# Economic Development (GEC)

## Title 5. Economic Development and Financial Assistance Programs

### Subtitle 3. Maryland Economic Development Assistance Authority and Fund

#### Section 5-301

(a) In this subtitle the following words have the meanings indicated.

(b) "Aquaculture project" means a project that encourages innovation, expansion, and modernization of the seafood processing industry or aquaculture industry.

(c) "Arts and entertainment district" means an area designated by the Secretary as an arts and entertainment district under Title 4, Subtitle 7 of this article.

(d) "Arts and entertainment enterprise" means a for-profit or nonprofit entity that is:

  (1) located in an arts and entertainment district; and

  (2) dedicated to the visual or performing arts.

(e) "Arts and entertainment project" means a project that promotes or enhances the development of an arts and entertainment district.

(f)

  (1) "Associated development and carrying costs" means costs that are associated with the acquisition and maintenance of an asset.

  (2) "Associated development and carrying costs" includes:

    (i) settlement costs;

    (ii) insurance;

    (iii) interest;

    (iv) taxes;

    (v) government fees;

    (vi) utilities; and

    (vii) the costs of managing and securing the asset.

(g) "Authority" means the Maryland Economic Development Assistance Authority.

(h) "Brownfields Revitalization Incentive Program" means the program in the Department that provides financial assistance from the Fund for the redevelopment of qualified brownfields sites, as provided in Part VI of this subtitle.

(i)

  (1) "Brownfields site" means a property that:

    (i) is located in a county or municipal corporation that elects to participate in the Brownfields Revitalization Incentive Program in accordance with Sec. 5-336 of this subtitle; and

    (ii) is:

      (1) an eligible property, as defined in Sec. 7-501 of the Environment Article, that is owned or operated by an inculpable person, as defined in Sec. 7-501 of the Environment Article; or

      (2) a property where there is a release, discharge, or threatened release of oil, as defined in Sec. 4-401 of the Environment Article, that is subject to Title 4 of the Environment Article.

  (2) "Brownfields site" does not include property that is owned or operated by:

    (i) a responsible person as defined in Sec. 7-201 of the Environment Article; or

    (ii) a person responsible for the discharge, as defined in Sec. 4-401 of the Environment Article.

(j) "Child care facility" means a facility that is required to be licensed as a child care center under Title 9.5, Subtitle 4 of the Education Article.

(k) "Child care special loan" means a direct loan to expand or improve child care services at a child care facility, as provided in Part VII of this subtitle.

(l) "Corporation" means the Maryland Economic Development Corporation.

(m) "Financial assistance" means a grant, loan, or investment provided under this subtitle.

(n) "Fund" means the Maryland Economic Development Assistance Fund.

(o) "Local economic development fund" means a revolving, nonlapsing fund that one or more local governments establish for economic development in the areas under their jurisdiction.

(p) "Local economic development opportunity" means a project that:

  (1) is determined by the Department or Authority to provide a valuable economic development opportunity to the jurisdiction in which the project is located; and

  (2) is a priority for and endorsed by the governing body of that jurisdiction.

(q) "Local government" means:

  (1) a county;

  (2) a municipal corporation;

  (3) a designated agency or instrumentality of a county; or

  (4) a designated agency or instrumentality of a municipal corporation.

(r) "Qualified brownfields site" means a brownfields site that is determined by the Department to be eligible for financial assistance under this subtitle.

(s) "Responsible person" has the meaning stated in Sec. 7-201 of the Environment Article.

(t) "Significant strategic economic development opportunity" means a project that is determined by the Department or Authority to provide a valuable economic development opportunity of statewide, regional, or strategic industry impact.

(u) "Specialized economic development opportunity" means:

  (1) an aquaculture project;

  (2) an arts and entertainment enterprise;

  (3) an arts and entertainment project;

  (4) the redevelopment of a qualified brownfields site; or

  (5) a project to create or expand a child care facility.

(v) "Tier I county project" means a project that a local government or the Corporation carries out in a Tier I county.

(w) "Working capital" means money to be used for current operations of a business.

#### Section 5-302

Assistance for a Tier I county project is available to a Tier I county under this subtitle only if:

(1) the county has developed a local strategic plan for economic development in consultation with the municipal corporations located in the county, if any;

(2) the county has submitted the plan to the Secretary for approval; and

(3) the Secretary has approved the plan.

