Title 05 — Subtitle 13. Neighborhood Business Development

In priority funding areas or eligible opportunity zones, to:

In food deserts or parts of priority funding areas or eligible opportunity zones that serve food deserts, to help create small businesses and other food–related enterprises that provide fresh fruits, vegetables, and other healthy foods to residents in the food desert.

In this chapter, the following words have the meanings indicated and as defined in the Act.

Terms Defined.

Be in good standing and qualified to do business in Maryland;

Be a small business, nonprofit organization, or microenterprise; and

Have the legal capacity and all necessary legal authority to incur the obligations involved in the form of financial assistance provided under the Program.

Financial assistance may be used for:

Financial assistance may not be made available for any of the following businesses as a principal use of a project:

Financial assistance may not be made available for the furtherance of sectarian religious instruction, or in connection with the design, acquisition, or construction of any building used or to be used as a place of sectarian religious worship or instruction, or in connection with any program or department of divinity for any religious denomination, including but not limited to religious services, religious instruction, or other activities that have an explicitly religious content. A project is not eligible for financial assistance under the Program if all or any part of the project includes these activities.

The project is located within the State;

The project is located in a priority funding area or eligible opportunity zone;

As determined by the Department, the financial assistance from the Program and the financial assistance requested is the least amount of money necessary to make the project financially feasible;

The project is ready to proceed upon receipt of financial assistance under the Program;

Food desert projects:

The political subdivision in which the project is located has:

The operating income and expenses projected for the project show income sufficient, in the sole discretion of the Department, to repay on schedule any loans authorized or guaranteed by the Program; and

Upon completion, the project will be in compliance with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which the project is located.

The financial assistance from the Program shall be on such terms as the Department considers necessary to make the project financially feasible.

The Department may require an approved applicant to make a cash contribution or other form of contribution to the project.

Secured or Unsecured Loans.

Insurance. At or before closing of the financial assistance, or at such other times as required by the Department, the applicant shall provide evidence acceptable to the Department that the applicant, contractor, and other parties, have obtained and maintained property, liability, and other insurance.

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:

Application Evaluation.

Geographical Distribution. In evaluating and recommending a project, the Program shall make reasonable efforts to ensure that financial assistance is equitably distributed among all of the local jurisdictions.

Approval of Applications.

Rejection of Applications. If the Program does not recommend approval of a project for financial assistance, the Program shall issue a written notice of rejection with an evaluation and explanation for rejection.

Reconsideration.

Closing. The closing of an award of financial assistance shall be scheduled at a time acceptable to the Department and the Office of the Attorney General.

Disbursement of Financial Assistance. Financial assistance may be disbursed in accordance with the terms and conditions set forth in the financial assistance documents.

Applicants, 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.

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.

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 applicant.

The Program may establish from time to time detailed Program guidelines containing underwriting standards, processing requirements, and other requirements or matters relating to providing financial assistance.

The Program shall make a reasonable, good faith effort to make 25 percent of Program loans and grants to microenterprises.

In accordance with the Act, the Department shall, for each State fiscal year, reserve at least the lesser of $5,000,000 or the annual capital appropriation for the Fund to make financial assistance available to projects located in sustainable communities.

The Department may charge and collect from an applicant or recipient of financial assistance under this title:

The Department shall ensure that Program guidelines, fee information, and application forms are publically available on its website and at its offices.

The Department may:

The maximum sale proceeds in any fiscal year may not exceed 20 percent of the total outstanding balance of loans in the Fund.

General. The Department may approve an entity to originate and administer financial assistance in accordance with this chapter.

To be eligible to administer a financial assistance program, the entity shall submit an application to the Department and meet the following minimum criteria to the satisfaction of the Department:

An approved entity shall execute and comply with the terms of an administration agreement, loan agreement, loan note, assignment, and other documents governing the duties of the entity under the Program, as required by the Department.

An approved entity shall be directly responsible for fulfilling all of its duties and responsibilities under the Program and may not assign its responsibilities without the prior written consent of the Department.

The Department may monitor an approved entity’s administration of loans funded by the Department, and may enforce its remedies under the Program loan documents, including revoking the entity’s approval to administer a loan program under this chapter.

Other Requirements.

To fund financial assistance under this regulation the Department may:

An applicant 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.

