LEONARDTOWN, Md. — Two areas in St. Mary’s County could receive federal tax incentives designed to attract new businesses, housing and redevelopment.
The Commissioners of St. Mary’s County voted unanimously July 21 to nominate census tracts covering portions of Great Mills Road and California for the federal Opportunity Zone 2.0 program.
Opportunity Zones are economically distressed areas where investors can receive capital gains tax benefits for supporting eligible projects. The program does not give money directly to property owners or approve development. Instead, it encourages private investors to put money into projects such as apartments, workforce housing, mixed-use developments and commercial properties.
The county’s recommendations will now be submitted to the Maryland Department of Housing and Community Development for consideration.
Great Mills Road Area Selected
One of the selected areas, Census Tract 8759.03, includes portions of Great Mills Road, Willows Road and properties east of Quatman Road. It includes the St. Mary’s Square area and nearby commercial properties.
The tract has a population of approximately 2,913 and a poverty rate of 26.7%, according to county documents.
The Department of Economic Development initially did not recommend the area because much of it falls within military aircraft noise zones and Naval Air Station Patuxent River’s Accident Potential Zone II. Those designations can limit certain types of development.
Commissioners, however, said the area has a significant need for reinvestment.
Commissioner Mike Hewitt pointed to the redevelopment of Millison Plaza (now Pax River Village Center) as an example of what investment incentives could accomplish along Great Mills Road.
“What concerns me — well, I was glad to see what they did with Millison Plaza,” Hewitt said. “That was always something in that part of Lexington Park that needed redevelopment.”
Hewitt said he would like to see similar investment on the other side of Great Mills Road, particularly around the A&E Motel, Canopy Liquors and St. Mary’s Square.
Commissioner Vice President Scott Ostrow agreed that Millison Plaza showed developers can work with the Navy to meet military-related requirements.
“I think Atlantic Realty really proved that there are ways to work with the Navy to get things done in those areas,” Ostrow said.
California Area Also Chosen
The second selected area, Census Tract 8760.04, covers portions of California between St. Andrews Church Road and Buck Hewitt Road. It extends from Three Notch Road toward St. Mary’s River State Park.
The tract has a population of approximately 7,315 and a poverty rate of 10.8%.
Deputy Director of Economic Development Kellie Hinkle said the area includes vacant parcels, publicly owned land and properties that could be redeveloped.
“I think there’s some opportunity for infill and vacant parcels,” Hinkle said.
Parts of the tract are within the Lexington Park Development District and a Priority Funding Area. The area also has access to public water and sewer, which can make larger development projects easier to complete.
Commissioners Change Staff Recommendation
St. Mary’s County has four census tracts eligible for the program, but Hinkle advised the commissioners to nominate only two. She said submitting all four could make it harder for the county to secure its preferred designations.
Economic development staff originally recommended the California tract and Census Tract 8759.04, which includes portions of southern Lexington Park and the Park Hall area.
The commissioners instead chose the California tract and the Great Mills Road tract. Several commissioners said Great Mills Road has a greater need for redevelopment than areas where development is already occurring.
The final motion to nominate Census Tracts 8759.03 and 8760.04 passed without opposition.
How The Program Works
The original Opportunity Zone program was created in 2017 to bring private investment into lower-income communities.
Investors can receive tax benefits when they place eligible capital gains into a qualified fund and use that money for projects inside a designated Opportunity Zone. To receive the program’s full benefits, investments generally must be held for at least 10 years.
“The original Opportunity Zone program was put in place to incentivize investment into economically distressed areas,” Hinkle said.
St. Mary’s County currently has one Opportunity Zone in the Lexington Park Development District. That designation expires at the end of 2028 and is not eligible to continue under the new federal requirements.
Opportunity Zone 2.0 makes the program permanent and establishes new designations every 10 years.
The designation would not change zoning or automatically allow a project to be built. Any future development would still require the normal county, state and federal reviews.
What Happens Next
The Department of Economic Development must submit the county’s two nominations to the Maryland Department of Housing and Community Development by Aug. 7.
State officials will review nominations from across Maryland and make recommendations to Gov. Wes Moore. The governor will then forward Maryland’s selections to the U.S. Department of the Treasury.
The commissioners’ vote does not guarantee that either St. Mary’s County tract will receive the federal designation.
Watch the full meeting below for the Opportunity Zone 2.0 at 20:08:
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