Chapter 05. Partnership Rental Housing Program
Regulation .01 General.LinkCopy Citation
This chapter prescribes the policies, procedures, and authorizations for providing capital assistance from the Partnership Rental Housing Fund and administering the Partnership Rental Housing Program.
Regulation .02 Objective.LinkCopy Citation
A.
The objective of the Program is to provide financing for all or a portion of the development costs of rental housing that will be occupied by households of lower income and is either:
(1)
Owned, or to be owned, by local governments, or local government entities, for which the applicable local government provides a site or funds to acquire a site and any necessary off-site improvements; or
(2)
Owned by private sector entities and is occupied by households of lower income that include one or more individuals with disabilities or special needs.
B.
The Program intends to provide financing to projects that:
(1)
Will be financially self-sufficient so that they do not require further State, local, or federal governmental funding for maintenance, renovation, or operating subsidies, other than as anticipated at the time the Program financing is provided; and
(2)
Can be maintained economically as rental housing for households of lower income in perpetuity if the sponsor so wishes.
C.
Projects financed by the Program are intended to provide rental housing to households with income, assets, or other resources sufficient to pay rent in amounts necessary to maintain the financial self-sufficiency of the project.
Regulation .03 Definitions.LinkCopy Citation
A.
In this chapter, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Act” means Housing and Community Development Article, Annotated Code of Maryland.
(2)
“Administration” means the Community Development Administration, a unit of the Division of Development Finance of the Department.
(3)
“Annual Income” means annual income as defined by the United States Department of Housing and Urban Development at 24 CFR §5.609, as amended.
(4)
“Applicable codes and standards” means the zoning, construction, health, safety, fire, occupancy, and other codes and standards applicable to the project in the political subdivision in which the project is located.
(5)
“Capital assistance” means funding provided by the Program used by a sponsor to finance development costs of a project.
(6)
“Capital assistance documents” means all documents either executed or supplied by a sponsor in connection with the application for and closing of capital assistance financing.
(7)
Department.
(a)
“Department” means the Department of Housing and Community Development, a principal department of the State.
(b)
“Department” includes the Administration.
(8)
“Development costs” means those costs incurred for the acquisition, construction, or rehabilitation of rental housing that are eligible for financing under the Program in accordance with, and as limited by, Regulation .07 of this chapter.
(9)
“Elderly household” means:
(a)
One or more individuals who occupy the same residential dwelling unit, at least one of whom is 62 years old or older;
(b)
For projects which also receive funding through one or more programs administered by HUD, an elderly family, elderly household, or elderly person, as defined by HUD; or
(c)
Such other definition established by the Secretary pursuant to Housing and Community Development Article, §4-101, Annotated Code of Maryland.
(10)
“Fund” means the Partnership Rental Housing Fund, which is a special, continuing, nonlapsing fund composed of moneys appropriated by the State for the Program or made available to the Program from the sale of general obligation or other bonds.
(11)
Household.
(a)
“Household” means one or more individuals who occupy the same residential dwelling unit as their permanent residence.
(b)
“Household” includes a family as defined in 24 CFR §5.403, as amended.
(12)
Household of Lower Income.
(a)
“Household of lower income” means a household whose annual income, upon initial occupancy, does not exceed 50 percent of the Statewide median income for a household of similar size or such lesser income level as may be established by the Secretary for any particular project or for partnership units to be occupied by one or more individuals with disabilities or special needs.
(b)
“Household of lower income”, for the purpose of continuing occupancy, includes a household whose annual income does not exceed an income level that the Secretary establishes or any applicable federal requirement.
(13)
“Housing Finance Review Committee” means the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland.
(14)
“Local contribution” means a contribution to the project by a local government that is consistent with the requirements set forth in Regulation .17 of this chapter.
(15)
“Local government” means:
(a)
Any municipal corporation in Maryland subject to the provisions of Article XI-E of the Constitution;
(b)
The Mayor and City Council of Baltimore;
(c)
Any of the 23 counties in Maryland; and
(d)
Any housing authority authorized under the Act.
(16)
“Local government entity” means a corporation, limited partnership, limited liability company, or other legal entity in which a local government has an ownership interest.
(17)
“Moderately priced dwelling unit (MPDU)” means a residential rental unit that is newly constructed by a private sector entity and sold to a local government under a local regulatory land use program.
(18)
“Partnership units” means the residential rental units in a rental housing project that are financed with capital assistance.
(19)
“Private sector entity” means any for-profit or nonprofit partnership, corporation, limited liability company, organization, or other legal entity that is not a local government or a local government entity.
(20)
“Program” means the Partnership Rental Housing Program.
(21)
“Project” means any undertaking for the acquisition, construction, or rehabilitation of land, buildings, and improvements, or any portion thereof, financed by the Program, that will be used for rental housing to be occupied entirely by households of lower income, except for any units occupied by management personnel.
