As the town council readies to submit an “Intent to Apply” request to the State to designate Chestertown as an Arts and Entertainment District, the Greater Chestertown Initiative (GCI) committee has identified some of the economic advantages to artists, businesses and individuals living and working within an A & E District:
The 2014 legislature defined a Qualified Residing Artists (QRA) as an individual who: owns or rents residential real property in the state; conducts a business in any A&E district; and derives income from the sale or performance within any A&E district, or any artistic work that the individual wrote, composed, or executed, either alone or with others, in an A & E district.
Income Tax Subtraction Modification: Any QRA who resides in Maryland, creates artistic work in any of the 22 A E districts and sells that work in any of the 22 districts will be eligible for the artist’s income tax incentive. The act took effect July 1, 2014 and is applicable to all taxable years beginning After December 31, 2013.
Exemption from Admission and Amusement: In addition, admission and amusement tax gross receipts for any amusement charge levied by an A&E enterprise or any QRA, are exempt for a period of (1-10) years
Property tax credit: Property tax credits are available for the owner of a building located within the A&E District. The building must be partially built or renovated for the use by a Qualified Residing Artist (QRA), or an A&E enterprise can be eligible for a property tax credit for (1-10) years, as long as the building is used by the QRA or an A&E enterprise.
The owner will work with the State Assessment Office to determine the qualified renovations and previous assessment to determine the amount of the credit. If less than the whole building is used by the QRA, the credit is only for the portion used by the QRA. The town may choose any period of time up to 10 years to determine the credit.
Examples of Property Tax Credit
(It is important to note that these are possible guidelines and may not be the actual percentages sought during the application process and will depend on how the request is packaged. Lani Seikaly, President of RiverArts and spokesperson for Greater Chestertown Initiative wrote to the Spy that the State recommended asking for the highest percentage of property tax credit. The State pointed out that Leonardtown was granted a 100% incentive for all ten years)
100% —1st and 2nd years
80% —3rd and 4th years
60% —5th and 6th years
40% —7th and 8th years
20% —9th and 10th years
0% —after 10 years
A 2013 Towson State economic analysis of the 22 A&E districts and their impact on jobs, wages and income, maybe be found here:
Form 501ae lists qualifications needed for tax reduction here.
Compiled with research help from Jeff Grotsky, Greater Chestertown Initiative.