These regulations prescribe the policies, procedures, and authorizations for a program for financing or refinancing the acquisition, construction, and rehabilitation of local government infrastructure. The objective of the program is to provide an accessible and uncomplicated mechanism for local governments to secure financing or refinancing for the acquisition, construction, and rehabilitation of public infrastructure projects, including streets, bridges, buildings, utility systems, and other structures and facilities used for providing public services. Any financing or refinancing under the Program may be backed by the full faith and credit of the local government or the pledge of specifically identified revenues. The terms appearing in the Act have the meanings defined there and, in addition, the meanings used in these regulations. Terms Defined. “Act” means Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland, as amended. “Administration” means the Community Development Administration, an agency in the Division of Development Finance of the Department. “Application” means the form and its attachments submitted by a local government in order to participate in the program. Repealed. “Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated pursuant to the Code. Except when inappropriate, any reference to the Internal Revenue Code of 1986 shall include a reference to the provisions of law formerly known as the Internal Revenue Code of 1954. “Committee” means the Housing Finance Review Committee. “Department” means the Department of Housing and Community Development, a principal department of the State of Maryland. “Indenture” means any trust indenture, bond resolution, certificate, or other similar document, including amendments and supplements that authorize the issuance and sale of bonds, notes, or other obligations of the Administration, the proceeds of which finance the loans. “Interagency Committee on Economic Growth, Resource Protection, and Planning” or “Interagency Committee” means the Interagency Economic Growth, Resource Protection, and Planning Committee established under Executive Order 01.01.1992.27. “Loan” means any loan or other form of financial assistance provided by the Administration to a local government for the financing of a project, specifically excluding grants. “Local government” means any county in the State, the Mayor and City Council of the City of Baltimore, and any municipal corporation in the State subject to the provisions of Article XI-E of the Maryland Constitution. “Local obligation” means any bond, note, or other obligation, including a bond issued by the local government which is purchased by the Administration. “Program” or “infrastructure program” means the Administration's Local Government Infrastructure Financing Program. “Project” means an infrastructure project financed or refinanced by the Administration in accordance with the Act. “Secretary” means the Secretary of Housing and Community Development. “State Economic Growth, Resource Protection, and Planning Policy” or “State Growth Policy” means the State Economic Growth, Resource Protection, and Planning Policy established by State Finance and Procurement Article, §5-7A-01, Annotated Code of Maryland. “State highway user revenues” means those funds allocated to a county under Transportation Article, §§8-401—8-413, Annotated Code of Maryland. “State payments” means moneys the local government is entitled to receive from the State, including, without limitations, the local government's share of the State income tax. A local government is eligible to participate in the program provided it: Possesses the legal capacity and all necessary legal authority to incur the obligations of the loan; Submits an application to the Department which identifies how the local government will construct, operate, and maintain the project; Is eligible to receive State payments in amounts satisfactory to the Administration, taking into consideration the amount of the loan; Needs to finance or refinance the acquisition, construction, or rehabilitation of a project; and Is acceptable to any entity which may be engaged to enhance the credit for a bond financing. A project shall provide one or more of the physical elements which are the basis of a public service system. Eligible projects include, but are not limited to: Water production, treatment, storage, and distribution systems; Sewer collection and treatment facilities; Solid waste transfer, conversion, and disposal facilities; Storm water control and drainage facilities; Bulkheads, piers, wharfs, and ramps; Bridges, streets, and roads; Facilities for police, fire, transportation, education, health and recreation, library and cultural facilities, and facilities for the delivery of other public services; Street lighting, landscaping, and other public space improvements; Sidewalks, curbs, and gutters; Governmental office, storage, and maintenance facilities; Acquisition of machinery and equipment for any of the projects described in this section. When a project is complete, it shall be in compliance with all applicable State and local laws, codes, regulations, and standards. The project shall have an expected useful life at least equal to the term of the corresponding local obligation, and otherwise satisfactory to the Administration. The project may not include any facilities for which the local obligations to be purchased by the Administration would be private activity bonds within the meaning of §141 of the Code, for which an allocation under §146 of the Code would be required. The local government