccine/immune stimulants, embryo manipulation;

(iv) Process biotechnology techniques: fermentation using bioreactors, bioprocessing, bioleaching, biopulping, biobleaching, biodesulphurisation, bioremediation, biofiltration, and phytoremediation;

(v) Gene and RNA vectors: gene therapy, viral vectors;

(vi) Bioinformatics: construction of databases on genomes, protein sequences; modeling complex biological processes, including systems biology and mechanism of actions of drugs; and

(vii) Nanobiotechnology: Applies the tools and processes of nano/microfabrication to build devices for studying biosystems and applications in drug delivery, diagnostics, and other applications.

(2) Single Definition.

(a) Section C(1)(a) of this regulation is referred to in this chapter as “the single definition”. The single definition is deliberately broad, general, and provisional. The single definition applies to the word “biotechnology” as used in the term “biotechnology company” stated in Tax-General Article, §10-725(a)(2), Annotated Code of Maryland.

(b) The single definition connotes the manipulation of living organisms or their components to produce useful commercial products and the innovative and proprietary technologies of biological science used in this manipulation.

(3) List–Based Definition. The list-based definition is based on the list of biotechnology techniques in §C(1)(b) of this regulation and will function for the Department as an interpretative guideline to the single definition. The list is indicative rather than exhaustive and is expected to change over time as biotechnology techniques evolve.

(4) The single definition covers all modern biotechnology but also many traditional or borderline activities. In application by the Department under this chapter, the single definition will always be accompanied by the list-based definition stated in §C(1)(b) of this regulation when the Department applies the single definition to particular facts and circumstances for the purposes of this chapter. The single definition and the list definition will be applied in conjunction under this chapter to take account of and to consider biotechnology techniques that fit the single definition but may not fit the list–based definition, with a view to constantly updating the list-based definition.

D. Criteria for a Biotechnology Company.

(1) A biotechnology company is a company primarily dedicated to turning the biological sciences into a commercial product and to commercialize the results. The Department shall apply the single definition and the list definition to determine whether a company’s activities or products constitute biotechnology for the purposes of the Act and this chapter.

(2) The scientific biotechnological basis of the company’s activities and plans is defining, but not conclusive.

(3) The company shall demonstrate that the investment it will attract by reason of the tax credit available under the Act and this chapter will be likely to:

(a) Materially advance and support the business viability of the company; and

(b) Result in the production of a biotechnology product that will contribute to economic development and employment growth in the State.

(4) Stage of Development. The company shall:

(a) Have begun active activities and operations and fairly be characterized as actively engaged in a biotechnology business;

(b) Be fully legally organized under the laws of the jurisdiction in which it was organized;

(c) Have competent management;

(d) Own or have immediately available and useable rights in biotechnology-related intellectual property; and

(e) Be actively engaged in research, development, or production of a commercially oriented, innovative, and patent protectable biotechnology product.

(5) Eligibility: “Active Business”.

(a) Except as provided in §C(5)(b) of this regulation, a company is eligible for certification as a qualified Maryland biotechnology company if it has been in active business not longer than 10 years.

(b) A company that has been in active business for up to 12 years may be eligible for certification as a QMBC if the Department determines that the company requires additional time to complete the process of regulatory approval of a biotechnology product.

(c) “Active business” means that the Department can reasonably determine and establish the nature of the Company’s commercial biotechnology research, development or production operations. The mere legal organization, appointment or election of officers or managers, initial capitalization, and establishment of business offices of a company, alone or in combination, are not sufficient to establish that the company is engaged in active business for the purposes of this chapter and the Act.

(d) The Department shall apply a facts and circumstances analysis on a case by case basis to determine whether a company has been engaged in active business and for what period of time.

(6) Commercialization of an Identifiable Biotechnology Product.

(a) The company shall have a developed, focused plan for:

(i) Research and development of an identifiable biotechnology product; and

(ii) The company’s growth.

(b) A biotechnology product will generally be:

(i) Used for human health, as in a therapeutic or diagnostic setting (for example, to treat, detect, or prevent diseases or to improve treatment outcomes);

(ii) Used on domesticated or farm animals, as in a therapeutic or diagnostic setting (for example, to improve animal health); or plants (for example to increase agricultural production); or

(iii) An application originally derived from use of a living organism, as in production of alternative energy (e.g., biofuels) or engineering or chemistry derived from nature to improve properties of products (for example, re-engineering of attachment molecules used by mollusks for the next SuperGlue®).

(c) In general, companies will not be certified that provide a service (e.g., analytical services or consulting services, etc.) or develop software, or develop or manufacture products or technology that do not involve use or application of biotechnology.

(d) A device may constitute eligible biotechnology if:

(i) It delivers a direct therapeutic effect through biological interaction; or

(ii) It performs a diagnosis through analyzing biological material.

(7) Innovative Biotechnology Projects and Products. The company shall provide evidence with its application that its existing or proposed biotechnology product is innovative and has the potential for commercial sale. The company must generally own the intellectual property or have exclusive rights to the use of the intellectual property.

(8) Maryland Location.

(a) The company shall demonstrate that its headquarters and the base of its biotechnology operations are entirely located in the State.

(b) The company shall provide with its application evidence that it will maintain its headquarters, the base of its biotechnology operations, and the sites, buildings, and facilities in which its headquarters and biotechnology operations are or will be conducted, in the State for a period of not less than 48 months after the date on which its application for certification as a qualified Maryland biotechnology company is submitted to the Department.

Cross References

24.05.03.02B(2)

24.05.03.02B(5)

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.03.15 Ownership Attribution.

A. General.

(1) Members of Family.

(a) In General. An individual shall be considered as owning the stock, partnership interest, membership interest, or other equity interest in a company owned, directly or indirectly, by or for the individual’s:

(i) Spouse (other than a spouse who is legally separated from the individual under a decree of divorce or separate maintenance); and

(ii) Children, grandchildren, and parents.

(b) Effect of Adoption. For purposes of §A(1)(a)(ii) of this regulation, a legally adopted child of an individual is treated as a child of that individual by blood.

(2) Attribution from Partnerships, Estates, Trusts, and Corporations.

(a) From Partnerships and Estates. Stock, partnership interests, membership interests, or other equity interests in a company owned, directly or indirectly, by or for a partnership or estate is considered as owned proportionately by its partners or beneficiaries.

(b) From Trusts.

(i) Stock, partnership interests, membership interests, or other equity interests in a company owned, directly or indirectly, by or for a trust (other than an employees’ trust described in section 401(a) of the Internal Revenue Code which is exempt from tax under section 501(a) of the Internal Revenue Code) is considered as owned by its beneficiaries in proportion to the actuarial interest of the beneficiaries in the trust.

(ii) Stock, partnership interests, membership interests, or other equity interests in a company owned, directly or indirectly, by or for any portion of a trust of which a person is considered the owner under Subpart E of Part I of Subchapter J of the Internal Revenue Code (relating to grantors and others treated as substantial owners) is considered as owned by that person.

(c) From Corporations. If 50 percent or more in value of the stock in a corporation is owned, directly or indirectly, by or for any person, that person is considered as owning the stock, partnership interests, membership interests, or other equity interests in a company owned, directly or indirectly, by or for the corporation, in that proportion which the value of the stock which the person so owns bears to the value of all the stock in the corporation.

(3) Attribution to Partnerships, Estates, Trusts, and Corporations.

(a) To Partnerships and Estates. Stock, partnership interests, membership interests, or other equity interests in a company owned, directly or indirectly, by or for a partner or a beneficiary of an estate is considered as owned by the partnership or estate.

(b) To Trusts.

(i) Stock, partnership interests, membership interests, or other equity interests in a company owned, directly or indirectly, by or for a beneficiary of a trust (other than an employees’ trust described in section 401(a) of the Internal Revenue Code which is exempt from tax under section 501(a) of the Internal Revenue Code is considered as owned by the trust.

(ii) Stock, partnership interests, membership interests, or other equity interests in a company owned, directly or indirectly, by or for a person who is considered the owner of any portion of a trust under Subpart E of Part I of Subchapter J of the Internal Revenue Code (relating to grantors and others treated as substantial owners), is considered as owned by the trust.

(c) To Corporations. If 50 percent or more in value of the stock in a corporation is owned, directly or indirectly, by or for any person, that corporation shall be considered as owning the stock, partnership interests, membership interests, or other equity interests in a company owned, directly or indirectly, by or for the person.

(4) Options. If a person has an option to acquire stock, that stock is considered as owned by that person. An option to acquire an option, and each one of a series of these options, is considered as an option to acquire the stock.

B. Operating Rules.

(1) In General. Except as provided in §B(2) and (3) of this regulation, stock, partnership interests, membership interests, or other equity interests in a company constructively owned by a person by reason of the application of §A(1), (2), or (3) of this regulation is, for purposes of applying §A(1), (2), and (3) of this regulation, considered as actually owned by the person.

(2) Members of Family. Stock, partnership interests, membership interests, or other equity interests in a company constructively owned by an individual by reason of the application of §A(1) of this regulation is not considered as owned by the individual for purposes of again applying §A(1) of this regulation in order to make another the constructive owner of the stock.

(3) Partnerships, Estates, Trusts, and Corporations. Stock, partnership interests, membership interests, or other equity interests in a company constructively owned by a partnership, estate, trust, or corporation by reason of the application of §A(3) of this regulation is not considered as owned by it for purposes of applying §A(3) of this regulation in order to make another the constructive owner of the stock.

(4) S Corporation treated as Partnership. For purposes of this section:

(a) An S corporation is treated as a partnership; and

(b) Any shareholder of the S corporation is treated as a partner of the partnership, except that this does not apply for purposes of determining whether stock in the S corporation is constructively owned by any person.

Cross References

24.05.03.05C(2)

History

• Administrative History: Effective date: December 7, 2006 (33:24 Md. R. 1907)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed and new Regulations .01—.15 adopted effective September 17, 2012 (39:18 Md. R. 1197)
• Administrative History: Regulation .02B amended effective May 23, 2016 (43:6 Md. R. 589)
• Administrative History: Regulation .06C amended effective May 23, 2016 (43:6 Md. R. 589)
• Authority: Economic Development Article, §2-108; Tax-General Article, §10-725; Annotated Code of Maryland

COMAR 24.05.04.01 Purpose.

These regulations prescribe the policies, procedures, and authorizations for insuring loans or other financial obligations made by financial institutions to businesses to encourage economic development.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.02 Objective.

The basic objective of the Program is to provide financial assistance in order to increase and expand financing opportunities for businesses, to encourage economic development, and to encourage the growth of exports through financial assistance.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.03 Definitions.

A. The terms appearing in these regulations have the meanings defined in the Act and, in addition, the meanings defined here.

B. Terms Defined.

(1) “Act” means Economic Development Article, Title 5, Subtitle 4, inclusive, Annotated Code of Maryland, as amended.

(2) “Applicant” means a corporation, partnership, sole proprietor, joint venture, or individual applying for financial assistance under the Program.

(3) "Authority" means the Maryland Industrial Development Financing Authority.

(4) “County” means any county or Baltimore City.

(5) “Department” means the Department of Commerce, a principal department of the State.

(6) “Director” means the Executive Director or Associate Director of the Authority.

(7) “Financial institution” means any financial institution as that term is defined in Financial Institutions Article, §1-101(h), Annotated Code of Maryland, as well as any other lender approved by the Authority.

(8) “Insurance” means insurance of a loan by the Authority in accordance with the Act.

(9) “Insurance agreement” means the insurance agreement between the lender and the Authority providing for the terms of the Authority's insurance under the Program.

(10) “Lender” means a financial institution that makes a loan that is insured by the Authority under the Program.

(11) “Loan” means any type of financial obligation insured under the Program, including bonds or notes, or other instruments, certificates, or other evidences of obligation issued, offered for sale, or delivered by any person or public body for any purpose found and determined by the Authority to accomplish the purposes of the Act.

(12) “Program” means the Conventional Loan Program, as authorized by the Act.

(13) “Retail establishment” means any establishment selling goods or services to the ultimate user of those goods or services, not for the purpose of resale, but for that user's or consumer's personal rather than business use.

(14) “Secretary” means the Secretary of the Department of Commerce.

(15) “Working capital” means funds used to pay for the current operations of a business, including, without limitation, supplies, materials, labor, or equipment.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.04 Eligible Borrowers.

Applicants shall meet the following requirements to qualify for loan insurance:

A. Be in good standing and qualified to do business in Maryland, if a corporation, partnership, or other similar entity;

B. Have the legal capacity and all necessary legal authorization to incur the obligations of the loan;

C. Demonstrate creditworthiness and repayment capability acceptable to the Authority.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.05 Eligible Uses.

The proceeds of the loan may be used for any purposes approved by the Authority and permitted by the Act, including:

A. Working capital;

B. Acquisition of real property and the construction of new buildings or renovation of existing buildings;

C. Acquisition and installation of machinery and equipment;

D. The obtaining of additional credit enhancements such as a letter of credit; and

E. Acquisition of stock.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.06 Loan Terms and Requirements.

Loans shall meet the following requirements:

A. Maximum Insurance. The maximum insurance with respect to any one transaction may not exceed the lesser of:

(1) $1,000,000; or

(2) 80 percent of the total of the principal of, redemption or prepayment premiums or penalties on, and interest on, the loan, and the payment or insurance of the payment of any fees or premiums necessary to obtain insurance, guarantees, or other credit support in connection with insurance provided by the Authority under the Act.

B. Term and Interest Rate. The term and interest rate of a loan shall be as negotiated between the applicant and the lender and approved by the Authority.

C. Determination of Insurance Amount. The Authority may consider the following factors when considering the amount of insurance for a loan:

(1) The amount of the loan;

(2) The amount and type of collateral securing the loan;

(3) The request of the lender;

(4) The economic impact of the loan; and

(5) Any other factor that the Authority considers relevant.

D. Security. A loan shall be secured by liens on real property and equipment or other assets purchased with loan proceeds, the personal guarantees of the principals of the applicant and any other collateral approved by the lender and the Authority which may include, but are not limited to, liens on the business assets of the applicant, guarantees of related entities, and indemnity deeds of trust on real property owned by the principals of the applicant.

E. Economic Impact. The economic impact of the loan shall be substantial. To determine the economic impact of a project, the Authority may consider:

(1) The amount of the insurance;

(2) The terms of the loan to be insured;

(3) The number of new jobs that will be created or existing jobs that will be retained because of the loan;

(4) The addition to the tax base of a county and the State;

(5) The development of small and medium businesses and minority-owned businesses;

(6) The promotion of tourism in the State;

(7) The retention of existing industry and commerce and the attraction of new industry and commerce in the State and a balanced economy in the State through, among other things, port development and the control, reduction, or abatement of pollution of the environment, and the utilization and disposal of wastes;

(8) The protection of natural resources and the encouragement of resource recovery;

(9) The general promotion of the health, welfare, and safety of the residents of each of the counties and municipalities of the State; and

(10) Any other factor that the Authority considers relevant.

F. Removal or Abandonment.

(1) The Authority shall determine that the transaction will not result in the removal of the business operations of any person benefiting from the transaction, from one county to another county, or the abandonment of the business operations of any person benefiting from the transaction in the State.

(2) If the transaction will result in the occurrence of either of the events in §F(1) of this regulation, the Authority shall determine that the transaction will discourage the business from leaving the State or will preserve the competitive position of the business in its industry.

G. Retail Establishment. The insurance may not be used in connection with a retail establishment unless the Authority determines, in its sole and absolute discretion, that the insurance will accomplish the purposes of the Act.

H. Operation on Default. The Authority shall determine that the Authority will not be required, except on default, to operate, service, or maintain any business.

I. Title Insurance. If the loan is to be secured by real property, the Authority may require the:

(1) Applicant to provide an American Land Title Association Loan Policy, as amended, issued by a title insurance company acceptable to the Authority for an amount equal to the maximum principal amount of the loan, naming the Authority as an insured, evidencing that title to property offered as collateral on the date of closing is vested in the applicant, and containing only standard exceptions and encumbrances approved by the Authority.

(2) Title insurance policy to be accompanied by a survey, certified in the manner required by the Authority and the title company issuing the title insurance, showing that there are no easements or encroachments upon or other matters pertaining to the property, except those acceptable to the Authority. The title insurance policy may not contain any survey exceptions.

J. Appraisals. The Authority may require an appraisal showing the value of real property or used equipment which is offered as collateral for the loan.

K. Insurance. Before providing insurance, the Authority may require the applicant or the principals of the applicant and key managers to obtain and assign to the Authority life insurance up to the amount of the loan. The Authority may also require public liability insurance, business interruption insurance, hazard and casualty insurance, flood insurance, homeowner's insurance, and other appropriate forms of insurance.

L. Financial Statements. The Authority shall require audited financial statements examined by an independent accountant acceptable to the Authority.

M. Balloon Payments. The Authority may not insure the balloon payment due when the amortization of the loan is longer than the term of the loan, without an event of default occurring before maturity.

N. Equity. The Authority will require an equity investment of the borrower for a loan used to purchase real estate of at least 10 percent of the total cost of the real estate and for a loan used to purchase equipment of at least 20 percent of the total cost of the equipment.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.07 Loan Insurance Application and Processing Procedures.

A. Loan Insurance Application. Loan insurance applications shall be made upon standard forms prescribed by the Authority. Each application shall include the following documentation:

(1) A fully completed and properly executed application;

(2) A copy of the articles of incorporation, bylaws, partnership agreement, or other organizational documents;

(3) A detailed description of the proposed use or uses of the proceeds of the loan including projected cash flow analyses, marketing plans, or descriptions and appraisals;

(4) Information that relates to the financial status of the applicant, including:

(a) Annual financial statements prepared in accordance with generally accepted accounting principles for 3—5 of the most recent years,

(b) A current balance sheet,

(c) A recent profit and loss statement,

(d) Financial projections for the next 3 years,

(e) Credit references,

(f) Personal financial statements of any individual applicants and personal guarantors, and

(g) The status of outstanding indebtedness;

(5) A detailed description of the applicant's experience in the trade or business for which the loan and insurance are sought;

(6) Information that relates to the economic impact to be created by the loan; and

(7) Any other relevant information that the Authority requests.

B. Processing of Application.

(1) After execution of the application, the applicant shall submit it to the Authority along with a copy of an executed commitment letter from the lender to provide financing which, at the minimum, shall state the amount, rate, and terms of the financing or a letter of intent from the lender on a form prescribed by the Authority.

(2) Each application shall be subject to an initial review to make a preliminary determination of the eligibility of the applicant and the project in accordance with these regulations.

(3) Each application shall be submitted to the Authority for review by its staff at least 14 business days before any Authority meeting date.

C. Approval. Approval of insurance shall be evidenced by a signed resolution of the Authority. The Authority is not obligated to take further action after approval of a resolution until an applicant executes and returns a copy of the lender's commitment letter.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.08 Insurance Premium.

A. Payment of Premium. The Authority shall receive from the lender the first year's insurance premium at closing and after that on each anniversary of the closing date in advance. The Authority may also require the lender or the applicant to reimburse the Authority for expenses it incurs in processing and closing the loan, such as credit reports and appraisals.

B. Computation of Premium. Except as provided in §C of this regulation, the insurance premium shall be calculated as the greater of:

(1) 1/2 of 1 percent of the outstanding insured principal balance for a term loan, and 1/2 of 1 percent of the maximum insured amount for a line of credit; or

(2) $500.

C. Determination of Rate. In accordance with the Act, the insurance premium need not be uniform among transactions, and in determining the rate of the insurance premium, the Authority may consider the following factors:

(1) Any other fees charged by the Authority or the lender;

(2) The amount of the loan or the amount of the insurance;

(3) The economic impact caused by the loan; and

(4) Any other factor that the Authority considers relevant.

D. Waiver of Insurance Premiums. The Authority may not charge any premium for insurance if the Authority determines that, at the time of approval of insurance, the facility or business with respect to which insurance is provided is located in a county where the average unemployment rate is at least 1 percent greater than the average unemployment rate for the United States.

E. Standards for Unemployment Rates. Average unemployment rates shall be established by the Department or any other agency or department responsible for establishing the rates. Average unemployment rates for the United States shall be those established by the United States Department of Labor or any other agency or department responsible for establishing the rates.

F. Review of Rates. The Authority shall annually review the rates based on statistics covering the preceding calendar year and shall only consider annual unemployment rates established not more than 12 months before the date of the Authority's review. The imposition or waiver of the insurance premium shall remain in effect as long as the Authority's insurance is in force.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.09 Fees.

The Authority may charge an application or commitment fee reasonably related to the expenses it incurs in processing an application.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.10 Insurance of $50,000 or Less.

The Authority may authorize the Executive Director of the Authority to approve, on behalf of the Authority, any insurance to be provided from the Authorized Purpose Insurance Fund which does not exceed, with respect to any one transaction, the total aggregate amount of $50,000. Any approval by the Executive Director shall:

A. Be subject to the concurrence of the Secretary or the Chairman of the Authority;

B. Comply with the requirements of the Act; and

C. Be binding upon the Authority.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.11 Nondiscrimination.

Each applicant shall comply with all applicable federal, State, and local laws, Executive Orders and Departmental policies regarding discrimination and equal opportunity in employment, housing, and credit practices including Title VII of the Civil Rights Act of 1964, the provisions of the Governor's Code of Fair Employment Practices, as amended, and the Department's Minority Business Enterprise Program, as amended.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.12 Program Administration.

A. The Authority may establish from time to time detailed Program guidelines containing underwriting standards, loan processing requirements, and other requirements or matters relating to the extension of insurance or to the Program. Copies of these guidelines shall be available for examination at the Authority's office. The Authority, upon request, will make copies available to the public.

B. Any action or decision required or permitted to be taken or made by the Department pursuant to the Act or these regulations may be taken by the Authority, the Secretary or the Secretary's designee, or, to the extent set forth in the Act or properly delegated by the Authority or the Secretary, the Director of the Authority.

C. The Secretary may delegate to the Director of the Authority or to any other official or employee of the Department the authority to review and execute any Program documents or loan documents.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.13 False Statements or Reports.

A. A person may not knowingly make or cause any false statement or report to be made:

(1) In any application or in any document furnished to the Authority;

(2) For the purpose of influencing the action of the Authority on an application for financial assistance or for the purpose of influencing any action of the Authority affecting financial assistance whether or not the assistance may have been already extended.

B. A person, or that person's aiders and abettors, who violates or attempts to violate any provision of §A of this regulation is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $50,000, or imprisonment not exceeding 5 years, or both.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.14 Waiver.

The Authority may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:

A. Conformance to the requirements of any federal, State, or local programs in connection with a loan or insurance necessitates waiver or variance of a regulation; or

B. In the determination of the Authority, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.04.15 Severability.

The provisions of these regulations are severable. A judgment by any court of competent jurisdiction finding or declaring that any provision of these regulations or the application of any provision to any person or circumstance is invalid does not affect the validity of the remaining provisions of the regulations or any other application of these regulations, and the remaining regulations shall have full force and effect as if no judgment had been entered.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 4, Annotated Code of Maryland

24.05.05 Maryland Industrial Development Financing Authority Bond Program

COMAR 24.05.05.01 Purpose.

These regulations prescribe the policies, procedures, and authorizations for insuring loans or other financial obligations made by financial institutions to businesses to encourage economic development.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.02 Objective.

The basic objective of the Program is to provide financial assistance in order to increase and expand financing opportunities for businesses and to encourage economic development through financial assistance.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.03 Definitions.

A. The terms appearing in these regulations have the meanings defined in the MIDFA Act and the Revenue Bond Act and, in addition, the meanings defined here.

B. Terms Defined.

(1) “Applicant” means a corporation, partnership, sole proprietor, joint venture, or individual applying for financial assistance under the Program.

(2) "Authority" means the Maryland Industrial Development Financing Authority.

(3) “County” means any county or Baltimore City.

(4) “Department” means the Department of Commerce, a principal department of the State.

(5) “Director” means the Executive Director or Associate Director of the Authority.

(6) “Financial assistance” means the issuance of bonds or insurance under the Program.

(7) “Financial institution” means any financial institution as that term is defined in Financial Institutions Article, §1-101(h), Annotated Code of Maryland, as well as any other lender approved by the Authority.

(8) “Insurance” means insurance of a loan by the Authority in accordance with the MIDFA Act.

(9) “Insurance agreement” means the insurance agreement between the lender or its representatives and the Authority providing for the terms of the Authority's insurance under the Program.

(10) “Lender” means a financial institution that makes a loan, purchases a bond, or provides other credit enhancement under the Program.

(11) “Loan” means any type of financial obligation under the Program, including bonds or notes, letters of credit or other instruments, certificates or other evidences of obligation issued, offered for sale or delivered by any person or public body for any purpose found and determined by the Authority to accomplish the purposes of the MIDFA Act and the Revenue Bond Act.

(12) “MIDFA Act” means Economic Development Article, Title 5, Subtitle 4, Annotated Code of Maryland.

(13) “Program” means the Bond Program, as authorized by the MIDFA Act and the Revenue Bond Act.

(14) “Revenue Bond Act” means Economic Development Article, Title 12, Subtitle 1, Annotated Code of Maryland.

(15) “Secretary” means the Secretary of Commerce.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.04 Eligible Applicants.

An applicant shall meet the following requirements to qualify for financial assistance:

A. Be in good standing and qualified to do business in Maryland if a corporation, partnership, or other similar entity;

B. Have the legal capacity and all necessary legal authorization to incur the obligations of the loan;

C. Demonstrate creditworthiness and repayment capability acceptable to the Authority.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.05 Eligible Uses.

The proceeds of the loan may be used for any purposes approved by the Authority and permitted by the MIDFA Act and the Revenue Bond Act, including:

A. Acquisition of real property and the construction of new buildings or renovation of existing buildings;

B. Acquisition and installation of machinery and equipment;

C. The obtaining of additional credit enhancements such as a letter of credit or bond insurance; and

D. Payment of costs related to issuance of the bonds and permitted by the MIDFA Act, the Revenue Bond Act, and any applicable federal law.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.06 Loan Terms and Requirements.

Loans shall meet the following requirements:

A. Maximum Insurance. The maximum insurance with respect to any one transaction may not exceed the lesser of:

(1) $5,000,000; or

(2) 100 percent of the total of:

(a) The principal of, redemption or prepayment premiums or penalties on, and interest on, the loan,

(b) Principal of, redemption or prepayment premiums or penalties on, and interest on any instrument executed, obtained, or delivered in connection with the issuance and sale of bonds, and

(c) The payment or insurance of the payment of any fees or premiums necessary to obtain insurance, guarantees, or other credit support in connection with insurance provided by the Authority under the MIDFA Act.

B. Term and Interest Rate. The term and interest rate of a loan shall be as negotiated between the applicant and the lender and approved by the Authority.

C. Determination of Insurance Amount. The Authority may consider the following factors when considering the amount of insurance for a loan:

(1) Amount of the loan;

(2) Amount and type of collateral securing the loan;

(3) Request of the lender;

(4) Economic impact of the loan; and

(5) Any other factor that the Authority considers relevant.

D. Security.

(1) A loan shall be secured by liens on real property, equipment, or other assets purchased with loan proceeds and any other collateral approved by the lender and the Authority which may include, but are not limited to:

(a) The personal guarantees of the principals of the applicant;

(b) Liens on the business assets of the applicant;

(c) Guarantees of related entities; and

(d) Indemnity deeds of trust on real property owned by the principals of the applicant.

(2) The personal guarantees of the principals of the applicant shall be required when the Authority insures a loan.

E. Economic Impact. The economic impact of the loan shall be substantial. To determine the economic impact of a project, the Authority may consider:

(1) Amount of the loan;

(2) Amount of any requested insurance;

(3) Amount of any required volume cap allocation;

(4) Terms of the loan to be insured;

(5) Number of new jobs that will be created or existing jobs that will be retained because of the loan;

(6) Addition to the tax base of a county and the State;

(7) Development of small and medium businesses and minority-owned businesses;

(8) Promotion of tourism in the State;

(9) Retention of existing industry and commerce and the attraction of new industry and commerce in the State and a balanced economy in the State through, among other things, port development and the control, reduction, or abatement of pollution of the environment, and the utilization and disposal of wastes;

(10) Factors which lead to the broadening of capital ownership, including the establishment of employee stock ownership plans;

(11) Protection of natural resources and the encouragement of resource recovery;

(12) General promotion of the health, welfare, and safety of the residents of each of the counties and municipalities of the State; and

(13) Any other factor that the Authority considers relevant.

F. Removal or Abandonment.

(1) The Authority shall determine that the transaction will not result in the removal of the business operations of any person benefiting from the transaction, from one county to another county, or the abandonment of the business operations in the State of any person benefiting from the transaction.

(2) If the transaction will result in the occurrence of either of the events in §F(1) of this regulation, the Authority shall determine that the transaction will discourage the business from leaving the State or will preserve the competitive position of the business in its industry.

G. Operation on Default. The Authority shall determine that the Authority will not be required, except on default, to operate, service, or maintain any business.

H. Title Insurance. If the loan is to be secured by real property, the Authority may require the:

(1) Applicant to provide an American Land Title Association Loan Policy, as amended, issued by a title insurance company acceptable to the Authority for an amount equal to the maximum principal amount of the loan, naming the Authority as an insured, evidencing that title to property offered as collateral on the date of closing is vested in the applicant, and containing only standard exceptions and encumbrances approved by the Authority.

(2) Title insurance policy to be accompanied by a survey, certified in the manner required by the Authority and the title company issuing the title insurance, showing that there are no easements or encroachments upon or other matters pertaining to the property, except those acceptable to the Authority. The title insurance policy may not contain any survey exceptions.

I. Appraisals. The Authority may require an appraisal showing the value of real property or used equipment which is offered as collateral for the loan.

J. Insurance. Before providing insurance, the Authority may require the applicant or the principals of the applicant and key managers to obtain and assign to the Authority life insurance up to the amount of the loan. The Authority may also require public liability insurance, business interruption insurance, hazard and casualty insurance, flood insurance, homeowner's insurance, and other appropriate forms of insurance.

K. Financial Statements. The Authority shall require audited financial statements examined by an independent accountant acceptable to the Authority.

L. Balloon Payments. The Authority may not insure the balloon payment due when the amortization of the loan is longer than the term of the loan, without an event of default occurring prior to maturity.

M. Call Options. The Authority may not insure the payment due as the result of a call option or mandatory redemption exercised by the lender, without a default occurring before this action.

N. Equity. The Authority shall require of the applicant an equity investment of at least 10 percent of the total cost of the acquired real estate and of at least 20 percent of the total cost of the acquired equipment.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.07 Application and Processing Procedures.

A. Application. Applications shall be made upon standard forms prescribed by the Authority. Each application shall include the following documentation:

(1) A fully completed and properly executed application;

(2) A copy of the articles of incorporation, bylaws, partnership agreement, or other organizational documents;

(3) A detailed description of the proposed use or uses of the proceeds of the loan including projected cash flow analyses and appraisals, and marketing plans or descriptions if requested by the Authority;

(4) Information that relates to the financial status of the applicant, including:

(a) Annual financial statements prepared in accordance with generally accepted accounting principles for 3—5 of the most recent years,

(b) A current balance sheet,

(c) A recent profit and loss statement,

(d) Financial projections for the next 3 years,

(e) Credit references,

(f) Personal financial statements of any individual applicants and personal guarantors, and

(g) The status of outstanding indebtedness;

(5) A detailed description of the application's experience in the trade or business for which the financial assistance is sought;

(6) Information that relates to the economic impact to be created by the financial assistance; and

(7) Any other relevant information the Authority requests.

B. Processing of Application.

(1) After execution of the application, the applicant shall submit it to the Authority along with a copy of an executed commitment letter from the lender to provide financing which, at a minimum, shall state the amount, rate, and terms of the financing and amount of any requested insurance or a letter of intent from the lender on a form prescribed by the Authority.

(2) Each application shall be subject to an initial review by the Authority's staff to make a preliminary determination of the eligibility of the applicant and the project in accordance with these regulations.

(3) Each application shall be submitted to the Authority for review by the Authority's staff at least 14 business days before any Authority meeting date.

C. Approval. Approval of financial assistance shall be evidenced by a signed resolution of the Authority. The Authority is not obligated to take further action after approval of a resolution until an applicant executes and returns a copy of the lender's commitment letter.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.08 Requirements of Issuance.

Bonds issued by the Authority shall meet the following requirements before issuance:

A. Approval of Local Political Subdivision. The legislative body of the county or municipality in which the facility to be financed with the proceeds of the bonds is to be located shall adopt a resolution which shall:

(1) Be administrative in nature, not subject to the procedures required for legislative acts, and not subject to referendum;

(2) Specify and describe the facility; and

(3) Generally describe the public purpose to be served by the facility.

B. Public Hearing. When issuing bonds that are exempt from taxation under the Internal Revenue Code of 1986, as amended, 26 U.S.C. §1 et seq., which is incorporated by reference, a public hearing shall be held in order to allow the public an opportunity to offer comments on the proposed financial assistance for the facility.

C. Notice to Department of Budget and Fiscal Planning. The Authority shall advise the State Department of Budget and Fiscal Planning of its intent to issue bonds by written notice describing the transaction and stating the proposed date of the issuance of the bonds. The State Department of Budget and Fiscal Planning shall receive the notice at least 30 days before the issuance of the bonds.

D. Notice to State Board of Public Works. The Authority shall notify the State Board of Public Works of its intention to issue the bonds up to a stated amount and the Board of Public Works may coordinate the issuance of the bonds with any intended issuance of bonds of the State, its agencies, and public instrumentalities. However, the failure to notify the Board of Public Works may not affect in any way the:

(1) Validity or enforceability of any bonds issued by the Authority;

(2) Validity of any finding or determination by the Authority under the MIDFA Act; or

(3) Validity or enforceability of any agreement entered into by the Authority under the MIDFA Act.

E. Approval of Governor. When issuing bonds that are exempt from taxation under the Internal Revenue Code of 1986, as amended, 26 U.S.C. §1 et seq., which is incorporated by reference, the Governor of the State shall approve the issuance of bonds.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.09 Participation by Minority Business Enterprise.

When bonds are issued by the Authority, it is in the interest of the public welfare and purpose that the Authority attempt to achieve a goal that 10 percent of the facility users are minority business enterprises within the meaning indicated in the State Finance and Procurement Article, §18-601, Annotated Code of Maryland. The failure to achieve the goal, however, may not affect in any way the:

A. Validity or enforceability of any bonds issued by the Authority;

B. Validity of any finding or determination by the Authority under the MIDFA Act; or

C. Validity or enforceability of any agreement entered into by the Authority under the MIDFA Act.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.10 Insurance Premium.

A. Payment of Premium. When providing insurance, the Authority shall receive from the lender the first year's insurance premium at closing and after that on each anniversary of the closing date in advance. The Authority may also require the lender or the applicant to reimburse the Authority for expenses the Authority incurs in processing and closing the loan, such as credit reports and appraisals.

B. Computation of Premium. Except as provided in §C of this regulation, the insurance premium shall be calculated as the greater of:

(1) 1/2 of 1 percent of the outstanding insured principal balance of the loan; or

(2) $500.

C. Determination of Rate. In accordance with the MIDFA Act, the insurance premium need not be uniform among transactions, and in determining the rate of the insurance premium, the Authority may consider the following factors:

(1) Other fees charged by the Authority or the lender;

(2) Amount of the loan or the amount of the insurance;

(3) Economic impact caused by the loan; and

(4) Other factors that the Authority considers relevant.

D. Waiver of Insurance Premiums. The Authority may not charge any premium for insurance if the Authority determines that, at the time of approval of insurance, the facility or business with respect to which insurance is provided is located in a county where the average unemployment rate is at least 1 percent greater than the average unemployment rate for the United States.

E. Standards for Unemployment Rates. Average unemployment rates shall be established by the Department or any other agency or department responsible for establishing the rates. Average unemployment rates for the United States shall be those established by the United States Department of Labor or any other agency or department responsible for establishing the rates.

F. Review of Rates. The Authority annually shall review the rates based on statistics covering the preceding calendar year and only shall consider annual unemployment rates established not more than 12 months before the date of the Authority's review. The imposition or waiver of the insurance premium shall remain in effect as long as the Authority's insurance is in force.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.11 Fees.

The Authority may charge an application, issuance, commitment, or other fees reasonably related to the expenses it incurs in processing an application and in issuing the bonds.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.12 Nondiscrimination.

Each applicant shall comply with all applicable federal, State, and local laws, Executive Orders, and Departmental policies regarding discrimination and equal opportunity in employment, minority business enterprises, housing and credit practices including Title VII of the Civil Rights Act of 1964, and the provisions of the Governor's Code of Fair Employment Practices, as amended.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.13 Program Administration.

A. The Authority may establish from time to time detailed Program guidelines containing underwriting standards, loan processing requirements, and other requirements or matters relating to the financial assistance or to the Program. Copies of these guidelines shall be available for examination at the Authority's office. The Authority, upon request, shall make copies available to the public.

B. An action or decision required or permitted to be taken or made by the Department pursuant to the MIDFA Act or these regulations may be taken by the Authority, the Secretary or the Secretary's designee, or, to the extent set forth in the MIDFA Act or properly delegated by the Authority or the Secretary, the Director of the Authority.

C. The Secretary or the Authority may delegate to the Director of the Authority or to any other official or employee of the Department the authority to review and execute any Program documents or loan documents.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.14 False Statements or Reports.

A. A person may not knowingly make or cause any false statement or report to be made:

(1) In any application or in any document furnished to the Authority;

(2) For the purpose of influencing the action of the Authority on an application for financial assistance or for the purpose of influencing any action of the Authority affecting financial assistance whether or not the assistance may have been already extended.

B. A person, or that person's aiders and abettors, who violates or attempts to violate any provision of §A of this regulation is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $50,000, or imprisonment not exceeding 5 years, or both.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.15 Waiver.

The Authority may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the MIDFA Act or the Revenue Bond Act if:

A. Conformance to the requirements of any federal, State, or local programs in connection with a loan or financial assistance necessitates waiver or variance of a regulation; or

B. In the determination of the Authority, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the MIDFA Act or the Revenue Bond Act.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.05.16 Drug-Free and Alcohol-Free Workplace.

The applicant shall comply, and remain in compliance, with the State's policy concerning drug-free and alcohol-free workplaces, as set forth in COMAR 01.01.1989.18, and shall make a good-faith effort to eliminate illegal drug use and alcohol and drug abuse from places at which work is performed in accordance with a State loan.

History

• Administrative History: Effective date: April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .16 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article,§2-108, Title 5, Subtitle 4, and Title 12, Subtitle 1, Annotated Code of Maryland

COMAR 24.05.06.01 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Business entity” means an individual, sole proprietorship, partnership, limited partnership, corporation, limited liability company, or other entity that is:

(a) Doing business in the State; and

(b) Organized and operated for profit.

(2) “Comptroller” means the Maryland Comptroller of the Treasury, or the Comptroller’s designee.

(3) “Costs” means the allowed costs as certified by the Department and incurred by a business entity for:

(a) Security clearance administrative expenses of the business entity incurred with regard to an employee in the State which may include but are not limited to expenses for:

(i) Processing application requests for clearances in the State;

(ii) Maintaining, upgrading, or installing computer systems in the State required to obtain federal security clearances;

(iii) Training employees in the State to administer the application process; and

(iv) Such other and additional administrative expenses related to obtaining security clearances as the Secretary may approve.

(b) “Costs” means the allowed costs as certified by the Department and incurred by a business entity for construction and equipment costs incurred to construct or renovate a sensitive compartmentalized information facility located in the State.

(c) “Costs” does not include wages and salaries of the employees of the business entity who apply for, or with respect to whom the business entity sponsors or applies for, a security clearance.

(4) “Credit” means the security clearance administrative expenses and construction and equipment costs tax credit described in Regulation .02A of this chapter.

(5) “Credit year” means the year for which the credit is being claimed.

(6) “Department” means the Department of Commerce.

(7) “Secretary” means the Secretary of the Department, or the Secretary's designee.

(8) "Sensitive compartmented information (SCI)” means classified intelligence information concerning or derived from sensitive sources, methods or analytical processes which is required to be handled exclusively within a formal access control system established by the Director of National Intelligence.

(9) “Sensitive compartmented information facility (SCIF)” means an area, room, group of rooms, or installation accredited by the proper authority to store, use, host discussions of, or process SCI.

(10) “Small Business” means a firm that:

(a) Is independently owned and operated;

(b) Is not a subsidiary of another firm;

(c) Is not dominate in its field of operation; and

(d) In its most recently completed fiscal year, did not employ in its operations more than 25 individuals.

(11) “State” means the State of Maryland.

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.06.02 Calculation of Amount of Credit.

A. For a taxable year beginning after December 31, 2012, but before January 1, 2017, a business entity may claim credits against the State income tax for:

(1) Allowed security clearance administrative expenses, not to exceed $200,000;

(2) Expenses incurred for rental payments owed during the first year of a rental agreement for spaces leased in the State for a small business that performs security-based contracting, not to exceed $200,000; and

(3) Subject to §B of this regulation, approved construction and equipment costs incurred to construct or renovate a single SCIF in an amount equal to the lesser of 50 percent of the costs or $200,000.

B. The total amount of construction and equipment costs incurred to construct or renovate multiple SCIFs for which a business entity is eligible to claim as a credit against the State income tax is $500,000.

