Chapter 02. Financing Adjustment Factor Funds

This chapter describes the policies and procedures the Community Development Administration will use to administer financing adjustment factor funds granted to the State under the Stewart B. McKinney Homeless Assistance Amendments Act of 1988, P.L. 100-628, as amended, to provide financial assistance to individuals, local governments, developers, and nonprofit organizations to provide decent, safe, and sanitary housing affordable to very low-income families or persons.

This chapter describes the specific eligible uses, restrictions, and procedures used to administer financing adjustment factor funds in the State.

Finance affordable housing in conjunction with housing loan programs administered by the Department by awarding funds to local governments, nonprofit sponsors, and developers, and for-profit sponsors and developers to:

Finance programs, projects, and activities that fill a need not met by other DHCD housing programs, but that promote the development and rehabilitation of housing for households of very low income for homeowners, renters, and special populations; and

Provide grants to local governments, local development corporations, local development agencies, municipalities, and nonprofit organizations for certain eligible activities.

In this chapter, the following terms have the meanings indicated.

Terms Defined.

The Administration may use FAF funds to finance the following:

The housing financed with FAF funds shall be rented, occupied, or sold to very low-income households in accordance with this chapter.

The projects financed with FAF funds shall be community development projects, public purpose projects, energy conservation projects, solar energy projects, home improvement projects, or special housing facilities.

Activities identified in 24 CFR §811.110, as amended;

Interest rate subsidies;

Direct rental subsidies;

Grants or loans for housing very low-income households, including housing in mixed income or mixed use projects;

Interest subsidies, grants, or loans to enable very low-income households to acquire ownership of single family housing units; and

Funds to assist in the acquisition, construction, and rehabilitation of housing for homeless persons, very low-income households, or persons at risk of becoming homeless, and other special needs populations consisting of very low-income households.

FAF funds may be used only to pay the development costs of dwelling units to the extent they are or would be chargeable for federal income tax purposes to the project's capital account with a proper election by a taxpayer.

FAF funds may be used toward the development costs of mixed-income or mixed-use projects, if the costs:

Any allocation shall be made under §B(2) of this regulation on a basis that reasonably reflects the actual costs of the dwelling units to be occupied by very low-income households as a percentage of the overall development costs of such mixed-income or mixed-use project.

Occupancy Requirements and Income Restrictions.

Repayment.

Lien Priority. Except for liens held in connection with public purpose projects, any lien held by the Administration on property is a lien superior to all other liens on the property except liens for taxes owed to the State or any subdivision of the State, and earlier mortgage liens. The Administration, in its discretion, may require the release and repayment of any liens.

The Administration, in its discretion, may use FAF funds in connection with a project financed under a single family program, multifamily program, community legacy program, or Maryland HOME program if the project complies with this chapter and the regulations of the single family program, multifamily program, community legacy program, or Maryland HOME program, as applicable.

The Administration, in its discretion, may use FAF funds for the programs identified in §A of this regulation instead of funds provided under a single family program, multifamily program, community legacy program, or Maryland HOME program, if the sponsor:

If there is a conflict between the regulations of the specific identified program and this chapter, the more restrictive regulation applies to the project to maintain compliance with this chapter and the regulations of the specific identified program.

The sponsor receiving FAF funds shall agree to comply with any program guidelines, manuals, or policies established for the specific identified program.

The waiver is consistent with the Act;

Any necessary approvals from HUD are obtained; and

The Secretary determines that: