Chapter 13. Federal Lead Hazard Reduction Program
Regulation .01 Scope.LinkCopy Citation
A.
This chapter describes the policies and procedures for lead hazard reduction grants and loans to be funded through a federal grant to the Department from the United States Department of Housing and Urban Development.
B.
The regulations set forth in COMAR 05.04.06 describe the policies and procedures for making State-funded loans and grants to finance certain lead hazard reduction activities in residential buildings.
Regulation .02 Objective.LinkCopy Citation
The purpose of the Program is to make grants and loans to owner-occupants and sponsors of privately owned, owner-occupied, and rental housing property to fund certain lead hazard reduction activities. The Program will emphasize evaluating cost-effective and innovative treatment methods.
Regulation .03 Definitions.LinkCopy Citation
A.
In this chapter, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
Abatement.
(a)
“Abatement” means a set of measures designed to eliminate lead-based paint hazards in accordance with standards established by the Department.
(b)
“Abatement” includes:
(i)
The removal of lead-based paint and lead-contaminated dust, the permanent containment or encapsulation of lead-based painted surfaces or fixtures, and the removal or covering of lead-contaminated soils; and
(ii)
All preparation, cleanup, disposal, worker protection, and post-abatement clearance testing activities associated with these measures.
(2)
“Annual income” means total household income from all sources, including wages, investment income, Social Security, retirement, disability, and unemployment benefits, less:
(a)
Unusual or temporary income items as determined by the Department; and
(b)
Abnormal expenses of a long-term nature, such as extraordinary medical, rehabilitation, or special education expenses.
(3)
“Borrower” means an owner who receives a loan under the Program.
(4)
“Building” means a structure that satisfies the requirements of Regulation .04 of this chapter.
(5)
Certified Contractor.
(a)
“Certified contractor” means a contractor, inspector, or supervisor who has successfully completed the MDE State certification program set forth in COMAR 26.16.01.
(b)
“Certified contractor” includes a certified inspector.
(6)
“Clearance testing” means a wipe test, performed in accordance with HUD guidelines, that a dwelling unit shall pass before it may be reoccupied, showing that lead dust levels are below HUD's maximum allowable standards, as follows:
(a)
For floors, 100 micrograms per square foot;
(b)
For window sills, 500 micrograms per square foot; and
(c)
For window wells, 800 micrograms per square foot.
(7)
“Closing costs” means the total of all settlement costs and fees and, when applicable, initial payments for taxes, property insurance, title examination, or other expense items as determined by the Department.
(8)
“Department” means the Department of Housing and Community Development, a principal department of the State of Maryland.
(9)
“Director” means the Director of the Division of Development Finance of the Department.
(10)
Encapsulation.
(a)
“Encapsulation” means a method of abatement that involves the coating and sealing of surfaces with durable surface coatings specifically formulated to be elastic, able to withstand sharp and blunt impacts, long-lasting, and resilient, while also resistant to cracking, peeling, algae, fungus, and ultraviolet light, so as to prevent any part of lead-containing paint from becoming part of house dust or otherwise accessible to children.
(b)
“Encapsulation” does not mean coating and sealing surfaces with paint, which is not an encapsulant.
(11)
“Enclosure” means the resurfacing or covering of surfaces with durable materials such as gypsum board or paneling, and sealing or caulking the edges and joints so as to prevent or control chalking, flaking, peeling, scaling, or loose lead-containing substances from becoming part of house dust or otherwise accessible to children.
(12)
“Grant” means a grant made under the Program.
(13)
“Grantee” means the recipient of a grant under the Program.
(14)
“Hazardous waste” means liquid or solid waste, or combination of solid wastes, which because of its quantity, concentration, or physical, chemical, or infectious characteristics may:
(a)
Cause, or significantly contribute to, an increase in mortality or in serious, irreversible, or incapacitating illness; or
(b)
Pose a substantial current or potential hazard to human health or the environment, when improperly treated, stored, transported, disposed of, or otherwise managed.
(15)
“HEPA (high efficiency particulate accumulator)” means a vacuum cleaner fitted with a filter capable of filtering out particles of 0.3 micron or greater from a body of air at 99.97 percent efficiency or more.
(16)
“Housing programs” means the acquisition, construction, rehabilitation, refinancing, and other housing financing programs operated by the Department.
(17)
“HUD” means the United States Department of Housing and Urban Development.
(18)
“HUD guidelines” means any guidelines or manuals issued by HUD in connection with HUD's lead-based paint hazard reduction practices and requirements.
(19)
“Interim controls” means a set of measures designed to reduce temporarily human exposure or likely exposure to lead-based paint hazards, including:
(a)
Specialized cleaning;
(b)
Repairs;
(c)
Maintenance;
(d)
Painting;
(e)
Temporary containment;
(f)
Ongoing monitoring of lead-based paint hazards or potential hazards; and
(g)
The establishment and operation of management and resident education programs.