(22)
“Rental housing” means any rental housing facilities, including apartments, condominiums, cooperatives, townhouses, single-family homes, or single-room occupancy facilities, for which rent is charged to the household occupying the housing, including improvements directly related to providing rental housing, such as:
(a)
Community spaces;
(b)
Maintenance work areas;
(c)
Administrative offices;
(d)
Laundry facilities; and
(e)
Units occupied by management personnel.
(23)
“Scattered site project” means noncontiguous units of rental housing developed and operated under a common plan of ownership and financing.
(24)
“Secretary” means the Secretary of Housing and Community Development.
(25)
“Sponsor” means all of the following:
(a)
A borrower or obligor on a loan made by the Department to finance a project;
(b)
The person or entity principally responsible for the project and loan application before the loan closing;
(c)
Any person or entity that has an ownership interest in, or identity of interest with, a person or entity under §B(25)(a) or (b) of this regulation; and
(d)
An applicant that develops a project and qualifies under §B(25)(a), (b), or (c) of this regulation.
(26)
“Treasurer” means the Maryland State Treasurer.
Regulation .04 Eligible Borrowers — Local Governments and Local Government Entities.LinkCopy Citation
A.
A local government or local government entity shall meet the requirements in §§B—F of this regulation to qualify for capital assistance.
B.
The local government shall provide a local contribution that meets the requirements of Regulation .17 of this chapter.
C.
The local government or local government entity shall assure that any off-site improvements necessary for a project are provided without capital assistance from the Program.
D.
The local government or local government entity shall develop a project or contract with a qualified for-profit or nonprofit developer to develop the project.
E.
The local government or local government entity shall own the project.
F.
A local government entity shall also meet the requirements of Regulation .05A(1)—(4) of this chapter.
Regulation .05 Eligible Borrowers — Private Sector Entities.LinkCopy Citation
A.
If a project is owned by a private sector entity, the entity shall meet the following requirements to qualify for capital assistance:
(1)
Be in good standing and qualified to do business in Maryland;
(2)
Have the legal capacity and all necessary legal authorizations to incur the obligations of the capital assistance;
(3)
At the time the assistance is provided, not be debarred or suspended by the Department under COMAR 05.01.05;
(4)
Demonstrate:
(a)
Financial credibility and stability;
(b)
The capability of achieving successful completion of the project; and
(c)
The ability to manage the project; and
(5)
Agree in writing to rent all partnership units to households of lower income that include one or more individuals with disabilities or special needs.
B.
Private sector entities that intend to sell a project to a local government or local government entity under Regulation .09 of this chapter shall:
(1)
Meet the requirements of §A(1)—(4) of this regulation; and
(2)
Have a binding contract to sell the housing financed by the capital assistance to the local government.
Regulation .06 Management.LinkCopy Citation
A.
The sponsor shall directly manage or contract with a qualified for-profit or nonprofit management agent for the management of the operation of a project.
B.
The management contract:
(1)
Shall be acceptable to the Department and its counsel;
(2)
If the capital assistance is funded from the proceeds of tax-exempt revenue bonds, shall have a duration not greater than 1 year, unless a longer term is approved by counsel to the Treasurer, and shall contain such other provisions necessary to ensure the tax-exempt status of the bonds; and
(3)
May be renewed at 1-year intervals, or such longer intervals as approved by counsel to the Treasurer, at the option of the parties.
C.
The sponsor shall agree in writing that as long as the capital assistance is outstanding, the sponsor shall:
(1)
Maintain the project in good physical and financial condition;
(2)
Cooperate with the Department in periodic monitoring of the:
(a)
Physical condition of the project;
(b)
Financial condition of the project;
(c)
Incomes of households residing in the project; and
(d)
Contributions of the households in the project to enhance and maintain the project or the community;
(3)
Maintain project accounts as required by the loan documents, including accounts for operating costs, tenant security deposits, insurance, taxes, and reserves for replacements, and a residual receipts account containing all project revenues in excess of allowable project expenses; and
(4)
Operate the project in accordance with the requirements of the Act and this chapter.
Regulation .07 Eligible Uses.LinkCopy Citation
A.
Program funds may be used to provide capital assistance for financing development costs, including:
(1)
Acquisition of buildings and land, provided, if the sponsor is a local government or local government entity, it has met the local contribution requirements of Regulation .17 of this chapter;
(2)
Labor and materials for construction, rehabilitation, and installation of improvements as set forth in approved plans and specifications;
(3)
Necessary studies, surveys, tests, plans, and specifications, including:
(a)
Appraisals;
(b)
Market analysis studies;
(c)
Construction cost estimates;
(d)
Test borings; and
(e)
Compaction tests;
(4)
Reasonable fees for architectural, design, engineering, and other special services;
(5)
Site preparation, including the costs of:
(a)
Running services from public utilities abutting the site to the buildings in the project;
(b)
Public utility connection fees;
(c)
Roads from public roads abutting the site to the buildings in the project;
(d)
Installing wells or septic systems on the site; and
(e)
Parking areas, play areas, and landscaping;
(6)
Indemnity and surety bonds;
(7)
Premiums on title, mortgage, and hazard insurance;
(8)
An allowance for start-up costs such as marketing and leasing expenses, as approved by the Department;
(9)
Costs associated with obtaining environmental assessments and testing for the presence of environmental hazards; and
(10)
Other costs and fees acceptable to the Department.
