# COMAR Title 05 — Department of Housing and Community Development

## Subtitle 17 — Community Legacy

### Chapter 01 — Community Legacy Program

**Authority:** Housing and Community Development Article, Title 6, Subtitle 2, Annotated Code of Maryland;Ch. 567, Acts of 2001

**Administrative History:** Effective date: October 29, 2001 (28:21 Md. R. 1853)

**Administrative History:** Chapter revised effective December 11, 2003 (30:24 Md. R. 1739)

**Administrative History:** Chapter revised effective January 17, 2005 (32:1 Md. R. 26)

**Administrative History:** Regulation .02B amended effective March 22, 2010 (37:6 Md. R. 476)

**Administrative History:** Regulation .03A amended effective March 22, 2010 (37:6 Md. R. 476)

**Administrative History:** Regulation .04C amended effective March 22, 2010 (37:6 Md. R. 476)

**Administrative History:** Regulation .05E, F amended effective March 22, 2010 (37:6 Md. R. 476)

**Administrative History:** Regulation .06B, C amended effective March 22, 2010 (37:6 Md. R. 476)

**Administrative History:** Regulation .07C amended effective March 22, 2010 (37:6 Md. R. 476)

**Administrative History:** Regulation .08 amended effective March 22, 2010 (37:6 Md. R. 476)

**Administrative History:** Regulation .13 adopted effective March 22, 2010 (37:6 Md. R. 476)

**Administrative History:** Regulations .01—.13 repealed and new Regulations .01—.13 adopted effective February 20, 2012 (39:3 Md. R. 258)

**Administrative History:** Regulation .05A amended effective January 20, 2014 (41:1 Md. R. 12)

**Administrative History:** Regulation .10 amended effective March 16, 2015 (42:5 Md. R. 485)

#### Regulation .01 Purpose.

*COMAR 05.17.01.01*

The purpose of this chapter is to prescribe the policies and procedures for providing financial assistance for community legacy projects, and for administering the Community Legacy Program.

#### Regulation .02 Definitions.

*COMAR 05.17.01.02*

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

B. Terms Defined.

  (1) “Act” means Housing and Community Development Article, Title 6, Subtitle 2, Annotated Code of Maryland.

  (2) “Application” means an application to the Department as described in Regulation .05 of this chapter.

  (3) “Community development financial institution (CDFI)” means a certified community development financial institution as defined under 12 U.S.C. §4702, as amended.

  (4) “Community development organization (CDO)” means a nonprofit organization that operates for the purpose of improving the physical, economic, or social environment of its geographic areas of operation.

  (5) “Community legacy agreement” means an agreement between the Department and a Sponsor to implement one or more community legacy projects in a designated Sustainable Community.

  (6) “Community legacy project” or “project” means a project submitted by a Sponsor to the Secretary for approval in accordance with the Act and this chapter for one or more of the following purposes:

    (a) Create, improve, or preserve housing opportunities, including the acquisition, construction, rehabilitation, or improvement of new or existing homeownership or rental properties;

    (b) Strategically demolish buildings or improvements that are dangerous for use or occupancy, or so deteriorated that rehabilitation is not feasible, to prepare the property for redevelopment or sale;

    (c) Create, improve, or preserve mixed use or commercial development, including any appropriate combination of properties related to business, housing, open space, and institutional uses;

    (d) Develop public infrastructure supporting the implementation of other revitalized projects, such as streets, parking, public utilities, landscaping, lighting, and improvements to pedestrian and bicycle circulation;

    (e) Encourage and develop cooperative ownership and control of open space;

    (f) Develop or create strategies targeted at increasing investment in existing communities, including outreach activities designed to attract business, capital, residents, and visitors, and the development and maintenance of resources directly related to the implementation of a community legacy project;

    (g) Acquire or improve vacant buildings or unimproved land, including the practice of land banking;

    (h) Provide financial assistance for a neighborhood intervention project; or

    (i) Develop or implement any other community legacy project that the Department considers necessary to further the purposes of the Act.

