In this subtitle the following words have the meanings indicated. “Affordable” means that housing costs do not exceed 30% of a household’s income. “Area median income” means the median household income for the area adjusted for household size as published and annually updated by the United States Department of Housing and Urban Development. “Development costs” means costs related to acquisition, site clearance and preparation, relocation, construction, renovation, financing, refinancing, engineering, or architectural plans. “Fund” means the Workforce Housing Fund. “Household of low or moderate income” means a household that a qualifying local government determines cannot afford a sales price or rent sufficient to induce private enterprise in the area of the qualifying local government to develop enough adequate and safe housing without the assistance of a program. “Housing costs” means: rent for a rental housing unit; or mortgage principal and interest, real property taxes, and insurance for a housing unit that is for sale. “Net proceeds of transfer” means all amounts paid to the original buyer or obligations of the original buyer assumed by a purchaser of a workforce housing unit minus: reasonable costs paid by the original buyer; the combined amount of Program funds and qualifying local government matching funds used to develop the workforce housing unit; and other liens as permitted by regulation by the Department. “Priority funding area” has the meaning stated in § 5–7B–02 of the State Finance and Procurement Article. “Program” means the Workforce Housing Grant Program. “Qualifying local government” means a county or municipal corporation that qualifies for participation in the Program under § 4–1803 of this subtitle. “Workforce housing” means: rental housing that is affordable for a household with an aggregate annual income between 50% and 100% of the area median income; or homeownership housing that: except as provided in item (ii) of this item, is affordable to a household with an aggregate annual income between 60% and 120% of the area median income; or in target areas that are recognized by the Secretary for purposes of administering the Maryland Mortgage Program, is affordable to a household with an aggregate annual income between 60% and 150% of the area median income.

There is a Workforce Housing Grant Program. The Program provides flexible funds to qualifying local governments for workforce housing programs, including programs that finance development costs. The Program shall be operated with money in the Fund.

A local government qualifies for participation in the Program if: the local government has: a 5–year consolidated plan approved by the United States Department of Housing and Urban Development; or a comprehensive plan; the plans listed in item (1) of this subsection: have a workforce housing element; assess workforce housing needs; and contain goals, objectives, and policies to preserve or develop workforce housing; and the local government provides a statement to the Department indicating: a desire to participate in the Program; and a reasonable expectation of the local government’s ability to provide the matching funds required under § 4–1804 of this subtitle. The workforce housing element in the 5–year consolidated plan or the comprehensive plan of a qualifying local government may include: preservation and renovation of existing housing stock; redevelopment of existing residential areas; streamlined regulatory processes and reduced regulatory fees for construction or renovation; financial incentives for construction and renovation including local property tax credits; special zoning regulations for construction and renovation including inclusionary zoning; efforts to preserve workforce housing stock for subsequent first–time homebuyers and renters; coordination with neighboring jurisdictions; coordination with private sector employers; and leveraging of federal financial assistance.

A qualifying local government shall provide a dollar–for–dollar match for Program funds used to develop workforce housing units under this subtitle. In determining whether a local government has met the match requirement under subsection (a) of this section, the Department may consider the local government’s: costs to administer a program under this subtitle; and financial commitments to other affordable or workforce housing initiatives.

The Department shall proportionately distribute the annual appropriation of Program funds as follows: if a county is a qualifying local government, and no municipal corporation in the county is a qualifying local government, the Department shall distribute Program funds to the county based on the county’s share of the State population; if a county is a qualifying local government, and a municipal corporation in the county is also a qualifying local government, the Department shall: determine the county’s proportionate share of Program funds based on the county’s share of the State population; and from the amount of Program funds determined under item (i) of this item, distribute: to each qualifying local government in the county that is a municipal corporation, an amount of Program funds based on the municipal corporation’s share of the county population; and to the county, the balance of the county’s share of Program funds; or if a county is not a qualifying local government, but a municipal corporation in the county is a qualifying local government, the Department shall: determine the county’s proportionate share of Program funds based on the county’s share of the State population; and distribute to each qualifying local government in the county that is a municipal corporation, a proportionate share of the amount of Program funds determined under item (i) of this item based on the municipal corporation’s share of the county’s population.

Before drawing down any Program funds, a qualifying local government shall: provide evidence satisfactory to the Department that the Program funds will be matched by the qualifying local government on a dollar-for-dollar basis; and meet other Program criteria adopted by the Secretary.

The Department shall redistribute among qualifying local governments the Program funds that have not been drawn down by other local governments within a 2–year period.

A qualifying local government shall use Program funds for development costs associated with a workforce housing development located in a priority funding area in accordance with the 5–year consolidated plan or comprehensive plan of the qualifying local government. A qualifying local government may request that its program funds or match be expended by the Department through the Department’s existing housing programs.

With the consent of the Department, in appropriate circumstances, a qualifying local government may extend the income eligibility limits for a workforce housing unit developed with Program funds to include a household of low or moderate income.

The Secretary shall establish annually the maximum amount of Program funds that a qualifying local government may use to develop a workforce housing unit. The per unit maximum established by the Secretary shall take into account the regional average construction costs applicable to the qualifying local government for a comparable workforce housing unit.

Rental units developed under this subtitle shall remain affordable as workforce housing for a period of at least 25 years. If an original buyer of a homeownership workforce housing unit developed through the Program transfers title to the unit at any time, the original buyer shall pay to the Department 100% of the combined amount of Program funds and qualifying local government matching funds used to develop the unit. If an original buyer of a homeownership workforce housing unit developed through the Program transfers title to the unit: within 5 years of the date of purchase, the original buyer shall pay the lesser of 20% of the net proceeds of transfer to the Department or a 5% annual return on the Program funds provided for the unit; during the period that is more than 5 years but less than 15 years from the date of purchase, the original buyer shall pay to the Department the lesser of a percentage of the net proceeds of transfer that begins at 20% and declines by 2% for each subsequent year of ownership or a 5% annual return on the Program funds provided for the unit; and during the period that is 15 years or more from the date of purchase, the original buyer is not required to pay any portion of the net proceeds of transfer to the Department. The Department shall distribute to the qualifying local government: of the funds paid by the original buyer to the Department under subsection (b) of this section, an amount equal to the matching funds provided by the qualifying local government for the homeownership workforce housing unit; and of the funds paid by the original buyer to the Department under subsection (c) of this section, a proportionate share based on the amount of matching funds provided by the qualifying local government for the homeownership workforce housing unit. The Department and the qualifying local governments shall use the funds received under this section to develop workforce housing under the Program. The contract of sale to the original buyer shall disclose all the requirements for repayment to the Department under this section in the event of a transfer of title, including the combined amount of Program funds and qualifying local government matching funds. The amounts owed to the Department in the event of a transfer of title of a homeownership workforce housing unit under this section shall be secured by a recorded lien on the homeownership workforce housing unit. The lien created under this subsection may be a subordinate lien. The Department may charge a fee for servicing a lien created under this subsection.

A qualifying local government shall report annually to the Department on or before January 1 of each year on the use of Program funds.

The Secretary shall adopt regulations to carry out the purposes of the Program.