B.
Program funds may be used in accordance with Regulation .10 of this chapter to purchase MPDUs.
C.
Program funds may not be used for:
(1)
Acquisition of the site, except as permitted in §A(2) of this regulation; or
(2)
Off-site improvements.
D.
If a capital assistance from the program loan is funded with the proceeds of general obligation bonds issued by the State of Maryland, additional limitations on eligible uses may be applicable.
Regulation .08 Project Eligibility.LinkCopy Citation
A.
General Requirements. Buildings and improvements comprising a project shall meet the following requirements:
(1)
Be located within the State;
(2)
When the project is complete, be in compliance with applicable codes and standards;
(3)
Be owned by an eligible borrower, with title and title insurance insuring the Department that are acceptable to the Department; and
(4)
For projects involving new construction, be located within a priority funding area as described in State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.
B.
A project is eligible only if:
(1)
The Department has complied with COMAR 05.01.06.06; and
(2)
The Secretary has issued the written determination required under COMAR 05.01.06.07.
C.
Project Income.
(1)
Rents charged for partnership units shall be in amounts adequate for total income from the partnership units plus any funds contributed under §C(2) of this regulation, to be sufficient to:
(a)
Pay all operating costs, insurance premiums, and payments instead of taxes, if any, that may be due; and
(b)
Fund a reserve account for future maintenance, renovation, and improvement of the project by periodic deposits in amounts, as determined by the Department, that are adequate for the long-term maintenance and renovation of the project.
(2)
The local government in its discretion may increase total income with operating or rent subsidies appropriated by the local government from its funds specifically for the project.
(3)
The total income collected under §C(1) and (2) of this regulation shall be of such an amount that it is reasonable to anticipate that additional State and federal subsidies will not be required to maintain, on a long-term basis, occupancy of the partnership units by households of lower income.
D.
Occupancy Limitation.
(1)
Throughout the term of the capital assistance financing, all of the residential rental units in a project that are financed with the capital assistance, other than units occupied by management personnel, shall be:
(a)
Occupied by households of lower income; or
(b)
If the project is owned by a private sector entity, occupied by households of lower income that include one or more individuals with disabilities or special needs.
(2)
A household whose annual income after initial occupancy exceeds the income limit set by the Secretary for continuing occupancy for households of lower income shall be given notice requiring it to vacate on or before that date which is 24 months after the date of the notice. The sponsor or its management agent shall deliver the required notice within 2 months of the date of the certification showing that the annual income of the household exceeded the income limit for continuing occupancy for households of lower income.
(3)
Notwithstanding §D(2) of this regulation, a lease renewal may be entered into with a household that is required to receive a notice to vacate, but the term of the renewal may not exceed 24 months after the date of the notice, unless conflicting federal requirements apply.
(4)
Partial Financing.
(a)
If capital assistance is used to partially finance a project, there shall be a minimum number of partnership units, other than units occupied by management personnel, that shall be occupied by households of lower income throughout the term of the capital assistance financing.
(b)
Except as provided in §D(4)(c) of this regulation, the minimum number of partnership units shall be equal to the amount of the loan divided by $75,000 or such other per unit cap as may be established by the Secretary.
(c)
For capital assistance to private sector entities for rental housing for households that include one or more individuals with disabilities or special needs, the minimum number of partnership units shall be as set by the Program.
(d)
The income levels and the disabilities or special needs of households not residing in the partnership units may not be restricted by the Program.
(e)
Only those households that reside in partnership units in a project are subject to the tenant participation requirements as provided under Regulation .18 of this chapter.
(f)
The sponsor shall provide equal access for all tenants to any amenities and common areas in a project that is partially funded with capital assistance from the Program.
(g)
A household having excess income may stay in its rental unit if, within 12 months of the income certification showing excess income:
(i)
There is another residential rental unit in the project that is not a required partnership unit;
(ii)
The nonpartnership unit is either vacant and will be rented to an income eligible household, or is occupied by an income eligible household; and
(iii)
Converting the nonpartnership unit to a partnership unit would not otherwise cause a violation of this regulation.
(h)
If the sponsor or its management agent has not identified a substitute partnership unit in accordance with §D(4)(g) of this regulation within the 12-month period, the household having excess income shall be given a notice requiring it to vacate the partnership unit on or before that date which is 24 months after the date of the notice.
(i)
If a nonpartnership unit becomes available before the 24-month date, the sponsor or its management agent may convert the available nonpartnership unit under the same restrictions identified in §D(4)(g) of this regulation and allow the household having excess income to remain in its rental unit, which shall be converted to nonpartnership status.
