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PRIME Act Provides Historic, Sweeping Tax Incentives – Part of $5 Billion Plus Package Designed to Win HQ2
ANNAPOLIS, MD – Governor Larry Hogan today announced that the administration is filing the Promoting ext-Raordinary Innovation in Maryland’s Economy (PRIME) Act of 2018, which provides a package of state income, property, and sales tax credits and exemptions to enable Maryland to put forward the most competitive bid possible for Amazon’s second headquarters, HQ2. The proposed legislation follows Amazon’s selection of Montgomery County, Maryland as one of just 20 finalists out of hundreds of bids for this historic economic development project.
“Amazon sent a clear signal that Maryland truly is open for business by selecting Montgomery County as one of an elite group of contenders for this transformative project,” said Governor Hogan. “HQ2 is the single greatest economic development opportunity in a generation, and we’re committing all of the resources we have to bring it home to Maryland. I look forward to continuing to work closely with Montgomery County Executive Ike Leggett and all county leadership as we do everything possible to secure this incredible opportunity.”
The legislation is one component of a major incentive package that includes a budget allocation of $10 million per year to the state’s Sunny Day Fund over 15 years and billions of dollars in road, transit, and infrastructure upgrades. The state’s package for Montgomery County totals over $5 billion in incentives and transportation improvements.
“I want to thank the Governor for his strong support for our compelling case to Amazon for locating their second world headquarters in Montgomery County,” said Montgomery County Executive Leggett.
The PRIME Act provides the following tax incentives for a period of 10 years:
- A state income tax credit equivalent to 5.75 percent of wages for each new qualifying headquarters job. To qualify, a job must be established within the first 17 years of the project and pay between $60,000 and $500,000.
- A state and local property tax credit, including a requirement for the state to reimburse the local jurisdiction for half of the property tax that would have been collected.
- A state sales and use tax exemption for construction material or warehousing equipment used in the project.
Once signed into law, the PRIME Act will be administered by the Maryland Department of Commerce and specifically applies to a Fortune 100 company creating a new headquarters facility in the state with employees earning an average salary of at least $100,000 per year. Additionally, the company must commit to spending a minimum of $5 billion in capital expenditures over 17 years, including $500 million in initial project costs, and employ at least 40,000 people over this 17-year period. Amazon’s HQ2 is projected to fulfill these requirements, according to the company’s Request for Proposal (RFP). The incentives being provided through this legislation based on the RFP, in combination with support from the Sunny Day Fund, will total over $3 billion.
The bill contains claw back provisions, enabling the state to recoup any or all tax credits if the company does not meet the requirements, and stipulates that the company will cease to receive tax credits if the number of jobs declines.
“The Hogan administration has put forth an incentive package that makes Maryland competitive with any state or city in the country – we’re playing to win,” said Commerce Secretary Mike Gill.
The PRIME Act is part of Governor Hogan’s 2018 jobs legislation, which includes the More Jobs for Marylanders 2.0 to expand and diversify the administration’s successful More Jobs for Marylanders program, which incentivizes manufacturing companies to locate and grow in areas of the state with higher-than-average unemployment. Landing HQ2 in Maryland would build on the administration’s major economic development successes, including retention and expansion of major companies like McCormick, Northrop Grumman, and Marriott.