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SB 698

Washington County - Sales and Use Tax Exemption - Target Redevelopment Area

2025 Regular Session Introduced by Paul Corderman

Provides a 10-year state sales and use tax exemption for construction materials and warehousing equipment bought for use in the Mount Aetna Technology Park redevelopment area.

Hearing 3/27 at 1:00 p.m.
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Bill Summary · SB 698

Summary — SB 698 (Washington County)

Title: Washington County — Sales and Use Tax Exemption — Target Redevelopment Area
Introduced: Jan. 26, 2025 (Sen. Corderman) | Effective date if enacted: July 1, 2025 | Duration: 10 years (expires June 30, 2035)

Purpose / Intent

Provide a targeted 10‑year State sales and use tax exemption to lower the cost of construction and warehousing investments inside a specified redevelopment area in Washington County (the Mount Aetna Technology Park), with the aim of encouraging redevelopment, construction, and industrial/office investment in that site.

Key provisions

  • Adds Section 11‑246 to the Tax‑General Article to create the exemption.
  • Exemption scope:
    • Exempts State sales and use tax on sales of:
    • "Construction material" — tangible personal property used to construct or renovate buildings or improvements (e.g., building materials, building systems equipment, landscaping materials, supplies) that typically lose separate identity once incorporated into real property.
    • "Warehousing equipment" — equipment used for material handling and storage (e.g., racking systems, conveying systems, computer systems/equipment).
    • Eligibility limited to purchases made by a person solely for use in the designated "target redevelopment area."
  • Target redevelopment area definition:
    • Real property in Washington County commonly known as the Mount Aetna Technology Park, accessible from Robinwood Drive, Mount Aetna Road, and Yale Drive, and located in an office, research, and industry zoning district.
  • Administrative requirement:
    • Buyer must provide the vendor with evidence of eligibility for the exemption issued by the Comptroller; vendors rely on that proof to make exempt sales.

Who is affected

  • Beneficiaries:
    • Developers, businesses, and other purchasers making construction or warehousing equipment purchases solely for use within the Mount Aetna Technology Park — will pay no State sales and use tax on qualifying purchases during the 10‑year period.
    • Small businesses locating or expanding in the designated area may see meaningful cost savings.
  • Others:
    • State general fund revenues will decline by an indeterminate amount (depends on the volume/value of qualifying purchases).
    • The Comptroller’s Office may incur minimal additional administrative/compliance costs to verify eligibility.
    • Local businesses outside the area could face a competitive disadvantage relative to firms inside the exemption zone.

Fiscal impact (per Fiscal Note)

  • State revenue: Indeterminate decrease in FY 2026–2035 (amount depends on value of eligible purchases in the Park).
  • Example context: Maryland’s sales/use tax is a major revenue source (~$6.0B in FY2025); in FY2022, building/construction categories generated $937.2M statewide and $20.7M from businesses with Washington County addresses.
  • Administrative: Potential minimal increase in Comptroller expenditures to monitor/verify exemption claims.

Timeline / Procedural status (selected)

  • Introduced Jan. 26, 2025; assigned to Budget & Taxation.
  • Committee report: Favorable; read second time Feb. 21, 2025.
  • If enacted, the exemption takes effect July 1, 2025, and automatically terminates June 30, 2035.

Related / contextual information

  • The bill mirrors the policy approach used for a Baltimore County target redevelopment area (Chs. 603 & 604, 2016) that created a similar exemption for construction material and warehousing equipment in a designated redevelopment zone.
  • Policy tradeoffs: targeted incentives can spur localized investment but reduce statewide general fund revenue and create differential tax treatment among businesses.

If you want, I can:
- Draft a one‑page fiscal briefing summarizing likely revenue scenarios (low/medium/high uptake), or
- Produce suggested questions for hearings (administration, Comptroller, Washington County, developers).

Compiled from official sources — confirm details with the bill’s official record.

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