Baltimore Charter Decoded

Accessible Law for All People

§ II-62 Tax increment financing.

(a) In general.

(1)To borrow money by issuing and selling bonds, at any time and from time to time, for the
purpose of financing and refinancing the development of an industrial, commercial, or
residential area in Baltimore City. Such bonds shall be payable from and secured by a pledge
of the special fund described in subsection (d)(3)(ii) of this section and the Mayor and City
Council of Baltimore may also establish sinking funds, establish debt service reserve funds,
or pledge other assets and revenues towards the payments of the principal and interest,
including revenues received by the Mayor and City Council of Baltimore pursuant to a
development agreement.

(2) (i)In lieu of the pledges set forth in paragraph (1) of this subsection, the authorizing
ordinance or trust agreement, subject to subparagraphs (ii) and (iii) of this paragraph, may
pledge or assign:

all or any part of that portion of the revenues and receipts from the taxes
representing the levy of the tax increment that would normally be paid to the
Mayor and City Council of Baltimore to the payment of such principal and
interest;

the special fund described in subsection (d)(3)(ii) of this section and any other
fund into which all or any part of such revenues and receipts are deposited after
such revenues and receipts are appropriated by the Mayor and City Council of
Baltimore to the payment of such principal and interest;

amounts provided to the Mayor and City Council of Baltimore by the State under § 2222 of the TaxProperty Article of the Annotated Code of Maryland; and

any other assets and revenues of the Mayor and City Council of Baltimore.

(ii)The revenues and receipts may not be irrevocably pledged to the payment of such
principal and interest and the obligation to pay such principal and interest from such
revenues and receipts shall be subject to annual appropriation by the Mayor and City
Council of Baltimore.

(iii) The Mayor and City Council of Baltimore may not pledge its full faith and credit or
unlimited taxing power to the payment of such bonds.

(b) Definitions.

(1)In this section the following words have the meanings indicated, unless the context clearly
indicates another or different meaning or intent:

(2)“Abandoned propertyhas the meaning stated in § 21-17(a) of the Public Local Laws of
Baltimore City.

(3)“Adjusted assessable basemeans, for real property that qualifies for farm or agricultural use
under § 8-209 of the Tax-Property Article of the Annotated Code of Maryland, as amended,
replaced, or supplemented from time to time, the fair market value of the property without
regard to its agricultural use assessment as of January 1 of that year preceding the effective
date of the ordinance creating the development district under subsection (d) of this section.

(4)“Affordable housingmeans housing that is affordable to households with incomes up to
115% of the regional median income.

(5)“Assessable basemeans the total assessable base of all real property in a development
district subject to taxation as determined by the Supervisor of Assessments.

(6)(i)“Assessment ratiomeans any real property tax assessment ratio, however designated or
calculated, which is used or applied under applicable general law in determining the
assessable base.

(ii)“Assessment ratioincludes the assessment percentage as provided under § 8-103(c) of
the Tax-Property Article of the Annotated Code of Maryland, as amended, replaced, or
supplemented from time to time.

(7)“Bondsorbondmeans any bonds or bond, notes or note, or other similar instruments or
instrument issued by the Mayor and City Council of Baltimore pursuant to and in accordance
with this section.

(8)“Developmentincludes new development, redevelopment, revitalization, and renovation.

(9)“Development agreementmeans an agreement between the Mayor and City Council of
Baltimore and any person involved in or responsible for development of property within a
development district pursuant to which such person shall agree to pay in each year in which
any bonds are outstanding an amount equal to all or a portion of the debt service on bonds
issued pursuant to this section to finance or refinance development in such development
district.

(10) “Development districtmeans an area or areas within the City of Baltimore designated by an
ordinance of the Mayor and City Council of Baltimore.

(11) “Distressed propertyhas the meaning stated in § 21-17(a) of the Public Local Laws of
Baltimore City.

(12) “Original assessable basemeans the assessable base as of January 1 of that year preceding
the effective date of the ordinance creating the development district under subsection (d) of
this section.

(13) “Original full cash valuemeans the dollar amount which is determined by dividing the
original assessable base by the assessment ratio used to determine the original assessable
base.

(14) “Original taxable valuemeans for any tax year the dollar amount that is the lesser of:

(i)the product of the original full cash value times the assessment ratio applicable to that
tax year;

(ii)the original assessable base; or

(iii) if an adjusted assessable base applies, then theoriginal taxable valueis the
adjusted assessable base.

(15) “Supervisor of Assessmentsmeans the Supervisor of Assessments for Baltimore City.