  (7) “Department” means the Department of Housing and Community Development, a principal department of the State.

  (8) “Financial assistance” means a grant, loan, assurance, guarantee, other credit enhancement, reduction in the principal obligation of or in the rate of interest payable on a loan or portion of a loan, or prepayment of interest on a subordinate or superior loan or portion of a loan.

  (9) “Fund” means the Community Legacy Financial Assistance Fund established under Housing and Community Development Article, §6-213, Annotated Code of Maryland.

  (10) “Land banking” means the acquisition and holding of improved or unimproved property in anticipation of future development of the property, or to ensure that the future use of the property and improvements remains affordable.

  (11) “Local government” means any of the 23 counties of the State, the City of Baltimore, a municipal corporation of the State subject to the provisions of the State Constitution, Article XI-E, or any of their duly authorized agencies or instrumentalities.

  (12) “Mixed use” means a use that combines commercial, business, institutional, open space, and residential uses, or some combination of those uses, in the same building or on the same site.

  (13) “Neighborhood intervention project” means a project sponsored by a local government or a CDFI that is for the purpose of:

    (a) Buying properties that need rehabilitation and redeveloping the properties through rehabilitation, demolition, reconstruction, or reuse; or

    (b) Demolishing property improvements and preparing properties for revitalization, redevelopment, or reuse.

  (14) “Nonprofit organization” means a corporation, foundation, or other legal entity that specifies in its charter or bylaws that no part of the net earnings may inure to the benefit of a private shareholder or individual holding any interest in the entity.

  (15) “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.

  (16) “Program” means the Community Legacy Program established under the provisions of the Act.

  (17) “Secretary” means the Secretary of Housing and Community Development.

  (18) “Sponsor” means a local government, a group of local governments, a CDO, or a CDFI.

  (19) “Subcabinet” means the smart growth subcabinet established under Chapter .02 of the Act.

  (20) “Sustainable community” means the part of a priority funding area that has been designated a sustainable community in accordance with Chapter .02 of the Act.

  (21) “Sustainable community plan” means a plan consisting of one or more community legacy projects or other revitalization projects that are located in a sustainable community.

#### Regulation .03 Minimum Eligibility Requirements.

*COMAR 05.17.01.03*

A. A Sponsor, or a Sponsor's designated third party, shall meet the following minimum requirements:

  (1) Be a local government, a group of local governments, a CDO, or a CDFI, except as provided in Regulation .05(C)(2) of this chapter with respect to Neighborhood Intervention Projects;

  (2) Not have defaulted on any prior financial assistance from the Department;

  (3) Not be currently barred or suspended from any of the Department's programs;

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

  (5) In the case of CDOs or other business entities, be in good standing and qualified to do business in Maryland; and

  (6) In the case of CDFIs, be certified in compliance with 12 U.S.C. §4702.

B. Any recipient of financial assistance from a Sponsor as permitted under Regulation .04C of this chapter shall satisfy the minimum requirements of §A(2)—(5) of this regulation.

#### Regulation .04 Eligible Uses of Financial Assistance.

*COMAR 05.17.01.04*

A. Except as limited by §B of this regulation, financial assistance may be used for any costs and expenses related to the development or implementation of a community legacy project as approved by the Secretary.

B. Total noncapital expenditures from the Fund to Sponsors may not exceed 15 percent of total annual Program funds.

C. A Sponsor may grant or lend all or a portion of the financial assistance the Sponsor receives from the Program to a designated third party to carry out the Project in accordance with the terms and conditions of the financial assistance awarded to the Sponsor. The Sponsor shall provide evidence to the Department that a designated third party complies with the minimum eligibility requirements of Regulation .03 of this chapter.

D. Financial assistance from the Program may be used in conjunction with financial assistance from other divisions or programs of the State or the Department.

