Sec. 05.05.01.14. Loan Terms

A. Interest Rates.

(1) Interest rates for each loan shall be established based on the underwriting of each project.

(2) The maximum interest rate on a loan shall be a rate which does not impair the financial viability of the project or the capability of the sponsor to provide rents which are affordable to households of limited income. The interest rate on a loan may be as low as zero percent, based upon projected cash flows for the proposed project.

(3) Bridge loans or portions of loans which will be repaid with the cash proceeds realized from a syndicated sale of the project shall have interest rates equal to private lending rates for bridge loans, unless in the determination of the Department a lower interest rate is required to ensure the financial feasibility and viability of the project. A lower rate approved by the Department under this subsection may not be less than the interest rates permitted under §A(1) and (2) of this regulation based upon the use and occupancy of the project.

(4) For income-restricted projects, the Department may establish additional provisions related to interest rates in the Program Guide.

B. Repayment.

(1) Terms for repayment of principal and interest shall be established based on the underwriting for each project and in a manner which does not impair the financial viability of the project or the capability of the sponsor to provide rents which are affordable to households of limited income.

(2) Repayment of principal and interest may be deferred at the discretion of the Department to meet the goals of this regulation.

(3) For income-restricted projects, the Department may establish additional provisions related to repayment terms in the Program Guide.

C. Maximum Loan Amount.

(1) The maximum amount of funds to be provided to an income-restricted project from the Program or the Maryland HOME Program under COMAR 05.12.01 may not exceed $2,000,000, unless the Housing Finance Review Committee has recommended and the Secretary has approved an exception on the basis that:

(a) The following three conditions are met:

(i) Other potential sources of funds have been sought and clearly are unavailable;

(ii) It is not feasible to reduce the size or scope of the project; and

(iii) The project serves a high public purpose, such as serving a significant percentage of very low-income households or being located in a high cost area; or

(b) An increase in the loan amount addresses administrative or programmatic needs of the Department and will result in an effective and appropriate use of DHCD resources.

(2) The maximum amount of funds to be provided to an office and commercial space conversion project:

(a) From the Program, shall be the lesser of:

(i) 20 percent of the total costs for the project; or

(ii) $1,500,000; and

(b) From all State-funded and State-administered programs, may not exceed 30 percent of the total costs of the undertaking, with the following limitations:

(i) State historic tax credits are excluded from the 30 percent limit; and

(ii) No other funds from the Fund, federal low-income housing tax credits, or State bond-allocated funds may be used on the project.

D. Term.

(1) The permanent loan term of each capital assistance loan may not exceed 40 years from the later of the date of acquisition or completion of construction or rehabilitation of the project, except when other sources of financing require a longer term.

(2) The term of a bridge loan generally may not exceed the greater of 2 years or the equity payment schedule and shall be based on the size and complexity of the project.

(3) The term of a loan during rehabilitation or construction generally may not exceed 2 years and shall be based on the size of the project and the nature of the rehabilitation or construction financed by the loan.

(4) The term of an operating assistance loan generally may not exceed 15 years and may be subject to renewal at the Department’s discretion.

E. Late Charges. Late charges, as permitted by law, may be imposed.