(16) “Tax incrementmeans for any tax year the amount by which the assessable base as of
January 1 preceding that tax year exceeds the original taxable value, divided by the
assessment ratio used to determine the original taxable value.

(17) “Tax yearmeans the period from July 1 of a calendar year through June 30 of the next
calendar year.

(18) “State obligationsmeans any bonds or bond, notes or note, or other similar instruments or
instrument issued by the Maryland Economic Development Corporation, the State of
Maryland, or any agency, department, or political subdivision thereof, the proceeds of which
have been used for any of the purposes specified in subsection (c) of this section.

(c) Application of proceeds.

All proceeds received from any bonds issued and sold pursuant to this section shall be applied
solely for:

(1)the cost of purchasing, leasing, condemning, or otherwise acquiring land or other
property, or an interest in them, in the designated development district area or as
necessary for a right-of-way or other easement to or from the development district area;

(2)site removal;

(3)surveys and studies;

(4)relocation of businesses or residents;

(5)installation of utilities, construction of parks and playgrounds, and other necessary
improvements including streets and roads to, from, or within the development district,
lighting, and other facilities;

(6)construction or rehabilitation of buildings provided that such buildings:

(i)are to be devoted to a governmental use or purpose;

(ii)are abandoned property;

(iii) are distressed property; or

(iv) will provide units of affordable housing;

(7)reserves and capitalized interest on the bonds;

(8)necessary costs of issuing bonds;

(9)structured and surface parking facilities that are:

(i)publicly owned; or

(ii)privately owned but serve a public purpose; and

(10) payment of the principal and interest on loans, money advanced, or indebtedness
incurred by the Mayor and City Council of Baltimore for any of the purposes set out in
this section.

(d) Prerequisites for bond issuance.

Before issuing any bonds under this section, the Mayor and City Council of Baltimore shall:

(1)designate by ordinance an area or areas within the City of Baltimore as adevelopment
district”;

(2)receive from the Supervisor of Assessments a certification as to the amount of the
original assessable base, or if applicable, the adjusted assessable base; and

(3)provide that until the bonds have been fully paid or thereafter, the property taxes on real
property within the development district shall be divided as follows:

(i)that portion of the taxes which would be produced by the rate at which taxes
levied each year by the Mayor and City Council of Baltimore upon the original
taxable value shall be allocated to and when collected paid into the funds of the
Mayor and City Council of Baltimore in the same manner as taxes by the Mayor
and City Council of Baltimore on all other property are paid; and

(ii)that portion of the taxes representing the levy on the tax increment that would
normally be paid to the Mayor and City Council of Baltimore shall be paid into a
special fund to be applied in accordance with the provisions of subsection (e) of
this section. This yield shall not be considered as municipal taxes for the
purposes of any constant yield tax limitation or State or local restriction. No State
real property taxes may be paid into the special fund.

(e) Special fund.

(1)The Mayor and City Council of Baltimore may enact an ordinance creating a special fund
described in subsection (d)(3)(ii) of this section with respect to a development district, even
though no bonds authorized by this section have been issued by the Mayor and City Council
of Baltimore with respect to that development district or are then outstanding. The taxes
allocated to such special fund by subsection (d)(3)(ii) of this section shall thereafter be paid
over to such special fund, as long as such ordinance remains in effect.

(2)When no bonds authorized by this section are outstanding with respect to a development
district and the Mayor and City Council of Baltimore by ordinance so determines, moneys in
the special fund for that development district created pursuant to subsection (d)(3)(ii) of this
section may be:

(i)used for any of the purposes described in subsection (c) of this section;

(ii)accumulated for payment of debt service on bonds subsequently issued under this
section;

(iii) used to pay or to reimburse the Mayor and City Council of Baltimore for debt service
which the Mayor and City Council of Baltimore is obligated to pay or has paid
(whether such obligation is general or limited) on any bonds or State obligations; or

(iv) paid to the Mayor and City Council of Baltimore to provide funds to be used for any
legal purpose as may be determined by the Mayor and City Council of Baltimore.

(3)When any bonds authorized by this section are outstanding with respect to a development
district and the Mayor and City Council of Baltimore so determines, moneys in the special
fund for that development district created pursuant to subsection (d)(3)(ii) of this section may
be used as provided in paragraph (2) of this subsection in any fiscal year by the Mayor and
City Council of Baltimore, but only to the extent that:

(i)the amount in such special fund exceeds the unpaid debt service payable on such
bonds in such fiscal year and is not restricted so as to prohibit the use of such moneys;
and

(ii)such use is not prohibited by the ordinance of the Mayor and City Council of
Baltimore or resolution of the Board of Finance authorizing the issuance of such
bonds.