(20)
“Lead-based paint hazard” means any condition that causes exposure to lead from lead-contaminated dust, lead-contaminated soil, or lead-contaminated paint that is deteriorated or present in accessible surfaces, friction surfaces, or impact surfaces, that would result in adverse human health effects as established by the appropriate federal agency.
(21)
“Lead paint abatement services” means the risk assessment, inspection, or abatement of lead-containing substances.
(22)
“Loan” means a loan made under the Program.
(23)
“Local administrator” means a Level I or Level II local administrator certified under the Maryland Housing Rehabilitation Program, as set forth in COMAR 05.04.01.16.
(24)
"MDE" means the Maryland Department of the Environment, a principal department of the State.
(25)
“NOFA” means, collectively, Notices and Super Notices of Funding Availability covering the Lead-Based Paint Hazard Control Program, published by HUD in the Federal Register, including those published at 58 FR 13848—13857 and at 63 FR 15490—15620.
(26)
“Program” means the Federal Lead Hazard Reduction (FLHR) Program.
(27)
“Program Director” means the Director of Special Loan Programs for the Department.
(28)
“Replacement” means a strategy of abatement that removes components such as windows, doors, and trim that have lead-based painted surfaces, and installs new or deleaded components free of lead-based paint.
(29)
“Residential dwelling” means:
(a)
A single-family dwelling, including attached structures, such as porches and stoops; or
(b)
A single-family dwelling unit in a structure that contains at least one separate residential dwelling unit, and in which each unit is, or is intended to be, used or occupied, in whole or in part, as the home or residence of one or more persons.
(30)
“Risk assessment” means an on-site investigation to determine and report the existence, nature, severity, and location of lead-based paint hazards in residential dwellings, including:
(a)
Information-gathering regarding the age and history of the housing and occupancy by children younger than 6 years old;
(b)
Visual inspection;
(c)
Limited wipe sampling or other environmental sampling techniques;
(d)
Other activity as may be appropriate; and
(e)
Provision of a report explaining the results of the investigation.
(31)
“Secretary” means the Secretary of Housing and Community Development.
(32)
“State certification program” means the MDE program for accrediting, certifying, and licensing contractors, inspectors, and supervisors, and training workers, as set forth in COMAR 26.16.01.
(33)
“Subcontractor” means an entity authorized by the Department to carry out the duties and responsibilities of a local administrator under the Maryland Housing Rehabilitation Program, as stated in COMAR 05.04.01.16.
(34)
“Target housing” has the meaning stated in Regulation .04A of this chapter.
(35)
“Testing” means the measurement of lead in painted surfaces by State-certified personnel using a portable XRF analyzer, laboratory analysis of paint samples, or other method approved by HUD.
(36)
“Title X” means the federal Residential Lead-Based Hazard Reduction Act of 1992, found in Title X of Public Law 102-550, approved October 28, 1992, and any regulations promulgated under the statute.
(37)
“Trained worker” means a worker who has successfully completed the State certification program defined in this section.
(38)
“Wipe test” means the testing of a surface for the presence of lead dust by the patterned wiping of the surface, followed by analysis of the wipe by atomic absorption spectroscopy, giving the result in micrograms of lead per square foot of surface.
(39)
“XRF analyzer” means a portable instrument that:
(a)
Determines lead concentration in milligrams per square centimeter using the principle of X-ray fluorescence;
(b)
Measures mean lead content or lead content plus a spectrum of other elements;
(c)
Is used in accordance with the rules for interpretation of the XRF sampling data for multifamily or scattered-site housing, as provided in HUD guidelines; and
(d)
Is a model approved by the Program.
Regulation .04 Eligible Housing.LinkCopy Citation
A.
Eligible housing shall be target housing, which is housing that meets the following criteria:
(1)
Was constructed before 1950, except that housing constructed after that but before 1978 may be approved if the Program Director determines that a lead-based paint hazard is present;
(2)
Is not housing for the elderly or persons with disabilities, unless a child younger than 6 years old resides or expects to reside there; and
(3)
Consists of residential dwellings with at least one bedroom each.
B.
Eligible housing shall be target housing under §A of this regulation that meets the following additional criteria:
(1)
Is owner-occupied housing that meets the income requirements set forth in Regulation .13 of this chapter or rental housing for tenants who meet the requirements set forth in Regulation .13 of this chapter; and
(2)
Is not public housing (whether federal or locally supported), federally owned housing, or federally assisted housing, except for tenant-based housing that receives assistance under §8(b) or 8(a) of the United States Housing Act of 1937.
C.
Each project building shall:
(1)
Be located within the State; and
(2)
Contain at least one residential unit, with each unit having at least one bedroom.
D.
Preferences for funding shall be given to housing that is target housing with evidence of a lead-based paint hazard or rental housing which will give rental priority to families with a child younger than 6 years old, or a child with an elevated blood lead level, and that meets the following criteria:
(1)
Has an existing lead violation;
(2)
Has a child with an elevated blood lead level in residence;
(3)
Has a child younger than 6 years old in residence; or
(4)
Has a child younger than 6 years old or a child with an elevated blood lead level who is expected to spend a significant amount of time visiting.
