This chapter prescribes the policies, procedures, and authorizations for administering the Maryland Appalachian Housing Program and the Maryland Appalachian Housing Fund. Under the provisions of Housing and Community Development Article, Title 11, Annotated Code of Maryland, the Department has been given the authority to administer the Program. The Department has assigned administration of the Program to the Community Development Administration, an agency with the Division of Development Finance, a division of the Department. The objectives of the program are to provide assistance to Maryland Appalachian counties in the following areas: The stimulation of production of housing for low and moderate income families; and The preservation of existing housing for low and moderate income families. The terms appearing in the Act and the Code shall have the meanings defined there and, in addition, the meanings used in this chapter. Terms Defined. “Act” means the Appalachian Regional Development Act of 1965, 40 U.S.C. App. §§101—405, as amended, and the regulations, rules, resolutions, policies, and procedures promulgated under it. “ARC” or the “Commission” means the Appalachian Regional Commission established under §101 of the Act. “Code” means Housing and Community Development Article, Title 11, Annotated Code of Maryland, as amended. “Demonstration assistance” means financial assistance which shall be used for activities set forth in Regulation .05D of this chapter. “Department” means the Department of Housing and Community Development, a principal department of the State of Maryland. “Director” means the Director of the Community Development Administration. “Financial assistance” means a grant under the Program including a grant with conditional repayment conditions. “Financial assistance documents” means the documents by and between the sponsor and the Department which set forth the terms of financial assistance under the Program. “Fund” or “MAHF” means the Maryland Appalachian Housing Fund established under the Code. “Housing Finance Review Committee” means the Housing Finance Review Committee established under Housing and Community Development Article, §4-208, Annotated Code of Maryland, as amended. “Legal entity” means a corporation, cooperative, association, general partnership, limited partnership, joint venture, organization, or business which is organized legally to conduct a project. “Limited dividend organization” means any legal entity which receives a limited rate of return on a project, as approved by the Program staff. “Local jurisdiction” means the Maryland Appalachian counties, or instrumentalities of them, and all municipalities located in the Maryland Appalachian counties. “Low and moderate income families” means an individual or household whose combined income does not exceed the income limits established by the public agency which contributes to or oversees a project receiving financial assistance for planning or site development, except for financial assistance for demonstration projects whose income limits are established by the Secretary. “Maryland Appalachian counties” means Allegany, Garrett, and Washington counties in Maryland. “Maryland ARC representative” means the Governor, or the individual and an alternate appointed by the Secretary, with approval of the Governor, to the ARC. “Municipality” means a municipal corporation subject to the provision of the State Constitution, Article XI-E. “Nonprofit organization” means a: Legal entity, no part of the earnings of which inures to the benefit of any private shareholder or individual holding an interest in that entity; or Limited partnership if: Each of the general partners qualifies as a nonprofit organization or the limited partnership is a wholly owned subsidiary of a nonprofit organization, The limited partnership is formed for the purpose of undertaking a project that is eligible in whole or in part for a federal program or incentives, including low-income housing tax credits, and An organization that meets the criteria set forth in §B(18)(a) is managing the project or will be the recipient of net cash flow or the residual sale proceeds upon the sale of the project. “Planning assistance” means financial assistance which shall be used for the activities set forth in Regulation .05B of this chapter. “Program” means the Maryland Appalachian Housing Program operated by the Department. “Program income” means interest earned on investment of Program funds. “Project” means a housing project for which financial assistance for a planning, site development, or demonstration project has been made and which benefits low and moderate income families under the Program. “Public agency” means any State, federal, or local public agency or program which contributes or oversees a project. “Public housing authority” means a housing authority created under Article 44A, Annotated Code of Maryland, as amended. “Secretary” means the Secretary of Housing and Community Development. “Site development assistance” means financial assistance which shall be used for the activities set forth in Regulation .05C of this chapter. “Sponsors” means eligible applicants who receive financial assistance under the Program. “State” means the State of Maryland. Grants, including grants with conditional repayment provisions, are the eligible form of financial assistance under the Program, unless the Department is otherwise directed by the ARC. The Department may provide the following types of financial assistance from the Fund to an