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Business Development Incentives
DEVELOPMENT INCENTIVES
City of Cumberland, Maryland
Last update November 2010
Cumberland. A great place to live, and an even better place to do business!
Enterprise Zone Tax Credits
Businesses locating in Cumberland and Allegany County’s Enterprise Zones may be eligible for income tax credits and real property tax credits in return for job creation and investments made in the zone.
· Real property tax credits : Ten-year credit against local real property taxes on a portion of real property improvements. Credit is 80 percent the first five years, and decreases 10 percent annually thereafter to 30 percent in the tenth and last year.
· Income tax credits : One-or three-year credit for creating new jobs. The general credit is a one-time $1,000 credit per new employee. For economically disadvantaged employees, the credit increases to a total of $6,000 per employee distributed over three years.
You can download frequently asked questions about the Enterprise Zone Tax Credits and the income tax credit from www.mdbusiness.state.md.us. Contact the county enterprise zone administrator, Tim Carney for more information on being certified. Allegany County Department of Economic Development, 301-777-5967, www.alleganyworks.org. Funds are provided through the State of Maryland in cooperation with the City of Cumberland and Allegany County. (Expires 6/14/2012)
One Maryland Tax Credit
Businesses can qualify for up to $5.5 million in income tax credits under the One Maryland Income Tax Credit Program. Businesses that invest in an economic development project in Cumberland may qualify for project tax credits of up to $5 million and start-up tax credits of up to $500,000.
Project Tax Credit: Project tax credits of up to $5 million are based on qualifying costs and expenses incurred by the business entity in connection with the acquisition, construction, rehabilitation, installation, and equipping of an eligible economic development project. Eligible costs may include, among others, land acquisition, performance and contract bonds, insurance, architectural and engineering services, environmental mitigation, and utility installation. Eligible project costs must be at least $500,000; project costs in excess of $5 million are not eligible for the project tax credit.
Start-up Tax Credit: The start-up tax credit is for the expense of moving a business from outside Maryland and for the costs of furnishing and equipping a new location for ordinary business functions. Examples of eligible start-up costs include the cost of fixed telecommunications equipment, office equipment, or office furnishings. The start-up credit earned may not exceed the lesser of $500,000 of eligible start-up costs or $10,000 times the number of new, qualified positions created. Business must locate in “Priority Funding Area, notify intent to apply before start up expense or hiring occurs, create 25 positions in 24 months)
You can download frequently asked questions about the One Maryland Tax Credit and the income tax credit from www.mdbusiness.state.md.us. Contact Maryland Department of Business and Economic Development, Division of Business Development, Tax Incentives Group for more information, 217 E. Redwood Street, Baltimore, MD 21202, Phone: 410-767-6438 or 410-767-4980, E-mail: taxincentives@choosemaryland.org. Funds are provided through the State of Maryland in cooperation with the City of Cumberland and Allegany County.
Federal HUB Zone Contracting Program
The HUB Zone Empowerment Contracting program was enacted into law as part of the Small Business Reauthorization Act of 1997. The program encourages economic development in historically underutilized business (HUB) zones through the establishment of preferences. SBA's HUB Zone program is an effort to promote economic development and employment growth in distressed areas by providing access to more Federal contracting opportunities. A small business must meet all of the following criteria to qualify for the HUB Zone program: It must be located in a HUB Zone. It must be owned and controlled by one or more US Citizens, and at least 35% of its employees must reside in a HUB Zone. Within the City of Cumberland, there are currently three qualifying districts according to the HUBZone locator Map.(As defined in section 42(d)(5)(C)(i)(I) of the Internal Revenue Code of 1986).
Additional information can be found by accessing the HUBZone website at: http://www.sba.gov/hubzone/. Federal Certification is required to participate in this program and the Small Business Administration (SBA) serves as the sponsoring agency. Contact: Economic Development (301) 722-2773 or e-mail: discovercumberland@allconet.org
Maryland Neighborhood Business Works Program
Is the State’s premiere small business loan program providing competitively-priced, flexible financing for the costs associated with business startup and expansion. The Neighborhood BusinessWorks loan program provides gap financing, i.e. subordinate financing, to new or expanding small businesses and nonprofit organizations in locally designated neighborhood revitalization areas. Occasionally, there are competitive rounds for NBW Grants. small businesses (as defined by the U.S. Small Business Administration), local development corporations and nonprofit organizations whose activities contribute to a broader revitalization effort, and whose projects are intended to promote investment in commercial districts or town centers. Eligible use of funds include Mixed-use projects combining residential and commercial uses in the same building, New construction or rehabilitation, Machinery and equipment, Certain other costs associated with opening or expanding a small business, Real estate acquisition, Manufacturing, service providers and retail. Interest rate is based on an underwriting analysis, Target loan term is five to 15 years, depending on use and loan amount, Minimum five percent applicant cash contribution is required (based on total new project cost), Personal guarantees and collateral are required.
