Legislation before the General Assembly aims to remove barriers and improve the financials of transit oriented developments, like Owings Mills Metro Centre. Photo courtesy of David S. Brown Enterprises.
Maryland is on the cusp of enacting legislation that would accelerate mixed-use, transit‑oriented development (TOD) by eliminating regulatory bottlenecks and altering tax-and-fee policies to make TODs more financially viable.
Senate Bill 389 / House Bill 894 — the Maryland Transit and Housing Opportunity Act —aims to lower the barriers to mixed-use developments around high frequency service rail stations. The bill would limit local authority to regulate land use near transit stations, unilaterally designate Enterprise Zones, and delay collection of local excise taxes and impact fees.
When introducing the bill, Governor Wes Moore emphasized the importance of implementing a strategy focused on underutilized land near transit stations.
“When transit investments are paired with housing and economic development, they become engines of growth rather than isolated infrastructure projects,” Moore said.
Unlocking opportunities
The Maryland Department of Transportation (MDOT) estimates that its land in the Baltimore region and along the MARC Penn Line could generate 7,000 housing units and $1.4 billion in state and local tax revenue. However, MDOT estimates that current restrictive zoning on transit-adjacent, state-owned land in the Baltimore region alone is preventing 2,700 housing units from being built.
The bill takes several steps to quickly align local zoning with state TOD goals:
- For state-owned land, the bill prohibits local limitations on zoning and bulk regulations related to MDOT-approved development projects within a half-mile of qualifying rail stations.
- The bill also requires that local jurisdictions rezone to allow mixed‑use development within a half-mile of these high frequency rail stations subject to environmental constraints and adequate public facilities.
- The bill also prohibits local governments from imposing minimum off‑street parking requirements on residential or mixed‑use projects within 0.25 miles of qualifying rail stations.
That last provision addresses the well-supported belief that parking mandates significantly increase development costs, suppress density, and undermine walkability and transit use. For developers, the change removes an expensive and often unnecessary construction requirement, particularly near stations where structured parking costs can dominate project budgets. Local government sensitivity to the negative impacts of insufficient parking has introduced the concept of an area parking adequacy study prior to waving parking minimums.
Improving tax law
The bill includes several key financial elements:
Delayed fees/taxes: The bill would require development impact fees and excise taxes for mixed‑use residential projects in TOD areas be collected at occupancy rather than during permitting or early construction. NAIOP and other development groups have endorsed this change. Collecting fees at occupancy maintains local revenue streams but improves project cash flow. This shift could materially enhance financial viability for large mixed‑use developments.
Enterprise Zones: The bill automatically designates certain areas adjacent to transit as Enterprise Zones. That status brings access to local property tax credits and state income tax credits for businesses. The Department of Legislative Services (DLS) estimates this automatic designation would increase statewide Enterprise Zone coverage by approximately 1.7%. For developers, that means enhanced incentives for office, retail, and job‑creating components of TOD projects. Automatic designation is receiving local pushback because it breaks with long‑standing practice that requires local initiation. A joint designation process may be the result.
The bill directs the Maryland Economic Development Corporation to prioritize TOD redevelopment in making loans from its Strategic Infrastructure Revolving Loan Program fund. But the bill makes use of Project Labor Agreements (PLAs) in scoring preference for loan qualification. NAIOP and other development groups urged lawmakers to strike this provision, noting that evidence about the financial impact of PLAs is that they introduce significant cost pressures, particularly for affordable housing and infrastructure projects.
NAIOP Maryland’s engagement on the 2026 TOD bill supports the general policy direction and the intent of specific provisions. But like other stakeholders, NAIOP has advised that TODs have the best chance for success when state policy, local planning, and private‑sector investment are aligned.
For commercial, multifamily and mixed‑use developers, the proposal shows promise, but also demands close attention to how the more prescriptive initiatives are scaled back by the General Assembly and how the legislation’s ambitions interact with local planning realities.