These regulations are intended to supplement and clarify the provisions of the Assisted Housing Preservation Act, Housing and Community Development Article, Title 7, Annotated Code of Maryland. These regulations should be read in conjunction with the Act. These regulations include the standards for granting, and procedures for requesting, exemptions from certain otherwise applicable requirements of the Act. In this chapter, the following terms shall have the meanings indicated and as defined in the Act. Terms Defined. “Act” means the Assisted Housing Preservation Act, Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland. “Department” means the Department of Housing and Community Development. “Designated households” means the portion of assisted households described in § 7-213 of the Act. “Designated household assistance” means the 3-year lease extensions and other special assistance available to certain designated households in accordance with §§7-214—7-219 of the Act. “Developer” means any individual, partnership, corporation, or other legal entity with experience in the ownership or operation of low-income housing developments. “Director” means the Director of the Division of Credit Assurance of the Department. “Federally-assisted mortgage” means a mortgage securing a loan made, insured, or receiving assistance or subsidies under the federal assistance programs described under § 7-102(a)(1) of the Act, or held by HUD and formerly assisted under these federal programs. “HUD” means the United States Department of Housing and Urban Development. “Individual with disability” means a person within the definition of “person with disabilities” in §3(b)(3)(E) of the United States Housing Act of 1937, 42 U.S.C. §§ 1437a(b)(3)(E), which is incorporated herein by reference. “Material violation of a lease” means a violation of the lease for which the landlord has repossessed the unit by execution of a warrant of restitution: In an action under Real Property Article, §8-401, Annotated Code of Maryland, for failure to pay rent; or Following a final judicial determination under Real Property Article, §8-402.1, Annotated Code of Maryland, finding a substantial violation of the lease, violation of obligations under state or local landlord-tenant law, or other good cause warranting an eviction. “Minor” means a person younger than 18 years old on the date that a notice of intent is given, including unborn children of a member of an assisted household. “Nonprofit developer” means any developer that is exempt from taxation under §501(a) of the Internal Revenue Code of 1986, 26 U.S.C. §501(a), or the corresponding provision of any succeeding internal revenue law. “Public housing authority” means any housing authority authorized under the Housing Authorities Law, Housing and Community Development Article, Division II, Annotated Code of Maryland. “Reasonable relocation expenses” means the costs incurred by an assisted tenant who vacates an assisted unit under a protected action including costs to: Transport personal property; Pack and unpack personal property; Disconnect and reconnect utilities; Disconnect and install personal property; Insure personal property to be moved; File rental application; and Obtain new rental housing, including security deposits. “Secretary” means the Secretary of Housing and Community Development. “Section 8 agreement” means any contract or agreement providing for project-based rental assistance under §8 of the United States Housing Act of 1937, 42 U.S.C. §1437f. “Senior citizen” means a person who is 62 years old or older on the date that a notice of intent is given. “Tenant association” means a group of tenants who reside in an assisted project organized for the purpose of protecting or advocating the rights of tenants in the project. Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland Effective date: April 18, 2011 (38:8 Md. R. 505) These regulations and the Act shall be read in conjunction with the federal Low Income Housing Preservation and Resident Homeownership Act of 1990, 12 U.S.C. §§4101—4125 (“LIHPRHA”). To the extent that §232(a)(1) of LIHPRHA, 12 U.S.C. §4122(a)(1), expressly preempts certain portions of the Act, actions subject to LIHPRHA are exempt from the Act. If a protected action is subject to LIHPRHA and, as required by §232(a)(1) of LIHPRHA, 12 U.S.C. §4122(a)(1), is exempt from the Act, the owner shall give written notice to the Secretary of the steps the owner has taken to comply with LIHPRHA. The Secretary, by written determination, may grant exemptions from the following requirements: The right of first purchase under §§7-204—7-211 of the Act; Tenant relocation assistance under §7-212(b)(1) and (2) of the Act; One-year lease extensions under §7-212(b)(3) of the Act; and Designated household assistance of 3-year lease extensions and additional relocation assistance for certain households under §§7-214—7-219 of the Act. The Secretary may grant exemptions under Regulation .02 of this chapter to: Diminish the burdens on a project owner of complying with similar requirements in federal law and in the Act when compliance with both sets of requirements would not provide any appreciable benefit to assisted tenants beyond compliance with the federal law; or Prevent the inconsistent