Tax Credits

Rehabilitation of Commercial Structures Tax Credit

Pursuant to the authority contained in Md. Tax-Prop. Code Ann. § 9-256, the City may offer a credit against the property tax imposed on an existing commercial structure in which a qualifying investment is made for the purpose of allowing for adaptive reuse of the structure.

Definitions:

Qualifying investment means the cost of installation or rehabilitation of building features for the purpose of bringing an existing commercial structure into compliance with current building codes relating to safety or accessibility. "Qualifying investment" includes costs incurred for:

1. Elevators;
2. Fire suppression systems;
3. Means of ingress or egress; or
4. Architectural or engineering services related to installation or rehabilitation of these or similar building features.

Commercial structure for the purposes of this tax credit may include an existing commercial building, mixed-use structure, or a multi-family residential building.

Tax Credit Terms:

1. The Tax Credit may:
   1. Not exceed fifty percent (50%) of the amount of qualifying investment in a structure;
   2. Not exceed the improved assessed value of the structure; and
   3. Be granted for up to a ten-year period in an equal amount each year.
2. The tax credit may be combined with the Enterprise Zone tax credit; however, the total credits may not exceed 75% of the total assessed value of the property.
3. If the property is sold during the term of the credit, the tax credit may be transferred to the new owner,for the remainder of the 10-year period.

Eligibility:

1. A qualifying investment of no less than twenty-five thousand dollars ($25,000.00) is required in order to be eligible for the tax credit provided for herein.
2. The property owner must remain current in any taxes assessed against the property for which the tax credit is sought. Failure to pay City or Allegany County property taxes by the due date may result in the tax forfeiture of the tax credit for the given year and/or future years.
3. The tax credit will only apply to qualifying investments that were not funded by any grant, forgivable loan, or any other government-issued funding sources.
4. If the project involves a historic structure or is located within Frostburg’s designated Historic District, the applicant must comply with applicable historic preservation guidelines.
5. Projects must comply with all applicable building codes, including those related to accessibility, safety. The Credit will not be made for structures or parts thereof which do not comply with current building code standards if they were constructed or improved when those standards were in place. Nevertheless, it shall be available as to those portions of a commercial structure that were built before such standards became effective.

How to Apply:

1. The property owner may apply at any point during the construction process (concept to completion), however, no guarantee is made that an application will be approved.
2. A property owner may apply no later than 6 months after project completion (passed final building inspection and Use and Occupancy Permit has been issued).
3. Application is made to the Director of Community Development and should include the following:
   1. Adaptive reuse plan, including:
      1. Estimated total investment in the building;
      2. Estimated assessed value of the building upon completion;
      3. Construction timeline;
      4. Intended use(s) of the b building and tenant(s) (if known);
      5. Area of the building that will be improved for occupancy Updated 01.30.2025
      6. Estimated number of temporary and permanent jobs to be created.
   2. The plan shall be approved by the Director of Community Development and the Director of Finance in order to obtain authorization of the tax credit.

How to Receive the Tax Credit:

1. After project completion and prior to receiving the tax credit, the property owner shall submit the following to the Director of Community Development:
   1. Pictures of the completed work;
   2. Narrative describing the work completed;
   3. Invoices and evidence of payment for the work related to the qualifying investments;
   4. Documentation of any grants, forgivable loans, tax credits, or any other government-issued funding that was used in the project, with clear indication of how funds were allocated;
   5. A complete project budget, including sources and uses, with qualifying investments listed as separate line items.
2. The Director of Community Development will review the submittal from the property owner, and will forward a completed set of documentation to the Director of Finance for processing.
3. The Director of Finance will calculate the tax credit at up to 50% of the qualifying investment in a commercial structure.
4. No credits should be issued until the project is complete and the application is approved. The first year of the tax credit will begin on the first July 1 after the Use and Occupancy permit is issued. The tax credit will be refunded to the owner via check after the tax bill has been paid in full in a timely manner.

Changes to the Scope of Work:

1. Approval Required for Changes: If a property owner wishes to make changes to the scope of work for a project that has already been approved for the tax credit, the property owner must submit a revised plan to the Director of Community Development for review and approval. The revised plan must include:
   1. A detailed description of the proposed changes to the scope of work;
   2. An updated budget reflecting the new or revised costs; and Updated 01.30.2025
   3. A revised timeline, if applicable, for the completion of the project.
2. Impact on Tax Credit: Changes to the scope of work that result in an increase or decrease in the total qualifying investment may affect the amount of the tax credit. If the revised qualifying investment is greater than originally approved, the tax credit may be adjusted accordingly, provided the revised work still meets the criteria for eligibility. Conversely, if the revised scope results in a lower investment, the tax credit may be reduced.
3. Notification of Delays: If the scope changes lead to delays in project completion, the property owner must notify the Director of Community Development promptly. If the project is not completed within the original timeline, the property owner may be required to reapply for the tax credit.
4. Non-Approval of Changes: The Director of Community Development reserves the right to deny approval of changes to the scope of work if the proposed modifications do not align with the original intent of the project, do not meet the required building codes, or would otherwise undermine the eligibility for the tax credit.

OTHER:

1. Pre-Approval Option: Property owners may request a pre-approval of eligibility before beginning work. The Director of Community Development will confirm whether the proposed improvements will meet the qualifications for the tax credit, although no guarantees will be made until the final review.
2. Audit and Compliance: The City reserves the right to audit the project to verify that the work was completed as described in the application. Non-compliance, falsification of records, or failure to meet the agreed-upon specifications could result in forfeiture of the tax credit.
3. Reporting and Transparency: The City will maintain a reporting mechanism to assess the effectiveness of the tax credit program, including tracking job creation, investment levels, and other economic impacts. Property owners may be asked to provide periodic updates on the success and impact of the completed project.
4. Geographic Priorities: Priority may be given to projects located in designated growth districts, Opportunity Zones, or other priority areas identified by the City and/or State of Maryland, based on the need for economic development or public benefit.
5. Penalties for Misuse: If the property owner fails to complete the project or does not adhere to the terms of the application, the tax credit may be revoked, and the City may require repayment of any credit already issued.

Volunteer Firefighter Municipal Tax Credit - Frostburg Fire Department

Program Overview

The City of Frostburg is offering a municipal property tax credit for eligible members of Frostburg Fire Department No. 1, Inc. This benefit recognizes your service and supports your commitment to our community.

Who Qualifies?

To be eligible for the credit, you must:

1. Be an active member of the FFD as of December 31 of the prior year.
2. Successfully complete any initial probationary period required by the FFD as of July 1 of the tax year for which the credit is sought.
3. Own and reside in a property located within the municipal boundary of the City of Frostburg.
4. Be eligible for the Maryland income tax subtraction for volunteer fire/rescue personnel.
5. Submit a completed application by May 1 of each year.

All qualifications shall be subject to certification by FFD Officers.

How Much Is the Credit?

• Up to $500 if you are the only eligible FFD member on the property deed.
• Up to $1,000 if two or more eligible FFD members own the property.
• The credit cannot exceed the total City property tax owed.

What Property Qualifies?

Only your primary residence located within the municipal boundary of the City of Frostburg is eligible. The property must be classified as a "Dwelling" as defined by § 9-105 of the Tax-Property Article of the Annotated Code of Maryland.

Annual Timeline

• December 31: Must be an active FFD Member
• May 1: Deadline to submit application
• May - June: City reviews application
• July 1: Must have completed FFD probationary period
• July 1: Property tax credit takes effect for new tax year