E.
A project shall meet the property standards set forth in Regulation .12 of this chapter.
F.
The Department in its discretion may approve a forward commitment reserving Program funds to a nonprofit organization, in connection with the organization's research into lead paint abatement or lead paint medical issues, for Program loans or grants.
G.
A project is ineligible for funding if any part of the property is located in:
(1)
A federal Coastal Barrier Resource System; or
(2)
An area identified by the Federal Emergency Management Agency as having special flood hazards, unless flood insurance is obtained in accordance with the federal Flood Disaster Protection Act.
H.
A project shall be reviewed and approved by the Maryland Historical Trust.
Regulation .05 Eligible Owner-Occupants and Sponsors.LinkCopy Citation
Owner-occupants and sponsors shall meet all of the following requirements to qualify for Program financing:
A.
Either own the eligible housing, and be current for all mortgage and property tax and assessment payments, or have an agreement to purchase the eligible housing;
B.
Be an individual or a business entity;
C.
Be in good standing and qualified to do business in Maryland;
D.
Have the legal capacity and all necessary legal authorization to incur the obligations of the financing;
E.
Not have been barred or suspended by:
(1)
The Department under COMAR 05.01.05, or
(2)
HUD;
F.
Demonstrate:
(1)
Financial credibility and stability, and
(2)
The ability to successfully complete the project in a timely and satisfactory manner; and
G.
Agree in writing to:
(1)
Fully cooperate with any related research and evaluation sponsored by HUD and associated with this grant program, including preservation of the data and records of the project and compiling requested information in formats provided by the researchers or evaluators,
(2)
Allow clearance testing of assisted units before units are re-occupied,
(3)
Participate in education programs as required by the Department, and encourage participation in these programs,
(4)
Use certified contractors and trained workers to perform lead paint abatement services in accordance with Regulation .17 of this chapter,
(5)
Perform lead abatement work on the assisted unit as required by the Department,
(6)
Make good faith efforts to assist the Department in obtaining blood lead tests for children younger than 6 years old who reside in the units to be abated within 3 months before abatement,
(7)
Assist with relocation of tenants to the extent required by the Department in accordance with the Federal Uniform Relocation Act, and
(8)
Assist in monitoring the tenant income as required by the Department.
Regulation .06 Ineligible Projects.LinkCopy Citation
A.
If any of the following federal funding sources were or may be used in a residential dwelling unit, Program funding may not be used for that unit:
(1)
Shelter Plus Care;
(2)
Emergency Shelter Grants Program;
(3)
Surplus Property for Use to Assist the Homeless;
(4)
Homeownership Assistance for Low- and Moderate-Income Families (§221(d)(2));
(5)
Rent Supplements (§101);
(6)
Multifamily Rental Housing for Moderate-Income Families (§221(d)(3));
(7)
Supportive Housing for Persons with Disabilities (§811);
(8)
HOPE 2: Homeownership of Multifamily Units (Title IV);
(9)
Low-Income Housing Preservation and Resident Homeownership (Title VI);
(10)
Emergency Low-Income Housing Preservation (Title II);
(11)
Flexible Subsidy (§201);
(12)
Lower Income Rental Assistance (§8);
(13)
Section 8 Moderate Rehabilitation Program;
(14)
Public Housing Development;
(15)
Public Housing Operating Subsidy; and
(16)
Public Housing Modernization (Comprehensive Grant Program and Comprehensive Improvement Assistance Program).
B.
If Program funds are used for other units in the building, the Program may require the sponsor to secure other funding for lead abatement for the units ineligible under §A of this regulation.
Regulation .07 Eligible Lead Abatement Treatment.LinkCopy Citation
A.
The Program shall determine the level of lead abatement treatment for each residential dwelling unit, and the type of work to be done.
B.
The four levels of treatment are:
(1)
Level I, which includes:
(a)
Installing caps of vinyl, aluminum, or any other material in all window wells, in order to make window wells smooth and cleanable, in a manner and under conditions approved by the Department,
(b)
Removing and repainting chipped, peeling, or flaking paint on exterior and interior painted surfaces,
(c)
HEPA-vacuuming and washing of the interior of the property with high phosphate detergent or its equivalent, as determined by MDE, and
(d)
Educational and other requirements of the Program;
(2)
Level II, which includes all of the following:
(a)
Any Level I treatment,
(b)
Stripping and repainting, replacing, or encapsulating all interior windowsills with vinyl, metal, or any other material in a manner and under conditions approved by the Department,
(c)
Except for a treated or replacement window that is free of lead-based paint on its friction surfaces, fixing the top sash of all windows in place in order to eliminate the friction caused by movement of the top sash,
(d)
Rehanging all doors where necessary in order to prevent the rubbing together of a lead-painted surface with another surface,
(e)
Making all bare floors smooth and cleanable, and
(f)
Ensuring that all kitchen and bathroom floors are overlaid with a smooth, water-resistant covering;
(3)
Level III, which includes:
(a)
Any Level II treatment,
(b)
Window replacement, and abatement of exterior window trim,
(c)
Doorway treatments such as use of sealants and encapsulants following reworking and removal of peeling paint,
(d)
Stairway treatments such as enclosure of treads and risers, and
(e)
Encapsulation or enclosure of designated wall and trim surfaces;
(4)
Level IV, which consists of one of the other levels of treatment combined with new and innovative techniques, as approved for the project by the Program Director and MDE.