#### Section 5-305

There is a Maryland Economic Development Assistance Authority in the Department.

#### Section 5-306

(a) The Authority consists of the individuals serving as members of the Maryland Industrial Development Financing Authority under Sec. 5-406 of this title.

(b) The members of the Authority shall be appointed in accordance with Sec. 5-407 of this title.

#### Section 5-307

(a) The members of the Authority may act concurrently in their capacities as members of the Authority and of the Maryland Industrial Development Financing Authority.

(b) The members of the Authority shall carry out the powers and duties of the Authority under this subtitle whether acting:

  (1) concurrently as members of the Authority and the Maryland Industrial Development Financing Authority; or

  (2) as members of either authority alone.

(c) The members of the Authority shall conduct the business of the Authority and of the Maryland Industrial Development Financing Authority under Subtitle 4 of this title.

#### Section 5-310

There is a Maryland Economic Development Assistance Fund in the Department.

#### Section 5-311

The purposes of the Fund are to:

(1) expand employment opportunities in the State by providing financial assistance to businesses that are engaged in eligible industry sectors, including financial assistance for:

  (i) aquaculture projects;

  (ii) arts and entertainment enterprises;

  (iii) arts and entertainment projects; and

  (iv) creation and expansion of child care facilities;

(2) provide financial assistance for the redevelopment of qualified brownfields sites;

(3) provide financial assistance to local governments and the Corporation for economic development projects; and

(4) provide grants to local economic development funds.

#### Section 5-312

(a) The Secretary shall administer the Fund.

(b)

  (1) The Fund is a special, nonlapsing fund that is not subject to reversion under Sec. 7-302 of the State Finance and Procurement Article.

  (2) The Treasurer shall hold the Fund separately and the Comptroller shall account for the Fund.

(c) Any investment earnings of the Fund shall be credited to the Fund.

#### Section 5-313

The Fund consists of:

(1) money appropriated in the State budget to the Fund;

(2) money made available to the Fund through federal programs or private contributions;

(3) repayments of principal and interest from loans made from the Fund;

(4) proceeds from the sale, disposition, lease, or rental of collateral related to financial assistance provided by the Department under this subtitle;

(5) application or other fees paid to the Fund to process requests for financial assistance;

(6) recovery of an investment made by the Department in a business, including an arrangement under which part of the investment is recovered through:

  (i) a requirement that the Department receive a proportion of cash flow, commissions, royalties, or license fees;

  (ii) the repurchase from the Department of any of its investment interest; or

  (iii) the sale of an appreciated asset;

(7) repayments received from recipients of conditional grants from the Department;

(8) money collected under Sec. 9-229 of the Tax - Property Article;

(9) repayments on or recoveries from financial assistance provided from the former:

  (i) Brownfields Revitalization Incentive Fund;

  (ii) Child Care Facilities Direct Loan Fund;

  (iii) Child Care Special Loan Fund;

  (iv) Maryland Industrial and Commercial Redevelopment Fund;

  (v) Maryland Industrial Land Fund;

  (vi) Maryland Seafood and Aquaculture Loan Fund; and

  (vii) Smart Growth Economic Development Infrastructure Fund; and

(10) any other money made available to the Fund.

#### Section 5-314

(a) The Department may use money in the Fund to:

  (1) provide financial assistance to eligible applicants; and

  (2) pay expenses for administrative, actuarial, legal, and technical services for the Fund.

(b) The Department periodically shall review its portfolio in an effort to ensure:

  (1) the equitable distribution among the counties of money from the Fund;

  (2) adequate funding for Tier I county projects; and

  (3) that no particular Tier I county benefits disproportionately from financial assistance to Tier I counties under this subtitle.

#### Section 5-315

In accordance with Sec. 2.5-109 of this article, the Department shall report on the number, amount, use, and economic benefits of financial assistance provided under this subtitle.

#### Section 5-316

Financial assistance is deemed authorized under this subtitle if it was provided, or approved to be provided, from the following programs that have been incorporated into the Fund:

(1) the Brownfields Revitalization Incentive Fund;

(2) the Child Care Facilities Direct Loan Fund;

(3) the Child Care Special Loan Fund;

(4) the Maryland Industrial and Commercial Redevelopment Fund;

(5) the Maryland Industrial Land Act;

(6) the Maryland Seafood and Aquaculture Loan Fund; and

(7) the Smart Growth Economic Development Infrastructure Fund.

