More than 2,400 bills are currently pending before the Maryland General Assembly that will directly or indirectly affect developers if they become law. At the mid-point in the legislative session, we have highlighted several of the most important:

The Budget and Proposed Taxes – SB 150/HB 85 and SB 152/HB 87
As always, budget concerns frame all discussions. The Governor’s 2013 proposed budget of $35.5 billion assumes an increase in general fund revenues by various means as proposed in the Budget Reconciliation and Financing Act of 2012.These include capping income tax deductions and phasing out exemptions for income earners over $100,000, requiring online companies to collect sales tax, and requiring counties and Baltimore City to pay for teachers’ pensions and transfer of monies from special funds.

The Flush Tax – SB 240
In conjunction with those proposals is the increase in the “flush” tax (Bay Restoration Fund) from $30 per year per household to up to a per-gallon tax that could exceed $120 per year.

The Gas Tax
On February 15, the Governor’s Gas Tax Bill was introduced, proposing a 16-percent gas tax increase, spread over a three-year period. Two critical components of the Bill include an automatic “time-out” if gas prices increase by more than 15 percent over the previous year, and a provision that allows borrowing the revenue in case of a statewide declared emergency.

The gas tax is anticipated to generate $613 million annually when it is fully implemented. The new revenues would be dedicated to the huge backlog of transportation projects, which includes Montgomery County’s Corridors Cities Transitway and the Purple Line.

Public-Private Partnership – SB 358/HB 576
With 13 sponsors in the Senate and 21 in the House, this Bill would create a state policy and process for partnerships on infrastructure projects by improving the definition of a “public-private partnership,” or P3, and shortening both the legislative review process and the approval process once partners are selected. The Senate’s Budget and Taxation Committee will be taking it up on March 7.

Several bills reflect the frustration that many counties have had with the Governor’s PlanMaryland initiative, and the view that it diminishes local jurisdictions’ ability to plan locally.SB 532 would establish local governance when there is a conflict between the State’s Plan and local planning. Several bills introduced by Senator Edward J. Pipkin—SB 701, SB 819/HB 35, SB 826, SB 829, and SB 832—would severely restrict the ability of PlanMaryland to impose any requirements on local planning, culminating in disbanding the Department of Planning and resurrecting it as an Office of Planning under the jurisdiction of the state Department of Natural Resources.

Septic Subdivisions – SB 236/ HB 445
The Sustainable Growth and Agricultural Preservation Act of 2012 authorizes the Maryland Department of the Environment (MDE) to approve septic subdivisions of five or more units. The Bill’s supporters contend that it simply supports the State’s 15-year-old policy of encouraging growth in designated “priority funding areas.” But the restrictions on septic subdivisions and future development have galvanized rural lawmakers, farmers, and developers because of the additional restrictions it would place on new developments and existing property owners.

Watershed Implementation Plan
On the heels of the Stormwater Act of 2007, and stormwater management practices that can be subjective, HB 486 would require MDE to evaluate best management practices related to the Watershed Implementation Plan (WIP) based on cost and expected pollution reduction. This Bill could provide some balance to the open-ended requirements that may be imposed when designing stormwater facilities. By contrast, SB 821 and SB 822/HB 837 would cap spending on WIP improvements.

Transportation and Infrastructure
Funding for transportation improvements as well as rebuilding of infrastructure dominates state and county agendas, even more so as federal funding continues to decrease. Over the years, Maryland has imposed a series of taxes and fees to ensure that specific initiatives have the revenue available to move forward. But as state revenues declined, both the Governor and the General Assembly have transferred Funds to balance revenue shortfalls and/or unexpected deficits. Consequently, transportation improvements and environmental initiatives have been delayed.

This session has seen the introduction of several Bills—SB 65/HB 121, SB 403, SB 441, and HB 23—designed to prohibit the past practices of borrowing monies from Funds such as the Transportation Trust Fund, the Chesapeake and Coastal Bays Trust Fund, and the Bay Restoration Fund. HB 146 and SB 441 would permit borrowing for certain purposes if an emergency is declared. In keeping with the sentiment, the Governor’s Gas Tax establishes criteria for borrowing from the Transportation Trust Fund and requires that the loan be repaid within five years.

The attorneys in Ballard Spahr’s Real Estate Development Group routinely monitor pending legislation that could affect developers and are ready to offer advice on how to prepare for changes in the law.

Copyright © 2012 by Ballard Spahr LLP.
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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.