(j)
A lease renewal may be entered into with a household that is scheduled to receive or has received a notice to vacate under §D(4)(h) of this regulation, but the term of the lease renewal may not extend beyond 24 months after the date of the household's notice of excess income.
Regulation .09 Special Projects—Assistance to Private Sector Entities for Sale to Local Governments.LinkCopy Citation
A.
Capital assistance may be provided to private sector entities to construct, acquire, reconstruct, or rehabilitate projects that are, upon completion, to be sold to a local government or local government entity, if, upon completion of the project, the private sector entity is required to:
(1)
Transfer legal title to the local government or local government entity without additional capital assistance from the Department; and
(2)
Unless the local government has contributed the land, pay an amount not to exceed the cost of the land and any off-site improvements paid for by the private sector entity.
B.
If the capital assistance is for partnership units that are part of a larger rental housing project or homeownership development project, the minimum number of units in the project that are required to be sold to the local government shall be determined by the formula specified in Regulation .08D(4) of this chapter.
Regulation .10 Special Projects—MPDUs.LinkCopy Citation
A.
MPDU projects that are constructed or rehabilitated by third parties and then sold to a local government or local government entity under a local regulatory land use program shall be eligible for financing under the Program, provided that the following requirements are satisfied, instead of the requirements set forth in Regulations .04 and .07A and C of this chapter:
(1)
The local government or local government entity is or will be the legal or equitable owner of the project not later than the time that capital assistance funds are disbursed; and
(2)
The amount of financing provided by the Program to the project does not exceed the amount of the acquisition cost of the completed project, less the sum of:
(a)
The market value of the land on which the project is located as set forth in or determined from the most recent tax assessment; and
(b)
Any additional contribution from the local government as may be required in accordance with Regulation .17 of this chapter.
B.
The Department may impose additional requirements pertinent to any unique factors of MPDU projects.
Regulation .11 Special Projects—Other.LinkCopy Citation
A.
Projects with Commercial or Other Nonresidential Space. The Department, in its discretion, may allow capital assistance for projects that are located on sites with improvements that are not eligible for financing under the Program in that the improvements are not for the purpose of providing rental housing, such as government offices or commercial space. If a project of this type does receive capital assistance, the Department may impose additional requirements pertinent to any unique factors of the project.
B.
Projects for the Elderly. Projects restricted to occupancy by elderly households may receive funding under the Program.
Regulation .12 Terms and Conditions — Repayment.LinkCopy Citation
A.
Conditional Repayment Obligation. Except as provided in §B of this regulation, a repayment of principal or interest on the capital assistance is not required unless the project ceases to be owned by the sponsor or operated in accordance with the requirements of the Act and this chapter and the terms and conditions of the capital assistance documents.
B.
If necessary to comply with, or receive the benefit of, federal or other financial assistance, capital assistance provided under the program may be made available as a deferred payment loan repayable on the later of:
(1)
The sale of the project;
(2)
The failure of the sponsor to operate the project for the benefit of households of lower income in accordance with the agreements between the Department and the local government; or
(3)
A maturity date set by the Department.
C.
Amounts Due upon Sale of Project.
(1)
If a project or any interest in it is sold or transferred by the sponsor, other than to a local government or local government entity in accordance with Regulations .09 and .10 of this chapter, or to another eligible borrower approved by the Department, the sponsor shall pay to the Department the principal amount of the financing, plus simple interest, if any, at the rate set forth in the capital assistance documents.
(2)
The capital assistance documents may require that the sponsor or the Department apply any proceeds of the sale of a project or any other loan repayment funds plus all sums held in any project accounts to the housing needs of low-income and moderate-income persons.
D.
Amounts Due upon Default.
(1)
In the event of default, the Department has the right to accelerate the indebtedness, and the amounts set forth in §C(1) of this regulation shall then be due and payable by the owner.
(2)
The Department shall have the right to demand a deed in lieu of foreclosure, or to foreclose, if the financing is secured by a mortgage or deed of trust.
(3)
An obligation to repay the financing under the Program is secured only by the project property or other security device acceptable to the Department, and a deficiency judgment against the owner may not be sought or obtained following foreclosure.
(4)
A local government is not required to pledge its faith or credit for the repayment of capital assistance.
E.
Voluntary Repayment. A sponsor may voluntarily repay Program financial assistance at any time if the sponsor complies with the following requirements:
(1)
If the financing was made with State bond proceeds, provides the Department with an opinion of bond counsel, prior to or simultaneously with the voluntary prepayment, that the prepayment does not adversely affect the interest of the bondholders under the pertinent State bonds and the State’s bond counsel for the bonds agrees;
(2)
Provides written notice to each tenant residing in the project which describes the impact of the prepayment on the tenant and, if applicable, any assistance to which the tenant is entitled;
(3)
Provides notice of the prepayment to the Department, the political subdivision, if not an owner of the project, the local public housing authority, if any and if not an owner of the project, and any parties registered with the Department;
(4)
Offer a right of first purchase to the Department, the political subdivision, if not an owner of the project, the local public housing authority, if any and if not an owner of the project, and any interested parties registered with the Department;
(5)
Provides a lease extension for at least 1 year following the notice of the prospective prepayment action to each tenant residing in an assisted unit;
(6)
Makes relocation assistance payments to each tenant in an amount determined by the Department;
(7)
Provides 3-year lease extensions or payments equal to 3 months rent to 20 percent of the tenants who live in assisted units and qualify as senior citizens, disabled, or households with minors; and
(8)
Complies with any procedural requirements of the Department with respect to the right of first purchase, the relocation payments, and lease extensions.