Cross References

24.05.06.01B(4)

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.06.03 Application and Approval of Credit.

A. Application for Tax Credit. To claim eligibility for a tax credit and to be certified as eligible for a tax credit, a business entity shall submit to the Department, by not later than September 15 of the calendar year following the end of the taxable year in which the costs were incurred, an application on a form approved by the Department.

B. Each application shall include the following:

(1) The legal name of the business entity;

(2) The street address of the principal place of business of the business entity, the business entity's mailing address, the business entity’s email address, and the business entity's telephone number;

(3) The name, business mailing address, telephone number, and email address of an individual with authority to act on behalf of the business entity;

(4) The federal employer identification number of the business entity or, if the business entity is an individual or sole proprietorship, the federal taxpayer identification number of the individual or proprietor;

(5) Verification of the accreditation of the SCIF or SCIFs by the appropriate federal agency;

(6) An account, which may be in the form of a spreadsheet, showing in detail and with specificity the eligible costs incurred by the business entity; and

(7) Any other information required or requested by the Department.

C. By December 15 of the calendar year following the end of the taxable year in which the costs were incurred, the Department shall certify to the business entity the amount of tax credits approved by the Department for the business entity.

Cross References

24.05.06.04A

24.05.06.04B

24.05.06.04B(2)

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.06.04 Maximum Annual Credits.

A. The total amount of credits approved by the Department under Regulation .03C of this chapter may not exceed $2,000,000 for any calendar year.

B. If the total amount of credits applied for by all business entities under Regulation .03C of this chapter exceeds the maximum specified under §A of this regulation, the Department shall approve a credit under Regulation .03 of this chapter for each business entity in an amount equal to the product of multiplying the credit applied for by the business entity times a fraction:

(1) The numerator of which is the maximum specified under §A of this regulation; and

(2) The denominator of which is the total of all credits applied for by all business entities under Regulation .03 of this chapter in the calendar year.

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.06.05 Certification of Credit.

The Department shall certify to the business entity the amount of the allowed tax credits approved by the Department for the business entity. The Department shall issue the certification by December 15 of the calendar year following the end of the taxable year in which the costs were incurred.

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.06.06 Claiming the Credit.

To claim the credits approved by the Department, a business entity shall:

A. File with the Comptroller an amended income tax return for the taxable year in which the costs were incurred; and

B. Attach a copy of the Department's certification of the approved credit amount to the amended income tax return.

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.06.07 Carryover of Tax Credits.

A. If the credit allowed in any taxable year exceeds the State income tax for that taxable year, the business entity may apply the excess as a credit against the State income tax for succeeding taxable years until the full amount of the excess is used.

B. A tax credit may not be carried back to a preceding taxable year.

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.06.08 Mergers and Acquisitions.

A. In determining the carryover of unused credits and the effect of a merger or acquisition, federal law shall be applied to the business entities as if they were separate business entities. Any provisions under federal law that would allow separate corporations that are merged or acquired to carry forward unused credits on the surviving corporation's returns shall apply to the carryover of this credit for State purposes.

B. Unused Credits.

(1) In a transaction involving an asset purchase, unused credits:

(a) Do not transfer from the business entity to the purchaser; and

(b) Remain with the business entity to whom the certification was issued.

(2) Unused credits may not be sold or purchased.

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.06.09 Short Taxable Years.

A. Eligible Costs. A business entity may only claim the credit for allowed costs incurred during its taxable year. If the business entity has a short taxable year, only the allowed costs incurred during the short taxable year are allowed on the short year return.

B. If the business entity incurs allowed costs in 2 taxable years during a calendar year, one of which is a short taxable year, the business entity may only claim a credit on the short taxable year return in an amount equal to the total credits certified by the Department multiplied by a fraction:

(1) The numerator of which is the allowed costs incurred during the short taxable year; and

(2) The denominator of which is the allowed costs incurred during the entire calendar year.

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.06.10 Addition Modifications.

A. Individuals. To the extent an individual is allowed a credit on the State individual income tax return, the amount of the credit claimed shall be added to federal adjusted gross income to calculate the individual's State adjusted gross income.

B. Corporations. To the extent that a corporation is allowed a credit on its State income tax return, the amount of the credit claimed shall be added to federal taxable income to calculate the corporation's State modified income.

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.06.11 Partnerships, S Corporations, Limited Liability Companies, Business Trusts, Estates, and Trusts.

A. Partnerships, S Corporations, Limited Liability Companies, and Business Trusts. In the case of a subchapter S corporation, partnership, limited liability company, or business trust, the amount of the credits computed for the pass-through entity shall be allocated among the owners as agreed to in writing by the owners in accordance with Internal Revenue Service rules.

B. Estates and Trusts. In the case of an estate or trust, the amount of the credits computed for the estate or trust for any taxable year shall be apportioned among the estate or trust and the beneficiaries on the basis of the income of the estate or trust allocable to each.

C. Statements to Partners, Shareholders, Members, and Beneficiaries.

(1) Requirements. A partnership, S corporation, limited liability company, business trust, estate, or trust shall provide each of its partners, shareholders, members, or beneficiaries with a Maryland Form 510, Schedule K-1.

(2) Statement Attached to Return. A partner, shareholder, member, or beneficiary shall attach a copy of the Maryland Form 510, Schedule K-1, to the income tax return on which the credit is claimed.

D. Year in Which Credits are Claimed. The credit apportioned to a partner, shareholder, member, or beneficiary under this regulation shall be claimed on the partner's, shareholder's, member's, or beneficiary’s State tax return in the taxable year of the partner, shareholder, member, or beneficiary within which the taxable year of the pass through entity ends.

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.06.12 Audits and Inquiries.

A. Audits.

(1) If the Department becomes aware of facts and circumstances that reasonably warrant an audit of the factual or accounting basis of a business entity’s claim of eligibility for a tax credit under this chapter or of a claim of tax credit under this chapter, the Department may require at any reasonable time before or after the issuance of a certificate of eligibility for tax credit that any information provided to the Department by a business entity be audited.

(2) The Department may require at any reasonable time an audit of any information submitted to the Department:

(a) By any business entity that applies for certification by the Department of tax credits under this chapter; and

(b) By any business entity that has been certified by the Department for a tax credit.

(3) An audit under §A(2) of this regulation shall be directed to the business entity's basis for its claim of eligibility for the tax credit under this chapter.

(4) An audit under §A(2) of this regulation shall be conducted at the business entity’s expense by an independent auditor selected by the business entity and reasonably satisfactory to the Department.

(5) The Department may initiate an audit by delivering to the business entity a written request for the performance of an audit stating the scope of the audit to be undertaken and the matters to be examined in the course of the audit.

(6) Within 10 business days after a business entity receives a request from the Department for the performance of an audit under this regulation, the business entity shall submit to the requesting agency a written response naming the independent auditor selected by the business entity.

(7) If the Department approves the auditor, it shall give written notice to the business entity that it approves the auditor and shall provide instructions to the auditor for the scope and conduct of the audit.

(8) If the Department disapproves of the selected auditor, it shall give written notice to the business entity of the disapproval and of the reasons for it. The business entity shall, within 5 business days after receipt of notice of the Department's disapproval of an auditor, select an alternative auditor and submit to the Department a written response naming the alternative independent auditor selected by the business entity.

(9) The process pursuant to §A(5)—(8) of this regulation for the selection and approval of an auditor will continue until the Department approves an alternative proposed auditor pursuant to §A(7) of this regulation.

(10) The approved auditor shall proceed to conduct the audit with due diligence and dispatch, and in accordance with the Department’s instructions. Within 90 days of the Department’s notice approving the selection of an auditor, the auditor shall submit to the Department and to the business entity a full report of its audit procedures, tests, matters examined, and findings.

(11) The Comptroller retains its audit authority under the Tax-General Article, Annotated Code of Maryland.

B. Inquiries; Duty of Business Entities to Respond.

(1) If the Department becomes aware of facts and circumstances that reasonably warrant further inquiry into the factual basis of a business entity’s claim of eligibility for a tax credit under this chapter, or the basis of the business entity’s claim of a tax credit under this chapter, the Department may make written inquiry, including a request for the production, inspection, or copying of documents specified in the inquiry, of any business entity or holder of a certificate of eligibility for a tax credit under this chapter to obtain information bearing on the eligibility of the business entity or of the business entity's partners, shareholders, members, or beneficiaries for that credit. The inquiry may include, but may not be limited to, whether the claimed costs were in fact incurred in the State.

(2) A business entity to which a written inquiry from the Department is directed under §B(1) of this regulation shall submit a full and complete written response, with copies of all requested documents, within 45 days of the date of the inquiry. The response shall be verified as true and correct by oath or affirmation made under penalty of perjury by the individual proprietor or by an individual officer, partner, or member of the business entity.

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.06.13 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with Tax-General Article, §10-732, Annotated Code of Maryland.

History

• Administrative History: Effective date: December 23, 2013 (40:25 Md. R. 2071)
• Authority: Tax-General Article, §§2-103 and 10-732; Economic Development Article, §2-108; Annotated Code of Maryland

24.05.07 Small Business Development Contract Financing Fund

COMAR 24.05.07.01 Purpose.

These regulations prescribe the policies, procedures, and authorizations for assisting socially or economically disadvantaged persons to obtain the financing needed to perform government and public utility contracts.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.02 Objective.

The basic objective of the Program is to guarantee loans or equity investments or to make loans to economically or socially disadvantaged business persons for working capital or equipment needed to perform federal, State, or local government or public utility contracts in order to encourage economically or socially disadvantaged persons to seek and perform these contracts.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.03 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, Title 5, Subtitle 5, Annotated Code of Maryland, as amended.

(2) “Applicant” means a sole proprietor, a partnership, or a corporation applying for financial assistance under the Program.

(3) "Authority" means the Maryland Small Business Development Financing Authority.

(4) “Contract” means a contract for a project financed by the federal or State government, a local government, or a utility regulated by the Public Service Commission.

(5) “Contract Financing Fund” means the Small Business Development Contract Financing Fund.

(6) “Department” means the Department of Commerce,

a principal department of the State.

(7) “Direct loan” means a loan made by the Authority under the Program directly to the applicant.

(8) “Director” means the Executive Director or Deputy Director of the Authority.

(9) “Equity guaranty” means the Authority's guaranty of an equity investment in the applicant.

(10) “Financial assistance” means a direct loan or guaranty made by the Authority.

(11) “Financial institution” means any financial institution as that term is defined in Financial Institutions Article, §1-101(h), Annotated Code of Maryland, as well as any other lender approved by the Authority.

(12) “Guarantied loan” means a loan made to the applicant by a lender and guarantied by the Authority under the Program.

(13) “Guaranty” means a loan guaranty or an equity guaranty made under the Program.

(14) “Guaranty agreement” means the agreement between the Authority and the lender providing for the terms of the Authority's guaranty of a loan or equity investment.

(15) “Investor” means a person who invests funds in an applicant.

(16) “Lender” means a financial institution or other lender approved by the Authority.

(17) “Loan documents” means any instrument or agreement evidencing, securing, or guaranteeing the payment or the repayment of a loan, including by way of example any note, financing statement, mortgage, pledge, assignment, loan and security agreement, or guarantee.

(18) “Program” means the Contract Financing Program, as authorized by the Act.

(19) “Project” means the facility to be constructed, or task to be performed, under the contract.

(20) “Secretary” means the Secretary of Commerce.

(21) “Working capital” means funds used to pay for the current operations of a business, including, without limitation, supplies, materials, labor, equipment, accounts payable not more than 12 months old, or short-term credit used for working capital such as a bridge loan or revolving line of credit due within 12 months or less. “Working capital” does not include funds used to refinance existing long-term obligations.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.04 Eligible Applicants.

A. The Authority shall be satisfied that the following requirements to qualify for financial assistance have been met by applicants who are sole proprietors and by the owners of at least 70 percent of business enterprises that are not sole proprietorships:

(1) The applicant is of good moral character;

(2) As determined from creditors, employers, and other individuals who have personal knowledge of the applicant, the applicant has a reputation for financial responsibility;

(3) The applicant is a resident of Maryland or the applicant's principal place of business is in Maryland;

(4) The applicant is unable to obtain adequate business financing on reasonable terms through normal lending channels because the applicant:

(a) Belongs to a group that historically has been deprived of access to normal economic or financial resources because of race, color, creed, sex, religion, or national origin;

(b) Has an identifiable physical handicap that severely limits the ability of the applicant to obtain financial assistance, but does not limit the ability of the applicant to perform the contract or other activity for which the applicant would be receiving financial assistance;

(c) Has any other social or economic impediment that is beyond the personal control of the applicant, such as a lack of formal education or financial capacity or geographical or regional economic distress but that does not limit the ability of the applicant to perform the contract or other activity for which the applicant would be receiving financial assistance; or

(d) Does not meet the established credit criteria of at least one financial institution; and

(5) The applicant or owners of the applicant who qualify as socially or economically disadvantaged under §A(4) of this regulation actually control as well as own at least 70 percent of the business enterprise.

B. Establishing Eligibility.

(1) The applicant's owner may establish the economic impediment of lack of formal education under §A(4)(c) of this regulation by demonstrating that the applicant's owner has not achieved the type or level of academic or vocational training that in the Authority's determination is typical of business owners in the industry in which the applicant is operating.

(2) The applicant or owners of the applicant may establish the economic impediment of lack of financial capacity under §A(4)(c) of this regulation by demonstrating that the applicant or owners of the applicant do not have the collateral, working capital, positive credit history, or financial experience, training, or expertise that in the Authority's determination is typical of businesses that are able to obtain financing through normal channels.

(3) The applicant may establish the economic impediment of regional economic distress under §A(4)(c) of this regulation by demonstrating that the applicant is located or operates in areas defined as economically distressed by the State or federal government, or a local government, including:

(a) Designated Neighborhoods, as designated by the Department of Housing and Community Development pursuant to Article 83B, §4-202, Annotated Code of Maryland;

(b) Enterprise Zones, as designated by the Secretary pursuant to Article 83A, §5-401, Annotated Code of Maryland; and

(c) Empowerment Zones, as designated by the federal government pursuant to 26 U.S.C. §1391.

(4) To qualify as economically disadvantaged under §A(4)(c) of this regulation, each applicant or owner shall have a net worth of $500,000 or less. Net worth is calculated deducting any interest in the business receiving financial assistance from the Authority, and any equity in real estate, including the applicant's or owner's primary personal residence, that is being used for collateral for the financial assistance from the Authority.

C. Applicants shall also meet the following requirements to qualify for financial assistance:

(1) Be in good standing and qualified to do business in Maryland;

(2) Have the legal capacity and all necessary legal authorization to incur the obligations of the financial assistance;

(3) Demonstrate creditworthiness and repayment capability acceptable to the Authority;

(4) For a direct loan, in the reasonable determination of the Authority, be unable to afford or secure private financing or to obtain other public or private sources of funds needed to perform the contract;

(5) For a guarantied loan, provide evidence that the applicant has applied for and been denied a loan for the same amount on similar terms by a financial institution;

(6) For an equity guaranty, show that the investor is not a person who:

(a) Previously held an equity investment in the applicant;

(b) Previously participated in the management of the applicant; or

(c) In any other manner is related to:

(i) The applicant, or

(ii) Any of its current stockholders, officers, or other management personnel;

(7) Demonstrate the capacity to manage the business enterprise for which financial assistance is sought.

Cross References

24.05.07.09F

24.05.07.10B

24.05.07.11J

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.05 Eligible Uses.

The proceeds of the financial assistance shall be used for working capital or for machinery or equipment needed to perform a contract. Machinery and equipment may be financed only if the cost of the equipment can be repaid from contract proceeds and if the Authority has entered into an agreement with the applicant necessary to secure the financial assistance.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.06 Applications for Financial Assistance.

A. To apply for financial assistance under the Program, an applicant shall submit to the Authority an application that includes:

(1) A detailed description of the project;

(2) An itemization of known and estimated costs, to include cash flow projections with underlying assumptions on the contract;

(3) The total amount of investment required to perform the contract;

(4) The funds available to the applicant without financial assistance from the Authority;

(5) The amount of financial assistance sought from the Authority;

(6) Information that relates to the inability of the applicant to obtain adequate financing on reasonable terms through normal lending channels;

(7) Information that relates to the financial status of the applicant, including:

(a) A balance sheet dated within 90 days of the application,

(b) A profit and loss statement dated within 90 days of the application,

(c) Credit references, and

(d) Detailed information on the status of outstanding indebtedness including copies of notes, security agreements, and other evidence of obligations;

(8) Information on available collateral;

(9) A copy of the applicant's articles of incorporation (filed with the state of incorporation), bylaws, partnership agreement, or other organizational documents;

(10) A copy of the deeds to all real property offered as collateral; and

(11) Other relevant information the Authority requests.

B. If an applicant is unable to provide the application information required by §A(1)—(3) of this regulation, the application shall nevertheless be deemed fully completed if the applicant:

(1) Provides the information required in §A(4)—(11) of this regulation in the application;

(2) Agrees that before disbursement of any funds for a project, the applicant shall submit to the Director the information required in §A(1)—(3) of this regulation; and

(3) Requests the Authority to delegate to the Director the review and approval of the information required in §A(1)—(3) of this regulation.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.07 Guarantied Loan Terms and Requirements.

Guarantied loans shall meet the following requirements:

A. Maximum Guaranty Amount. The part of the loan to be guarantied may not exceed $500,000.

B. Interest Rate. The interest rate to be paid on guarantied loans shall be a reasonable rate approved by the Authority.

C. Security. Guarantied loans shall be secured by liens on machinery and equipment purchased with guarantied loan proceeds, assignment of the contract to the lender or the Authority, as appropriate, the personal guaranties of the applicant's owners, and any other collateral approved by the lender and the Authority, which may include, but is not limited to, liens on the business assets of the applicant and deeds of trust on real property owned by the applicant or the applicant's owners.

D. Term. The term of each loan guaranty may not exceed the term of the contract for which the loan is provided, unless the Authority finds that a longer term better carries out the purposes of the Act.

E. Late Charges. Late charges, as permitted by law, may be imposed.

F. Title Insurance. If the guarantied loan is to be secured by real property, the Authority may require the:

(1) Applicant to provide an American Land Title Association Loan Policy issued by a title insurance company acceptable to the Authority for an amount equal to the maximum principal amount of the loan, insuring the Authority, evidencing that title to property offered as collateral on the date of closing is vested in the applicant, and containing only standard exceptions and encumbrances approved by the Authority.

(2) Title insurance policy to be accompanied by a survey, certified in the manner required by the Authority and the title company issuing the title insurance, showing that there are no easements or encroachments upon or other matters pertaining to the property, except those acceptable to the Authority. The title insurance policy may not contain any survey exceptions.

G. Appraisals. The Authority may require appraisals done by qualified appraisers showing the value of property which is offered as collateral for the financial assistance.

H. Insurance. Before providing financial assistance, the Authority may require the applicant or the applicant's owners and key managers to obtain and assign to the Authority and the lender life insurance in the amount of the financial assistance. The Authority may also require business interruption insurance, hazard and casualty insurance, liability insurance, vehicle insurance, flood insurance, homeowner's insurance, workers' compensation insurance, and other appropriate forms of insurance.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.08 Guarantied Loan Application and Processing Procedures.

A. Loan Application.

(1) Guarantied loan applications shall be made upon standard forms prescribed by the Authority.

(2) Each application shall include the following documentation:

(a) A fully completed and properly executed application, executed by the lender and the applicant;

(b) A copy of a letter evidencing that the applicant has applied for and been denied a loan for the same amount or a lesser amount of money and having similar terms by a financial institution; or

(c) An executed copy of the lender's commitment letter that provides a commitment of financing contingent upon the Authority's approval of a guaranty of the lender's loan.

B. Processing of Application.

(1) After execution of the application, the lender shall submit it to the Authority along with a copy of a commitment letter from the lender to provide financing which, at the minimum, shall state the amount, rate, and terms of the financing.

(2) To make a determination of the eligibility of the applicant and the contract in accordance with Regulations .03B(4) and .04 of this chapter, the Authority's staff shall perform an initial review of each application and may also perform a preliminary audit investigation of the applicant's books and records.

C. Loan Approval. Approval of a loan guaranty shall be evidenced by a signed resolution of the Authority.

D. Loan Documents. The guarantied loan documents may include:

(1) Promissory notes;

(2) Deeds of trust;

(3) Loan and security agreements;

(4) Financing statements;

(5) Personal and corporate guarantee agreements;

(6) A guaranty agreement;

(7) Assignments of contracts and notices of assignment;

(8) Assignment of life insurance; and

(9) Other documents the Authority may require.

E. Fees. As a precondition to the effectiveness of the guaranty, the Authority shall receive in advance a guaranty fee of 1 percent of the outstanding principal amount of the guarantied loan from the lender.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.09 Equity Guaranty Terms and Requirements.

A. Equity guaranties shall meet the requirements in §§B—H of this regulation.

B. Maximum Equity Guaranty Amount. The maximum equity guaranty amount may not exceed the lesser of:

(1) 10 percent of the investor's equity investment in the applicant; or

(2) $500,000.

C. Terms. The terms of the equity guaranty shall be determined by the Authority.

D. Security. The equity guarantees shall be secured by the personal guaranties of the applicant's owners and any other collateral required by the Authority, which may include, but is not limited to, liens on the business assets of the applicant and deeds of trust on real property owned by the applicant or the applicant's owners.

E. Late Charges. Late charges, as permitted by law, may be imposed.

F. Change of Applicant Eligibility. If at any time the applicant ceases to satisfy the requirements of Regulation .04 of this chapter, the Authority may, in accordance with the terms of the equity guaranty documents between the Authority, the investor, and the applicant, accelerate the payment of the entire equity investment.

G. Change of Ownership. If at any time during the term of the equity guaranty the applicant sells, ceases to own, assigns, transfers, or otherwise disposes of, all or any part of the business performing the contract, the Authority, in accordance with the terms of the equity guaranty documents between the Authority, the investor, and the applicant, may accelerate the payment of the entire principal and interest due under the guarantied loan.

H. Insurance. The Authority may require the applicant or the applicant's owners and key managers to obtain and assign to the Authority life insurance in the amount of the equity guaranty. The Authority may also require business interruption insurance, hazard and casualty insurance, flood insurance, homeowner's insurance, workers' compensation insurance, and other appropriate forms of insurance.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.10 Equity Guaranty Application and Processing Procedures.

A. Application. Equity guaranty applications shall be made upon standard forms prescribed by the Authority. Each application shall be properly and fully completed and properly executed by the applicant.

B. Processing of Application. To make a determination of the eligibility of the applicant and the investor in accordance with Regulation .04 of this chapter, the Authority's staff shall perform an initial review of each equity guaranty application and may also perform a preliminary audit investigation of the applicant's and the investor's books and records.

C. Final Processing. Before approval of the equity guaranty, the applicant shall provide, for the Authority's review and approval, a copy of a commitment letter from the investor to provide equity financing which, at a minimum, shall state the amount, rate, and terms of the financing.

D. Equity Guaranty Approval. Approval of an equity guaranty shall be evidenced by a resolution of the Authority.

E. Equity Guaranty Documents. The equity guaranty documents may include, among others:

(1) A guaranty agreement;

(2) Personal and corporate guarantees;

(3) Evidence of proper equity investment approvals and filings by the applicant;

(4) Assignments of life insurance;

(5) Assignments of contracts and notices of assignment;

(6) Evidence of equity investment, such as stock certificates; and

(7) Other documents the Authority may require.

F. Fees. As a precondition to the effectiveness of the equity guaranty, the Authority shall receive in advance a guaranty fee of 1 percent of the outstanding equity investment amount from the applicant.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.11 Direct Loan Terms and Requirements.

A. Direct loans shall meet the requirements in §§B—M of this regulation.

B. Maximum Direct Loan Amount. The maximum direct loan amount may not exceed $500,000.

C. Interest Rate. The interest rate to be paid on a direct loan shall equal the market rate for a conventional loan of comparable risk unless the Authority finds that a lower rate better carries out the purposes of the Act.

D. Security. Each direct loan shall be secured by the assignment of the contract to the Authority, the personal guaranties of the applicant's owners and any other collateral required by the Authority, which may include, but is not limited to, liens on the business assets of the applicant and deeds of trust on real property owned by the applicant or the applicant's owners.

E. Term. The term of each direct loan may not exceed the term of the contract, unless the Authority finds that a longer term better carries out the purposes of the Act.

F. Payment Schedule. The Authority shall prepare a payment schedule that provides money to the applicant in the amounts and at times that the applicant needs the money to perform the contract.

G. Late Charge. Late charges, as permitted by law, may be imposed.

H. Cosigning Requests. Before each advance of money is released to the applicant, the applicant and the Authority shall cosign the request for money.

I. Repayment. The Authority's direct loan documents shall contain provisions for repayment of the direct loan.

J. Change of Applicant Eligibility. If at any time the applicant ceases to satisfy the requirements of Regulation .04 of this chapter, the Authority may, in accordance with the terms of the direct loan documents between the Authority and the applicant, accelerate the payment of the entire principal and interest due under the direct loan.

K. Change of Ownership. If at any time during the term of the direct loan the applicant or any owner of the applicant sells, ceases to own, assigns, transfers, or otherwise disposes of, all or any part of the business performing the contract, the Authority, in accordance with the terms of the direct loan documents between the Authority and the applicant, may accelerate the payment of the entire principal and interest due under the direct loan.

L. Title Insurance. If the direct loan is to be secured by real property, the Authority may require:

(1) The applicant to provide an American Land Title Association Loan Policy—1970, as amended, issued by a title insurance company acceptable to the Authority for an amount equal to the maximum principal amount of the direct loan, insuring the Authority, evidencing that title to property offered as collateral is vested in the applicant on the date of closing, and containing only standard exceptions and encumbrances approved by the Authority.

(2) That the title insurance policy be accompanied by a survey, certified in the manner required by the Authority and the title company issuing the title insurance, showing that there are no easements or encroachments upon or other matters pertaining to the property, except those acceptable to the Authority. The title insurance policy may not contain any survey exceptions.

M. Insurance. The Authority may require the applicant or the applicant's owners and key managers to obtain life insurance in the amount of the direct loan. The Authority may also require business interruption insurance, hazard and casualty insurance, flood insurance, homeowner's insurance, workers' compensation insurance, and other appropriate forms of insurance.

N. Appraisals. The Authority may require appraisals by qualified appraisers showing the property's value for each item of real or personal property offered as collateral.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.12 Direct Loan Application and Processing Procedures.

A. Loan Application. Loan applications shall be made upon standard forms prescribed by the Authority. Each application shall be fully completed and properly executed by the applicant.

B. Processing of Application.

(1) To make a determination of the eligibility of the applicant and the contract in accordance with Regulations .03B(4) and .04 of this chapter, the Authority's staff shall perform an initial review of each application and may also perform a preliminary audit investigation of the applicant's books and records.

(2) The Authority may obtain credit reports and lien and judgment reports and take other appropriate steps to investigate the creditworthiness of the applicant and the applicant's owners and the guarantors and the value of the collateral.

C. Loan Approval. Approval of a direct loan shall be evidenced by a resolution and commitment letter from the Authority to the applicant. The Authority is not obligated to take further action on a direct loan after issuance of a commitment letter until an applicant executes and returns a copy of the executed commitment letter to the Authority.

D. Direct Loan Documents. Direct loan documents may include:

(1) Promissory notes;

(2) Deeds of trust;

(3) Loan and security agreements;

(4) Financing statements;

(5) Assignments of contracts and notices of assignment;

(6) Assignments of life insurance;

(7) Personal and corporate guaranties; and

(8) Other documents the Authority may require.

E. Fees. Each applicant:

(1) Shall pay a $250 application fee;

(2) May also be required to reimburse the Authority for filing fees, the cost of credit reports and appraisals, and other expenses incurred in making the direct loan.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.13 Nondiscrimination.

Each applicant shall comply with all applicable federal, State, and local laws and Departmental policies and programs regarding discrimination and equal opportunity in employment and credit practices including:

A. Title VII of the Civil Rights Act of 1964;

B. The provisions of the Governor's Code of Fair Employment Practices, as amended; and

C. The Department's Minority Business Enterprise Program, as amended.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.14 Program Administration.

A. Any action or decision required or permitted to be taken or made by the Authority pursuant to the Act or these regulations may be taken by the Authority, the Secretary or the Secretary's designee, or, to the extent set forth in the Act or properly delegated by the Authority or the Secretary, the Executive Director of the Authority.

B. The Secretary may delegate to the Executive Director of the Authority or to any other official or employee of the Department or Authority the authority to review and execute any Program documents or loan documents.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.15 False Statements or Reports.

A. A person may not knowingly make or cause any false statement or report to be made:

(1) In any application or in any document furnished to the Authority;

(2) For the purpose of influencing the action of the Authority on an application for financial assistance or for the purpose of influencing any action of the Authority affecting financial assistance whether or not the assistance may have been already extended.

B. A person, or the person's aiders and abettors, who violates or attempts to violate any provision of §A of this regulation is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $50,000, or imprisonment not exceeding 5 years, or both.

C. In addition, any applicant who knowingly makes or causes to be made any material misstatement of fact, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Authority's action in any statement or report in or regarding an application for financial assistance or affecting financial assistance already extended, shall be subject to immediate acceleration of the financial assistance.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.16 Waiver.

The Authority may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:

A. Conformance to the requirements of any federal, State, or local programs in connection with a direct loan, equity guaranty or guarantied loan necessitates waiver or variance of a regulation; or

B. In the determination of the Authority, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.17 Severability.

The provisions of these regulations are severable. A judgment by any court of competent jurisdiction finding or declaring that any provisions of these regulations or the application of any provision to any person or circumstance is invalid does not affect the validity of the remaining provisions of the regulations or any other application of these regulations, and the remaining regulations shall have full force and effect as if no judgment had been entered.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.07.18 Drug-Free and Alcohol-Free Workplace.

The applicant shall comply, and remain in compliance, with the State's policy concerning drug-free and alcohol-free workplaces, as set forth in COMAR 01.01.1989.18, and shall make a good-faith effort to eliminate illegal drug use and alcohol and drug abuse from places at which work is performed in accordance with a State loan.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .11 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .12E adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .18 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

24.05.08 Small Business Development Guaranty Fund

COMAR 24.05.08.01 Purpose.

These regulations prescribe the policies, procedures, and authorizations for encouraging financial institutions to make loans to socially or economically disadvantaged persons to enable them to obtain the financing needed to sustain and expand their businesses and to hire and train employees.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.08.02 Objective.

The basic objective of the Program is to guarantee loans and, in some cases, to provide interest subsidies to economically or socially disadvantaged business persons for working capital, the acquisition and related installation of machinery or equipment, certain necessary improvements to real property leased or owned in fee simple by the applicant, or the acquisition of real property if used in the business, in order to assist economically or socially disadvantaged business persons.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.08.03 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, Title 5, Subtitle 5, inclusive, Annotated Code of Maryland, as amended.

(2) “Applicant” means a sole proprietor, a partnership, a limited liability company, a limited liability partnership, a cooperative, an unincorporated association, or a corporation applying for financial assistance under the Program.

(3) "Authority" means the Maryland Small Business Development Financing Authority.

(4) “Department” means the Department of Commerce, a principal department of the State.

(5) “Director” means the Executive Director or Deputy Director of the Authority.

(6) “Financial assistance” means a guaranty or an interest subsidy provided by the Authority.

(7) “Financial institution” means any financial institution as that term is defined in Financial Institutions Article, §1-101(h), Annotated Code of Maryland, as well as any other lender approved by the Authority.

(8) “Guaranty” means a loan guaranty made under the Program.

(9) “Guaranty agreement” means the agreement between the Authority and the lender providing for the terms of the Authority's guaranty of a loan and, if applicable, for an interest subsidy.

(10) “Interest subsidy” means a subsidy to be paid by the Authority to a lender to reduce the applicant's interest payments to the lender.

(11) “Lender” means a financial institution that makes a loan that is guarantied by the Authority under the Program.

(12) “Loan” means a loan made to the applicant by a lender and guarantied by the Authority under the Program.

(13) “Loan documents” means any instrument or agreement evidencing, securing, or guaranteeing the payment or the repayment of a loan, including by way of example any note, financing statement, deed of trust, pledge, assignment, loan and security agreement, or guarantee.

(14) “Program” means the guaranty program, as authorized by the Act.

(15) “Secretary” means the Secretary of Commerce.

(16) “Working capital” means funds used to meet the cash needs of an operating business entity, excluding capital purchases.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.08.04 Eligible Applicants.

A. The Authority shall be satisfied that the following requirements to qualify for financial assistance have been met by applicants who are sole proprietors and by the owners of at least 70 percent of business enterprises that are not sole proprietorships:

(1) The applicant is of good moral character;

(2) As determined from creditors, employers, and other individuals who have personal knowledge of the applicant, the applicant has a reputation for financial responsibility;

(3) The applicant is a resident of Maryland or the applicant's principal place of business is in Maryland;

(4) The applicant is unable to obtain adequate business financing on reasonable terms through normal lending channels because the applicant:

(a) Belongs to a group that historically has been deprived of access to normal economic or financial resources because of race, color, creed, sex, religion, or national origin,

(b) Has an identifiable physical disability that severely limits the ability of the applicant to obtain financial assistance, but does not limit the ability of the applicant to perform the activity for which the applicant would be receiving financial assistance, or

(c) Has any other social or economic impediment that is beyond the personal control of the applicant, such as lack of formal education or financial capacity or geographical or regional economic distress but that does not limit the ability of the applicant to perform the activity for which the applicant would be receiving financial assistance; and

(5) The applicant or owners of the applicant who qualify as socially or economically disadvantaged under §A(4) of this regulation shall actually control as well as own at least 70 percent of the business enterprise.

B. Establishing Eligibility.

(1) The applicant's owner may establish the economic impediment of lack of formal education under §A(4)(c) of this regulation by demonstrating that the applicant's owner has not achieved the type or level of academic or vocational training that in the Authority's determination is typical of business owners in the industry in which the applicant is operating.

(2) The applicant or owners of the applicant may establish the economic impediment of lack of financial capacity under §A(4)(c) of this regulation by demonstrating that the applicant or owners of the applicant do not have the collateral, working capital, positive credit history, or financial experience, training, or expertise that in the Authority's determination is typical of businesses that are able to obtain financing through normal channels.

(3) The applicant may establish the economic impediment of regional economic distress under §A(4)(c) of this regulation by demonstrating that the applicant is located or operates in areas defined as economically distressed by the State or federal government, or a local government, including:

(a) Designated Neighborhoods, as designated by the Department of Housing and Community Development pursuant to Housing and Community Development Article, §6-305, Annotated Code of Maryland;

(b) Enterprise Zones, as designated by the Secretary pursuant to Economic Development Article, §5-704, Annotated Code of Maryland; and

(c) Empowerment Zones, as designated by the federal government pursuant to 26 U.S.C. §1391.

(4) To qualify as economically disadvantaged under §A(4)(c) of this regulation, each applicant or owner shall have a net worth of $500,000 or less. Net worth is calculated deducting interest in the business receiving financial assistance from the Authority, and any equity in real estate, including the applicant's or owner's primary personal residence, that is being used for collateral for the financial assistance from the Authority.

C. Applicants shall also meet the following requirements to qualify for financial assistance:

(1) Be in good standing and qualified to do business in Maryland;

(2) Have the legal capacity and all necessary legal authorization to incur the obligations of the financial assistance;

(3) Demonstrate creditworthiness and repayment capability acceptable to the Authority;

(4) Provide evidence that the applicant has applied for and been denied a loan for the same amount or a lesser amount, within the last 90 days and on similar terms by a financial institution; and

(5) Demonstrate sufficient experience and the capacity to manage the business enterprise for which financial assistance is sought.

Cross References

24.05.08.08A(10)

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.08.05 Eligible Uses.

The purposes for which the loan is to be used include:

A. Working capital;

B. The acquisition and related installation of machinery or equipment;

C. Necessary improvements to real property leased or owned in fee simple by the applicant; or

D. The acquisition of real property to be owned in fee simple by the applicant if:

(1) The real property is to be used in the operation of the applicant's trade or business for which the loan and guarantee are sought, and

(2) A lien is placed on the real property by the financial institution.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.08.06 Loan and Guaranty Terms and Requirements.

A. In order to qualify for a guaranty, all loans shall meet the requirements in §§B—K of this regulation.

B. Maximum Guaranty Amount. The Authority may not guaranty more than 80 percent of the principal of a loan or more than 80 percent of the interest on the loan accrued for up to 120 days beginning with the date of a payment default payable by the Authority after the Authority receives written notice of the payment default. The maximum amount payable by the Authority under its guaranty may not exceed $1,000,000.

C. Minimum Loan Amount. The loan amount may not be less than $5,000.

D. Interest Rate. The rate of interest on the loan shall be not greater than the rate of interest determined by the Authority to be the monthly weighted average of the prime lending rate, plus 2 percent, prevailing from time to time in the City of Baltimore on unsecured commercial loans.

E. Security. Guarantied loans shall be secured by liens on machinery and equipment purchased with guarantied loan proceeds, the personal guaranties of the applicant's owners, and any other collateral approved by the lender and the Authority which may include, but is not limited to, liens on the business assets of the applicant and deeds of trust on real property owned by the applicant or the applicant's owners.

F. Term. The loan shall mature not more than 10 years from the date of closing the loan.

G. Economic Impact. The economic impact of the loan shall be substantial. To determine the economic impact of a project, the Authority may consider:

(1) The amount of the guaranty obligation;

(2) The terms of the loan to be guaranteed;

(3) The number of new jobs that will be created by the loan;

(4) The number of jobs that will be retained because of the loan; and

(5) Any other factor that the Authority considers relevant.

H. Late Charges. Late charges, as permitted by law, may be imposed.

I. Title Insurance. If the guarantied loan is to be secured by real property, the Authority may require the:

(1) Applicant to provide an American Land Title Association Loan Policy, as amended, issued by a title insurance company acceptable to the Authority for an amount equal to the maximum principal amount of the loan, insuring the Authority, evidencing that title to property offered as collateral on the date of closing is vested in the applicant, and containing only standard exceptions and encumbrances approved by the Authority.

(2) Title insurance policy to be accompanied by a survey, certified in the manner required by the Authority and the title company issuing the title insurance, showing that there are no easements or encroachments upon or other matters pertaining to the property, except those acceptable to the Authority. The title insurance policy may not contain any survey exceptions.

J. Appraisals. The Authority may require appraisals showing the value of property which is offered as collateral for the financial assistance.

K. Insurance. Before providing financial assistance, the Authority may require the applicant or the applicant's owners and key managers to obtain and assign to the lender and the Authority life insurance in an amount acceptable to the Authority. The Authority may also require business interruption insurance, hazard and casualty insurance, flood insurance, homeowner's insurance, workers' compensation insurance, and other appropriate forms of insurance.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.08.07 Interest Subsidy.

In addition to the granting of a loan guaranty, the Authority may for the benefit of an applicant provide an interest subsidy to a financial institution issuing a loan guarantied by the Authority pursuant to this regulation which:

A. Is payable quarterly;

B. Does not exceed the difference between the rate of interest requested by the financial institution to make the loan (which rate may not exceed the rate of interest determined by the Authority to be the monthly weighted average of the prime lending rate, plus 2 percent, prevailing from time to time in the City of Baltimore on unsecured commercial loans) and the discount rate of interest employed by the Federal Reserve Bank of the United States, the difference to be determined by the Authority as of the date of closing of the loan for which the guaranty is given;

C. Is payable during the term of the loan, excluding any period in which the Authority determines that the loan is in default;

D. May be approved for the life of the loan or may be approved for 1 year, renewable annually at the Authority's discretion; and

E. May not exceed 4 percent.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.08.08 Financial Assistance Application and Processing Procedures.

A. Application. Guaranty and interest subsidy applications shall be made upon standard forms prescribed by the Authority. Each application shall be accompanied by a detailed business plan which shall include but is not limited to the following:

(1) A detailed description of the proposed use or uses of the proceeds of the loan including projected cash flow analyses with underlying assumptions, marketing plans, or descriptions and appraisals;

(2) A detailed description of the funds available to the applicant;

(3) A detailed description of the proposed loan documents to be executed by the financial institution and the applicant;

(4) A detailed description of the property proposed as collateral for the loan together with the financial institution's certification as to value;

(5) Information that relates to the inability of the applicant to obtain adequate financing on reasonable terms through normal lending channels;

(6) Information that relates to the financial status of the applicant, including:

(a) A balance sheet dated within 90 days of the date of application,

(b) A profit and loss statement dated within 90 days of the date of application,

(c) Credit references, and

(d) The status of outstanding indebtedness;

(7) A proposed disbursement schedule;

(8) A proposed amortization schedule;

(9) A detailed description of the applicant's experience in the trade or business for which the loan and guaranty are sought;

(10) Information that relates to satisfaction of the applicant's meeting the requirements of Regulation .04 of this chapter;

(11) A copy of the articles of incorporation filed with the state of incorporation, bylaws, partnership agreement, or other organizational documents;

(12) A copy of the deeds and deeds of trust to all real property offered as collateral and of the certificates of title to vehicles;

(13) A copy of the letter from a financial institution dated within 90 days of the date of application evidencing that the applicant has applied for and been denied a loan for the same amount or a lesser amount of money and having similar terms;

(14) Information that relates to the economic impact to be created by the loan;

(15) A copy of a signed commitment letter from the lender outlining the terms and conditions under which the loan will be made;

(16) Other relevant information that the Authority requests.