or inequitable application of federal law and the Act to a property owner, when compliance with both sets of requirements would: Be impossible due to conflicts between the requirements; Impose inequitably duplicative high costs or burdens on the property owner; or Otherwise result in an unreasonable application of the requirements or procedures of the Act on the property owner considering full compliance with federal law. The following factors shall be taken into consideration in determining whether to grant an exemption: Type of protected action; Size and location of the project; Nature of the assisted households of the project; Availability of other assisted housing in the area, including whether tenant based rental assistance will be available and accepted at these projects; Extent of benefit to the assisted tenants which would be retained as a result of the exemption; Availability of alternative rental subsidies or other assistance to tenants for use at the project; Provision by the project owner of notices and other benefits to the tenants beyond the requirements of the Act; Compliance by the owner with requirements of federal law relating to the protected action or tenant benefits generally; Extent of conflicts which would result from the owner’s full compliance with federal law and the Act; Extent of costs or other burdens on the owner which would result from full compliance with federal law and the Act; or Other relevant factors as determined by the Secretary. Additional Requirements. Provide a portion of the benefits set forth in the Act; Accept the use by assisted households of rental assistance at the project for a certain period following the protected action; Provide, as is appropriate, other benefits to all or a portion of the assisted households; Provide initial or supplemental notices to the tenants, containing some or all of the information required by §7-202(b) of the Act, as applicable to the exemption conditions being imposed and for such length of time before the protected action as the Secretary determines is necessary and desirable to carry out the purposes of the Act; or Execute a written agreement specifying, or provide other assurances of compliance by the owner with, any conditions required in connection with the granting of an exemption. Failure by the owner to comply with any conditions shall be grounds for the Secretary to withdraw the exemption and require the owner to comply fully with all requirements of the Act. Requests for secretarial exemptions under this regulation shall include: A letter requesting the exemption and outlining the reasons why the property owner believes the exemption is appropriate under the Act and these regulations; A description of the nature of the proposed protected action; A list of the federal program or programs which govern the federally-assisted mortgage; A description of any federal project-based assistance; A description of any other state, local government, or other assistance to the project; Copies of the notices of intent given under §7-201 of the Act, and copies of all other notices delivered in connection with the proposed protected action, including notices to or required by HUD or other federal regulatory agencies, and any notices in connection with any state or local proceedings concerning the assisted households’ leases at the project; A statement as to the expected impact of the proposed protected action on rents and the continued occupancy by existing assisted households for 3 years following the date of the protected action; Data which shows the number of: Assisted households; Assisted households with senior citizens and handicapped persons; and Assisted households with minors; An explanation of any provisions planned or previously given to provide assisted households with adequate alternative housing or other assistance, including any federal rental assistance; The timetable anticipated for taking any protected action; The anticipated dates on which the protected action would result in dispossession of any assisted households at the project; A statement certifying that the owner has not taken any of the following actions, or any other action before the date of the protected action in order to avoid the owner's obligations in conjunction with the protected action: Termination without cause of the lease of any tenant occupying an assisted unit; Alteration of any of the terms and conditions of executed leases of existing tenants; Interference with any existing rights of tenants to occupy their units in the assisted project under existing leases or under any applicable federal, state, or local law; Interference with the efforts of individual tenants to obtain housing subsidies or other public assistance; or Discrimination in the leasing of units in the project based on source of income or receipt of rent subsidies provided by governmental or other sources; and Other supporting documentation required by the Director. Timing for Requests for Exemption. To permit compliance with the notice requirements of the Act, requests for exemption should ordinarily be submitted at least 1 year and 60 days before the effective date of any protected action, except as permitted under §B(2) of this regulation. In an emergency situation when urgent action is