Regulation .13 Terms and Conditions — General.LinkCopy Citation
A.
Project Income.
(1)
A sponsor shall charge rents in amounts sufficient to pay all project expenses and fund project accounts as provided in the capital assistance documents and in this chapter.
(2)
Project revenues, including all income from the rental of dwelling units, parking, and laundry, shall be placed in project accounts as provided in §B of this regulation and may not be withdrawn except to pay project expenses.
(3)
If the total amount in the accounts in §B of this regulation reaches a level that the Secretary and the sponsor agree exceeds the reasonable foreseeable needs of a project, the sponsor and the Secretary may enter into an agreement to use the excess moneys for the housing needs of low-income and moderate-income individuals who need not reside in the project.
B.
Project Accounts.
(1)
The sponsor shall establish and maintain accounts for a project in a manner satisfactory to the Department and as required by the capital assistance documents.
(2)
The accounts may include funds for:
(a)
Tenant security deposits;
(b)
Operating costs;
(c)
Insurance;
(d)
Taxes or payment in lieu of taxes;
(e)
Reserves for maintenance, renovation, and improvements in amounts satisfactory to the Department; and
(f)
A residual receipts account containing all project revenues in excess of allowable project expenses.
(3)
The sponsor shall file periodic reports with the Department regarding those accounts required by the capital assistance documents.
C.
Tenant Selection Procedures.
(1)
The sponsor may establish tenant selection preferences for applicants living or working in the area.
(2)
Tenant selection preferences may not be based upon the length of time the applicant has lived or worked in the area.
(3)
Local residency requirements are prohibited.
D.
Security Deposits. The sponsor may collect security deposits as permitted by Maryland law.
E.
Rental Period. For the entire period during which the capital assistance, or any part of it, is outstanding, the partnership units shall be maintained:
(1)
If the project is owned by a local government or local government entity, as rental housing for households of lower income; or
(2)
If the project is owned by a private sector entity, as housing for households of lower income that include one or more individuals with disabilities or special needs.
F.
Payments in Lieu of Taxes. A project owned by a local government as a governmentally owned facility is not subject to property taxes and may only be charged a payment in lieu of taxes if there is a preexisting agreement between the sponsor and the local government providing for payments instead of taxes.
Regulation .14 Terms and Conditions — Property, Liability, and Other Insurance.LinkCopy Citation
A.
At or before closing of a loan, and at such other times as required by the Department, the sponsor shall provide evidence that the sponsor, contractor and other parties, have obtained and maintained the following insurance:
(1)
Owner's liability;
(2)
Owner's property or hazard or contractor's builder's risk;
(3)
Contractor's liability;
(4)
Architect's errors and omissions;
(5)
Engineer's errors and omissions; and
(6)
Flood insurance, if the project is located in a flood hazard zone.
B.
All insurance required under §A of this regulation shall meet the following requirements:
(1)
Be written by a company registered with the Maryland Insurance Administration;
(2)
Be in force at the time of closing;
(3)
Not be terminable without prior notification to the Department; and
(4)
Contain such other terms and coverage satisfactory to the Department.
C.
In addition to the requirements of §B of this regulation, owner's liability insurance shall:
(1)
Name the Department as an additional insured; and
(2)
Remain in force for the duration of the loan.
D.
In addition to the requirements of §B of this regulation, contractor's liability and contractor's builder's risk insurance shall:
(1)
Name the Department as an additional insured; and
(2)
Remain in place through final closing or such later date as the Department requires.
E.
In addition to the requirements of §B of this regulation, owner's property or hazard insurance shall:
(1)
Name the Department as an additional insured, loss payee and mortgagee; and
(2)
Remain in force for the duration of the loan.
F.
For local governments, the Department shall:
(1)
Evaluate any self-insurance program to determine if adequate coverage and terms acceptable to the Department can be provided; and
(2)
Accept coverage under the self-insurance subject to this determination.
Regulation .15 Terms and Conditions—Construction.LinkCopy Citation
A.
Construction Standards. Construction, reconstruction, and rehabilitation funded with capital assistance shall comply with applicable codes and standards.
B.
Construction Wages. The wages paid for construction, reconstruction, or rehabilitation are not subject to the requirements of the prevailing wage rates law for public work contracts, State Finance and Procurement Article, Title 17, Subtitle 2, Annotated Code of Maryland, if:
(1)
More than 50 percent of the cost of the construction, reconstruction, and rehabilitation is contracted and paid for by a sponsor out of the proceeds of a loan from the Fund; and
(2)
The sponsor has not by resolution or ordinance required that it shall be covered by the prevailing wage rates law for public work contracts, State Finance and Procurement Article, Title 17, Subtitle 2, Annotated Code of Maryland.