#### Regulation .05 Application Requirements.

*COMAR 05.17.01.05*

A. An application submitted to the Department shall:

  (1) Be on standard forms prescribed by the Department;

  (2) Be submitted by a Sponsor;

  (3) Be for a project that:

    (a) Is located within a sustainable community; and

    (b) Is part of and serves to implement a sustainable community plan;

  (4) Describe the proposed project in detail;

  (5) State the amount and type of financial assistance requested;

  (6) Specify the ability of a Sponsor to carry out the proposed project, as well as the strength and quality of partnerships created among federal, State, and local governments, community development organizations, or other private organizations for implementing the project, including:

    (a) Financial support;

    (b) Dedication of staff and resources; and

    (c) The local government's commitment to and development of local smart growth policies;

  (7) Propose benchmarks for evaluating whether the proposed project results in a desired outcome such as community stabilization or reversing the social, economic, and physical decline of the sustainable community in which the project is located;

  (8) Describe the process used to solicit and receive public input on the proposed project, including the nature and extent of the public support for or in opposition to the proposed project;

  (9) Demonstrate that the project can be completed within the time period of the grant award agreement, as determined by the Department;

  (10) Include a budget, in a form acceptable to the Department, that at a minimum shows anticipated project costs and expenses, anticipated sources of project revenue, and identification of the revenues that can be used to repay the financial assistance provided by the Program if provided as a loan;

  (11) For projects that include the ownership, acquisition, demolition, construction, or rehabilitation of land or improvements:

    (a) Demonstrate that, 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 government in which jurisdiction the project is located; and

    (b) Demonstrate site control through ownership, leasehold interest, contract, option, or other written agreement satisfactory to the Department that evidences the legal right of the Sponsor or its approved designated third party to acquire, occupy, or demolish the property in furtherance of the project;

  (12) Provide a projected timeline for implementation of the project;

  (13) Contain written approval for the proposed project from the local government in whose jurisdiction the project is located, as follows:

    (a) Either:

      (i) A resolution of support for the proposed project from the local government in whose jurisdiction the project is located; or

      (ii) A letter of support for the proposed project delivered to the Department by the authorized designee of the local government in whose jurisdiction the project is located;

    (b) If the project affects a sustainable community located entirely within a municipal corporation, the resolution or the authorized designee’s letter of support shall come from the municipal corporation rather than the surrounding county; and

    (c) If the project affects a sustainable community located within the territory of more than one local government, the Sponsor shall obtain a resolution or a letter of support from the authorized designee from each local government in which the community legacy project is located or will be operated; and

  (14) Include other information or documentation the Department may require.

B. An application for financial assistance may be submitted for the following purposes:

  (1) To fund one or more community legacy projects; or

  (2) To fund a neighborhood intervention project.

C. In addition to the requirements of §A of this regulation, an application for financial assistance for one or more neighborhood intervention projects shall satisfy the following requirements:

  (1) Unless waived under Regulation .06C(4) of this chapter, provide evidence that the neighborhood in which the project is located is in a sustainable community and is part of a sustainable community plan;

  (2) The Sponsor shall be either a local government or a CDFI. If the Sponsor is a CDFI, it shall:

    (a) Certify that the financial assistance will be made to individuals or businesses that are owner-occupants, CDOs, or local governments; and

    (b) Certify that it will use the financial assistance, and any repayments and prepayments, primarily to make loans for the purposes set forth in this chapter;

  (3) Unless waived under Regulation .06C(3) of this chapter, for a neighborhood intervention project involving demolition, the Sponsor shall agree to repay the financial assistance to the fund, up to the amount received by the Sponsor from:

    (a) The net proceeds of the sale of the property on which the demolition took place; or

    (b) Any payment to the Sponsor relating to the property, including any payment for the cost incurred in demolishing the improvements on the property;

  (4) Provide information that the property will be revitalized, redeveloped, sold, or reused as part of a Board-approved redevelopment strategy or plan;

  (5) Provide evidence that the Sponsor has complied with the requirements of State Finance and Procurement Article, §§5A-325—5A-326, Annotated Code of Maryland, and Financial Institutions Article, §13-1112(b), Annotated Code of Maryland;

  (6) Provide evidence that the financial assistance from the program is the least amount necessary to complete the project; and

  (7) Include other information or assurances as requested by the Department.