B. Processing of Application.

(1) After execution of the application, the lender shall submit it to the Authority along with a copy of an executed commitment letter from the lender to provide financing which, at the minimum, shall state the amount, rate, and terms of the financing.

(2) To make a determination of the eligibility of the applicant and the loan in accordance with these regulations, the Authority's staff shall perform an initial review of each application and may perform a preliminary audit investigation of the books and records of the applicant.

(3) After receipt of an application for financial assistance from the guaranty fund, the Authority may determine by resolution that before the Authority makes its decision on the application, an applicant shall provide an audited financial statement which includes, but is not limited to, a balance sheet and profit and loss statement certified by an independent certified public accountant in accordance with generally accepted accounting principles.

C. Approval. Approval of a loan guaranty and, if applicable, of an interest subsidy, shall be evidenced by a signed resolution of the Authority.

D. Loan Documents. Loan documents may include:

(1) Promissory notes;

(2) Deeds of trust;

(3) Loan and security agreements;

(4) Financing statements;

(5) Personal and corporate guarantee agreements;

(6) A guaranty agreement;

(7) Assignment of life insurance; and

(8) Other documents the Authority may require.

E. Fees.

(1) As a precondition to the effectiveness of the guaranty, the Authority shall receive from the lender at closing a guaranty fee up to 1.5 percent of the loan amount and after that, on each anniversary of the closing date, an annual guaranty fee up to 1.5 percent of the average outstanding principal balance of the loan, averaged over the preceding year, by the Authority or the Executive Director. In determining the rate of the guaranty fee, the Authority may consider the following factors:

(a) Any other fees charged by the Authority or the lender;

(b) The amount of the loan or the amount of the guaranty;

(c) The economic impact caused by the loan; and

(d) Any other factor that the Authority considers relevant.

(2) The Authority shall require the lender or the applicant to reimburse the Authority for expenses it incurs in processing and closing the loan, such as credit reports and appraisals.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.08.09 Nondiscrimination.

Each applicant shall comply with all applicable federal, State, and local laws and Departmental policies and programs regarding discrimination and equal opportunity in employment and credit practices including Title VII of the Civil Rights Act of 1964, the provisions of the Governor's Code of Fair Employment Practices, as amended, and the Department's Minority Business Enterprise Program, as amended.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.08.10 Program Administration.

A. An action or decision required or permitted to be taken or made by the Department pursuant to the Act or these regulations may be taken by the Authority, the Secretary or the Secretary's designee, or, to the extent set forth in the Act or properly delegated by the Authority or the Secretary, the Executive Director of the Authority.

B. The Secretary may delegate to the Executive Director of the Authority or to any other official or employee of the Department or Authority the authority to review and execute any Program documents or loan documents.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.08.11 False Statements or Reports.

A. A person may not knowingly make or cause any false statement or report to be made:

(1) In any application or in any document furnished to the Authority;

(2) For the purpose of influencing the action of the Authority on an application for financial assistance or for the purpose of influencing any action of the Authority affecting financial assistance whether or not the assistance may have been already extended.

B. A person, or the person's aiders and abettors, who violates or attempts to violate any provision of §A of this regulation is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $50,000, or imprisonment not exceeding 5 years, or both.

C. In addition, any applicant who knowingly makes or causes to be made any material misstatement of fact, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Authority's action in any statement or report in or regarding an application for financial assistance or affecting financial assistance already made, shall be subject to immediate acceleration of the financial assistance.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.08.12 Waiver.

The Authority may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:

A. Conformance to the requirements of any federal, State, or local programs in connection with a loan, guaranty or interest subsidy necessitates waiver or variance of a regulation; or

B. In the determination of the Authority, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.08.13 Severability.

The provisions of these regulations are severable. A judgment by any court of competent jurisdiction finding or declaring that any provisions of these regulations or the application of any provision to any person or circumstance is invalid does not affect the validity of the remaining provisions of the regulations or any other application of these regulations, and the remaining regulations shall have full force and effect as if no judgment had been entered.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .02 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .03B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .07B amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
• Administrative History: Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

24.05.09 Small Business Surety Bond Guaranty Program

COMAR 24.05.09.01 Purpose.

These regulations prescribe the policies, procedures, and authorizations for providing guaranties to sureties to encourage them to provide surety bonds to Maryland contractors.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.09.02 Objective.

The basic objective of the Program is to guaranty surety bonds to sureties licensed to do business in Maryland to enable small Maryland businesses to obtain the bid, payment, and performance surety bonds necessary to perform local, State, and federal government and public utility contracts.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.09.03 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, Title 5, Subtitle 5, inclusive, Annotated Code of Maryland, as amended.

(2) "Authority" means the Maryland Small Business Development Financing Authority.

(3) “Bond” means a bid, payment, or performance bond of not more than $1 million for each bond guarantied under the Program.

(4) “Contract” means the federal, State, or local government or public utility contract requiring a surety bond for which a guaranty under the Program is being requested.

(5) Contract Term.

(a) “Contract term” means the term of the contract.

(b) “Contract term” includes the:

(i) Maintenance or warranty period required by the contract; and

(ii) Period during which the surety may be liable for latent defects.

(6) “Department” means the Department of Commerce, a principal department of the State.

(7) “Fund” means the Small Business Surety Bond Guaranty Fund.

(8) “Guaranty” means a surety bond guaranty made under the Program.

(9) “Principal” means a small business entity that:

(a) Needs a surety bond to perform a contract; and

(b) Employs fewer than 500 full-time employees or has annual gross sales of less than $50 million.

(10) “Program” means the Small Business Surety Bond Guaranty Program, as authorized by the Act.

(11) “Secretary” means the Secretary of Commerce.

(12) “Surety” means a properly licensed surety bond company issuing a bond.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.09.04 Eligible Principals.

Principals shall meet the following requirements to qualify for a bond guaranty:

A. The principal shall be of good moral character, or, if the principal is not an individual, the principal shall be owned by individuals of good moral character;

B. As determined from creditors, employers, and other individuals who have personal knowledge of the principal:

(1) The principal shall have a reputation for financial responsibility, or

(2) If the principal is not an individual, a majority of the principal shall be owned by individuals with a reputation for financial responsibility;

C. The principal shall:

(1) Be a resident of Maryland or have its principal place of business in Maryland,

(2) Be unable to obtain adequate bonding on reasonable terms through normal channels,

(3) Demonstrate creditworthiness and contract performance capability acceptable to the Authority,

(4) Agree in writing not to subcontract more than 75 percent of the dollar value of the contract, and

(5) Never have defaulted on any loan or financial assistance made or guarantied by the Authority.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.09.05 Guarantied Bond Terms and Requirements.

A. Guarantied bonds shall meet the requirements in §§B—K of this regulation.

B. Maximum Bond and Guaranty Amount. The Authority may guaranty up to 90 percent of all loss, cost, and reasonable expenses incurred by a surety as a result of its writing bonds for a principal on a contract. The amount of a single bond may not exceed $1,000,000.

C. Surety Bonding Line. The Authority may establish a surety bonding line in order to guaranty multiple bonds to a principal within pre

approved terms, conditions, and limitations.

D. Guaranty Fees. As a precondition to the effectiveness of the guaranty, the Authority may require the principal to pay to the Authority a fee of 1/2 of 1 percent of the bond amount and the surety to pay to the Authority 20 percent of the bond premium it charges to the principal. The Authority may, however, in its sole and absolute discretion, set the premiums and fees to be paid to it for providing bonding assistance under this Program. The Authority may also require the principal to reimburse the Authority for expenses incurred in providing the guaranty.

E. Security. The bond shall be secured by a reimbursement or similar agreement including an indemnification by the principal, as well as by such other security (including any form of insurance) as may be required by the Authority.

F. Insurance. Before providing a guaranty, the Authority may require the principal to obtain hazard, casualty, liability, vehicle, business interruption, flood, workers' compensation, or other insurance. The Authority also may require that the principal or the principal's owners and managers obtain and assign to the surety and the Authority key person life insurance in an amount not to exceed the amount of the guaranty.

G. Term. The term of each guaranty may not exceed the contract term.

H. Timeliness.

(1) The Authority may not honor a guaranty of a bond that is issued before the guaranty has been approved by the Authority.

(2) The Authority may not honor a guaranty of a bond that is issued after work under the contract has actually begun without the Authority's consent. The Authority may consent to the guaranty of a bond to be issued after work under the contract has begun if the Authority receives satisfactory evidence that:

(a) The contract has been satisfactorily performed to date; and

(b) All suppliers and subcontractors have been paid to date.

I. Bond Terms. The terms and conditions of the bond shall be in accord with those generally established and accepted by the surety industry for the type of contract for which the bond is required.

J. Guaranty Terms. The Authority may vary the terms and conditions of the guaranty from surety to surety, based upon the Authority's history of experience with that surety and upon any other factor that the Authority considers relevant.

K. Economic Impact. The Authority may not approve a bond guaranty unless the Authority considers the economic impact of the contract, for which a bond is sought to be guaranteed, to be substantial. To determine the economic impact of a contract, the Authority may consider:

(1) The amount of the guaranty obligation;

(2) The terms of the bond to be guaranteed;

(3) The number of new jobs that will be created by the contract to be bonded; and

(4) Any other factor that the Authority considers relevant.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.09.06 Application and Processing Procedures.

A. Bond Guaranty Application. Bond guaranty applications shall be made upon standard forms prescribed by the Authority and shall be executed by the principal and the surety. Each application shall include:

(1) A detailed description of the government or utility project, including a copy of the contract;

(2) An itemization of known and estimated costs;

(3) The total amount of investment required to perform the contract;

(4) The funds available to the principal for working capital;

(5) The amount of bonding assistance sought from the Authority;

(6) Information that relates to the inability of the principal to obtain adequate bonding on reasonable terms through normal channels, or an affidavit certifying rejection by a surety;

(7) Information that relates to the financial status of the principal, including:

(a) A balance sheet dated within 90 days of the application,

(b) A profit and loss statement dated within 90 days of the application, and

(c) Credit references;

(8) A schedule of all existing and pending contracts to be performed by the principal and the current status of each contract;

(9) A copy of the filed articles of incorporation, bylaws, partnership agreement, or other organizational documents;

(10) A copy of the financial statements of the principal dated within 90 days of the application; and

(11) Any other relevant information that the Authority requests.

B. Processing of Application.

(1) To make a preliminary determination of the eligibility of the principal and the contract in accordance with these regulations, the Authority's staff shall perform an initial review of each application and may also perform a preliminary audit investigation of the principal's books and records.

(2) After receipt of an application for assistance from the Program, the Authority may determine that a principal shall provide audited financial statements that include a balance sheet and a profit and loss statement before the Authority makes its decision on the application.

C. Application Approval. Approval of an application shall be evidenced by a resolution of the Authority.

D. Bonding Documents. Upon approval of an application, the Authority's staff shall deliver to the surety the resolution and an unexecuted surety bond guaranty agreement. The surety shall return to the Authority:

(1) A surety bond guaranty agreement signed by the surety;

(2) A copy of the bid, payment, or performance bond to be issued by the surety;

(3) A copy of the executed contract (or if a bid bond, a copy of the solicitation requiring the bid bond);

(4) A reimbursement or indemnity agreement; and

(5) Other documents the Authority may require.

E. Surety Bond Guaranty Agreement. Upon review and approval of the bonding documents, the Authority shall issue a fully executed surety bond guaranty agreement to the surety. The surety shall provide the Authority with a copy of the executed bonds within 30 days after the guaranty agreement is issued.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.09.07 Nondiscrimination.

Principals may not discriminate against any person on the basis of race, color, religion, national origin, sex, marital status, physical or mental handicap, or age in any aspect of the Program. Each principal shall comply with all applicable federal, State, and local laws and Departmental policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices including:

A. Title VII of the Civil Rights Act of 1964;

B. The provisions of the Governor's Code of Fair Employment Practices, as amended; and

C. The Department's Minority Business Enterprise Program, as amended.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.09.08 Program Administration.

A. An action or decision required or permitted to be taken or made by the Authority pursuant to the Act or these regulations may be taken by the Authority or the Secretary, or their designees, or, to the extent authority is properly delegated by the Authority or the Secretary, by the Executive Director of the Authority.

B. The Secretary may delegate to the Executive Director of the Authority or to any other official or employee of the Department or Authority the authority to review and execute any Program documents.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.09.09 False Statements or Reports.

A. A person may not knowingly make or cause any false statement or report to be made:

(1) In any application or in any document furnished to the Authority;

(2) For the purpose of influencing the action of the Authority on an application for assistance or for the purpose of influencing any action of the Authority affecting bonding assistance whether or not the assistance may have already been extended.

B. A person who violates any provision of this regulation is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $1,000, or imprisonment not exceeding 6 months, or both.

C. In addition, any surety that knowingly makes or causes to be made any material misstatement of fact, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Authority's action in any statement or report in or regarding an application for a bond guaranty or affecting a bond guaranty already made, shall be subject to immediate termination of the bond guaranty.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.09.10 Waiver.

The Authority may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:

A. Conformance to the requirements of any federal, State, or local programs in connection with a bond guaranty necessitates waiver or variance of a regulation; or

B. In the determination of the Authority, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.09.11 Severability.

The provisions of these regulations are severable. A judgment by any court of competent jurisdiction finding or declaring that any provisions of these regulations or the application of any provision to any person or circumstance is invalid does not affect the validity of the remaining provisions of the regulations or any other application of these regulations, and the remaining regulations shall have full force and effect as if no judgment had been entered.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective August 3, 1992 (19:15 Md. R. 1394)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

24.05.10 Equity Participation Investment Program

COMAR 24.05.10.01 Purpose.

These regulations prescribe the policies, procedures, and authorizations for providing financing to economically or socially disadvantaged persons owning franchised businesses, acquiring existing businesses, or owning technology-based businesses.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.02 Objective.

The basic objective of the Program is to provide financial assistance in the form of “equity investments”, including loans, or guaranties to qualifying socially or economically disadvantaged persons who wish to begin or develop franchised businesses or acquire existing businesses or technology-based businesses in the State.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.03 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, Title 5, Subtitle 5, inclusive, Annotated Code of Maryland, as amended.

(2) “Applicant” means an enterprise that applies for equity participation financing.

(3) "Authority" means the Maryland Small Business Development Financing Authority.

(4) “Controlling interest” means at least 51 percent of the voting interests of the existing business.

(5) “Department” means the Department of Commerce, a principal department of the State.

(6) “Enterprise” means a business entity, including a sole proprietorship, a partnership, a limited partnership, a corporation, a limited liability company, or a joint venture proposing to carry on a business within the State and meeting the requirements of Regulation .04 of this chapter.

(7) “Equity participation financing” means any financial assistance provided under the Program including investment in a qualified security of an enterprise or guaranty of investment in a qualified security of an enterprise.

(8) “Existing business” means a business whose board of directors or owners approve the sale of the business to an enterprise receiving equity participation financing.

(9) “Franchise” means a contract or agreement, either expressed or implied, whether oral or written, between two or more persons by which:

(a) A franchise or distributorship is created granting the right to engage in the business of offering, selling, or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor or a distributor;

(b) The operation of the franchisee's and distributee's business pursuant to a plan or system is substantially associated with the franchisor's or distributor's trademark, service mark, trade name, logotype, advertising, or other commercial symbol designating the franchisor or distributor or their affiliate; and

(c) The franchisee is required to pay, directly or indirectly, a franchise fee in excess of $100.

(10) “Franchisee” means a person to whom a franchise is granted.

(11) “Franchisor” means a person who grants a franchise.

(12) “Guaranty” means a guaranty of an investment in a qualified security made under the Program.

(13) “Loan” means a loan made or guaranteed under the Program.

(14) “Major owner” means a person or persons who, in the aggregate, owns or own at least 50 percent of the ownership interests in a franchise enterprise or at least 35 percent of the ownership interests in an enterprise acquiring an existing business or a technology-based business.

(15) “Net worth” means the dollar amount determined by subtracting the total liabilities of the enterprise or its principals from the total assets of the enterprise or its principals, excluding any valuation for goodwill.

(16) “Person” means an individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, or unincorporated organization.

(17) “Program” means the Equity Participation Investment Program in the Maryland Small Business Development Financing Authority, as authorized by the Act.

(18) “Qualified security” means any:

(a) Note, bond, debenture, or other evidence of indebtedness;

(b) Stock or other form of equity participation;

(c) Certificate of interest or participation in a profit sharing agreement;

(d) Investment contract;

(e) Certificate of deposit for a security;

(f) Certificate of interest of participation in a patent or patent application or in royalty or other payments under a patent or patent application; or

(g) Interest or instrument commonly known as a “security” or any certificate for, receipt for, guarantee of, or option, warrant, or right to subscribe to or purchase any qualified security.

(19) “Secretary” means the Secretary of Commerce.

(20) “Technology-based business” means a commercial or industrial enterprise engaged in the application of scientific knowledge to practical purposes in a particular field for a profit.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.04 Eligible Applicants.

A. The Authority shall be satisfied that the following requirements to qualify for equity participation financing have been met by applicants who are sole proprietors (and by the owners of at least 70 percent of enterprises that are not sole proprietorships):

(1) The applicant is of good moral character;

(2) As determined from creditors, employers, and other individuals who have personal knowledge of the applicant, the applicant has a reputation for financial responsibility;

(3) The applicant shall be a resident of Maryland or the applicant's principal place of business shall be in Maryland;

(4) The applicant is unable to obtain adequate business financing on reasonable terms through normal lending channels because the applicant:

(a) Belongs to a group that historically has been deprived of access to normal economic or financial resources because of race, color, creed, sex, religion, or national origin;

(b) Has an identifiable physical handicap that severely limits the ability of the applicant to obtain financial assistance, but does not limit the ability of the applicant to perform the activity for which the applicant would be receiving financial assistance;

(c) Has any other social or economic impediment that is beyond the personal control of the applicant, such as lack of formal education or financial capacity or geographical or regional economic distress but that does not limit the ability of the applicant to perform the activity for which the applicant would be receiving financial assistance; or

(d) Does not meet the established credit criteria of at least one financial institution;

(5) The applicant or owners of the applicant who qualify as socially or economically disadvantaged under §A(4) of this regulation shall actually control as well as own at least 70 percent of the enterprise.

B. Establishing Eligibility.

(1) The applicant's owner may establish the economic impediment of lack of formal education under §A(4)(c) of this regulation by demonstrating that the applicant's owner has not achieved the type or level of academic or vocational training that in the Authority's determination is typical of business owners in the industry in which the applicant is operating.

(2) The applicant or owners of the applicant may establish the economic impediment of lack of financial capacity under §A(4)(c) of this regulation by demonstrating that the applicant or owners of the applicant do not have the collateral, working capital, positive credit history, or financial experience, training, or expertise that in the Authority's determination is typical of businesses that are able to obtain financing through normal channels.

(3) The applicant may establish the economic impediment of regional economic distress under §A(4)(c) of this regulation by demonstrating that the applicant is located or operates in areas defined as economically distressed by the State or federal government, or a local government, including:

(a) Designated Neighborhoods, as designated by the Department of Housing and Community Development pursuant to Housing and Community Development Article, §6-305, Annotated Code of Maryland;

(b) Enterprise Zones, as designated by the Secretary pursuant to Economic Development Article, §5-704, Annotated Code of Maryland; and

(c) Empowerment Zones, as designated by the federal government pursuant to 26 U.S.C. §1391.

(4) To qualify as economically disadvantaged under §A(4)(c) of this regulation, each applicant or owner shall have a net worth of $500,000 or less. Net worth is calculated deducting any interest in the business receiving financial assistance from the Authority, and any equity in real estate, including the applicant's or owner's primary personal residence, that is being used for collateral for the financial assistance from the Authority.

C. Applicants shall also meet the following requirements to qualify for financial assistance:

(1) Be in good standing and qualified to do business in Maryland;

(2) Have the legal capacity and all necessary legal authorization to incur the obligations of the equity participation financing;

(3) Demonstrate creditworthiness and repayment capability acceptable to the Authority;

(4) Demonstrate sufficient experience and the capacity to manage the enterprise; and

(5) If the applicant is requesting a guaranty of a loan, the applicant shall have applied for and been denied a loan in the same amount and on similar terms by a financial institution.

D. In addition to meeting the requirements of §§A and B of this regulation at the time of application by the enterprise to the Authority to obtain financing to acquire an existing business, the following minimum qualifications shall be met:

(1) The enterprise or its principals shall have a minimum net worth of $75,000 pledged to the Authority as security;

(2) The enterprise or its principals shall have exhibited at least 3 years of successful experience with demonstrated achievements and management responsibilities;

(3) The enterprise does not own a controlling interest in the existing business, but, after the acquisition, will own a controlling interest;

(4) The existing business shall have been in existence for at least 5 years;

(5) The existing business shall have been profitable for at least 2 of the previous 3 years;

(6) The existing business shall have sufficient cash flow to service the debt and ensure an adequate return on the Authority's investment;

(7) The existing business shall have the capacity for growth and job creation;

(8) The existing business shall have its principal place of business in Maryland; and

(9) The existing business shall have a strong customer base.

Cross References

24.05.10.03B(6)

24.05.10.07Q

24.05.10.08A(5)

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.05 Eligible Franchisors.

To be eligible for equity participation financing involving a franchise, an applicant shall obtain or plan to obtain a franchise from a franchisor meeting the following requirements:

A. The franchisor's trademarks, patents, and service marks shall be registered;

B. The franchisor shall:

(1) Have complied with State and federal disclosure and registration laws pertaining to franchising,

(2) Be able to explain, to the Authority's satisfaction, all suits and other legal actions pending against it,

(3) Have the financial resources to support a franchise system,

(4) Be creditworthy by commercial banking standards,

(5) Have been in business for a period of time which demonstrates its capacity to survive successfully in the marketplace,

(6) Have at least one company-owned outlet to function as a prototype store and training facility,

(7) Have existing franchised outlets that have operated successfully in the marketplace;

C. Royalties required by the franchisor should not exceed 10 percent of the franchisee's gross sales.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.06 Eligible Uses.

The proceeds of the equity participation financing may be used for the purposes approved by the Authority, which may include, but are not limited to, working capital, acquisition of inventory, equipment, or real property, construction, renovation, or leasehold improvements.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.07 Equity Participation Financing Terms and Requirements.

A. Equity participation financings shall meet the requirements in §§B—U of this regulation.

B. The Authority may not own securities representing more than:

(1) 45 percent of the voting stock of the franchisee or own an interest greater than 45 percent in any enterprise engaged in franchising; or

(2) 25 percent of the voting stock of any enterprise acquiring an existing business or own an interest greater than 25 percent in any enterprise acquiring an existing business.

C. The amount of the Authority's equity participation financing for any franchise enterprise may not exceed:

(1) $100,000; and

(2) 45 percent of the total initial investment in the enterprise.

D. The amount of the Authority's equity participation financing for any enterprise acquiring an existing business may not exceed:

(1) $500,000; and

(2) 25 percent of the total investment in the enterprise acquiring an existing business.

D-1. The amount of the Authority's equity participation financing may not exceed $500,000 for a technology-based business.

E. Authority's Investment.

(1) The Authority shall find that there is a reasonable probability that the Authority will recover its initial investment and an adequate return on investment.

(2) The Authority's investment shall be recoverable within:

(a) 7 years of the equity participation financing involving a franchise;

(b) 7 years of the equity participation financing involving an acquisition of an existing business; or

(c) 10 years of the equity participation financing involving a technology-based business.

F. The Authority's recovery shall be the greater of the current value of the percentage of the equity investment in the enterprise or the amount of the initial investment in the enterprise.

G. The value of the enterprise at the time of the recovery shall be determined after obtaining at least one independent appraisal of the value from an appraiser selected from a list of at least three appraisers supplied by the Authority.

H. The applicant shall either provide the enterprise with an equity injection in cash, assets, or collateral or demonstrate substantial technical or managerial expertise within the business or trade for which the financing is sought.

I. An enterprise involved in franchising shall have its principal location within Maryland and carry on its franchise business primarily in Maryland.

J. The existing business to be acquired shall have its principal place of business in Maryland.

J-1. A technology-based business applying for equity participation financing shall have its principal place of business in Maryland.

K. The applicant's business plan shall:

(1) Show a thorough understanding of franchising, of the existing business, or of the technology-based business;

(2) Demonstrate an understanding of the unique features of the products or services to be provided; and

(3) Have a fully developed marketing strategy.

L. The applicant's business plan shall show that the Authority can liquidate its initial investment within 7 years for a franchise or an acquisition of an existing business, or 10 years for a technology-based business.

L-1. The applicant's business plan shall show that the Authority can meet its minimum required return within 5 to 10 years.

M. An individual applicant or a major owner of the applicant shall be involved in the enterprise on a full-time basis.

N. The equity participation financing agreement shall be secured by the security required by the Authority, which may include but is not limited to the personal guaranties of the owners of the enterprise, liens on personal and real property of the enterprise, its owners, or the personal guarantors, and assignment of the franchise agreement.

O. To obtain equity participation financing for the acquisition of an existing business, an enterprise or its owners shall have the capacity to contribute cash from their own capital in an amount equal to at least 5 percent of the equity participation financing amount toward the acquisition of the existing business.

P. Late Charges. Late charges, as permitted by law, may be imposed.

Q. Change of Applicant Eligibility. If at any time the applicant ceases to satisfy the requirements of Regulation .04 of this chapter, the Authority, in accordance with the terms of the financing documents between the Authority and the applicant, may accelerate the payment of the entire amount due under the equity participation financing.

R. Change of Ownership. If at any time during the term of the equity participation financing the enterprise sells, ceases to own, assigns, transfers, or otherwise disposes of, all or any part of the franchised, existing, or technology-based business, the Authority, in accordance with the terms of the financing documents between the Authority and the enterprise, may accelerate the payment of the entire amount due under the equity participation financing.

S. Title Insurance. The applicant may be required to provide an American Land Title Association Loan Policy, as amended, issued by a title insurance company acceptable to the Authority for an amount equal to the amount of the equity participation financing, insuring the Authority, evidencing that title to the property on which the enterprise is located on the date of closing is vested in the enterprise, or that title to the property, if any, offered as collateral for the equity participation financing is vested in the enterprise, the owner or owners of the enterprise, or the offerers of the property. The title insurance policy:

(1) Shall contain only standard exceptions and encumbrances approved by the Authority;

(2) Shall be accompanied by a survey, certified in the manner required by the Authority and the title company issuing the title insurance, showing that there are no easements or encroachments upon or other matters pertaining to the property, except those acceptable to the Authority;

(3) May not contain any survey exceptions.

T. Insurance. Before providing equity participation financing, the Authority may require the applicant or the applicant's owners and key managers to obtain and assign to the Authority life insurance in the amount of the equity participation financing. The Authority may also require casualty, hazard, liability, vehicle, workers' compensation, and business interruption insurance as well as any other insurance it deems necessary.

U. Appraisals. The Authority may require appraisals by qualified appraisers showing the value of property that is offered as collateral.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.08 Application and Processing Procedures.

A. Equity Participation Financing Application. Equity participation financing applications shall be made upon standard forms prescribed by the Authority. Each application shall contain a business plan including the following documentation:

(1) A description of the enterprise and the franchisor, existing business, or technology-based business and their management, product, and market;

(2) A statement of the amount, immediacy of need, and projected use of the capital required;

(3) A statement of the potential economic impact of the purchase of qualified securities;

(4) A copy of the most recent Maryland offering circular of the franchisor;

(5) Information that relates to the satisfaction of the applicant's requirements of Regulation .04 of this chapter;

(6) A copy of the articles of incorporation filed with the state of incorporation, bylaws, partnership agreement, or other organizational documents, and most recent financial statements of the applicant;

(7) A copy of the lease or deed to the property, or the contract or option to purchase the property;

(8) Photographs of the site and any existing buildings; and

(9) Other information the Authority requires.

B. Processing of Application. To make an initial determination of the eligibility of the applicant and the franchisor in accordance with these regulations, the Authority's staff shall perform an initial review of each application and may also perform a preliminary audit investigation of the enterprise's books and records.

C. Final Processing. Before approval of the equity participation financing, the applicant shall provide the following documentation for review and approval by the Authority:

(1) Evidence of zoning compliance; and

(2) If a loan guaranty is requested, a copy of a lender's commitment letter to provide financing which, at a minimum, shall state the amount, rate, and terms of the financing.

D. Equity Participation Financing Approval. Approval of equity participation financing shall be evidenced by a resolution and commitment letter from the Authority to the applicant. The Authority is not obligated to take further action on equity participation financing after issuance of a commitment letter until an applicant executes and returns the commitment letter to the Authority.

E. Equity Participation Financing Documents. The Authority, or, in the case of a guaranty, the lender, shall provide the enterprise with copies of relevant standard form equity participation financing documents which may include:

(1) An investment agreement, loan agreement, limited partnership agreement, preferred stock purchase agreement, or other investment document;

(2) A deed of trust or indemnity deed of trust;

(3) A security agreement;

(4) Financing statements;

(5) A guaranty agreement;

(6) A personal guaranty agreement;

(7) A franchisor's cooperation agreement;

(8) A landlord's waiver;

(9) Subordination agreements; and

(10) Other documents the Authority may require.

F. Taxes. Taxes and assessments against the enterprise or any collateral which are due and payable shall be paid at or before closing.

G. Fees.

(1) A franchise applicant shall pay a $50 preapplication fee and a $100 application fee.

(2) An applicant acquiring an existing business and an applicant acquiring a technology-based business shall pay a $250 preapplication fee and a $250 application fee.

(3) The applicant may also be required to reimburse the Authority for expense incurred in making the equity participation financing and for filing fees, credit reports, appraisals, and other expenses.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.09 Nondiscrimination.

Applicants may not discriminate against any person on the basis of race, color, religion, national origin, sex, marital status, physical or mental handicap, or age in any aspect of the Program. Each applicant shall comply with all applicable federal, State, and local laws and Departmental policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices including Title VII of the Civil Rights Act of 1964, the provisions of the Governor's Code of Fair Employment Practices, as amended, and the Department's Minority Business Enterprise Program, as amended.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.10 Program Administration.

A. Any action or decision required or permitted to be taken or made by the Authority pursuant to the Act or these regulations may be taken by the Authority, the Secretary or the Secretary's designee, or, to the extent set forth in the Act or properly delegated by the Authority or the Secretary, the Executive Director of the Authority.

B. The Secretary may delegate to the Executive Director of the Authority or to any other official or employee of the Department the authority to review and execute any equity participation financing documents.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.11 False Statements.

A. A person may not knowingly make or cause any false statement or report to be made:

(1) In any application or in any document furnished to the Authority;

(2) For the purpose of influencing the action of the Authority on an application for financial assistance or for the purpose of influencing any action of the Authority affecting financial assistance whether or not the assistance may have been already extended.

B. A person and that person's aiders and abettors who violate or attempt to violate any provision of §A of this regulation are guilty of a misdemeanor and on conviction are subject to:

(1) A fine not exceeding $50,000, or imprisonment not exceeding 5 years, or both; and

(2) Immediate acceleration of the equity participation financing.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.12 Waiver.

The Authority may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:

A. Conformance to the requirements of any federal, State, or local programs in connection with an equity participation financing necessitates waiver or variance of a regulation; or

B. In the determination of the Authority, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.13 Severability.

The provisions of these regulations are severable. A judgment by any court of competent jurisdiction finding or declaring that any provisions of these regulations or the application of any provision to any person or circumstance is invalid does not affect the validity of the remaining provisions of the regulations or any other application of these regulations, and the remaining regulations shall have full force and effect as if no judgment had been entered.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

COMAR 24.05.10.14 Drug-Free and Alcohol-Free Workplace.

The applicant shall comply, and remain in compliance, with the State's policy concerning drug-free and alcohol-free workplaces, as set forth in COMAR 01.01.1989.18, and shall make a good-faith effort to eliminate illegal drug use and alcohol and drug abuse from places at which work is performed in accordance with equity participation financing.

History

• Administrative History: Effective date: April 3, 1989 (16:6 Md. R. 730)
• Administrative History: Regulation .01 amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .02 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .03B amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)
• Administrative History: Regulation .04A amended effective December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .04C adopted effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .05 amended effective April 16, 1990 (17:7 Md. R. 853)
• Administrative History: Regulation .07 amended effective April 16, 1990 (17:7 Md. R. 853); August 3, 1992 (19:15 Md. R. 1394); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)
• Administrative History: Regulation .09 amended effective April 15, 1991 (18:7 Md. R. 775)
• Administrative History: Regulation .14 adopted effective April 15, 1991 (18:7 Md. R. 775)
• Authority: Economic Development Article, §2-108 and Title 5, Subtitle 5, Annotated Code of Maryland

24.05.11 BRAC Revitalization and Incentive Program

COMAR 24.05.11.01 Objective.

A. The objective of the BRAC Revitalization and Incentive Zone Program is to manage growth in the State related to the federal Base Realignment and Closure (BRAC) Commission recommendations.

B. By managing growth, the Program will:

(1) Enhance the State's ability to preserve natural resources;

(2) Enhance the vitality of older neighborhoods; and

(3) Increase the State's return on infrastructure investment by:

(a) Encouraging new development within designated growth areas;

(b) Directing growth related to BRAC in areas that are served by public infrastructure and mass transit facilities; and

(c) Providing financial incentives to local governments to provide the infrastructure necessary to encourage BRAC households to locate in those designated growth areas.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.02 Purpose.

This chapter describes the procedures that shall be used by the Secretary of Business and Economic Development to designate zones and to establish the requirements an area shall meet in order to be designated a zone.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.03 Scope and Administration.

The Secretary of Business and Economic Development shall administer the BRAC Revitalization and Incentive Zone Program. The Department of Assessments and Taxation and the Comptroller shall administer the activities relating to revenue and taxes. The procedures set forth in this chapter are applicable to the designation of zones and the administration of the State BRAC Revitalization and Incentive Zone Program. The State BRAC Revitalization and Incentive Zone Program is independent of the State Enterprise Zone Program and of any federal enterprise zone program or designation.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.04 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, Title 5, Subtitle 13, Annotated Code of Maryland.

(2) Abandoned Structure.

(a) “Abandoned structure” means a commercial or residential building that is given up and substantially unused for its permissible purposes with no apparent intent of an owner to return to, reclaim, or again use the building.

(b) “Abandoned structure” includes a building where the ratio of the square footage of the building that is vacant and substantially unused to the total usable square footage of the building is 20 percent or more.

(3) “Area” means a geographic area within one or more political subdivisions within the State described by a closed perimeter boundary.

(4) “BRAC installation” means a military installation as defined by 10 U.S.C. §2687(e)(1) that is:

(a) Located in the State; and

(b) The subject of BRAC action or affected by BRAC action.

(5) “BRAC revitalization and incentive zone” means an area:

(a) Meeting the requirements of Economic Development Article, §5-1303(c), Annotated Code of Maryland, and this chapter; and

(b) So designated by the Secretary under Economic Development Article, §5-1304, Annotated Code of Maryland, and this chapter.

(6) Brownfields.

(a) “Brownfields” means real property that is eligible property within the meaning of Environment Article, §7-501(g), Annotated Code of Maryland.

(b) “Brownfields” includes a brownfields site as defined in Economic Development Article, §5-301(j), Annotated Code of Maryland.

(7) “Business entity” means a person operating or conducting a trade or business or carrying on commercial activities.

(8) “Business facilities” means permanent buildings and structures within an area in or on which business entities may:

(a) Operate or conduct trades or businesses; or

(b) Carry on commercial activities.

(9) “Department” means the Department of Business and Economic Development.

(10) “Enterprise zone” has the meaning stated in Economic Development Article, §5-701, Annotated Code of Maryland.

(11) “Federal enclave property” has the meaning stated in Tax-Property Article, §7-211.3(a)(2), Annotated Code of Maryland.

(12) “Government property” has the meaning stated in Tax-Property Article, §7-210(a), Annotated Code of Maryland.

(13) “Infrastructure” means capital public works in an area owned and maintained by the State or by a political subdivision for public purposes only and not for private purposes.

(14) “Interest in government property” means the interest or privilege of a person in government property if the property is leased or otherwise made available to that person by a government, or an agency or instrumentality of a government, with the privilege to use that property in connection with a business that is conducted for profit.

(15) “Local jurisdiction” has the meaning stated in Tax-Property Article, §7-211.3(a)(3), Annotated Code of Maryland.

(16) “Mixed-use development” means a development consisting of one or more lots which:

(a) Are developed as a cohesive project and designed with a blend of various compatible uses such as commercial, residential, office, and institutional; and

(b) Promote a mixture of complimentary land uses that includes retail, offices, commercial services, housing, and civic uses, to create economic and social vitality and to encourage the linking of trips as well as shortening trip distance between uses and services.

(17) PILOT Agreement.

(a) “PILOT agreement” means a payment in lieu of tax agreement, a negotiated written contract between the State or a local jurisdiction, or the State and a local jurisdiction, and the occupant, tenant, or private developer of an interest in government property, including but not limited to an enhanced use lease under 10 U.S.C. §2667, providing for the payment of money in lieu of real property taxes.

(b) A PILOT agreement is subject to the provisions of Tax-Property Article, §§6-101(a)(2) and 6-102(e), and §§7-211, 7-211.2, 7-211.3(b), and 7-501, Annotated Code of Maryland.

(18) Plan.

(a) “Plan” means the policies, statements, goals, and interrelated plans for private and public land use, transportation, and community facilities documented in texts and maps, which constitute the guide for an area's future development.

(b) “Plan” includes a general plan, master plan, comprehensive plan, or community plan adopted in accordance with Article 66B, §§3.01—3.09, Annotated Code of Maryland.

(19) “Planned MARC station along the Penn, Camden, or Brunswick lines, Baltimore Metro Subway station, Baltimore MTA Light Rail station, or Metrorail System station in the State” means any transit station that is:

(a) Included, as of the time of the filing of an application under this chapter, in a transportation plan element of a comprehensive plan or transportation plan meeting the requirements of Article 66B, §§1.03(a)(1)(i), 1.03(a)(2), and 3.05(a)(4)(ii), Annotated Code of Maryland; or

(b) Designated as a planned transit station by the Secretary of Transportation.

(20) “Political subdivision” means any county or municipal corporation in the State.

(21) “Present MARC station along the Penn, Camden, or Brunswick lines, Baltimore Metro Subway station, Baltimore MTA Light Rail station, or Metrorail System station in the State” means any transit station in the State that is serving its primary function as of the time of the filing of an application under this chapter.

(22) “Priority funding area” has the meaning stated in State Finance and Procurement Article, §5-7B-03, Annotated Code of Maryland.

(23) “Private developer” has the meaning stated in Tax-Property Article, §7-211.3(a)(4), Annotated Code of Maryland.

(24) “Qualified property” has the meaning stated in Tax-Property Article, §2-222(a)(8), Annotated Code of Maryland.

(25) “Revitalization area” means an area designated for redevelopment within a political subdivision's comprehensive plan, small area plan, or other growth related ordinance or plan, which typically are older neighborhoods or commercial or light industrial areas where renewed investment in housing and retail and commercial uses would help retain existing residents and businesses and attract new residents and businesses.

(26) “Secretary” means the Secretary of Business and Economic Development.

(27) Sensitive Area.

(a) “Sensitive area” has the meaning stated in Article 66B, §1.00(j), Annotated Code of Maryland.

(b) “Sensitive area” includes:

(i) Streams;

(ii) Wetlands, and their buffers;

(iii) 100-year flood plains;

(iv) Habitats of threatened or endangered species;

(v) Steep slopes;

(vi) Agricultural and forest lands intended for resource protection or conservation; and

(vii) Other areas in need of special protection as determined by the political subdivision's plan.

(28) “Submission date” means April 15 and October 15 of any calendar year.

(29) Substandard Structure.

(a) “Substandard structure” means:

(i) A commercial or residential building, or a portion of a commercial or residential building, in which there exist physical conditions serious enough to endanger the life, limb, health, safety, welfare, or property of the occupants or of the public; and

(ii) Housing that is overcrowded (more than one person per room) or has an incomplete or nonfunctional kitchen or bathroom.

(b) “Substandard structure” includes a structure that:

(i) Meets the definition of “substandard” in the political subdivision's HUD-approved consolidation plan under 24 CFR Part 91; or

(ii) Does not meet current standards for safety, occupancy, or habitability under the ordinances of the political subdivision in which it is located.

(30) Transit Station.

(a) “Transit station” means any facility, the primary function of which relates to the boarding and alighting of passengers from transit vehicles.

(b) “Transit station” includes platforms, shelters, passenger waiting facilities, parking areas, access roadways, and other real property used to facilitate passenger access to transit service or railroad service.

(31) “Zone” means a BRAC revitalization and incentive zone designated or proposed to be designated under this chapter.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.05 Eligible Applicants for BRAC Revitalization and Incentive Zone Designation.

A. Eligible applicants include all political subdivisions.

B. The following political subdivisions may apply to the Secretary to designate a zone:

(1) A political subdivision for an area within that political subdivision;

(2) With the prior consent of the municipal corporation, a county on behalf of a municipal corporation for an area in a municipal corporation; or

(3) Two or more political subdivisions jointly for an area astride their common boundaries.

