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When Al Carr opened a high-tech retail store in the Westfield Wheaton Shopping Center several years ago, he counted on receiving a tax credit to help pay for updating the vacant building.

But on April 15, there was no check in the mail, and Carr said that was one of the reasons he was forced to close shop.

Carr, who is now a state delegate representing Wheaton's District 18, said his own experience inspired him to pass a law this year to reform Montgomery County's enterprise tax-credit program to make it better for small businesses who pour money into improving their stores.

The original tax credit provided money to property owners who increased the value of their land, and it was designed to encourage investment in fledgling commercial districts like Wheaton's. But the problem was that many property owners didn't want the value of their land to increase, at least on the books, because higher property taxes usually follow. And many business owners in downtown Wheaton are renters, so they don't actually own the land they're improving.

This conflict can take away precious time and money that could be dedicated to improving Wheaton's commercial district, Carr said.

"It's a really good tax-credit program, but it only works in certain circumstances," he said. "[Property owners] may not want to try to show their property is going up in value. ...They may be arguing the opposite so they can get just their basic taxes lower."

Under Carr's new bill, which was co-sponsored in the senate by Sen. Richard Madaleno of Dist. 18 and takes effect this week, property owners are required to pass the tax credit on to their tenants in the form of reduced rent and other leasing fees, he said.

But not everyone agrees with the new program. Westfield Wheaton Shopping Center's attorneys opposed the bill on the grounds that Wheaton first became an enterprise tax zone to support Westfield's mall.

"Westfield's investment in Wheaton Plaza is in excess of $170 million dollars, and it continues to search for avenues to grow business in the area," wrote Devin John Doolan, an attorney for Westfield, in a December memo to the Montgomery County delegation. " ... While we recognize the need to encourage small business growth, we believe that the bill as written would result in efforts to reallocate Westfield's tax credit to its tenants."

That's exactly what the bill will do, Carr said.

The state approves areas eligible for the tax credit, and from 1998 to 2008, a dozen Wheaton landowners received almost $1.4 million in tax credits for real-estate improvements and adding jobs. Westfield was one of the largest recipients of that — in 2007, the most recent information available, the shopping center reaped $270,000 in tax credits under the enterprise zone, according to county records. Now all of that money will be required to be passed down to the tenants if they are the ones who actually improve the property, Carr said.

"Westfield Wheaton was comfortable with the status quo, and they might have been fearful that a change in the law would hurt them," Carr said.

At the heart of Carr's argument for his law are property-tax records that show Westfield continuously appeals the assessed value of its property to lower its value and taxes. Carr cited the infamous case of the failed Montgomery Cinema ‘N' Drafthouse, a food and movie theater that opened in Westfield before closing shortly thereafter over disputes with the mall. Carr said the drafthouse invested $1 million in the building, but the property didn't increase in value, and the owner wasn't eligible for the enterprise-tax credit.

It's cases like this that Carr said make his bill necessary. And he said that passing the tax credit on to tenants could benefit Westfield: It could make the mall and other downtown properties a more desirable place to open up a business, for example.

"Anything that's done to help one business in Wheaton helps every business in Wheaton," Carr said. "The stronger the entire downtown and the stronger the entire community is."

However, the original enterprise-zone credit was designed with the assumption that landowners would pass the tax credit on to the tenant in the form of lower rent, but it wasn't a requirement, said Steve Silverman, the director of the county's Department of Economic Development. Silverman said Carr's bill doesn't necessarily create a new tax break to spur redevelopment, it simply makes it law that the tax credit must be passed on to the tenant.

"We expect that it won't change the way things are generally done," said Silverman, adding the county doesn't have any problems with the law.

But there is a provision in the law that could expand what constitutes a tax credit, Carr said.

Carr said the previous law is geared more toward constructing new buildings as opposed to renovating old ones. Now the County Council has the power to decide what kind of improvements count under the tax credit and can vote to expand it. For example, the County Council could expand the tax credit to include improvements in personal property, such as installing a new soda fountain in a movie theater. That could amount to thousands of dollars in savings for businesses — the Costco in Gaithersburg, for example, has paid the state $31,000 in personal-property taxes last year, and under the new law the store could see almost all of that handed back to them.

Carr added that the tax credit is available to every business, big or small. Not every small business can score a $4 million taxpayer subsidy to relocate to Wheaton like Costco has, but every business can qualify for this tax credit by improving the land or offering jobs.

"It's a much more egalitarian or accessible type of incentive than some of the other things that are out there," he said.