shall provide a certificate that it has determined that the project is consistent with the local comprehensive plan or warranted by extraordinary circumstances with no reasonably feasible alternative, as required under State Finance and Procurement Article, §5-7A-02(b), Annotated Code of Maryland. The project shall be determined by the Department to be consistent generally with the State Economic Growth, Resource Protection, and Planning Policy, and demonstrate specifically that the project: Is located: On a site suitable for infill development or redevelopment which: Is occupied by a structure to be rehabilitated, Was previously improved with a structure, or Is surrounded by a development; or In an area: Designated for growth, Within an existing water and sewer service area or an area planned for service within the next 5 years under the adopted county water and sewerage plan, and (iii) With public facilities and services that are adequate under standards adopted by the local government; If in a rural area, is: Located in an existing population center or its designated growth area; and Sensitive to resource areas, including agricultural and forests lands; and Is designed with sensitivity for sensitive areas, including streams and stream buffers, 100-year floodplains, habitats of threatened or endangered species, and steep slopes; and Is consistent with the comprehensive plan of the local jurisdiction in which the project is located. If the project cannot meet the requirements in §F of this regulation, the project shall be determined by the Department to: Be warranted by extraordinary circumstances, which are defined as circumstances that: Require emergency action, or Provide a unique opportunity to promote the purposes of the Program consistent with the State Growth Policy; and Not have a reasonably feasible alternative, which is defined as an alternative that: Is capable of being carried out, Is readily identifiable by the Program, Is reasonably related to and will carry out the purposes of the State Growth Policy, Has reasonably ascertainable effects distinguishable from and less environmentally damaging than the project proposed, Is within the expertise of the local government, Can be implemented practically and effectively, not remotely or speculatively, and Is realistic and reasonably available within the time the local government intends to act. The determination under §F or G of this regulation shall be: Evidenced by a written project report signed by the Administration and the Secretary's designee; and Finalized in accordance with the procedures set forth in Regulation .08C(3) of this chapter. Proceeds of loans may be used to finance the costs associated with the planning, development, acquisition, construction, reconstruction, rehabilitation, or improvement of a project, including, without limitation, the following: Costs of appraisals and other necessary studies, including compaction tests, soil borings, market analysis studies, and construction cost estimates; Architectural and engineering costs for design and supervision; Acquisition of land and improvements, and site preparation; Costs of bonds, permits, and fees; Indemnity and surety bonds; Carrying costs during construction including construction interest, real estate taxes, and property insurance; Financing fees and charges imposed by the Administration; Legal, processing, packaging, and marketing fees and charges; The costs of surveys, title examinations, and title insurance; and Other costs authorized by Housing and Community Development Article, §4-201(e), Annotated Code of Maryland, and acceptable to the Administration. Program funds may also be used for loans to: Purchase existing or completed projects; Refinance a project; and Pay closing costs for loans. Interest Rate. The Administration shall establish or determine an interest rate or rates for the loans and corresponding local obligations, and other charges and fees, if any, that together with other moneys made available for those purposes, are sufficient to meet the interest payable by the Administration for its revenue bonds, notes, or other obligations financing the loans, and, in the discretion of the Administration, the administrative expenses of the Program. The interest rate or rates on loans may not exceed the maximum permitted by §103 of the Code. Term. The term of each loan and corresponding local obligation shall be proposed initially by the local government, based upon existing market conditions for the financing of similar projects. Except as provided in §B(3) of this regulation, the term may not exceed the lesser of the useful life of the applicable project or 30 years, and the final term shall be at the discretion of the Administration, taking into consideration the applicable requirements of the indenture and of Article 31, §11, Annotated Code of Maryland. In the case of any county transportation facility financed by the Administration and secured by a pledge of a county's share of State highway user revenues, the term may not exceed 15 years. The final term shall be at the discretion of the Administration, taking into consideration the applicable requirements of the indenture and of Article 31, §11, Annotated Code of Maryland. Maximum Loan Amount. Loans may be made in any amounts that are necessary to finance eligible costs of a project, but may not exceed 100 percent of the eligible costs of the project. Prepayment. Loans, in most cases, may not be prepaid. Repayment Agreement. The local government shall, at the option of the Administration, execute a repayment agreement in