C. Required Consent.

(1) A county shall obtain the required consent of a municipal corporation before submission of the application for designation concerning that municipal corporation. The consent document shall be included as part of the application.

(2) The required consent document shall be in the form required by the law of the county or the governing body of the municipal corporation, or both.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.06 Designations of BRAC Revitalization and Incentive Zones.

A. Within 60 days after a submission date, the Secretary may designate one or more zones from among the areas described in the applications which were timely submitted.

B. The Secretary shall determine and approve the precise location and boundaries of a zone on the basis of an application for designation, or permitted amendments to the application.

C. Before a designation of a zone, the Secretary shall consult with:

(1) The Secretary of Transportation;

(2) The Secretary of Housing and Community Development;

(3) The Secretary of the Environment; and

(4) The Secretary of Planning.

D. The Secretary may consult and receive the advice of other appropriate individuals and advisors.

E. PILOT Agreements. If the political subdivision is authorized under Tax-Property Article, §7-211.3, Annotated Code of Maryland, to enter into a PILOT agreement with a private developer for federal enclave property, then the Secretary may not designate the area as a zone until, in the judgment of the Secretary in consultation with the Secretary of Transportation, the political subdivision has entered into good faith negotiations for a PILOT agreement with all private developers of the federal enclave property.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.07 Expansions of BRAC Revitalization and Incentive Zones.

A. The Secretary may permit the expansion of a designated zone into an area that meets the requirements of Economic Development Article, §5-1303, Annotated Code of Maryland, and this chapter.

B. A political subdivision may apply to the Secretary for permission to expand an existing zone in the same manner as the political subdivision would apply to designate a new zone.

C. The political subdivision or subdivisions that originally obtained the zone designation shall apply for the expansion.

D. The application for expansion of a designated zone shall set forth the basis for the request for expansion but need not duplicate data submitted for the original designation if the data submitted is sufficient for the Secretary to determine the relation of the geographic area of the existing zone to the geographic area of the proposed expansion of that zone.

E. The designation period for the expansion of the zone runs simultaneously with the period of the original zone designation and expires at the same time as the original zone designation.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.08 Extraordinary Expansions of BRAC Revitalization and Incentive Zones.

A. The Secretary may grant an extraordinary expansion of a zone each calendar year for an area that:

(1) Meets the requirements of Economic Development Article, §5-1303, Annotated Code of Maryland, and this chapter; and

(2) In the determination of the Secretary, is of strategic importance to the economic development interests of the county in which the zone is located.

B. A political subdivision may apply to the Secretary for the designation of an extraordinary expansion of an existing zone in the same manner as the political subdivision would apply to designate a new zone.

C. The political subdivision or subdivisions that originally obtained the zone designation shall apply for the extraordinary expansion.

D. The application for an extraordinary expansion of a designated zone shall set forth the basis for the request for extraordinary expansion but need not duplicate data submitted for the original designation if the data submitted is sufficient for the Secretary to determine the relation of the geographic area of the existing zone to the geographic area of the proposed expansion of that zone.

E. The designation period for the extraordinary expansion of the zone runs simultaneously with the period of the original zone designation and expires at the same time as the original zone designation.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.09 Limits on Designations of BRAC Revitalization and Incentive Zones.

A. The Secretary may not designate more than six zones in a calendar year.

B. Limit on Number of Zones Designated.

(1) A county may not receive more than two zones.

(2) A joint application by two or more counties counts as one designation of an area as a zone for each county.

(3) A joint application by two or more municipalities within the same county counts as one designation of an area as a zone within the county.

(4) A joint application by a county and a municipality located within an adjoining county counts as one designation of an area as a zone for each county.

(5) Except as provided in §B(6) of this regulation, an application for expansion of a designated zone is considered a new zone request and is counted as one additional designation of an area as a zone for the appropriate county or counties.

(6) An expansion of a zone that does not exceed 50 percent of the existing geographic area of the zone is not considered a new zone request and does not count toward the limit set forth in §A or B(1) of this regulation.

(7) An extraordinary expansion of a zone does not count towards the limit set forth in §A or B(1) of this regulation.

(8) The Secretary may not grant more than two extraordinary expansions of zones throughout the State in any calendar year.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.10 Designation and Notice; Reapplication.

A. A designation by the Secretary of an area as a zone is final.

B. The Secretary shall give written notice of a designation to both a political subdivision that receives a designation and the State agencies that will provide tax credits and other incentives and initiatives.

C. The Secretary shall notify a political subdivision that does not receive a requested designation in writing. The political subdivision may reapply for a designation at any time by resubmitting the previously filed application or a revised application.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.11 Mandatory Requirements for Designation of a BRAC Revitalization and Incentive Zone.

A. A political subdivision shall demonstrate in its application that an area meets all of the following requirements in order to receive the Secretary's designation of the area as a zone:

(1) That the area is located within a priority funding area;

(2) That the area is served by a public or community water and sewer system, or is planned to be served by a public or community water and sewer system under the approved 10-year water and sewer plan;

(3) That the area is designated by the political subdivision for mixed use development that includes residential uses as part of the mix of land uses;

(4) That, at the time of the filing of the application, the area has an average density of at least 3.5 units per acre, calculated in accordance with State Finance and Procurement Article, §5-7B-03, Annotated Code of Maryland, in that part of the area designated for residential use or development; and

(5) If a political subdivision is authorized under Tax-Property Article, §7-211.3, Annotated Code of Maryland, to enter into a PILOT agreement with a private developer for a federal enclave property, that the political subdivision has entered into good faith negotiations, in the judgment of the Secretary, for a PILOT agreement with all private developers of federal enclave property within the county.

B. The Secretary may withhold designation of an area proposed to be designated as a zone until a political subdivision has entered into PILOT agreements with some or all private developers for federal enclave property within the county on terms satisfactory to the Secretary.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.12 Requirements for Priority Consideration for Designation of a BRAC Revitalization and Incentive Zone.

A. The Secretary will give an area priority in consideration for designation of an area as a zone if the area is within one-half mile of a present or planned:

(1) MARC station along the Penn, Camden, or Brunswick lines;

(2) Baltimore Metro Subway station;

(3) Baltimore MTA Light Rail station; or

(4) Metrorail System station in the State.

B. Discretionary Standard for Priority Consideration. The Secretary may give an area priority in consideration for designation of an area as a zone if the area is of strategic importance to the economic development interests of a county.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.13 Additional Factors to be Considered for Designation of a BRAC Revitalization and Incentive Zone.

In addition to the factors to be considered in Regulations .11 and .12 of this chapter, the Secretary shall consider the following factors in determining whether to designate an area as a zone:

A. Whether the area's designation as a zone is consistent with the political subdivision's comprehensive plan;

B. Whether the area contains brownfields sites that are capable of redevelopment;

C. Whether the political subdivision has targeted the area for revitalization as provided for in the political subdivision's comprehensive plan or in another plan or ordinance;

D. The relationship of the area to a BRAC installation;

E. How the area is impacted by the BRAC Commission recommendations;

F. The availability, cost, and condition of business facilities;

G. The number and age of abandoned structures;

H. The number and age of substandard structures;

I. The income of residents of the area relative to the State and regional median incomes;

J. The number of individuals residing in the area who receive public assistance;

K. The number of individuals residing in the area who are unemployed;

L. The extent of unemployment in the proposed area;

M. The ability of government and of the private sector, including business and nonprofit, nongovernmental organizations, to upgrade the social and economic conditions of the area;

N. The need for financing of small businesses to upgrade the social and economic conditions of the area;

O. Any existing or proposed plans of the applicant and of other political subdivisions to undertake improvements to facilities or infrastructure in the area;

P. Any financial commitments of the applicant and of other political subdivisions to undertake improvements to facilities or infrastructure in the area;

Q. The nature and extent of a political subdivision's participation in revitalization activities in the area, including whether the area has been designated an enterprise zone;

R. The presence of a special taxing district, an historic district listed on the National Register of Historic Places, or a local historic district in, or in proximity to, the area;

S. The existence of support for the proposed zone from community and business organizations;

T. Other revitalization projects undertaken in the area;

U. A political subdivision's participation in workforce readiness programs;

V. A political subdivision's participation in the creation of affordable and workforce housing options for residents of the area;

W. Whether and to what extent a political subdivision has acted to provide for the adequate protection and conservation of vital natural resource areas and agricultural areas within the political subdivision's comprehensive plan, or other plan, or ordinances;

X. The presence of sensitive areas in the area and the political subdivision's existing or proposed plans for the protection of those sensitive areas;

Y. Whether and to what extent a political subdivision has provided for transportation options in the area that improve accessibility and support transit ridership, walking, and bicycle use;

Z. Whether and to what extent a political subdivision has provided for land use that supports transit ridership, walking, and bicycle use; and

AA. The fiscal impact of the proposed designation of the area as a zone on the State.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.14 Other Application Requirements.

A. Applications Generally.

(1) An application must be received in the Office of the Secretary, Department of Business and Economic Development, on or before any submission date.

(2) An application shall be complete, meet all requirements of the Act and this chapter, and be properly signed by the chief elected officer, or officers in the case of a joint application, or, if none, by the governing body of each of the political subdivisions.

(3) The Secretary may permit any political subdivision to amend its application at any time before the Secretary acts upon the application.

B. Additional Information, Maps, and Documents to be Filed with an Application. In addition to information addressing the requirements of Regulations .11, .12, and .13 of this chapter, each political subdivision shall submit the following with an application:

(1) PFA Map: a map showing that the proposed zone is within a priority funding area;

(2) Tax map or parcel map: A tax map or block plat showing all parcels that are within the proposed zone, accompanied by a parcel listing, which clearly shows the proposed boundaries of the zone;

(3) Zoning map or maps;

(4) Land use map or maps;

(5) A map showing the relationship of the proposed zone to enterprise zones, special taxing districts, historic districts listed on the National Register of Historic Places, locally designated historic districts, Designated Neighborhoods, Community Legacy Areas, Main Street Maryland communities, or Priority Funding Areas within or in the vicinity of the proposed zone;

(6) Maps showing the presence and location of sensitive areas and brownfields;

(7) A statement whether the political subdivision has examined the feasibility of creating educational or training opportunities for employers and employees of business enterprises located or to be located in the proposed zone, as follows:

(a) If these opportunities are to be established, indicate the nature, type, and sponsorship of the educational or training opportunities; or

(b) If these opportunities are not to be established, indicate the reason;

(8) Evidence and certification that the political subdivision, before submission, held a public hearing with adequate notice on the application;

(9) Letters, resolutions, and other documents from community or business organizations, businesses and citizens located in the proposed zone, elected officials, and others supporting the application;

(10) A description of the expected economic and social impact of a zone on the communities within, or in the vicinity of, the proposed zone:

(a) Identifying the needs of the political subdivision including economic, financial, and social needs; and

(b) Describing how the designation of a zone is expected to aid or assist the political subdivision to address those needs;

(11) A description of the infrastructure improvements proposed to be constructed in the zone, the expected economic, social, and public health benefits of these improvements, obstacles or problems that might impede the construction of the improvements, and the political subdivision's plans for financing the improvements; and

(12) Other information as established by the Secretary from time to time and prescribed in instructions for the application.

Cross References

24.05.11.17A(1)(d)

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.15 Annual Report.

A political subdivision with a zone designation shall submit an annual report to the Department by October 15 of the year after the designation of the zone, and by October 15 of each of the succeeding years until the year after the expiration and termination of the zone. The report shall assess with respect to each zone within the boundaries of the political subdivision the effectiveness of the benefits provided to the zone or zones in attracting and retaining businesses within the zone or zones, in the form and containing the information established by the Secretary.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.16 Period of Availability.

The designation of an area as a zone is effective for 10 years, as provided in the Act.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.17 Qualified Property—Categories.

A. Establishing Categories of Qualified Property.

(1) In consultation with the BRAC Subcabinet, the Department establishes categories of commercial or residential property that enhance the economic development of zones. The categories are deliberately broad and provisional to allow for flexibility and innovation in the planning and development of zones. The Department will update, revise, and amend the categories from time to time to take account of:

(a) Experience and local, regional, and Statewide changes in population distribution;

(b) The availability of regional transit and transportation facilities;

(c) Market demand for various land uses and services; and

(d) Other factors, including those enumerated in Regulation .14A of this chapter.

(2) The Department applies the following principles and criteria to establish the categories of commercial and residential property:

(a) The property and its proposed mode of development should demonstrably enhance the overall economic development of the area, by creating and providing access to jobs, services, and transportation conducive to a thriving community, preferably within walking distance of residences; and

(b) The proposed mode of development should conform to the political subdivision's plan for the area, and most particularly to the density, transit and transportation, and traffic management elements of the plan.

B. Categories of Qualified Property. The Department, in consultation with the BRAC Subcabinet, has determined that the following listed categories of commercial and residential property will enhance the economic development of zones:

(1) Mid-rise and high-rise multi-family residential buildings, including condominiums, cooperatives, and rental apartments, having separate residential units on at least three floors or levels;

(2) Two-family and three-family attached houses (duplexes and triplexes) having a density of not less than 3.5 houses per acre;

(3) Town house type single family attached houses having a density of not less than 3.5 houses per acre;

(4) Mid-rise and high-rise multi-use buildings with a mix of Class A office, and restaurant, service, or retail spaces and uses;

(5) Multi-use or flexible use commercial and retail buildings, including research, laboratory, light manufacturing and office uses, and anchor grocery stores, restaurants, retail shops, and service establishments, spaces, and uses;

(6) In general, but subject to the approval of the Department in consultation with the BRAC Subcabinet, any other category of residential or commercial property that is allowed under the political subdivision's ordinances, regulations, and other provisions governing mixed-use development as provided in its zoning ordinance, comprehensive plan, sector plan, small area plan, revitalization plan, or other economic development plans, or by resolution of the political subdivision's legislative body.

C. Uses Excluded from Categories of Qualified Property. Qualified property does not include the following uses:

(1) Automobile service or fuel establishments;

(2) Adult bookstores, adult video shops, or adult entertainment facilities;

(3) Check cashing facilities;

(4) Gambling facilities;

(5) Gun shop or firearms stores;

(6) Beer, wine, or liquor stores;

(7) Massage parlors;

(8) Pawn shops;

(9) Tanning salons; or

(10) Tattoo parlors.

D. Determination by Department of Status as Qualified Property. A political subdivision may request the Department to make a determination by September 1 of each year as to whether a property is a qualified property if it does not fit into the categories listed in §§B and C of this regulation. The Department, in consultation with the BRAC Subcabinet, will make the determination. The determination of the Department as to a specific property is final.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.11.18 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with the Act.

History

• Administrative History: Effective date: December 29, 2008 (35:26 Md. R. 2250)
• Authority: Economic Development Article, §§5-102(1) and 5-1301—5-1307, Annotated Code of Maryland

COMAR 24.05.12.01 Purpose.

This chapter describes the:

A. Requirements for a taxpayer to receive a certificate allowing it to claim a credit against the State income tax for Maryland qualified cellulosic ethanol research and development expenses; and

B. Procedures that will be used by the Department of Commerce to:

(1) Receive, review, evaluate, and approve or disapprove applications for tax credits; and

(2) Issue tax credit certificates.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.02 Scope and Administration.

The Department of Commerce administers the certification of the amount of the cellulosic ethanol technology research and development tax credit. The Comptroller of the Treasury administers the tax credit.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.03 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Business entity” means a sole proprietorship, corporation, business trust, partnership, limited partnership, limited liability company, or other pass-through entity, or other entity doing business in the State.

(2) “Cellulosic ethanol technology” means technology that is used to develop cellulosic biomass for conversion to ethanol fuel.

(3) “Certificate” means a certificate issued by the Department stating the credit amount approved by the Department.

(4) “Comptroller” means the Maryland Comptroller of the Treasury, or the Comptroller's designee.

(5) “Credit” means the credit against the State income tax for Maryland qualified research and development expenses equal to the credit amount approved by the Secretary in a certificate.

(6) “Credit amount” means the amount in money approved by the Department with respect to a business entity's Maryland qualified research and development expenses and set out in a certificate.

(7) “Department” means the Department of Commerce.

(8) “Maryland qualified research and development expenses” means qualified research expenses, as defined in 26 U.S.C. §41(b) and 26 CFR §§1.41.0—1.41.8, as amended, which are incorporated by reference, paid or incurred for cellulosic ethanol technology research and development that is conducted in the State.

(9) “Research and development” means qualified research as defined in 26 U.S.C. §41(d) and 26 CFR §§1.41.0—1.41.8, as amended, which are incorporated by reference.

(10) “Secretary” means the Secretary of the Department, or the Secretary's designee.

(11) “State” means the State of Maryland.

(12) “Taxable year” means the period for which the taxpayer's State income tax return is filed, which shall be the same as that for which the taxpayer's federal income tax return is filed.

(13) “Taxpayer” means an individual, fiduciary, or business entity required to pay an income tax or file an income tax return with the State.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.04 Calculation of Tax Credit.

A taxpayer may claim a credit against the State income tax in an amount equal to 10 percent of the Maryland qualified research and development expenses paid or incurred by the taxpayer during the taxable year.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.05 Calculation of Credit for Partial or Short Taxable Year.

A. The Maryland qualified research and development expenses for a partial year taxpayer are:

(1) The actual Maryland qualified research and development expenses incurred during the partial taxable year; or

(2) The total Maryland qualified research and development expenses incurred during the entire taxable year multiplied by a fraction:

(a) The numerator of which is the number of days in the calendar year included in the partial taxable year; and

(b) The denominator of which is 365.

B. The partial or short year taxpayer may claim a credit against the State income tax in the amount of 10 percent of the Maryland qualified research and development expenses paid or incurred by the taxpayer during the taxable year.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.06 Maximum Annual Credits.

The total amount of credits approved by the Department under this chapter may not exceed $250,000 for any calendar year.

Cross References

24.05.12.08B

24.05.12.08B(1)

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.07 Application—Required Information.

A. By September 15 of the calendar year following the end of the taxable year in which the Maryland qualified research and development expenses were incurred, a business entity that paid or incurred Maryland qualified research and development expenses shall submit to the Department a completed application for certification on the form prescribed by the Department.

B. Cellulosic Ethanol Technology Research and Development Tax Credit Application. Each application shall include the following information:

(1) The business entity's legal name and address;

(2) The business entity's federal employer identification number;

(3) The beginning and ending dates of the business entity's taxable year, or, if a partial year, then the fraction of a taxable year for which the credit is being claimed;

(4) The North American Industrial Classification System (NAICS) code number for the business entity;

(5) The amount of the Maryland qualified research and development expenses eligible for the Maryland cellulosic ethanol technology research and development tax credit for the applicable taxable year;

(6) The credit amount being applied for with respect to the applicable taxable year, before allocation and certification by the Department;

(7) A description of the general nature of the cellulosic ethanol technology research or development activities of the business entity that paid or incurred Maryland qualified research and development expenses;

(8) The names, business addresses, home addresses, relevant qualifications, and business or employment relationship to the business entity of the persons that performed cellulosic ethanol technology research or development activities for or on behalf of the business entity during the applicable taxable year;

(9) A description of the nature, quantities, sources, and suppliers of the materials and supplies used or consumed during the taxable year by or in connection with the cellulosic ethanol technology research or development activities of the business entity, and of the locations where those materials and supplies were used or consumed during the applicable taxable year;

(10) A factual narrative describing the business entity and other evidence in sufficient detail to establish that the business entity actually and actively engaged in cellulosic ethanol technology research and development activities, or had or caused cellulosic ethanol technology research and development activities to be performed or conducted by third parties on behalf of the business entity, in the State during the applicable taxable year before the date of the filing of the application;

(11) A description of the sites, buildings, and facilities where research and development are conducted;

(12) Copies of all contracts, agreements, or other arrangements however styled for the performance of cellulosic ethanol technology research and development activities on behalf of the business entity by any third parties;

(13) The number of full-time and part-time employees of the business entity, or of any third person or firm performing or conducting cellulosic ethanol technology research and development activities for or on behalf of the business entity, in Maryland employed at each site, building, or facility and the titles, job descriptions, and duties of each type of employee;

(14) A detailed description of the business entity's cellulosic ethanol technology research and development activities and operations conducted, performed, or carried on by the business entity, or by any third person or firm conducting, performing, or carrying on cellulosic ethanol technology research and development activities for or on behalf of the business entity, at each site, building, or facility; and

(15) Any other information required by the Department.

C. The Department may require that the information required by §B of this regulation be verified by an independent auditor retained by the business entity at the expense of the business entity.

Cross References

24.05.12.09E

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.08 Certification of Credit.

A. The Department shall certify to the taxpayer or the business entity the amount of the credit approved by the Department for the business entity. The Department shall issue the certification, in a form approved by the Secretary, by December 15 of the calendar year following the end of the taxable year in which the Maryland qualified research and development expenses were incurred.

B. If the total amount of the credits applied for by all business entities exceeds the maximum credit amounts available under Regulation .06 of this chapter, then the Department shall approve a credit for each business entity in an amount equal to the product of multiplying the credit applied for by the business entity times a fraction:

(1) The numerator of which is the maximum specified under Regulation .06 of this chapter; and

(2) The denominator of which is the total of all credits applied for by all business entities in the calendar year.

C. The determination of the Department to grant or to deny an application for a certificate is final.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.09 Determining Whether Research or Development is Conducted in the State.

A. All the cellulosic ethanol technology research or development activities conducted, performed, or carried on by or on behalf of the business entity for which the business entity applies for a credit must have been performed, conducted, or carried on in the State.

B. If the business entity contracts or makes arrangements of any kind, however styled, for the performance, conduct, or carrying on of cellulosic ethanol technology research and development activities on behalf of the business entity by third parties, the person or firm performing, conducting, or carrying on cellulosic ethanol technology research or development activities for or on behalf of the business entity and for which the business entity applies for a credit must have performed, conducted, or carried on all of those cellulosic ethanol technology research or development activities in the State.

C. All supplies used in the cellulosic ethanol technology research and development activities for or on behalf of the business entity for which the business entity applies for a credit must have been consumed in the State.

D. Business entities making application for a tax credit shall maintain accounting books, records, and systems that account for cellulosic ethanol technology research and development activities and Maryland qualified research and development expenses in accordance with:

(1) Federal and State income tax laws and regulations; and

(2) Generally accepted accounting principles.

E. The Department shall apply a facts and circumstances analysis to determine whether a business entity has conducted, performed, or carried on in the State all the cellulosic ethanol technology research and development activities for which the business entity applies for a credit. The Department's determination will be based in substantial part on the statements and documents of the business entity contained in or appended to its application submitted in accordance with Regulation .07 of this chapter.

F. For purposes of determining eligibility for certification of tax credits, the Department shall consider the following factors:

(1) The locations where the cellulosic ethanol technology research or development activities are performed by or on behalf of the business entity;

(2) The nature of the business entity's interest in and control over the buildings, fixtures, and equipment used in performing or conducting the cellulosic ethanol technology research or development activities;

(3) The identity, residence or business location, qualifications, relevant experience, demonstrated expertise, and legal and business relationship to the business entity of any third party persons or firms performing any cellulosic ethanol technology research or development activities or services on behalf of the business entity;

(4) The nature and quantities of supplies obtained for use or used in cellulosic ethanol technology research or development activities performed or conducted by or on behalf of the business entity at each location, the sources of these supplies, whether the supplies are in fact consumed in cellulosic ethanol technology research or development activities by or on behalf of the business entity, and the locations where the supplies are consumed in cellulosic ethanol technology research or development activities by or on behalf of the business entity;

(5) The business entity's methods and policies for accounting for the cellulosic ethanol technology research and development activities;

(6) The scientific, environmental, and engineering merits of the business entity's Maryland qualified research and development paradigms, activities, manufacturing methods and processes, and products; and

(7) Any other factors that the Department determines are relevant for the determination.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.10 Claiming the Credit.

To claim the credit approved by the Department, a taxpayer shall:

A. File an amended income tax return for the taxable year in which the Maryland qualified research and development expense was incurred; and

B. Attach a copy of the Department's certification to the amended income tax return.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.11 Carryover of Tax Credit.

A. If the credit allowed in any taxable year exceeds a taxpayer's State income tax for that taxable year, the taxpayer may apply the excess as a credit against the State income tax for succeeding taxable years until the earlier of:

(1) The full amount of the excess is used; or

(2) The expiration of the 15th taxable year after the taxable year in which the Maryland qualified research and development expense was incurred.

B. A tax credit may not be carried back to a preceding taxable year.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.12 Affiliated Corporations and Entities under Common Control.

A. All members of the same controlled group of corporations, as defined in 26 U.S.C. §41(f), and all entities under common control, whether incorporated or not, shall be treated as a single taxpayer for purposes of the tax credit.

B. The credit allowable to each member shall be determined by multiplying the total credits certified by the Department for the controlled group by a fraction:

(1) The numerator of which is the Maryland qualified research and development expenses incurred by the separate member; and

(2) The denominator of which is the total Maryland qualified research and development expenses incurred by all members of the controlled group.

C. The computation of the credit amount shall include all of the qualified research and development expenses of an acquired, consolidated, restructured, or merged entity.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.13 Mergers and Acquisitions.

A. In determining the carryover of unused credits and the effect of a merger or acquisition, federal law shall be applied to the corporations as if they were separate corporations. Any provisions under federal law that would allow separate corporations that are merged or acquired to carry forward unused credits on the surviving corporation's returns shall apply to the carryover of this credit for State purposes.

B. Unused Credits.

(1) In a transaction involving an asset purchase, unused credits:

(a) Do not transfer from the target business entity to the purchaser; and

(b) Remain with the target business entity.

(2) Unused credits may not be sold or purchased.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.14 Short Taxable Years.

A. Eligible Expenses. A taxpayer may only claim the credit for Maryland qualified research and development expenses incurred during its taxable year. If the business entity has a short taxable year, only the Maryland qualified research and development expenses incurred during the short taxable year are allowed on the short year return.

B. If the business entity incurs Maryland qualified research and development expenses in 2 taxable years during a calendar year, one of which is a short taxable year, the taxpayer may only claim a credit on the short taxable year return in an amount equal to the total credits certified by the Department multiplied by a fraction:

(1) The numerator of which is the Maryland qualified research and development expenses incurred during the short taxable year; and

(2) The denominator of which is the Maryland qualified research and development expenses incurred during the entire calendar year.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.15 Addition Modifications.

A. Individuals. To the extent an individual is allowed a credit on the Maryland individual income tax return, the amount of the credit claimed shall be added to federal adjusted gross income to calculate the individual's Maryland adjusted gross income.

B. Corporations. To the extent a corporation is allowed a credit on its Maryland income tax return, the amount of the credit claimed shall be added to federal taxable income to calculate the corporation's Maryland modified income.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.16 Partnerships, S Corporations, Limited Liability Companies, Business Trusts, Estates, and Trusts.

A. Partnerships, S Corporations, Limited Liability Companies, and Business Trusts. In the case of a subchapter S corporation, partnership, limited liability company, or business trust, the amount of the credit computed for the pass-through entity shall be allocated among the owners as agreed to in writing by the owners. If there is no written agreement governing the allocation of the credit, the credit shall be allocated in the same proportion as other items are allocated for the taxable year.

B. Estates and Trusts. In the case of an estate or trust, the amount of the credits computed for the estate or trust for any taxable year shall be apportioned among the estate or trust and the beneficiaries on the basis of the income of the estate or trust allocable to each beneficiary of the estate or trust under the controlling instrument or rule of law.

C. Statements to Partners, Shareholders, Members, and Beneficiaries.

(1) Requirements. A partnership, S corporation, limited liability company, business trust, estate, or trust shall provide each of its partners, shareholders, members, or beneficiaries with an income tax statement.

(2) Form and Contents of Statement.

(a) Form. A partnership, S corporation, limited liability company, business trust, estate, or trust may elect to use a:

(i) Modified federal Schedule K-1; or

(ii) Statement prepared on its own form.

(b) Contents. In addition to the contents required under COMAR 03.04.07.04B(2), the statement shall contain the amount of each credit apportioned to the individual partner, shareholder, member, or beneficiary.

(3) Statement Attached to Return. A partner, shareholder, member, or beneficiary shall attach a copy of the statement to the income tax return on which the credit is claimed.

D. Year in which Credit is Claimed. The credit apportioned to a taxpayer under §§A—C of this regulation shall be claimed on the taxpayer's Maryland tax return in the taxable year of the taxpayer within which the taxable year of the pass-through entity ends.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

COMAR 24.05.12.17 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with Tax-General Article, §10-726, Annotated Code of Maryland.

History

• Administrative History: Effective date: April 6, 2009 (36:7 Md. R. 527)
• Authority: Economic Development Article, §2-108; Tax General Article, §§2-103 and 10-726; Annotated Code of Maryland

24.05.13 Maryland Public Art Initiative Program

COMAR 24.05.13.01 Purpose.

This chapter describes the policies, procedures, and authorizations for the Maryland Commission on Public Art to promote the installation of artwork in public facilities for the enrichment of the public.

History

• Administrative History: Effective date: June 15, 2009 (36:12 Md. R. 838)
• Administrative History: Regulation .10A, B amended effective March 3, 2014 (41:4 Md. R.306)
• Authority: Economic Development Article, §§4-601—4-608, Annotated Code of Maryland

COMAR 24.05.13.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Acquire” means obtain by purchase or commission.

(2) “Act” means Economic Development Article, §§4-601—4-608, Annotated Code of Maryland.

(3) Art, Artwork, or Work of Art.

(a) “Art, artwork, or work of art” means an original creative work by an artist.

(b) “Art, artwork, or work of art” may include, but is not limited to, paintings, mosaics, sculpture, frescoes, stained glass, and decorative, ornamental work that is integrated into a structure.

(4) “Artist” means an individual professionally engaged in the production of creative and original artwork.

(5) “Commission” means the Maryland Commission on Public Art.

(6) “Commissioned artwork” means art, artwork, or works of art authorized by the Commission to be made or done under the Program.

(7) “Department” means the Department of Commerce.

(8) “Fund” means the Maryland Public Art Fund.

(9) “Local government” means a county or municipal corporation in the State.

(10) “Program” means the Maryland Public Art Initiative Program.

(11) “Public art project” means art, artwork, or works of art acquired under the Program using money from the Fund, to be installed or developed in or at public facilities and public spaces in the State.

(12) “Secretary” means the Secretary of Commerce or the Secretary's designee.

History

• Administrative History: Effective date: June 15, 2009 (36:12 Md. R. 838)
• Administrative History: Regulation .10A, B amended effective March 3, 2014 (41:4 Md. R.306)
• Authority: Economic Development Article, §§4-601—4-608, Annotated Code of Maryland

COMAR 24.05.13.03 Program Activities Financed by the Fund.

The Fund shall be used to acquire art, artwork, or works of art to be owned by the State, to preserve public art assets, and to make grants to local governments.

History

• Administrative History: Effective date: June 15, 2009 (36:12 Md. R. 838)
• Administrative History: Regulation .10A, B amended effective March 3, 2014 (41:4 Md. R.306)
• Authority: Economic Development Article, §§4-601—4-608, Annotated Code of Maryland

COMAR 24.05.13.04 Notice of Public Art Project.

The Commission shall post a notice of each proposed public art project on the website of the Maryland State Arts Council, stating:

A. A general description of the type of artwork to be commissioned;

B. A description of the site for which the artwork will be commissioned;

C. An estimated budget for the public art project; and

D. The deadline by which applications shall be filed.

History

• Administrative History: Effective date: June 15, 2009 (36:12 Md. R. 838)
• Administrative History: Regulation .10A, B amended effective March 3, 2014 (41:4 Md. R.306)
• Authority: Economic Development Article, §§4-601—4-608, Annotated Code of Maryland

COMAR 24.05.13.05 Applications.

A. Artist Application. Public art project applications shall be made on standard forms prescribed by the Commission.

B. Each application shall include the following:

(1) The current resume of the artist;

(2) Images of relevant artwork by the artist; and

(3) Any other information the Commission requires related to the proposed public art project and the applicant.

History

• Administrative History: Effective date: June 15, 2009 (36:12 Md. R. 838)
• Administrative History: Regulation .10A, B amended effective March 3, 2014 (41:4 Md. R.306)
• Authority: Economic Development Article, §§4-601—4-608, Annotated Code of Maryland

COMAR 24.05.13.06 Selection Panels.

A. The Commission shall appoint one or more selection panels for each proposed public art project to review the applications of artists and the artwork to be funded under this chapter.

B. A selection panel shall consist of:

(1) A Commission member;

(2) A representative of the community where the artwork will be located;

(3) A representative of the facility where the artwork will be located;

(4) A materials conservator;

(5) Art professionals, including, but not limited to, visual artists, art educators, and architectural historians;

(6) Technical advisors to the site, including engineers, construction managers, and architects;

(7) Users of the facility where the artwork will be located; and

(8) Other key stakeholders selected by the Commission.

C. The selection panels shall make recommendations to the Commission concerning the selection of an artist and artwork.

History

• Administrative History: Effective date: June 15, 2009 (36:12 Md. R. 838)
• Administrative History: Regulation .10A, B amended effective March 3, 2014 (41:4 Md. R.306)
• Authority: Economic Development Article, §§4-601—4-608, Annotated Code of Maryland

COMAR 24.05.13.07 Commission Selection Criteria.

A. The Commission shall consider all of the following criteria in selecting an artist and artwork under this chapter:

(1) Artistic excellence, innovation, and qualifications;

(2) Appropriateness of artwork for the site in terms of scale, form, content, and materials;

(3) Durability of the artwork;

(4) Community support;

(5) Appropriate site availability in public locations; and

(6) Extent of conservation and maintenance necessary for the artwork.

B. The Commission shall make the final recommendation to the Secretary concerning the allocation of money from the Fund.

History

• Administrative History: Effective date: June 15, 2009 (36:12 Md. R. 838)
• Administrative History: Regulation .10A, B amended effective March 3, 2014 (41:4 Md. R.306)
• Authority: Economic Development Article, §§4-601—4-608, Annotated Code of Maryland

COMAR 24.05.13.08 Budget Allocation for Public Art Projects.

A. The Commission shall allocate money from the Fund to commission, maintain, and preserve works of art for installation at public facilities around the State.

B. The Commission shall determine the estimated budget allocation for a specific work of art. In determining the estimated budget allocation, the Commission may consider the following factors:

(1) The construction cost of the specific facility where the work of art will be located; and

(2) The amount of money in the Fund.

History

• Administrative History: Effective date: June 15, 2009 (36:12 Md. R. 838)
• Administrative History: Regulation .10A, B amended effective March 3, 2014 (41:4 Md. R.306)
• Authority: Economic Development Article, §§4-601—4-608, Annotated Code of Maryland

COMAR 24.05.13.09 Local Community Involvement.

A. The Commission shall post information concerning all proposed public art projects under the Program on the website of the Maryland State Arts Council.

B. The Commission shall give notice of its meetings and comply with all applicable requirements of State Government Article, §§10-501—10-512, Annotated Code of Maryland.

History

• Administrative History: Effective date: June 15, 2009 (36:12 Md. R. 838)
• Administrative History: Regulation .10A, B amended effective March 3, 2014 (41:4 Md. R.306)
• Authority: Economic Development Article, §§4-601—4-608, Annotated Code of Maryland

COMAR 24.05.13.10 Conservation and Maintenance.

A. All commissioned artwork funded by the Program shall be the property of the Commission.

B. The Commission, in cooperation with the Department of General Services, is responsible for the inventory, maintenance, and preservation of all artwork acquired through the Program, with funding for condition assessment and conservation activities provided by the Fund.

C. The Commission shall develop collection management guidelines to address documentation, condition assessment, routine maintenance, conservation maintenance, and conservation treatment.

History

• Administrative History: Effective date: June 15, 2009 (36:12 Md. R. 838)
• Administrative History: Regulation .10A, B amended effective March 3, 2014 (41:4 Md. R.306)
• Authority: Economic Development Article, §§4-601—4-608, Annotated Code of Maryland

COMAR 24.05.13.11 Grants to Local Governments.

A. A local government may apply for a grant under the Act as set forth in this regulation.

B. Before a grant is awarded to a local government under this regulation, the local government shall provide and spend a matching fund.

C. A matching fund of a local government may not consist of:

(1) Money provided, directly or indirectly, from appropriated or unappropriated State money;

(2) Real property;

(3) In-kind contributions; or

(4) Money spent before June 1, 2005.

D. Grant applications shall be made on standard forms prescribed by the Commission. Each application shall include:

(1) The source of the required matching fund provided by the local government;

(2) A detailed description of the project for which the grant is requested;

(3) The amount of the grant requested; and

(4) Any other information the Commission requires related to the project for which the grant is requested.

E. The Commission shall review each application to determine whether a local government will be awarded a grant from the Fund and the amount of the grant.

F. In making the determination whether to award a grant, or the amount of a grant to be awarded, the Commission shall consider the following factors:

(1) Artistic excellence and innovation;

(2) Community support; and

(3) Location and accessibility of project to the public.

G. The Commission shall prepare and provide the local government with a copy of the grant agreement which shall contain the provisions the Commission determines are necessary to reflect the terms of the grant.

History

• Administrative History: Effective date: June 15, 2009 (36:12 Md. R. 838)
• Administrative History: Regulation .10A, B amended effective March 3, 2014 (41:4 Md. R.306)
• Authority: Economic Development Article, §§4-601—4-608, Annotated Code of Maryland

COMAR 24.05.13.12 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that a waiver is not inconsistent with the Act.

History

• Administrative History: Effective date: June 15, 2009 (36:12 Md. R. 838)
• Administrative History: Regulation .10A, B amended effective March 3, 2014 (41:4 Md. R.306)
• Authority: Economic Development Article, §§4-601—4-608, Annotated Code of Maryland

24.05.14 Maryland Export Credit Program

COMAR 24.05.14.01 Purpose.

A. These regulations prescribe the policies and procedures that govern the activities of the Maryland Export Credit Program.

B. Under the Maryland Export Credit Program the State, through action of the Board of Public Works, may assign to business enterprises offset credits accrued by the State.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.02 Objective.

A. The basic objective of the Program is to encourage the exportation by business enterprises located in Maryland of goods and services to foreign purchasers by assigning to those business enterprises offset credits accrued by the State.

B. This objective is to be accomplished in a way that:

(1) Is accepted by the foreign jurisdiction's offset authority;

(2) Maximizes economic and social benefits to the State proportionate to the amount of offset credits available to the State; and

(3) Imposes minimal costs to the State.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.03 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means State Finance and Procurement Article, §10-305, Annotated Code of Maryland.

(2) “Applicant” means a business enterprise applying for assignment of offset credits from the Program.

(3) “Application” means an application for assignment of offset credits submitted to the Program by an applicant.

(4) “Assignment of offset credits” means that a business enterprise that receives offset credits pursuant to this chapter receives the right to negotiate with the foreign offset authority the acceptability of the transfer of the offset credits from the State to the business enterprise.

(5) “Board” means the Board of Public Works.

(6) “Business enterprise” means a business entity that:

(a) Maintains or intends to locate its principal place of business in the State;

(b) Is in good standing; and

(c) Is qualified to do business in the State.

(7) “Department” means the Department of Business and Economic Development.

(8) “Director” means the Director of the Program, as designated by the Secretary.

(9) “Foreign” means non-United States.

(10) “Foreign contract” means a contract or proposed contract for which a business enterprise intends to bid, pursuant to which a business enterprise sells goods or services to a foreign purchaser in a foreign jurisdiction that requires offsets as a condition to international trade.

(11) “Foreign offset authority” means the organizational unit within a foreign jurisdiction charged with administration of the jurisdiction's offset credit requirements.

(12) “Offset” means the international trade practice by which a purchaser in a foreign jurisdiction of goods or services from a United States contractor may require, among other things, that a specified monetary amount of unrelated goods or services be purchased from domestic sources of that foreign jurisdiction.

(13) “Offset credits” means those credits accrued by the State in any manner, including:

(a) Through direct procurement by the State of goods or services from:

(i) Foreign suppliers operating from jurisdictions that impose offset requirements as a condition to international trade,

(ii) United States manufacturers incorporating into their finished products components made in foreign jurisdictions that impose offset requirements, or

(iii) United States distributors of those final products or the goods or services of foreign suppliers; and

(b) Through indirect procurement by the State of the types of products, goods, or services described in §B(13)(a) of this regulation in the course of performance of contracts, especially construction contracts, between the State and contractors.

(14) “Program” means the organizational unit within the Department that administers the assignment of offset credits on behalf of the State.

(15) “Qualified applicant” means an applicant that submitted an application initially classified by the Director as reasonably susceptible of being selected for award.

(16) “Secretary” means the Secretary of Business and Economic Development, or the Secretary's designee.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.04 Offset Credits.

A. The Department shall maintain records of purchases by the State resulting in offset credits to the State.

B. The records specified in §A of this regulation shall include the following information:

(1) Name and address of the company awarded the contract;

(2) The date of the contract;

(3) The purchase order number assigned to the contract;

(4) The dollar amount of the contract;

(5) Whether the goods or services that are the subject of the contract are from a foreign supplier, and if so, the identity of the foreign country and the name, address, and contact person for the supplier, and the estimated dollar value of the goods or services; or

(6) Whether any goods that are the subject of the contract contain foreign components, and if so, the identity of the foreign country, the name, address, and contact person for the foreign manufacturer, and the estimated dollar value of the foreign components.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.05 Eligible Applicants.

