This chapter prescribes the policies, procedures, and authorizations for providing financial assistance to eligible small businesses, nonprofit organizations, and microenterprises from the Neighborhood Business Development Fund and for administering the Business Development Program, also known as the Neighborhood Business Works Program. The purposes of the Program as set forth in the Act are: In priority funding areas or eligible opportunity zones, to: Help develop, redevelop, or expand small businesses and microenterprises; Stimulate investment by the private sector; Invest in revitalization projects for small businesses and microenterprises; and Stimulate political subdivisions to participate in developing and expanding small businesses and microenterprises; and 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. “Act” means Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland. “Business” means a commercial or industrial enterprise. “Business project” means a project that is: Both: Located in a priority funding area or eligible opportunity zone; and Acquired, owned, developed, constructed, reconstructed, rehabilitated, or improved by a person or an entity for the purposes of carrying on a business whether or not for profit; or Eligible for funding from the Fund. “Department” means the Department of Housing and Community Development, a principal department of the State. “Development costs” means the costs incurred to develop, redevelop, or expand a business project and include the costs of: Necessary studies, surveys, plans, and specifications; Architectural, engineering, or other special services, including flood plain studies, environmental audits, and critical area or wetland assessments; Land and improvements; Site preparation; Construction, reconstruction, and rehabilitation; Machinery, equipment, and furnishings; Essential operating costs, including working capital and initial occupancy expenses; Indemnity and surety bonds and premiums on insurance; Temporary relocation expenses; and Other costs determined to be acceptable by the Department. “Eligible opportunity zone” means an area designated as a qualified opportunity zone under §1400 Z-1 of the Internal Revenue Code that is located in Allegany County, Garrett County, Somerset County, or Wicomico County. “Financial assistance” means any form of grant, loan, loan participation, assurance, guarantee, or other credit enhancement, reduction in the principal obligation of or in the rate of interest payable on a loan or portion of a loan, and prepayment of interest on a subordinate or superior loan or portion of a loan. “Financial assistance documents” means those documents executed by an approved applicant and the Department which set forth the terms and conditions of financial assistance under the Program. “Food desert” means that part of a priority funding area or eligible opportunity zone designated by the Secretary in accordance with COMAR 05.13.06.05. “Food desert project” means a project that is located in a food desert or a part of a priority funding area or eligible opportunity zone that serves a food desert for the purpose of providing fresh fruits, vegetables, and other healthy foods to residents in the food desert. “Fund” means the Neighborhood Business Development Fund under Housing and Community Development Article, §6-310, Annotated Code of Maryland. Local Jurisdiction. “Local jurisdiction” means: A municipal corporation subject to the provisions of the State Constitution, Article XI-E, if a project is located entirely within the boundaries of the municipal corporation; or Any of the 23 counties of this State and the City of Baltimore within which a project is located. “Local jurisdiction” includes each local jurisdiction within which any part of a project is located, if part of the project is located within one local jurisdiction while the remainder of the project is located in a different local jurisdiction. “Microenterprise” means a business that employs a number of employees or has annual gross receipts no greater than the limits set forth by the U.S. Small Business Administration for microenterprises. “Mixed use” means a use which includes commercial, retail, residential or any other uses approved by the Department. “Nonprofit organization” means a corporation, foundation, or other entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of any private shareholder or individual holding any interest in the entity. “Priority funding area” means an area designated as a priority funding area under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland. “Program” means the Business Development Program, also known as the Neighborhood Business Works Program. “Program funds” means monies from the Program that are used to provide financial assistance. “Project” means a project or activity which qualifies for financial assistance under the Program. “Secretary” means the Secretary of Housing and Community Development. “Small business” means a business that employs a number of employees or has annual gross receipts no greater than the limits set forth by the U.S. Small Business Administration for small businesses. “Sustainable community” means the part of a priority funding area or eligible opportunity zone that: Has been designated as a sustainable community in accordance with COMAR 05.17.02; Has been designated as a BRAC Revitalization and Incentive Zone under Economic Development Article, Title 5, Subtitle 13, Annotated Code of Maryland; or Has been designated as a transit-oriented development under Transportation Article, §7-101, Annotated Code of Maryland. Applicants shall meet the following minimum requirements to be eligible to apply for financial assistance under the Program: 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: Loans or grants for project development costs including, but not limited to: The acquisition of: Land; Structures; Equipment; or Furnishings which are or will be a part of a project; Construction; Reconstruction; Rehabilitation; Reasonable fees, as determined by the Program, for: Architectural services; Engineering services; Legal services; or Other special services acceptable to the Program; Special studies such as: Market and feasibility studies; Property appraisals; Test borings; Flood plain studies; Critical area or wetland assessments; and Other studies acceptable to the Department; Site preparation; Environmental audits; Essential operating costs, which are related to an activity necessary to the operation of a project, including: Working capital; Occupancy expenses, such as taxes, rent, tenant buildup of leased space, and inventory; Development costs; and Business expenses; Acquisition of machinery and equipment necessary to the operation of an enterprise; Indemnity and surety bonds; Premiums for hazard, liability, title, and mortgage insurance; Necessary fees, licenses, and permits related to construction, project review, and approval; Necessary studies, surveys, plans, and specifications; Payment and performance bonds; Relocation expenses; and Other necessary costs and fees acceptable to the Department; Assurances, guarantees, or any other form of credit enhancement; Reduction in the principal obligation of or rate of interest payable on a loan or portion of a loan; Prepayment of interest on a subordinate or superior loan or portion of a loan; or Fees charged by the Department. Financial assistance may not be made available for any of the following businesses as a principal use of a project: Adult bookstore, adult video shop, or other adult entertainment facility; Check cashing facility; Gambling facility; Gun shop; Liquor store; Massage parlor; Pawn shop; Tanning salon; or Tattoo parlor. 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. In order to be eligible for financial assistance, a project shall satisfy the following requirements: 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: Include a plan to seek out sources of Maryland-grown produce and Maryland-produced foods; and Are located in a food desert or a priority funding area or eligible opportunity zone that serves food deserts; The political subdivision in which the project is located has: Approved the project by adopting a local resolution of support; Approved the project through a letter of support delivered to the Program by an authorized designee; or Allowed at least 45 days to lapse following receipt of written notice of the proposed project to the highest elected official without denying the application; 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. The Program may offer financial assistance as secured or unsecured loans. Secured Loans. Financial assistance in the form of a loan from the Program may be secured, at the discretion of the Department. The security shall be acceptable to the Department and may be: A mortgage or deed of trust lien; A cash escrow; A letter of credit; A pledge of depository accounts; A pledge of accounts receivable; An assignment of income; A security interest in machinery and equipment; or Any other form of security or collateral acceptable to the Department. Repayment. The principal and interest of a loan made or guaranteed under the Program shall: Be repayable out of revenues specified by an approved applicant; Bear interest at a rate determined to be necessary and reasonable for the project which may be as low as zero percent; and Be repayable in accordance with a schedule determined by the Department, including a deferred payment schedule. Modification. In order to facilitate the successful completion or operation of a project, the Department may modify: The rate of interest; The time or amount of payment; or Any other term of a loan. 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. 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: Be submitted by an eligible applicant as described in Regulation .04 of this chapter; Contain the applicant’s organizational documents, including, as applicable, its articles of incorporation and bylaws, its articles of organization and operating agreement, its certificate of limited partnership and limited partnership agreement, or its partnership or joint venture agreement; Contain a description of the project; Contain a description of all sources of funding the applicant has obtained for the project; Contain sufficient information to determine that the: Project is located in a priority funding area or eligible opportunity zone; Project is eligible in accordance with Regulation .06 of this chapter; Terms and requirements of financial assistance as set forth in Regulation .07 of this chapter can be met; and Applicant is eligible in accordance with Regulation .04 of this chapter; and Contain the following additional information: The estimated number and types of jobs to be created or retained by the project; The amount, size, and types of space to be created or retained; The cost of the project; A project budget identifying all sources and uses of funds; A pro forma showing anticipated project revenue, expenses, and debt service and other indebtedness of the project; Identification of the revenues which can be used to repay the financial assistance provided by the Program; and Other and further information as the Program may request. Application Evaluation. Each application submitted shall be reviewed by the Program to determine whether all of the information required under §A of this regulation is contained in the application. Upon submission of all required information, the Program shall undertake an analysis of each application and make a recommendation to the Secretary, as to whether, in accordance with this section, a project is eligible for financial assistance, the amount of financial assistance, and any special terms and conditions for a project. The Program may take the information set forth in an application and the following factors into consideration in recommending an award of financial assistance: The ratio of Program and other State funds to both private and other non-State public funds; The relationship of a project to area revitalization plans, efforts, and strategies; The capability of an applicant to administer a project; The potential of the business to serve the needs of the priority funding area or eligible opportunity zone in which it is situated; and Other factors which the Program determines are desirable in fostering commercial and economic revitalization within a local jurisdiction. 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. The Program shall evaluate each application for financial assistance. If the Program recommends approval of a project for financial assistance, the Program shall present the project to the Secretary. The Secretary shall approve, disapprove, or approve with modifications all financial assistance to be provided under the Program according to procedures established by the Secretary. The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications financial assistance provided under the Program. 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. An applicant may request reconsideration of a rejection by submitting a written request, to the Secretary, which is received within 30 days following the date of the rejection notice. The request for reconsideration shall address each reason for the rejection and provide documentation supporting reasons for reconsideration of the issues. The Secretary shall respond in writing to the applicant’s request for reconsideration within 30 days of receipt by the Secretary of the request for reconsideration. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02. The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications a request for reconsideration of a rejection under the Program. 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: Origination, application, and processing fees; and Any other charges, fees, or reimbursements incidental to a project application or providing financial assistance. 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: Sell, assign, or otherwise dispose of any Program loan or revenue from a loan on terms and conditions acceptable to the Department, including selling loans at a discount; Apply the proceeds received from any sale, assignment, or other disposition to the Fund; and Pledge a program loan as security for any: Business project loan, bond, or security that is issued, made, or purchased by the community development administration of the Department under Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland; or Insurance, guaranty, or credit enhancement on a program loan or business project under Housing and Community Development Article, Title 3, Subtitle 2, Annotated Code of Maryland. 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: Provide evidence satisfactory to the Department supporting the entity’s demonstrated ability to: Manage a performing portfolio of business loans; Evaluate applications for financial assistance, underwrite loans, and administer financial assistance programs; Leverage Program proceeds with other private or public sources of funding; Comply with Program statutes, regulations, guidelines, and policies; Provide adequate resources and staff to implement the Program, including staff trained to efficiently: Process loan applications, draw schedules, and other loan documentation; Evaluate loan portfolio performance; and Monitor the work performed with the Program proceeds; Provide substantive technical assistance to recipients of financial assistance; Obtain coverage by a fidelity bond or employee dishonesty liability insurance as determined by the Department; and Be duly organized and in good standing in the State of Maryland; and Provide audited financial statements that demonstrate the entity’s ability to maintain consistent: Revenues; Operating reserves; Net assets; Unrestricted assets; and Portfolio delinquency rates. 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. An approved entity shall; Maintain financial records of Program proceeds for at least 5 years, and shall make them available for review by the Department at all reasonable times; and Provide the Department with periodic reporting on: Loan disbursements to loan borrowers; and Other information required by the Department. Upon notice to an approved entity, and during normal business hours, the Department may inspect the files of an approved entity relating to any loans originated under the Program. To fund financial assistance under this regulation the Department may: Directly fund the financial assistance that is originated by an approved entity; Provide financial assistance to an approved entity for the purpose of the approved entity making the financial assistance to another entity; Purchase or commit to purchase from approved entities any form of financial assistance that meets the requirements of this chapter; and Enter into agreements with approved entities to collectively lend money on a project that meets the requirements of this chapter. 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: Title 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; 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; State Government Article, Title 20, Annotated Code of Maryland, as amended; and The Americans with Disabilities Act of 1990, as amended. Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties. The Secretary may waive or vary provisions of these regulations to the extent that the waiver or variance is consistent with the Act 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 the Act. 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: Subject to immediate cancellation or acceleration of the form of financial assistance provided by the Program; and Guilty of a misdemeanor and upon conviction is subject to a fine not exceeding $50,000, or imprisonment not exceeding 5 years, or both. Housing and Community Development Article, §§2-201 and 2-111, Title 4, Subtitle 5, and Title 6, Subtitle 3, Annotated Code of Maryland Effective date: September 25, 1995 (22:19 Md. R. 1472) Regulation .03B amended effective May 19, 1997 (24:10 Md. R. 709); September 6, 1999 (26:18 Md. R. 1374) Regulation .05B, C amended effective May 19, 1997 (24:10 Md. R. 709) Regulation .06A amended effective May 19, 1997 (24:10 Md. R. 709) Regulation .08A amended effective May 19, 1997 (24:10 Md. R. 709) Regulation .10 amended effective May 19, 1997 (24:10 Md. R. 709) Chapter revised effective September 17, 2001 (28:18 Md. R. 1619) Chapter revised effective April 25, 2005 (32:8 Md. R. 741) Regulation .03B amended effective April 7, 2008 (35:7 Md. R. 747); January 20, 2014 (41:1 Md. R. 12) Regulation .06A amended effective January 20, 2014 (41:1 Md. R. 12) Regulation .07E amended effective April 19, 2010 (37:8 Md. R. 614) Regulation .08C, D amended effective April 7, 2008 (35:7 Md. R. 747) Regulation .09 repealed effective January 20, 2014 (41:1 Md. R. 12) Regulation .11A,B amended effective January 20, 2014 (41:1 Md. R. 12) Chapter revised effective December 22, 2014 (41:25 Md. R. 1477) Regulations .01—.19 repealed and new Regulations .01—.14 adopted effective October 7, 2019 (46:20 Md. R. 843) This chapter describes the policies and procedures for: 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. “Approved nonprofit organization” means a nonprofit organization that has been designated by a local jurisdiction to apply for Program funding on behalf of that local jurisdiction. “Business district” means a geographically specified area, located within a sustainable community of a local jurisdiction, in which the predominant activity carried on is the operation of trades and businesses. “County” means any of the 23 counties of this State, and the Mayor and City Council of Baltimore. “Department” means the Department of Housing and Community Development. “Designated jurisdiction” means a local jurisdiction that is, or that contains, an officially approved and recognized Main Street Maryland community. Repealed. “Director” means the Director of the Division. “Division” means the Division of Neighborhood Revitalization. “Local jurisdiction” means a county or municipality. “Main Street Maryland community” means a commercial area in a local jurisdiction designated by the Secretary as a Main Street Maryland community under the Main Street Maryland Program. “Main Street Maryland Program” means the program for local jurisdictions operated by the Department since 1998. “Maple Street community” means an area designated by the Secretary under Regulation .08 of this chapter. “Nonprofit organization” means a corporation, foundation, or other entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of any private shareholder or individual holding any interest in that entity. “Program” means the Main Street Improvement Program. “Secretary” means the Secretary of Housing and Community Development. “Sustainable community” means the part of a priority funding area that: Has been designated as a sustainable community in accordance with COMAR 05.17.02; Has been designated as a BRAC Revitalization and Incentive Zone under Economic Development Article, Title 5, Subtitle 13, Annotated Code of Maryland; or Has been designated as a transit-oriented development under Transportation Article, §7-101, Annotated Code of Maryland. 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: Have the legal capacity to enter into a grant agreement; Satisfy all legal requirements to operate in the State; Not have defaulted on any prior assistance from the Department; and Not be currently barred or suspended from any of the Department's programs. 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: Gateway, directional, or highway signage associated with a business district; Acquisition, development, or improvement of property associated with projects which will assist the development or revitalization of a business district; Facade improvement programs; Public improvements to business districts, such as: Sidewalk repair and replacement; Thoroughfare and public lighting; Street furniture; Landscaping; Trash cans; and Banners; Engineering and architectural design studies for: Key properties; Parking; and Market and business recruitment strategies which will improve a business district; Demolition of vacant and abandoned buildings; Promotional materials, such as: Advertising campaigns; Brochures; Banners; and Shopping bags; Other projects that have been identified in the applicant's work plans as key to its Main Street efforts; and Operating assistance for Main Street Maryland managing organizations. 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: Operating assistance for Maple Street managing organizations; Developing and implementing a mixed-income strategy for acquisition and rehabilitation of residential properties; Developing and implementing strategies for improving the physical appearance of the neighborhood; Attracting development to reuse vacant or underutilized properties for mixed-use and mixed-income purposes; Increasing community safety; Improving streetscapes; Increasing the number of parks and open spaces; Improving existing parks and open spaces; Improving public infrastructure that serves Maple Street communities; and Other projects that have been identified in the applicant's work plans as key to its Maple Street community efforts. 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. Grant funds shall be allocated in accordance with the criteria set forth in Regulation .07B of this chapter. Grant awards to eligible applicants shall take into consideration the need to fund a variety of projects, and to serve as many geographic areas of the State as possible. The Department may refuse to consider applications with incomplete information. The Department may make grant awards to particular projects and decline to make awards to otherwise eligible projects, based on the Department's assessment of the project's overall merit and its merit relative to competing applicants. The Department may fund projects at levels less than requested based on the: Number of applications; Merit of each project; and Amount of funding available. Application Solicitation. The Department shall solicit applications for grants under the Program, subject to the availability of Program funds. At the beginning of each fiscal year in which Program funds are available, the Department shall issue announcements of the availability of funds under the Program to active Main Street Maryland communities. If any Program funds remain unobligated at the end of the 6th month of a fiscal year, the Department shall issue announcements of the availability of any remaining funds under the Program to: Active Main Street Maryland communities; and Local jurisdictions or nonprofit organizations, or both, which are operating downtown revitalization projects in business districts with a significant number of historic commercial buildings. The announcements in §B(2) and (3) of this regulation shall consist of a description of the application process, total anticipated funding available for eligible grantees, and activities eligible for funding. Grant Awards. A single local jurisdiction may not be awarded more than 25 percent of the total Program funds for a fiscal year unless, at the end of the 8th month of a fiscal year, all of the Program funds have not been committed. Local jurisdictions may not receive more than two grants in a fiscal year. The maximum amount of any one grant may not exceed the amount indicated in §C(1) of this regulation. Local Contributions. A local contribution of cash from or on behalf of the local jurisdiction is required. The local contribution shall equal or exceed the grant amount. The local contribution may be derived from private funds or public funds other than State funds. The local contribution shall be used in the project funded by a grant under the Program. 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: Type of project; Cost of a project; Support for a project by a local jurisdiction, the property owners and businesses in a business district, and the community surrounding a business district; and Type and amount of the local contribution required under Regulation .06A of this chapter. The Department shall undertake a review of each application. The Department shall take the following factors into consideration in reviewing applications: Cost of a project; Relationship of a project to existing revitalization programs and plans in the local jurisdiction; Support of a local jurisdiction for a project; Support of the business district and the community surrounding a business district for a project; Time frame for completion of a project; Benefit of a project to the business district and the surrounding community; and Other factors which the Department considers relevant. 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: Be on a form approved by the Department, which may be in electronic or paper form; Be submitted by a date to be determined by the Department; and Contain the information and supporting documentation required by the Department. In evaluating applications for a Maple Street community designation, the Department will take into consideration the following factors: Demonstration that the residential revitalization strategy will build upon and reinforce the progress of the Main Street Maryland revitalization strategy; The relationship of the proposed Maple Street community boundary to the existing Main Street community; An adequate local budget of at least 3 years and evidence of continuous funding commitment from public and private organizations; Strength of the commitment from local government and private sector organizations to provide sustained support for a local Maple Street community program; Organizational and financial capacity of the applicant; Experience of the applicant to implement a residential revitalization strategy and the value of that strategy on the community; Population and housing stock of the community; Historic architectural resources of the community and evidence of a local historic preservation ethic and commitment to historic preservation; Willingness of sponsors to develop and implement a mixed-income housing strategy as evidenced by the strategies and goals outlined in the Maple Street framework provided in the application; and Presence of revitalization designations. Application Review. Applications will be reviewed by a selection committee approved by the Department for consistency with selection criteria. The selection committee will forward recommendations to the Secretary. The Secretary may approve, reject, or accept with modifications the selection committee's recommendations. 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 shall maintain such books, accounts, and records and shall file with the Department such financial and other reports as the Department may require. All of these books, accounts, and records shall be open to the inspection of the Department or other agencies of the State during reasonable working hours. 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: 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 Americans with Disabilities Act of 1990, as amended; The Fair Housing Amendments Act of 1988, as amended; The Department’s Minority Business Enterprise Program, as amended; The Governor’s 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; and State Government Article, Title 20, Annotated Code of Maryland, as amended. Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties. The Secretary may waive or vary the provisions of this chapter to the extent that the waiver or variance is consistent with the legal authorizations for the Program, 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 the Program. A person may not knowingly make or cause to be made any false statement or report in a document required to be furnished to the Department by any agreement relating to the Program. Housing and Community Development Article, §6-102, Annotated Code of Maryland Effective date: April 16, 1990 (17:7 Md. R. 847) Regulation .02B amended effective February 28, 1994 (21:4 Md. R. 273) Regulation .05C amended effective February 1, 1993 (20:2 Md. R. 112); February 28, 1994 (21:4 Md. R. 273) Regulation .08 amended effective February 28, 1994 (21:4 Md. R. 273) Regulation .08C and D amended effective February 1, 1993 (20:2 Md. R. 112) Regulation .08-1 adopted effective February 28, 1994 (21:4 Md. R. 273) Regulation .11B amended effective February 1, 1993 (20:2 Md. R. 112) Chapter recodified from COMAR 05.07.06 to COMAR 05.13.02 effective September 6, 1999 (26:18 Md. R. 1373) Regulation .02B amended effective September 6, 1999 (26:18 Md. R. 1373) Regulation .08 amended effective September 6, 1999 (26:18 Md. R. 1373) Regulation .09 amended effective September 6, 1999 (26:18 Md. R. 1373) Regulations .01—.13, Main Street Improvement Grant Program, repealed effective October 15, 2001 (28:20 Md. R. 1779) Regulations .01—.12, Main Street Improvement Program, adopted effective October 15, 2001 (28:20 Md. R. 1779) Chapter revised effective October 20, 2008 (35:21 Md. R. 1823) Regulation .02B amended effective January 20, 2014 (41:1 Md. R. 12) Regulation .11 amended effective March 16, 2015 (42:5 Md. R. 485) The purpose of the Maryland Town Manager Circuit Rider Grant Program is to provide grants to assist eligible municipal governments to build their management capabilities by supplying needed managerial expertise through circuit riding managers. In this chapter, the following terms have the meanings indicated. Terms Defined. “Circuit” means a group of two or more municipalities that agree to share the services of a circuit rider, or a municipality and a county that agree to share an individual who will provide circuit rider services to the municipality. “Circuit rider” means the individual or individuals who provide managerial services to a circuit. “Circuit sponsor” means a corporation, foundation, county, municipality or governmental entity of it, regional agency, or other legal entity no part of the net earnings of which inures to the benefit of any private shareholder or individual holding an interest in the entity. “County” means any of the 23 counties of this State. “Department” means the Department of Housing and Community Development, a principal department of the State. “Director” means the Director of the Division. “Division” means the Division of Neighborhood Revitalization, an organizational unit of the Department. “Existing circuit” means a circuit comprised of two or more municipalities that has received a grant under the Program within 2 years of the circuit's most recent application. “Municipality” means a municipal corporation in Maryland subject to the provisions of Article XI-E of the Maryland Constitution. “Program” means the Maryland Town Manager Circuit Rider Grant Program. “Proposed circuit” means a circuit applying for a grant under the Program for the first time or that has not received a grant within 2 years of the circuit's most recent application. “Regional agency” means a multicounty or multistate agency established for the purpose of supporting development of an area or areas, no part of the net earnings of which inures to the benefit of any private shareholder or individual holding an interest in the entity. “Secretary” means the Secretary of Housing and Community Development. Circuit sponsors are eligible grantees under the Program. The Department may provide grants under the Program to eligible grantees for the purpose of defraying the costs associated with: The managerial services of a circuit rider as described in the budget of an applicant that has been approved by the Department and these costs may include: Salary, Fringe benefits, Travel, Administrative costs of the circuit sponsor and the circuit rider, or Training; and Other services or needs of a circuit considered acceptable to the Department including expertise in the areas of code enforcement, community revitalization, planning, economic development, and grant management. 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: Be responsible for the administration of grant funds and the collection of the local contribution from each member of a circuit required by §E of this regulation; and Perform any other duties that may be required by an agreement evidencing the grant. 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. A circuit shall make a cash or in-kind contribution of a type acceptable to the Department. It is the preference of the Department that the local contribution be an amount at least equal to the amount of the grant. Each member of the circuit shall pay a share of the local contribution proportionate to the amount of the circuit rider's time allocated to that member. The local contribution shall be used to pay for costs associated with the managerial services and training of the circuit rider, or for other costs considered appropriate by the Department that are associated with the duties of the circuit rider. In evaluating the adequacy of a local contribution, the Department may examine the combined financial resources of the members of a circuit. In no event, however, shall the local contribution requirement be completely eliminated. Employment of Circuit Rider. Before entering into an employment agreement with a circuit rider, a circuit shall: Utilize the selection process set forth in its grant application that is approved by the Department; and Obtain the Department's approval of the proposed circuit rider. In granting approval of the proposed circuit rider, the Department shall consider with respect to: Proposed circuits, among other things, the qualifications of the circuit rider; or Existing circuits, among other things, the past performance of the circuit rider. The employment agreement between the circuit sponsor and the circuit rider shall provide, among other things, the services to be provided to each member of the circuit and that the circuit sponsor shall be responsible for hiring, terminating, and paying the 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. On or before May 1 of each calendar year, the Program shall notify the circuit sponsor of each existing circuit that the Department is accepting applications for the upcoming fiscal year. The notification may contain a deadline for submission of applications as well as the proposed amount of the grant. Proposed Circuits. The Department may consider letters of intent requesting assistance under the Program on behalf of a proposed circuit. The letter of intent shall be submitted by the prospective members of a circuit and shall contain the following information: Names of prospective municipalities that are willing to be circuit members; Tentative administrative arrangements; and Prospective circuit sponsor. Before approving or rejecting a proposed circuit, the Department, in its discretion, may provide the prospective members with technical assistance to develop an acceptable circuit and an acceptable circuit sponsor. If the circuit described in the letter of intent is approved by the Department, the circuit sponsor may submit an application for a grant on behalf of the circuit. The Director is authorized to certify the establishment of new 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: Number of applications received; Merit of each application; Demonstration of special managerial needs and limited financial resources; and Amount of funding available. 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: Manageable number of municipalities in a circuit; Reasonable distance between the members of a circuit; The amount of the prospective work load of a circuit; The ability of the circuit sponsor to provide administrative and other services to the circuit; The ability of a circuit to make the local contribution required under Regulation .06E(1) of this chapter; and Such other criteria the Department considers appropriate. 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. Except for powers reserved to the Secretary or the Secretary's designee under these regulations, actions or decisions to be taken or made by the Department with respect to the operation of the Program may be taken or made by the Director, or the Director's designee. Circuit sponsors shall maintain such books, accounts, and records, and shall file with the Department such financial reports, progress reports, 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 the Department or other agencies of the State during reasonable working hours. 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: 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 Americans with Disabilities Act of 1990, as amended; The Department’s Minority Business Enterprise Program, as amended; Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and Department or State regulations adopted or to be adopted to carry out the requirements of that Order; and State Government Article, Title 20, Annotated Code of Maryland, as amended. Covenants implementing these requirements, including affirmative action measures, shall be included in the grant agreement between the Department and other parties. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is consistent with the legal authorizations for the Program, 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 the Act; and The Secretary's determination is approved for form and legal sufficiency by the Office of the Attorney General. A person may not knowingly make or cause to be made any false statement or report in any document required to be furnished to the Department by any contract or agreement relating to the Program. Housing and Community Development Article, §§2-102 and 2-111, Annotated Code of Maryland Effective date: November 20, 1995 (22:23 Md. R. 1800) Chapter recodified from COMAR 05.07.08 to COMAR 05.13.03 effective September 6, 1999 (26:18 Md. R. 1373) Regulation .02 amended effective September 6, 1999 (26:18 Md. R. 1373) Regulation .04A amended effective August 20, 2001 (28:16 Md. R. 1481) Regulation .07 amended effective August 20, 2001 (28:16 Md. R. 1481) Regulation .10 amended effective March 16, 2015 (42:5 Md. R. 485) This chapter describes the policies, procedures, and authorizations for providing financial assistance to eligible small businesses from the Neighborhood Business Development Fund through the Capital Access Program, and for administering the Capital Access Program. 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: Stimulating the provision of private capital to small businesses; and Offering an incentive to each lender participating in the Program to make loans to borrowers that otherwise might not qualify for conventional loans, through a reserve account established for the exclusive benefit of that lender. 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. “Amount”, as used in this chapter in connection with a loan, means only the amount covered under a participation agreement, unless the context clearly requires otherwise. “Borrower” means the recipient of a loan that is, has been, or will be filed by the lender for enrollment under the Capital Access Program. “Business” means a commercial or industrial enterprise. “Claim” means a claim filed by the lender under Regulation .19 of this chapter. “Department” means the Department of Housing and Community Development, a principal department of the State. “Early loan” means an enrolled loan where, at the time of enrollment, the aggregate amount of previously enrolled loans made by the lender under the Capital Access Program was less than $2,000,000. “Eligible loan” means a loan made by the lender to a borrower that meets the requirements of Regulations .09, .10, and .11 of this chapter. “Enrolled loan” means a loan enrolled by the Department under the terms of Regulation .14 of this chapter. “Financial assistance” means any form of assurance, guarantee, or other credit enhancement offered with respect to a loan made and enrolled under the Program. “Fund” means the Neighborhood Business Development Fund under Housing and Community Development Article, Title 6, Subtitle 3, Annotated Code of Maryland. “Lender” means a federally insured financial institution as defined in Financial Institutions Article, §1-101(i), Annotated Code of Maryland, or other institution regulated by the Commissioner of Financial Regulation, that has entered into a participation agreement with the Department to participate in the Capital Access Program. Local Jurisdiction. “Local jurisdiction” means: A municipal corporation subject to the provisions of the State Constitution, Article XI-E, if a project is located entirely within the boundaries of the municipal corporation; or The Mayor and City Council of Baltimore and any of the 23 counties of this State within which a project is located. If part of a project is located within one local jurisdiction while the remainder of the project is located in a different local jurisdiction, then for that project, “local jurisdiction” includes each local jurisdiction within which any part of the project is located. “Mixed use” means a use that combines residential and business uses in the same building. “Participation agreement” means an agreement between a lender and the Department under which a lender may participate in the Program. Passive Real Estate Ownership. “Passive real estate ownership” means ownership of real estate for the purpose of deriving income from speculation, trade, or rentals. “Passive real estate ownership” does not include the following: Ownership of that part of real estate being used or intended to be used for the operation of the business of the owner of the real estate; or Ownership of real estate for the purpose of construction or renovation until the completion of the construction or renovation phase. “Priority funding area” means a priority funding area as stated in State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland. “Proceeds”, as used in this chapter in connection with a loan, means only the proceeds covered under a participation agreement, unless the context clearly requires otherwise. “Program” means the Capital Access Program. “Project” means a project or activity that qualifies for a loan made under the Program. “Reserve account” means an account established by the Department: With funds accumulated under this chapter; and To cover claims made by the lender under this chapter. “Secretary” means the Secretary of Housing and Community Development. “Small business” means a business that employs a number of employees, or has annual gross receipts, no greater than the limits set forth by the U.S. Small Business Administration. 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. Except upon the exercise of the Department's right of subrogation under this chapter, the Department has no legal or equitable interest in any collateral, security, or other right of recovery in connection with any loan enrolled in the Program, and the Department's consent is not necessary for any amendment to the lender's loan documents. Upon execution of a participation agreement between the Department and the lender, the Department shall establish a federally insured reserve account with the lender in the name of the Department, for the purpose of receiving all: 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: Direct obligations of the United States, the principal and interest of which are unconditionally guaranteed by the United States; or A deposit account at a depository institution whose deposits are insured by the Federal Deposit Insurance Corporation or National Credit Union Administration. 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 balance in the reserve account; Payments and transfers into the reserve account; Withdrawals from the reserve account; and Interest or income earned on the money credited to the reserve account. 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: Payments and transfers into the reserve account; Withdrawals from the reserve account; and Interest or income earned on the money credited to the reserve account. 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: The money in the reserve account is available to pay claims under Regulation .19 of this chapter; The lender has a first security interest in the money in the reserve account to pay the claims; and The Department will not encumber or pledge the money to any other party. 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: Be in good standing and qualified to do business in Maryland; Be a small business; Have the legal capacity and all necessary legal authority to incur the obligations involved in the form of financial assistance provided under the Program; and Not be a government entity, including without limitation a local housing authority. A borrower shall meet the following minimum requirements: The borrower shall be authorized to conduct business in the State as: A corporation, A limited liability company, A partnership, A joint venture, A sole proprietorship, A cooperative, or Another form of business entity; The borrower shall be a for-profit or nonprofit small business; and The borrower may not be: An executive officer, a director, or a principal shareholder of the lender, A member of the immediate family of a person described in §B(3)(a) of this regulation, or An entity controlled by a person described in §B(3)(a) or (b) of this regulation. The following types of loans are eligible loans under the Program: Loans for industrial or commercial purposes; Loans to refinance loans made for the purposes in §A(1) of this regulation; and Loans for line of credit agreements established between the lender and the borrower that are used for the purposes in §A(1) of this regulation. Eligible loans shall meet the following criteria: The lender has not made the loan to enroll in the Program a prior debt that is not covered under the Program and that is or was owed by the borrower to the lender; The proceeds of the loan will not be used for a project or development devoted to housing, except as provided under Regulation .11C of this chapter; The proceeds of the loan will not be used to finance passive real estate ownership; and The proceeds of the loan will not be used for any of the following businesses or uses: Adult bookstore, adult video shop, or other adult entertainment facility, Check-cashing facility, College or university, Community hall, Fire station, Gambling facility, Hospital, Liquor store, Massage parlor, Multi-family or single-family housing development including the development of rental properties other than mixed use projects permitted under COMAR 05.13.01.06A(10), Nursing home, Passive real estate ownership, Pawn or gun shop, Tanning salon, or Tattoo parlor. 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. In order to be eligible for a loan under the Program, a project shall satisfy the following requirements: 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 has no substantial reason to believe that the loan is being made to a borrower who does not meet the requirements of Regulation .09 of this chapter; The lender has received from the borrower a written representation, warranty, pledge, and waiver stating that the borrower has no legal, beneficial, or equitable interest in the nonrefundable premium charges or any other funds credited to the reserve account established to cover losses sustained by the lender on enrolled loans; The loan being filed for enrollment is an eligible loan under Regulations .10 and .11 of this chapter; and Premium charges required of the borrower and the lender under Regulation .16 of this chapter have been deposited in the reserve account. 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 date on which the lender first disburses proceeds of the loan to the borrower; or The date on which the loan documents have been executed and the lender has obligated itself to disburse proceeds of the loan. The filing date of a loan enrollment form is the date on which the lender does any of the following: Delivers the required documentation to the Department; Delivers the required documentation to a professional courier service for delivery to the Department; or Mails the required documentation to the Department by certified mail. 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 Department may not accept loans for enrollment in the Program if the Department does not have sufficient money to make the necessary transfer from the Fund to the reserve account described in Regulation .16 of this chapter. 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. The lender shall deposit into the reserve account the premium charges payable by the lender and the borrower in connection with a loan filed for enrollment. The premium paid by the borrower shall be not less than the minimum premium charge, and not more than the maximum premium charge, established by the Secretary under §A of this regulation. The lender may contribute any portion of the borrower's premium payment, and may recover the cost of this contribution from the borrower in any manner on which the lender and borrower agree. The premium paid by the lender shall be equal to the premium paid by the borrower, including any portion of the borrower's premium that may be contributed by the lender under §B(2) of this regulation. The lender may recover the cost of the lender's premium payment from the borrower in any manner on which the lender and borrower agree. 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. The minimum amount of an enrolled loan for which assurance may be provided under the Program to a project is $1,000. The maximum aggregate amount of enrolled loans for any one borrower, or any group of borrowers among which a common enterprise exists, is $1,000,000, unless, pursuant to a written request by a lender, the Secretary (or those authorized officers of the Department that the Secretary may designate in writing) approves a waiver of this maximum on the basis that: Other potential sources of funds have been sought and clearly are unavailable; It is not feasible to reduce or increase the size or scope of the project; and The project serves a high public purpose. 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. If the outstanding balance of an enrolled loan that is not a line of credit is reduced to $0, the loan is no longer an enrolled loan. If an enrolled loan that is a line of credit has an outstanding balance of $0 for a period of 12 months, the line of credit is no longer an enrolled loan, unless, before the expiration of the 12-month period, the lender reaffirms in writing to the borrower that the line of credit will remain open and the borrower acknowledges the reaffirmation in writing. 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: Provided information to the Department under this chapter that the lender knew to be false; or Is not otherwise in substantial compliance with this chapter or with the participation agreement with the Department. Result of Insufficient Money in Reserve Account. If there is insufficient money in the reserve account to cover the entire amount of the lender's claim, the Department shall pay to the lender, or authorize the lender to withdraw an amount equal to, the current balance in the reserve account. For the purposes of §B(1) of this regulation, the following shall apply: If the enrolled loan for which the claim has been filed is not an early loan, the payment fully satisfies the claim, and the lender has no right to receive any further amount from the reserve account with respect to that claim; or If the enrolled loan for which the claim has been filed is an early loan, the Department, upon request of the lender, shall, out of any future funds that are transferred into the reserve account on subsequently enrolled loans, pay the remaining balance of the claim, upon a finding that: The partial payment has not satisfied the lender's claim, and The remaining balance of the claim is not greater than 75 percent of the balance in the reserve account at the time the request for payment is received by the Department. 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, after payment of a claim by the Department, the lender recovers from a borrower any amount for which payment of the claim was made, the following apply: 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. On or before July 15 of each year, the lender shall file a year-end report with the Department indicating the number and aggregate outstanding balances of all enrolled loans for the period comprising the 12 months ending on June 30. On or before October 15, January 15, and April 15 of each year, the lender shall file a quarterly report with the Department indicating the number and aggregate outstanding balances of all enrolled loans for the period comprising the 3 preceding calendar months. A quarterly report is not required for a quarter that ends with a balance in the reserve account of $0, but a year-end report shall be filed before July 15 for the period comprising the 12 months ending on June 30. In the computation of the aggregate outstanding balance of all enrolled loans, the balance of a loan may not be greater than the covered amount of the loan as enrolled. 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: If a year-end report is filed by July 15 or not more than 30 days after that, the Department has the right of withdrawal for a period of 90 days from the date of the filing of the report with the Department; and If a year-end report is not filed within 30 days after the original due date, the Department has the right of withdrawal for a period of 90 days from the date the Department determines from an inspection of the lender's files (or, if the lender fails or refuses to make all or any part of its files available to the Department for inspection for this purpose, then from the date the Department determines from a review of the Department's own records) that the Department is entitled to make a withdrawal from the reserve account under this regulation. The Department may terminate the obligation to a lender to enroll loans under the Program if the Department determines that the lender is not in substantial compliance with the requirements of the Program or the requirements of this chapter. The termination takes effect on the date specified in the notice of termination, except that the termination does not apply to a loan made on or before the date on which the notice of termination is received by the lender. If the Department is terminating the enrollment of loans for all participating lenders under the Program, the Department shall provide at least 90 days notice to the lender. A termination under this regulation is prospective only and does not apply to a loan previously refinanced. After termination, the amount covered under the Program may not be increased beyond the covered amount as previously enrolled. 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: Titles VI and VII of the Civil Rights Act of 1964, as amended; Title VIII of the Civil Rights Acts of 1968, as amended; The Americans with Disabilities Act of 1990, as amended; The Fair Housing Amendments Act of 1988, as amended; The Department’s Minority Business Enterprise Program, as amended; The Governor’s Executive Order 01.01.1989.18, Drug and Alcohol Free Workplace, and Department or State regulations adopted or to be adopted to carry out the requirements of that Order; and State Government Article, Title 20, Annotated Code of Maryland, as amended. 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. If the reserve accounts are not maintained in an account with the lender, upon execution of a participation agreement the Department shall establish a reserve account at the Department for the lender for the purpose of receiving all required premium charges to be paid by the lender and the borrower and transfers made by the Department under this chapter. If the reserve accounts are maintained in an account with the lender, upon execution of a participation agreement the Department shall establish a reserve account with the lender in the name of the Department for the purpose of receiving all required premium charges to be paid by the lender and the borrower and transfers made by the Department under this chapter. 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. The Secretary may waive or vary provisions of this chapter: 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: Immediate cancellation or acceleration of the form of financial assistance provided by the Program; and Upon conviction of a misdemeanor is subject to a fine not exceeding $50,000, or imprisonment not exceeding 5 years, or both. Housing and Community Development Article, §§2-102 and 4-504, and Title 6, Subtitle 3, Annotated Code of Maryland Effective date: December 25, 2000 (27:25 Md. R. 2279) Regulation .03B amended effective June 19, 2006 (33:12 Md. R. 996) Regulation .11C amended effective June 19, 2006 (33:12 Md. R. 996) Regulation .12B amended effective June 19, 2006 (33:12 Md. R. 996) Regulation .17A amended effective June 19, 2006 (33:12 Md. R. 996) Regulation .25 amended effective March 16, 2015 (42:5 Md. R. 485) This chapter provides policies and procedures for the Department to certify and enroll loans from financial institutions to eligible minority business enterprises and small businesses under the Linked Deposit Program, established pursuant to the State Finance and Procurement Article, §§6-211 and 6-212, Annotated Code of Maryland. In this chapter, the following words have the meanings indicated. Terms Defined. “Certified minority business enterprise” means a minority business enterprise certified under State Finance and Procurement Article, Title 14, Subtitle 3, Annotated Code of Maryland. “Department” means the Department of Housing and Community Development. “Financial institution” has the meaning stated in State Finance and Procurement Article, §6-201, Annotated Code of Maryland. “Program” means the Linked Deposit Program established under State Finance and Procurement Article, §6-211, Annotated Code of Maryland. “Program loan” means a loan made under this chapter. “Secretary” means the Secretary of Housing and Community Development. “Small business” means a business that is qualified under State Finance and Procurement Article, Title 14, Subtitle 5, Annotated Code of Maryland. “Treasurer's Office” means the Office of the State Treasurer. A loan is eligible under the Program if the loan: Is made by a financial institution that is eligible to participate in the Program under Regulation .04B of this chapter; Meets the financial institution's lending criteria; Has a term not exceeding 10 years; Is made to a certified minority business enterprise or a small business that will use the proceeds for a project or activity primarily located in Maryland; Has an interest rate that is lower than the interest rate the financial institution would charge for a loan for a similar purpose and term by at least: 2 percentage points; or The difference between the financial institution’s rate on a 60-month certificate of deposit and the interest rate acceptable to the Treasurer’s Office for its deposits; Does not exceed $1,000,000 when added to any other loans the borrower received under the Program; Has points or fees charged by the financial institution at closing not exceeding 1 percent of the loan amount; and Complies with all terms and conditions of this chapter. The proceeds of a Program loan may not be used: For the furtherance of sectarian religious instruction; 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 purpose. 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: One or more participating financial institutions; or The Department, to be forwarded to all participating financial institutions. For an application submitted directly to a financial institution under §A(1) of this regulation, the following procedures apply: Before making a loan commitment to the applicant, the financial institution shall submit an application to the Department on forms prescribed by the Department; The Department may require that the application be submitted in electronic form; and After receipt of a completed application, the Department shall either: Confirm that the applicant is a certified minority business enterprise or a small business and notify the applicant and the financial institution in writing that the applicant meets the program requirement that it be a certified minority business enterprise or a small business; or Notify the applicant and the financial institution in writing that the application has been denied because the applicant is not a certified minority business enterprise or a small business. For an application submitted to the Department under §A(2) of this regulation, the following procedures apply: An applicant shall submit a completed application to the Department on forms prescribed by the Department; An applicant may submit the application in electronic form or written form; After the receipt of a completed application, the Department shall either: Confirm that the applicant is a certified minority business enterprise or a small business; or Notify the applicant in writing if its application has been denied because it is not a certified minority business enterprise or a small business; and If the Department confirms that the applicant is a certified minority business enterprise or a small business, the Department shall provide: All financial institutions eligible to participate in the Program with a copy of the completed application; and The applicant with a list of all financial institutions that received a copy of the application. If a financial institution decides to offer the applicant a loan, it shall: Provide the applicant and the Department with a commitment letter describing the terms and conditions of the loan, including the interest rate and fees charged by the financial institution; and Certify to the Department on forms approved by the Department that the loan will meet the requirements of Regulation .03 of this chapter. If a financial institution declines to offer the applicant a loan, it shall: Notify the applicant and Department in writing; and Comply with all State and federal requirements regarding the denial of a loan. 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. Within 10 business days of receipt of all forms and documentation from the financial institution, the Department shall determine if the loan closed in conformity with the criteria of Regulation .03 of this chapter. If the Department determines that a loan is eligible, it shall enroll the loan in the Program and notify the Treasurer's Office and the financial institution in writing of its decision. If the Department determines that a loan is not eligible, it shall notify the financial institution in writing stating the reason the loan is not eligible. An applicant or financial institution may request that the Department reconsider its decision in accordance with Regulation .07E of this chapter. Reconsideration. An applicant or a financial institution may request reconsideration of a Department decision that a loan is not eligible for the Program by submitting a written request to the Secretary or the Secretary's designee within 30 days following the date of the Department's written decision. The request for reconsideration shall address each reason for the decision and provide documentation supporting reasons for reconsideration of the issues. The Secretary shall respond in writing to the applicant's request for reconsideration within 30 days of receipt by the Secretary of the request for reconsideration. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02. The Secretary, in the Secretary's sole discretion, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications a request for reconsideration of a determination of ineligibility under the Program. 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: The Treasurer's Office shall reduce the amount of the certificate of deposit purchased from the financial institution under the Program by the amount of the outstanding principal balance of the specified Program loan; and If permitted by the loan documents, the financial institution may increase the interest rate of the Program loan by the lesser of: 2 percent; or The difference between the financial institution’s rate on a 60-month certificate of deposit and the interest rate acceptable to the Treasurer’s Office for its deposits, as determined as of the date that the loan closed. 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 requirements of this chapter are in addition to any other State, federal, and local laws or regulations that are applicable to the financial institution, and do not preempt or supersede any of those requirements. The Secretary may waive or vary provisions of this chapter: To the extent that the waiver or variance is consistent with State Finance and Procurement Article, §6-211, 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 State Finance and Procurement Article, §6-211, Annotated Code of Maryland. 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: The number of loans made under the Program; The dollar value of loans made under the Program; The performance of the loans made under the Program; The type of business that received loans; and Any other information requested by the Department related to the Program. Program Guidelines. The Department may establish from time to time Program guidelines containing procedures, required reports, forms, and other matters related to the Program. State Finance and Procurement Article, §§6-211 and 6-212, Annotated Code of Maryland Effective date: October 22, 2007 (34:21 Md. R. 1913) Regulation .01 amended effective September 1, 2014 (41:17 Md. R. 970) Regulation .02B amended effective September 1, 2014 (41:17 Md. R. 970) Regulation .03A amended effective September 1, 2014 (41:17 Md. R. 970) Regulation .04A amended effective September 1, 2014 (41:17 Md. R. 970) Regulation .05 repealed and new Regulation .05 adopted effective November 2, 2009 (36:22 Md. R. 1722) Regulation .05B, C amended effective September 1, 2014 (41:17 Md. R. 970) Regulation .08 amended effective September 1, 2014 (41:17 Md. R. 970) Regulation .08D adopted effective November 2, 2009 (36:22 Md. R. 1722) This chapter prescribes the policies, procedures, and authorizations for designating areas as food deserts and providing financial assistance to eligible small businesses and other food-related enterprises that provide fresh fruits, vegetables, and other healthy foods to residents in food deserts. In this chapter, the following words have the meanings indicated and as defined in the Act. Terms Defined. “Advisory Committee” means the Interagency Food Desert Advisory Committee established under Housing and Community Development Article, §6-308.2, Annotated Code of Maryland. “Business” means a commercial or industrial enterprise. “Department” means the Department of Housing and Community Development, a principal department of the State. “Financial assistance” means any form of grant, loan, assurance, guarantee, or other credit enhancement, reduction in the principal obligation of or in the rate of interest payable on a loan or portion of a loan, and prepayment of interest on a subordinate or superior loan or portion of a loan. “Financial assistance documents” means those documents executed by an approved applicant and the Department which set forth the terms and conditions of financial assistance under the Program. “Food desert” means that part of priority funding area designated by the Secretary under Regulation .05 of this chapter. “Food desert project” or “project” means a project or activity which qualifies for financial assistance under the Program. “Local jurisdiction” means: A municipal corporation subject to the provisions of the State Constitution, Article XI-E; or Any of the 23 counties of the State and the Mayor and City Council of Baltimore. “Nonprofit organization” means a corporation, foundation, or other entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of any private shareholder or individual holding any interest in the entity. “Program” means the Business Development Program, also known as the Neighborhood Business Works Program. “Secretary” means the Secretary of Housing and Community Development. “Small business” means a business that employs a number of employees, or has annual gross receipts, no greater than the limits set forth by the U.S. Small Business Administration. “State” means the State of Maryland. 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: A detailed map and description of the proposed food desert demonstrating the proposed areas within a priority funding area; Information and data on the: Availability of fresh fruit, vegetables, and other healthy foods in the area; Income levels of local residents; and Transportation needs of local residents and the availability of public transportation; Any comments the applicant has received from the local governments or community; and Any other information that the Department considers relevant. Application Evaluation. Each application shall be submitted to the Department to determine whether all of the information required under Regulation .03 of this chapter is contained in the application. Upon receipt of all required information, the Department shall: Convene the Advisory Committee to: Review applications; Provide assistance and guidance to applicants; and Make recommendations to the Secretary; Refer the application to other State agencies for comment, as the Department considers appropriate; Consider any recommendation from a State unit; and Analyze each application to determine whether the proposed food desert merits designation. The Advisory Committee or the Department may request additional information from the applicant concerning an application, including oral presentations. Upon completion of the requirements in §A(1)—(3) of this regulation, the Advisory Committee shall make a recommendation on the application to the Secretary after considering the: Availability of fresh fruit, vegetables, and other healthy foods in the area; Income levels of local residents; Transportation needs of local residents and the availability of public transportation; Comments from local governments and other State agencies; and Any other factors that the Advisory Committee considers relevant. 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 request initial reconsideration of a denial by submitting a written request to the Secretary. The request for reconsideration must be received within 30 days following the date of the denial notice. The request for reconsideration shall address each reason for the denial and provide documentation supporting reasons for reconsideration of the application. The Secretary shall respond in writing to the applicant’s request for reconsideration within 90 days of receipt of the request for reconsideration. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02. 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. In order to be eligible for financial assistance, a project shall satisfy the following requirements: 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: A mortgage or deed of trust lien; A cash escrow; A letter of credit; A pledge of depository accounts; A pledge of accounts receivable; An assignment of income; A security interest in machinery and equipment; or Any other form of security or collateral acceptable to the Department. The principal and interest of a loan made or guaranteed under the Program shall: Be repayable out of revenues specified by an approved applicant; Bear interest at a rate determined to be necessary and reasonable for the project which may be as low as zero percent; and Be repayable in accordance with a schedule determined by the Department and may be on a deferred payment schedule. In order to facilitate the successful completion or operation of a project, the Department may modify: The rate of interest; The time or amount of payment; or Any other term of a loan. 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. At or before closing of the financial assistance, and at such other times as required by the Department, the applicant shall provide evidence that the applicant, contractor, and other parties have obtained and maintained the following insurance: Owner’s liability; Owner’s property or hazard or contractor’s builder’s risk; Contractor’s liability; Business income; Architect’s errors and omissions; and Engineer’s errors and omissions. All insurance required under §G(1) of this regulation shall meet the following requirements: Be written by a company registered with the Maryland Insurance Administration, or a company approved by the Department in the event the property and company are located out of State; Be in force at the time of closing; Not be terminable without prior notification to the Department; and Contain such other terms and coverage satisfactory to the Department. In addition to the requirements of §G(2) of this regulation, owner’s liability and business income insurance shall: Name the Department as an additional insured; and Remain in force for the duration of the loan. In addition to the requirements of §G(2) of this regulation, contractor’s liability insurance shall: Name the Department as an additional insured; and Remain in place through final closing or such later date as the Department requires. In addition to the requirements of §G(2) of this regulation, owner’s property or hazard insurance and builder’s risk insurance shall: Name the Department as an additional insured, loss payee, and mortgagee; and Remain in force for the duration of the loan. Minimum Amount of Financial Assistance. The minimum amount of financial assistance from the Program to a project is $1,000. The maximum amount of financial assistance from the Program to a project may not exceed 50 percent of total project costs. 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: Contain the applicant’s organizational documents, including as applicable its articles of incorporation and bylaws, its articles of organization and operating agreement, its certificate of limited partnership and limited partnership agreement, or its partnership or joint venture agreement; Contain a description of the project; Contain proof of the dollar amount committed to the project from private and non-State public resources, and proof of any applications submitted to private and non-State public sources of financing for the project except that if the applicant is not applying to any private or non-State public resources, the Program may request additional information which would have been contained in those applications; Contain sufficient information to determine that the: Project is located in a food desert; Project is eligible in accordance with Regulation .07 of this chapter; and Terms and requirements of financial assistance as set forth in Regulation .08 of this chapter can be met; and Contain the following additional information: The number and types of jobs to be created or retained by the project; The amount, size, and types of commercial or industrial space to be created or retained; The cost of the project; A project budget identifying all sources and uses of project development funds; Except for projects seeking financial assistance for minor rehabilitation, a pro forma showing anticipated project revenue, expenses, and debt service and other indebtedness of the project; Identification of the revenues which can be used to repay the financial assistance provided by the Program; and Other and further information as the Program may request. Application Evaluation. Each application submitted shall be reviewed by the Program to determine whether all of the information required under §B of this regulation is contained in the application. Upon submission of all required information, the Program shall undertake an analysis of each application and make a recommendation to the Secretary, as to whether, in accordance with this section, a project is eligible for financial assistance, the amount of financial assistance, and any special terms and conditions for a project. The Program may take the information set forth in an application and the following factors into consideration in recommending an award of financial assistance: The ratio, as permitted under Regulation .07E of this chapter, of Program and other State funds to both private and other non-State public funds; The relationship of a project to area revitalization plans, efforts, and strategies; The capability of an applicant to administer a project; The potential of the business to serve the needs of the food desert in which it is situated; A plan to seek out sources of Maryland-grown produce and Maryland-produced foods; A strategy to encourage hiring local residents; and Other factors which the Program determines are desirable in fostering commercial and economic revitalization within each local jurisdiction in which the project is located. Approval of Applications. If the Program determines to recommend approval of a project for financial assistance, the Program shall present the project to the Secretary. The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications financial assistance provided under the Program. 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. An applicant may request reconsideration of a rejection by submitting a written request, to the Secretary, which is received within 30 days following the date of the rejection notice. The request for reconsideration shall address each reason for the rejection and provide documentation supporting reasons for reconsideration of the issues. The Secretary shall respond in writing to the applicant’s request for reconsideration within 30 days of receipt by the Secretary of the request for reconsideration. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02. The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications a request for reconsideration of a rejection under the Program. 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. 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 Department may charge fees related to the processing of an application for financial assistance and servicing of financial assistance. 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: Provide evidence satisfactory to the Department supporting the entity’s demonstrated ability to: Manage a performing portfolio of business loans for a minimum period of 5 years; Evaluate loan applications, underwrite loans, and administer a loan program; Leverage Program proceeds with other private or public sources of funding; Comply with Program statutes, regulations, guidelines, and policies; Provide adequate resources and staff to implement the Program, including staff trained to efficiently: Process loan applications, draw schedules, and other loan documentation; Evaluate loan portfolio performance; and Monitor the work performed with the loan proceeds; Provide substantive technical assistance to borrowers; Obtain coverage by a fidelity bond or employee dishonesty liability insurance in an amount to be determined by the Department; and Be duly organized and in good standing in the State of Maryland; and Provide audited financial statements for a period of 3 years that demonstrates the entity’s ability to maintain consistent: Revenues; Operating reserves; Net assets; Unrestricted assets; and Portfolio delinquency rates. 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. An approved entity shall: Maintain financial records of loan disbursements for at least 5 years, and shall make them available for review by the Department at all reasonable times; and Provide the Department with periodic reporting on: Loan disbursements; and Other information required by the Department. Upon notice to an approved entity, and during normal business hours, the Department may inspect the files of an approved entity relating to any loans originated under the Program. To fund loans under this regulation the Department may: Directly fund a loan that is originated by an approved entity; or Provide financial assistance to an approved entity for the purpose of the approved entity making a loan for a food desert project. 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. 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: Titles VI and VII of the Civil Rights Act of 1964, as amended; Title VIII of the Civil Rights Acts of 1968, as amended; The Fair Housing Amendments Act of 1988, as amended; The Department’s Minority Business Enterprise Program, as amended; The Governor’s Executive Order 01.01.1989.18 on Drug and Alcohol Free Workplaces, and any Department or State regulations adopted or to be adopted to carry out the requirements of that Order; State Government Article, Title 20, Annotated Code of Maryland, as amended; and The Americans with Disabilities Act of 1990, as amended. Covenants implementing these requirements, including affirmative action measures, shall be included in appropriate agreements between the Department and other parties. The Secretary may waive or vary provisions of these regulations to the extent that the waiver or variance is consistent with the Act 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 the Act. 