(f) Enabling ordinance.

(1)Before issuing any bonds under this section the Mayor and City Council of Baltimore shall
enact an ordinance which:

(i)specifies and describes the proposed undertaking and states that it has complied with
subsection (d) of this section; and

(ii)specifies the maximum principal amount of bonds to be issued, from time to time or
at any time, pursuant to such ordinance.

(2)The ordinance, if such bonds constitute debt of the Mayor and City Council of Baltimore
under Section 7 of Article XI of the State Constitution, shall be submitted to the legal voters
of the City of Baltimore at the time and place specified therein. Such ordinance shall become
effective only if it is approved by the majority of the votes cast at the time and place specified
in such ordinance. Except as otherwise provided herein, this section may not be construed as
requiring the submission to the legal voters of the City of Baltimore of any ordinance creating
a development district pursuant to subsection (d) of this section.

(3)Such ordinance may specify that the bonds authorized thereunder may be issued from time to
time or at any time.

(4)Such ordinance may authorize the Mayor and City Council of Baltimore by ordinance or the
Board of Finance by resolution to specify and prescribe any of the following as it deems
appropriate to effect the financing or refinancing of the proposed undertaking:

(i)the actual principal amount of the bonds to be issued;

(ii)the actual rate or rates of interest the bonds are to bear or the method for determining
the same;

(iii) the manner in which and the terms upon which the bonds are to be sold;

(iv) the manner in which and the times and places that the interest on the bonds is to be
paid;

(v)the time or times that the bonds may be executed, issued, and delivered;

(vi) the form and tenor of the bonds and the denominations in which the bonds may be
issued;

(vii) the manner in which and the times and places that the principal of the bonds is to be
paid, within the limitations sot forth in this subsection;

(viii) provisions pursuant to which any or all of the bonds may be called for redemption
prior to their stated maturity dates;

(ix) the terms and provisions of any development agreement to be executed by the Mayor
and City Council of Baltimore and any person in connection with the issuance of such
bonds; and

(x)any other provisions not inconsistent with this section, the Charter and applicable law
as shall be determined by the Mayor and City Council of Baltimore or the Board of
Finance (as the case may be) to be necessary or desirable to effect the financing or
refinancing of the proposed undertaking.

(g) Tax exemption.

The principal amount of the bonds, the interest payable thereon, their transfer, and any income
derived therefrom, including any profit made in the sale or transfer thereof, shall be exempt from
taxation by the State of Maryland and by the several counties and municipalities of the State of
Maryland but shall be included, to the extent required under Title 8, Subtitle 2 of the
Tax-General Article of the Annotated Code of Maryland, as amended, replaced, or supplemented
from time to time, in computing the net earnings of financial institutions.
(h) Form; tenor; sale.

(1)All bonds may be in bearer form or in coupon form or may be registrable as to principal alone
or as to both principal and interest. Each of the bonds shall be deemed to be asecurity
within the meaning of § 8-102 of the Commercial Law Article of the Annotated Code of
Maryland, as amended, replaced, or supplemented from time to time, whether or not it is
either one or a class or series or by its terms is divisible into a class or series of instruments.

(2)All bonds shall be signed manually or in facsimile by the Mayor of the City of Baltimore, and
the seal of the Mayor and City Council of Baltimore shall be impressed thereon manually or
by facsimile and attested by the custodian of the City seal, manually or by facsimile. If any
officer whose signature or countersignature appears on the bonds ceases to be such officer
before delivery of the bonds, his signature or countersignature shall nevertheless be valid and
sufficient for all purposes the same as if he had remained in office until delivery thereof.

(3)All bonds shall mature not later than 40 years from their date of issuance.

(4)All bonds shall be sold in such manner, either at public or private sale, and upon such terms
as the Mayor and City Council of Baltimore by ordinance or (if authorized in the ordinance
authorizing such bonds) the Board of Finance by resolution deems best. Any contract for the
acquisition of property may provide that payment shall be in bonds.

(i) Refunding bonds.