A business enterprise that has entered into or is bidding on a foreign contract is eligible to apply for assignment of offset credits.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.06 Eligible Uses.

Offset credits assigned to a business enterprise may be used only to satisfy offset requirements in foreign contracts approved by the Board of Public Works or the Secretary.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.07 Advertising the Availability of Offset Credits.

A. From time to time the State shall advertise in the Maryland Register the availability of offset credits with an estimated value of $10,000 or greater and, at the Director's discretion, offset credits with an estimated value of less than $10,000.

B. The Director shall maintain a list of business enterprises that have expressed an interest in applying for assignment of offset credits relating to a particular foreign country, and shall inform those business enterprises of the availability of offset credits relating to that country.

C. The Director may, in addition, advertise the availability of offset credits to business enterprises through any other means.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.08 Consideration for Assignment.

A. The consideration required for the assignment of offset credits to a business enterprise shall be as determined by the Board upon recommendation of the Secretary.

B. Consideration may consist of benefits derived by the State from creation of new contract opportunities that create new jobs and new capital investment in the State.

C. Consideration payable to the State shall be credited to the State's General Fund.

Cross References

24.05.14.11A(1)

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.09 Solicitation of Applications.

A. The preferred method for the award of offset credits is by competitive applications.

B. The Program's request for applications shall include:

(1) Information concerning application submission requirements, including the date, time, and place for the receipt of applications;

(2) The evaluation factors and an indication of the relative importance of each evaluation factor, including consideration;

(3) A statement that discussions may be conducted with those applicants that submit applications initially judged by the Director to be reasonably susceptible of being selected for award; and

(4) A statement whether multiple or alternate applications may be submitted and their treatments.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.10 Applications for Assignment of Offset Credits.

To apply for assignment of offset credits under the Program, an applicant shall submit to the Director an application containing the following information:

A. The name, address, and telephone number of the applicant and the name and title of the applicant's authorized representative for the application process;

B. Whether the applicant is seeking the offset credits to carry out an existing foreign contract as either a prime contractor or subcontractor or intends to bid on a foreign contract;

C. If the applicant is or intends to be a subcontractor, the name, address, and telephone number of the prime contractor, and the name of a contact person for the prime contractor;

D. The name of the foreign country to which the applicant intends to export its goods or services and the name, address, and telephone number of the purchaser in that country, and of the contact person for offset approval authority;

E. The date that the applicant entered into or anticipates entering into the foreign contract;

F. The estimated total value of the foreign contract during the term of the foreign contract;

G. The amount of the offset credits requested by the applicant;

H. The estimated number of jobs to be created or retained in the State as a result of the performance of the foreign contract during the term of the foreign contract, and the estimated value of the salaries and wages to be expended in the State;

I. The estimated value of the capital investment in the State to be generated by the foreign contract;

J. The estimated value of contracts to be awarded to subcontractors in the State, and to suppliers of goods and services in the State, resulting from the foreign contract;

K. Any cash payment the applicant will make to the State in consideration of assignment of the offset credits;

L. Any other activities of benefit to the State and its citizens that the applicant will carry out if assigned offset credits; and

M. Whether the applicant considers any of the information provided in the application to be confidential commercial or confidential financial information, pursuant to State Government Article, §10-617, Annotated Code of Maryland.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.11 Evaluation of Applications.

A. Evaluation.

(1) An evaluation shall be based on the consideration obtained by the State in accordance with Regulation .08 of this chapter.

(2) Numerical rating systems may be used.

(3) Initial evaluations may be conducted and recommendation for award made by an evaluation committee.

B. Classification of Applications.

(1) When more than one application has been received, the Director may initially classify an application as:

(a) Reasonably susceptible of being selected for award; or

(b) Not reasonably susceptible of being selected for award.

(2) Applicants whose applications are judged by the Director as not reasonably susceptible of being selected for award shall be so notified.

C. Discussions. Discussions and negotiations may be held with all qualified applicants to:

(1) Assure full understanding of the Program's requirements and of the qualified applicant's application and abilities to perform; and

(2) Obtain the best consideration for the State.

D. If no applications are received in response to the request for applications, the Director may solicit applications directly without republication of notice.

E. Best and Final Offers.

(1) When in the best interest of the State, the Director may permit a qualified applicant to revise its initial application by submitting a best and final offer.

(2) The Director may require more than one series of submissions of best and final offers.

(3) If more than one submission of best and final offers is requested, an applicant's immediate previous application shall be construed as its best and final offer unless the applicant submits a timely notice of withdrawal or another best and final offer.

F. Preliminary Determination.

(1) Upon completion of all discussions and negotiations, the Director shall prepare a written preliminary determination ranking the top three applications received from the qualified applicants, and recommending award of the offset credits to the qualified applicant whose application is determined to be the most advantageous to the State. The Director may recommend dividing the available offset credits between more than one applicant.

(2) The Director shall promptly notify all qualified applicants of the preliminary determination.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.12 Documentation.

If the Director makes a preliminary determination to recommend an award of offset credits, the Director may condition the recommendation upon an applicant's providing certain documentation or related requirements, which may include:

A. Execution by an applicant of an assignment agreement; and

B. Copies of the:

(1) Foreign contract,

(2) Solicitation, and

(3) Bid or proposal relating to the foreign contract.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.13 Final Approval.

A. Approval by the Secretary.

(1) The Director may recommend to the Secretary approval of the assignment and forward to the Secretary a copy of the assignment agreement executed by the business enterprise.

(2) The Secretary may approve the assignment as recommended by the Director, or conditionally upon modification of its terms.

B. Final Approval by the Board of Public Works. The Board, in its discretion, may approve the assignment as recommended by the Secretary, or conditionally upon modification of its terms. Upon recommendation of the assignment by the Secretary and upon any modification of the terms of the assignment as may be required by the Board, the Board shall execute or authorize the Secretary to execute, on behalf of the State, the assignment agreement and any other documents evidencing the assignment.

C. Reporting Requirements. The business enterprise shall send a written report to the Director indicating the actions taken by the foreign offset authority, including the dollar amount of offset credits accepted by the foreign offset authority.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.14 Nondiscrimination.

An applicant shall comply with all applicable federal, State, and local laws regarding discrimination and equal opportunity, including the provisions of the Governor's Code of Fair Employment Practices, COMAR 01.01.1995.19.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.15 Annual Report.

The Department shall submit by June 30 of each year an annual report to the Governor and Board of Public Works describing the Program's achievements in the immediately preceding year.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

COMAR 24.05.14.16 Waiver.

A. The Director, with the approval of the Secretary, may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the State Finance and Procurement Article, §10-305, Annotated Code of Maryland.

B. A waiver is subject to the Board's prior approval.

History

• Administrative History: Effective date: October 12, 1992 (19:20 Md. R. 1819)
• Authority: Economic Development Article, §2-108 and Title 3, Subtitle 3; State Finance and Procurement Article, §10-305; Annotated Code of Maryland

24.05.15 Special Fund for Preservation of Cultural Arts in Maryland

COMAR 24.05.15.01 Purpose.

This chapter describes the policies, procedures, and authorizations for the Secretary of Business and Economic Development to administer the Special Fund for Preservation of Cultural Arts in Maryland.

History

• Administrative History: Effective date: November 30, 2009 (36:24 Md. R. 1859)
• Administrative History: Regulation .02B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .04B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective April 1, 2013 (40:6 Md. R. 476)
• Authority: Economic Development Article, §§2-108 and 4-801, Annotated Code of Maryland

COMAR 24.05.15.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, §4-801, Annotated Code of Maryland.

(2) “Applicant” means a cultural arts organization applying for a grant from the Fund to strengthen the organizational capacity and financial stability of the cultural arts organization.

(3) “Cultural arts organization” means a nonprofit arts organization or arts program whose purpose is producing or presenting the arts through public programs or services.

(4) “Department” means the Department of Business and Economic Development.

(5) “Fund” means the Special Fund for Preservation of Cultural Arts in Maryland.

(6) “Grant” means a grant made by the Secretary under the provisions of the Act and this chapter.

(7) “Secretary” means the Secretary of Business and Economic Development.

History

• Administrative History: Effective date: November 30, 2009 (36:24 Md. R. 1859)
• Administrative History: Regulation .02B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .04B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective April 1, 2013 (40:6 Md. R. 476)
• Authority: Economic Development Article, §§2-108 and 4-801, Annotated Code of Maryland

COMAR 24.05.15.03 The Fund.

A. The Fund shall be used to provide supplemental grants to cultural arts organizations in the State that qualify for general operating support from the Maryland State Arts Council, to strengthen the organizational capacity and financial stability of the cultural arts organizations.

B. A grant from the Fund is supplemental to and is not intended to take the place of funding that otherwise would be appropriated for qualifying organizations.

History

• Administrative History: Effective date: November 30, 2009 (36:24 Md. R. 1859)
• Administrative History: Regulation .02B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .04B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective April 1, 2013 (40:6 Md. R. 476)
• Authority: Economic Development Article, §§2-108 and 4-801, Annotated Code of Maryland

COMAR 24.05.15.04 Eligible Applicants.

A. An applicant may apply for a grant under the Act as set forth in this regulation.

B. The applicant shall:

(1) Have received a general operating support grant from the Maryland State Arts Council in the fiscal year in which they are applying;

(2) Be in compliance with applicable reporting requirements of the Maryland State Arts Council; and

(3) Have an operating budget of at least $25,000.

History

• Administrative History: Effective date: November 30, 2009 (36:24 Md. R. 1859)
• Administrative History: Regulation .02B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .04B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective April 1, 2013 (40:6 Md. R. 476)
• Authority: Economic Development Article, §§2-108 and 4-801, Annotated Code of Maryland

COMAR 24.05.15.05 Applications and Application Review.

A. Grant Application.

(1) A grant application shall be made on a standard form prescribed by the Department.

(2) Each application shall include:

(a) A description of the applicant’s mission statement and goals;

(b) Needs assessment;

(c) A proposed plan of activities and budget for proposed activities;

(d) A detailed explanation of how the cultural arts organization will use a grant to strengthen the organizational capacity and financial stability of the cultural arts organization;

(e) Expected outcomes and evaluation methods; and

(f) Any other information the Secretary requires related to strengthening organizational capacity and financial stability of the cultural arts organization.

B. Application Review. The Secretary shall review each application to determine whether a cultural arts organization will be awarded a grant from the Fund and the amount of that grant. In making the determination whether to award a grant or the amount of a grant to be awarded, the Secretary may consider any of the following factors:

(1) The ability of the applicant to carry out the proposed activities;

(2) The cultural arts organization's explanation of how it will use a grant from the Fund to strengthen the organizational capacity and financial stability of the cultural arts organization; and

(3) The impact of the proposed activities on strengthening organizational capacity and financial stability of the cultural arts organization.

History

• Administrative History: Effective date: November 30, 2009 (36:24 Md. R. 1859)
• Administrative History: Regulation .02B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .04B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective April 1, 2013 (40:6 Md. R. 476)
• Authority: Economic Development Article, §§2-108 and 4-801, Annotated Code of Maryland

COMAR 24.05.15.06 Grant Agreement.

The Department shall prepare and provide the cultural arts organization with a copy of the grant agreement which shall contain the provisions the Department determines are necessary to reflect the terms of the grant.

History

• Administrative History: Effective date: November 30, 2009 (36:24 Md. R. 1859)
• Administrative History: Regulation .02B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .04B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective April 1, 2013 (40:6 Md. R. 476)
• Authority: Economic Development Article, §§2-108 and 4-801, Annotated Code of Maryland

COMAR 24.05.15.07 Drug-Free and Alcohol-Free Workplace.

The applicant shall:

A. Comply with the State's policy concerning drug-free and alcohol-free workplaces, as set forth in COMAR 01.01.1989.18; and

B. Make a good-faith effort to eliminate illegal drug use and alcohol and drug abuse from places at which work is performed in accordance with the terms of the Department's financial assistance.

History

• Administrative History: Effective date: November 30, 2009 (36:24 Md. R. 1859)
• Administrative History: Regulation .02B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .04B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective April 1, 2013 (40:6 Md. R. 476)
• Authority: Economic Development Article, §§2-108 and 4-801, Annotated Code of Maryland

COMAR 24.05.15.08 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that a waiver is not inconsistent with the Act.

History

• Administrative History: Effective date: November 30, 2009 (36:24 Md. R. 1859)
• Administrative History: Regulation .02B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .03 amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .04B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .05 amended effective April 1, 2013 (40:6 Md. R. 476)
• Authority: Economic Development Article, §§2-108 and 4-801, Annotated Code of Maryland

COMAR 24.05.16 Enterprise Investment Program [Repealed]

History

• Administrative History: Effective date: August 29, 1994 (21:17 Md. R. 1440)
• Administrative History: ——————
• Administrative History: Regulations .01—.11 repealed effective February 10, 2020 (47:3 Md. R. 173)

24.05.17 Challenge Investment Program

COMAR 24.05.17.01 Applicability.

Regulations .01—.05 and .07—.11 under COMAR 24.05.16 apply.

History

• Administrative History: Effective date: August 29, 1994 (21:17 Md. R. 1440)
• Authority: Economic Development Article, §2-108, Annotated Code of Maryland

COMAR 24.05.17.02 Equity Investment Terms.

A. The proceeds of the equity investment may be used for the purposes approved by the Director, which include, but are not limited to:

(1) Working capital;

(2) Salaries;

(3) Marketing materials;

(4) Acquisition of inventory, equipment, or real property;

(5) Construction;

(6) Renovation;

(7) Leasehold improvements; or

(8) Research and development.

B. The amount of an equity investment shall be in a range of $20,000 to $100,000 per enterprise, unless a greater amount is authorized by the Secretary.

C. The Department may not acquire an ownership interest exceeding 25 percent of any enterprise.

D. The terms of an equity investment approved by the Director shall be set forth in a funding agreement.

E. At the Director's discretion, a funding agreement may consist of:

(1) An investment agreement;

(2) A limited partnership agreement;

(3) A preferred stock purchase agreement; or

(4) Other documents the Program may require.

F. The Department shall divest itself of any enterprise in which an equity investment is made within 15 years after the Department's investment.

History

• Administrative History: Effective date: August 29, 1994 (21:17 Md. R. 1440)
• Authority: Economic Development Article, §2-108, Annotated Code of Maryland

24.05.18 Maryland Economic Adjustment Fund

COMAR 24.05.18.01 Purpose.

These regulations describe the policies, procedures, and authorizations for making:

A. Loans to individuals and business entities in the State to enable them to modernize manufacturing operations, develop commercial applications for technology, or explore and enter new markets; and

B. Grants to local or regional Maryland governmental or nonprofit revolving loan funds.

History

• Administrative History: Effective date: December 18, 1995 (22:25 Md. R. 1965)
• Administrative History: Chapter revised effective March 6, 2000 (27:4 Md. R. 455)
• Authority: Economic Development Article, §§2-108 and 5-204, Annotated Code of Maryland

COMAR 24.05.18.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, Title 5, Subtitle 2, Annotated Code of Maryland.

(2) “Applicant” means a business entity seeking a loan from the Department.

(3) “Business entity” means an individual, partnership, corporation, limited liability company, or other form of entity doing business in Maryland.

(4) “Defense contractor” means a business entity that has over the 5 years before the date of its application for a loan derived a substantial amount of revenue from defense contracts.

(5) “Department” means the Department of Commerce.

(6) “Economic Development Administration (EDA)” means the Economic Development Administration of the U. S. Department of Commerce.

(7) “Fund” means the Maryland Economic Adjustment Loan Fund, which is administered by the Department.

(8) “Loan” means a loan made from the Fund by the Department under the Program.

(9) “Maryland Economic Adjustment Financing Committee” means the Committee described in Economic Development Article, §5-202, Annotated Code of Maryland.

(10) “Program” means the Maryland Economic Adjustment Program, as authorized by the Act.

(11) “Restricted funds” means EDA funds and required matching funds from State or other sources.

(12) “Secretary” means the Secretary of Commerce, or the Secretary's designee.

(13) Working Capital.

(a) “Working capital” means funds to be used for current operations of a business.

(b) “Working capital” includes funds for supplies, materials, labor, equipment, rent, software, marketing, insurance, and fees for professional services.

History

• Administrative History: Effective date: December 18, 1995 (22:25 Md. R. 1965)
• Administrative History: Chapter revised effective March 6, 2000 (27:4 Md. R. 455)
• Authority: Economic Development Article, §§2-108 and 5-204, Annotated Code of Maryland

COMAR 24.05.18.03 Eligible Applicants.

To qualify for a loan, an applicant shall:

A. Be a new or existing business entity in good standing and qualified to do business in Maryland;

B. Have the legal capacity and all necessary legal authorization to incur the obligations of the loan;

C. Demonstrate creditworthiness and repayment capability acceptable to the Department;

D. Meet any additional requirements imposed by any source of the funds to be loaned; and

E. In the reasonable determination of the Department, be unable to obtain the financing necessary for the activities described in the applicant's strategic business plan on affordable terms through normal lending channels.

History

• Administrative History: Effective date: December 18, 1995 (22:25 Md. R. 1965)
• Administrative History: Chapter revised effective March 6, 2000 (27:4 Md. R. 455)
• Authority: Economic Development Article, §§2-108 and 5-204, Annotated Code of Maryland

COMAR 24.05.18.04 Priority.

In making loans, the Department shall give priority to:

A. Defense contractors; and

B. Companies started by former defense workers who lost their jobs with defense contractors or agencies.

History

• Administrative History: Effective date: December 18, 1995 (22:25 Md. R. 1965)
• Administrative History: Chapter revised effective March 6, 2000 (27:4 Md. R. 455)
• Authority: Economic Development Article, §§2-108 and 5-204, Annotated Code of Maryland

COMAR 24.05.18.05 Use of Loan Proceeds.

A. Loan proceeds may be used for working capital, equipment, furnishings, fixtures, and the construction, rehabilitation, or purchase of real property to:

(1) Modernize manufacturing operations;

(2) Develop commercial applications for technology; or

(3) Enter into and compete in new economic markets.

B. Loan proceeds consisting of restricted funds may not be used to:

(1) Acquire an equity position in a private business;

(2) Subsidize interest payments on existing debt;

(3) Provide the equity contribution required of borrowers under other federal loan programs;

(4) Acquire an interest in a business, either through the purchase of stock or through the acquisition of assets, unless the need for a loan is sufficiently justified and documented in the loan application;

(5) Refinance existing debt unless:

(a) There is sound economic justification, and

(b) In the loan application the applicant sufficiently documents that the program is not replacing private capital solely for the purpose of reducing the risk of loss to an existing lender, or lenders, or to lower the cost of financing to the applicant; or

(6) Invest in interest-bearing accounts, certificates of deposit, or other investments not related to the objectives of the program.

History

• Administrative History: Effective date: December 18, 1995 (22:25 Md. R. 1965)
• Administrative History: Chapter revised effective March 6, 2000 (27:4 Md. R. 455)
• Authority: Economic Development Article, §§2-108 and 5-204, Annotated Code of Maryland

COMAR 24.05.18.06 Loan Terms and Requirements.

A. Loans shall meet the following requirements in §§B—F of this regulation.

B. Interest Rate. The minimum interest rate to be paid on loans shall be a fixed rate of 4 percent per annum.

C. Security. The Department may require that a loan be secured by:

(1) Liens and security interests in real and personal property;

(2) Personal guarantees;

(3) Any other collateral required by the Department; or

(4) A combination of the items in this section.

D. Repayment Terms. The loan documents shall include provisions for repayment of the loan, provided that the provisions for repayment may be based on a flexible repayment schedule.

E. Late Charges. Late charges, as permitted by law, may be imposed.

F. Additional Documentation. The Department may require the applicant to provide title insurance, surveys, insurance, appraisals, and any other documentation that the Department determines is necessary or advisable.

History

• Administrative History: Effective date: December 18, 1995 (22:25 Md. R. 1965)
• Administrative History: Chapter revised effective March 6, 2000 (27:4 Md. R. 455)
• Authority: Economic Development Article, §§2-108 and 5-204, Annotated Code of Maryland

COMAR 24.05.18.07 Additional Requirements for Loans Made with Restricted Funds.

A. Federal Requirements. When loans are made from EDA funds made available under Title IX of the Public Works and Economic Development Act of 1965, P. L. 89-136, as amended (42 U.S.C. §3121 et seq.), or matching funds, the requirements set forth in the EDA regulations, including those set forth in this regulation, also apply.

B. Loan Amount. The maximum loan amount may not exceed the limit set by the regulations of the Economic Development Administration.

C. Eligible Areas.

(1) Restricted funds shall be used to make loans only to applicants located in those areas of the State designated as eligible areas for EDA Title IX defense economic adjustment activities.

(2) When restricted funds are loaned, the loan documents shall include a provision to call the loans if the economic activity financed is moved outside the eligible lending area.

D. Relocation.

(1) Restricted funds may not be used to relocate jobs from one commuting area to another.

(2) When restricted funds are loaned, the loan documents shall include a provision to call the loans if the Department determines that:

(a) The applicant used the restricted funds to relocate jobs from another commuting area; or

(b) The economic activity financed is moved to another commuting area to the detriment of local workers.

E. Civil Rights. When restricted funds are loaned, the applicant shall agree in the loan documents not to discriminate against employees, applicants for employment, or providers of goods and services.

F. Flood Hazard Insurance. Where applicable, the applicant shall obtain flood hazard insurance pursuant to the Flood Disaster Protection Act of 1973, P. L. 93-234, as amended (42 U.S.C. §4002 et seq.)

G. Contract Work Hours and Safety Standards Act and Anti-Kickback Act. Applicants borrowing restricted funds shall comply, where applicable, with the Contract Work Hours and Safety Standards Act, as amended (40 U.S.C. §§327—333) and with the Anti-Kickback Act, as amended (40 U.S.C. §276(c), 18 U.S.C. §874).

H. Conflict of Interest. Applicants with a conflict of interest, as defined by EDA, may not receive restricted funds.

I. Federal Debarment. Applicants who are debarred or suspended may not receive restricted funds.

J. Restrictions on Lobbying. Applicants shall comply with federal restrictions on lobbying.

K. Private Leveraging. Applicants shall be required to provide evidence acceptable to the Department of other financing from private sources.

Cross References

24.05.18.08D(2)(e)

History

• Administrative History: Effective date: December 18, 1995 (22:25 Md. R. 1965)
• Administrative History: Chapter revised effective March 6, 2000 (27:4 Md. R. 455)
• Authority: Economic Development Article, §§2-108 and 5-204, Annotated Code of Maryland

COMAR 24.05.18.08 Application and Processing Procedures.

A. Loan Application.

(1) Loan applications shall be made on standard forms required by the Department.

(2) Each application shall include:

(a) A detailed strategic business plan for achieving a goal of technology commercialization or manufacturing modernization for long-term growth;

(b) The total amount of funds required for the activities described in the strategic business plan;

(c) The amount and type of funds available to the applicant without financial assistance from the Department;

(d) The amount of financial assistance sought from the Department and a description of the applicant's proposed use of proceeds;

(e) Information concerning where in the State the activities to be financed with the defense adjustment loan will take place and what economic and environmental impact the activities are expected to have on that area;

(f) Evidence of the inability of the applicant to obtain the financing necessary for the activities described in the strategic business plan on affordable terms through normal lending channels;

(g) Information that relates to the financial status of the applicant, including, if applicable:

(i) A current balance sheet,

(ii) A recent profit and loss statement,

(iii) Credit references, including a recent credit report, and

(iv) Income tax returns;

(h) Information that relates to potential security for the loan; and

(i) Any other relevant information the Department requests.

B. Initial Review. The Department shall subject each application to an initial review for a preliminary determination of the applicant's eligibility in accordance with these regulations.

C. Loan Approval. Each loan shall be approved by the Secretary or by the Defense Adjustment Financing Committee.

D. Loan Documents.

(1) The Department shall prepare and provide the applicant with copies of relevant standard form loan documents.

(2) Loan documents shall include:

(a) The rate of interest on the loan;

(b) The amount of the loan;

(c) Provisions for repayment of the loan;

(d) Other provisions the Department determines are necessary to secure the loan, including, if applicable, the taking of liens and security interests in real and personal property; and

(e) For loans made with restricted funds, the provisions required by EDA and set forth in Regulation .07 of this chapter.

(3) Loan documents may include:

(a) A promissory note;

(b) A loan agreement;

(c) A security agreement;

(d) A deed of trust or mortgage;

(e) An agreement of prior lien holder;

(f) Personal and corporate guarantees; and

(g) Other documents the Department may require, including the applicant's insurance information and articles of incorporation filed with the state of incorporation, bylaws, partnership agreement, or other organizational documents, and certificates of good standing as appropriate.

E. Fees.

(1) The applicant shall pay the following fees:

(a) Upon application for the loan, a nonrefundable application fee of $100; and

(b) At the loan closing, a commitment fee of 1 percent of the loan amount.

(2) The Department may also require the applicant to pay for expenses incurred in processing and closing the loan, such as fees for appraisals and credit reports.

(3) The Department may instruct the borrower to pay the application fee and 1/2 of the commitment fee directly to a designated local economic development agency, if the agency:

(a) Has entered into a written agreement with the Department; and

(b) Originated the loan.

F. Violations. If an applicant violates any provision of the loan documents or ceases to meet the requirements of the Act, on reasonable notice to the applicant, the Department may:

(1) Withhold from the applicant further advances of loan proceeds until the applicant complies with the agreement or requirements; and

(2) Exercise any other remedy for which the loan documents provide.

G. Fund Limitations. The faith and credit of the State are not pledged to the Fund.

History

• Administrative History: Effective date: December 18, 1995 (22:25 Md. R. 1965)
• Administrative History: Chapter revised effective March 6, 2000 (27:4 Md. R. 455)
• Authority: Economic Development Article, §§2-108 and 5-204, Annotated Code of Maryland

COMAR 24.05.18.09 Grants.

The Department may make a grant from the Fund to a local or regional Maryland governmental or nonprofit revolving loan fund. In making the grant, the Department shall consider the:

A. Purposes of the Fund; and

B. Issues set forth in the Department's strategic economic development plan.

History

• Administrative History: Effective date: December 18, 1995 (22:25 Md. R. 1965)
• Administrative History: Chapter revised effective March 6, 2000 (27:4 Md. R. 455)
• Authority: Economic Development Article, §§2-108 and 5-204, Annotated Code of Maryland

COMAR 24.05.18.10 Drug-Free and Alcohol-Free Workplace

The applicant shall comply with the State's policy concerning drug-free and alcohol-free workplaces, as set forth in COMAR 01.01.1989.18, and shall make a good-faith effort to eliminate illegal drug use and alcohol and drug abuse from places where work is performed in accordance with a loan.

History

• Administrative History: Effective date: December 18, 1995 (22:25 Md. R. 1965)
• Administrative History: Chapter revised effective March 6, 2000 (27:4 Md. R. 455)
• Authority: Economic Development Article, §§2-108 and 5-204, Annotated Code of Maryland

COMAR 24.05.18.11 False Statements.

A. A person may not knowingly make or cause any false statement or report to be made:

(1) In any application or document furnished to the Department;

(2) For the purpose of influencing the action of the Department:

(a) On an application for financial assistance, or

(b) Affecting financial assistance whether or not assistance may have already been extended.

B. A person or any aider or abettor who violates any provision of the Act is guilty of a misdemeanor, and on conviction is subject to a fine not exceeding $50,000 or imprisonment not exceeding 5 years, or both.

C. In addition, any applicant who knowingly makes or causes to be made any material misstatement of fact, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action in any statement or report in or regarding an application for a loan or affecting a loan already made, shall be subject to immediate acceleration of the loan.

History

• Administrative History: Effective date: December 18, 1995 (22:25 Md. R. 1965)
• Administrative History: Chapter revised effective March 6, 2000 (27:4 Md. R. 455)
• Authority: Economic Development Article, §§2-108 and 5-204, Annotated Code of Maryland

COMAR 24.05.18.12 Waiver.

The Secretary, or the Secretary's designee, may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act if:

A. Conformance to the requirement of any federal, State, or local program in connection with a loan necessitates waiver or variance of a regulation; or

B. In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: December 18, 1995 (22:25 Md. R. 1965)
• Administrative History: Chapter revised effective March 6, 2000 (27:4 Md. R. 455)
• Authority: Economic Development Article, §§2-108 and 5-204, Annotated Code of Maryland

24.05.19 Wineries and Vineyards Capital Expenses Tax Credit

COMAR 24.05.19.01 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Comptroller” means the Maryland Comptroller of the Treasury, or the Comptroller’s designee.

(2) “Credit” means the qualified capital expenses tax credit described in Regulation .02 of this chapter.

(3) “Credit year” means the year for which the credit is being claimed.

(4) “Department” means the Department of Commerce.

(5) “Qualified capital expenses” means all the expenditures made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products for winemaking at a vineyard or in a winery, including but not limited to:

(a) Barrels;

(b) Bins;

(c) Bottling equipment;

(d) Canopy management machines;

(e) Capsuling equipment;

(f) Chemicals;

(g) Corkers;

(h) Crushers;

(i) Destemmers;

(j) Fermenters or other recognized fermentation devices;

(k) Fertilizer and soil amendments;

(l) Filters;

(m) Fruit harvesters;

(n) Fruit plants;

(o) Hoses;

(p) Irrigation equipment;

(q) Labeling equipment;

(r) Lugs;

(s) Mowers;

(t) Poles;

(u) Posts;

(v) Presses;

(w) Pruning equipment;

(x) Pumps;

(y) Refractometers;

(z) Refrigeration equipment;

(aa) Seeders;

(bb) Soil;

(cc) Small tools;

(dd) Tanks;

(ee) Tractors;

(ff) Vats;

(gg) Weeding and spraying equipment;

(hh) Wine tanks;

(ii) Wire; and

(jj) Any other items as approved by the Department.

(6) “Secretary” means the Secretary of Business Commerce, or the Secretary's designee.

(7) “State” means the State of Maryland.

(8) “Taxpayer” means an individual or corporation.

(9) “Vineyard” means agricultural lands located in the State consisting of at least 1 contiguous acre dedicated to the growing of grapes that are used or are intended to be used in the production of wine by a winery and any plants or other improvements located thereon.

(10) “Winery” means an establishment licensed by the Comptroller as either a Class 3 winery or a Class 4 winery pursuant to Article 2B, §§2–204 and 2–205, Annotated Code of Maryland.

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.19.02 Calculation of Tax Credit.

A. A tax credit is allowed for a taxable year beginning after December 31, 2012 but before January 1, 2018.

B. A taxpayer may claim credits against the State income tax in an amount equal to 25 percent of the qualified capital expenses made in connection with:

Cross References

24.05.19.01B(2)

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.19.03 Application and Approval of Credit.

A. To claim eligibility for a tax credit and to be certified as eligible for a tax credit, a taxpayer shall submit to the Department, by not later than September 15 of the calendar year following the end of the taxable year in which the costs were incurred an application on a form approved by the Department.

B. Each application shall include the following:

(1) The legal name of the taxpayer;

(2) The street address of the principal place of business of the taxpayer, the taxpayer’s mailing address, the taxpayer’s email address, and the taxpayer’s telephone number;

(3) The name, business mailing address, telephone number, and email address of an individual with authority to act on behalf of the taxpayer;

(4) The federal employer identification number of the taxpayer or, if the taxpayer is an individual or sole proprietorship, the federal taxpayer identification number of the individual or sole proprietor;

(5) An account, which may be in the form of a spreadsheet, showing in detail the eligible capital costs incurred by the taxpayer; and

(6) Any other information requested by the Department.

C. By December 15 of the calendar year following the end of the taxable year in which the qualified capital expenses were incurred, the Department shall certify to the taxpayer the amount of tax credits approved by the Department for the taxpayer.

Cross References

24.05.19.04A

24.05.19.04B

24.05.19.04B(2)

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.19.04 Maximum Annual Credits.

A. The total amount of credits approved by the Department under Regulation .03C of this chapter may not exceed $500,000 for any calendar year.

B. If the total amount of credits applied for by all business entities under Regulation .03C of this chapter exceeds the maximum specified under §A of this regulation, the Department shall approve a credit under Regulation .03C of this chapter for each taxpayer in an amount equal to the product of multiplying the credit applied for by the taxpayer times a fraction:

(1) The numerator of which is the maximum specified under §A of this regulation; and

(2) The denominator of which is the total of all credits applied for by all business entities under Regulation .03C of this chapter in the calendar year.

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.19.05 Certification of Credit.

The Department shall certify to the taxpayer the amount of the allowed tax credits approved by the Department for the taxpayer. The Department shall issue the certification by December 15 of the calendar year following the end of the taxable year in which the costs were incurred.

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.19.06 Claiming the Credit.

To claim the credits approved by the Department, a taxpayer shall:

A. File with the Comptroller an amended income tax return for the taxable year in which the costs were incurred; and

B. Attach a copy of the Department's certification of the approved credit amount to the amended income tax return.

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.19.07 Carryover of Tax Credits.

A. If the credit allowed pursuant to this chapter in any taxable year exceeds the total tax otherwise payable by the taxpayer for that taxable year, the taxpayer may apply the excess as a credit for succeeding taxable years until:

B. A tax credit may not be carried back to a preceding taxable year.

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.19.08 Mergers and Acquisitions.

A. In determining the carryover of unused credits and the effect of a merger or acquisition, federal law shall be applied to the business entities as if they were separate business entities. Any provisions under federal law that would allow separate corporations that are merged or acquired to carry forward unused credits on the surviving corporation's returns shall apply to the carryover of this credit for State purposes.

B. Unused Credits.

(1) In a transaction involving an asset purchase, unused credits:

(a) Do not transfer from the taxpayer to the purchaser; and

(b) Shall remain with the taxpayer to whom or to which the certificate was issued.

(2) Unused credits may not be sold or purchased.

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.19.09 Short Taxable Years.

A. Eligible Costs. A taxpayer may only claim the credit for allowed costs incurred during its taxable year. If the taxpayer has a short taxable year, only the allowed costs incurred during the short taxable year are allowed on the short year return.

B. If the taxpayer incurs allowed costs in 2 taxable years during a calendar year, one of which is a short taxable year, the taxpayer may only claim a credit on the short taxable year return in an amount equal to the total credits certified by the Department multiplied by a fraction:

(1) The numerator of which is the allowed qualified capital costs incurred during the short taxable year; and

(2) The denominator of which is the allowed qualified capital costs incurred during the entire calendar year.

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.19.10 Addition Modifications.

A. Individuals. To the extent an individual is allowed a credit on the State individual income tax return, the amount of the credit claimed shall be added to federal adjusted gross income to calculate the individual's State adjusted gross income.

B. Corporations. To the extent that a corporation is allowed a credit on its State income tax return, the amount of the credit claimed shall be added to federal taxable income to calculate the corporation's State modified income.

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.19.11 Partnerships, S Corporations, Limited Liability Companies, Business Trusts, Estates, and Trusts.

A. Partnerships, S Corporations, Limited Liability Companies, and Business Trusts. In the case of a subchapter S corporation, partnership, limited liability company, or business trust, the amount of the credits computed for the pass-through entity shall be allocated among the owners as agreed to in writing by the owners in accordance with Internal Revenue Service rules.

B. Estates and Trusts. In the case of an estate or trust, the amount of the credits computed for the estate or trust for any taxable year shall be apportioned among the estate or trust and the beneficiaries on the basis of the income of the estate or trust allocable to each.

C. Statements to Partners, Shareholders, Members, and Beneficiaries.

(1) Requirements. A partnership, S corporation, limited liability company, business trust, estate, or trust shall provide each of its partners, shareholders, members, or beneficiaries with a Maryland Form 510, Schedule K-1.

(2) Statement Attached to Return. A partner, shareholder, member, or beneficiary shall attach a copy of the Maryland Form 510, Schedule K-1 to the income tax return on which the credit is claimed.

D. Year in which Credits are Claimed. The credit apportioned to a partner, shareholder, member or beneficiary under §§A—C of this regulation shall be claimed on the partner's, shareholder's, member's or beneficiary's State tax return in the taxable year of the partner, shareholder, member, or beneficiary within which the taxable year of the pass through entity ends.

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.19.12 Audits and Inquiries.

A. Audits.

(1) If the Department becomes aware of facts and circumstances that reasonably warrant an audit of the factual or accounting basis of a taxpayer’s claim of eligibility for a tax credit under this chapter or of a claim of tax credit under this chapter, the Department may require at any reasonable time before or after the issuance of a certificate of eligibility for tax credit that any information provided to the Department by a taxpayer be audited.

(2) The Department may require at any reasonable time an audit of any information submitted to the Department:

(a) By any taxpayer that applies for certification by the Department of tax credits under this chapter; and

(b) By any taxpayer that has been certified by the Department for a tax credit.

(3) An audit under §A(2) of this regulation shall be directed to the taxpayer’s basis for its claim of eligibility for the tax credit under this chapter.

(4) An audit under §A(2) of this regulation shall be conducted at the taxpayer’s expense by an independent auditor selected by the taxpayer and reasonably satisfactory to the Department.

(5) The Department may initiate an audit by delivering to the taxpayer a written request for the performance of an audit stating the scope of the audit to be undertaken and the matters to be examined in the course of the audit.

(6) Within 10 business days after a taxpayer receives a request from the Department for the performance of an audit under this regulation, the taxpayer shall submit to the Department a written response naming the independent auditor selected by the taxpayer.

(7) If the Department approves the auditor, it shall give written notice to the taxpayer that the Department approves the auditor and shall provide instructions to the auditor for the scope and conduct of the audit.

(8) If the Department disapproves of the selected auditor, it shall give written notice to the taxpayer of the disapproval and of the reasons for it. The taxpayer shall, within 5 business days after receipt of notice of the Department’s disapproval of an auditor, select an alternative auditor and submit to the requesting agency a written response naming the alternative independent auditor selected by the taxpayer.

(9) The process pursuant to §§A(5)—(8) of this regulation for the selection and approval of an auditor will continue until the Department will have approved an alternative auditor pursuant to §A(7) of this regulation.

(10) The approved auditor shall proceed to conduct the audit with due diligence and dispatch, and in accordance with the Department’s instructions. Within 90 days of the Department’s notice approving the selection of an auditor, the auditor shall submit to the Department and to the taxpayer a full report of its audit procedures, tests, matters examined, and findings.

(11) The Comptroller retains its audit authority under the Tax-General Article, Annotated Code of Maryland.

B. Inquiries; Duty of Business Entities to Respond.

(1) If the Department becomes aware of facts and circumstances that reasonably warrant further inquiry into the factual basis of a taxpayer’s claim of eligibility for a tax credit under this chapter, or the basis of the taxpayer’s claim of a tax credit under this chapter, the Department may make written inquiry, including a request for the production, inspection, or copying of documents specified in the inquiry, of any taxpayer or holder of a certificate of eligibility for a tax credit under this chapter to obtain information bearing on the eligibility of the taxpayer or of the taxpayer’s partners, shareholders, members, or beneficiaries for that credit. The inquiry may include, but may not be limited to, whether the claimed costs were in fact incurred in the State.

(2) A taxpayer to which a written inquiry from the Department is directed under §B(1) of this regulation shall submit a full and complete written response, with copies of all requested documents, within 45 days of the date of the inquiry. The response shall be verified as true and correct by oath or affirmation made under penalty of perjury by the individual proprietor or by an individual officer, partner, or member of the taxpayer.

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

COMAR 24.05.19.13 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with Tax-General Article, §10-735, Annotated Code of Maryland.

History

• Administrative History: Effective date: February 3, 2014 (41:2 Md. R. 92)
• Authority: Tax General Article, §§2-103 and 10-735; Economic Development Article, §2-108; Annotated Code of Maryland

24.05.20 Job Creation Tax Credit

COMAR 24.05.20.01 Objective.

The objective of the job creation tax credit is to increase the number and quality of new jobs in the State by encouraging:

A. Significant expansions of existing private sector enterprises;

B. Establishment of new private sector enterprises;

C. Creation of family supporting jobs; and

D. Revitalization of neighborhoods and commercial areas.

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.02 Purpose.

This chapter describes the procedures that will be used by the Secretary of Commerce to establish the requirements necessary to qualify for the tax credit program.

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.03 Scope and Administration.

Certification for the job creation tax credit is administered by the Secretary of Commerce. The Comptroller of the Treasury, the Department of Assessments and Taxation, and the Insurance Commissioner shall administer the tax credit.

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.04 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means the Job Creation Tax Credit Act at Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland.

(2) “Average wage” means the average wage for all employment in the State as reported from time to time by the Maryland Department of Labor.

(3) Central Administrative Offices.

(a) “Central administrative offices” means a facility where a business entity's central management or administrative functions are handled on either a regional or national basis.

(b) “Central administrative offices” includes offices or locations in the region where functions such as personnel, planning, general management, accounting and financial, purchasing, advertising, legal, data processing, and research and development are performed.

(4) “Central financial, real estate, or insurance services” means the performance of central management or administrative functions for a business entity engaged in financial, real estate, or insurance services.

(5) “Central management or administrative functions” includes general management, accounting, computer tabulating, data processing, purchasing, transportation or shipping, advertising, legal, financial, and research and development.

(6) Company Headquarters.

(a) “Company headquarters” means a facility where the majority of a business entity's financial, personnel, legal, and planning functions are handled either on a regional or national basis.

(b) “Company headquarters” does not include the headquarters of a professional sports organization.

