Caroline County Economic Development

Enterprise Zones 101

As you may have heard, we are actively working to establish an Enterprise Zone in Federalsburg. So what exactly is an Enterprise Zone? Read on for some basic info. If you’d like to know more, feel free to call our office (410.479.4188) or attend a public hearing on Monday, February 2nd at 6:00 p.m. at the Federalsburg Town Office located at 204 South Main Street.

What is the purpose of an Enterprise Zone?

An Enterprise Zone (EZ) is intended to spur development and investment in economically disadvantaged areas within the state.  By stimulating investment by businesses, new and better jobs are created.  The ultimate goal is to realize an increase in income levels and employment rates for the citizens living in and around the EZ.

What are the benefits of an Enterprise Zone

The EZ provides a reduction on real property taxes for businesses that make significant improvements within the zone.  It is important to note that the tax breaks are on the increased property value resulting from improvements only.  In other words, there is no tax break on the existing value of the property, so there is no reduction in current local tax revenues.

The following is the schedule of real property tax reductions on improvements for qualifying businesses located within the EZ:

Years 1 – 5:  80%

Year 6:  70%

Year 7:  60%

Year 8:  50%

Year 9:  40%

Year 10:  30%

Regular tax rates resume after Year 10.

What is the cost of the Enterprise Zone to the Town of Federalsburg and Caroline County?

Fortunately, the EZ program has no cost to local jurisdictions.  As described above, it does not impact current tax revenues.  Although both the county and town will be forgoing a portion of future tax revenues, the State of Maryland reimburses 50% of the uncollected tax revenue to each jurisdiction.  So, as companies move to or expand within the EZ, both the town and county will be collecting more tax revenue than they otherwise would have.

Which properties are included within the proposed Enterprise Zone?

The EZ will encompass all three industrial parks located in Federalsburg, additional industrial properties (such as Kraft and Maryland Plastics), the commercial properties along Main Street, undeveloped commercial properties in other areas of the town, and several industrial and commercially zoned properties within the county near Federalsburg.  Check back at this blog soon; we’ll be adding a map that shows each parcel to be included.  We will also have a large map available at the public hearing on February 2nd.

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