the form prepared by the Administration, by which the local government pledges its full faith and credit, or pledges other revenues and assets acceptable to the Administration, to the repayment of the loan. If required by the Administration, the obligations of the local government shall be evidenced by a local obligation, which shall: Constitute an indebtedness of and a charge against the general credit and taxing powers of the local government; and Include a covenant by the local government to levy upon all property within its jurisdiction taxes in rates and amounts sufficient to make all payments under the local obligation. Under the terms of a repayment agreement, the local government shall be required to make, or cause to be made, payments semiannually or at other times as selected by the Administration in accordance with the indenture. Pledge Agreement. Except as provided in §G of this regulation, the local government shall execute a pledge agreement in a form prepared by the Administration, pledging all or a portion, at the discretion of the Administration, of State payments as security for the repayment agreement to be used by the Administration in the event of a default under the loan by the local government, and other documents evidencing and securing the loan, in forms prepared by the Administration. Under the pledge agreement, the local government shall authorize the Comptroller and Treasurer of Maryland to intercept State payments on behalf of the Administration in the event of a default under the loan. For a project from which revenue is intended to be generated, the local government may also be required to pledge this revenue to the Administration. Participation Agreement. If the Administration finances a county transportation facility secured by a pledge of a county's share of State highway user revenues, the county shall execute a participation agreement meeting the requirements of this section, instead of the repayment and pledge agreements under §§E and F of this regulation. The participation agreement shall: Constitute a pledge of a county's share of State highway user revenues to the Administration in an amount sufficient to repay the Administration's revenue bonds, notes, or other obligations, with interest, in 15 years; Authorize the State Comptroller to withhold and deposit a county's share of State highway user revenues into a sinking fund maintained to pay the principal of and interest on the Administration's revenue bonds, notes, or other obligations due on the next payment date under the indenture; Require a county to use the proceeds of the Administration's bonds, notes, or other obligations solely for activities permitted by Transportation Article, §§8-401—8-413, Annotated Code of Maryland; and Describe any other terms of the financing required by the Administration. Opinion of Counsel. The local government shall submit an opinion of counsel acceptable to the Administration, in form and substance satisfactory to counsel to the Administration, stating: That local government has full power and authority to incur the loan and to issue the local obligation; That local government has duly and validly entered into the loan and has duly and validly issued the local obligation, and the loan and the local obligation together with their related documents and instruments are legal, valid, and binding obligations of the local government in accordance with their terms; That the project conforms with applicable laws and regulations; and Any other matters required by the Administration or its counsel. Applications for participation may be accepted on a continuing basis by the Administration. The form of the application shall be prescribed by the Administration and shall include all supporting documentation specified in the application, which may include: A narrative describing the local government and any special recognition accorded it by other levels of government or by professional organizations; A copy of the charter and other organizational materials; Detailed information about the project; Biographies of key officials; Demographic, geographical, assessment, tax, building, and similar data; Audited annual financial statements; Current operating and capital budgets; Multiyear capital improvement program; Schedule of existing debt service payments; Employee and pension information; Anticipated borrowing plans; Investment policy; If the local government will be issuing a local obligation in connection with a financing or refinancing under the Program, a copy of the local government's debt affordability policy, together with a resolution adopted by the governing body of the local government that the financing or refinancing conforms to the policy and is prudent under all of the circumstances; and A certificate that the local government has determined that the project is consistent with the local comprehensive plan or warranted by extraordinary circumstances with no reasonably feasible alternative, as required under State Finance and Procurement Article, §5-7A-02(b), Annotated Code of Maryland. Review and Letter of Intent. Each application shall be reviewed by the Administration to make a determination of the eligibility of the local government and the project in accordance with Regulations .04—.06 of this chapter. The Administration will review each application as to loan amount and terms. Report Filing. The Secretary's designee shall file with the State Office of Planning the project report required under Regulation .05H of this chapter. If the project report concludes that a project is an inconsistent project