(7) “Credit year” means the taxable year for which a qualified business entity claims the tax credit.

(8) “Department” means the Department of Commerce.

(9) “Federal minimum wage” means the wage established by the Fair Labor Standards Act of 1938 as amended. For purposes of the tax credit, hourly wages may include bonuses and commissions, prorated on an hourly basis, if these bonuses and commissions are reported on the W-2 Wage and Tax Statements of the qualified employees.

(10) “Full-time position” means a position requiring at least 840 hours of an employee's time during at least 24 weeks in a 6-month period (an average of 35 hours per week).

(11) “Person” includes an individual, corporation, business trust, partnership, limited liability company, association, two or more persons having a joint or common interest, or any other legal or commercial entity.

(12) “Qualified business entity” has the meaning stated in §C of this regulation.

(13) “Qualified employee” means an employee filling a qualified position.

(14) Qualified Position.

(a) “Qualified position” means a position that:

(i) Is a full-time position;

(ii) Is of indefinite duration;

(iii) Pays at least 150 percent of the federal minimum wage;

(iv) Is located in Maryland;

(v) Is newly created, as a result of the establishment or expansion of a business facility in a single location in the State; and

(vi) Is filled.

(b) “Qualified position” does not include a position that is:

(i) Created when an employment function is shifted from an existing business facility of the business entity located in the State to another business facility of the same business entity if the position does not represent a net new job in the State;

(ii) Created through a change in ownership of a trade or business;

(iii) Created through a consolidation, merger, or restructuring of a business entity if the position does not represent a net new job in the State;

(iv) Created when an employment function is contractually shifted from an existing business entity located in the State to another business entity if the position does not represent a net new job in the State; or

(v) Filled for a period of less than 12 months.

(c) “Qualified position” is limited to the following positions if the entity is engaged in the operation of entertainment, recreational, cultural, or tourism-related activities:

(i) Positions engaged in the operation of entertainment, recreational, cultural, or tourism-related activities for the multiuse facility in which the entertainment, recreational, cultural, or tourism-related activities are operated; or

(ii) Positions engaged in management, marketing, building maintenance, hotel services, and security for the facility.

(d) “Qualified position” does not include a temporary training position but does include a permanent position which is filled by hiring a successful trainee from a temporary training position that does not exceed 3 months in length.

(15) “Retention period” means the 3-year period after the credit year during which the qualified business entity is required to maintain the qualified positions. The retention period may be extended under Regulation .10 of this chapter.

(16) “Revitalization area” means an area designated as:

(a) An enterprise zone by the Secretary under Economic Development Article, §5-704, Annotated Code of Maryland;

(b) An empowerment zone by the United States Government pursuant to 26 U.S.C. §1391 et seq.; or

(c) A neighborhood that is eligible for economic revitalization assistance under Housing and Community Development Article, §6-303, Annotated Code of Maryland.

(17) “Secretary” means the Secretary of Commerce or the Secretary's designee.

(18) State Priority Funding Area.

(a) “State priority funding area” includes the following areas:

(i) An incorporated municipality;

(ii) A designated neighborhood, as defined in Housing and Community Development Article, §6-305, Annotated Code of Maryland;

(iii) An enterprise zone as designated under Economic Development Article, §5-704, Annotated Code of Maryland, or by the United States government;

(iv) Those areas of the State located between Interstate 495 and the District of Columbia;

(v) Those areas of the State located between Interstate 695 and Baltimore City;

(vi) Not more than one area in a county designated in writing to the Department by the county as a priority funding area under State Finance and Procurement Article, §5-7B-03(d), Annotated Code of Maryland; and

(vii) That portion of the port land use development zone, as defined in Transportation Article, §6-501(e), Annotated Code of Maryland, that has been designated as an area appropriate for growth in the county comprehensive master plan.

(b) “State priority funding area”, for purposes of qualifying for the tax credit, includes the entire area of a business facility, if at least 25 percent of the business facility is located within a State priority funding area.

(19) “Tax credit” means job creation tax credit.

C. Qualified Business Entity.

(1) “Qualified business entity” means a person conducting or operating a qualified type of business in Maryland who:

(a) Is engaged in an activity specified in Regulation .07 of this chapter;

(b) During any 24-month period creates at least:

(i) 60 qualified positions,

(ii) 30 qualified positions if the aggregate payroll for the qualified positions is greater than a threshold amount equal to the product of multiplying 60 times the State's average annual salary, as determined by the Department, or

(iii) 25 qualified positions if the business facility established or expanded by the business entity is located in a State priority funding area; and

(c) Is certified by the Secretary under Regulation .06 of this chapter as qualifying for the tax credit.

(2) “Qualified business entity” includes the persons owning or operating a multiuse facility in which the entertainment, recreation, cultural, or tourism-related activities are operated.

(3) “Qualified business entity” does not include any separate entity that leases retail space at a multiuse facility.

Cross References

24.05.20.10C

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.05 Notification Required.

A business entity shall notify the Department of its intent to seek certification for the tax credit before hiring any qualified employees to fill the qualified positions necessary to satisfy the requirements for a qualified business entity establishing or expanding the business facility on which the tax credit is based.

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.06 Certification Procedures.

A. To be preliminarily certified as a qualified business entity, a business entity shall submit the following to the Department on an application form approved by the Department:

(1) The proposed effective date of the start-up or expansion;

(2) The number of full-time employees before the start-up or expansion and the payroll of the existing employees;

(3) The expected number of qualified positions expected to be created, qualified employees expected to be hired, and the estimated payroll of those employees; and

(4) Any other information required by the Department.

B. To be certified as a qualified business entity, a business entity shall submit the following to the Department on an application form approved by the Department:

(1) The effective date of the start-up or expansion;

(2) The number of qualified positions created, qualified employees hired, and the estimated payroll of those employees; and

(3) Any other information required by the Department.

C. The Department may require any information required by this regulation to be verified by an independent auditor selected by the business entity.

D. If a business entity satisfies the definition of qualified business entity, the Secretary shall certify the business as a qualified business entity eligible for the tax credit.

Cross References

24.05.20.04C(1)(c)

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.07 Eligible Business Activities.

A. To qualify for the tax credit, a qualified business entity shall establish or expand a business facility in the State that is primarily engaged in one or more of the following qualifying activities:

(1) Manufacturing;

(2) Mining;

(3) Transportation;

(4) Communications;

(5) Agriculture;

(6) Forestry;

(7) Fishing;

(8) Research, development, or testing;

(9) Biotechnology;

(10) Computer programming, data processing, or other computer-related services;

(11) Central financial, real estate, or insurance services;

(12) The operation of central administrative offices or a company headquarters;

(13) A public utility;

(14) Warehousing;

(15) Business services, if the business facility established or expanded by the business entity is located in a State priority funding area; or

(16) Operation of entertainment, recreation, cultural, or tourism-related activities in a multiuse facility located within a revitalization area, if the facility:

(a) Generates a minimum of 1,000 new full-time equivalent filled positions in a 24-month period, and

(b) Is not primarily used by a professional sports franchise or for gaming.

B. In determining whether a business facility is engaged in a qualifying activity, the Department shall consider the definitions set forth in the U.S. Department of Labor's Standard Industrial Classification Manual.

Cross References

24.05.20.04C(1)(a)

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.08 Amount of Tax Credit.

A. Standard Tax Credit. The standard tax credit earned under this section equals the lesser of:

(1) $1,000 multiplied by the number of qualified employees employed by the qualified entity during the credit year; and

(2) 2.5 percent of the wages paid by the qualified business entity during the credit year to all qualified employees.

B. Tax Credit for Facility in Revitalization Area. The tax credit for qualified employees working in a facility located in a revitalization area equals the lesser of:

(1) $1,500 multiplied by the number of qualified employees employed by the qualified entity during the credit year; and

(2) 5 percent of the wages paid by the qualified business entity during the credit year to the qualified employees.

C. Earning the Tax Credit.

(1) The tax credit is earned by the business entity at the end of the 12-month period during which the requisite number of qualified positions have been filled.

(2) The 12 months need not be consecutive.

D. Time That Tax Credit May Be Taken. The tax credit shall be allowed ratably with 1/2 of the tax credit amount allowed annually for 2 years beginning with the credit year.

E. Limitations on the Tax Credit.

(1) The tax credit earned by a qualified business entity may not exceed $1,000,000 for any credit year.

(2) The same tax credit may not be applied more than once against different taxes by the same taxpayer.

(3) The tax credit shall be taken in only 1 credit year for each qualified position.

(4) The tax credit shall be based on 12 months' wages for each qualified employee.

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.09 Carryover of Tax Credit.

A. A business entity may carry over the tax credit to a successive tax year if the tax credit allowed exceeds the total tax otherwise due from the entity.

B. The tax credit may only be carried over until the earlier of the:

(1) Full amount of the excess is used; or

(2) Expiration of the fifth taxable year from the credit year.

C. The tax credit may not be carried back to a preceding taxable year.

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.10 Recapture Provisions.

A. Except as provided in §D of this regulation, the tax credit shall be recaptured if, during any of the retention period following the credit year, the number of qualified positions of the qualified business entity falls more than 5 percent below the average number of qualified positions during the credit year on which the tax credit was computed.

B. A temporary vacancy in a qualified position does not constitute the abolition of that qualified position if:

(1) The vacancy is filled within 4 months; and

(2) Not more than 10 percent of the qualified positions at the business facility are vacant at any given time.

C. Except as provided in §D of this regulation, the tax credit shall be recaptured in its entirety if, during the retention period following the credit year, the average number of qualified positions falls below the applicable minimum threshold number of positions specified in Regulation .04C(1)(b) of this chapter.

D. If, during the retention period, for a period of time more than 5 percent of qualified positions are vacant due to a labor action or due to a fire, flood, or other cause beyond the control of the qualified business entity, instead of recapture of the tax credit, the retention period shall be extended by that period of time.

E. The tax credit shall be recaptured in the following manner:

(1) The tax credit shall be recomputed to reduce the tax credit by the percentage reduction of the number of qualified employees;

(2) The recomputed tax credit shall be subtracted from the amount of tax credit previously allowed; and

(3) The qualifying business entity shall pay the difference as taxes payable to the State for the taxable year in which the number of qualified positions falls more than 5 percent below the average number of qualified positions during the credit year.

Cross References

24.05.20.04B(15)

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.11 Information Required from Entity.

A. To be eligible to receive the tax credit, a firm shall notify the Department in writing of its intention to use the tax credit before hiring the qualified employees necessary for establishing or expanding a facility.

B. To obtain preliminary certification, the qualified business entity shall provide the Department with a completed application for preliminary certification.

C. To obtain certification, the qualified business entity shall provide the Department with a completed application for certification.

D. By April 1 of each year after the credit year, the qualified business entity shall provide the Department with the following information:

(1) Employment information regarding the tax year for which the credit is being claimed, the number of qualified positions created and filled by qualified employees during the tax year, whether the qualified positions still existed and were still filled by qualified employees at the end of the tax year, and whether the qualified business entity has complied with all the requirements of the Act; and

(2) Any other employment information requested by the Department.

E. At the end of the retention period for a given credit year, an independent certified public accountant selected by the qualified business entity shall provide the Department and the appropriate taxing authority with a written statement stating either:

(1) That no refund of the tax credit is due to the State; or

(2) If a refund is due, the original amount of tax credit earned, the amount taken, and the amount to be refunded to the State.

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.12 Confidentiality Protections for Business Entities.

A. Any information provided to the Comptroller or the appropriate agency by a qualified business entity in connection with eligibility for a tax credit allowed under this chapter shall be shared by the Comptroller or the appropriate agency with the Department.

B. Information provided under §A of this regulation shall be subject to the confidentiality requirements applicable to the Comptroller or the appropriate agency.

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.13 Repealed.

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

COMAR 24.05.20.14 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with the Act if:

A. Conformance to the requirement of any federal, State, or local program necessitates waiver or variance of a regulation; or

B. In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: June 15, 1998 (25:12 Md. R. 949)
• Administrative History: Regulation .04B amended effective March 6, 2000 (27:4 Md. R. 455); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11 amended effective December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .13 repealed effective November 12, 2001 (28:22 Md. R. 1937)
• Authority: Economic Development Article, Title 6, Subtitle 3, Annotated Code of Maryland

24.05.21 Regional Institution Strategic Enterprise Zone Program

COMAR 24.05.21.01 Objective.

The objective of the Regional Institution Strategic Enterprise (RISE) Zone Program is to access institutional assets that have a strong and demonstrated history of commitment to economic development and revitalization in the communities in which they are located.

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

COMAR 24.05.21.02 Purpose.

This chapter describes the application requirements and procedures that will be used by the Secretary of Commerce to designate qualified institutions and RISE Zones.

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

COMAR 24.05.21.03 Scope and Administration.

The Secretary of Commerce administers the RISE Zone Program. Certain activities are subject to approval by the Secretary of Commerce, with input from the Legislative Policy Committee. Certain activities will require input from the local jurisdiction in which the RISE Zone is located. The Department of Assessments and Taxation and the Comptroller of the Treasury administer activities related to revenue and taxes.

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

COMAR 24.05.21.04 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, Title 5, Subtitle 14, Annotated Code of Maryland.

(2) “Area” means a geographic area in one or more political subdivisions in the State described by a closed perimeter boundary.

(3) “Department” means the Department of Commerce.

(4) “Institution” means:

(a) A regional higher education center as defined in Education Article, §10-101, Annotated Code of Maryland;

(b) An institution of higher education as defined in Education Article, §10-101, Annotated Code of Maryland; or

(c) A nonprofit organization that is affiliated with a federal agency.

(5) “Nonprofit organization” means an organization that is exempt or eligible for exemption from taxation under §501(C)(3) of the Internal Revenue Code.

(6) “Qualified institution” means an institution that is designated as a qualified institution under Regulation .06 of this chapter.

(7) “Qualified property” has the meaning stated in Tax-Property Article, §9-103.1(A)(6), Annotated Code of Maryland.

(8) “Political subdivision” means any county or municipal corporation.

(9) “RISE Zone” means an area that:

(a) Is targeted for increased economic and community development;

(b) Proximity or Nexus.

(i) Is in immediate proximity to a qualified institution;

(ii) Has a nexus with the qualified institution and its proposed activities; or

(iii) Is a rural area and has a nexus with the qualified institution and its proposed activities;

(c) Meets the requirements of Regulation .08 of this chapter; and

(d) Is designated as a Regional Institution Strategic Enterprise Zone by the Secretary under Regulation .09 of this chapter.

(10) “Secretary” means the Secretary of Commerce.

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

COMAR 24.05.21.05 Application for Designation as a Qualified Institution.

A. An institution may apply to the Secretary to be designated as a qualified institution.

B. If the applicant is a non-profit organization that is not an institute of higher education, the non-profit must provide documentation that it is affiliated with a federal agency.

C. The application to be designated as a qualified institution shall be in a form approved from time to time by the Department:

D. The applicant shall provide the information and documents required by this regulation and the application form, including:

(1) Evidence of the applicant’s intention to:

(a) Make a significant financial investment or commitment in an area of the State that the applicant intends to become a RISE Zone, including:

(i) A description of the projected amount and type of financial investment or commitment the qualified institution intends to make in the area to become a RISE Zone;

(ii) An explanation of why the financial investment or commitment is significant to the area; and

(iii) An explanation of where the financial investment or commitment will be made and for what purpose;

(b) Use the resources and expertise of the applicant to spur economic development and community revitalization in the area the applicant intends to become a RISE Zone, including:

(i) A list of the resources and expertise the applicant has in economic development and community revitalization; and

(ii) An explanation of how the applicant plans to apply its resources and expertise in the area it intends to become a RISE Zone;

(c) Create a significant number of new jobs within the area the applicant intends to become a RISE Zone, taking into account the geographic region and the business sectors located within that region, and including:

(i) An explanation of how the designation of the intended RISE Zone will create new jobs; and

(ii) A discussion of how many jobs and the types of jobs that will be created as a result of the designation of a RISE Zone;

(2) Evidence that demonstrates the applicant’s history of community involvement and economic development within the communities that the applicant serves, by providing examples of the institution’s involvement in the community or communities and with economic development, including descriptions of:

(a) The community or communities in which the applicant is involved;

(b) The applicant’s involvement in the community, including specific programs and community outreach;

(c) The time and financial resources committed by the applicant in the community; and

(d) The outcomes of the applicant’s community involvement, including job creation;

(3) Information necessary for the Department to determine if the applicant has the financial qualifications to accomplish its commitments set forth in its application, including:

(a) Evidence that the applicant has sufficient financial resources to make a significant financial investment or commitment in the proposed RISE Zone;

(b) Copies of the applicant’s balance sheet and any financial plans or proposed budgets; and

(c) If the applicant intends to rely in whole or in part on fund raising, evidence of previous fund raising ability; and

(4) Any other information or documents required by the Secretary.

E. If the political subdivision in which the proposed RISE Zone is to be located supports the application, the applicant should include a letter of support from the chief executive or governing body of the political subdivision, as may be required by local law. If the intended RISE Zone is located in more than one political subdivision, the applicant should include a letter of support from each political subdivision that supports the intended RISE Zone.

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

COMAR 24.05.21.06 Secretary’s Designation of a Qualified Institution.

A. The Secretary shall approve or reject an application of an institution within 90 days after submission of an application for designation as a qualified institution.

B. The Secretary shall notify the Legislative Policy Committee at least 30 days before approval or rejection of an application for designation as a qualified institution.

C. The Legislative Policy Committee may provide advice to the Secretary regarding the approval or rejection of an institution as a qualified institution.

Cross References

24.05.21.04B(6)

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

COMAR 24.05.21.07 Application for Designation of a RISE Zone Jointly With Political Subdivision.

A. On or after July 1, 2015, application for designation of a RISE Zone may be made to the Department by one or more qualified institutions jointly with a county, a municipal corporation, or the economic development agency of a county or municipal corporation.

B. Unless a municipal corporation located within a county agrees to designation of a RISE Zone within its boundaries, qualified property in the county may not receive a tax credit against the municipal property tax. The applicant shall obtain the consent of the governing body of the municipal corporation in the form of a resolution.

C. Unless a county, in which a municipal corporation is located, agrees to designation of a RISE Zone in the municipal corporation, qualified property in the municipal corporation may not receive a tax credit against county property tax. The applicant shall obtain the consent of the governing body of the county in the form of a resolution.

D. All applications shall be complete, meet all stated requirements, and be properly signed by the chief elected, executive official or, if none, by the governing body of, each of the political subdivisions applying with the qualified institution.

E. Any modification to the boundaries of an existing RISE Zone must be approved by each applicant for the initial designation of the RISE Zone.

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

COMAR 24.05.21.08 Application Requirements for Designation of a RISE Zone.

The RISE Zone application shall include the following:

A. A detailed description of the boundaries of the proposed RISE Zone, including:

(1) Both a hard copy and digital map of the proposed RISE Zone;

(2) The acreage of the proposed RISE Zone;

(3) A map showing any overlap of the proposed RISE Zone with an existing enterprise zone or focus area; and

(4) A statement from the planning departments of each political subdivision joining in the application that the boundaries of the proposed RISE Zone do not overlap a development district established under Economic Development Article, Title 12, Subtitle 2, Annotated Code of Maryland, or a special taxing district established under Local Government, Article, Title 21, Annotated Code of Maryland or The Charter of Baltimore City, §62A.

B. A description of the nexus of the proposed RISE Zone with the qualified institution. If the proposed RISE Zone is not in immediate proximity to the qualified institution, an explanation of the connection between the qualified institution, its proposed activities, and the proposed RISE Zone.

C. If the proposed RISE Zone is in a rural area of the State, a description of the nexus between the qualified institution, its proposed activities, and the area of the proposed RISE Zone.

D. Evidence and certification that each political subdivision, before submission of the application, held a public hearing on the application with adequate notice.

E. Copies of resolutions from the political subdivisions approving the real property tax credit and specifying the credit percentage each year for the 5-year period.

F. A plan that contains a target strategy and anticipated economic impacts of the RISE Zone, which plan shall include:

(1) A description of existing demographic and socioeconomic character of the proposed RISE Zone;

(2) A description of how the area is of strategic importance to the economic development interests of the applicants, including a list of other revitalization programs applicable to the area, such as enterprise zones, sustainable communities, Priority Funding Areas (PFA), and Maryland Department of Transportation designated Transit Oriented Development (TOD) areas;

(3) A statement of the goals and objectives of the proposed RISE Zone;

(4) A description of proposed projects to be developed in the proposed RISE Zone;

(5) A timeline of development and activity in the proposed RISE Zone;

(6) The expected economic impact of the designation on the area, including anticipated capital investment resulting from the designation, projected number, type, and salary ranges of jobs to be created, and projected number of new establishments to locate in the proposed RISE Zone;

(7) The industry sectors that will be certified for RISE Zone incentives;

(8) The requirements for existing businesses that are located in a RISE Zone prior to the RISE Zone designation to be certified for RISE Zone incentives, including a discussion of the significance of these requirements to the area, which requirements must include:

(a) Minimum capital investment; or

(b) Minimum increase in labor force;

(9) A description of workforce training programs that may be available in the proposed RISE Zone area;

(10) The point of contact for the RISE Zone and entity responsible for certifying to the Department if the business is eligible for RISE Zone incentives and for submitting an annual report to the Department; and

(11) A description of the local process for certifying businesses as eligible for the RISE Zone incentives.

G. Any other information the Secretary requires.

Cross References

24.05.21.04B(9)(c)

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

COMAR 24.05.21.09 RISE Zone General Requirements.

A. The designation of a RISE Zone is effective for 5 years.

B. The Secretary may not approve more than three RISE Zones in a single political subdivision.

C. The Secretary may not designate a RISE Zone in the following areas:

(1) A development district established under Economic Development Article, Title 12, Subtitle 2, Annotated Code of Maryland; or

(2) A special taxing district established under Local Government Article, Title 21, Annotated Code of Maryland, or The Charter of Baltimore City, §62A.

D. The designation of an area as a RISE Zone may not be construed to limit or supersede a provision of a comprehensive plan, zoning ordinance, or other land use policy adopted by a political subdivision or bicounty agency with land use authority over the area designated as a RISE Zone.

Cross References

24.05.21.04B(9)(d)

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

COMAR 24.05.21.10 Secretary’s Designation of a RISE Zone.

A. The Secretary shall approve or reject an application for designation of a RISE Zone, including approval or modification of the proposed boundaries of the RISE Zone, within 120 days after the submission of the application.

B. The Secretary shall notify the Legislative Policy Committee at least 45 days before approval or rejection of the application.

C. The Legislative Policy Committee may provide advice to the Secretary regarding the approval or rejection of the RISE Zone or the boundaries of the RISE Zone proposed by the Secretary.

D. The Secretary may consult with the Maryland Department of Planning and other State agencies before the designation of a RISE Zone.

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

COMAR 24.05.21.11 Renewal of RISE Zones.

A. The Secretary may renew a RISE Zone for an additional 5 years upon joint application by the entities that applied for the original RISE Zone designation.

B. To apply for renewal, the entities that applied for the original RISE Zone designation shall file a complete application, which shall include:

(1) An analysis of whether the goals and objectives of the target strategy were met;

(2) An analysis of the success and outcomes of the designation, including the number of jobs created, total and type of capital investment made, the number of new businesses locating to the RISE Zone, and any other information that demonstrates success;

(3) A description of how the qualified institution met the goals specified in the qualified institution’s application for qualified institution designation; and

(4) A discussion of what would be achieved by renewing the RISE Zone for an additional 5-year period.

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

COMAR 24.05.21.12 Annual Report.

The person or entity identified in the target strategy for preparing the annual report shall submit an annual report to the Department on a fiscal year basis by September 15 of the following fiscal year, in the form and containing the information established by the Secretary.

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

COMAR 24.05.21.13 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that a waiver is not inconsistent with the Act if:

A. Conformance to this requirement of any federal, State, or local program necessitates waiver or variance of a regulation; or

B. In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: March 30, 2015 (42:6 Md. R. 514)
• Administrative History: Regulation .12 amended effective March 12, 2018 (45:5 Md. R. 288)
• Authority: Economic Development Article, §§2-108 and 5-1401—5-1407; Tax-General Article, §10-702;Tax Property Article, §9-103.1; Annotated Code of Maryland

24.05.22 Maryland E-Nnovation Initiative Program

COMAR 24.05.22.01 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, Title 6, Subtitle 6, Annotated Code of Maryland.

(2) “Affiliated foundation” means a corporation created, organized, and located in the State that meets the following conditions:

(a) With respect to public nonprofit institutions of higher education, an affiliated foundation created and operated in accordance with Education Article, §15-104, Annotated Code of Maryland; and

(b) With respect to private nonprofit institutions of higher education, a corporation created, organized, and located in the State that meets the following conditions:

(i) Is organized and operated for educational purposes in support of one or more nonprofit institutions of higher education and other affiliated organizations;

(ii) Is designated by the governing board of one or more nonprofit institutions of higher education to receive charitable contributions for educational purposes on behalf of the nonprofit institution or institutions of higher education;

(iii) Does not have any part of its earnings inuring to the benefit of any private shareholder or individual;

(iv) Is not disqualified for tax exemption under 26 U.S.C. §501(c)(3) of the Internal Revenue Code for any reason;

(v) Does not participate or intervene in, on behalf of or in opposition to, any political campaigns for public office; and

(vi) Has its fiscal affairs audited annually by an independent certified public accountant.

(3) “Authority” means the Maryland E-Nnovation Initiative Fund Authority established under Economic Development Article, §6-605, Annotated Code of Maryland.

(4) “Cash equivalent” means U.S. Treasury bills, bank certificates of deposit, bankers’ acceptances, corporate commercial paper, and other money market instruments.

(5) “Endowment proceeds” means those investment earnings accruing to a research endowment of a nonprofit institution of higher education and available for expenditure by the nonprofit institution of higher education in accordance with Economic Development Article, §6-612, Annotated Code of Maryland.

(6) “First submission date” means the June 1 before the beginning of a fiscal year in which a nonprofit institution of higher education requests a distribution of matching funds under the Program.

(7) “Fiscal year” means the fiscal year of the State.

(8) “Fund” means the Maryland E-Nnovation Initiative Fund.

(9) “Governing board” has the meaning stated in Education Article, §10-101, Annotated Code of Maryland.

(10) “Governing body” means:

(a) A governing board;

(b) The governing entity of private nonprofit institutions of higher education; or

(c) The governing entity of a regional higher education center.

(11) “Marketable securities” means securities for which market quotations are readily available on an established public securities market or exchange at the time of the donation or gift and are readily convertible into cash.

(12) Nonprofit Institution of Higher Education.

(a) “Nonprofit institution of higher education” means a public or private nonprofit institution of postsecondary education located in the State that:

(i) Receives State funds in the annual operating budget;

(ii) Limits enrollment to graduates of secondary schools; and

(iii) Awards degrees at the associate, baccalaureate, or graduate level.

(b) “Nonprofit institution of higher education” includes its affiliated foundation for purposes of receiving and depositing qualified donations and matching funds in a research endowment under Economic Development Article, Title 6, Subtitle 6, Annotated Code of Maryland.

(13) “Private nonprofit institution of higher education” has the meaning stated in Education Article, §10-101, Annotated Code of Maryland.

(14) “Program” means the Maryland E-Nnovation Initiative Program, as authorized by the Act.

(15) Qualified Donation.

(a) “Qualified donation” means any private donation, gift, irrevocable pledge, or bequest to a research endowment in accordance with Economic Development Article, §6-613, Annotated Code of Maryland.

(b) “Qualified donation” includes a donation, gift, pledge, or bequest in the form of cash and cash equivalents or marketable securities.

(16) “Regional higher education center” has the meaning stated in Education Article, §10-101, Annotated Code of Maryland.

(17) “Research endowment” means an account established at or administered by a nonprofit institution of higher education in accordance with Economic Development Article, §6-612, Annotated Code of Maryland.

(18) “Research endowment plan” means a plan adopted by a governing body and submitted to the Authority for approval, outlining how a nonprofit institution of higher education proposes to use matching funds from the program in accordance with Economic Development Article, §6-615, Annotated Code of Maryland, and Regulation .05 of this chapter.

(19) “Second submission date” means November 1 during a fiscal year in which a nonprofit institution of higher education requests a distribution of matching funds under the Program.

(20) “Submission date” means the first submission date or the second submission date.

History

• Administrative History: Effective date: June 22, 2015 (42:12 Md. R. 763)
• Administrative History: Regulation .01B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .02A, B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .03 B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .04C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05B, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05G adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .06A, C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .07 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .08 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09A, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09E, F adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .10A amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .11C amended September 2, 2024 (51:17 Md. R. 778)
• Authority: Economic Development Article, §§2-108 and 6-601—6-623, Annotated Code of Maryland

COMAR 24.05.22.02 Designated Fields of Scientific and Technical Fields of Study; Expenditure of Endowment Proceeds.

A. The Authority designates the following scientific and technical fields of study as eligible for the expenditure of endowment proceeds under the Program:

(1) Physical sciences;

(2) Life and neuro sciences;

(3) Engineering;

(4) Mathematical and computational sciences;

(5) Regulatory science;

(6) Autonomous systems;

(7) Aeronautical and space science;

(8) Environmental sciences;

(9) Behavioral and language science;

(10) Health sciences;

(11) Agriculture;

(12) Cybersecurity;

(13) Emerging fields in science and technology;

(14) Entrepreneurial sciences; and

(15) Social sciences.

B. At least 90 days prior to the first submission date, the Authority may announce that certain scientific and technical fields of study will be awarded greater weight in the Authority's evaluation of the applications in the upcoming fiscal year if the Authority has determined that certain scientific and technical fields will enhance the economic competitiveness of the State or build on existing clusters of research and innovation. If no announcement is made, the scientific and technical fields of study shall be weighted equally. An announcement of the greater weight assigned to certain scientific and technical fields of study shall remain in effect until the Authority announces revised weightings.

C. Endowment proceeds may be expended by a nonprofit institution of higher education for:

(1) The payment of base salaries of newly endowed department chairs, new professorship positions, new research scientists, or new research staff positions, including research technicians and support personnel, and to fund affiliated graduate or undergraduate student research fellowships, if the positions or fellowships are engaged in the areas of research identified in §A of this regulation; or

(2) The purchase of basic infrastructure, including, but not limited to, laboratory and scientific equipment or other essential equipment and materials, related to an area of research identified in §A of this regulation.

History

• Administrative History: Effective date: June 22, 2015 (42:12 Md. R. 763)
• Administrative History: Regulation .01B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .02A, B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .03 B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .04C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05B, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05G adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .06A, C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .07 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .08 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09A, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09E, F adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .10A amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .11C amended September 2, 2024 (51:17 Md. R. 778)
• Authority: Economic Development Article, §§2-108 and 6-601—6-623, Annotated Code of Maryland

COMAR 24.05.22.03 Application — Requirements.

A. A nonprofit institution of higher education shall first submit an application to the Authority prior to submitting its first request for a distribution of matching funds from the Fund in a fiscal year.

B. The application shall be on a form provided by the Authority and shall include the following information:

(1) A copy of the proposed research endowment plan for a research endowment at the nonprofit institution of higher education that includes the information required by Economic Development Article, §6-615, Annotated Code of Maryland, and Regulation .05 of this chapter;

(2) The legal name of the nonprofit institution of higher education;

(3) The street address of the principal place of business of the nonprofit institution of higher education and the mailing address, email address, and telephone number of the nonprofit institution of higher education;

(4) The name, business mailing address, telephone number, and email address of an individual with authority to act on behalf of the nonprofit institution of higher education with respect to the application;

(5) The name and title of the individual with authority to sign the agreement for distribution of matching funds under the Program on behalf of the nonprofit institution of higher education;

(6) The federal employer identification number of the nonprofit institution of higher education;

(7) Certification of the president of the nonprofit institution of higher education or the designee of the president determining that the donation constitutes a qualified donation; and

(8) Any other information requested by the Authority.

C. Applications must be received by the Authority on or before a submission date in order for the nonprofit institution of higher education to be considered for an allocation of matching funds available for a fiscal year.

D. The Authority may allocate all of the matching funds available under the Program for a fiscal year after reviewing applications submitted for the first submission date for that fiscal year, and there can be no guarantee that funds will be available under the Program for allocation to applications received after the first submission date.

E. A nonprofit institution of higher education may submit more than one application to the Authority during the fiscal year. Each application shall include one research endowment plan for a research endowment at the nonprofit institution of higher education.

Cross References

24.05.22.04A

History

• Administrative History: Effective date: June 22, 2015 (42:12 Md. R. 763)
• Administrative History: Regulation .01B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .02A, B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .03 B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .04C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05B, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05G adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .06A, C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .07 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .08 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09A, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09E, F adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .10A amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .11C amended September 2, 2024 (51:17 Md. R. 778)
• Authority: Economic Development Article, §§2-108 and 6-601—6-623, Annotated Code of Maryland

COMAR 24.05.22.04 Application — Authority Review.

A. The Authority shall review each application for compliance with the Act and this chapter. If the Authority determines that an application is not responsive to the requirements under Regulation .03 of this chapter, the Authority shall notify the nonprofit institution of higher education of the deficiency, and the nonprofit institution of higher education shall have 5 business days to cure the deficiency.

B. The Authority shall provide notice to a nonprofit institution of higher education of the Authority’s approval or rejection of an application, including the research endowment plan submitted with the application, and any allocation of matching funds under the Program within 60 days after the Authority has deemed the application complete. If an application is not approved, the notice from the Authority shall include the reason(s) the application could not be approved.

C. The Authority shall encumber the matching funds allocated to a nonprofit institution of higher education at the time the Authority approves an application. Subject to Regulation .08 of this chapter, Program funds are encumbered once the agreement for distribution of matching funds under the Program is fully executed and the funds shall remain encumbered.

History

• Administrative History: Effective date: June 22, 2015 (42:12 Md. R. 763)
• Administrative History: Regulation .01B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .02A, B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .03 B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .04C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05B, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05G adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .06A, C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .07 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .08 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09A, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09E, F adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .10A amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .11C amended September 2, 2024 (51:17 Md. R. 778)
• Authority: Economic Development Article, §§2-108 and 6-601—6-623, Annotated Code of Maryland

COMAR 24.05.22.05 Research Endowment Plan — Requirements.

A. The research endowment plan shall provide the Authority with an explanation of the nonprofit institution of higher education’s comprehensive research objectives and plans to build competitive research infrastructure in the specified scientific and technical fields of study as designated by the Authority, as well as comprehensive measures for achieving this goal.

B. The proposed research endowment plan shall include the following:

(1) A description of the nonprofit institution of higher education’s current research initiatives in the fields of study designated by the Authority for which the nonprofit institution of higher education will be seeking matching funds under the Program;

(2) The designated field(s) of study covered by the research endowment plan;

(3) The total amount of Program funds for which the nonprofit institution of higher education is requesting approval under the research endowment plan;

(4) The proposed use of the matching funds to be requested by the nonprofit institution of higher education with respect to the research endowment plan, including:

(a) An explanation of how the proposed uses of the endowment proceeds satisfies the criteria for eligible uses of endowment proceeds under Economic Development Article, §6-614, Annotated Code of Maryland;

(b) The anticipated costs associated with the proposed uses of the endowment proceeds;

(c) An explanation of how the proposed uses of the endowment proceeds further the purposes of the Program and address the research needs of the nonprofit institution of higher education; and

(d) The identification of any specific disciplinary hires to be made with the endowment proceeds, if known to the nonprofit institution of higher education at the time of the submission of the research endowment plan;

(5) A designation of the applicable research endowment(s) into which Program funds are to be deposited;

(6) A description of how the research endowment plan will play a role in achieving institutional research objectives in the designated field(s) of study and its relation to and impact on the colleges, schools, departments, centers, institutes, or other academic units proposed, currently under development, or currently operating;

(7) A description of the current or proposed collaborations, particularly with other institutional partners, that play or will play a significant collaborative role in achieving institutional objectives;

(8) An analysis of possible strategies to enhance current research initiatives;

(9) An evaluation of how the research endowment plan furthers the purposes of the Program’s goals and the research needs of the nonprofit institution of higher education;

(10) Documentation of the demonstrations of interest to make qualified donations in a form satisfactory to the Authority;

(11) An explanation of the entrepreneurial and economic development aspects of the research endowment plan; and

(12) Such other information as requested by the Authority from time to time.

C. The Authority shall conduct a thorough review of the research endowment plan for compliance with the provisions of the Act and this chapter. The Authority may request additional information from a nonprofit institution of higher education as it deems necessary and appropriate for consideration of the research endowment plan and the implementation of the Program.

D. In evaluating whether to allocate matching funds to a nonprofit institution of higher education for a research endowment plan, the Authority may consider:

(1) The compliance by the nonprofit institution of higher education with other research endowment plans approved by the Authority for the nonprofit institution of higher education;

(2) Such other evaluation criteria as the Authority shall establish from time to time;

(3) Any lack of compliance with reporting requirements when evaluating new applications, including the proper formatting of reports; and

(4) Failure to obtain prior consent for an amendment of the research endowment plan.

E. At least 90 days prior to the first submission date, the Authority shall publish the evaluation criteria to be considered by the Authority in its evaluation of research endowment plans for the upcoming fiscal year. The Authority may change the evaluation criteria applicable to subsequent applications by publishing revised evaluation criteria at least 90 days prior to the applicable submission date. Evaluation criteria published by the Authority shall remain in effect until the Authority publishes revised evaluation criteria.

F. The approved research endowment plan shall serve as the document for guiding future endowment activities, research investments and reports for the designated research endowment. If a nonprofit institution of higher education desires to amend an approved research endowment plan, it shall submit a written request for such approval to the Authority at least 45 days prior to the desired effectiveness of the amendment. A request to amend a research endowment plan shall include a description of the proposed amendment to the approved research endowment plan, including any changes to the responses to §B of this regulation and any other responses included in the research endowment plan previously provided to the Authority.

G. Failure to obtain prior consent of the Authority for an amendment of the research endowment plan may result in a return and reallocation of matching funds.

Cross References

24.05.22.01B(18)

24.05.22.03B(1)

24.05.22.06B

History

• Administrative History: Effective date: June 22, 2015 (42:12 Md. R. 763)
• Administrative History: Regulation .01B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .02A, B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .03 B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .04C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05B, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05G adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .06A, C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .07 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .08 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09A, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09E, F adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .10A amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .11C amended September 2, 2024 (51:17 Md. R. 778)
• Authority: Economic Development Article, §§2-108 and 6-601—6-623, Annotated Code of Maryland

COMAR 24.05.22.06 Distributions — Documentation Required.

A. A nonprofit institution of higher education seeking a distribution of matching funds from the Fund first shall obtain qualified donations in an amount equal to or greater than the amount of matching funds requested for distribution and shall submit a request to the Authority on such form as designated by the Authority from time to time that includes:

(1) The amount requested for distribution to the nonprofit institution of higher education;

(2) The amount of all previous distributions of matching funds from the Fund;

(3) The total amount of matching funds allocated to the nonprofit institution of higher education by the Authority for the fiscal year;

(4) The amount of qualified donations designated for use in requesting the distribution of matching funds from the Fund;

(5) A certification by the nonprofit institution of higher education that the information provided to the Authority in the approved research endowment plan remains true and correct as of the date of the distribution request and that the nonprofit institution of higher education does not anticipate any changes to that information; and

(6) Confirmation that the nonprofit institution of higher education’s qualified donation has been deposited by providing the following documents:

(a) The validated deposit ticket showing the account number associated with the approved research endowment plan, canceled checks, and gift receipts;

(b) Bank statements, investment statements, canceled checks, and gift receipts; or

(c) Wire transfer documentation, gift receipts, and bank statements.

B. If the nonprofit institution of higher education is not able to provide the certification required by §A(5) of this regulation, the nonprofit institution of higher education shall submit an amendment to the approved research endowment plan pursuant to Regulation .05F of this chapter.

C. In addition to the written request for distribution, the nonprofit institution of higher education shall submit documentation for the qualified donations including:

(1) A cover letter that transmits the documentation and information required by §§A — C of this regulation;

(2) For a qualified donation that includes cash and cash equivalents or marketable securities that has already been received by the nonprofit institution of higher education, a deposit ticket or gift receipt and any designation identified by the donor;

(3) For a qualified donation that includes marketable securities, evidence in a form satisfactory to the Authority that the marketable securities are not subject to a lock-up agreement or other restriction on transfer that would prohibit or otherwise restrict the ability of the nonprofit institution of higher education to sell or otherwise dispose of the marketable securities;

(4) For a qualified donation that includes a bequest, evidence in a form satisfactory to the Authority that includes but is not limited to the will, trust agreement, or other documents evidencing the bequest;

(5) For a qualified donation that includes an unrestricted gift or bequest, or a portion of an unrestricted gift or bequest, a designation made in writing by the nonprofit institution of higher education and submitted with the request;

(6) Complete contact information for a technical manager or responsible institutional contact such as a dean, academic officer, or research director, who shall oversee the implementation or supervision of the activity, program, or individual sponsored by the endowed funds; and

(7) Complete contact information for a financial manager or compliance officer who shall be responsible for all associated financial statements or reports relating to the endowed funds or expenditures of proceeds.

D. State matching funds distributed to a nonprofit institution of higher education are to be invested in the same manner as other institutional endowment funds of the nonprofit institution of higher education.