D. A Sponsor may file one or more applications in accordance with schedules established by the Department.

#### Regulation .06 Application Processing.

*COMAR 05.17.01.06*

A. Application Evaluation.

  (1) Each application shall be submitted to the Department to determine whether all of the information required under Regulation .05 of this chapter is contained in the application.

  (2) Upon receipt of all required information, the Department shall:

    (a) Accept public input on the application;

    (b) Undertake an analysis of each application as to the following considerations:

      (i) Whether the financial assistance for the proposed project should be approved;

      (ii) The amount and type of financial assistance the Sponsor should receive for the proposed project;

      (iii) Any special terms and conditions which should be imposed on the project;

      (iv) What other Department or State programs or resources could be used in conjunction with the financial assistance from the Program;

      (v) The geographical balance of the application in relation to other applications previously received or approved by the Department;

      (vi) The likelihood of repayment of the financial assistance provided; and

      (vii) Other matters that the Department considers relevant; and

    (c) Refer the application to members of the subcabinet and other State agencies, as the Department considers appropriate, to undertake the analysis in §A(2)(c) of this regulation.

  (3) The Department, in its discretion, may request from the Sponsor additional information concerning an application, including oral presentations.

  (4) Upon completion of the requirements in §A(1)—(3) of this regulation, the Department shall make a recommendation on the application to the Secretary.

B. Approval of Applications.

  (1) Upon receipt of the Department's recommendation, the Secretary:

    (a) May request additional information from the Sponsor concerning the application, including oral presentations; and

    (b) Shall act on the application by approving, disapproving, or approving such application with modifications.

  (2) In approving applications and awarding financial assistance, the Department shall give priority to applications that provide for the likely repayment of the financial assistance to a CDFI or to the Fund.

  (3) The Secretary shall award financial assistance to a Sponsor, or a third party designated by a Sponsor and approved by the Department, in an amount and type determined by the Secretary, and under the terms and conditions of a community legacy agreement and such other documents as the Department considers necessary to evidence the financial assistance and to secure any security interest taken by the State with respect to a project.

C. Neighborhood Intervention Projects.

  (1) The Secretary may not:

    (a) Allocate annually more than 15 percent of the Fund to neighborhood intervention projects; or

    (b) Award more than $500,000 in financial assistance for any one neighborhood intervention project.

  (2) The restrictions in §C(1) of this regulation do not apply to projects approved by the Secretary under Regulation .13 of this chapter.

  (3) The Secretary, acting under §B of this regulation or Regulation .13 of this chapter, may waive, in whole or in part, the requirements of Regulation .05C(3)(a) or (b) of this chapter regarding the repayment of financial assistance in connection with a neighborhood intervention project involving demolition.

  (4) The Secretary, acting under §B of this regulation or Regulation .13 of this chapter, may waive, in whole or in part, the requirements of Regulation .05C(1) of this chapter that the project be located in a sustainable community and be part of a sustainable community plan.

D. Denial of Applications. If the Secretary determines not to approve all or part of an application, the Department shall issue a written notice of denial.

E. Reconsideration.

  (1) An applicant may request initial reconsideration of a denial by submitting a written request to the Department, which must be received by the Department 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 Department shall respond in writing to the applicant's request for reconsideration within 90 days of receipt by the Department of the request for reconsideration.

  (2) 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.

#### Regulation .07 Program Administration.

*COMAR 05.17.01.07*

A. The Department may establish from time to time detailed Program guidelines containing application schedules, procedures, underwriting standards, processing requirements, and other requirements or matters relating to the Program.

B. The Department.

  (1) After financial assistance has been awarded to a Sponsor, the Department may:

    (a) Determine specific terms and conditions, including length of term and rate of interest, for the financial assistance, which may be awarded as grants, recoverable grants, unsecured loans, or loans secured by a mortgage or other lien or security interest, which security interest may be superior or subordinate to other mortgages, liens, or other security interests on the collateral;

    (b) Enforce the terms of grants, loans, or other financial assistance according to their terms and conditions;

    (c) Notwithstanding any other provision of law, with respect to loans or grants secured by first or subordinate mortgages or other liens:

      (i) Commence and pursue any action to protect or enforce any right conferred by law, contract, or other agreement;

      (ii) Foreclose on property that the Department has a security interest in, and which is the subject of a community legacy agreement;

      (iii) Bid for and purchase such property at any foreclosure or at any other sale, or acquire or take possession of the property through conveyance in lieu of foreclosure or otherwise, and convey property after acquisition;

      (iv) Settle or compromise any debt or obligation to the Department;

      (v) Pay the principal of and interest on any obligations incurred in connection with the property, and dispose of or otherwise deal with the property, in any manner necessary or desirable to protect the interest of the Program; or

      (vi) Release or sell any mortgage, obligation, or property held by the Department at public or private sale, with or without public bidding;

    (d) Require and obtain appraisals, credit information, and other information related to making loans and enforcing the terms and conditions;

    (e) Enter into contracts with any governmental or private party for the furnishing of property or services necessary to the operation of the Program or the implementation of community legacy projects, including private property managers, mortgage servicers, architects, engineers, or other consultants;

    (f) Enter into agreements with other government agencies, including local, State, or federal agencies, for the purpose of establishing partnerships to carry out the Program;

    (g) Modify any provision of any grant, loan, or other financial assistance in order to facilitate the successful completion or operation of a project;

    (h) Contract for and accept any grant, contribution, or loan of funds, property, or other aid from the federal government or other sources and, subject to the provisions of the Act, do all things necessary to qualify for, participate in, or administer any federal program consistent with the purposes of the Act;

    (i) Modify the scope of work, location, or other aspect of a community legacy project; or

    (j) Exercise all powers necessary or desirable for the implementation of the Program.

#### Regulation .08 Books and Accounts.

*COMAR 05.17.01.08*

A. Sponsors, 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 designated third parties, contractors, and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between a designated third party, contractor, or subcontractor and the Sponsor.

B. Sponsors shall submit quarterly reports to the Department on the progress or implementation of a community legacy project.

#### Regulation .09 Fees and Charges.

*COMAR 05.17.01.09*

A. The Department may establish application fees.

B. The Department may establish other fees to be paid to the Department related to the processing of applications and servicing of financial assistance.

#### Regulation .10 Nondiscrimination; Drug and Alcohol Free Workplace.

*COMAR 05.17.01.10*

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

B. A Sponsor 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:

  (1) Titles VI and VII of the Civil Rights Act of 1964, as amended;

  (2) Title VIII of the Civil Rights Acts of 1968, as amended;

  (3) The Fair Housing Amendments Act of 1988, as amended;

  (4) State Government Article, Title 20, Annotated Code of Maryland, as amended;

  (5) The Department’s Minority Business Enterprise Program, as amended;

  (6) 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

  (7) The Americans with Disabilities Act of 1990, as amended.

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

#### Regulation .11 Waiver.

*COMAR 05.17.01.11*

The Secretary may waive or vary provisions of this chapter 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.

#### Regulation .12 False Statements.

*COMAR 05.17.01.12*

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

B. An individual 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 Secretary or the Department on an application or for the purpose of influencing the action of the Secretary or the Department affecting financial assistance already provided.

C. An individual who violates §A or B of this regulation is subject to immediate cancellation or acceleration of the financial assistance provided by the Program and any other penalties authorized by law.

#### Regulation .13 Urgent or Emergency Projects Reserve.

*COMAR 05.17.01.13*

A. In any fiscal year, the Secretary may hold up to 10 percent of the money in the Fund in reserve for emergency use or urgent projects.

B. After determining an emergency or urgent project exists, the Secretary may approve a community legacy project or a neighborhood intervention project.

C. Any funds held in reserve that are not used for emergency use or urgent projects shall be administered in accordance with the Act.