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Cuts on board for the City of Frederick’s Business Personal Property Tax?

Cutting or eliminating a tax to be more competitive … what a brilliant idea!

Could Cuts be on board for the City of Frederick’s Business and Personal Property Tax?

It was the first order of business for the Mayor’s newly formed Economic Advisory Committee:

Should the City of Frederick take the bold move to cut, phase out or out-right eliminate its business personal property tax?

Affectionately referred to as the BPPT, it has recently become an urgent matter that could mean the difference between a multi-million dollar expansion of a major employer within the bounds of the City of Frederick or the loss of this business to another jurisdiction.

At issue is the average of $2,700,000 in BPPT revenue that is derived from levying an annual assessment on the equipment and personal property owned by businesses located within the City.

This particular employer has requested a waiver of the BPPT and seeks an answer soon.

Richard Griffin, Director of the City’s Economic Development office, brought to the predicament to the 16 member committee on the morning of September 8th.  The question put forth to the group of business leaders was not what the Mayor and Board of Aldermen should do about this specific case, but to gain some guidance as to whether the tax is considered an impediment to new and expanding businesses as they consider the City as their home.

Of course to be fair in its planning Griffin and Mayor realize that what they do for one business, they must do for everyone else.  In keeping with the purpose of the Economic Advisory Committee, the discussion that morning centered on issues such as:

  • If the BPPT was eliminated, would such a move make the City a more attractive option to other businesses seeking a new home?
  • How quickly will the City be able to offset a $2,700,000 loss in tax revenue?
  • Has Griffin’s office kept a record of the reasons certain employers have not chosen City?
  • Knowing the Frederick County does not assess a business personal property tax on companies, what do other counties and municipalities within and outside Maryland do?
  • One local developer member of the panel made no bones about the fact that of all the industrial buildings they have built within the county, they have never done a project within the City limits.
  • Commercial broker members stated that in their experience about 50% of their industrial leasing customers do not make the decision to locate within the City due the BPPT and the fact that real property taxes are nearly double that of Frederick County.

It was a lively and thought provoking discussion, which provided Griffin and his staff with some assignments to be presented at the October meeting of the committee.

While this discussion was focused on one issue for consideration, the consensus of the committee members was that it should put a lot of time into taking a more strategic look at a complete package of economic development incentives and marketing ideas and then map out a number of individual tactics to accomplish the larger plan.

Stay tuned!

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The author: Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He has been an active member of the Frederick, Maryland community for over four decades.  He has served as chairman of the board of Frederick Memorial Hospital and as a member of the Frederick County Charter Board from 2010 to 2012, to name a few. 

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