C.
At the request of the local government or local government entity, the Department may defer to the local government for construction review and approval of construction draws if the Department determines that such deference will avoid duplication of effort while ensuring appropriate fiduciary oversight and controls.
Regulation .16 Capital Assistance Documents.LinkCopy Citation
The Department shall prescribe or approve the form and content of all documents, which may include a note, deed of trust, regulatory agreement, and other instruments that the Department may require to evidence or secure the capital assistance or enforce the requirements of the Act and this chapter.
Regulation .17 Local Contribution.LinkCopy Citation
A.
For each project undertaken by a local government or local government entity, the local government shall contribute from non-State sources:
(1)
All or a portion of the land for the project;
(2)
Funds equal to the proportion of the acquisition cost of the property attributable to the value of the land as set forth in, or determined from, the most recent tax assessment;
(3)
A contribution towards development costs that equals or exceeds the value of the land, as set forth in, or determined from, the most recent tax assessment; or
(4)
A combination of the above.
B.
In determining the amount of the local contribution the Department shall consider:
(1)
The value of land contributed by the local government which shall be equal to the:
(a)
Amount paid for the land, if the land is acquired in conjunction with undertaking the project; or
(b)
Market value of the land, if the land is contributed from the local government's existing inventory of land;
(2)
Cash contributions that pay for capital costs;
(3)
The value of contributed services such as design, architectural, or engineering services;
(4)
The value of foregone or waived fees required for newly developed housing such as water and sewer tap fees, front footage fees, impact fees, and building or other permit fees;
(5)
The value of locally installed infrastructure on and off the site that reduces costs normally attributable to a rental housing project; and
(6)
Other contributions that in the determination of the Department reduce the amount of Program funding required for the project.
C.
A local contribution is not required for projects owned by private sector entities.
Regulation .18 Tenant Participation.LinkCopy Citation
A.
Except as provided in §C of this regulation, as a condition of capital assistance, a sponsor shall provide a plan, acceptable to the Department, to ensure that households residing in partnership units contribute services to enhance or maintain the project or community in which the project is located, such as:
(1)
Participation in a tenants association, which may be responsible for activities such as:
(a)
Evaluation of tenant complaints with recommendations to project management for resolution;
(b)
Participation in formulating operating policies for the project; or
(c)
Organization of tenant or community activities;
(2)
Project maintenance, upkeep, or management that enhances the project and reduces operating costs, such as:
(a)
Snow removal from sidewalks, lawn maintenance, and exterior painting;
(b)
Interior unit painting undertaken on a regular schedule with materials, supplies, and supervision provided by the project management;
(c)
Community room activity scheduling and post-activity cleanup;
(d)
Grounds or building decorating including flower gardens and lobby decorations;
(e)
Tenant assignments to answer project management office telephones or staff a reception desk; or
(f)
Minor repairs, including window and screen repairs, undertaken in conjunction with a management-sponsored training program; or
(3)
Community activities that benefit the community in which the project is located on a continuing basis or on a periodic schedule, such as:
(a)
Participation in recycling programs, neighborhood crime watch, or neighborhood community associations; or
(b)
Participation in periodic neighborhood cleanups or fund-raising activities to benefit community charities or nonprofit activities.
B.
Tenant Participation Encouragement. For a rental housing project where not all of the rental units are partnership units, the sponsor shall be encouraged to require tenants who do not reside in partnership units to participate in activities specified in the tenant participation plan.
C.
Tenant participation may not be required in connection with capital assistance if:
(1)
Private sector entities receive financial assistance to provide rental housing for individuals with disabilities or special needs; or
(2)
Such a requirement is prohibited by a federal program applicable to the project.
Regulation .19 Making an Application.LinkCopy Citation
Applications for capital assistance shall be made upon standard forms prescribed by the Department and shall include the information and documentation required by the Department to assess whether the project meets the requirements of the Act and this chapter.
Regulation .20 Application Processing Procedures.LinkCopy Citation
A.
Approval.
(1)
After considering the application and the availability of resources, the Program staff shall select projects for review and recommendation for funding by the Housing Finance Review Committee.
(2)
The Housing Finance Review Committee shall review the projects selected by Program staff and recommend projects to the Secretary for reservation of funds and capital assistance commitments.
(3)
Upon receipt of the recommendation of the Housing Finance Review Committee, the Secretary shall approve or disapprove the capital assistance and the terms of the capital assistance. A written determination that each instance of capital assistance, regardless of the capital assistance amount, is statutorily authorized and approved by the Secretary shall be executed before the issuance of a reservation of funds or capital assistance commitment.
(4)
In an emergency, when urgent action is required, the Secretary may approve capital assistance that would otherwise have been forwarded to the Housing Financing Review Committee, without the recommendation of the Housing Financing Review Committee.