Regulation .08 Program Testing.LinkCopy Citation
A.
Biological Testing.
(1)
For every unit to be assisted with Program funds, the sponsor shall make a good faith effort to ensure that each child younger than 6 years old receives a blood lead test within the 3-month period before the beginning of lead abatement treatment.
(2)
Testing shall be performed by the local health department or other party approved by MDE.
(3)
The project sponsor shall assist in obtaining the cooperation of tenants for the blood testing.
B.
Environmental Testing. The testing in §§C—E of this regulation is required for each unit receiving abatement treatment under the Program.
C.
Initial Testing.
(1)
Every room or area in a dwelling unit planned for abatement shall:
(a)
Receive a risk assessment as defined in Regulation .03B of this chapter; and
(b)
Undergo testing as defined in Regulation .03B of this chapter.
(2)
Risk assessment, initial wipe tests, and other testing shall be performed by certified contractors and trained workers selected by the sponsor and acceptable to the Program.
D.
Clearance Testing.
(1)
Before a dwelling unit may be re-occupied, the unit shall undergo a wipe test showing that lead dust levels are below HUD's maximum allowable standard for floors (currently 100 micrograms per square foot), window sills (currently 500 micrograms per square foot), and window wells (currently 800 micrograms per square foot).
(2)
All lead dust samples shall be collected directly by MDE personnel or others approved by the Program. Test results shall be analyzed by the Maryland Department of Health or another entity acceptable to MDE.
(3)
MDE shall be permitted to perform inspections during abatement work, after visual clearance and before repainting, and at final clearance.
Regulation .09 Eligible Costs.LinkCopy Citation
A.
Program funds may be used to pay the cost of the lead abatement treatment required by the Program, as described in Regulation .07 of this chapter, to the extent permitted under Regulation .11B of this chapter.
B.
Program funds may also be used to pay all or a portion of the following costs, the extent of the coverage to be determined for each project in the discretion of the Program:
(1)
Post-treatment cleanup costs;
(2)
Costs of testing required under Regulation .08 of this chapter;
(3)
Costs of interim controls, defined in Regulation .03B of this chapter, as approved by the Program for the project;
(4)
Costs of risk assessment, defined in Regulation .03B of this chapter, and costs of inspections; and
(5)
Other costs determined by the Program to be permitted under the federal grant that provides the funds for the Program.
C.
Program funds may not be used:
(1)
For chelation or other medical treatment; or
(2)
To meet the costs of repairing a structural defect that causes paint to chip, peel, or flake.
Regulation .10 Allocation of Funds.LinkCopy Citation
A.
The Department may reserve a portion of Program funding for projects that are also receiving funding through the Department's Housing Development Programs.
B.
Program funds may not be used in jurisdictions that receive HUD funds to operate a lead abatement program, unless the project meets one of the following criteria:
(1)
The following requirements are in connection with the project:
(a)
Either the jurisdiction has committed all of its HUD lead abatement funds, or the project is ineligible for HUD lead abatement funding from that jurisdiction, and
(b)
Program funding for that jurisdiction, including funding for the applicant's project, may not exceed $500,000, unless the Secretary determines the need for project funding is exceptional;
(2)
The project previously received funding or mortgage insurance through the Department and the property is in need of lead abatement; or
(3)
The project meets the criteria of Regulation .04G of this chapter.
Regulation .11 Terms and Conditions of Financing.LinkCopy Citation
A.
Form of Financing. The Department may offer grants and loans.
B.
Maximum Amount of Program Financing.
(1)
Except as provided in §B(2) of this regulation, Program financing may not exceed:
(a)
$2,000 per dwelling unit for Level I treatment described in Regulation .07 of this chapter;
(b)
$4,000 per dwelling unit for Level II treatment described in Regulation .07 of this chapter; or
(c)
$6,000 per dwelling unit for Level III or IV treatment described in Regulation .07 of this chapter.
(2)
The Program may approve an increase in the per unit cost for a particular project based on site conditions, size of units, or innovative methods.
(3)
A project may not receive more than $500,000 of Program financing, except as provided in §B(4) of this regulation.
(4)
In the discretion of the Department, a project may receive more than $500,000 of Program funding if:
(a)
Other Departmental financing for the project is in default and the Department in its discretion determines that the default workout requires Program funds; or
(b)
The Program approves an increase for a particular project based on the size of the project, use of innovative methods, availability of other funding, or other special features of the project.
C.
Loan Terms.
(1)
Term. The term of a loan may not exceed the term of any other funding for the project provided by the Department.