(1)The Mayor and City Council of Baltimore, acting by and through the Board of Finance
thereof, is hereby authorized and empowered to issue its bonds for the purpose of refunding
any bonds authorized to be issued under the provisions of this section by payment at maturity
or the purchase or redemption of bonds in advance of maturity. The validity of any refunding
bonds shall in no way be dependent upon or related to the validity or invalidity of the bonds
being refunded. Such refunding bonds may be issued by the Mayor and City Council of
Baltimore, acting by and through the Board of Finance thereof, for the purpose of providing
it with funds to pay any of its outstanding bonds authorized to be issued under the provisions
of this section at maturity, to purchase in the open market any of its outstanding bonds
authorized to be issued under the provisions of this subsection prior to their maturity, to
redeem prior to their maturity any outstanding bonds which are, by their terms, redeemable,
to pay interest on any outstanding bonds prior to their payment at maturity or purchase or
redemption in advance of maturity, or to pay any redemption or purchase premium in
connection with the refunding of any of its outstanding bonds authorized to be issued under
the provisions of this subsection.

(2)Any refunding bonds authorized to be issued and sold under the provisions of this section
may be issued for the public purpose of:

(i)realizing savings to Baltimore City in the aggregate cost of debt service on either a
direct comparison or present value basis; or

(ii)debt restructuring that:

1. in the aggregate effects such a reduction in the cost of debt service; or

2. is determined by the Board of Finance of the Mayor and City Council of
Baltimore to be in the best interest of Baltimore City, to be consistent with
Baltimore Citys long-term financial plan, and to realize a financial objective
of Baltimore City, including, without limitation, improving the relationship of
debt service to a source of payment such as taxes, assessments, or other
charges.

(3)Any refunding bonds authorized to be issued and sold under the provisions of this section
may be issued in whatever principal amount shall be required to achieve the purpose for the
issuance of the refunding bonds, which amount may be in excess of the principal amount of
the bonds refunded or the maximum principal amount of bonds authorized to be issued under
subsection (f)(4)(i) of this section.

(4)Any refunding bonds authorized to be issued and sold under the provisions of this section
may be issued to mature on such dates and in such amounts as the Board of Finance may
determine; provided that the entire principal amount represented by the refunding bonds shall
be discharged not more than 40 years from the date of issuance of the bonds being refunded.

(5)Any refunding bonds authorized to be issued and sold under the provisions of this section
may be sold at public sale by the solicitation of competitive bids or at private (negotiated)
sale without advertisement or solicitation of competitive bids, for a price or prices which may
be at, above, or below the par value of the refunding bonds, as determined by resolution of
the Board of Finance of the Mayor and City Council of Baltimore. If the Board of Finance
determines to sell the refunding bonds at public sale, the refunding bonds shall be sold to the
highest responsible bidder or bidders therefor after due notice of such sale, but the Mayor and
City Council of Baltimore, acting by and through the Board of Finance thereof, shall have the
right to reject any or all bids therefor for any reason.

(6)Any refunding bonds authorized to be issued and sold under the provisions of this section
shall bear interest at such rate or rates as may be determined by the Board of Finance of the
Mayor and City Council of Baltimore, which rate or rates may be fixed or variable or as
determined by a method approved by the Board of Finance, and such interest shall be payable
at such time or times as may be determined by the Board of Finance.

(7)The proceeds of the sale of any refunding bonds authorized to be issued and sold under the
provisions of this section, after the payment of issuance costs relating thereto, shall be set
aside by the Mayor and City Council of Baltimore as a separate trust fund to be used solely
for the purposes stated in this subsection.

(8)Except as otherwise provided in this subsection, the powers granted in, the limitations and
obligations imposed by, and the procedures specified in this section with respect to the
issuance of bonds shall be applicable to the issuance of refunding bonds.

(9)Any refunding bonds authorized to be issued and sold under the provisions of this section
shall not be subject to any debt policy limitation that may from time to time be established by
the Mayor and City Council of Baltimore.

(j) Assessment and taxation of property.

Whenever the Mayor and City Council of Baltimore, as lessor, leases its property within the
development district, the property shall be assessed and taxed in the same manner as privately
owned property, and the lease or contract shall provide that the lessee shall pay taxes or payments
in lieu of taxes upon the assessed value of the entire property and not merely the assessed value
of the leasehold interest.

(k)In addition to the powers in this section, the Mayor and City Council of Baltimore may use the
authority granted to a political subdivision for tax increment financing in a sustainable
community as provided for in Title 12, Subtitle 2 of the Economic Development Article of the
Annotated Code of Maryland.
(Ch. 624, Acts of 1994; Chs. 9 and 10, Acts of 1996; Ch. 66, Acts of 2000; Ch. 170, Acts of 2001;
Ch. 405, Acts of 2004; Ch. 338, Acts of 2008; Ch. 544, Acts of 2008; Ch. 624, Acts of 2013.)

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