Montgomery County may provide by local law for the county’s guarantee of the principal and interest on bonds that the Montgomery Commission issues: to finance the acquisition, provision, development, or rehabilitation of housing at rental rates and prices not being offered in adequate quantity by the private sector; or to finance wholly or partly: mortgage loans secured by the housing; and fund-related reserves and costs that are approved under this subtitle. When a mortgage loan is financed partly by bonds guaranteed by Montgomery County and partly by bonds not so guaranteed, the part of the mortgage loan that is financed by bonds not so guaranteed shall be insured by: the Federal Housing Administration; the Maryland Housing Fund; a private mortgage insurer that is: authorized to do business in the State; and approved by the Federal National Mortgage Association or the Federal National Mortgage Loan Corporation; or more than one of these insurers.

The Montgomery Commission shall meet the terms and conditions that the county government imposes in guaranteeing bonds issued under this subtitle and § 12-702 of this article. If guaranteed revenue bonds are to finance the total cost of the housing, the Montgomery Commission shall meet any requirements that the county government imposes after the bonds are issued to protect the financial solvency of the housing project. The total principal of the bonds guaranteed under this subtitle may not exceed $50,000,000.

Except as provided in subsections (b) and (c) of this section, the bonds authorized to be guaranteed under this subtitle are subject to § 312 of the County Charter. The bonds may be structured with: substantially level debt service payments; and interest-only payments during the projected period for construction or rehabilitation of the housing project financed with bonds issued under this subtitle and § 12-702 of this article. The bonds shall be issued on a serial maturity plan. Part of each issue may be sold as term bonds structured with mandatory sinking fund payments, if required for market acceptance and approved by the county government in the manner specified by the County Council resolution adopted under § 16-206 of this subtitle.

On determining to issue bonds, the Montgomery Commission shall provide to the County Executive information about the bonds and the housing projects benefiting from the bond proceeds. The information shall include: the terms and conditions of the bonds; an estimate of the bond interest rate and the basis for the estimate; the estimated timing and other provisions about the advertising and sale of the bonds; a description of the proposed housing project, with detailed estimates of construction and related costs to make it ready to rent or sell; detailed estimates of operating costs and debt service; schedules of reserves for depreciation and major maintenance; separate schedules that show how, after allowance for vacancies, revenues are expected to cover: operating costs; debt service and capital costs; and reserves for depreciation and major maintenance; separate schedules that: show the cost, benefit, and effect on rent schedules of added safeguards to ensure solvency of the housing project; address devices such as mortgage insurance and debt service reserves; and state the recommendation of the Montgomery Commission on use of those devices; a description of the terms and conditions for construction of the housing project, including any safeguards against construction default and the conditions under which construction financing is to be provided by the Montgomery Commission; and a description of the accounting system for recording and controlling expenditures of bond funds, debt service, operating costs, reserves, and revenues. Each housing project shall be established as an independent accounting entity for revenues, expenditures, debt service, and reserves.

The local law implementing this subtitle shall provide procedures for review and approval of the issuance of bonds guaranteed by the county government. The procedures shall include requirements for the County Executive to: comment on the feasibility of the proposed bond guarantee and each housing project contemplated by the proposed bond guarantee; and recommend whether the proposed bond guarantee should be approved and any terms and conditions for approval. If the County Executive recommends approval, the recommendation shall include a statement that the proposed housing project is fully self-supporting. Except as provided in subparagraph (ii) of this paragraph, a recommendation by the County Executive to approve the proposed bond guarantee shall be supported by an acceptable independent feasibility study or studies that the Montgomery Commission submits. The County Executive may waive the feasibility study requirement for a housing project financed, insured, or assisted by the State or the federal government.

After considering the recommendations of the County Executive and holding a public hearing, the County Council shall approve, approve with modifications, or disapprove the proposed bond guarantee. The County Council shall state the terms and conditions of an approved bond guarantee, including: the maximum interest payable; the terms of the bond issue; the purposes for which the bond proceeds may be expended; and the method of controlling the expenditures of the bond proceeds and the revenues and expenditures for housing projects financed by the bond proceeds.

An approval of a bond guarantee by the County Council shall be submitted to the County Executive within 3 days for concurrence or disapproval. If the County Executive does not communicate disapproval and reasons for the disapproval to the County Council within 10 days after receipt of an approval of a bond guarantee from the Council, the Council’s approval shall stand. The County Council may override a disapproval of a bond guarantee by a vote of at least six members. The County Council may rescind an approval of a bond guarantee by resolution adopted: before the advertisement of the bonds; or if the sale is to be private, before the earlier of: the sale of the bonds; and the distribution of a related offering circular.

On request of the Montgomery Commission, the county may allocate by local law a part of the total guarantee authorized by this subtitle in an amount that the local law determines. Without further approval by the County Council, the County Executive may approve by executive order the use of all or part of the allocation authorized under subsection (a) of this section as a bond guarantee. The Montgomery Commission may then issue bonds guaranteed by as much of the allocation as the County Executive has approved as a bond guarantee, and the proceeds of the bonds shall be used to: finance wholly or partly mortgage loans secured by housing; and fund related reserves and costs approved under this subtitle.

The Montgomery Commission shall provide annually to the county government an audit of each housing project financed by bonds guaranteed by the county. The audit shall be done by: an independent certified public accountant licensed by the State; or a firm of independent certified public accountants licensed by the State. The accountant or firm of accountants shall provide appropriate certified financial statements and a management letter on the financial soundness of the housing project. The county government may undertake financial and compliance audits on housing projects financed by bonds guaranteed under this subtitle.

A bond stating in substance that it has been issued by the Montgomery Commission to help finance a housing project for persons of eligible income shall be considered to have been issued for that purpose in a proceeding in which the validity or enforceability of the bond or the security for the bond is in question.

Montgomery Commission bonds may be sold at a public or private sale in the manner and on the terms authorized by resolution of the Montgomery Commission.