An applicant or contractor shall comply with all applicable federal, State, and local laws and Departmental policies and programs regarding discrimination, equal opportunity in employment, housing, and credit practices, and drug and alcohol free workplaces, including:

Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.

A person may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Department by an agreement relating to financial assistance.

A person applying for or benefiting from financial assistance under the Program may not knowingly make or cause to be made a false statement or report for the purpose of influencing the action of the Department on an application or for the purpose of influencing the action of the Department affecting financial assistance already provided.

A person who violates §A or B of this regulation is:

Making Main Street Improvement Program grants to local jurisdictions and nonprofits to promote the development and revitalization of business districts in local jurisdictions; and

Designating Maple Street communities that will benefit from Main Street Improvement Program grants to help promote revitalization of residential areas adjacent to designated Main Streets.

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

Terms Defined.

Local jurisdictions and approved nonprofit organizations are eligible to receive grants under the Program.

Applicants shall meet the following minimum requirements to qualify for a Program grant:

Priority for Main Street Improvement Program grants shall be given to existing designated Main Street Maryland communities and existing designated Maple Street communities. If Program funds remain unobligated at the end of the 6th month of a fiscal year, priority thereafter shall be given also to local jurisdictions or nonprofit organizations, or both, that are operating downtown revitalization projects in business districts with a significant number of historic commercial buildings.

Grant funds may be used to pay for costs associated with projects which support the development or revitalization of business districts, including:

Grant funds may be used to pay for costs associated with projects that support the development or revitalization of residential areas in Maple Street communities, including:

A project shall be located within a priority funding area identified under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland.

Grant Allocation.

Application Solicitation.

Grant Awards.

Local Contributions.

The period of a grant may not exceed 12 months, unless the Director agrees in writing to an additional grant period. Extensions may be granted in the Director's discretion only for one period of not more than 3 months.

With the approval of the Department, a local jurisdiction may distribute all or a portion of a grant to a property owner or business in a business district, or other nonpublic entities which will be involved in a project. The local jurisdiction, however, shall remain responsible for the proper utilization, distribution, and administration of grant funds.

The Department may establish any other reasonable and necessary terms and conditions in an agreement evidencing the grant.

Applications shall be made upon standard forms prescribed by the Department. Each application shall include sufficient information and documentation to determine the:

The Department shall undertake a review of each application. The Department shall take the following factors into consideration in reviewing applications:

The Director shall recommend grants to the Secretary for approval.

Upon the Secretary's approval of a grant, the Director is authorized to issue an award letter to the successful applicant setting forth the amount of the grant.

The Department shall enter into a grant agreement with each successful applicant.

A community must be located within a priority funding area identified under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland, to be eligible for a Maple Street community designation.

An application submitted to the Department for designation as a Maple Street community shall:

In evaluating applications for a Maple Street community designation, the Department will take into consideration the following factors:

Application Review.

Except as otherwise set forth in this chapter, the Department designates the Division to administer all aspects of the Program, and to be a party to each agreement executed in connection with a grant.

Except as otherwise set forth in this chapter, the Department designates the Division to administer all aspects of the Maple Street Program, and to be a party to each agreement executed in connection with a grant.

Other action or decision required or permitted to be taken by the Department under this chapter may be taken by the Director, or the designees of the Director.

Local jurisdictions and approved nonprofit organizations 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 jurisdiction and approved nonprofit organization in connection with any project financed or assisted under the Program.

Each local jurisdiction and approved nonprofit organization shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:

Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.

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

Terms Defined.

The Department may provide grants under the Program to eligible grantees for the purpose of defraying the costs associated with:

The Department may also use Program funds to pay for activities which enhance the managerial skills of circuit riders, including group training and group meetings for the circuit riders. The Department may directly pay for the activities or reimburse circuit sponsors for eligible costs.

The Department may not use more than 15 percent of the monies appropriated in a fiscal year for the purposes set forth in §B of this regulation.

The Department's financial participation in the Program shall be subject to available funding.

Grant funds shall be allocated in accordance with the procedures set forth in these regulations, and the Department may give priority to applications on behalf of existing circuits.

The Department shall request, in writing, applications from existing circuits each fiscal year in accordance with the procedures set forth in Regulation .07 of this chapter. The written request from the Department may contain a deadline for submission of applications by existing circuits as well as a proposed grant amount for all existing circuits.

The procedures for grants to proposed circuits shall be made in accordance with the provisions in Regulation .07 of this chapter.

Existing and proposed circuits applying for a grant shall be represented by a circuit sponsor acceptable to the Department. The circuit sponsor shall:

Each applicant shall demonstrate that its circuit or proposed circuit has a need for services sufficient to justify hiring at least one full-time circuit rider. An applicant may request funds to hire more than one full-time circuit rider if the applicant can demonstrate a work load warranting the additional personnel.

Each applicant shall demonstrate the inability of each member of the circuit to afford qualified management staff with its own resources.

Members of a circuit shall be located within reasonable proximity of each other.

Contributions of Circuit Members.

Employment of Circuit Rider.

The Department may establish any other reasonable and necessary terms and conditions governing the use of grant funds in an agreement evidencing the grant.

Existing Circuits.

Proposed Circuits.

Applications for a grant shall be submitted by the circuit sponsor. The application shall be signed by the chief executive officer of the circuit sponsor. Each member of the circuit shall provide a resolution or other acceptable form of approval by the governing body of the municipality evidencing the commitment of the member to pay its share of the circuit costs.

The Department may refuse to consider applications with incomplete information.

The Department may make grant awards to benefit particular circuits and decline to make awards to benefit otherwise eligible circuits based on the assessment by the Department of the overall merit of the application of a circuit and its relative merit to competing applications.

The Department may fund a circuit based on the:

The Department may require applicants to pay an application fee to cover some or all of the cost of processing an application.

Applications shall be made on standard forms provided by the Department.

The Program staff shall evaluate each application based on the following criteria:

The Program shall recommend to the Director the circuits to be funded and the level of funding.

The Director shall recommend grant awards to the Secretary for approval.

The Secretary shall approve all grant awards.

A grant agreement shall be executed for each circuit that receives a grant. The grant agreement shall be signed by the circuit sponsor and the Secretary, or the Secretary's designee, on behalf of the Department.

Circuits and circuit sponsors 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 circuit or circuit sponsor in connection with any project financed or assisted under the Program.

Each circuit and circuit sponsor 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:

Covenants implementing these requirements, including affirmative action measures, shall be included in the grant agreement between the Department and other parties.

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

The Secretary's determination is approved for form and legal sufficiency by the Office of the Attorney General.

The objectives of the Capital Access Program as set forth in Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland, are to foster economic growth and development in the State by:

Loans made under the Program are to be slightly riskier than conventional loans, but will still offer a high degree of soundness in connection with the Program.

In this chapter, the following words have the meanings indicated, and also as defined in Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland.

Terms Defined.

A lender is eligible to participate in the Program upon entering into a participation agreement with the Department that governs the duties of the Department and the lender under the Program. Each participation agreement shall specify that the enrollment of the lender's loans under the Program does not pledge the faith, credit, or taxing power of the State, the Department, the Program, or the Fund.

The lender shall provide the Department with the information regarding the lender's participation in the Program that the Department reasonably requires. Upon notice to the lender, and during normal business hours of the lender, the Department may inspect the files of the lender relating to any loans enrolled under the Program.

Required premium charges to be paid by the lender and the borrower;

Transfers made by the Department under this chapter.

All money deposited or otherwise credited to the reserve account is under the exclusive control of the Department. The Department may not withdraw money from the reserve account, except as specifically provided in this chapter.

If money in the reserve account is not deposited by the Department in a federally insured account with the lender, the money shall be invested or reinvested by the Department in one of the following:

If the reserve account for a given lender is not maintained with that lender, the Department shall provide to the lender quarterly transaction reports indicating the following:

The records of the Department are available to the lender at the offices of the Department, during normal business hours of the Department, with respect to:

All interest earned in a reserve account shall be credited to that account. Fifty percent of the interest earned may be withdrawn by the Department from that account and used for any purpose.

The Department shall pledge the following to the lender:

Assurances, guarantees, or other credit enhancements provided under the Program do not pledge the faith, credit, or taxing power of the State, the Department, the Program, or the Fund, and hence are payable only to the extent of the reserve account established for any given lender.

An applicant shall meet the following minimum requirements to be an eligible borrower for loans made under the Program:

A borrower shall meet the following minimum requirements:

The following types of loans are eligible loans under the Program:

Eligible loans shall meet the following criteria:

The proceeds of an eligible loan may not be used for the furtherance of sectarian religious instruction, or in connection with the design, acquisition, or construction of any building used or to be used as a place of sectarian religious worship or instruction, or in connection with any program or department of divinity for any religious denomination, including but not limited to religious services, religious instruction, or other activities that have an explicitly religious content.

An eligible loan may provide for an interest rate, fees, security, and other terms and conditions agreed to by the lender and the borrower. If the loan amount to be borrowed is determined by a commitment agreement that establishes a line of credit, the amount of the loan is the maximum amount available to the borrower under the agreement.

The project is located within a priority funding area in the State;

Upon completion, the project will be in compliance with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which the project is located; and

If the project is a mixed use project, it has a commercial or retail use at street level.

To enroll a loan under the Program, the lender shall file a completed loan enrollment form with the Department. The lender shall also certify the following to the Department as part of the filing:

The lender shall file the enrollment form not later than 45 business days after the lender makes the loan.

The date on which the lender makes a loan is the earlier of:

The filing date of a loan enrollment form is the date on which the lender does any of the following:

When filing a loan enrollment form, the lender shall specify an amount to be covered under the Program. The amount may be less than, but not greater than, the total principal amount of the loan.

In the case of a loan to refinance a loan that was previously made by the lender to the borrower but that was not enrolled under the Program, the lender may obtain coverage under the Program for an amount not exceeding the amount of additional financing.

If an enrolled loan is refinanced and the total amount to be covered under the Program does not exceed the covered amount of the loan as previously enrolled, the refinanced loan may continue as an enrolled loan without payment of additional premium charges or transfers by the Department to the reserve account.

If an enrolled loan is refinanced in an amount that exceeds the amount of the loan as previously enrolled, the lender may obtain coverage of the amount that exceeds the amount covered when the loan was previously enrolled by refiling the loan for enrollment under Regulation .12 of this chapter.

Fluctuations in the outstanding balance of a line of credit, without increasing the enrolled amount under the Program, are not a refinancing of the loan.

When the Department receives a loan enrollment form, the Department shall enroll the loan if the information provided under Regulation .12 of this chapter indicates that the loan is an eligible loan. Within 10 business days after receipt of a loan enrollment form for an eligible loan, the Department shall deliver to the lender an acknowledgment of enrollment signed by the Secretary or the Secretary's designee, including documentation of the amount being transferred by the Department into the reserve account under this chapter.

The enrollment of a loan under the Program does not pledge the faith, credit, or taxing power of the State or of the Department with respect to that loan.

The Secretary may, from time to time, by written determination, establish minimum and maximum premium charges payable by borrowers in connection with loans filed for enrollment.

Lender Premium Deposit Into the Reserve Account.

When enrolling a loan, the Department shall transfer from the Fund into the reserve account a premium amount equal to the combined premiums paid into the reserve account by the borrower and the lender for each enrolled loan.

The Secretary may, from time to time, by written determination, designate one or more areas lying within priority funding areas as CAP targeted areas, and may authorize the Department to make an increased premium payment for an enrolled loan made with respect to a project located in a CAP targeted area. The increased premium payment may, in the discretion of the Secretary, be in addition to, or in lieu of, the premium paid by the borrower under §B of this regulation.

Unless money is paid out of the reserve account according to the specific terms of this chapter, all money paid into the reserve account by the lender shall remain in that account.

Minimum and Maximum Amount of Financial Assistance.

For purposes of §A(2) of this regulation, the term “common enterprise” has the meaning stated in 12 CFR 32.

Effect of Outstanding Balance of Zero.

Notwithstanding §A of this regulation, any amount recovered from a lender by a trustee in bankruptcy, or a similar representative of creditors, as a preference under 11 U.S.C. §547, remains an enrolled loan for the purpose of filing a claim against the reserve account.

If the lender charges off all or part of an enrolled loan, the lender may file a claim with the Department. If the lender files a claim, it shall be filed contemporaneously with the charge off, and must be received by the Department within 30 days after the charge off.

The lender's claim may include, in addition to the amount of principal charged off plus accrued interest, 1/2 of the reasonable and documented out-of-pocket expenses incurred in pursuing collection efforts, including preservation of collateral. The amount of principal included in the claim may not exceed the amount of principal covered under the Program. The amount of accrued interest included in the claim may not exceed the amount of accrued interest attributable to the covered principal amount.

The lender shall determine when and how much to charge off on an enrolled loan in a manner consistent with the lender's normal method for making these determinations on similar loans that are not enrolled loans.

If the lender files two or more claims contemporaneously and there are insufficient funds in the reserve account at that time to cover the entire amount of the claims, the lender may designate the order of priority in which the Department shall pay the claims, except that a claim made with respect to an early loan always has priority of payment over all other claims that are not made with respect to an early loan or loans.

Upon receipt by the Department of a claim filed by the lender, the Department shall, within 10 business days, pay from the reserve account, or authorize the lender to withdraw from the reserve account, the amount of the claim as submitted, unless the Department reasonably determines that the lender:

Result of Insufficient Money in Reserve Account.

The Department and the Fund are not liable for any claim if there is insufficient money in the reserve account to cover the entire amount of the claim.

If the recovered amount, when added to the claim previously paid by the Department in connection with an enrolled loan, exceeds the lender's loss on that enrolled loan, the lender shall promptly pay to the Department for deposit in the reserve account the amount of the excess; and

For the purposes of §A of this regulation and Regulation .22 of this chapter, the lender's loss on an enrolled loan is the amount of principal charged off by the lender plus accrued interest plus 1/2 of the reasonable and documented out-of-pocket expenses incurred by the lender in pursuing collection efforts.

If the payment of a claim has fully covered the lender's loss on an enrolled loan, or if the payment of a claim when combined with any recovery from the borrower has fully covered the lender's loss, the Department, upon its own request, is subrogated to the rights of the lender with respect to any collateral, security, or other right of recovery in connection with the loan that has not been realized by the lender. The lender thereafter shall assign to the Department any right, title, or interest in or to any collateral, security, or other right of recovery in connection with the loan.

If an assignment has been made under §A of this regulation, the Department is not required to undertake the obligations of the lender under the lender's loan documents, except for obligations directly related to the Department's assigned rights of recovery in connection with the loan. The lender shall fulfill any other obligations the lender has under the loan documents in the same manner and to the same degree as would be required if the assignment had not been made. The lender shall provide the Department with all reasonable assistance the Department requests in proceeding with respect to any collateral, security, or other right of recovery, except that the lender does not need to incur any out-of-pocket expenses.

Reports by Lender.

If a year-end report filed under §A of this regulation indicates that, for the immediately preceding 12-month period ending on June 30, the balance in the reserve account continuously exceeded 100 percent of the aggregate outstanding balance of all enrolled loans, including unfunded portions of enrolled loans that are lines of credit, the Department may make a withdrawal from the reserve account. The amount of the withdrawal may not be greater than the minimum amount of any excess as continuously maintained over the immediately preceding 12-month period ending on June 30. Withdrawals of excess sums by the Department under this section may be used for any purpose.

If a year-end report is not filed within 30 days of the original due date of the report, the Department may make a withdrawal from the reserve account on the basis of the Department's determination from an inspection of the lender's files that, for the immediately preceding 12-month period ending on June 30, the balance in the reserve account continuously exceeded 100 percent of the aggregate outstanding balance of all enrolled loans, including unfunded portions of enrolled loans that are lines of credit. If the lender fails or refuses to make all or any part of its files available to the Department for inspection for this purpose, the Department may make a withdrawal from the reserve account on the basis of the Department's determination from a review of the Department's own records that, for the immediately preceding 12-month period ending on June 30, the balance in the reserve account continuously exceeded 100 percent of the aggregate outstanding balance of all enrolled loans, including unfunded portions of enrolled loans that are lines of credit. The amount of the withdrawal may not be greater than the minimum amount of any excess as continuously maintained over the immediately preceding 12-month period ending on June 30. Withdrawals of excess sums by the Department under this section may be used for any purpose.

The right of the Department to make a withdrawal from the reserve account under §B or C of this regulation is subject to the following provisions:

A lender or borrower under the Program 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 borrower in connection with any project financed or assisted under the Program.

A lender or borrower shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:

Covenants implementing the requirements of this regulation, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties, and between lenders and other parties.

The Department shall manage, supervise, and administer the Program.

The Department shall market the Program to businesses and other persons in the State in cooperation with financial institutions and Statewide associations representing financial institutions.

The Department shall make every effort to ensure that loans under the Program are reasonably available to qualified borrowers throughout the State.

Reserve Accounts.

The Department shall develop the Program, in cooperation with financial institutions and Statewide associations representing financial institutions, so that the degree of flexibility for the Department and the participating lenders is maximized, the State oversight of individual loans is minimized, and the fiscal integrity of the Program is maintained.

The Department shall enter into any contracts necessary to carry out the Program.

The Department shall take any action reasonably necessary to ensure compliance with the Program.

The Program shall be operated with moneys in the Neighborhood Business Development Fund, which is a continuing, nonlapsing special fund consisting of those items as provided for in Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland.

In connection with the Program, the Department may use moneys from the Fund to make premium payments under the Program and to pay expenses of the Program.

At any time following the first 8 months of a fiscal year, the Department may transfer, subject to approval of the Legislative Policy Committee and subject to the provisions of State Finance and Procurement Article, §7-209, Annotated Code of Maryland, unencumbered moneys in the Fund to any other fund under Housing and Community Development Article, Title 4, Annotated Code of Maryland.

To the extent that the waiver or variance is consistent with Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland; and

If, 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 Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland.

A person may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Department in connection with a loan under the Program.

A person applying for or benefiting from a loan under the Program may not knowingly make or cause to be made a false statement or report for the purpose of influencing the action of the Department on an application or for the purpose of influencing the action of the Department affecting financial assistance already provided.

A person who violates §A or B of this regulation is subject to the following penalties:

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

Terms Defined.

A loan is eligible under the Program if the loan:

The proceeds of a Program loan may not be used:

To be eligible to receive a Program loan, an applicant shall be a certified minority business enterprise or a small business.

To be eligible to make Program loans, a financial institution shall be designated by the Treasurer's office as a depository for State money and as eligible to participate in the Program.

An applicant may choose to submit an application directly to:

For an application submitted directly to a financial institution under §A(1) of this regulation, the following procedures apply:

For an application submitted to the Department under §A(2) of this regulation, the following procedures apply:

If a financial institution decides to offer the applicant a loan, it shall:

If a financial institution declines to offer the applicant a loan, it shall:

Notification. Within 3 business days of receiving a Program loan, the borrower shall notify the Department that the loan has closed.

Forms. Applications for enrollment of a loan under the Program by the financial institutions shall be made on forms prescribed by the Department.

Submission of Documentation. Within 10 business days of making a Program loan, the financial institution shall submit all loan documents, forms, and other documentation required by the Department.

Review by Department.

Reconsideration.

A borrower that receives a Program loan shall maintain its status as a certified minority business enterprise or a small business for the term of the Program loan.

The Department shall notify the Treasurer's Office in writing if the borrower is decertified as a minority business enterprise or no longer meets the definition of a small business for any reason during the term of the Program loan.

If a borrower is decertified as a minority business enterprise or disqualified as a small business during the term of the Program loan and upon written notification:

A minority business enterprise that loses its certification or a small business that no longer qualifies as a small business due to revenue or employee growth may not be considered decertified for purposes of this regulation.

The Secretary may waive or vary provisions of this chapter:

Electronic Means. The Department may require the financial institution to submit any written documentation required in this chapter by electronic means.

Subject to all State and federal privacy requirements, the Department may require a participating financial institution to provide reports that contain:

Program Guidelines. The Department may establish from time to time Program guidelines containing procedures, required reports, forms, and other matters related to the Program.

In this chapter, the following words have the meanings indicated and as defined in the Act.

Terms Defined.

An application for a food desert designation shall be submitted by a local government or local governments.

An application for a food desert designation shall be submitted to the Department on forms prescribed by the Department and in accordance with the schedule that the Department establishes.

An application for a designation shall provide:

Application Evaluation.

Upon receipt of the recommendation from the Advisory Committee, the Secretary may request additional information from the applicant concerning the application, including oral presentations.

The Secretary, on the recommendation of the Advisory Committee, may designate an area as a food desert.

If the Secretary determines not to designate all or part of an area as a food desert, the Secretary shall issue a written notice of denial with an evaluation and explanation of the denial.

Reconsiderations.

An applicant may submit modifications to a food desert designation to the Department in accordance with the schedule that the Department establishes.

The Secretary, on the recommendation of the Advisory Committee, may approve modifications to a food desert designation.

Regulations .03—.05 of this chapter shall apply to the procedures and approval process for modifying a food desert designation.

The Department may establish an abbreviated application for modifying a food desert designation.

The project is in a food desert;

The project will provide fresh fruits, vegetables, and other healthy foods to residents in food deserts;

The project has a commitment of monies from private, local, or federal funds so that upon receipt of financial assistance under the Program there will be adequate funding to assure completion of the project;

As determined by the Department, the project is not feasible but for the financial assistance from the Program and the financial assistance requested is the least amount of money necessary to complete the project;

The financial assistance from all State government sources, including but not limited to the Program, may not exceed 50 percent of total project costs;

The project is ready to proceed upon receipt of financial assistance under the Program;

Each local jurisdiction in which the project is located has adopted a local resolution, or its authorized designee has delivered a letter to the Program, expressing support for the project;

The operating income and expenses projected for the project show income sufficient, in the sole discretion of the Department, to repay on schedule any loans authorized or guaranteed by the Program; and

Upon completion, the project will be in compliance with all applicable zoning requirements and standards as well as the applicable building code of the local jurisdiction in which the project is located.

The financial assistance from the Program shall be on such terms as the Department considers necessary to make the project financially feasible.

Financial assistance in the form of a loan from the Program may be secured, at the discretion of the Department, by a security instrument described in §C of this regulation, which may be subordinate to other security interests.

The security shall be acceptable to the Department and may be:

The principal and interest of a loan made or guaranteed under the Program shall:

In order to facilitate the successful completion or operation of a project, the Department may modify:

Default. In the event of default, the Department shall have the right to modify the rate of interest, the time or amount of payment, or any other term of financial assistance in order to ensure repayment and achieve the purposes of the Program.

Property, Liability, and Other Insurance.

Minimum Amount of Financial Assistance.

Disbursement of Financial Assistance. Financial assistance may be disbursed in accordance with the terms and conditions set forth in the financial assistance documents.

The Secretary may approve an exception to the maximum amount of the financial assistance, up to 65 percent of total project costs, on the basis that other potential sources of funds have been sought and clearly are not available and it is not feasible to reduce the size or scope of the project.

The Secretary may approve an exception to the minimum amount of the financial assistance on the basis that it is not feasible to increase the size or scope of the project.

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:

Application Evaluation.

Approval of Applications.

Rejection of Applications. If the Program determines not to recommend approval of a project for financial assistance, the Program shall issue a written notice of rejection with an evaluation and explanation for rejection.

Reconsideration.

Closing. The closing of an award of financial assistance shall be scheduled at a time acceptable to the Department and the Office of the Attorney General.

General. The Department may approve non-profit and for-profit entities to originate and administer loans to food desert projects in accordance with this chapter.

To be eligible to administer a loan program, the entity must submit an application to the Department and meet the following minimum criteria to the satisfaction of the Department:

An approved entity shall execute and comply with the terms of an administration agreement, loan agreement, loan note, assignment, and other documents governing the duties of the entity under the Program, as required by the Department.

An approved entity shall be directly responsible for fulfilling all of its duties and responsibilities under the Program and may not assign its responsibilities without the prior written consent of the Department.

The Department may monitor an approved entity’s administration of loans funded by the Department, and may enforce its remedies under the Program loan documents including revoking the entity’s approval to administer a loan program under this chapter.

Other Requirements.

To fund loans under this regulation the Department may:

An applicant may not discriminate against a person on the basis of race, color, religion, national origin, sex, sexual orientation, marital status, physical or mental disability, or age, except with regard to age as permitted under the federal Housing for Older Persons Act, as amended from time to time, in any aspect of the Program.

An applicant shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination and equal opportunity in employment, housing, credit practices, and drug and alcohol free workplaces, including:

Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties.

A person may not knowingly make or cause to be made a false statement or report in any document required to be furnished to the Department by an agreement relating to financial assistance.

A person applying for or benefiting from financial assistance under the Program may not knowingly make or cause to be made a false statement or report for the purpose of influencing the action of the Department on an application or for the purpose of influencing the action of the Department affecting financial assistance already provided.