History

• Administrative History: Effective date: June 22, 2015 (42:12 Md. R. 763)
• Administrative History: Regulation .01B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .02A, B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .03 B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .04C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05B, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05G adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .06A, C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .07 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .08 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09A, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09E, F adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .10A amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .11C amended September 2, 2024 (51:17 Md. R. 778)
• Authority: Economic Development Article, §§2-108 and 6-601—6-623, Annotated Code of Maryland

COMAR 24.05.22.07 Distributions — Authority Review.

A. Within 90 days of execution of the agreement for distribution of matching funds under the Program, the nonprofit institution of higher education shall submit a request for distribution of matching funds from the Fund.

B. The Authority shall conduct a review of each request for distribution of matching funds from the Fund for compliance with the provisions of the Act and this chapter.

C. The Authority shall use the nonprofit institution of higher education’s approved research endowment plan to determine if requests for distributions from the Fund are valid and shall consider any additional information or details that expand upon the specific area of research, including endowment research plans, strategies, objectives, and projected outcomes.

D. In addition to the factors set forth in Economic Development Article, §6-618(c), Annotated Code of Maryland, in evaluating a request for distribution from the Fund, the Authority shall consider the qualified donation is greater than or equal to the amount of the requested distribution of matching funds from the Fund.

E. Ninety days after the Authority approves a request for distribution of matching funds, the nonprofit institution of higher education shall deposit an amount of qualified donations equal to or greater than the total amount of funds allocated for distribution to the nonprofit institution of higher education into the applicable research endowment.

F. If the Authority determines not to grant a request for distribution to a nonprofit institution of higher education, the Authority shall issue a letter to the nonprofit institution of higher education detailing the reason(s) the distribution of matching funds to the nonprofit institution of higher education could not be approved.

History

• Administrative History: Effective date: June 22, 2015 (42:12 Md. R. 763)
• Administrative History: Regulation .01B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .02A, B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .03 B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .04C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05B, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05G adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .06A, C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .07 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .08 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09A, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09E, F adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .10A amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .11C amended September 2, 2024 (51:17 Md. R. 778)
• Authority: Economic Development Article, §§2-108 and 6-601—6-623, Annotated Code of Maryland

COMAR 24.05.22.08 Reallocation of Funds.

If a nonprofit institution of higher education fails to have deposited into its research endowment the required amount of qualified donations within 90 days after the Authority approves a request for distribution of matching funds:

A. The nonprofit institution of higher education shall return any matching funds received from the Authority with respect to the distribution request within 10 business days of the expiration of the 90-day period; and

B. Any funds allocated to that nonprofit institution of higher education for the fiscal year that have not been distributed shall be reallocated by the Authority in accordance with the Act and this chapter.

Cross References

24.05.22.04C

History

• Administrative History: Effective date: June 22, 2015 (42:12 Md. R. 763)
• Administrative History: Regulation .01B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .02A, B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .03 B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .04C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05B, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05G adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .06A, C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .07 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .08 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09A, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09E, F adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .10A amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .11C amended September 2, 2024 (51:17 Md. R. 778)
• Authority: Economic Development Article, §§2-108 and 6-601—6-623, Annotated Code of Maryland

COMAR 24.05.22.09 Reporting Requirements.

A. By November 15 of each year, a nonprofit institution of higher education which has received matching funds shall provide an annual report to the Authority on the form required by the Authority, for the 12- month period ending June 30 of that year, that includes a full accounting of the matching funds, endowment proceeds, and adherence to the objectives established by the research endowment plan approved by the Authority.

B. A nonprofit institution of higher education which has received matching funds shall include with the annual report a certification in the form provided by the Authority that the matching funds received by the nonprofit institution of higher education have been used in accordance with the approved research endowment plan and the requirements of the Program.

C. A nonprofit institution of higher education which has received matching funds shall detail in its annual report to the Authority the total amount of qualified donations received, the investment earnings realized, and any anticipated expenditures of the endowment proceeds in its annual operating budget.

D. Five years after the installment of the endowed professor, a nonprofit institution of higher education which has received matching funds shall provide a comprehensive report to the Authority on the impact of the Program on research competitiveness, institutional growth, infrastructure development, entrepreneurial activity, and economic development. The nonprofit institution of higher education shall articulate clearly the strategic goals realized and those anticipated as a result of its participation in the Program. The comprehensive report shall include a full accounting of all matching funds distributed to the nonprofit institution of higher education, endowment proceeds, outcomes, and designated endowments.

E. After the submission of the cumulative report, nonprofit institutions of higher education shall provide on the form required by the Authority a report to the Authority by November 15 of each year documenting how qualified donations and matching funds were used. These reports shall include such items as the number of endowed chairs, professorships, and research scholars created or expanded using Program funds, and the impact of the Program in terms of job creation, increases in sponsored research attributable to the Program, and generation and profitable use of intellectual property. The nonprofit institutions of higher education shall also provide annual Fiduciary Duty in the 21st Century reports as part of their annual report to the Authority. The Authority may work with nonprofit institutions of higher education to identify any additional information that shall be included in reports provided to the Authority.

F. Failure to timely submit a report on the required form to the Authority may result in a return and reallocation of matching funds

Cross References

24.05.22.11A

History

• Administrative History: Effective date: June 22, 2015 (42:12 Md. R. 763)
• Administrative History: Regulation .01B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .02A, B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .03 B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .04C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05B, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05G adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .06A, C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .07 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .08 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09A, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09E, F adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .10A amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .11C amended September 2, 2024 (51:17 Md. R. 778)
• Authority: Economic Development Article, §§2-108 and 6-601—6-623, Annotated Code of Maryland

COMAR 24.05.22.10 Audits and Inquiries.

A. Audits.

(1) The Authority may require at any reasonable time an audit of any information submitted to the Authority by the nonprofit institution of higher education in its application, research endowment plan, report, or request for distribution of matching funds from the Fund.

(2) An audit under §A(1) of this regulation shall be conducted at the expense of the nonprofit institution of higher education by an independent auditor selected by the nonprofit institution of higher education and reasonably satisfactory to the Authority.

(3) The Authority may initiate an audit by delivering to the nonprofit institution of higher education a written request for the performance of an audit stating the scope of the audit to be undertaken and the matters to be examined in the course of the audit.

(4) Within 10 business days after a nonprofit institution of higher education receives a request from the Authority for the performance of an audit under this regulation, the nonprofit institution of higher education shall submit to the Authority a written response naming the independent auditor selected by the nonprofit institution of higher education.

(5) If the Authority approves the auditor, it shall give written notice to the nonprofit institution of higher education that the Authority approves the auditor and shall provide instructions to the auditor for the scope and conduct of the audit.

(6) If the Authority disapproves of the auditor, it shall give written notice to the nonprofit institution of higher education of the disapproval and of the reasons for it. The nonprofit institution of higher education, within 5 business days after receipt of the Authority’s disapproval of an auditor, shall select an alternative auditor and submit to the Authority a written response naming the alternative independent auditor selected by the nonprofit institution of higher education.

(7) The process under §A(5) and (6) of this regulation for the selection and approval of an auditor will continue until the Authority approves an alternative auditor.

B. Inquiries; Duty of Nonprofit Institution of Higher Education to Respond.

(1) In order to ensure compliance with the Program requirements and to satisfy the Authority’s reporting obligations under Economic Development Article, §6-623, Annotated Code of Maryland, the Authority may make written inquiry, including a request for the production, inspection, or copying of documents specified in the inquiry, of a nonprofit institution of higher education’s receipt of matching moneys from the Fund and use of endowment proceeds to obtain information on the compliance with the requirements of the Act, and this chapter. The inquiry may include whether an individual in a position funded by endowment proceeds under the Program satisfies the requirements of Economic Development Article, §6-614, Annotated Code of Maryland.

(2) A nonprofit institution of higher education to which a written inquiry from the Authority is directed under §B(1) of this regulation shall submit a full and complete written response, with copies of all requested documents, within 45 days of the date of the inquiry. The response shall be verified as true and correct by oath or affirmation by the president of the nonprofit institution of higher education or the president’s designee in the form prescribed by the Authority.

Cross References

24.05.22.11A

History

• Administrative History: Effective date: June 22, 2015 (42:12 Md. R. 763)
• Administrative History: Regulation .01B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .02A, B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .03 B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .04C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05B, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05G adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .06A, C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .07 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .08 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09A, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09E, F adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .10A amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .11C amended September 2, 2024 (51:17 Md. R. 778)
• Authority: Economic Development Article, §§2-108 and 6-601—6-623, Annotated Code of Maryland

COMAR 24.05.22.11 Noncompliance with Approved Research Endowment Plan.

A. If the Authority discovers from any source, including the reports submitted by a nonprofit institution of higher education to the Authority as set forth in Regulation .09 of this chapter and audit or inquiry responses from a nonprofit institution of higher education to the Authority as set forth in Regulation .10 of this chapter, that a nonprofit institution of higher education is not in compliance with the approved research endowment plan for which the matching funds have been allocated, the Authority shall notify the nonprofit institution of higher education of the noncompliance.

B. Within 10 business days of receipt of notice from the Authority under §A of this regulation, the nonprofit institution shall provide the Authority with a complete written explanation of the noncompliance, including:

(1) All of the facts and circumstances surrounding the noncompliance;

(2) The manner in which the nonprofit institution of higher education proposes to address the noncompliance; and

(3) Such other information as the Authority may request in its notice to the nonprofit institution of higher education under §A of this regulation.

C. If the Authority determines in its sole discretion that the noncompliance is capable of cure by the nonprofit institution of higher education, the Authority may provide the nonprofit institution of higher education with a reasonable period of time, as determined by the Authority in its sole discretion, to cure the noncompliance.

D. If the Authority determines in its sole discretion that the noncompliance is not capable of cure or the nonprofit institution of higher education fails to cure the noncompliance within the time period determined by the Authority under §C of this regulation, the Authority may impose sanctions on the nonprofit institution of higher education, including the return of all matching funds received by the nonprofit institution of higher education with respect to the approved research endowment plan.

E. In making a determination under §C or D of this regulation, the Authority may invite the nonprofit institution of higher education to engage in discussions with the Authority to explain the noncompliance. Any oral clarification of an explanation of noncompliance by the nonprofit institution of higher education shall be confirmed in writing by the nonprofit institution of higher education within 5 business days of the making of the clarification.

History

• Administrative History: Effective date: June 22, 2015 (42:12 Md. R. 763)
• Administrative History: Regulation .01B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .02A, B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .03 B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .04C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05B, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05G adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .06A, C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .07 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .08 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09A, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09E, F adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .10A amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .11C amended September 2, 2024 (51:17 Md. R. 778)
• Authority: Economic Development Article, §§2-108 and 6-601—6-623, Annotated Code of Maryland

COMAR 24.05.22.12 Waiver.

The Authority may waive or vary particular provisions of this chapter to the extent that a waiver is not inconsistent with the Act if:

A. Conformance to the requirement of any federal, State, or local program necessitates waiver or variance of a regulation; or

B. In the determination of the Authority, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: June 22, 2015 (42:12 Md. R. 763)
• Administrative History: Regulation .01B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .02A, B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .03 B amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .04C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05B, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .05G adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .06A, C amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .07 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .08 amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09A, D amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .09E, F adopted September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .10A amended September 2, 2024 (51:17 Md. R. 778)
• Administrative History: Regulation .11C amended September 2, 2024 (51:17 Md. R. 778)
• Authority: Economic Development Article, §§2-108 and 6-601—6-623, Annotated Code of Maryland

COMAR 24.05.23.01 Purpose.

This chapter describes the policies, procedures, and authorizations for providing financial assistance to qualified economically distressed counties, or to the Maryland Economic Development Corporation for use in those counties, for the purpose of financing approved economic development plans.

History

• Administrative History: Effective date: December 27, 1999 (26:26 Md. R. 1961)
• Administrative History: Regulation .02B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .04E amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .05B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .06 amended effective June 25, 2001 (28:12 Md. R. 1112)
• Authority: Economic Development Article, §2-108, Annotated Code of Maryland

COMAR 24.05.23.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, §10-105, Annotated Code of Maryland.

(2) “Applicant” means a qualified governmental entity that is seeking financial assistance from the Department.

(3) “Department” means the Department of Commerce.

(4) “Financial assistance” means a loan, an investment, or a loan convertible in whole or in part to a grant upon the satisfaction of specified conditions, all upon terms specified by the Department.

(5) “Fund” means the Smart Growth Economic Development Infrastructure Fund which is administered by the Department.

(6) “Loan” means a loan made from the Fund by the Department under the Program.

(7) “MEDCO” means the Maryland Economic Development Corporation which is a body politic and corporate and a public instrumentality of the State of Maryland established by Economic Development Article, §10-105, Annotated Code of Maryland.

(8) “Program” means the Smart Growth Economic Development Infrastructure Program, as authorized by the Act.

(9) “Qualified distressed county” means a county, including Baltimore City:

(a) That, in consultation with the municipal corporations located within the county, developed, submitted to the Secretary, and obtained from the Secretary approval for a local strategic plan for economic development; and

(b) For which the average:

(i) Rate of unemployment for the most recent 18-month period for which data are available is greater than 150 percent of the average rate of unemployment for the entire State during that same period, or

(ii) Per capita personal income for the most recent 24-month period for which data are available is equal to or less than 67 percent of the average personal per capita income for the entire State during that same period.

(10) “Secretary” means the Secretary of Business Commerce or the Secretary's designee.

History

• Administrative History: Effective date: December 27, 1999 (26:26 Md. R. 1961)
• Administrative History: Regulation .02B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .04E amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .05B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .06 amended effective June 25, 2001 (28:12 Md. R. 1112)
• Authority: Economic Development Article, §2-108, Annotated Code of Maryland

COMAR 24.05.23.03 Strategic Plan.

A. To qualify for financial assistance, a county must, in consultation with the municipal corporations located within the county, develop, submit to the Secretary, and obtain from the Secretary approval for a local strategic plan for economic development.

B. The Department may develop a local strategic plan for economic development in a qualified distressed county in consultation with a municipal corporation in that county if the qualified distressed county has:

(1) Not developed a local strategic plan for economic development; or

(2) Developed a local strategic plan for economic development but is not actively pursuing financial assistance from the Fund.

History

• Administrative History: Effective date: December 27, 1999 (26:26 Md. R. 1961)
• Administrative History: Regulation .02B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .04E amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .05B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .06 amended effective June 25, 2001 (28:12 Md. R. 1112)
• Authority: Economic Development Article, §2-108, Annotated Code of Maryland

COMAR 24.05.23.04 Eligible Applicants.

A. The following may apply for financial assistance under this chapter:

(1) A qualified distressed county;

(2) MEDCO, as a coapplicant with a qualified distressed county; or

(3) Under the conditions set forth in §C of this regulation, MEDCO, as a coapplicant with a municipal corporation located in a qualified distressed county.

B. To be eligible for financial assistance under this chapter, MEDCO shall enlist as a coapplicant a qualified distressed county or municipal corporation.

C. A municipal corporation located in a qualified distressed county may coapply with MEDCO for financial assistance from the Fund in a manner consistent with the local strategic plan for economic development developed by the:

(1) Department in consultation with the municipal corporation if the qualified distressed county has not developed a local strategic plan for economic development; or

(2) Qualified distressed county if the qualified distressed county has developed a local strategic plan for economic development but is not actively pursuing financial assistance from the Fund.

D. As a coapplicant with MEDCO, a qualified distressed county or municipal corporation applying shall:

(1) Certify that:

(a) It supports the project, and

(b) The proposed financial assistance is consistent with the qualified distressed county's plan for economic development; and

(2) Provide to the Department details of the qualified distressed county's support for and participation in the project.

E. To be eligible for financial assistance under this chapter, an applicant shall:

(1) Request funding for a project located in a qualified distressed county; and

(2) Submit to the Department an application containing any information the Department or the Authority considers necessary in evaluating the request for financial assistance.

History

• Administrative History: Effective date: December 27, 1999 (26:26 Md. R. 1961)
• Administrative History: Regulation .02B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .04E amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .05B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .06 amended effective June 25, 2001 (28:12 Md. R. 1112)
• Authority: Economic Development Article, §2-108, Annotated Code of Maryland

COMAR 24.05.23.05 Financial Assistance.

A. Proceeds of the Fund may be used only for the purpose of providing financial assistance to qualified distressed counties and MEDCO.

B. Proceeds of financial assistance may be used only for:

(1) Acquisition, improvements, and rehabilitation of land for industrial sites and parks; and

(2) Development of:

(a) Water and sewer lines,

(b) Shell buildings,

(c) Infrastructure serving existing retail and office oriented centers occupying at least 400,000 square feet on a limited basis of not more than one per jurisdiction, and

(d) Other needed infrastructure projects.

C. Financial assistance from the Fund may be in the form of a loan, an investment, or a loan convertible in whole or in part to a grant upon the satisfaction of specified conditions, all upon terms specified by the Department.

D. Financial assistance from the Fund may be used only for a project that is located in a priority funding area or meets an exception to the priority funding area requirements set forth in State Finance and Procurement Article, Title 5, Subtitle 7B, Annotated Code of Maryland.

History

• Administrative History: Effective date: December 27, 1999 (26:26 Md. R. 1961)
• Administrative History: Regulation .02B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .04E amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .05B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .06 amended effective June 25, 2001 (28:12 Md. R. 1112)
• Authority: Economic Development Article, §2-108, Annotated Code of Maryland

COMAR 24.05.23.06 Terms and Requirements.

A. Security. The Department may require that financial assistance be secured by:

(1) Liens and security interests in real and personal property;

(2) Guarantees;

(3) Any other collateral required by the Department; or

(4) A combination of the items in §A(1)—(3) of this regulation.

B. Late Charges. Late charges, as permitted by law, may be imposed.

C. Additional Documentation. The Department or the Authority may require the applicant to provide title insurance, surveys, insurance, appraisals, and any other documentation that the Department determines is necessary or advisable.

History

• Administrative History: Effective date: December 27, 1999 (26:26 Md. R. 1961)
• Administrative History: Regulation .02B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .04E amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .05B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .06 amended effective June 25, 2001 (28:12 Md. R. 1112)
• Authority: Economic Development Article, §2-108, Annotated Code of Maryland

COMAR 24.05.23.07 Application and Processing Procedures.

A. Application. An application for financial assistance shall be made on standard forms required by the Department. Each application shall include:

(1) A detailed local strategic plan for economic development for the qualified distressed county, approved by the relevant officials of the qualified distressed county or municipal corporation;

(2) A marketing plan designed to market the project to prospective businesses and a statement of planned marketing expenditures as a percent of the total financial assistance amount requested;

(3) A site plan for the project that is consistent with the county's local strategic economic development plan as to the location and type of project;

(4) The total amount of funds required for the project;

(5) The amount and type of funds available to the applicant without financial assistance from the Department;

(6) The amount of financial assistance sought from the Department and a description of the applicant's proposed use of proceeds;

(7) Information concerning the compliance of the applicant with State Finance and Procurement Article, Title 5, Subtitle 7B, Annotated Code of Maryland, concerning priority funding areas, including a written statement from the applicant that the project is located within a certified priority funding area or meets an exception;

(8) Information that relates to potential security for the loan;

(9) An environmental study on the project site;

(10) An “as built” appraisal of the project; and

(11) Any other relevant information the Department requests.

B. Initial Review. The Department shall subject each application to an initial review for a preliminary determination of the applicant's eligibility in accordance with this chapter.

C. Approval. The Secretary may not approve financial assistance for a project under this chapter unless the Secretary approves the local strategic plan for economic development, the marketing plan, and the site plan for the project submitted with the application.

D. Fair Distribution. In approving financial assistance, the Secretary shall consider the aggregate amount of financial assistance that may already have been provided for a particular qualified distressed county under this chapter and under any other State economic development program to ensure that a particular qualified distressed county does not benefit disproportionately from financial assistance under this chapter.

E. Loan Documents.

(1) The Department shall prepare and provide the applicant with copies of relevant loan documents.

(2) Loan documents shall include:

(a) The rate of interest on the loan;

(b) The amount of the loan;

(c) Provisions for repayment of the loan; and

(d) Other provisions the Department determines are necessary to secure the loan, including, if applicable, the taking of liens and security interests in real and personal property.

(3) Loan Agreement.

(a) Each loan agreement under this chapter shall include a provision for repayment of principal to begin only after the project is initially occupied.

(b) The Secretary may include in a loan agreement under this chapter a provision for payment of interest to begin only after the project is initially occupied.

(4) Loan documents may include those provisions the Department may require.

F. Fees. The Department may require the applicant to pay for expenses incurred in processing and closing the financial assistance, such as fees for appraisals and credit reports.

G. Violations. If an applicant violates any provision of the financial assistance documents or ceases to meet the requirements of the Act, the Department may:

(1) Withhold from the applicant further advances of proceeds until the applicant complies with the agreement or requirements; and

(2) Exercise any other remedy for which the financial assistance documents provide.

H. Fund Limitations. The faith and credit of the State are not pledged to the Fund.

History

• Administrative History: Effective date: December 27, 1999 (26:26 Md. R. 1961)
• Administrative History: Regulation .02B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .04E amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .05B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .06 amended effective June 25, 2001 (28:12 Md. R. 1112)
• Authority: Economic Development Article, §2-108, Annotated Code of Maryland

COMAR 24.05.23.08 Drug-Free and Alcohol-Free Workplace.

The applicant shall:

A. Comply with the State's policy concerning drug-free and alcohol-free workplaces as set forth in COMAR 01.01.1989.18; and

B. Make a good-faith effort to eliminate illegal drug use and alcohol and drug abuse from places at which work is performed in accordance with a loan.

History

• Administrative History: Effective date: December 27, 1999 (26:26 Md. R. 1961)
• Administrative History: Regulation .02B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .04E amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .05B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .06 amended effective June 25, 2001 (28:12 Md. R. 1112)
• Authority: Economic Development Article, §2-108, Annotated Code of Maryland

COMAR 24.05.23.09 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with the Act if:

A. Conformance to the requirement of any federal, State, or local program in connection with a loan necessitates waiver or variance of a regulation; or

B. In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: December 27, 1999 (26:26 Md. R. 1961)
• Administrative History: Regulation .02B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .04E amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .05B amended effective June 25, 2001 (28:12 Md. R. 1112)
• Administrative History: Regulation .06 amended effective June 25, 2001 (28:12 Md. R. 1112)
• Authority: Economic Development Article, §2-108, Annotated Code of Maryland

24.05.24 One Maryland Economic Development Tax Credits

COMAR 24.05.24.01 Scope and Administration.

Certification for the tax credits is administered by the Secretary of Commerce. The Comptroller of the Treasury, the Department of Assessments and Taxation, and the Insurance Commissioner shall administer the tax credits.

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.24.02 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland.

(2) Central Administrative Offices.

(a) “Central administrative offices” means a facility where a business entity's central management or administrative functions are handled on either a regional or national basis.

(b) “Central administrative offices” includes offices or locations in its region where functions such as personnel, planning, general management, accounting and financial, purchasing, advertising, legal, data processing, and research and development are performed.

(3) “Central financial, real estate, or insurance services” means the performance of central management or administrative functions for a business entity engaged in financial, real estate, or insurance services.

(4) “Central management or administrative functions” includes general management, accounting, information technology, purchasing, transportation or shipping, advertising, legal, financial, and research and development.

(5) “Company headquarters” means a facility where the majority of a business entity's financial, personnel, legal, and planning functions are handled either on a regional or national basis.

(6) “Credit year” means the first taxable year in which an eligible economic development project is placed in service and each taxable year thereafter in which the qualified business entity is eligible to use a project tax credit or a start-up tax credit.

(7) “Department” means the Department of Commerce.

(8) “Eligible economic development project” means an economic development project establishing or expanding a business facility within a qualified distressed county that is approved by the Secretary to receive the tax credits under this chapter.

(9) Eligible Project Costs.

(a) “Eligible project costs” means up to $5,000,000 of costs and expenses incurred by a qualified business entity in connection with the acquisition, construction, rehabilitation, installation, and equipping of an eligible economic development project.

(b) “Eligible project costs” includes:

(i) The costs of acquiring, constructing, rehabilitating, installing, and equipping the eligible economic development project, including obligations incurred for labor and to contractors, subcontractors, builders, and materialmen;

(ii) The costs of acquiring land or rights in land, and costs incidental to acquiring land or rights in land, to the extent that the amount of land acquired is reasonably necessary for the eligible economic development project;

(iii) The costs of contract bonds and insurance that are required or necessary during the acquisition, construction, or installation of the eligible economic development project;

(iv) The costs of architectural and engineering services, including test borings, surveys, estimates, plans and specifications, preliminary investigations, environmental mitigation, and supervision of construction;

(v) The costs for the performance of all the duties required by or consequent to the acquisition, construction, and installation of the eligible economic development project;

(vi) The costs required for the installation of utilities such as water, sewer, sewer treatment, gas, electricity, communications, railroads, and similar facilities;

(vii) The interest costs before and during the acquisition, construction, installation, and equipment of the eligible economic development project and for a period of up to 2 years after completing the eligible economic development project;

(viii) The costs, expenses, and fees incurred in connection with the financing of the eligible economic development project, including legal, accounting, financial, printing, recording, filing costs, fees, and expenses;

(ix) The costs of obtaining bond insurance, letters of credit, or other forms of credit enhancement or liquidity facilities;

(x) The cost of the land on which an existing building is located, the cost of renovating or upgrading existing improvements to real property, and other costs specifically permitted under this chapter;

(xi) If approved in writing by the Secretary, a portion of the value of a capitalized lease for a newly constructed or purchased asset, so long as that portion is directly related to the eligible project costs, including only those interest costs described in §B(9)(b)(vii) of this regulation, actually expended on the asset after notice to the Department, but the portion of the value of a capitalized lease that is attributable to other interest costs and lease fees is not an eligible project cost; and

(xii) If approved in writing by the Secretary, the present value of that portion of the value of a long term lease expense that is directly related to eligible project costs, including only those interest costs described in §B(9)(b)(vii) of this regulation, that are actually expended on the real property portion of the eligible economic development project after notice to the Department.

(c) “Eligible project costs” does not include:

(i) Any costs incurred by a business entity before notifying the Department of its intent to seek certification as qualifying for the tax credit under this chapter;

(ii) Any costs incurred in dealings between related parties;

(iii) Any costs paid for with local, State, or federal government funds unless those funds are the proceeds of a loan that will be repaid by the business entity;

(iv) The cost of acquiring an existing building or improvement, unless the Secretary determines that the acquisition of the existing building or improvement is being made in connection with a project to reuse a vacant or underused facility, including the reuse of a property determined by the Department under Economic Development Article, §5-338, Annotated Code of Maryland, to be a qualified brownfields site; or

(v) Any costs of acquiring vehicles to be used in whole or in part off the premises of an eligible economic development project.

(10) Eligible Start-Up Costs.

(a) “Eligible start-up costs” means up to a total of $500,000 of a company's:

(i) Costs to furnish and equip a new location for ordinary business functions, including computers, the initial software needed to operate the computers or other computerized equipment, nonrecurring costs of fixed telecommunications equipment, furnishings, and office equipment; and

(ii) Reasonable expenditures for moving costs, separation costs, including severance pay and lease cancellation charges, and any other reasonable expenditures incurred by a company directly related to a move from an existing location outside of Maryland to a location in a qualified distressed county in Maryland.

(b) “Eligible start-up costs” does not include any costs incurred by a business entity before notifying the Department of its intent to seek certification as qualifying for the tax credit under this chapter or after the date which is 3 years after the date on which the qualified business entity began construction, acquisition, or installment of the eligible economic development project.

(11) “Federal minimum wage” means the wage established by the Fair Labor Standards Act of 1938 as amended from time to time. For purposes of the tax credit, hourly wages may include bonuses and commissions, prorated on an hourly basis, if these bonuses and commissions are reported on the W-2 Wage and Tax Statements of the qualified employees.

(12) “Full-time position” means a position requiring an employee to work at least 840 hours during at least 24 weeks in a 6-month period.

(13) “Person” means an individual, corporation, business trust, partnership, limited liability company, association, two or more persons having a joint or common interest, or any other legal or commercial entity.

(14) “Placed in service” means the date on which an eligible economic development project meets all of the requirements to receive a project tax credit or a start-up tax credit.

(15) “Project tax credit” means the tax credit for up to $5,000,000 in eligible project costs as further described in Regulation .07 of this chapter.

(16) “Qualified business entity” means a person that:

(a) Conducts or operates a trade or business in Maryland or is an organization operating in Maryland that is exempt from taxation under §501(c)(3) or (4) of the Internal Revenue Code;

(b) Establishes or expands a business facility that is located:

(i) In a qualified distressed county in the State; and

(ii) Within a priority funding area under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland, or is eligible for funding outside of a priority funding area under State Finance and Procurement Article, §5-7B-05 or 5-7B-06, Annotated Code of Maryland;

(c) During any 24-month period occurring within the period beginning on the date of notification of an intent to seek certification and ending 24 months after a project is completed, creates at least 25 qualified positions at the new or expanded business facility; and

(d) Is certified by the Secretary under Regulation .04 of this chapter as qualifying for the tax credits under this chapter.

(17) “Qualified distressed county” has the meaning stated in Economic Development Article, §1-101, Annotated Code of Maryland.

(18) “Qualified employee” means an employee filling a qualified position and who either is physically present in the qualified distressed county for a majority of the employee's work time or begins and ends the employee’s work day in the qualified distressed county.

(19) Qualified Position.

(a) “Qualified position” means a position that:

(i) Is a full-time position;

(ii) Is of indefinite duration;

(iii) Pays at least 150 percent of the federal minimum wage;

(iv) Is located in a qualified distressed county in Maryland;

(v) Is newly created, as a result of the establishment or expansion of a business facility in one location in the qualified distressed county; and

(vi) Is filled.

(b) “Qualified position” does not include a position that is:

(i) Created when an employment function is shifted from an existing business facility of the business entity located in Maryland to another business facility of the same business entity if the position does not represent a net new job in the State;

(ii) Created through a change in ownership of a trade or business or acquisition of existing assets;

(iii) Created through a consolidation, merger, or restructuring of a business entity if the position does not represent a net new job in the State;

(iv) Created when an employment function is contractually shifted from an existing business entity located in the State to another business entity if the position does not represent a net new job in the State;

(v) Filled for a period of less than 12 months;

(vi) A temporary training position; or

(vii) Filled before the business entity has notified the Department in writing of its intent to seek certification for a tax credit.

(c) “Qualified position” includes a permanent position which is filled by hiring a successful trainee from a temporary training position that does not exceed 3 months in length.

(20) “Recreational business” means a business providing facilities for golf, water sports, skiing, or other similar sports or recreation activities, excluding adult entertainment.

(21) “Resort” means a lodging facility that includes, or is closely associated with, a recreational business, excluding adult entertainment.

(22) “Secretary” means the Secretary of Commerce or the Secretary's designee.

(23) “Start-up tax credit” means the tax credit for up to $500,000 in eligible start-up costs as further described in Regulation .06 of this chapter.

(24) “Tax credit” means the One Maryland Economic Development Tax Credits, including either the start-up tax credit or the project tax credit or both.

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.24.03 Notification Required.

A business entity shall notify the Department in writing of its intent to seek certification for a tax credit before:

A. Hiring any qualified employees to fill the 25 qualified positions necessary to satisfy the employment threshold required to qualify for the tax credit; and

B. Incurring any costs or expenses for which it intends to take a tax credit.

Cross References

24.05.24.11A

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.24.04 Certification Procedures.

A. Application.

(1) To obtain a preliminary certification as a qualified business entity, a business entity may apply to the Department on an application approved by the Department.

(2) To be certified as a qualified business entity, a business entity shall submit the information required in Regulation .11 of this chapter to the Department on an application approved by the Department.

B. The Department may require any information required by this chapter to be verified by a certified public accountant selected by the qualified business entity.

C. The Secretary shall determine whether or not to approve a tax credit for a business entity and shall deny approval of a tax credit if:

(1) The business entity has failed to meet the qualifications for the tax credit; or

(2) Approving the tax credit would have a significant deleterious effect on another State location, county, or region by inducing a business entity to move a substantial number of existing positions from an existing State location to a project in a qualified distressed county.

D. A qualified business entity shall obtain and submit to the appropriate State taxing agency with the tax return on which the credit is claimed, certification from the Secretary that the entity has met the tax credit requirements and is eligible for the credit.

E. A project in a county that loses its eligibility as a qualified distressed county is eligible for a tax credit if:

(1) The county qualified as a qualified distressed county on the earlier of the date on which the:

(a) Business entity notified the Department in writing that it intended to apply for a tax credit for a project in that county; or

(b) Qualified business entity provided a written application to the Department for a tax credit for a project in that county; and

(2) The qualified business entity meets the project timing requirements set forth in Regulation .08 of this chapter.

Cross References

24.05.24.02B(16)(d)

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.24.05 Eligible Business Activities.

A. To qualify for a tax credit, a qualified business entity shall establish or expand a business facility in the State that is primarily engaged in one or more of the following qualifying activities:

(1) Manufacturing;

(2) Mining;

(3) Transportation;

(4) Communications;

(5) Filmmaking;

(6) Resort/recreational business (excluding adult entertainment);

(7) Agriculture;

(8) Forestry;

(9) Fishing;

(10) Research, development, or testing;

(11) Biotechnology;

(12) Computer programming, information technology, or other computer-related services;

(13) Central financial, real estate, or insurance services;

(14) The operation of central administrative offices or a company headquarters;

(15) A public utility;

(16) Warehousing; or

(17) Business services.

B. In determining whether a business facility is engaged in a qualifying activity, the Department may consider the definitions set forth in the U.S. Office of Management and Budget's Standard North American Industrial Classification Manual.

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.24.06 Start-Up Tax Credit.

A. Eligibility. A qualified business entity may claim a start-up tax credit in the amount provided in §C of this regulation.

B. Limit. The start-up tax credit for a qualified business entity and all of its related entities and successors may not exceed $500,000 for an eligible economic development project. In extraordinary circumstances, the Secretary may make a written determination approving the maximum start-up tax credit for more than one proposed project in the same qualified distressed county if the proposed project is beyond the scope of the original project and is of significant value to the county due to number of jobs to be created, quality of jobs, job training programs to be offered, or other economic development factors.

C. Calculation. The start-up tax credit allowed for eligible start-up costs for each credit year equals the lesser of:

(1) 100 percent of the qualified business entity's eligible start-up costs associated with an eligible economic development project, less the amount of the credit allowed with respect to the eligible economic development project for prior credit years; or

(2) The product of multiplying $10,000 times the number of qualified employees employed at the new or expanded business facility.

D. Application of Start-Up Tax Credit Against Taxes.

(1) If the tax credits allowed under this regulation for the first credit year exceeds the total tax otherwise due from the qualified business entity for that credit year, the qualified business entity may apply the excess as a credit for succeeding credit years until the earlier of the:

(a) Full amount of the excess is used; or

(b) Expiration of the 14th credit year following the first credit year.

(2) Subject to the limitation based on the amount of qualified employee withholding under §D(3) of this regulation and subject to §D(4) of this regulation, for any credit year after the 4th credit year following the first credit year but before the 15th credit year following the first credit year, the qualified business entity may claim a refund in the amount, if any, by which the qualified business entity's eligible start-up costs exceed the cumulative amount used as a tax credit under this section for the credit year and all prior credit years.

(3) For any credit year, the total amount claimed as a refund as provided in this section may not exceed the amount of taxes that the qualified business entity is required to withhold and has actually remitted for the credit year from the wages of qualified employees under Tax-General Article, §10-908, Annotated Code of Maryland.

(4) If the pay for the majority of the qualified positions created as a result of the establishment or expansion of a business facility is at least 250 percent of the federal minimum wage, the provisions of §D(2) of this regulation shall apply beginning with the credit year after the 2nd credit year following the first credit year.

Cross References

24.05.24.02B(23)

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.24.07 Project Tax Credit.

A. Eligibility. A qualified business entity may claim a project tax credit for the costs of an eligible economic development project in a qualified distressed county if the amount of the qualified business entity's total eligible project costs for the eligible economic development project is at least $500,000.

B. Limit. The project tax credit for a qualified business entity and all of its related entities and successors may not exceed $5,000,000 for an eligible economic development project. In extraordinary circumstances, the Secretary may make a written determination approving the maximum project tax credit for more than one proposed project in the same qualified distressed county if the proposed project is beyond the scope of the original project and is of significant value to the county due to number of jobs to be created, quality of jobs, job training programs to be offered, or other economic development factors.

C. Calculation.

(1) Subject to the limitation under §C(2) of this regulation, the project tax credit allowed for an eligible economic development project is equal to 100 percent of the eligible project costs for the eligible economic development project, less the amount of the credit allowed with respect to the eligible economic development project for prior credit years.

(2) Except as provided in §D(1) and (2) of this regulation, the credit allowed under this regulation for any credit year may not exceed the State tax for the credit year on the qualified business entity's income generated by or arising out of the eligible economic development project (the “project income”), as determined by the Comptroller and the Department of Assessments and Taxation.

D. Application of Project Tax Credit Against Taxes.

(1) If the eligible project costs for the eligible economic development project exceed the State tax on the qualified business entity's income generated by or arising out of the eligible economic development project for the first credit year, the qualified business entity may apply any excess as a credit for succeeding credit years against the State tax on the qualified business entity's project income until the earlier of the:

(a) Full amount of the excess is used; or

(b) Expiration of the 14th credit year following the first credit year.

(2) In addition to taking the tax credit against State tax on project income, subject to the limitations under §§D(3), E, and F of this regulation, and subject to §D(4) of this regulation, for any credit year after the 4th credit year following the first credit year, but before the 15th credit year following the first credit year, a qualified business entity other than a person subject to taxation under Insurance Article, Title 6, Annotated Code of Maryland:

(a) May apply any excess of eligible project costs for the eligible economic development project over the cumulative amount used as a tax credit under this section for the credit year and all prior credit years as a tax credit against the State tax for the credit year on the qualified business entity's income other than income generated by or arising out of the eligible economic development project (the “non-project income”); and

(b) May claim a refund in the amount, if any, by which the unused excess exceeds the State tax for the credit year on the qualified business entity's non-project income.

(3) For any credit year, the total of the amount used as a tax credit against State tax on non-project income plus the amount claimed as a refund as provided in this section may not exceed the amount of taxes that the qualified business entity is required to withhold and has actually remitted for the credit year from the wages of qualified employees under Tax-General Article, §10-908, Annotated Code of Maryland.

(4) If the pay for the majority of the qualified positions created as a result of the establishment or expansion of a business facility is at least 250 percent of the federal minimum wage, the provisions of §D(2) of this regulation shall apply beginning with the credit year after the 2nd credit year following the first credit year.

E. Insurer Ineligible for 4 years. A qualified business entity that is subject to taxation under Insurance Article, Title 6, Annotated Code of Maryland, may not claim the credit under this regulation for the first credit year or for the first 4 credit years following the first credit year.

F. Insurer Eligibility.

(1) A qualified business entity that is subject to taxation under Insurance Article, Title 6, Annotated Code of Maryland:

(a) May apply any excess of eligible project costs for the eligible economic development project over the cumulative amount used as a tax credit under this regulation for the credit year and all prior credit years as a tax credit against the premium tax imposed for the credit year; and

(b) May claim a refund in the amount, if any, by which the unused excess exceeds the premium tax for the credit year.

(2) For any credit year, the total of the amount used as a tax credit against the premium tax plus the amount claimed as a refund as provided in this regulation may not exceed the amount of taxes that the qualified business entity is required to withhold and has actually remitted for the credit year from the wages of qualified employees under Tax-General Article, §10-908, Annotated Code of Maryland.

Cross References

24.05.24.02B(15)

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.24.08 Earning the Tax Credits.

Before a qualified business entity earns a tax credit, it shall meet the following timing requirements:

A. Construction, acquisition, or installation of the project shall begin within 12 months after the earlier of the date on which the qualified business entity:

(1) Notifies the Department in writing that it intends to apply for a tax credit for a project in that county; or

(2) Provides a written application to the Department for a tax credit for a project in that county;

B. The project shall be completed no later than the date which is 3 years after the date on which the qualified business entity began construction, acquisition, or installment of the project;

C. The qualified business entity shall have created and filled at least 25 qualified positions at the project within any 24-month period occurring during the period beginning on the date of notification of an intent to seek certification and ending 24 months after completion of the project; and

D. The 25 qualified positions shall have been filled for 12 months, which need not be consecutive.

Cross References

24.05.24.04E(2)

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.24.09 Claiming the Tax Credit.

A. The same tax credit may not be claimed more than once against different taxes by the same taxpayer.

B. A tax credit may not be claimed against taxes resulting from the sale of the eligible economic development project without the written consent of the Secretary.

C. A tax credit may be claimed only once against a particular eligible economic development project.

D. An organization that is exempt from taxation under §501(c)(3) or (4) of the Internal Revenue Code may file an income tax return to claim a refund under Tax-General Article, §10-714, Annotated Code of Maryland.

E. An insurer may file for the credit on the insurance premiums tax return form.

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.24.10 Carryover of Tax Credit.

A. A qualified business entity may carry over a tax credit to a succeeding tax year if:

(1) The tax credit allowed exceeds the total tax otherwise due from the qualified business entity; and

(2) Except as provided in §E of this regulation, the succeeding tax year, the qualified business entity continues to employ at least 25 qualified employees at the eligible economic development project.