required, requests for exemption may be considered in the discretion of the Secretary if submitted at least 90 days before the effective date of any protected action. Requests for secretarial exemption shall be submitted to the Secretary of Housing and Community Development, Department of Housing and Community Development, Attn: Director, Division of Credit Assurance, 100 Community Place, Crownsville, Maryland 21032. Copies of Exemption Requests. Copies of the letter requesting an exemption described under §A(1) of this regulation shall be delivered to the following parties not later than 3 days after the request is made to the Secretary: The chief executive officers of each local jurisdiction in which the assisted project is located; Any public housing authority existing in any local jurisdiction where the assisted project is located; and Each assisted household of the assisted project. The Director or the Director’s designee shall review each request to determine if the request conforms to the standards for exemption. When reviewing the request, the Director or the Director’s designee shall consider the factors set forth in Regulation .03B of this chapter and any other information made available to the Director or the Director’s designee concerning the impact of the protected action on the property owner and the assisted households. Upon completion of the review, the Director shall make a recommendation to the Secretary for approval or disapproval of the request for exemption. Upon approval or disapproval of the request for exemption by the Secretary, a notification of the Secretary's determination shall be sent to the owner. The notification shall be issued within 30 days of receipt of the request for exemption and any required supplemental documentation. The determination by the Secretary or a redetermination of any decision to grant or not to grant an exemption from any requirements of the Act is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02. Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland Effective date: April 18, 2011 (38:8 Md. R. 505) Each property owner who takes or intends to take a protected action shall send written notices of intent that comply with the requirements of §§7-201 and 7-202 of the Act and these regulations. The purpose of providing notices of intent is to: Inform appropriate government agencies of the proposed action, and its possible impact on the tenants, and the local stock of affordable housing; Provide the Department with information to determine if the proposed action is legally permissible; Inform assisted households of the proposed actions and their rights in the event federal assistance is discontinued; and If the project is to be sold, afford other parties the opportunity to exercise a right of first purchase in accordance with §§7-204—7-211 of the Act. The notices of intent required under the Act and Regulations .03 and .04 of this chapter shall be submitted to the Department and the other required parties in addition to any other notification requirements imposed by the federal government. Submission of a notice to the applicable federal agency only by the owner or any other party does not constitute compliance with the Act and these regulations. In addition to any requirements specified in the Act, the notice of intent to the chief executive officers, public housing authority, tenant association, and Secretary shall be sent by certified mail, return receipt requested and include the following information or material: The nature of the proposed protected action; A list of the federal program or programs that govern the federally-assisted mortgage or any project-based assistance; For assisted projects that are subject to federally-assisted mortgages: A copy of the assisted mortgage, the secured note, and any regulatory agreement and other related mortgage documents; and A statement setting forth the: Maturity date of the mortgage; Original and current principal balance of the mortgage; Name and address of the mortgagee; and Number of assisted units regulated by the mortgage; For assisted projects that have units subsidized by project based assistance: A copy of the federal agreement to enter into a household assistance payments contract (AHAP); A copy of the federal housing assistance payments contract (HAP) evidencing the Section 8 agreement and a statement setting forth the expiration date of the Section 8 agreement, including all extensions or renewal options; The name and address of the agency responsible for administering the Section 8 agreement; and The number of units for which assistance is provided; A statement as to the expected impact of the proposed protected action on rents and the continued occupancy by existing assisted households for 3 years following the date of the protected action, including: Any proposed rent increases over such period; and The size of any tenant waiting list on the project; For projects that receive project-based assistance for less than 100 percent of the units: The number of unsubsidized units; The current rents for unsubsidized units; and Any planned or projected rent increases for the unsubsidized units for 3 years following the date of the protected action; Financial statements: For projects encumbered by a federally