(5)
For capital assistance below the minimum amount established by the Housing Finance Review Committee, the Director of Development Finance may approve the capital assistance.
B.
Commitment Letter. Upon the issuance of a determination by the Secretary approving capital assistance financing, the Director of Development Finance or Director of Multifamily Housing is authorized to issue a commitment letter setting forth the amount of the capital assistance and the terms and conditions under which the capital assistance will be made.
C.
Expiration of Commitment.
(1)
The Department shall specify in the commitment letter a time limit within which the execution of the commitment letter and the documents evidencing the financing shall occur.
(2)
The time limits may be extended in the Department's sole discretion.
(3)
If execution of the commitment and loan documentation do not occur within the time limits specified by the Department, the commitment shall expire, and, upon written notification to the sponsor, the Department may withdraw the moneys encumbered for the project and use them for any other project authorized by the Act.
D.
Rejection of Applications. If Program staff determines not to recommend approval of a project for capital assistance, or if the Housing Finance Review Committee or the Secretary rejects a project for financing, the Director of Multifamily Housing shall issue a written notice of rejection.
E.
Reconsideration.
(1)
A sponsor may request reconsideration of a rejection by submitting a written request to the Director of Development Finance, to be received within 15 days following the date of the rejection notice.
(2)
The request for reconsideration shall address each reason for the rejection and provide documentation supporting reasons for reconsideration of the issues.
(3)
An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02.
Regulation .21 Allocation of Funds.LinkCopy Citation
A.
It is the intent of the Department that Program funds be made available Statewide.
B.
Funds generally shall be available on a first-come, first-served basis and be based upon the readiness of projects to initiate construction or rehabilitation. If a project application is submitted, but funding is not then available under the Program, the Program, in its discretion, may continue to process the application until funding is available, and then may authorize the capital assistance without the necessity of a new application.
C.
If applications for capital assistance exceed available financing, the Department, in approving projects for funding, may give priority to projects that provide:
(1)
A greater percentage of housing for families with children; or
(2)
An equitable distribution of funds Statewide.
D.
Funding Availability.
(1)
The Department shall publicize the Program on the Department's website or by such other means as the Department determines to be appropriate. Any publications shall provide general information about the availability of funding.
(2)
The Department may at any time consider applications for a loan or loans or may establish beginning and ending dates for the receipt of applications.
(3)
The Department shall provide notice on the Department's website, or by such other means as the Department determines to be appropriate, of the lack of funding availability that would result in closing of the Program or restrictions on the acceptance of applications.
E.
Limitations.
(1)
The Department may specify the type of applications it will consider, and may limit during any period the type of applications that it will receive on the basis of:
(a)
The type of entity providing primary financing of the undertaking;
(b)
The amount of local government contributions;
(c)
The number or proportion of eligible residents who will reside in the undertaking;
(d)
The areas of the State in which the undertaking is located; or
(e)
Other factors the Department considers relevant.
(2)
The Department may also establish priorities among applications.
Regulation .22 Fund Administration.LinkCopy Citation
Funds shall be maintained in the State Treasurer's collection account and may be withdrawn by the Department upon the request of the Director of Multifamily Housing or the Director's designee to reimburse or pay for development costs. Sponsors shall requisition funds on forms prescribed by the Department in accordance with the terms of the capital assistance documents for approved development costs.
Regulation .23 Program Administration.LinkCopy Citation
A.
Guidelines. The Program may establish from time to time detailed Program guidelines containing underwriting standards, processing requirements, and other requirements or matters relating to providing capital assistance.
B.
Delegation. The Secretary may delegate to the Director of Development Finance, or to any other official or employee of the Department or Program, the authority to execute or approve any capital assistance documents or other documents governing capital assistance, except waivers pursuant to Regulation .28 of this chapter and determinations under Regulation .20B of this chapter.
Regulation .24 Nondiscrimination; Drug Free and Alcohol Free Workplace.LinkCopy Citation
A.
A sponsor or contractor 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 leasing or otherwise providing dwelling accommodations or in any other aspect of the development, administration, or operation of any project or undertaking financed or assisted under the program, or in any aspect of employment by any sponsor, developer, or contractor in the construction, repair, or maintenance of any property financed or assisted under the program.
B.
Each sponsor or contractor shall comply with all 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 Act Amendments of 1988, as amended;
(4)
State Government Article, Title 20, Annotated Code of Maryland, as amended;
(5)
The Americans with Disabilities Act of 1990, as amended;
(6)
The Department's Minority Business Enterprise Program, as amended, if the local government does not have its own minority business participation program that is acceptable to the Department; 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 the requirements of this regulation, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.
Regulation .25 Signs.LinkCopy Citation
If requested by the Department, each sponsor shall install a sign identifying the Department as a lender on the project. The sign, at the discretion of the Department, may be supplied by the Department, but in any case shall comply with the design specifications of the Department. The sponsor shall bear all costs of acquisition, delivery, and installation of a conforming sign, which costs may be included in the loan.