eligible sponsor: Planning; Site development; and Demonstration. Planning Assistance. Planning assistance may be used to pay for predevelopment costs associated with a project including: Reasonable fees for architectural, engineering, consultant, or legal services; Organizational expenses; Socioeconomic market studies; Appraisals; Surveys; Reasonable costs associated with obtaining construction or permanent financing; and Other fees and costs acceptable to the Department and permitted under the Act and the Code. Planning assistance may be used to fund an option for the purchase of land which will be part of a project, but may not be used for the acquisition of land which will be a part of a project. Site development assistance may be used to pay for on-site development and off-site development costs associated with a project, including: Excavation; Sewer and water services; Demolition, clearing, and grubbing; Sidewalks, curbs, and gutters; Paving; Landscaping; Seeding and sediment control; Installation of wells; Installation of septic and other waste disposal systems; Recreation facilities; and Other costs acceptable to the Department and permitted under the Act and the Code. Demonstration assistance may be used to pay direct costs associated with a project which responds to housing needs of low and moderate income families in Maryland Appalachian counties, and which demonstrates a new or innovative method of constructing or financing housing for low and moderate income families, or projects which demonstrate alternative living arrangements for low and moderate income families. These direct costs include: The activities described in §§B and C of this regulation; The acquisition of equipment which will be part of a project; The acquisition of land and any buildings located on the land; Cost of labor and materials for new construction or rehabilitation or installation of improvements as set forth in the approved plans and specifications for a project; Indemnity and security bonds; Premiums on hazard, liability, title, and mortgage insurance; Necessary fees, licenses, and permits related to construction, project review, and approval; Payment and performance bonds; and Other costs acceptable to the Department and permitted under the Act and the Code. Grants with conditional repayment provisions may be used to provide planning, site development, or demonstration assistance in accordance with the provisions set forth in Regulation .08B of this chapter. Program income from the Fund may be used to pay the expenses of the Program, as approved by the ARC. The Fund may not be used to pay for costs associated with the following activities unless otherwise permitted by the Act: Activities associated with libraries, cultural centers, or adult or child day-use facilities; Construction of schools, hospitals, or government office buildings; and Construction of community centers or social service facilities. The following entities are eligible to apply for financial assistance under the Program: Nonprofit organizations; Limited dividend organizations; Local jurisdictions eligible or potentially eligible to sponsor projects; and Public housing authorities. Applicants for financial assistance shall meet the following minimum requirements to be eligible to apply for financial assistance under the Program: Applicants shall be in good standing and qualified to do business in Maryland; and Applicants shall have the legal capacity and all necessary legal authority to incur the obligations of any financial assistance provided under the Program. In order to be eligible for financial assistance under the Program, a project shall demonstrate that it: Is located in a Maryland Appalachian county; Will provide housing for low and moderate income families; Is eligible for financial assistance from a public agency if the project involves planning or site development assistance; and Will be in compliance upon completion with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which it is located. Amount of Financial Assistance. The maximum amount of financial assistance under the Program shall be as follows: Planning assistance may not exceed 50 percent of the total predevelopment costs of a project or such other percentage as may be specified by ARC; Site development assistance may not exceed the following amounts of such other amounts as may be specified by ARC: 10 percent of the total project costs for new construction, or 10 percent of the reasonable costs after rehabilitation value of a rehabilitation project; Demonstration assistance may not exceed 50 percent of the total cost of a project or such other percentage as may be specified by ARC; The total amount of federal financial assistance involved in a project may not exceed 80 percent of the total costs of a project. Conditional Repayment Provisions. The Department may require the repayment of any financial assistance if the: Sponsor anticipates being reimbursed for eligible costs paid out of financial assistance from the Program; and Reimbursement of the sponsor will occur within 2 years of the date of the grant agreement between the sponsor and the Department. The Department may require a sponsor to maintain the following insurance: Multi-peril insurance which provides fire and extended coverage insurance on a project both during and after construction or rehabilitation. The insurance coverage shall include such endorsements as the Department may require including: Collapse; Explosion; Loss of rents; and Vandalism. Liability Insurance. Comprehensive