#### Section 5-319

(a)

  (1) Financial assistance from the Fund not exceeding $5,000,000 may be approved by the Secretary.

  (2) Except as provided in paragraph (3) of this subsection, financial assistance from the Fund exceeding $5,000,000 requires approval by the Authority.

  (3) For a Tier I county project, the Secretary may approve financial assistance exceeding $5,000,000.

(b) Except as provided in subsection (a)(3) of this section, with respect to requests for financial assistance exceeding $5,000,000:

  (1) the Department shall evaluate the requests; and

  (2) the Authority shall:

    (i) evaluate the requests that have first been evaluated by the Department;

    (ii) determine whether to approve the requests; and

    (iii) set the terms and conditions of the financial assistance.

(c)

  (1) Except as provided in paragraph (2) of this subsection, financial assistance provided to a local government or the Corporation for a project shall be approved by a letter from or formal resolution of:

    (i) the governing body of the jurisdiction in which the project is located; or

    (ii) if the recipient of the financial assistance is the Corporation, its board of directors.

  (2) If the recipient of financial assistance is the Corporation for a Tier I county project, the financial assistance shall be approved by letters from or formal resolutions of both the board of directors of the Corporation and the governing body of the jurisdiction in which the project is located.

  (3) A project that is funded by a grant from the Fund to a local government or the Corporation, and carried out by the local government or the Corporation, shall be consistent with the strategy or plan for economic development of the county or municipal corporation in which the project is located.

  (4) If the Department provides financial assistance to a local government for a project, an interest in that project is later transferred to a third party, and the transfer of the interest is financed by the local government:

    (i) the local government may assign the financing documents to the Department as a repayment of or return on the Department's financial assistance to the local government; and

    (ii) the assignment may not be considered a new financing under this subtitle.

(d) For a local economic development opportunity, the local government of the jurisdiction in which the project is located shall provide:

  (1) a letter from or formal resolution of the governing body of the jurisdiction in which the project is located that endorses the financial assistance to be provided from the Fund; and

  (2) as determined by the Department or Authority to evidence the support of the local government for the project:

    (i) a guarantee, secured by the full faith and credit of the county or municipal corporation in which the project is located, of all or part of the financial assistance to be provided by the Fund;

    (ii) the financing of part of the costs of the project; or

    (iii) both.

(e) A letter submitted under this section shall include the signatures of a majority of the members of the governing body.

#### Section 5-320

(a) To be eligible for financial assistance from the Fund, an applicant shall be:

  (1) a local economic development fund that meets the criteria set forth in Part V of this subtitle; or

  (2) an individual, private business, nonprofit entity, or local government, or the Corporation that intends to use the requested financial assistance for a project that:

    (i) except as provided in subsection (b) of this section, is in an eligible industry sector under Sec. 5-321 of this subtitle; and

    (ii) has a strong potential for expanding or retaining employment opportunities in the State.

(b) A project need not be in an eligible industry sector if the applicant:

  (1) is located in a Tier I county; or

  (2)

    (i) is a local government or the Corporation; and

    (ii) does not intend to use the financial assistance to carry out a project that benefits a particular private sector entity.

(c) In form and content acceptable to the Department, an applicant for financial assistance from the Fund shall submit to the Department an application that contains:

  (1) the information that the Department or Authority considers necessary to evaluate the request for financial assistance; and

  (2) for a Tier I county project:

    (i) a marketing plan designed to market the project to prospective businesses;

    (ii) a statement of planned marketing expenditures as a percent of the total financial assistance amount requested; and

    (iii) a plan for the project that is consistent with the county's local strategic economic development plan as to the location and type of project.

#### Section 5-321

(a)

  (1) After consulting with the Department and the Maryland Department of Labor, each year the Maryland Economic Development Commission shall:

    (i) evaluate the potential employment and economic growth of Maryland's industry sectors; and

    (ii) recommend eligible industry sectors to the Authority.

  (2) Each year the Authority shall:

    (i) consider the recommendation of the Maryland Economic Development Commission; and

    (ii) establish a list of industry sectors that will be eligible for financial assistance from the Fund.