with extraordinary circumstances, the Secretary's designee shall submit with the report the documentation, if any, that the Program provided to any local government proposing the project. The Secretary's designee may withdraw a project report filed with the Office of Planning by filing a withdrawal with that Office at any time before the determination becomes final. Finality. The determination evidenced by the project consistency report under §C(2) of this regulation shall become final and the Program may proceed with the sale of the bonds after: For a determination of consistency: The date the Interagency Growth, Resource Protection, and Planning Committee concurs in the determination, or The date that is the later of 15 days from the date the project consistency report is filed with the Office of Planning, no Interagency Committee member has requested review by the Interagency Committee, or For a determination of inconsistency with extraordinary circumstances: The date the Interagency Committee concurs in the determination, or 45 days from the date the project consistency report is filed with the Office of Planning, if the Interagency Committee has failed to act; or For a determination of consistency or of inconsistency with extraordinary circumstances in which the Interagency Committee does not concur and which the Administration or the Interagency Committee refers to the Governor, the date the Governor determines the project is consistent or is inconsistent with extraordinary circumstances. When the Administration determines that there are sufficient, acceptable applications from local governments to enable the Administration to issue bonds, notes, or other obligations in an amount sufficient to finance economically the applicable projects under the Program, the Administration shall prepare a letter of intent. Before issuance of the bonds, the Administration shall issue a letter of intent to the local government setting forth the maximum interest rate on the loan, the repayment provisions, and any other terms and conditions that the Administration considers appropriate for the loan or the project. The letter of intent shall be executed by the local government and returned to the Administration, within the time limit set forth in the letter of intent. Each letter of intent shall be conditioned upon: Authorized execution by the local government; The sale of the Administration's bonds by a certain date; Recommendation by the Committee and approval by the Secretary; The occurrence before the sale of the Administration's bonds of any required voter referendum necessary in order for the local government to sell its local obligation to the Administration; and Finalization under §C(3) of this regulation of the project report required under Regulation .05H of this chapter. Loan Approval. Except in the case of an emergency when urgent action is required, all loans shall be submitted by the Administration to the Committee for review and recommendation to the Secretary for approval or disapproval of a loan and the terms of the loan. Upon receipt of a recommendation of the Committee, the Secretary shall approve or disapprove the loan and the terms of the loan. In an emergency when urgent action is required, the Secretary may approve a loan without the recommendation of the Committee. Before the closing of the sale of the Administration's bonds, notes, or other obligations, the Secretary shall execute a written determination that each loan, regardless of the loan amount: Is an infrastructure project authorized by the Act; and Complies with Regulation .05F or G of this chapter and has been finalized under §C(3) of this regulation. If the Secretary disapproves a loan, the Administration shall notify the local government in writing of the disapproval and the reasons for it. Timing. The Administration will specify a time limit within which the closing of the loan shall occur, which time limit may be extended in the Administration's sole discretion. If closing does not occur within the time limit specified by the Administration, the Administration may use the monies committed for the loan for any other loan or purpose authorized by the Act. Rejection of Applications. If the Administration determines that a project or local government is not eligible for a loan, the Administration shall issue a written notice of ineligibility. Reconsideration. Local governments may request reconsideration of a rejection. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.04.02. Loan Closing. Upon meeting all of the conditions stipulated for approval and the prerequisites to loan disbursement or settlement, the Administration's counsel shall prepare the required legal documents for closing prescribed by the Administration. The documents shall be forwarded to the local government. When all procedures and requirements are completed, and the bonds, notes, or other obligations of the Administration funding the loan have been issued, a closing shall be arranged by counsel to the Administration. Disbursement. The Administration shall disburse the proceeds of the loan upon receipt of a requisition from the local government and approved by the Administration. Each requisition shall include an itemization of the costs for which the local government requests payment, which shall be costs eligible under these regulations as determined by the Administration. Amounts and time of payment of any fees as may be required by the Administration shall be as provided in a fee schedule set forth and revised from time to time by the Administration. The Administration may