general liability insurance shall be maintained with such endorsements as the Department may require, both during and after construction or rehabilitation of a project. Flood Insurance. If the project is located on real property which is in the 100-year flood plain, as designated by the United States Department of Housing and Urban Development, the project shall be covered by a flood plain insurance policy. Before closing of a loan for a project, permits shall be secured from the Maryland Department of Natural Resources and the Maryland Appalachian county in which the project is located. Contractor's Insurance. If a project involves construction or rehabilitation of a building or improvements of any kind, the general contractor shall provide insurance coverage for comprehensive public liability, property damage, and workers' compensation in form and amounts required by the Department. Other Insurance. The sponsor shall provide at closing of the financial assistance such other insurance as the Department may require including builder's risk, boiler insurance, comprehensive automobile liability, and broad form workers' compensation. Terms and Conditions. Each insurance policy shall meet the following minimum requirements plus any additional requirements which may be set by the Department: Be written by companies acceptable to the Department; Be written by companies which are reputable and financially sound, as determined by the Department; Be in force to the extent applicable upon the closing of the financial assistance; Contain to the extent applicable a standard mortgagee endorsement attached to or printed in the policy naming the Department as mortgagee; Name to the extent required by the Department, the Department as loss payee and additional insured; Provide for notification to the Department before termination; and Contain terms and coverage satisfactory to the Department. An application for financial assistance shall be submitted to the Department and shall be made upon standard forms prescribed by the Department. Each application shall contain sufficient information and documentation to determine: Whether the project is located in a Maryland Appalachian county; The extent, if any, to which the project will change the type of use or increase the intensity of the existing use of the property; Whether the project will benefit low and moderate income families; The rate of return, if any, the sponsor anticipates receiving on a project; In the case of an application for a planning or site development assistance, whether the project is eligible for financial assistance from a public agency; The availability or lack of conventional financing for the project; and Such other information as the Program may request. Approval of Applications. Upon submission of all required information, the Program shall undertake an analysis of each application and make a recommendation as to the amount of financial assistance and any special terms and conditions for a project. Approval of Application. If the Secretary approves an application for financial assistance, the Secretary shall execute a determination that the financial assistance is authorized by the Act and the Code. The determination shall include authorization for the issuance of a grant agreement between the Department and the sponsor for the financial assistance only if the financial assistance is approved by ARC on the same terms and conditions approved by the Secretary. The determination also shall constitute authorization for issuance of a grant agreement between the sponsor and the Department, obligating the Department to provide the financial assistance after the financial assistance is approved by ARC on the same terms and conditions approved by the Secretary. Upon issuance of a determination by the Secretary approving the financial assistance, the application for financial assistance shall be submitted to the Maryland ARC representative for approval. If the Maryland ARC representative approves the application, the Maryland ARC representative shall submit the application to the ARC for approval. If the application is approved by the ARC on the same terms and conditions set forth in the Secretary's determination, the Department shall issue a grant agreement between the sponsor and the Department for the financial assistance. Rejection of Application. The Program shall inform an applicant in writing of rejection of an application for financial assistance, and an applicant shall have the right to appeal any rejection of an application by the Program under the procedures set forth in §E of this regulation. When an application is rejected by the ARC: If the ARC requires additional terms and conditions for a proposed project, the Director shall inform the applicant, in writing, of these additional terms and conditions. The applicant shall notify the Director, in writing, of its acceptance or rejection of the new or additional terms and conditions required by the ARC. If the ARC rejects an applicant's application for financial assistance for a project, the Department may not have the authority to provide the financial assistance requested by the applicant. The Program shall inform the applicant of rejection by the ARC of its proposed project. The appeal procedures set forth in §E of this regulation may not be available to an applicant whose application is rejected by the ARC. The Program, the Maryland ARC representative, and the ARC may take the following factors into consideration in considering the award of financial