  (3) In determining whether an applicant is engaged in an eligible industry sector, the Department shall consider the definitions set forth in the North American Industry Classification System.

(b)

  (1) For the purpose of providing financial assistance under this subtitle, the following are deemed to be in eligible industry sectors:

    (i) aquaculture projects;

    (ii) arts and entertainment enterprises;

    (iii) arts and entertainment projects;

    (iv) redevelopment of qualified brownfields sites;

    (v) creation or expansion of child care facilities;

    (vi) projects in areas that are declared to be federal disaster areas within 1 year before the Department receives an application for financial assistance under this subtitle; and

    (vii) feasibility studies.

  (2) The requirements specifically imposed on significant strategic economic development opportunities and local economic development opportunities under this subtitle do not apply to the items listed in paragraph (1) of this subsection.

#### Section 5-322

(a) Financial assistance from the Fund may be used only to finance costs incurred for:

  (1) construction or acquisition of a building or real property, and associated development and carrying costs;

  (2) construction, acquisition, or installation of equipment, furnishings, fixtures, leasehold improvements, site improvements, or infrastructure improvements, including rail line enhancements on or to the site of an economic development project, and associated development and carrying costs;

  (3) working capital for significant strategic economic development opportunities, arts and entertainment enterprises, or arts and entertainment projects;

  (4) redevelopment of qualified brownfields sites;

  (5) subject to Sec. 5-325(b)(3) of this subtitle, construction, purchase, or renovation of real property, fixtures, or equipment related to a child care facility;

  (6) if supported by a resolution adopted by the governing body of the jurisdiction in which a project may be located, feasibility studies;

  (7) subject to Sec. 5-325(b)(4) of this subtitle, preparation of a county's or municipal corporation's strategy or plan for economic development; and

  (8) a project intended to assist businesses in areas that are declared to be federal disaster areas, but only if the Department receives an application for financial assistance within 1 year after the declaration of the federal disaster area.

(b) Financial assistance from the Fund may not be used to refinance existing debt.

#### Section 5-323

Financial assistance from the Fund may not exceed the lesser of:

(1) $10,000,000; or

(2) 20% of the Fund balance.

#### Section 5-324

(a) Each subsection of this section is subject to Sec. 5-323 of this subtitle.

(b) If the Department or Authority determines a project to be a significant strategic economic development opportunity, the Department or Authority may provide a loan from the Fund for the project to an individual, private business, nonprofit entity, or the Corporation in an amount not exceeding $10,000,000.

(c) If the Department or Authority determines a project to be a local economic development opportunity, the Department or Authority may provide financial assistance from the Fund for the project to an individual, private business, nonprofit entity, or the Corporation in an amount not exceeding:

  (1) $7,500,000 for a loan or investment; and

  (2) $5,000,000 for a grant.

(d)

  (1) Financial assistance provided to a local government or the Corporation to finance a project may be:

    (i) in the form of a grant, loan, or investment; and

    (ii) except as provided in paragraph (2) of this subsection, in an amount not exceeding $5,000,000.

  (2) Financial assistance for a Tier I county project may be in an amount determined by the Department.

  (3) A grant to a local economic development fund is subject to the requirements of Part V of this subtitle.

(e) Financial assistance for a specialized economic development opportunity may be:

  (1) provided to an individual, private business, nonprofit entity, or local government, or the Corporation;

  (2) in the form of a grant, loan, or investment; and

  (3) in an amount determined by the Department or Authority.

#### Section 5-325

(a) Subject to the restrictions of this subtitle, the Department or Authority may impose the terms and conditions on financial assistance from the Fund as either considers appropriate.

(b)

  (1) Except as provided in paragraph (2), (3), or (4) of this subsection, financial assistance from the Fund may not exceed 70% of the total costs of the project being financed.

  (2) Financial assistance from the Fund may constitute 100% of the total costs of the project being financed if:

    (i) the recipient is the Corporation; or

    (ii) the financial assistance is for:

      (1) an arts and entertainment enterprise;

      (2) an arts and entertainment project; or

      (3) a Tier I county project.

