Baltimore officials plan to offer up to $5,000 in tax credits to homeowners who move to new homes but choose to remain in the city.
The Resident Retention Tax Credits – which will be introduced before the City Council Monday – are intended to help residents who lose their Homestead tax credits when they switch homes.
“This has the potential to be a very effective tool in retaining families and contributing to my goal of growing Baltimore by 10,000 families over the next decade,” Mayor Stephanie Rawlings-Blake said in a statement.
The program was pushed at the state level by Del. Maggie McIntosh, a Baltimore Democrat. Her bill allowed city homeowners to transfer a portion of the Homestead tax credit from their old building to a new property.
State Sen. Bill Ferguson sponsored the Senate version of the bill.
"Growing our city must include strategies to retain the residents who already live in our city's neighborhoods," he said.
The city is altering the General Assembly's proposal, said William Voorhees, the city’s director of revenue and taxation.
“It’s better to do a tax credit rather than making Homestead portable,” he said. “Making the Homestead tax credit portable is extremely complex. We didn’t want to go down that route.”
Baltimore residents receiving a Homestead tax credit can be eligible for five years of the Resident Retention Tax Credits when they move.
City officials have allocated $3 million – which will cover about 750 credits – for the program. They will be awarded on a first-come, first-served basis, Voorhees said.
Residents will receive a $1,000 tax credit in the program’s first year, followed by credits of $900, $800, $700 and $600. Homeowners who buy in poorer areas could be eligible to earn an additional $200 in credits per year, he said.
In the sixth year of the program, the homeowner will return to receiving his or her Homestead property tax credit, Voorhees said. The average Homestead property tax credit per year in Baltimore is currently $860.
If the council passes the legislation, the program would begin in 2015.
“We think it will help retain people in the city,” Voorhees said. “Maybe their family grew and they need a three or four bedroom house now. If they move, they lose their Homestead credit. This will help bridge the gap and help keep them in the city."
The city’s property tax rate is double that of surrounding counties.
The council will also take up another tax credit Monday, when it casts a preliminary vote on Rawlings-Blake's plan make 10 years of tax credits available citywide for developers of apartments.
The bill would expand an existing 15-year tax program for apartments that's in place for eight targeted areas of the city. The 15-year credits will still apply for those areas, while the rest of the city will be eligible for the 10-year credits, the mayor's office said.