Md. Code Regs. 05.05.01.20

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

Section 05.05.01.20 - Threshold Criteria

A. Development Team.

(1) The sponsor or any member of the development team may not have:

(a) Been directly involved with any project placed on the Department's delinquency list due to actions which, in the opinion of the Department, are attributable to the sponsor or the development team;

(b) A current limited denial of participation from the U.S. Department of Housing and Urban Development or been debarred, suspended, or voluntarily excluded from participation in any federal or State program at the time of, or subsequent to, the sponsor's application;

(c) Participated as an owner or manager in the development or operation of a project that has defaulted on a Department or other government or private sector loan in the previous 5 years;

(d) Had an ownership or management interest in other projects:

(i) With a record within the past 5 years of chronic past due accounts, substantial liens, or judgments; or

(ii) Which have been the subject of foreclosure or bankruptcy actions which are unacceptable to the Department;

(e) Consistently failed to provide documentation required by the Department in connection with loan applications or the management or operation of existing projects;

(f) Unpaid fees, loan arrearages, or other obligations due to the Department on other projects;

(g) Been involuntarily removed within the previous 5 years as a general partner or managing member from any affordable housing project whether or not financed or subsidized by the Department;

(h) Three or more instances of unpaid taxes to the federal government or any Maryland jurisdiction within the 5 years before the application date;

(i) Within the 5 years before the application date, received a reservation or commitment for funding from the Department and been unable to complete the project; or

(j) Within the 5 years before the application date, with regard to low-income housing tax credits and the requirements of the Internal Revenue Code:

(i) Received a reservation of credits and been unable to meet the requirements for a carryover allocation;

(ii) Received a carryover allocation of credits and been unable to meet the requirements for the 10 percent test; or

(iii) Received an allocation of credits and been unable to place the project in service within the time requirements.

(2) The sponsor or any member of the development team identified at the time of application shall demonstrate:

(a) Financial credibility and stability;

(b) The capacity to complete the project in a timely and satisfactory manner; and

(c) The ability to manage the project.

(3) Any member of the development team identified after application and after approval of a project is subject to the standards in §A(1) and (2) of this regulation and failure to meet those standards shall result in a rejection of the application.

(4) If the project includes the rehabilitation of an existing building, the sponsor shall:

(a) Provide a relocation plan, if applicable, in a form acceptable to the Department with assurances that existing residential and commercial tenants will receive relocation protections; and

(b) Agree to comply with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Act of 1970 (42 U.S.C. § 4601) and § 104(d) of the Housing and Community Development Act of 1974 (42 U.S.C. § 5304(d)).

(5) The Department, in its discretion, may elect not to make a loan to a sponsor for a project that results in the permanent displacement of more than 5 percent of elderly or disabled tenants or 10 percent of non-elderly or non-disabled tenants.

B. Local Support.

(1) The sponsor shall submit evidence of political subdivision approval and contribution as set forth in Regulation .07 of this chapter;

(2) Evidence of political subdivision approval for threshold review shall:

(a) Be in the form of either:

(i) A political subdivision resolution in the form required by the Department; or

(ii) A letter from the political subdivision executive, county commission, or manager authorized to act on behalf of the political subdivision executive; and

(b) Indicate the political subdivision's support for the project in the current round of competition.

(3) If a political subdivision letter is submitted for threshold review, a political subdivision resolution under Regulation .07C of this chapter shall be submitted by the sponsor before closing.

(4) Evidence of an anticipated political subdivision contribution shall be in the form of a letter from an authorized political subdivision official and shall indicate the type and amount of the contribution that the political subdivision anticipates making.

C. Site Requirements.

(1) The sponsor shall own the project site or shall submit evidence acceptable to the Department that it has the ability to acquire the project site within a timeframe acceptable to the Department.

(2) The sponsor shall supply evidence acceptable to the Department that public water and sewer and other necessary utilities will be available at the project site in time to allow the project to proceed in accordance with its schedule.

(3) The sponsor shall supply evidence acceptable to the Department that the site is or will be in compliance with all zoning and land use requirements. If the site is not in compliance at the time of application, the sponsor shall submit a schedule setting forth the necessary approvals, the process for obtaining the approvals, and the projected dates when the approvals will be received.

(4) For projects involving new construction, the project shall be located within a priority funding area identified under State Finance and Procurement Article, § 5-7 B-02, Annotated Code of Maryland.

(5) The requirements of §C(1)-(4) of this regulation do not apply to projects involving completed residential units under a density bonus, affordable zone, or other comparable program.

D. Proposed Income Levels. The proposed income limits for tenants in the project's restricted units shall be within the limits required in Regulation .11 of this chapter.

E. Other Financing. The sponsor shall submit:

(1) Letters of intent, acceptable to the Department, for all other sources of financing including equity necessary for the project, which shall set forth the financing amount, repayment terms, if any, and any other conditions of the loan or equity contribution; and

(2) Information acceptable to the Department on the status of applications or pre-applications for funding or insurance, if the other financing is through the Federal Home Loan Bank Board, the Federal Housing Administration, or other competitively funded subsidies.

F. Financial Feasibility.

(1) The project shall be economically feasible so that it is not unreasonable to anticipate that the loan can be repaid under the loan terms and provisions as set forth in the loan documents.

(2) The sponsor shall submit financial plans and estimates satisfactory to the Department.

G. Repayment Terms. In general, loans shall be repayable on an amortizing basis. Under certain conditions, as established from time to time by Department guidelines, loans may be repaid from surplus cash.

H. Project Schedule. The proposed schedule for closing of the loan and construction of the project shall meet the completion schedule established by the Department.

Md. Code Regs. 05.05.01.20

Regulations .20 adopted effective March 4, 1991 (18:4 Md. R. 446)
Regulation .20 amended effective August 26, 1996 (23:17 Md. R. 1246)
Regulations .20 Rental Multifamily Rental Financing Program adopted effective March 13, 2006 (33:5 Md. R. 518)