  (3)

    (i) Except as provided in subparagraph (ii) of this paragraph, financial assistance from the Fund:

      (1) may be used to finance up to 50% of the costs of construction, purchase, or renovation of real property, fixtures, or equipment related to a child care facility; but

      (2) may not be used for working capital, supplies, or inventory related to a child care facility.

    (ii) Financial assistance from the Fund may be used to finance up to 20% of the costs described in subparagraph (i) of this paragraph incurred by a business that has received or will receive a day care loan insured by the Maryland Industrial Development Financing Authority.

  (4) Financial assistance for preparation of a strategy or plan for economic development of a county or municipal corporation may not exceed:

    (i) 50% of the costs of preparation; or

    (ii) $50,000 in a 3-year period.

(c) The Department or the Authority shall determine whether a loan from the Fund shall bear interest and, if so, the interest rate.

#### Section 5-326

(a) In this section, "minority business enterprise" has the meaning stated in Sec. 14-301 of the State Finance and Procurement Article.

(b)

  (1) This section applies to financial assistance that exceeds $100,000.

  (2) This section does not apply to financial assistance that is used solely to acquire real property or structures on real property.

(c)

  (1) If a local government that receives financial assistance has a program for promoting procurement opportunities among minority businesses that is acceptable to the Department, the local government shall apply the requirements of that program to procurement made with the proceeds of financial assistance.

  (2) If the local government does not have a program that is acceptable to the Department under paragraph (1) of this subsection, the local government is subject to subsection (d) of this section.

(d)

  (1) An entity other than a local government, or a local government in accordance with subsection (c)(2) of this section, that receives financial assistance shall agree to include in the agreement providing the financial assistance a provision acceptable to the Department that would encourage the procurement from minority business enterprises of goods or services purchased with the proceeds from the financial assistance.

  (2) In negotiating the provision required under paragraph (1) of this subsection, the Department shall take into account relevant factors, including:

    (i) the intended use of the proceeds from the financial assistance; and

    (ii) the feasibility of obtaining the required goods or services from minority business enterprises.

(e) The Department may require a recipient of financial assistance to submit to the Department a list, or an updated list, of the minority business enterprises from which goods or services were procured and the nature and cost of the goods or services.

#### Section 5-329

(a) A local government may apply to the Department for a grant from the Fund to a local economic development fund.

(b) In determining whether to approve a grant to a local economic development fund, the Department or Authority shall consider and determine:

  (1) the average rate of unemployment for the local jurisdiction in comparison to the average rate of unemployment for the State;

  (2) whether the local government currently administers a local economic development fund;

  (3) the ability of the local government to leverage private money;

  (4) the level of financial commitment provided by the local government; and

  (5) any other factors that the Department or Authority considers relevant.

#### Section 5-330

(a) Except as provided in subsection (b) of this section, to qualify for a grant from the Fund, a local government shall provide at least an equal and matching grant of money to the local economic development fund.

(b) A local government that is, or is located in, a Tier I county may qualify for a grant from the Fund by providing a grant to the local economic development fund in an amount equal to at least 50% of the grant from the Fund.

#### Section 5-331

(a) During each fiscal year the Department may not grant more than $2,000,000 under this part.

(b)

  (1) Subject to paragraph (2) of this subsection, during each fiscal year a county may not receive more than $250,000 under this part.

  (2) For purposes of the limitation under paragraph (1) of this subsection:

    (i) any money received under this part by a municipal corporation or designated agency or instrumentality is deemed to be money granted to the county within which the municipal corporation, agency, or instrumentality is located; and

    (ii) if more than one county administers or capitalizes a local economic development fund, each county may receive the maximum authorized for a county.

#### Section 5-332

(a) A local government shall use a grant under this part:

  (1) to provide loans or loan guarantees, or to subsidize the interest rate on loans, for financing economic development projects; or

  (2) to provide loans to small businesses.

(b) The Department may require that money from a grant under this part be returned to the Department if the local economic development fund is inactive for more than 2 years after the grant is made.

#### Section 5-335

(a) There is a Brownfields Revitalization Incentive Program in the Department.

(b) The Department shall develop a program of financial assistance, including low-interest loans and grants, to assist persons who participate in the Brownfields Revitalization Incentive Program.