assisted mortgage, copies of financial statements submitted to HUD or the United States Department of Agriculture or the Department; or For projects receiving project based assistance, audited financial statements, if available, or instead of these, compiled financial statements or certified copies of federal income tax returns; All financial statements or federal income tax returns shall be for the 3 fiscal years immediately preceding the date of the notice of intent; A statement under penalty of perjury certifying that the owner has not taken any of the following actions, or any other action before the date of the notice of intent to avoid the owner’s obligations in conjunction with the protected action: Termination without cause of the lease of any tenant occupying an assisted unit; Alteration of any of the terms and conditions of executed leases of existing tenants; Interference with any existing rights of tenants to occupy their units in the assisted project under existing leases or under any applicable federal, state, or local law; Interference with the rights of applicants or eligible prospective tenants to obtain housing in the assisted project in accordance with federal admission preferences, and other applicable federal, state, or local law governing admissions to subsidized housing or the allocation of housing subsidies; Interference with the efforts of individual tenants to obtain housing subsidies or other public assistance; Discrimination in the leasing of units in the project based on source of income or receipt of housing subsidies provided by governmental or other sources; and Any other supporting documentation required by the Director. In addition to the notices of intent sent under Regulation .03 of this chapter, the owner shall send a notice of intent to each assisted household in accordance with §7-202(b) of the Act and this regulation. The owner shall submit a proposed notice of intent, application for extended tenancy, and extended tenancy lease to the Director for comment and approval at least 15 days before delivery to the assisted households. The notices, applications and leases shall be in a form approved by the Department. The Director shall develop and make available to an owner on request, samples of a notice of intent, application for extended tenancy, and extended tenancy lease. The Director will review a notice of intent and other forms received from an owner to determine whether: The notice of intent meets the requirements of the Act and these regulations; The owner is permitted to take the protected action in accordance with these regulations. The Director will complete the review and notify the owner of the results within 30 days of receipt of the notice. The property owner shall send a notice of intent that complies with the requirements of Regulation .04 of this chapter to each assisted household by U.S. mail, postage prepaid. Simultaneously with the notice of intent, the owner shall send applications for extended tenancy and extended tenant leases to all assisted households that qualify as designated households. Within 5 days of sending the required notices and forms to the assisted households, the owner shall send the Department by certified mail, return receipt requested, an affidavit signed by the property owner or property manager certifying: That the notice of intent complied with the requirements of the Act and these regulations; and The names and addresses of each assisted household to whom a notice of intent was sent. The notice periods and corresponding lease extension periods may not commence until a notice of intent, which accurately and completely provides all the information required by the Act and these regulations, is served. If the notice of intent fails to provide all required information, it does not become effective until that information is provided. Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland Effective date: April 18, 2011 (38:8 Md. R. 505) The following entities may register with the Secretary at any time, including after a notice of intent and owner’s offer of right of first purchase have been sent to the Secretary, to receive owners’ offers of first purchase by sending a written request to the Secretary: Any legally organized tenant association or other group representing any of the tenants at any assisted project; Any nonprofit developer; and Any other developer unrelated to the owner and experienced in the ownership or operation of low income housing projects. On receipt of an owner’s offer of right of first purchase, the Director shall provide the owner with a list of all entities registered under this regulation. Not later than 10 days after the owner receives the list of entities registered to receive a copy of the offer, the owner shall send by certified mail, return receipt requested, the owner’s offer to any person or entity on the registration list. The acceptance of an owner’s offer of a right of first purchase is governed by §§7-204—7-211 of the Act and this regulation. In determining which party’s acceptance will most benefit the assisted households, the Secretary shall consider the following factors as applicable to each prospective purchaser: The duration of the low income rental restrictions for the project following the