Regulation .26 Books and Accounts.LinkCopy Citation
A.
Sponsors, contractors, and subcontractors shall maintain books, accounts, and records and shall file with the Department financial and other reports as the Department may require. All of these books, accounts, and records shall be open to the inspection of representatives of the Department or other agencies of the State during reasonable working hours.
B.
Books, accounts, and records of contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the contractor and the sponsor.
Regulation .27 Certification of Income.LinkCopy Citation
A.
The sponsor shall obtain signed certificates of annual income from all tenants occupying a partnership unit and shall certify the annual incomes to the Department. The Department requires annual recertifications of income as well as periodic occupancy reports containing the information required by the Department. Leases and certifications are subject to periodic review by the Department.
B.
For projects where existing tenants continue in occupancy during rehabilitation, the sponsor shall obtain signed income certifications from income-eligible tenants in partnership units before the loan closing.
C.
The purpose of the certification of annual income and the reports is to assure compliance with the upper income limits established in accordance with the Act, and Regulation .08D of this chapter. In the case of a project that receives federal assistance, including low-income housing tax credits, the procedures for the certification of income prescribed by the federal agency are acceptable, including recertification waivers under 26 U.S.C. §42(g)(8)(B).
D.
The sponsor shall verify the information contained in the certificate of income, upon the consent of the individual, with the source of income, and file with the Department a report disclosing the income of all individuals selected for occupancy unless the sponsor obtained a waiver under the federal low-income housing tax credit program, as provided in 26 CFR §1.42-5.
E.
The sponsor shall retain all certificates of income and documents verifying the information contained in them for a period of at least 3 years from the date on which the income certification is submitted to the sponsor.
Regulation .28 Waiver.LinkCopy Citation
The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is consistent with the legal authorizations for the Program, if:
A.
In the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act; and
B.
The Secretary's determination is approved for form and legal sufficiency by the Office of the Attorney General.
Regulation .29 False Statements.LinkCopy Citation
A sponsor that knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, is subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by Housing and Community Development Article, §4-1209, Annotated Code of Maryland.
Chapter annotations
Authority: Housing and Community Development Article, Title 4, Subtitle 12;
State Finance and Procurement Article, §§5-7B-01—5-7B-10; Annotated Code of Maryland;
Executive Orders 01.01.1992.27C and 01.01.1998.04
State Finance and Procurement Article, §§5-7B-01—5-7B-10; Annotated Code of Maryland;
Executive Orders 01.01.1992.27C and 01.01.1998.04
History: Effective date:
History: Regulations .01—.16 adopted as an emergency provision effective December 13, 1988 (15:27 Md. R. 3116); emergency status extended at 16:10 Md. R. 1101; emergency status expired July 24, 1989; adopted permanently effective August 7, 1989 (16:15 Md. R. 1650)
History: Regulations .01—.16 repealed and new Regulations .01—.27 adopted effective November 11, 1991 (18:22 Md. R. 2393)
History: Regulation .03B amended effective January 2, 1994 (20:25 Md. R. 1943); November 20, 1995 (22:23 Md. R. 1800)
History: Regulation .04E amended effective November 20, 1995 (22:23 Md. R. 1800)
History: Regulation .07 amended effective January 2, 1994 (20:25 Md. R. 1943)
History: Regulation .07A amended effective January 21, 2002 (29:1 Md. R. 21)
History: Regulation .07G amended effective November 20, 1995 (22:23 Md. R. 1800)
History: Regulation .07H amended effective May 20, 1996 (23:10 Md. R. 730)
History: Regulation .08A amended effective May 31, 1999 (26:11 Md. R. 853)
History: Regulation .10B amended effective November 20, 1995 (22:23 Md. R. 1800)
History: Regulation .11A—C amended effective November 20, 1995 (22:23 Md. R. 1800)
History: Regulation .11D amended effective February 1, 1993 (20:2 Md. R. 111)
History: Regulation .12F amended effective November 20, 1995 (22:23 Md. R. 1800)
History: Regulation .13A amended effective November 20, 1995 (22:23 Md. R. 1800)
History: Regulation .18B amended effective January 2, 1994 (20:25 Md. R. 1943)
History: Regulation .19 amended effective January 2, 1994 (20:25 Md. R. 1943)
History: Regulations .01—.27 repealed and new Regulations .01—.29 adopted effective December 15, 2008 (35:25 Md. R. 2150)
History: Regulation .02A, B amended effective December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .03B amended effective December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .04E amended effective December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .05A amended effective December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .06B amended effective December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .07A amended effective December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .07D adopted effective December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .08D amended effective December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .12 amended effective December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .13E amended effective December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .14 amended effective April 19, 2010 (37:8 Md. R. 614); December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .16 amended effective December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .18C amended effective December 22, 2014 (41:25 Md. R. 1476)
History: Regulation .24 amended effective December 22, 2014 (41:25 Md. R. 1476)