Additional information can be found on the Maryland Housing website at: http://www.neighborhoodrevitalization.org/Programs/NBW/NBW.aspx Funds provided through the State of Maryland’s Department of Housing and Community Development Local Contact: Economic Development (301) 722-4173 or e-mail: discovercumberland@allconet.org – State Contact: Dawn Medley Director, Business Lending Programs
Maryland Department of Housing and Community Development 100 Community Place Crownsville, MD 21032 (410) 514-7237 Medley@mdhousing.org
Lenders Loan Pool
This program was created to encourage development of the Cumberland Downtown area by financing the start-up costs and renovations of businesses relocating and/or expanding within the Central Business District. Loans ranging from $10,000 - $100,000 are provided at competitive interest rate for a maximum of 60 months and can be used for expenses such as inventory, leasehold improvements, equipment, and receivables.
Funds are provided by the City of Cumberland in partnership with Local Banks and the State of Maryland. Contact: Economic Development (301) 722-4173 or e-mail: discovercumberland@allconet.org.
Micro-Enterprise Grant Program
Funded through the Community Development Block Grant Program, this program is available for qualifying businesses locating within the targeted areas of the City. Grants of up to $5,000 are made available to assist micro businesses with start-up or retention costs including job creation, marketing, staff development, and project expansion. Businesses must not have more than 5 full-time employees (including the owner) and the owner’s household must qualify according to the federal standards for low to moderate income (see DHCD website for HUD guidelines www.dhcd.state.md.us ).
Cumberland Historic District Financial Assistance Programs
A. City of Cumberland Historic District Tax Incentive Program
For qualified renovations that have been approved by the Historic Preservation Commission, a ten-percent credit can be deducted from the property owner’s annual city property taxes. A minimum expenditure of $5,000 is required. This credit can be used for up to five years if the amount of credit is greater than the amount of annual taxes due. Additionally, a city property tax assessment freeze is available for a period of up to ten years. The length of the freeze depends upon the amount of the expenditure in relation to the pre-improvement market value of the property. In 2006, this program was expanded to include not only the Canal Place Preservation District, but also all National Register of Historic Districts
B. Allegany County Historic District Tax Incentive Program
The Allegany County Commissioners have provided a tax assessment freeze equal to that received through the City of Cumberland’s program. Applicants must have work approved by the Cumberland Historic Preservation Commission in order to be eligible. Approved City of Cumberland Historic District Tax Incentive Applications will be forwarded to the Allegany County Office of Finance for processing. There is not a separate application required.
C. Heritage Preservation Tax Credit
Administered by the Maryland Historical Trust, this program provides Maryland income tax credits equal to 20% of the qualified capital costs expended in the rehabilitation of a “certified heritage structure.” As of July 1, 2001, non-profit organizations and individuals have the option to select a cash refund, instead of income tax credits. A yearly cap is in
effect for commercial buildings and a project cap is in effect for residential buildings. All applications must be approved by the Maryland Historical Trust prior to the commencement of work. More information about this program can be obtained by contacting the Maryland Historical Trust’s Office of Preservation Services at 410-514-7627 or 410-514-7628. Forms and instructions may be obtained by visiting the website at http://www.mht.maryland.gov/taxcredits.html.
D. Maryland Historical Trust Historic Preservation Loan Program
The Maryland Historical Trust administers loan programs that assist both bricks and mortar activities such as acquisition and rehabilitation of historic properties and the development of heritage tourism-related businesses. Loans are awarded as a lump sum that must be repaid within an agreed-upon time period. The loan terms are attractive, offering below market rates. More information about this program can be obtained by contacting the Maryland Historical Trust’s Office of Preservation Services at 410-514-7627 or 410-514-7628. More information is available on the MHT website by visiting http://www.mht.maryland.gov/loans.html.