(2)
Interest Rate. In its discretion, the Department may require interest to be paid on a loan at a rate set by the Program. The Department may defer payment of interest.
(3)
Repayment. At the discretion of the Department, repayment of principal and interest, or either, may be deferred for a period of time or until the earlier to occur of:
(a)
Maturity;
(b)
Sale of the project; or
(c)
Such time as the project fails to qualify as priority housing.
D.
Security for Loans. Program loans shall be secured by a recorded mortgage or deed of trust.
Regulation .12 Terms and Conditions—Property Standards and Insurance Requirements.LinkCopy Citation
A.
Property Standards. All housing assisted with Program funds shall:
(1)
Meet the minimum livability code set forth in COMAR 05.02.03, as adopted by the jurisdiction; or
(2)
Be property for which the owner-occupant or sponsor has obtained financing for rehabilitation work to ensure that the building will meet the minimum livability code and, if necessary, repair any structural defect that is causing paint to chip, peel, or flake.
B.
Insurance Requirements.
(1)
Hazard Insurance.
(a)
The owner of the building shall maintain fire and extended coverage insurance at the owner's expense in the amount not less than the sum of the loan and any other indebtedness secured by the building, up to the value of the improvements.
(b)
The hazard insurance policy shall:
(i)
Be written by companies authorized to transact business in the State;
(ii)
Be written by companies which are reputable and financially sound, as determined by the Department;
(iii)
Be in force on or before the date of the loan closing;
(iv)
For loans, name the Department as insured and as loss payee as its interest may appear in a standard mortgagee endorsement attached to or printed in the policy; and
(v)
Contain terms and coverage satisfactory to the Department.
(2)
Flood Insurance. If the building is in a 100-year flood plain, as designated by the United States Department of Housing and Urban Development:
(a)
The building shall be covered by a flood insurance policy, naming the Department as beneficiary, in an amount not less than the sum of the loan and any other indebtedness secured by the building; and
(b)
The flood insurance policy may not be terminated without prior notification to the Department.
Regulation .13 Income, Occupancy, and Rental Housing Requirements.LinkCopy Citation
A.
In order to qualify for Program funds, a rental housing project shall meet the requirements of this regulation.
B.
Income Requirements for Tenants.
(1)
At least 50 percent of the project units shall be occupied by households whose annual income does not exceed 50 percent of the HUD area median income adjusted for household size.
(2)
The remaining project units shall be occupied by households whose annual income does not exceed 80 percent of the HUD area median income adjusted for household size.
(3)
Notwithstanding the requirements set forth in §B(2) of this regulation, for buildings with five or more units, 20 percent of the project units may be occupied without regard to household income level.
C.
In renting a project unit, the landlord shall give priority to households with children younger than 6 years old.
D.
Each project is subject to the requirements set forth in §§B and C of this regulation for a period of at least 3 years, under covenants and restrictions in the form required by the Department.
E.
Annual Review.
(1)
Owners shall examine the income of each tenant household annually for 3 years. The Program may require owners to report the results.
(2)
If noncompliance with the occupancy requirements is caused by an increase in tenant income, all vacancies shall be filled with income eligible households until the noncompliance is corrected.
F.
Income Requirements for Owner-Occupants. All owner-occupied units shall be the principal residence of families whose annual income does not exceed 80 percent of the HUD area median income adjusted for household size.
G.
Not less than 90 percent of owner-occupied units shall be occupied by a child younger than 6 years old or shall be units where a child younger than 6 years old spends a significant amount of time visiting.
H.
Property Maintenance. The owner shall maintain the premises in compliance with all applicable local requirements.
Regulation .14 Application Procedures.LinkCopy Citation
A.
Housing Programs Application. If the applicant is also applying for funding through a housing program described in Regulation .03B of this chapter, the applicant shall supply the information and supporting documentation specified on the application form for the housing program.
B.
Application for Program Funding Only.
(1)
Application Procedures in General. Applicants for Program financing in amounts less than $100,000 may apply through local administrators in accordance with procedures established by the Program. All applicants may also apply directly to the Department through the Special Loan Programs, unless an alternative procedure has been approved on a case-by-case basis.
(2)
Application Forms. All loan and grant applications shall be made on standard forms described by the Department.
(3)
Documentation.
(a)
The applicant shall submit with the application any documentation that the Department requires.
(b)
The applicant shall submit supporting documentation specified in the checklist attached to the application, including but not limited to the following:
(i)
A copy of the deed to the property;
(ii)
A copy of all existing mortgages or mortgage verification requests, on the form approved by the Department, signed by the applicant for each mortgage secured by the building in need of abatement or verification of income, as required by the Department;
(iii)
A copy of the first page and declarations page of all policies for fire and extended coverage insurance and, if applicable, flood insurance;
(iv)
A copy of the most recent paid real estate tax bill which sets forth the current assessed value of the building and the property;
(v)
Evidence of a lead-based paint hazard in each project building;
(vi)
Contractor's proposal outlining proposed cost and proposed lead hazard reduction activity in accordance with MDE regulations, if available;
(vii)
Results of any environmental testing for the presence of lead, and biological testing of occupants for blood lead content;
(viii)
Relocation plan for tenants that complies with the federal Uniform Relocation Act; and
(ix)
Hazardous waste disposal plan, if applicable.
