Md. Code Regs. 05.05.01.12

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

Section 05.05.01.12 - Restrictions on Ownership and Occupancy

A. Change of Ownership. During the loan term, the sponsor of the project may not sell, cease to own, assign, transfer, or dispose of all or any part of the sponsor's interest in the project or the real property on which it is situated, without the prior written consent of the Department, except for leases of individual units or as set forth in the loan documents.

B. Income-restricted projects are subject to the occupancy requirements set forth in §§D-G of this regulation. Projects funded through the Rental Housing Production Program are restricted in occupancy to families of lower income. Projects funded through the Elderly Rental Housing Program are restricted in occupancy to families of limited income.

C. The occupancy restrictions in §§D-G of this regulation shall be evidenced by a covenant running with the land which shall be recorded in the land records of the county where the project is located.

D. Minimum Restricted Occupancy Period. The project shall be maintained as rental housing for families of lower income or families of limited income for a minimum of the greater of:

(1) 15 years; or

(2) If the project qualifies for federal low income housing tax credits, the number of years imposed by the federal requirements.

E. Low Income Occupancy Requirements.

(1) The greater of all the rental units in a project, as determined in accordance with §E(3) of this regulation, or, if the project qualifies for federal low income housing tax credits, the number of units in the undertaking selected by the sponsor to satisfy the minimum federal requirements, shall be occupied by families of lower income or families of limited income, as appropriate.

(2) If, after initial occupancy, the annual income of a family of lower income or a family of limited income exceeds the income limits for continued occupancy set by the Secretary in accordance with the Housing and Community Development Article, Annotated Code of Maryland, and Regulation .11 of this chapter, the sponsor shall notify the Department within 2 months of receipt of the information and shall either:

(a) If the project is part of an undertaking, rent the next available rental housing unit in the undertaking to a family of lower income or a family of limited income; or

(b) If the project is not part of an undertaking, which means it only has rental housing units which are required to be occupied by families of lower income or families of limited income, give the ineligible tenant a notice to vacate the rental housing unit by the later of the expiration of the term of the lease or 1 year from the date of notice.

(3) If a loan is made for a project which is only a portion of an undertaking which is being acquired, constructed, or rehabilitated by a sponsor in part with program funds, the minimum number of rental housing units which shall be occupied by families of lower income or families of limited income in order for the sponsor to qualify for a loan shall be the greater of the:

(a) Amount of the loan divided by the total cost of the undertaking multiplied by the total number of rental units in the sponsor's undertaking; or

(b) Number of residential units selected by the sponsor to satisfy the federal requirements for projects which receive an allocation of federal low-income housing tax credits.

F. The maximum rent for each unit in a project shall equal the difference between:

(1) 30 percent of the imputed tenant income as calculated in §G of this regulation; and

(2) A utility allowance determined by the local public housing authority in the jurisdiction where the project is located in accordance with § 8 of the United States Housing Act of 1937, as amended, or such other determination acceptable to the Department.

G. The imputed tenant income shall equal the restricted unit income limit for

(1) A family which is considered to have a size of 1.5 times the number of bedrooms in the unit for units with one or more bedrooms; and

(2) One person for efficiency and single room occupancy units.

H. Elderly Housing. In addition to the requirements in §§A-G of this regulation, all projects funded through the Elderly Rental Housing Program are restricted in occupancy to elderly households.

I. The location of the income-restricted units in an undertaking may change from time to time as tenants move, and the rental housing units in an undertaking which are not income-restricted units are not required by the program to be occupied by persons meeting age or income restrictions.

J. Limited Equity Cooperative Housing.

(1) The units in a limited equity cooperative housing project shall be occupied by families of lower income or families of limited income at the time of initial occupancy, and following any subsequent sale, resale, or transfer of shares, or subletting which results in a change in the household occupying the unit.

(2) If existing rental housing is converted to limited equity cooperative housing through the assistance of a loan from the program, an existing tenant may not be required to vacate the premises solely because the tenant does not elect to become a stockholder in the corporation owning the limited equity cooperative housing.

Md. Code Regs. 05.05.01.12

Regulations .12 adopted effective March 4, 1991 (18:4 Md. R. 446)
Regulations .12 Rental Multifamily Rental Financing Program adopted effective March 13, 2006 (33:5 Md. R. 518)