Md. Code Regs. 05.05.01.07

Current through Register Vol. 51, No. 24, December 2, 2024

Section 05.05.01.07 - Local Support and Contribution

A. The political subdivision in which the proposed project is situated shall approve the project and shall make a contribution to the project as described in §D of this regulation. If the project is in a municipal corporation, the local approval and the local contribution shall be from the municipal corporation, not the surrounding county, except that a county in which a municipal corporation is located may make a contribution on behalf of the municipal corporation, subject to approval by the Department.

B. For office and commercial space conversion projects that are part of a larger undertaking, the local contribution in §A of this regulation may be toward the cost of the project or the undertaking.

C. The approval in §A of this regulation shall be evidenced by a certified copy of an ordinance or resolution duly adopted by the appropriate governing body of the political subdivision and approved by the chief executive officer of the political subdivision, if any, setting forth:

(1) The identity of the sponsor;

(2) The location and nature of the project; and

(3) Approval of the loan.

D. Contributions.

(1) The contribution in §A of this regulation shall be a contribution which:

(a) Reduces development costs, such as:

(i) The donation or long-term leasing of land or improvements;

(ii) Capital funds for acquisitions, construction, rehabilitation, or development costs;

(iii) Locally installed infrastructure or site improvements which reduce off-site costs attributable to the project; or

(iv) Waiver of local fees for permits, tap fees, impact fees, and other fees and charges;

(b) Reduces operating expenses, such as:

(i) Real estate tax abatement, or a payment in lieu of taxes;

(ii) Operating or rent subsidies for the project; or

(iii) Long-term agreements for a political subdivision to provide services at no cost to a project such as trash collection, road or grounds maintenance, or grounds care; or

(c) Otherwise supports a project such as:

(i) Allocation of rent subsidies;

(ii) Guarantees of deficits or completion of construction;

(iii) Long-term provision of needed social services for special use projects; or

(iv) Sponsorship or solicitation of local or community services, materials, or funds which benefit the project and make a material impact on the feasibility of a project may, in some cases, be acceptable local contributions.

(2) The contribution in §A of this regulation may not be contingent upon the completion of tasks or improvements that are unrelated to the project.

E. Sources for Contributions.

(1) Local contributions shall be made from local resources and assets.

(2) Federal funds which are awarded at the federal level for a specific project are not eligible to be used as a local contribution unless the political subdivision is instrumental in the application for and administration of the federal funds.

(3) Local contributions which are made in conjunction with grants from the Department's Small Cities and Community Development Block Grant Programs may be counted toward or may satisfy the local contribution requirement if the grant is used for the project in a manner consistent with §D of this regulation.

(4) Other State funds are not permitted as a local contribution even if the political subdivision has discretion in allocating the funds.

F. The Department shall consider the political subdivision's contribution to the project in relation to the political subdivision's ability to contribute.

G. In most cases, the amount of the local contribution is expected to fill any gap or, if a project has little or no gap, the local contribution shall enhance the project.

H. Local contributions may include terms which require repayment of the contribution if the project is sold or no longer provides low income housing.

I. Local contributions may be in the form of loans with interest if, in the discretion of the Department, the loan:

(1) Is significantly large;

(2) Has an interest rate which is not greater than the interest rate on the program loan, except as permitted in §J of this regulation; and

(3) Is unsecured or secured by a subordinate mortgage, with terms fully subordinate in all respects to the program loan.

J. A loan from the political subdivision with interest at a rate greater than the program loan is permitted, in the discretion of the Department, if:

(1) The project is receiving federal low income housing tax credits and the local loan otherwise would be characterized as federally subsidized under § 42(i)(2)(A) of the Internal Revenue Code;

(2) The project is located in a "difficult development area" as defined in § 42(d) of the Internal Revenue Code;

(3) The project is located in a "qualified census tract" as defined in § 42(d) of the Internal Revenue Code; and

(4) The loan from the political subdivision is made from federal funds.

Md. Code Regs. 05.05.01.07

Regulations .07 adopted effective March 4, 1991 (18:4 Md. R. 446)
Regulations .07 Rental Multifamily Rental Financing Program adopted effective March 13, 2006 (33:5 Md. R. 518)