assistance: With respect to a planning assistance, whether the costs incurred are reimbursable out of permanent financing for the project; The area in a Maryland Appalachian county in which the project will be located; The extent to which the project will benefit low or moderate income families; The availability or unavailability of funds for preconstruction expenses and gap financing through conventional commercial lenders; The extent of local government participation in the project; and Other factors which the Program determines are desirable in fostering development in the Maryland Appalachian counties. The Department shall provide the sponsor with a grant agreement that is consistent with the terms and requirements under which the financial assistance was approved, and the provisions set forth in these regulations and in the Act and the Code. The grant agreement shall specify the reports necessary to monitor compliance by the sponsor with the terms and conditions of the Act, the Code, and these regulations. Appeal. An applicant may appeal rejection by the Program of an application for financial assistance in the following manner: Submission to the Secretary within 15 working days of the date of the notice of rejection from the Program, a written appeal which contains the following information: Reasons for disagreement with rejection, Additional information and supporting documents, and Explanation as to why the documentation was not furnished in the original application; The Secretary shall respond in writing to the applicant's request within 30 days of receipt of the written appeal of the applicant. An applicant may not have any right to appeal to the Department a rejection of any application by the ARC. Sponsors, contractors, and subcontractors shall maintain such books, accounts, and records and shall file with the Department such financial and other reports as the Department may from time to time require. The books, accounts, and records in §A of this regulation, as well as the administrative personnel, whether full-time or part-time, shall be available to the inspection of representatives of the ARC, the Department, or other agencies of the State during reasonable working hours. 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. The Department may charge a sponsor an application and administrative fee to cover the costs to the Department involved in processing the financial assistance. A sponsor may withdraw an application at any time before an award of financial assistance by written notice to the Department. The sponsor may be required to bear any costs incurred by the Department for items other than Departmental processing including a nonusage fee. The Department may retain the application and administrative fees paid before the date of withdrawal of an application. 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 financed or assisted under the Program, or in any aspect of employment by any sponsor or contractor in the construction, repair, or maintenance of any property financed or assisted under the Program. A 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: Titles VI and VII of the Civil Rights Act of 1964, as amended; Title VIII of the Civil Rights Act of 1968, as amended; The Fair Housing Amendments Act of 1988, as amended; The Department’s Minority Business Enterprise Program, as amended; State Government Article, Title 20, Annotated Code of Maryland, as amended; The Americans with Disabilities Act of 1990, as amended; and 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. Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties. As a condition of receipt of financial assistance from the Program, the Department may require the sponsor to: Adopt and administer a program to promote a drug and alcohol free workplace; Make a good faith effort to ensure that any project it owns, manages, or otherwise retains an interest in shall be free from the illegal use, possession, or distribution of drugs or alcohol by residents or beneficiaries of the project; and Agree to participate in the Families Insisting on Safe Tenancies Program sponsored by the State. The Secretary may waive or vary provisions of these regulations to the extent that the waiver or variance is consistent with the Act and the Code and if, in the written determination of the Secretary, the application of the regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act or the Code, or contrary to federal law or regulation. Housing and Community Development Article, §2-102(a)(7), Title 11, Annotated Code of Maryland;Executive Order 01.01.1992.27C Effective date: April 30, 1990 (17:8 Md. R. 976) Regulation .03B amended effective January 2, 1993 (19:26 Md. R. 2283) Regulation .04 amended effective January 2, 1993 (19:26 Md. R. 2283) Regulation .05 amended effective January 2, 1993 (19:26 Md. R. 2283) Regulation .07 amended effective January 2, 1994 (20:25 Md. R. 1944); April 5, 1999 (26:7 Md. R. 539) Regulation .08 amended effective January 2, 1993 (19:26 Md. R. 2283) Regulation .09 amended effective January 2, 1993 (19:26 Md. R. 2283) Regulation .09A amended effective January 2, 1994 (20:25 Md. R. 1944) Regulation .11A amended effective January 2, 1993 (19:26 Md. R. 2283) Chapter recodified from COMAR 05.07.07 to COMAR 05.05.10 effective September 6, 1999 (26:18 Md. R. 1373) Regulation .01B amended effective September 6, 1999 (26:18 Md. R. 1373) Regulation .03B amended effective September 6, 1999 (26:18 Md. R. 1373) Regulation .12 amended effective March 16, 2015 (42:5 Md. R. 485)