(4)
The loan applicant shall submit the following additional documentation:
(a)
Any documentation required by the Department to establish the eligibility and credit worthiness of the applicant;
(b)
For the 3 years immediately preceding the application:
(i)
Copies of federal income tax returns, or
(ii)
Sufficient documentation to verify income as determined by the Program;
(c)
If applicable, certified copies of the organizational documents of the owner-landlord and a certificate of good standing;
(d)
Certified financial statements of the applicant and, if applicable, certified financial statements of its principals;
(e)
3 years of operating statements for the project;
(f)
If applicable, resolutions of the board of directors or consents of all of the partners authorizing the application;
(g)
Photographs of the building and site;
(h)
Evidence of subdivision and zoning compliance.
Regulation .15 Loan and Grant Approval.LinkCopy Citation
A.
Initial Eligibility Determination.
(1)
An application may be submitted to the local administrator for an initial review to make a preliminary determination of the eligibility of the applicant and the project.
(2)
If an applicant is determined preliminarily to be eligible for a loan or grant, verifications and reports deemed appropriate by the Program Director or the local administrator, as the case may be, will be obtained.
(3)
If an applicant is determined preliminarily to be eligible for a loan or grant, the applicant may be provided with a letter from the local administrator in the form approved by the Program acknowledging receipt of the application and notifying the applicant of the ongoing review process.
(4)
If the applicant is ineligible for a grant or loan, the applicant shall be informed in writing of the determination.
B.
Building Evaluation.
(1)
Each building for which an application is received shall be inspected for the purposes of determining compliance with the minimum livability code and evaluating the adequacy of lead hazard reduction proposals submitted by the applicant.
(2)
The inspection shall be performed by:
(a)
The Department;
(b)
The local administrator; or
(c)
Another inspector acceptable to the Department.
C.
Loan and Grant Approval.
(1)
All loan applications shall be evaluated by the Special Loan Programs operated by the Department.
(2)
Upon receipt and approval of all acceptable contractors' proposals, and all other data the Program considers relevant or necessary, the local administrator originating a grant shall undertake an analysis of the grant and other grant terms and conditions.
(3)
After completing the steps described in §C(2) of this regulation, the local administrator shall forward the application package and the analysis of the loan or grant, or both, to the Department for approval, disapproval, or modification.
(4)
Approval to make a loan, grant, or combination of loan and grant shall be as follows:
(a)
A loan, grant, or combination of loan and grant in an amount of $30,000 or less may be approved by:
(i)
The Level II local administrator, when the Level II local administrator originates the loan or grant, or
(ii)
The Program Director when a Level I local administrator or the Department originates the loan or grant;
(b)
A loan, grant, or combination of loan and grant in an amount over $30,000 and less than $100,000 may be approved by the Director;
(c)
For a loan, grant, or combination loan and grant in an amount of $100,000 or more, the following procedures shall apply:
(i)
The loan/grant proposal shall be submitted to the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland,
(ii)
For a loan, grant, or combination loan and grant in an amount greater than $100,000 but less than $250,000, the recommendation of the Housing Finance Review Committee constitutes approval unless the loan is specifically disapproved by the Secretary,
(iii)
For a loan, grant, or combination loan and grant in amounts of $250,000 or more, the Secretary shall determine in writing whether the loan is approved and under what loan terms after receiving the recommendation of the Housing Finance Review Committee,
(iv)
In an emergency when urgent action is required, the Secretary may approve loans and grants by written determination without the recommendation of the Housing Finance Review Committee.
(5)
Before a Level II local administrator gives final approval and issues a commitment for Program funding in the amount of $30,000 or less, the Level II local administrator shall contact the Program and receive confirmation that funds are available.
D.
Rejection. If an application for Program funds through a Housing Program is rejected, the Director of the Housing Program processing the application shall notify the applicant in writing of the rejection. If a direct application for Program funds only is rejected, the Director of the Special Loan Programs or local administrator, as the case may be, shall notify the applicant in writing of the rejection.
E.
Reconsideration. An applicant may request reconsideration of a rejection in accordance with the procedures contained in Program guidelines. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.
F.
Loan and Grant Documents. Loans and grants shall be closed on standard form documents required and provided by the Program and may not be altered by the local administrator.
Regulation .16 Loan and Grant Disbursements.LinkCopy Citation
A.
Monitoring.
(1)
The local administrator shall monitor loan and grant disbursements during lead hazard reduction work to assist the Program funding recipient and to ensure that loan funds are properly used.
(2)
The local administrator shall make at least two inspections of the project, including:
(a)
An initial inspection; and
(b)
An inspection before any disbursement of funds.