E. Maryland Historical Trust Grant Programs
The Maryland Historical Trust administers six separate grant programs that assist in a wide
variety of historic preservation-related activities, including:
· acquisition and rehabilitation of historic properties;
· acquisition, construction, and capital improvement of buildings, sites, and communities of historical and cultural significance to the African American experience in Maryland;
· Historic Property documentation projects such as National Register of Historic Places nominations; Maryland Inventory of Historic Property forms; and HABS/HAER/HALS documentation;
· archeological investigations;
· documentation of folkways and cultural history through oral histories;
· heritage tourism development, such as brochures, tours and site improvements;
· museum activities, encompassing strategic planning, exhibits, collections management, educational programs and marketing.
Each program has different eligibility standards, operating regulations, applications and deadlines, so please be sure to read each program’s guidelines closely to make sure your project is eligible. MHT encourages applicants to contact the appropriate MHT staffperson prior to submitting application. More information about this program can beobtained by contacting MHT’s website at http://www.mht.maryland.gov/grants.html.
F. Federal Tax Incentive Program
The program enables the owners or long-term leaseholders of income-producing certified historic structures (listed in the National Register of Historic Places, or a contributing element within the boundaries of an historic district), to receive a federal tax credit. The credit amounts to 20% of the cost of a certified rehabilitation. Applications for this program contain three parts and are available through the Maryland Historical Trust. More information about this program can be obtained by contacting the MHT’s Office of Preservation Services at 410-514-7627 or 410-514-7628. More information can be found on the National Park Service’s Heritage Preservation Services website, located at http://www.nps.gov/hps/tps/tax/index.htm.
Please contact the phone numbers or websites listed above to ensure that stated program information is still accurate prior to submitting application forms.
Arts and Entertainment District Programs
A. Arts & Entertainment District Rehabilitation Tax Credit Program
A tax credit will be provided on City real property taxes for properties wholly or partially constructed or renovated to be capable for use by a qualifying artist or arts enterprise located within the Arts & Entertainment District. The credit shall be the difference between the property tax that, but for the tax credit, would be payable after the completion of eligible improvements, and the property tax that would be payable if the eligible improvements were not made. This tax "freeze" is available for a period of up to 10 years based on the level of improvements made to the property. Qualifying commercial properties are eligible for the tax "freeze". Properties must be located within the A&E District and a minimum of $5,000 investment must be made. Application must be made prior to work beginning with the City of Cumberland's Department of Community Development and a certificate of appropriateness from the local Historic Preservation Commission must be obtained, when applicable.
This program is available as a result of Cumberland's designation as a State of Maryland Arts & Entertainment District through the Maryland Department of Business and Economic Development. Contact: Cumberland Economic Development at discovercumberland@allconet.org or 301-722-4173.
B. Arts & Entertainment District Admissions & Amusement Tax Exemption Program
Enterprises dedicated to visual or performing arts located within the Arts & Entertainment District are exempt from the collection of the State of Maryland's Admissions and Amusement Tax. Businesses must qualify for the exemption and notification must be provided to the State of Maryland's Comptroller's Office in order to be eligible.
This program is available as a result of each City's designation as a State of Maryland Arts & Entertainment District through the Maryland Department of Business and Economic Development. Contact: Cumberland Economic Development at discovercumberland@allconet.org or 301-722-4173.
C. Arts & Entertainment District Income Tax Subtraction Modification Program
Qualifying artists who own or rent residential real property in the county where the Arts & Entertainment District is located, and who conduct business in the District, may be eligible for a Maryland personal income tax subtraction modification to eliminate state and local income tax on their income from the sale, publication, or production within the District of their artistic work that is written, composed, or executed within the District. This includes income derived from internet, mail order, and catalog sales of artistic work that is shipped from within the District to buyers in another location, if the qualifying artist created that artistic work within the District.
This program is available as a result of each City's designation as a State of Maryland Arts & Entertainment District through the Maryland Department of Business and Economic Development. Contact: Allegany Arts Council at avick@allconet.org or 301-777-ARTS (2787).