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: Subject to immediate cancellation or acceleration of the form of financial assistance provided by the Program; and Guilty of a misdemeanor and upon conviction is subject to a fine not exceeding $50,000, imprisonment not exceeding 5 years, or both. Housing and Community Development Article, §6-308(a)(2), Annotated Code of Maryland Effective date: May 11, 2015 (42:9 Md. R. 646) This chapter prescribes the policies, procedures, and authorizations for providing financial assistance to eligible business projects from the Community Development Administration, an agency in the Division of Development Finance of the Department of Housing and Community Development. In this chapter, the following terms have the meanings indicated and as defined in the Act. Terms Defined. “Act” means Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland. “Administration” means the Community Development Administration, an agency in the Division of Development Finance of the Department of Housing and Community Development. “Borrower” means a recipient of any type of financial assistance from the Administration under this chapter. “Business project” means a project that is located in a priority funding area or an eligible opportunity zone and: Is acquired, owned, developed, constructed, reconstructed, rehabilitated, or improved by a person or an entity for the purposes of carrying on a business, whether or not for profit; or Is eligible for funding from the Neighborhood Business Development Fund under Housing and Community Development Article, §6-310, Annotated Code of Maryland. “Department” means the Department of Housing and Community Development, a principal department of the State. Development Costs. “Development costs” means the costs incurred in acquiring, developing, operating, and expanding a business that the Department considers reasonable and necessary for the project. “Development costs” includes the costs for: Acquisition of land, equipment, and machinery; Operating costs; Necessary studies, surveys, plans, and specifications; Architectural, engineering, or special services; Site preparation and development; Labor and materials for construction; Fees and closing costs incurred in connection with financing the project; Indemnity and surety bonds; Premiums on insurance; and Other costs the Administration deems reasonable and necessary. “Eligible opportunity zone” means an area designated as a qualified opportunity zone under §1400 Z-1 of the Internal Revenue Code that is located in Allegany County, Garrett County, Somerset County, or Wicomico County. Financial Assistance. “Financial assistance” means any form of assurance, guarantee, grant, payment, loan, loan participation, loan insurance, credit enhancement, or other assistance. “Financial assistance” includes a reduction in the principal obligation of, or in the rate of interest payable on, a loan or portion of a loan. “Nonprofit organization” means a corporation, foundation, or other entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of any private shareholder or individual holding any interest in the entity. “Priority funding area” means an area designated as a priority funding area under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland. “Program” means the business lending program within the Administration. “Project” means a business project. “Secretary” means the Secretary of Housing and Community Development of Maryland. To qualify as an eligible recipient of financial assistance, an applicant shall: 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. To be eligible for financial assistance, business projects shall be: 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: Owner's liability; Owner's property or hazard or contractor's builder's risk; Contractor's liability; Architect's errors and omissions; and Engineer's errors and omissions. All insurance required under this regulation shall meet the following requirements: Be written by a company registered with the Maryland Insurance Administration; Name the Administration as an additional insured; Be in force at the time of closing; Not be terminable without prior notification to the Administration; Be in force for the duration of the financial assistance; and Contain such other terms and coverage satisfactory to the Administration. 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: A loan agreement; An agreement and declaration of covenants and restrictions; A disbursement agreement; A guaranty of completion or loan payments; A completion assurance agreement; An assignment of the construction contract; An opinion of borrower's counsel; An opinion of contractor's counsel; A contractor's letter and certification; An assurance of compliance with civil rights requirements; A fair practices certification; and Such other documents as the Administration may find it desirable or necessary to require. 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: A cash escrow; A letter of credit in an amount and form and from a financial institution acceptable to the Administration; Depository accounts pledged to the Administration; Performance and payment bonds from a surety acceptable to the Administration; A completion assurance agreement executed by the borrower and backed by some form of monetary collateral; A guaranty of completion or loan payments, or both, executed by a third party who is financially able and willing to back the guarantee by some collateral acceptable to the Administration; A pledge of the developer's fee; or Other collateral acceptable to the Administration. Credit Enhancement. After consideration of underwriting and the requirements of any bond issuance, the Administration shall determine and notify the borrower whether the borrower will be required to insure or guarantee the proposed loan, or otherwise insure or enhance the bonds financing the loan. If required by the Administration, the borrower shall engage a credit enhancer and secure a commitment to insure or guarantee the proposed loan, or otherwise insure or enhance any bonds financing the loan. The borrower shall comply with any conditions of the insurance or guarantee commitment so that the insurance or guarantee will be in effect from the time of loan closing, with respect to loan insurance, or from the time of the issuance of the bonds, with respect to bond insurance. Disclosure. All directors, officers, principals, members, general partners, and limited partners of the borrower shall be identified, and the proportionate share of each in the proposed project so indicated in the application. Subsequent changes in either a general partner, a limited partner having more than a 25 percent interest in the borrower, a managing member, or member owning more than a 20 percent interest in the borrower shall be subject to the written approval of the Administration. The borrower is responsible for providing any disclosure required by the Administration or any credit enhancer relating to the project, the borrower, the syndication, and the construction team. 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: Be submitted by an eligible applicant as described in Regulation .03 of this chapter; Contain the applicant's organizational documents, including, as applicable, its articles of incorporation, bylaws, articles of organization, operating agreement, certificate of partnership, partnership agreement, or joint venture agreement; Contain a description of the project; Contain a description of all sources of funding the applicant has obtained for the project; Contain sufficient information to determine that the: Project is located in a priority funding area; Project is eligible in accordance with Regulation .04 of this chapter; and Terms and requirements of financial assistance as set forth in Regulation .05 of this chapter can be met; and Contain the following additional information: The estimated number and types of jobs to be created or retained by the project; The amount, size, and types of space to be created or retained; The cost of the project; A project budget identifying all sources and uses of funds; A pro forma showing anticipated project revenue, expenses, and debt service and other indebtedness of the project; Identification of the revenues which can be used to repay the financial assistance provided by the Administration; and Other information as the Administration may request. Application Evaluation. Each application submitted shall be reviewed by the Administration to determine whether all of the information required is contained in the application. Upon submission of all required information, the Administration shall undertake an analysis of each application and make a recommendation to the Secretary as to whether, in accordance with this section, a project is eligible for financial assistance, the amount of financial assistance, and any special terms and conditions for a project. The Administration may take the information set forth in an application and the following factors into consideration in recommending an award of financial assistance: The ratio of Program and other State funds to both private and other non-State public funds; The relationship of a project to area revitalization plans, efforts, and strategies; The capability of an applicant to administer a project; The potential of the business to serve the needs of the priority funding area in which it is situated; and Other factors which the Administration determines are desirable in fostering commercial and economic revitalization within a local jurisdiction. Approval of Applications. The Administration shall evaluate each application for financial assistance. If the Administration recommends approval of a project for financial assistance, the Administration shall present the project to the Secretary. The Secretary shall approve, disapprove, or approve with modifications all financial assistance to be provided under the Program. The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department and Administration the authority to recommend approval, approve, disapprove, or approve with modifications financial assistance provided under the Program. 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. An applicant may request reconsideration of a rejection by submitting a written request, to the Secretary, which is received within 30 days following the date of the rejection notice. The request for reconsideration shall address each reason for the rejection and provide documentation supporting reasons for reconsideration of the issues. The Secretary shall respond in writing to the applicant's request for reconsideration within 30 days of receipt by the Secretary of the request for reconsideration. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02. The Secretary, in the sole discretion of the Secretary, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications a request for reconsideration of a rejection under the Program. 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: Origination, application, and processing fees; and Any other charges, fees, or reimbursements incidental to a project application or providing financial assistance. 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: Sell, assign, or otherwise dispose of all or a portion of any Program loan or revenue from a loan on terms and conditions acceptable to the Administration; and Pledge a program loan as security for any: Business project loan, bond, or security that is issued, made, or purchased by Administration under Housing and Community Development Article, Title 4, Subtitle 2, Annotated Code of Maryland; or Insurance, guaranty, or credit enhancement on a program loan or bond issued to fund a program loan. 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: Title 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; 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; State Government Article, Title 20, Annotated Code of Maryland, as amended; and The Americans with Disabilities Act of 1990, as amended. Covenants implementing the requirements of this regulation, including affirmative action measures, shall be included in appropriate agreements between the Administration and other parties. The Secretary may waive or vary provisions of these regulations to the extent that the waiver or variance is consistent with the Act 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 the Act. An applicant or recipient of financial assistance who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, shall be subject to immediate acceleration of the loan, in addition to the criminal penalties authorized by the Act. Housing and Community Development Article, §§2-111 and 3-206 and Title 4, Subtitle 2, Annotated Code of Maryland Effective date: July 16, 2020 (47:14 Md. R. 674)