purchase; The number of units to receive or continue to receive, project-based rental assistance or other subsidies, under the prospective purchaser’s ownership of the project; Projected tenant rents for a period of at least 5 years under the prospective purchaser’s ownership; Tenant ownership and operation or ownership and operation by a nonprofit developer, local government, or local housing authority; The experience and expertise of the purchasers in the ownership and operation of low income residential rental property; The economic feasibility of the project following purchase; The type, nature, and extent of any proposed physical improvements to the project; The extent of any tenant services proposed by the prospective purchaser; The extent to which the proposed ownership would minimize financial hardship and displacement to the tenants; or Any other relevant factor, including the preferences of the tenants, as determined by the Secretary. The original party which accepts or is authorized to accept an offer of the right of first purchase by the Secretary may withdraw its acceptance by a written notice to the owner, with a copy to the Department. The party withdrawing its acceptance will forfeit the first $10,000 of its deposit, unless any remaining party submits an acceptance of the owner’s offer. In the event of a withdrawal, the owner, within 3 days of receipt of the notice of withdrawal shall notify in writing: All other parties who received a notice of a right of first purchase; All parties who submitted an acceptance; and The Department. The withdrawal notice shall specify the terms of the owner’s offer and the rights of the parties receiving notice to submit an acceptance in accordance with the timeframes in the Act. Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland Effective date: April 18, 2011 (38:8 Md. R. 505) A tenant is entitled to tenant protection assistance, including relocation expenses and lease extensions, in accordance with §§7-212—7-219 of the Act. To receive the additional $475 for relocation expenses authorized in the Act, the tenant shall submit reasonable documentation of actual and reasonable relocation expenses to the owner within 60 days after the tenant vacates the unit. The owner shall pay the additional relocation expenses to the tenant within 15 days after the documented expenses are submitted to the owner. The owner shall offer a lease extension for a period of at least 1 year from the date of the notice of intent to each assisted household that has not committed a material violation of the lease. The owner shall include in each extended lease the criteria for early termination or cessation of the extended lease that are listed in §7-218 of the Act. Designated households that do not receive an extended tenancy under the Act may be eligible for rental equivalent payments and relocation expense payments under §7-219(e) of the Act. All designated households are eligible upon vacating their assisted unit for reimbursement by the project owner for ordinary relocation expenses payable to all assisted households in accordance with §7-212(b)(1) and (2) of the Act. The owner shall create and maintain accurate records that set forth: The relocation and reimbursement expenses paid to each assisted household; The rates of rent charged for the assisted units; and Any other information concerning tenant protection assistance provided by the owner. The records shall be retained and available for inspection by the Department for five years after the date of the notice of intent delivered to the tenants. Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland Effective date: April 18, 2011 (38:8 Md. R. 505) Settlement agents conducting real estate settlements involving the sale of residential rental projects, or the release of federally-assisted mortgages or related documents encumbering the projects, shall make inquiries of the owner as to the nature of the project, and the possible termination of federal assistance which may be governed by the Act and these regulations. If responses to the agent’s inquiries, the nature of the transaction and related documents, or any information otherwise known to the settlement agent raises a reasonable possibility that a sworn statement under §7-307 of the Act is required, the settlement agent shall use its best efforts to procure and file a sworn statement with the Department, and if unable to comply, shall notify the Department in writing before the settlement of the circumstances of the failure to deliver the sworn statement. Settlement agents failing to comply with this regulation may be subject to civil liability and civil monetary penalties in accordance with the Act. The Secretary may, by written determination, waive or vary particular provisions of these regulations, provided that: The waiver is not inconsistent with the Act; and In the written determination of the Secretary, the application of the regulations in a specific case, or in an emergency situation, would be inequitable or contrary to the purposes of the Act, and would not substantially limit any significant protections to tenants required under the Act. Housing and Community Development Article, §§7-101—7-501, Annotated Code of Maryland Effective date: April 18, 2011 (38:8 Md. R. 505)