South Cumberland Corridor
Virginia Avenue Area Targeted for Revitalization Programs
Virginia Avenue Façade Program
This CDBG funded grant up to $2,000 is available for property owners to repair and repaint housing structures in the Virginia Avenue Area Targeted for Revitalization (VAATR) District (map attached). Grants are provided to homeowners whose households qualify according to the federal standards for low to moderate income (see DHCD website for HUD guidelines www.dhcd.state.md.us ). Applicants will be required to become educated in State Historic Tax Credits. Typical improvements may include exterior painting, rain spout repair, or siding or similar projects.
Home Improvement Matching Grant Program
This CDBG funded grant up to $5,000 is available for property owners to repair and repaint housing structures in the Virginia Avenue Area Targeted for Revitalization (VAATR) District (map attached). Grants are provided to homeowners whose households qualify according to the federal standards for low to moderate income (see DHCD website for HUD guidelines www.dhcd.state.md.us ). Applicants will be required to match the grant with at least $250 and become eligible and educated in State Historic Tax Credits. Typical improvements may include exterior painting, rain spout repair, siding or similar projects .
Targeted Commercial Façade Program
This CDBG funded grant up to $2,000 is available for property owners to repair and repaint commercial structures in the Virginia Avenue Area Targeted for Revitalization (VAATR) District (map attached). Grants are provided to commercial property owners whose households qualify according to the federal standards for low to moderate income (see DHCD website for HUD guidelines www.dhcd.state.md.us ). Applicants will be required to become educated in State Historic Tax Credits. Typical improvements may include exterior painting, rain spout repair, siding or similar projects .
Virginia Avenue Targeted Area Revitalization (VAATR) Tax Incentive
Established by the Mayor and City Council to stimulate revitalization and growth along the Virginia Avenue corridor. This program provides flexibility to the owner to make improvements to his property and be eligible to receive property tax credits outside the structure of the Historic District guidelines. Allegany County tax credits will also be available for this program beginning September 24, 2007. Both commercial and residential properties eligible. $5,000 minimum investment required. Property must be maintained for up to 10 years. Eligibility based on property improvements, restoration and rehabilitation, or new construction costs. Property tax credit to be determined by cost of eligible improvement as compared to value of property if eligible improvements had not been made. Allowable for up to 10 years, as determined by improvement costs.
Virginia Avenue Enterprise Zone for Revitalization Area (VAEZRA) Program
The local standards of the Gateway Enterprise Zone are amended by the City and the County to include merchantile, retail or service activity, eligible for Enterprise Zone benefits in the Virginia Avenue area. The new district began in January 1, 2008 and has been expanded. The business must create at least three (3) new or additional jobs above a base employment level within a reasonable time period as determined by the Enterprise Zone Advisory Committee. Amount of credit is 80% of the taxes due on any expansions renovation or capital improvement in the property over the first 5 years. Subsequent years, the credit decreases 10% annually. (See Enterprise Zone on page 1).
Virginia Avenue Enterprise Zone Tax Credits
The local standards of the Gateway Enterprise Zone are amended by the City and the County to include merchantile, retail or service activity, eligible for Enterprise Zone benefits in the Virginia Avenue area. The new district began in January 1, 2008 and expanded in 2009. The business must create at least three (3) new or additional jobs above a base employment level within a reasonable time period as determined by the Enterprise Zone Advisory Committee. Amount of credit is 80% of the taxes due on any expansions renovation or capital improvement in the property over the first 5 years. Subsequent years, the credit decreases 10% annually. A business could qualify for the following incentives:
- Real property tax credits : Ten-year credit against local real property taxes on a portion of real property improvements. Credit is 80 percent the first five years, and decreases 10 percent annually thereafter to 30 percent in the tenth and last year.
- Income tax credits : One-or three-year credit for creating new jobs. The general credit is a one-time $1,000 credit per new employee. For economically disadvantaged employees, the credit increases to a total of $6,000 per employee distributed over three years.
You can download frequently asked questions about the Enterprise Zone Tax Credits and the income tax credit from www.mdbusiness.state.md.us. Contact the county enterprise zone administrator, Tim Carney for more information on being certified. Allegany County Department of Economic Development, 301-777-5967, www.alleganyworks.org. Funds are provided through the State of Maryland in cooperation with the City of Cumberland and Allegany County. (Expires 6/14/2012)
Please contact the phone numbers or websites listed above to ensure that stated
program information is still accurate prior to submitting application forms
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