#### Section 5-336

A county or municipal corporation may elect to participate in the Brownfields Revitalization Incentive Program by:

(1)

  (i) submitting to the Department a list of potential brownfields sites in the county or municipal corporation, ranked in the order of priority for redevelopment that the county or municipal corporation recommends; and

  (ii) updating each year the list submitted under item (i) of this item; or

(2)

  (i) enacting legislation granting property tax credits in accordance with Sec. 9-229 of the Tax - Property Article; and

  (ii) notifying the Department of the legislation.

#### Section 5-337

(a) Notwithstanding any other provision of law, the Department may provide to a person, including a responsible person, a low-interest loan or grant to conduct the environmental site assessment of a potential brownfields site that is required to participate in the Voluntary Cleanup Program under Title 7, Subtitle 5 of the Environment Article, if the person:

  (1) has not already applied to participate in the Program;

  (2) is otherwise eligible to participate in the Program; and

  (3) meets the eligibility requirements that the Department sets.

(b) The information contained in an environmental site assessment is:

  (1) the property of the State, if the assessment is financed wholly or partly by:

    (i) a grant from the Department; or

    (ii) a loan that is in payment default; or

  (2) the property of the person who contracted for the assessment, if the assessment is financed by:

    (i) a loan from the Department; or

    (ii) a grant that is repaid.

(c) Eligibility for a loan or grant for an environmental site assessment under this section does not constitute eligibility for:

  (1) any other financial assistance under this subtitle; or

  (2) the tax credits provided under Sec. 9-229 of the Tax - Property Article.

(d) The recipient of a grant under this section shall repay the grant if, within 12 months after receiving the grant, the recipient does not receive approval from the Department of the Environment to:

  (1) participate in the Voluntary Cleanup Program; or

  (2) implement a corrective action plan under Title 4 of the Environment Article.

(e) A low-interest loan provided under this section shall convert to a market rate loan if, within 12 months after receiving the loan, the recipient does not receive approval from the Department of the Environment to:

  (1) participate in the Voluntary Cleanup Program; or

  (2) implement a corrective action plan under Title 4 of the Environment Article.

(f) The Department may establish procedures and eligibility requirements for the approval of requests for loans and grants under this section.

#### Section 5-338

(a) The Department shall determine whether a brownfields site is a qualified brownfields site based on whether the property:

  (1) is located in a densely populated urban center and is substantially underutilized; or

  (2) is an existing or former industrial or commercial site that poses a threat to public health or the environment.

(b) When reviewing qualified brownfields sites for financial assistance under this part, the Department may consider:

  (1) the feasibility of redevelopment;

  (2) the public benefit to the community and the State through the redevelopment of the property;

  (3) the extent of releases or threatened releases at the brownfields site and the degree to which the cleanup and redevelopment of the brownfields site will protect public health or the environment;

  (4) the potential to attract or retain manufacturing or other economically significant employers;

  (5) the absence of identifiable and financially solvent responsible persons; or

  (6) any other factor relevant and appropriate to economic development.

(c) A person may submit a request to the Department to determine whether the person qualifies for financial assistance for the potential redevelopment of a brownfields site when the person:

  (1) applies to participate in the Voluntary Cleanup Program under Title 7, Subtitle 5 of the Environment Article; or

  (2) receives approval from the Department of the Environment to implement a corrective action plan under Title 4 of the Environment Article.

(d)

  (1) The Department shall notify the person whether the person qualifies for financial assistance for the redevelopment of a brownfields site within 30 days after the Department receives a request under subsection (c) of this section if:

    (i) the Department of the Environment approves the participation in the Voluntary Cleanup Plan or a corrective action plan; and

    (ii) the Department or Authority approves the financial assistance.

  (2) The notice shall specify which of the criteria in subsection (b) of this section that the person meets.

(e) When evaluating potential qualified brownfields sites, the Department shall consult with:

  (1) the Department of the Environment, the Department of Planning, and relevant local officials;

  (2) the neighboring community and any citizens groups located in the community;

  (3) representatives of State and local environmental organizations;

  (4) public health experts; and

  (5) any other person the Department considers appropriate.

#### Section 5-339

This part does not affect:

(1) the planning and zoning authority of a county or municipal corporation; or

(2) any provision of the Environment Article.

#### Section 5-342

(a) In addition to providing money from the Fund to assist in creating and expanding child care facilities in the State under other provisions of this subtitle, the Department may use federal or other money provided for the purpose to make child care special loans.

