Md. Code Regs. 05.12.01.15

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

Section 05.12.01.15 - Affordable Rental Housing Requirements-Rent and Occupancy Restrictions

A. General. In order to quality for HOME funds, a rental housing development project shall meet the additional requirements of Regulations .15 and .16 of this chapter.

B. Rent Limits.

(1) The rent limits in this section apply to rent plus utilities or utility allowance, as applicable.

(2) Except as provided in §B(3) of this regulation, to qualify as affordable housing and a recipient of HOME funds, project rents may not exceed the lesser of:

(a) Fair market rent established by HUD for the area;

(b) An amount that does not exceed 30 percent of the adjusted income of a household whose gross income equals 65 percent of median income as determined by HUD and adjusted for the number of bedrooms in the unit; or

(c) An amount that does not exceed limits, if any, established by the Department.

(3) Unless a unit has been allocated federal low-income housing tax credits, if the income of an existing tenant of a HOME-assisted unit exceeds 80 percent of area median income adjusted for household size, the rent charged for the HOME unit shall be adjusted to the lesser of:

(a) The amount payable by the tenant under State or local law; or

(b) 30 percent of the household's adjusted monthly income, as recertified annually.

C. Additional Rent Limitations for Single Room Occupancy Housing.

(1) For single room occupancy housing that has both sanitary and food preparation facilities, the maximum HOME rent is based on the zero-bedroom fair market rent. The housing shall meet the requirements of §§A and B of this regulation.

(2) For single room occupancy housing that has no sanitary or food preparation facilities or only one of the two, the maximum HOME rent is based on 75 percent of the zero-bedroom fair market rent. The project is not required to have low HOME rents in accordance with §B(1) or (2) of this regulation, but shall meet the occupancy requirements of §D of this regulation.

D. Occupancy Requirements.

(1) Multiple Unit HOME Projects.

(a) A HOME project with five or more rental units, or scattered multiple HOME projects under common ownership containing five or more rental units, is required to meet the requirements of §D(1)(b)-(e) of this regulation.

(b) At least 20 percent of the units in the project shall be occupied by income eligible households which qualify as very low income families as defined in 24 CFR § 92.2.

(c) For the units described under §D(1)(b) of this regulation, rent shall meet the requirements set forth in 24 CFR § 92.252(b).

(d) All units in the project which do not meet the requirements of §D(1)(b) and (c) of this regulation shall be occupied by households with annual incomes that do not exceed 80 percent of area median income adjusted for household size. However, a qualified household may continue to occupy a unit in a project if the household's income exceeds 80 percent of area median income and the rent is adjusted as set forth in §B(2) of this regulation.

(2) Regardless of changes in fair market rents and in median income over time, the rent limits set forth in §§B and D(1)(c) of this regulation are not required to be lower than the HOME rent for the project in effect at the time of project commitment.

(3) Small HOME Projects. A HOME project with one to four rental units shall be occupied by households with annual incomes that do not exceed 80 percent of area median income adjusted for household size.

(4) HOME Projects as Part of an Undertaking.

(a) If a loan is made for a project which is only a portion of the undertaking being acquired, constructed, or rehabilitated by an eligible recipient in part with HOME funds, the following formula shall be used to determine the minimum number of rental housing units which shall meet the occupancy requirements of §D(1) of this regulation:

(i) The amount of HOME funds;

(ii) Divided by the total cost of the undertaking;

(iii) Multiplied by the total number of units or homes in the undertaking;

(iv) Equals the number of units in the HOME project subject to the requirement of §D(1) of this regulation.

(b) If the HOME project is contained within an undertaking, the recipient shall provide equal access to tenants of the project to any amenities and common areas within the undertaking.

E. Restrictive Covenants.

(1) The project shall be subjected to restrictive covenants containing the rent and occupancy restrictions, which covenants shall be set forth in a deed of trust, mortgage, deed, declaration of covenants, or other instrument acceptable to the Department.

(2) The covenants shall govern the property for a minimum period of 5-20 years, in addition to an anticipated construction or rehabilitation period, as follows:

(a) New construction, or acquisition of a newly constructed structure, 20 years;

(b) Rehabilitation or acquisition of an existing structure, when HOME funds per unit equal:

(i) Under $15,000, 5 years,

(ii) $15,000-$40,000, 10 years, and

(iii) Over $40,000 or rehabilitation involving refinancing, 15 years.

(3) The document setting forth the restrictive covenants specified in §E(1) and (2) of this regulation shall provide that, upon foreclosure by, or a deed in lieu of foreclosure to, an after recorded deed of trust securing the lender, the restrictive covenants shall be terminated if:

(a) The parties to the foreclosure, or deed in lieu of foreclosure, recognize in writing any statutory or contractual rights of the Department, other public agencies, nonprofit sponsors, or others to preserve affordable housing units;

(b) The foreclosure, or deed in lieu of foreclosure, is not for the purpose of avoiding the covenants; and

(c) At any time following foreclosure, or deed in lieu of foreclosure, if the owner or any entity in which the owner or the owner's family or business associates owns an interest, obtains any interest in the HOME project or property, the covenants shall be revived according to their original terms.

F. HOME-assisted rental housing shall be occupied by income eligible households within 6 months following the date of project completion.

G. Records and Reports. The owner of rental housing shall annually provide the Department with information on rents and occupancy of HOME-assisted units to demonstrate compliance with §§A-F of this regulation. If the rental housing project has floating HOME units, the owner shall provide the Department with information regarding unit substitution and filling vacancies so that the project remains in compliance with HOME rental occupancy requirements.

Md. Code Regs. 05.12.01.15

Regulation .15B, C amended effective September 25, 1995 (22:19 Md. R. 1471)
Regulation .15 amended effective 41:25 Md. R. 1476, eff.12/22/2014