A person who violates §A or B of this regulation is:

In this chapter, the following terms have the meanings indicated and as defined in the Act.

Terms Defined.

If a nonprofit organization, corporation, or partnership, be in good standing and qualified to do business in Maryland;

Have the legal capacity and all necessary authorization to incur the obligations of the financial assistance;

Own the project or have a valid contract to purchase or lease the project;

Demonstrate credit worthiness and repayment ability acceptable to the Department; and

Demonstrate the ability to complete and operate the project.

Properly zoned for the proposed use;

If involving construction or renovation, rehabilitated, constructed, and operated in accordance with the applicable federal, State, and local building, zoning, environmental, health, and safety standards; and

Licensed and registered as applicable.

Financial assistance may be used for the development costs of a business project.

The Administration shall establish interest rates and fees for the financial assistance based on the underwriting of each project.

Terms for repayment of principal and interest shall be established based on the underwriting for each project.

A loan shall be evidenced by a promissory note and secured by deed of trust or other security agreement in the form acceptable to the Administration.

Financial assistance shall be disbursed in accordance with a draw schedule approved by the Administration, which may include releasing funds upon successful inspections.

Borrowers shall pay any servicing fees, loan insurance premiums, bond insurance premiums, late charges, or other fees that the Administration or the loan insurer may require and that are permitted by State law.

Escrow Accounts. The Administration may require the borrower to make monthly deposits with the Administration for real estate taxes, insurance, mortgage insurance premiums, a reserve for replacements, and other expenses of the project.

Appraisal. Borrowers may be required to provide or pay for an appraisal performed by an appraiser acceptable to the Administration which shows the current value of the property and the expected value of the property after completion of the improvements.

The Administration may require certified financial statements for all partners, corporate borrowers, or any other individuals or entities having an interest in the project, in a form acceptable to the Administration.

The recipient of financial assistance shall agree not to sell, cease to own, assign, transfer, or dispose of all or any part of the business project or their interest in it, without the prior written consent of the Administration.

Taxes and assessments against the property which are due and payable shall be paid at or before closing.

The borrower shall maintain property, fire, and extended coverage insurance on the real and personal property comprising a project both during and after construction.

If the project is located on real property in the 100-year flood plain, as designated by the United States Administration of Housing and Urban Development, the project shall be covered by a flood plain insurance policy.

For all secured loans, the borrower shall provide a standard American Land Title Association (ALTA) Loan policy or other form of title policy approved by the Administration.

The Administration may require the borrower to obtain any of the following types of insurance, depending on the size of the project and risks to the Administration:

All insurance required under this regulation shall meet the following requirements:

In addition to a promissory note and security agreement, the Administration may require the borrower to execute or provide additional loan documents, which may include any of the following:

The Administration, at its sole discretion, may require additional security or collateral from the borrower to assure completion of the construction of the project or repayment of the loan.

The collateral may be in the form of one or more of the following:

Credit Enhancement.

Disclosure.

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:

Application Evaluation.

Approval of Applications.

Rejection of Applications. If the Administration does not recommend approval of a project for financial assistance, the Administration shall issue a written notice of rejection with an evaluation and explanation for rejection.

Reconsideration.

Closing. The closing of an award of financial assistance shall be scheduled at a time acceptable to the Department and the Office of the Attorney General.

Disbursement of Financial Assistance. Financial assistance may be disbursed in accordance with the terms and conditions set forth in the financial assistance documents.

Applicants, 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.

All of the books, accounts, and records under §A of this regulation shall be open to the inspection of representatives of 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 applicant.

The Administration may establish from time to time detailed Program guidelines containing underwriting standards, processing requirements, and other requirements or matters relating to providing financial assistance.

The Department may charge and collect from an applicant or recipient of financial assistance under this title:

The Department shall ensure that Program guidelines, fee information, and application forms are publically available on its website and at its offices.

The Administration may:

An applicant 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.

An applicant or contractor shall comply with all applicable federal, State, and local laws and Department policies and programs regarding discrimination, equal opportunity in employment, housing, and credit practices, and drug-free and alcohol-free workplaces, including:

Covenants implementing the requirements of this regulation, including affirmative action measures, shall be included in appropriate agreements between the Administration and other parties.