(b) Child care special loans may be made to finance the expansion or improvement of child care services at child care facilities in the State, in accordance with this part.

(c) All money received by the Fund for making child care special loans shall be accounted for separately, including:

  (1) federal money allocated or granted for child care special loans, including child care and development block grant money;

  (2) private money donated or granted to the Fund for child care special loans;

  (3) premiums, fees, interest payments, and principal payments on child care special loans made with federal money;

  (4) proceeds from the sale, disposition, or lease of collateral that relates to child care special loans;

  (5) any other money made available for child care special loans; and

  (6) any federal money for child care special loans that are used by the Department to pay costs of administering the child care special loans.

#### Section 5-343

In making child care special loans, the Department shall consider:

(1) community need;

(2) community income, with priority given to those communities with the lowest median family income;

(3) care for children with teenage parents in school or training;

(4) care for children with special needs; and

(5) infant care.

#### Section 5-344

(a) An applicant for a child care special loan shall submit to the Department an application that contains the information that the Department requires.

(b) The application shall include:

  (1) a detailed description of the proposed or existing child care facility;

  (2) an itemization of known and estimated costs;

  (3) the total amount of money required to expand or improve child care services at the child care facility;

  (4) the money available to the applicant without a child care special loan from the Department;

  (5) the amount of money sought from the Department;

  (6) evidence of the inability of the applicant to obtain the financing necessary for the child care facility on affordable terms through normal lending channels;

  (7) information that relates to the financial status of the applicant, including, if applicable:

    (i) a current balance sheet;

    (ii) a profit and loss statement; and

    (iii) credit references; and

  (8) a lease, option to buy, deed, or evidence that the applicant is legally entitled to remain at the child care facility for at least the term of the loan.

(c) The applicant for a child care special loan shall agree to:

  (1) operate the child care facility for at least the term of the child care special loan; and

  (2) repay the outstanding child care special loan in full on the loss of license, termination of lease, or transfer, sale, or refinancing of the child care facility, as applicable, before the end of the term of the child care special loan.

#### Section 5-345

The Department may make a child care special loan to an applicant if:

(1) the applicant meets the qualifications required by this part;

(2) the applicant meets any additional requirements imposed by the source of the money to be loaned; and

(3) the child care special loan will be used for an authorized use under Sec. 5-348 of this subtitle.

#### Section 5-346

(a) Except as provided in this part, the Department may set the terms and conditions for child care special loans.

(b) The term of a child care special loan may not exceed 10 years.

(c)

  (1) The minimum amount of a child care special loan is $1,000.

  (2) The maximum amount of a child care special loan is $10,000.

#### Section 5-347

(a) If the Department makes a child care special loan to an applicant, the Department shall prepare loan documents.

(b) The loan documents shall include:

  (1) the rate of interest on the child care special loan;

  (2) the amount of the child care special loan;

  (3) a requirement that before each disbursement of loan proceeds is released to the applicant, the applicant and the Department cosign the request for the money;

  (4) provisions for repayment of the child care special loan; and

  (5) any other provisions that the Department determines are necessary, including provisions to take liens and security interests in real and personal property.

(c) The child care special loan documents may provide for penalties for an applicant who fails to operate the child care facility for the entire term of the child care special loan.

#### Section 5-348

(a) The proceeds of a child care special loan may be used:

  (1) to assist the applicant in meeting applicable State and local child care standards;

  (2) to pay for minor renovations, and to upgrade child care facilities, to ensure that applicants meet State and local child care standards; or

  (3) to purchase and install equipment and furniture, including equipment needed to accommodate children with special needs.

(b) Except as provided in subsection (a) of this section, the proceeds of a child care special loan may not be used:

  (1) to purchase or improve land; or

  (2) to purchase, construct, or improve a building or facility.

#### Section 5-349

(a) A mortgage or deed of trust held as security for a child care special loan made under this part that is in default may be foreclosed by the Department in the same manner as the Maryland Rules provide for foreclosures in private transactions.

(b) The Department may take title in its name to any property foreclosed under this section as well as to convey title to that property to a bona fide purchaser of the property.

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Md. Code Ann., Econ. Dev. (as displayed at mgaleg.maryland.gov, October 16, 2026)