B. A temporary vacancy in a qualified position does not constitute the abolition of that qualified position if the vacancy is filled within 4 months and not more than 10 percent of the qualified positions at the business facility are vacant at any given time.

C. A tax credit may only be carried over until the earlier of the:

(1) Full amount of the excess is used; or

(2) Expiration of the 14th credit year following the first credit year.

D. A tax credit may not be carried back to a preceding credit year.

E. A qualified business entity which has maintained at least 25 qualified employees at the eligible economic development project for at least 5 years and now employs between 10 and 24 qualified employees at the eligible economic development project, may claim a prorated share of a tax credit calculated based upon the number of qualified employees at the eligible economic development project for the credit year divided by 25.

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.24.11 Information Required from Entity.

A. To be eligible to receive a tax credit, a business entity shall notify the Department in writing of its intent to seek certification for a tax credit as set forth in Regulation .03 of this chapter.

B. To obtain preliminary certification, the qualified business entity may provide the Department with a completed application for preliminary certification.

C. To obtain certification, the qualified business entity shall provide the Secretary with a completed application for certification, which shall contain the following:

(1) General information about the business, including name, address, contact person, federal employment identification number, North American Industrial Classification System number, and type of entity;

(2) General information about the project, including location, business activities undertaken, and project and startup costs incurred;

(3) The effective date of the start-up or expansion;

(4) For the period before the start-up or expansion, both for any existing operations at the project site and Statewide, the number of full-time employees, the number of full-time employees earning at least 150 percent of federal minimum wage, and the payroll of the existing employees;

(5) For the project, the number of qualified positions created, the number of qualified employees hired, and the payroll of those employees;

(6) A statement allowing the Department to have access to any information provided to the Comptroller or another appropriate agency by a qualified business entity in connection with eligibility for a tax credit allowed under this chapter; and

(7) Any other information that the Secretary requires.

D. By April 1 of each year after the year in which the eligible economic development project is placed in service, the qualified business entity shall provide the Department with the following information:

(1) Employment information regarding the tax year for which the credit is being claimed, the number of qualified positions created and filled by qualified employees during the tax year, whether the qualified positions still existed and were still filled by qualified employees at the end of the tax year, and whether the qualified business entity has complied with all the requirements of the Act;

(2) Information regarding the costs and expenses incurred at the eligible economic development project; and

(3) Any other information requested by the Department.

Cross References

24.05.24.04A(2)

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.24.12 Period of Availability.

The tax credit is applicable to all taxable years beginning after December 31, 1999.

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

COMAR 24.05.24.13 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with the Act if:

A. Conformance to the requirement of any federal, State, or local program necessitates waiver or variance of a regulation; or

B. In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: February 7, 2000 (27:2 Md. R. 147)
• Administrative History: Regulation .02B amended effective April 14, 2003 (30:7 Md. R. 489); April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .04A, C amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .04E amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: Regulation .08A amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .09D, E adopted effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11 amended effective April 14, 2003 (30:7 Md. R. 489)
• Administrative History: Regulation .11D amended effective April 11, 2005 (32:7 Md. R. 686)
• Administrative History: ——————
• Administrative History: Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective May 21, 2018 (45:10 Md. R. 503)
• Authority: Economic Development Article, Title 6, Subtitle 4, Annotated Code of Maryland

24.05.25 Film Production Tax Exemption

COMAR 24.05.25.01 Purpose.

This chapter describes the:

A. Requirements for a film producer or film production company to receive a certificate of eligibility for the film production activity tax exemption; and

B. Procedures that will be used by the Department of Commerce to:

(1) Issue tax exemption certificates, and

(2) Monitor and evaluate the effectiveness of the film production tax exemption.

History

• Administrative History: Effective date: December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .04B amended effective February 6, 2012 (39:2 Md. R. 142)
• Authority: Economic Development Article, §6-203, Annotated Code of Maryland

COMAR 24.05.25.02 Scope and Administration.

Certification of eligibility for the sales and use tax exemption for film production activities is administered by the Department of Commerce. The Comptroller of the Treasury shall administer the tax exemption.

History

• Administrative History: Effective date: December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .04B amended effective February 6, 2012 (39:2 Md. R. 142)
• Authority: Economic Development Article, §6-203, Annotated Code of Maryland

COMAR 24.05.25.03 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means Economic Development Article, Title 6, Subtitle 2, and Tax-General Article, §11-226, Annotated Code of Maryland.

(2) “Comptroller” means Comptroller of the Treasury, State of Maryland.

(3) “Department” means the Department of Commerce.

(4) “Film producer” means an individual with sufficient recognized professional, artistic, or educational credentials to successfully undertake the business or artistic responsibilities of organizing and supervising the production of film production activity as defined in §B(5) of this regulation, or both.

(5) Film Production Activity.

(a) “Film production activity” means the production or post-production of film or video projects including feature films, television projects, commercials, corporate films, infomercials, music videos, or other projects for which the producer or production company will be compensated, and which are intended for nationwide commercial distribution.

(b) “Film production activity” includes the production or post-production of digital, animation, and multimedia projects.

(c) “Film production activity” does not include:

(i) Production or post-production of student films or noncommercial personal videos;

(ii) Any activity not necessary to and not undertaken directly and exclusively for the making of a master film, tape, or image; or

(iii) Production or post-production of projects the sale, display, exhibition, distribution, advertising, receipt or possession of which, in the State, would violate the provisions of any State or federal law, including but not limited to Criminal Law Article, Title 11, Subtitles 1 and 2, Annotated Code of Maryland.

(6) “Film production company” means a corporation, business trust, partnership, limited liability company, association, two or more persons having a joint or common interest, or any other legal entity with a currently valid federal tax ID number, that employs or includes one or more individuals who meet the qualifications for a film producer set forth in §B(4) of this regulation, and whose goal is to engage in film production activity.

(7) “Maryland Film Office” means the Maryland Film Office, a unit of the Department of Commerce's Division of Tourism, Film, and the Arts.

(8) Nationwide Commercial Distribution.

(a) “Nationwide commercial distribution” means intended for commercial distribution extending primarily beyond Maryland's local or regional (Maryland, Virginia, and the District of Columbia) market.

(b) “Nationwide commercial distribution” does not include:

(i) Distribution primarily via Internet transmission; or

(ii) Live coverage of an event, including but not limited to news, sporting events, and concerts.

(9) “Secretary” means the:

(a) Secretary of Commerce; or

(b) Secretary's designee.

History

• Administrative History: Effective date: December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .04B amended effective February 6, 2012 (39:2 Md. R. 142)
• Authority: Economic Development Article, §6-203, Annotated Code of Maryland

COMAR 24.05.25.04 Certification Procedures.

A. To apply for a certificate of eligibility to receive the film production activity tax exemption, a film producer or film production company shall submit to the Maryland Film Office, on an application form approved by the Department:

(1) Name of producer;

(2) Production company;

(3) Title of the project;

(4) Type of project (feature film, television series, commercial, etc.);

(5) Start date of preproduction and end date of production;

(6) Federal tax identification number;

(7) Home and local business address, telephone and fax numbers;

(8) Planned distribution of the project;

(9) Signature of an authorized agent;

(10) Production expenses projected to be incurred in the State;

(11) Production expenses projected to be subject to the Maryland sales and use tax in the absence of the exemption;

(12) Production expenses projected to be eligible for the sales and use tax exemption for film production activities; and

(13) Any other information requested by the Department.

B. If a film producer or film production company is considered eligible to receive the film production activity tax exemption, the Maryland Film Office shall issue a numbered tax exemption Certificate of Eligibility and a Comptroller Buyer Certification to the film producer or film production company, and shall forward a copy of the Certificate of Eligibility to the Comptroller. The Buyer Certification shall include a list of examples of tangible personal property and taxable services that are eligible and ineligible for the tax exemption.

C. The film producer or film production company, or authorized personnel, shall present a copy of the Buyer Certification to each vendor at the time of the purchase or lease of tax-exempt tangible personal property or services.

D. The Comptroller may conduct periodic audits of the records of the film producer or film production company to assure proper compliance.

History

• Administrative History: Effective date: December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .04B amended effective February 6, 2012 (39:2 Md. R. 142)
• Authority: Economic Development Article, §6-203, Annotated Code of Maryland

COMAR 24.05.25.05 Tax Exemption.

A. Sales and use tax does not apply to a sale of certain tangible personal property or services to a film producer or film production company certified by the Department if the tangible personal property or services are used directly in connection with a film production activity.

B. The types of tangible personal property and services used directly in connection with a film production activity which are subject to the sales and use tax exemption when sold to a film producer or film production company certified by the Department are specified by the Comptroller at COMAR 03.06.01.35B—E.

History

• Administrative History: Effective date: December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .04B amended effective February 6, 2012 (39:2 Md. R. 142)
• Authority: Economic Development Article, §6-203, Annotated Code of Maryland

COMAR 24.05.25.06 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with the Act if:

A. Conformance to the requirement of any federal, State, or local program necessitates waiver or variance of a regulation; or

B. In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: December 25, 2000 (27:25 Md. R. 2285)
• Administrative History: Regulation .04B amended effective February 6, 2012 (39:2 Md. R. 142)
• Authority: Economic Development Article, §6-203, Annotated Code of Maryland

24.05.26 Arts and Entertainment Districts

COMAR 24.05.26.01 Purpose.

This chapter describes the procedures that will be used by the Secretary of Commerce to designate arts and entertainment districts.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

COMAR 24.05.26.02 Scope and Administration.

The Secretary of Commerce shall administer the Arts and Entertainment Districts Program. Local jurisdictions shall administer certain activities related to designation and taxes. The Department of Assessments and Taxation and the Comptroller shall administer activities related to revenue and taxes. The procedures set forth in this chapter are applicable to the designation of arts and entertainment districts and the administration of the State Arts and Entertainment Districts Program.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

COMAR 24.05.26.03 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) Artistic Work.

(a) “Artistic work” means an original and creative work, whether written, composed, or executed, within one of the following categories:

(i) A book or other writing;

(ii) A play or performance of a play;

(iii) A musical composition or the performance of a musical composition;

(iv) A painting or other picture;

(v) A sculpture;

(vi) Traditional or fine crafts;

(vii) The creation of a film or the acting within a film;

(viii) The creation of a dance or the performance of a dance; or

(ix) The creation of original jewelry, clothing, or design.

(b) “Artistic work” includes any product generated as a result of any of the categories listed under §B(1)(a) of this regulation.

(c) “Artistic work” does not include any piece or performance created or executed for industry-oriented or industry-related production, such as a commercial or advertising copy.

(2) Arts and Entertainment District.

(a) “Arts and entertainment district” means a developed district of public and private uses that:

(i) May be a portion of a county or municipal corporation or a district with a special coherence that crosses jurisdictional lines;

(ii) Is distinguished by physical and cultural resources that play a vital role in the life and development of the community and contribute to the public through interpretive, educational, and recreational uses; and

(iii) Is a contiguous geographic area of a county that is wholly within a priority funding area as provided under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.

(b) “Arts and entertainment district” in Queen Anne’s County may be composed of a noncontiguous area in the county, including a noncontiguous area within a municipal corporation in the county, as established by the governing body of the county.

(3) “Arts and entertainment enterprise” means a for-profit or nonprofit entity dedicated to visual or performing arts, excluding adult entertainment.

(4) “Department” means the Department of Commerce.

(5) “District incentives” means the financial incentives described in Economic Development Article, §4-706, Annotated Code of Maryland, for a qualifying residing artist and an arts and entertainment enterprise in an arts and entertainment district.

(6) “Effective date” means the July 1 following the designation of the district by the Secretary.

(7) “Fund” means the Maryland Economic Development Assistance Fund.

(8) “Political subdivision” means a county or municipal corporation in the State.

(9) “Qualifying residing artist” means an individual who:

(a) Owns or rents residential real property in the State and conducts an arts or entertainment-related business in any arts and entertainment district; and

(b) Derives income from the sale or performance within any arts and entertainment district of an artistic work, excluding adult entertainment, that the individual wrote, composed, or executed within any arts and entertainment district, either solely or with one or more other individuals.

(10) “Secretary” means the Secretary of Commerce.

(11) “State fiscal year” means the period from July 1 through June 30.

(12) “Submission date” means October 1 and April 1 of any calendar year.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

COMAR 24.05.26.04 Eligible Applicants and District Designation.

A. Subject to the requirements of this chapter, the Mayor and City Council of Baltimore City or the governing body of a county or municipal corporation may apply to the Secretary for designation of an arts and entertainment district in the county or municipal corporation.

B. County Application.

(1) Municipal Consent.

(a) A county may apply to the Secretary for designation of an area in the county as an arts and entertainment district, but if all or any portion of the area is within the boundaries of a municipal corporation, the governing body of the municipal corporation must first consent.

(b) The governing body of the municipal corporation shall state in its application whether, if the district is designated, it will offer the property tax credit under Tax-Property Article, §9-240, Annotated Code of Maryland, and the exemption from the admissions and amusement tax under Tax-General Article, §4-104, Annotated Code of Maryland, in the district.

(c) The required consent of the municipal corporation shall be obtained before submission of the application for designation and the consent document shall be included as part of the application.

(d) The required consent document shall be in the form required by local law or the governing body of the municipal corporation, or both.

(2) The county shall state in its application that, if the district is designated, it will offer the property tax credit under Tax-Property Article, §9-240, Annotated Code of Maryland, and the exemption from the admissions and amusement tax under Tax-General Article, §4-104, Annotated Code of Maryland, in the district.

C. Municipal Corporation Application.

(1) A municipal corporation may apply to the Secretary for designation of an area in the municipal corporation as an arts and entertainment district.

(2) The municipal corporation shall state in its application that, if the district is designated, it will offer the property tax credit under Tax-Property Article, §9-240, Annotated Code of Maryland, and the exemption from the admissions and amusement tax under Tax-General Article, §4-104, Annotated Code of Maryland, in the district.

(3) Before a municipal corporation may apply for a designation, it shall obtain the acknowledgement of the governing body of the county in which it is located that the income tax subtraction modification under Tax-General Article, §10-207(v), Annotated Code of Maryland, to be offered in the proposed district may affect the county's income, and the acknowledgment shall be included as part of the application.

(4) The county governing body shall also state whether the county will, if the district is designated, offer the property tax credit under Tax-Property Article, §9-240, Annotated Code of Maryland, and the exemption from the admissions and amusement tax under Tax-General Article, §4-104, Annotated Code of Maryland, in the district.

(5) The required statements of the county and municipal corporation shall be in the form required by local law or the governing bodies, or both.

D. Two or more political subdivisions may jointly apply for designation of an area as an arts and entertainment district if portions of the proposed area are within each of their common boundaries.

E. The application shall be complete, meet all stated requirements, and be properly signed by the chief elected officer or officers in the case of a joint application or, if none, by the governing body of each of the political subdivisions. An application signed by the chief elected officer shall include a written expression of sentiment of the local elected governing body or bodies regarding the filing of an application for designation. The expression of sentiment may be in the form of a letter or a resolution at the discretion of the local jurisdiction.

F. The Secretary may permit a political subdivision to amend its application at any time before the Secretary acts upon the application.

G. The application shall be received by the Secretary of Commerce in care of the Division of Tourism, Film, and the Arts, Department of Commerce, on or before a submission date.

H. Within 60 days after a submission date, the Secretary may designate one or more arts and entertainment districts for a designation period of up to 10 years from the effective date from among the applications submitted.

I. The Secretary shall give the Comptroller of the Treasury notice of the establishment of an arts and entertainment district on or before July 1 before the effective date of the district's establishment. The subtraction modification under Tax-General Article, §10-207(v), Annotated Code of Maryland, is applicable to taxable years after the July 1 effective date.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

COMAR 24.05.26.05 Application for Designation.

A. An application for an arts and entertainment district shall include the following:

(1) A vicinity map and plan of the proposed district indicating:

(a) Existing improvements and, if known, their historic significance;

(b) Existing transportation facilities;

(c) Existing arts, entertainment, and tourist facilities; and

(d) Any proposed State or local capital improvements projects that affect the proposed district;

(2) A tax map or block plat identifying those properties that are within the proposed district and their property valuations by class, an indication as to those publicly or privately held, an analysis of current building use or uses including their zoning, the availability of affordable housing, studio, and performance space, and other information that is established by the Secretary;

(3) A plan covering the responsibility for management of the district;

(4) Evidence that the county, the municipal corporation, or both, will offer the following incentives to arts and entertainment enterprises and qualifying residing artists if the request for designation is approved:

(a) A property tax credit under Tax-Property Article, §9-240, Annotated Code of Maryland; and

(b) An exemption from the admissions and amusement tax under Tax-General Article, §4-104, Annotated Code of Maryland;

(5) Additional incentives and initiatives the political subdivision may provide or establish to encourage arts and entertainment enterprises and qualifying residing artists to locate within the proposed district;

(6) Evidence and certification that the political subdivision, before submission, held a public hearing with adequate notice and publicity on the application;

(7) A written narrative to explain the goals and strategy for the district, including a narrative description on how the proposed district complements the local economic development plan;

(8) If the size of the proposed district exceeds 100 acres, a written justification of the size of the proposed district;

(9) A certification from the county or municipality that is applying that the entire proposed arts and entertainment district is located in a priority funding area under State Finance and Procurement Article, §5-7B-03, Annotated Code of Maryland; and

(10) Any other information requested by the Department.

B. Under §A(4) of this regulation, a political subdivision shall require an arts and entertainment enterprise or qualifying residing artist to provide an annual report containing information required by the Secretary as a precondition to receiving an eligibility certification for the Arts and Entertainment Districts Program incentives and initiatives.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

COMAR 24.05.26.06 Designation Determination and Notice.

A. A determination by the Secretary as to the area designated an arts and entertainment district is final.

B. The Secretary may give preference to applications for districts that are supported by all affected local jurisdictions and eligible for all available tax incentives.

C. The Secretary shall give written notice of a designation to both a political subdivision that receives a designation and the State agencies that will provide tax credits and other incentives and initiatives.

D. The Secretary shall notify a political subdivision that does not receive a requested designation in writing. The jurisdiction may reapply for a designation at any subsequent submission date by resubmitting the previously filed application or a revised application.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

COMAR 24.05.26.07 Expansion of Arts and Entertainment Districts.

A. Upon application, the Secretary may permit the expansion of a designated arts and entertainment district.

B. The political subdivision or subdivisions that originally obtained the district designation shall apply for the expansion.

C. An application for expansion of a designated arts and entertainment district shall set forth the basis for the request for expansion but need not duplicate data submitted for the original designation.

D. The designation period for the expansion area of the district runs simultaneously with the period of the original district designation and expires at the same time as the original district designation.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

COMAR 24.05.26.08 Redesignation of Arts and Entertainment Districts.

A. Upon application, the Secretary may permit redesignation of all or a portion of a designated arts and entertainment district.

B. Application Procedure.

(1) To apply for redesignation, the appropriate political subdivision shall file an application showing that the proposed district meets all the requirements for a new district, but need not duplicate the map requirements of Regulation .05A(1)—(2) of this chapter.

(2) A redesignation application shall also include the following information:

(a) An evaluation of the history and benefits of the existing district;

(b) An explanation of why portions of the existing arts and entertainment districts are included in the redesignation request;

(c) A comparison of the strategy for the redesignation application with that of the existing district; and

(d) Any other information requested by the Department.

C. A political subdivision may request redesignation of all or a portion of the designated district before the end of the 10-year designation period. The new 10-year designation period shall, however, begin immediately upon the redesignation by the Secretary, within 60 days after the submission date, rather than at the end of the original 10-year term.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

COMAR 24.05.26.09 Limit on Designation of Arts and Entertainment Districts.

A. The Secretary may not designate more than six arts and entertainment districts in any calendar year.

B. Limit on Number of Districts.

(1) A county may not receive more than one designation of an area as an arts and entertainment district in any calendar year.

(2) A joint application by two or more counties counts as one designation of an area as an arts and entertainment district for each county.

(3) A joint application by two or more municipalities within the same county counts as one designation of an area as an arts and entertainment district within the county.

(4) A joint application by a county and a municipality located within an adjoining county counts as one designation of an area as an arts and entertainment district for each county.

(5) The application for expansion of a designated arts and entertainment district is not considered a new request and is not counted as one additional designation of an area as an arts and entertainment district for the appropriate county or counties.

(6) A redesignation request is not considered a new district request and is not counted as one additional designation of an area as an arts and entertainment district.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

COMAR 24.05.26.10 Property Tax Credit.

A. The governing body of a county or municipal corporation may grant, by law, a real property tax credit against the county or municipal corporation property tax imposed on a manufacturing, commercial, or industrial building that:

(1) Is located in an arts and entertainment district; and

(2) Is wholly or partially constructed or renovated to be capable for use by a qualifying residing artist or an arts and entertainment enterprise.

B. The eligible assessment is that difference in value, attributable to the qualified renovations, between the first revaluation of the building after the completion of the renovations and the value existing in the records of the Department of Assessments and Taxation as of the January 1 before the commencement of the renovations.

C. If less than the entire building is used by a qualifying residing artist or an arts and entertainment enterprise, the credit is available only for the portion of the building used by a qualifying residing artist or an arts and entertainment enterprise.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

COMAR 24.05.26.11 Annual Report.

A political subdivision receiving an arts and entertainment district designation from the Secretary shall submit an annual report on a fiscal year basis to the Secretary by September 1 following each fiscal year end, in the form and containing the information established by the Secretary.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

COMAR 24.05.26.12 Period of Availability.

Except as provided in Tax-Property Article, §9-240, Annotated Code of Maryland, the Arts and Entertainment Districts Program incentives and initiatives are available for a period of 10 years after the date on which the area becomes an arts and entertainment district.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

COMAR 24.05.26.13 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that a waiver is not inconsistent with the law.

History

• Administrative History: Effective date: November 11, 2002 (29:22 Md. R. 1722)
• Administrative History: Regulation .03B amended effective June 15, 2009 (36:12 Md. R. 838); June 27, 2011 (38:13 Md. R. 757); April 1, 2013 (40:6 Md. R. 476); December 22, 2014 (41:25 Md. R. 1486)
• Administrative History: Regulation .06D amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .08B amended effective April 2, 2012 (39:6 Md. R. 410)
• Administrative History: Regulation .09B amended effective April 1, 2013 (40:6 Md. R. 476)
• Administrative History: Regulation .10A amended effective June 15, 2009 (36:12 Md. R. 838)
• Authority: Economic Development Article, §§2-108, 4-701—4-707, Annotated Code of Maryland

24.05.27 More Jobs for Marylanders

COMAR 24.05.27.01 Objective.

The objective of the More Jobs for Marylanders Program is to increase the number and quality of new manufacturing jobs in the State and non-manufacturing jobs in opportunity zones.

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.02 Purpose.

This chapter describes the procedures used by the Secretary of Commerce to establish the requirements necessary to qualify for the More Jobs for Marylanders Program.

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.03 Scope and Administration.

Certification for the More Jobs for Marylanders Program is administered by the Secretary of Commerce. The Secretary of Commerce administers the sales and use tax refund and the More Jobs for Marylanders Sales and Use Tax Reserve Fund. The Comptroller administers the income tax credit and the More Jobs for Marylanders Tax Credit Reserve Fund. The Department of Assessments and Taxation administers the real property tax credit established under Tax-Property Article, §9-110, Annotated Code of Maryland, and the waiver of fees established under Corporations and Associations Article, §1-203.1, Annotated Code of Maryland.

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.04 Definitions.

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) “Act” means the More Jobs for Marylanders Act at Economic Development Article, Title 6, Subtitle 8, Annotated Code of Maryland.

(2) “Benefit year” means any one of the 10 consecutive taxable years for which the qualified business entity is eligible to receive benefits under the Program.

(3) Business Entity.

(a) “Business entity” means a person conducting or operating a trade or business that is:

(i) Primarily engaged in activities that, in accordance with the North American Industrial Classification System (NAICS), United States Manual, United States Office of Management and Budget, 2012 Edition, would be included in Sector 31, 32, or 33; or

(ii) Located in an opportunity zone.

(b) “Business entity” does not include:

(i) A refiner, as defined in Business Regulation Article, §10-101, Annotated Code of Maryland;

(ii) A person conducting or operating a trade or business that is providing adult entertainment, as determined by the Department;

(iii) A person conducting a trade or business that is primarily engaged in retail activities, unless the person is operating a grocery store located in an opportunity zone;

(iv) A person conducting a trade or business that is primarily engaged in the sale or distribution of alcoholic beverages;

(v) A private or commercial golf course or country club;

(vi) A tanning salon; or

(vii) A bail bondsman.

(4) “Comptroller” means the Comptroller of the Treasury or the Comptroller’s designee.

(5) “Department” means the Department of Commerce.

(6) “Eligible project” means a facility operated by a business entity in a Tier I area or Tier II area.

(7) “Existing business entity” means a business entity that is located in the State at the time it notifies the Department under Regulation .05 of this chapter.

(8) “Final application” means the application submitted by the qualified business entity for certification of the income tax credit for a benefit year.

(9) “Final certificate” means the certificate of the income tax credit for a benefit year.

(10) “Fiscal year” means the fiscal year of the State as defined in State Finance and Procurement Article, §2-101(a), Annotated Code of Maryland.

(11) “Full-time position” means a position requiring at least 840 hours of an employee’s time during at least 24 weeks in a 6-month period (an average of 35 hours per week).

(12) “Income Tax Credit Reserve Fund” means the More Jobs for Marylanders Tax Credit Reserve Fund established under Tax-General Article, §10-741(d), Annotated Code of Maryland.

(13) “Initial application” means the application submitted by the qualified business entity to reserve the income tax credit against the Income Tax Reserve Fund for a benefit year.

(14) “Initial certificate” means the certificate that the Secretary has reserved the income tax credit against the Income Tax Reserve Fund on behalf of the qualified business entity.

(15) “New business entity” means a business entity that is not located in the State at the time it notifies the Department under Regulation .05 of this chapter.

(16) “Opportunity zone” means an area that has been designated as a qualified opportunity zone in the State under Internal Revenue Code, §1400Z-1.

(17) “Person” means an individual, corporation, business trust, partnership, limited liability company, association, two or more persons having a joint or common interest, or any other legal or commercial entity.

(18) “Program” means the More Jobs for Marylanders Program established under the Act.

(19) “Qualified business entity” means a new business entity or an existing business entity operating an eligible project under the Act.

(20) “Qualified personal property or services” means personal property or services purchased for use at an eligible project by a qualified business entity that is enrolled in the Program.

(21) Qualified Position.

(a) “Qualified position” means a position that:

(i) Is a full-time position;

(ii) Is of indefinite duration;

(iii) Is a position in a facility of a business entity that is located in an opportunity zone and pays an average annual salary that exceeds $50,000;

(iv) Is a position in a facility of a business entity described in §B(3)(a)(i) of this regulation and pays at least 120 percent of the State minimum wage;

(v) Is located in the State;

(vi) Is newly created, as a result of the establishment or expansion of a business facility in a single location in the State; and

(vii) Is filled.

(b) “Qualified position” includes a position that satisfies the definition set forth in §B(21)(a) of this regulation for which there is a temporary vacancy that is filled within 4 months.

(c) “Qualified position” does not include a position that is:

(i) Created when an employment function is shifted from an existing business facility of the business entity located in the State to another business facility of the same business entity if the position does not represent a net new job in the State;

(ii) Created through a change in ownership of a trade or business;

(iii) Created through a consolidation, merger, or restructuring of a business entity if the position does not represent a net new job in the State;

(iv) Created when an employment function is contractually shifted from an existing business entity located in the State to another business entity if the position does not represent a net new job in the State; or

(v) Filled for a period of less than 12 months.

(d) “Qualified position” does not include a temporary training position but does include a permanent position which is filled by hiring a successful trainee from a temporary training position that does not exceed 3 months in length.

(22) “Sales and Use Tax Credit Reserve Fund” means the More Jobs for Marylanders Tax Credit Reserve Fund established under Tax-General Article, §11-411, Annotated Code of Maryland.

(23) “Secretary” means the Secretary of Commerce or the Secretary’s designee.

(24) “State” means the State of Maryland.

(25) “State minimum wage” is the minimum wage rate as defined in Labor and Employment Article, §3-413(c), Annotated Code of Maryland.

(26) “Tax credit” means the More Jobs for Marylanders income tax credit established under Tax-General Article, §10-741, Annotated Code of Maryland, or the More Jobs for Marylanders real property tax credit established under Tax-Property Article, §9–110, Annotated Code of Maryland.

(27) “Tier I area” has the definition set forth in §6-801(l) of the Act.

(28) “Tier II area” has the definition set forth in §6-801(m) of the Act.

Cross References

24.05.27.07A

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.05 Notification Required.

A. An existing business entity shall notify the Department of its intent to seek certification for a tax credit before hiring any employees to fill the qualified positions necessary to satisfy the requirements for a qualified business entity establishing or expanding the business facility on which the tax credit is based.

B. A new business entity shall notify the Department of its intent to seek certification for a tax credit before establishing its facility in the State.

Cross References

24.05.27.04B(7)

24.05.27.04B(15)

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.06 Enrollment Certification Procedures.

A. A business entity may apply to the Department to enroll an eligible project in the Program if the eligible project:

(1) Is in a Tier I area and the business entity intends to create at least five qualified positions at the project location; or

(2) Is in a Tier II area and the business entity intends to create at least ten qualified positions at the project location.

B. A new business entity may be certified as a qualified business entity if the new business entity:

(1) Notifies the Department of its intent to seek designation of an eligible project before establishing its facility in the State; and

(2) Offers an ongoing job skills enhancement training program or postsecondary education program that is approved by the Department.

C. A new business entity shall submit an application to the Department on a form approved by the Department and shall include the following information:

(1) The anticipated date of the establishment and initial operation of the facility and the nature of its operations;

(2) The expected location of the facility;

(3) The estimated number of qualified positions to be created and qualified employees to be hired and the anticipated payroll of the new qualified employees; and

(4) Any other information required by the Department.

D. An existing business entity may apply to be certified as a qualified business entity if the existing business entity increases the number of qualified positions as required under §A of this regulation for an eligible project in a Tier I area or a Tier II area.

E. An existing business entity may be certified as a qualified business entity if the business entity:

(1) Notifies the Department of its intent to seek designation of an eligible project prior to hiring any employees to fill the qualified positions necessary to meet the requirements of the Act; and

(2) Offers an ongoing job skills enhancement training program or postsecondary education program that is approved by the Department.

F. An existing business entity shall submit an application to the Department on a form approved by the Department and shall include the following information:

(1) The number of full-time employees existing before the expansion and the payroll of the existing employees;

(2) The estimated number of qualified positions to be created and qualified employees to be hired and the anticipated payroll of the new qualified employees; and

(3) Any other information required by the Department.

G. Time to Hire.

(1) A business entity shall begin hiring the employees to fill the qualified positions necessary to meet the requirements of the Act within 12 months after it notifies the Department of its intent to seek designation of an eligible project.

(2) A business entity shall hire the employees to fill the minimum number of qualified positions required under §A of this regulation within 12 months after it hires the first employee to fill the qualified positions necessary to meet the requirements of the Act.

H. If a business entity satisfies the definition of qualified business entity, the Secretary shall provide to the qualified business entity an initial certificate that:

(1) Certifies the eligible project that is enrolled in the Program;

(2) Provides the duration of the certification; and

(3) Provides any additional information necessary for the Comptroller and Department to administer the Program.

I. On enrollment in the Program, a qualified business entity is eligible for the benefits described in Regulation .10 of this chapter.

J. The Department may not provide a qualified business entity a certificate after the date specified in Economic Development Article, §6-805, Annotated Code of Maryland.

K. If at any time the qualified business entity ceases to operate the eligible project, the qualified business entity shall give notice to the Department.

Cross References

24.05.27.08A

24.05.27.12B(1)

24.05.27.13D(1)

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.07 Eligible Business Activities.

A. To qualify for the tax credit, a qualified business entity shall establish or expand a business facility in the State that is primarily engaged in manufacturing or any other business activity in an opportunity zone not excluded by Regulation .04B(3)(b) of this chapter.

B. In determining whether a business facility is engaged in a manufacturing activity, the Department shall consider the definitions set forth in the U.S. Department of Labor’s Standard Industrial Classification Manual.

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.08 Income Tax Certification Procedures.

A. First Benefit Year. For each eligible project, a qualified business entity may submit an initial application no sooner than July of the fiscal year following the close of the first fully completed fiscal year that the qualified business entity is enrolled in the Program under Regulation .06F of this chapter and the business entity claims a Program benefit.

B. Subsequent Benefit Years.

(1) For each eligible project, a qualified business entity may submit an initial application no sooner than July of the fiscal year following the fiscal year referenced under §A of this regulation.

(2) A business entity shall receive a final certificate for a previous benefit year before submitting an initial application.

C. Application Window.

(1) The Department shall establish the period during the fiscal year for accepting initial applications for the purposes of determining priority under Regulation .09 of this chapter.

(2) The Department may establish more than one period during the fiscal year for accepting initial applications.

D. A qualified business entity that receives an initial certificate may submit a final application at any time.

E. Limitations.

(1) For any fiscal year, the Department may not issue initial tax credit certificates for credit amounts in the aggregate totaling more than $9,000,000 in a fiscal year.

(2) For each eligible project, a qualified business entity may not submit more than one initial application in a fiscal year except as provided in §E(3) of this regulation.

(3) A qualified business entity may submit an initial application during each period within the fiscal year established by the Department under §C(2) of this regulation.

(4) A qualified business entity shall receive a final certificate for a previous benefit year before submitting an initial application.

(5) The amount of the tax credit in the final certificate may not exceed the reserved amount from the initial certificate.

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.09 Priority of Funding for Initial Certificates.

A. The Department shall approve initial applications submitted under Regulation .08 based on the following priority order:

(1) An eligible project in a Tier 1 area that received a final certificate in the previous fiscal year.

(2) An eligible project in a Tier II area that received a final certificate in the previous fiscal year.

(3) An eligible project in a Tier 1 area that did not receive a final certificate in the previous fiscal year.

(4) An eligible project in a Tier II area that did not receive a final certificate in in the previous fiscal year.

B. If there are unencumbered funds remaining, the Department may:

(1) Carry forward the unused balance to the next fiscal year;

(2) Establish one or more additional periods during the fiscal year for accepting initial applications; or

(3) Issue credits on a first-come first-served basis during the fiscal year until fiscal year funding is exhausted.

Cross References

24.05.27.08C(1)

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.10 Program Benefits.

A. The Program benefits authorized under this regulation may be claimed by a qualified business entity for up to 10 consecutive benefit years.

B. On enrollment in the Program:

(1) A new business entity in a Tier I area is eligible for:

(i) A credit against the State income tax, established under Tax-General Article, §10-741(b), Annotated Code of Maryland;

(ii) A credit against the State property tax, established under Tax-Property Article, §9-110, Annotated Code of Maryland;

(iii) A refund of sales and use tax paid during the immediately preceding taxable year, as provided under Tax-General Article, §11-411, Annotated Code of Maryland; and

(iv) A waiver of fees charged by the State Department of Assessments and Taxation, established under Corporations and Associations Article, §1-203.1, Annotated Code of Maryland; and

(2) Except as provided in §C of this regulation, an existing business entity that operates an eligible project is eligible for a credit against the State income tax, established under Tax-General Article, §10-741(b), Annotated Code of Maryland.

C. The income tax credit established under Tax-General Article, §10-741(b), Annotated Code of Maryland, is not available to an existing business entity if the entity moves its facility to another county in the State on or after June 1, 2017.

D. If the number of qualified positions at the eligible project decreases to a number less than the number established in the first benefit year, the project shall be removed from the Program and all Program benefits terminate.

Cross References

24.05.27.06I

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.11 Amount of Tax Credit.

A. The income tax credit earned under this regulation is equal to the product of:

(1) The State employer withholding amount, which is equal to the highest tax rate listed in Tax-General Article, §10–105(a), Annotated Code of Maryland; and

(2) The total amount of wages paid for each qualified position at an eligible project.

B. Earning the Tax Credit.

(1) First Benefit Year. The income tax credit is earned by the qualified business entity at the end of the 12-month period during which the requisite number of qualified positions have been filled at each eligible project and the business entity claims a Program benefit.

(2) Subsequent Benefit Years. The income tax credit is earned by the qualified business entity at the end of each new 12-month period during which the requisite number of qualified positions have been filled at each eligible project.

(3) The 12 months need not be consecutive.

C. Claiming the Tax Credit.

(1) To claim the income tax credit approved by the Department, the qualified business entity shall file with the Comptroller an income tax return for the taxable year in which the income tax credit is earned and attach a copy of the Department’s certificate of the approved credit amount to the income tax return.

(2) A qualified business entity may claim a refund in the amount, if any, by which the unused excess exceeds the State tax for the taxable year.

(3) The tax credit may not be claimed against taxes resulting from the sale of the eligible project without the written consent of the Secretary.

(4) The same tax credit may not be applied more than once against different taxes by the same taxpayer.

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.12 Sales and Use Tax Refund.

A. A qualified business entity may apply to claim the refund of sales and use tax paid during the immediately preceding calendar year for a sale of qualified personal property or services purchased solely for use at the eligible project.

B. Limitations.

(1) A qualified business entity shall be enrolled in the Program under Regulation .06 of this chapter to be eligible for a refund of sales and use tax paid for any benefit year.

(2) A qualified business entity shall continue to operate the eligible project for the calendar year in which the sales and use tax was paid.

(3) The purchase of qualified personal property and services was made on or after January 1, 2018.

(4) A qualified business entity may submit an application for refund on or after January 1 of the calendar year immediately following the purchase of the qualified personal property or services.

(5) The Department may not issue sales and use tax refunds in amounts in the aggregate totaling more than $1,000,000 in a fiscal year.

C. Application for Refund.

(1) The application for refund shall contain the following information:

(a) A description of property or service purchased;

(b) The date of sale;

(c) The amount of sale;

(d) The amount of sales and use tax paid;

(e) The name of the persons or entities to whom the sales and use tax was paid;

(f) Copies of invoices and payment evidencing the sale or purchase;

(g) A statement allowing the Department to have access to any information provided to the Comptroller or another appropriate agency by a qualified business entity in connection with eligibility for refund allowed under this regulation; and

(h) Any other information that the Department requires.

(2) To the extent that funds are available in the Sales and Use Tax Reserve Fund, the Department shall issue a refund in an amount equal to the amount claimed by the qualified business entity under §C(1) of this regulation and approved by the Department.

D. The Comptroller retains its audit authority under the Tax-General Article, Annotated Code of Maryland.

E. Carryover. If the aggregate amount of sales and use tax refunds issued in a fiscal year totals less than the maximum provided under §B(5) of this regulation, the Department shall transfer the excess amount to the More Jobs for Marylanders Tax Credit Reserve Fund established under Tax-General Article, §10–741, Annotated Code of Maryland.

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.13 Real Property Tax Credit.

A. A qualified business entity may apply to claim a credit against the State’s portion of the tax imposed on real property owned by either:

(1) A new manufacturer that locates in a Tier I Area; or

(2) A new non-manufacturer that locates in a Maryland opportunity zone.

B. Amount of Real Property Tax Credit.

(1) A new manufacturer in a Tier I area is entitled to a 100 percent credit against the State real property tax.

(2) A new non-manufacturer in a Maryland opportunity zone is entitled to a State real property tax credit of the lesser of:

(a) 100 percent of the State real property tax; or

(b) $250 per qualified position.

C. Request for Credit. The eligible qualified business entity shall submit a request for the credit against the State’s portion of the real property tax to the State Department of Assessments and Taxation.

D. Limitations.

(1) A qualified business entity shall be enrolled in the Program under Regulation .06 of this chapter.

(2) A new business that leases a facility does not qualify for the State real property tax credit.

(3) The property tax credit provided under this regulation does not affect the amount of the county or municipal corporation property tax imposed on the property.

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.14 Information Required from Entity.

A. To be eligible to receive the tax credit, a business entity shall notify the Department in writing of its intention to use the tax credit before hiring the qualified positions necessary for establishing or expanding a facility.

B. To obtain an initial certificate, the qualified business entity shall provide the Department with a completed initial application.

C. To obtain a final certificate, the qualified business entity shall provide the Department with a completed final application.

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.15 Sharing of Information.

A. The Department shall require that any information provided under this chapter be verified including by an independent certified public accountant that the qualified business entity selects.

B. Any information provided to the Comptroller or the appropriate agency by a qualified business entity in connection with eligibility for a tax credit allowed under this chapter shall be shared by the Comptroller or the appropriate agency with the Department.

C. Information provided under §B of this regulation shall be subject to the confidentiality requirements applicable to the Comptroller or the appropriate agency.

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland

COMAR 24.05.27.16 Waiver.

The Secretary may waive or vary particular provisions of this chapter to the extent that the waiver is not inconsistent with the Act if:

A. Conformance to the requirement of any federal, State, or local program necessitates waiver or variance of a regulation; or

B. In the determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act.

History

• Administrative History: Effective date: April 4, 2022 (49:7 Md. R. 469)
• Authority: Corporations and Associations Article, §1-203.1; Economic Development Article, §§2-108 and 6-801—6-809; Tax-General Article, §§10-741 and 11-411; Tax-Property Article §9-110; Annotated Code of Maryland