(3)
Based on Program guidelines, the local administrator shall determine the frequency and level of inspections during lead hazard reduction work, taking into consideration:
(a)
The capability of the Program funding recipient;
(b)
The demonstrated experience and reliability of the contractor;
(c)
The amount of the grant or loan;
(d)
The availability of local technical assistance; and
(e)
Other factors considered relevant by the Department.
B.
Payments Generally.
(1)
Loan and grant funds shall be disbursed in full at the closing to an account held on behalf of the Program funding recipient by either the political subdivision that is the local administrator for the loan or the subcontractor. The loan or grant funds shall be held in an account established under §C of this regulation.
(2)
The local administrator or the subcontractor shall disburse loan and grant proceeds in accordance with the following requirements:
(a)
Loan funds may not be disbursed if payments of interest or escrow required by the loan documents are in arrears;
(b)
Draws shall be paid by a joint payee check issued to the borrower and contractor unless an alternative payment method is approved by the Program Director;
(c)
Advance payments are not permitted; and
(d)
Payments shall be made only for work completed.
(3)
Payments may not be made for material delivered to the site but not yet installed in the project.
C.
Loan Accounts.
(1)
Loan funds shall be held in a non-interest-bearing account established by the local administrator or the subcontractor and approved by the Department. The account may be:
(a)
An account with a depository institution that is separate from the other operating accounts of the local administrator or subcontractor;
(b)
An account with a depository institution that is not separate from the other operating accounts of the local administrator or subcontractor using a separate reconciled general ledger account for all Program funds;
(c)
An escrow account or attorney's trust account held and managed by an escrow agent if the escrow agent meets the following minimum criteria to the satisfaction of the Department:
(i)
Any employee of the escrow agent with access to the account shall be covered by a fidelity bond, or insured with employee dishonesty liability insurance, in an amount not less than $100,000,
(ii)
The escrow agent shall provide the local administrator or the subcontractor, if any, and the Department with the quarterly statements required under §C(2) of this regulation, and
(iii)
Any other requirements established by the Department; or
(d)
Another type of account approved by the Department.
(2)
The local administrator or the subcontractor shall provide the Department with quarterly statements of all loan funds in a loan account. The Department shall review these quarterly statements and shall reconcile the loan balances in the records of the local administrator or the subcontractor with the loan balances in the records of the Department. If the quarterly statements do not correspond with the Department's records of loan funds in the account, the local administrator or subcontractor shall work with the Department to reconcile the differences.
(3)
The Department may revoke, at any time, its approval of any loan account established under this regulation.
D.
Progress Payments.
(1)
Progress payments shall be made in accordance with a schedule setting forth payments and corresponding percentages of completed work. The schedule shall be approved by the local administrator before any payments are made, and may be revised by the local administrator from time to time. The schedule may provide for a holdback of a portion of the loan amount.
(2)
If a Program funding recipients' request for payment is refused, the local administrator shall notify the Program funding recipient and give the reasons for the refusal. The determination of the local administrator as to the percentage of work completed is final.
E.
Final Payment. Final payment shall be made as follows:
(1)
The Program funding recipient shall submit to the local administrator a certificate of completion, executed by the Program funding recipient and contractor, certifying that all work has been completed in accordance with the contract documents;
(2)
The Program funding recipient shall submit to the local administrator documentation that the work area meets the lead dust clearance test standard set by MDE or another agency acceptable to the Department;
(3)
The Program funding recipient shall submit to the local administrator documentation that the entire dwelling unit meets MDE requirements and that all work required to achieve mechanical and structural soundness has been completed;
(4)
Final payment shall be processed upon satisfactory final inspection and receipt of the certificate of completion; and
(5)
If, in the opinion of the local administrator, the contractor has satisfied the contract and the Program funding recipient refuses to request or release the final payment, the local administrator may employ the following procedure:
(a)
The local administrator may require the Program funding recipient to explain in writing within 10 days why the local administrator should not make direct payment to the contractor,
(b)
If the Program funding recipient responds within the 10-day period and requests a meeting, the local administrator shall hold a meeting at which the Program funding recipient shall present the borrower's objections to requesting or releasing the final payment, and
(c)
The local administrator, in the local administrator's discretion, may then either approve or disapprove direct payment to the contractor or the Program funding recipient, if applicable.
F.
Retainage for Claims. If the Program funding recipient or the local administrator receives written notice that subcontractors, materialmen, or suppliers have not been paid for work done or material supplied to and for the project, the local administrator shall retain amounts sufficient to satisfy the claims, to the extent that loan funds have not been disbursed, until satisfactory evidence of satisfaction and release by the subcontractors, materialmen, or suppliers is presented. The contractor shall promptly pay or bond any liens established.
G.
Retainage in General.
(1)
The local administrator may retain 10 percent of the loan amount until final payment.
(2)
The retainage shall be released at final payment upon confirmation that:
(a)
All lead hazard reduction work is complete and acceptable to the local administrator;
(b)
The lead dust clearance test standard has been met; and
(c)
Verification has been made by a county health department, MDE, or other agency acceptable to the Program that the lead hazard reduction was successful.