establish from time to time detailed program guidelines containing underwriting standards, loan processing requirements, and other requirements or matters relating to the financing of loans or to the Program. Copies of the fee schedule and guidelines shall be available for examination at the Administration's principal office. The Administration, upon request, shall make copies available to the public. Local governments shall maintain such books, accounts, and records, and shall file with the Administration such financial and other reports as the Administration may from time to time require. All of these books, accounts, and records shall be open to the inspection of representatives of the Administration, or other agencies of the State during reasonable working hours. Books, accounts, and records of the local government shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the local government and the Administration. The Administration shall pay the proceeds of the loan to the local government based upon a schedule of draws acceptable to the Administration. The local government shall be solely responsible for: Ensuring the adequacy and sufficiency of the design and construction of the project and for supervising the invoicing for and timeliness of the draws. The local government shall submit periodic construction status reports together with its requisitions for draws in a form satisfactory to the Administration. Operating, maintaining, and managing the project, notwithstanding whether the project is managed under an operating agreement with a third party. Administration staff from time to time may conduct an inspection, announced or unannounced, to ascertain the status of the construction or operation of the project. Timing. The Administration may obtain funds for loans to finance projects from any source authorized by law, and in particular may issue bonds, notes, or other obligations pursuant to an indenture payable from payments on the loans. The timing of any bond or note sale and the acceptability of the interest rate to be paid by the Administration are solely within the discretion of the Secretary. Rights of Bond and Note Holders. In the event of any conflict, whether or not expressly so stated, the rights of local governments under any loan, corresponding local obligation or accompanying agreement with the Administration, which loan is financed by bonds, notes, or other obligations issued pursuant to an indenture, are subject to the rights of the holders of the Administration's bonds, notes, or other obligations issued under that indenture. The local government shall ensure compliance with the Department's Minority Business Enterprise Program or with the local government's own program, not substantially dissimilar from the Department's program for including minority contractors in the construction of the project. A local government 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 local government in the construction, repair, or maintenance of any property financed or assisted under the Program. Each local government 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; The Americans with Disabilities Act of 1990, as amended; State Government Article, Title 20, Annotated Code of Maryland, 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. A local government which knowingly makes or causes to be made a false statement or report may be subject to exclusion from the Program and to immediate acceleration of the loan, and its officials shall be subject to the criminal penalties authorized by Housing and Community Development Article, §4-255, Annotated Code of Maryland, as amended. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act or contrary to the provisions of any applicable indenture if: Adherence to the requirements of any federal, State, or local program used in connection with a project necessitates waiver or variance of a regulation; or In the 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. The Secretary may delegate to the Director of the Administration, the Director of the Program, or to any other official or employee of the Department or Administration the authority to execute or approve any Program documents or loan documents, including loan commitments. The provisions of these regulations are severable. A judgment by any court of competent jurisdiction finding or declaring that any provisions of these regulations or the application of any provision to any person or circumstance is invalid does not affect the validity of the remaining provisions of the regulations or any other application of these regulations, and the remaining regulations shall have full force and effect as if no judgment had been entered. Housing and Community Development Article, §§2-102(a)(7), 2-111 and 2-202 and Title 4, Subtitle 2; State Finance and Procurement Article, §5-7A-02; Annotated Code of Maryland; Executive Order 01.01.1992.27C Effective date: June 26, 1989 (16:12 Md. R. 1332) Regulations .01—.12 amended effective November 22, 1993 (20:23 Md. R. 1801) Regulation .03B amended effective September 6, 1999 (26:18 Md. R. 1374) Regulation .04B amended effective September 6, 1999 (26:18 Md. R. 1374) Regulation .08 amended effective September 6, 1999 (26:18 Md. R. 1374) Regulation .09B amended effective September 6, 1999 (26:18 Md. R. 1374) Regulation .10 amended effective September 6, 1999 (26:18 Md. R. 1374) Regulation .11A amended effective September 6, 1999 (26:18 Md. R. 1374) Regulation .12 amended effective September 6, 1999 (26:18 Md. R. 1374) Regulation .15 amended effective March 16, 2015 (42:5 Md. R. 485)