Budget Bill (Fiscal Year 2027)
HB0390 expands Maryland’s authority for counties to use payment-in-lieu-of-taxes (PILOT) agreements for rental housing projects that include affordable units. Under the bill, an owner of rental property and a county governing body may agree that the owner will pay a negotiated amount instead of county property tax, so long as the owner also commits to keeping a specified share of the units affordable for at least 15 years. The bill defines “affordable” and “affordable dwelling unit” by reference to existing law, tying affordability to household income and area median income standards.
The bill changes the minimum affordability threshold for these PILOT agreements from 50% of units to 25% of units, while preserving county discretion to require a higher percentage in any particular agreement. It also provides that qualifying property is exempt from county property tax when the agreement conditions are met. The act takes effect June 1, 2025, and applies to taxable years beginning after June 30, 2025.
HB0390 amends the Tax-Property Article by adding a new section authorizing county property tax exemptions through negotiated PILOT agreements for rental housing that includes affordable dwelling units. It also relies on definitions in the Land Use Article for “affordable,” “affordable dwelling unit,” and “area median income,” thereby linking tax treatment to Maryland’s existing affordable housing framework. The practical effect is to give counties and developers a more flexible tool to support affordable housing production or preservation while reducing property tax liability for qualifying projects.
Based on the bill text and the absence of recorded committee testimony or votes in the provided materials, the bill appears to be a policy-oriented housing measure with an overall pro-affordable-housing posture. The structure of the bill suggests support for incentivizing private development of rental housing with affordability commitments, and the retention of county discretion indicates an attempt to balance local control with housing incentives. No explicit opposition or recorded controversy is included in the provided context.
The main policy tension in HB0390 is the tradeoff between property tax relief and the level of affordability required from participating projects. Supporters are likely to favor the expanded flexibility and lower minimum affordability threshold, while critics could object that the bill reduces county tax revenue or sets too low a baseline at 25% affordable units. Counties also retain authority to require a higher percentage, which may be a point of contention in negotiations between local governments and property owners.