H.
Payment for Additional Work. Payment for any additional cost to complete work not included in the approved contract proposal is the obligation of the Program funding recipient. A Program funding recipient may apply to the local administrator for a loan increase to cover some or all of the increased costs. Any loan increase shall be subject to approval or disapproval in accordance with the provisions of this chapter. The Department has no obligation to pay for increased costs.
I.
Quality Control.
(1)
Subject to the rights of tenants, if any, the Department or the local administrator may collect random samples of dust levels in a building before and after completion of the lead hazard reduction activity.
(2)
Wipe samples may be analyzed by MDE, or its designee, and the local administrator and the Department may maintain records of the results of the sampling.
(3)
The Department may provide MDE with a list of all buildings which undertake lead hazard reduction through the Program.
J.
Closeout Procedures.
(1)
After final payment or payout is made, the local administrator or the subcontractor shall reconcile all receipts and disbursements.
(2)
A copy of the closeout statement shall be forwarded to the Program and the servicer.
Regulation .17 Accreditation and Training Requirements.LinkCopy Citation
All individuals involved in lead paint abatement services for the lead hazard reduction activity shall be fully trained and accredited in accordance with the MDE State certification program outlined in COMAR 26.16.01.
Regulation .18 Nondiscrimination; Drug and Alcohol Free Workplace.LinkCopy Citation
A.
Recipients of Program funds, contractors, local administrators, and subcontractors may not discriminate on the basis of race, color, religion, national origin, sex, marital status, physical or mental disability, sexual orientation, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, or other similar federal laws, in any aspect of the Program, or in any aspect of employment by any recipient of Program funds, contractors, local administrators, or subcontractors in connection with any property financed or assisted under the Program.
B.
Each recipient of Program funds, contractor, local administrator, and subcontractor shall comply with applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces including:
(1)
Titles VI and VII of the Civil Rights Act of 1964, as amended;
(2)
Title VIII of the Civil Rights Act of 1968, as amended;
(3)
The Fair Housing Amendments Act of 1988, as amended;
(4)
The Department’s Minority Business Enterprise Program, as amended;
(5)
The Americans with Disabilities Act of 1990, as amended;
(6)
State Government Article, Title 20, Annotated Code of Maryland, as amended; and
(7)
Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order.
C.
Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.
Regulation .19 Program Administration.LinkCopy Citation
A.
Except for a waiver under §E of this regulation, any action or decision required or permitted to be taken or made by the Department under these regulations may be taken or made by the Director, Division of Development Finance, or the Director's designee.
B.
The Department may terminate an approval of funds or refuse to make disbursements under a loan or grant agreement if the Department finds that the sponsor is not complying with any of the requirements of the Program or the financing documents.
C.
The Department may establish from time to time operational handbooks or manuals governing matters relating to the Program including descriptive statements of Program procedures available to the public.
D.
Because a federal grant is the source of funding for the Program, federal laws and regulations such as Title X, NOFA, and HUD guidelines constitute Program requirements and take precedence over these regulations in the event of a conflict.
E.
The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver or variance is not inconsistent with the requirements of HUD, if in the written determination of the Secretary:
(1)
Application of the regulation would violate HUD requirements for administering the federal grant;
(2)
The application of the regulations in a specific case or in an emergency situation would be inequitable or contrary to the purpose of the Program or the HUD grant to the Department; or
(3)
Conformance with the requirements of any federal, State, or local programs in connection with the Program necessitates waiver or variance of a regulation.
F.
The Secretary may delegate to the Director, the Program Director, or to any other official or employee of the Department the authority to execute or approve Program documents, including commitments and agreements with local administrators. In addition, through the agreement with the local administrator, specific staff members of the local administrator may be authorized by the Department to execute loan and grant documents on behalf of the Department.
Regulation .20 Fees.LinkCopy Citation
A.
The Program may charge fees such as application fees, commitment fees, loan processing fees, and financing fees.
B.
The fees for sponsors may not be included in Program financing.
C.
Fees for owner-occupants may be included in Program financing.
Regulation .21 False Statements.LinkCopy Citation
A person may not knowingly make or cause to be made any false statement or report in any documents required to be furnished to the Department or the local administrator by any agreement relating to the Program.
Chapter annotations
Authority: Housing and Community Development Article. §4-211(a)(8) and (9), Annotated Code of Maryland
History: Effective date: July 1, 1996 (23:13 Md. R. 939)
History: Regulation .03B amended effective May 5, 1997 (24:9 Md. R. 655); November 29, 1999 (26:24 Md. R. 1856)
History: Regulation .04B amended effective May 5, 1997 (24:9 Md. R. 655)
History: Regulation .13 amended effective May 5, 1997 (24:9 Md. R. 655)
History: Regulation .18A amended effective November 29, 1999 (26:24 Md. R. 1856)
History: Chapter revised effective February 21, 2000 (27:3 Md. R. 327)
History: Regulation .18 amended effective March 16, 2015 (42:5 Md. R. 485)