Sec. 05.05.02.03. Eligible Sponsors

A. Each sponsor shall meet all of the applicable requirements set forth in §§ B-I of this regulation.

B. If the sponsor is a business entity, the entity shall be in good standing and be qualified to do business in Maryland.

C. The sponsor shall own the property in fee simple or under a ground lease acceptable to the Administration.

D. The sponsor shall have all necessary legal and corporate authorizations to incur the obligations of the loan.

E. The sponsor shall demonstrate creditworthiness and repayment ability acceptable to the Administration.

F. For community development, public purpose, and home improvement projects, a sponsor shall agree in a recordable document that the percentage of the total dwelling units in the project to be occupied by families of limited incomes, as determined in accordance with Regulation .04B, below, shall be occupied for so long as the loan is outstanding or such longer period of time as the Administration may require. If a sponsor is subject to the occupancy requirements of §F or §G, the units restricted for those purposes may also be used to meet the occupancy requirements of this section.

G. If the project is funded with proceeds that are subject to the occupancy requirements of the Internal Revenue Code of 1986, the sponsor shall agree in a recordable document that:

(1) Not less than:

(a) 20 percent of the dwelling units in the project will be occupied by households whose gross incomes do not exceed 50 percent of the area median gross income, adjusted for household size as published from time to time by the United States Department of Housing and Urban Development, or

(b) 40 percent of the dwelling units in the project will be occupied by households whose gross incomes do not exceed 60 percent of the area median gross income, adjusted for household size as published from time to time by the United States Department of Housing and Urban Development;

(2) The project will have the applicable percentage of occupied dwelling units actually occupied by individuals or families whose gross incomes do not exceed the applicable percentage of the area median gross income as soon as 10 percent of the dwelling units in the project are first occupied unless, in the case of a project occupied at closing, the Administration permits a reasonable period for compliance based on an opinion of bond counsel that this reasonable period is permitted under applicable federal tax law;

(3) The applicable occupancy percentage will be maintained until the latest of the:

(a) Date which is 15 years after the date on which 50 percent of the dwelling units in the project are occupied,

(b) First day on which no tax-exempt bond, including any refunding bond in certain instances when a loan is made from the funds derived from payments or prepayment on loans made with the proceeds of revenue bonds, issued with respect to the project is outstanding, or

(c) Date on which any assistance provided with respect to the project under Section 8 terminates.

H. If the project is funded with proceeds that are subject to the occupancy requirements of the Internal Revenue Code of 1954, the sponsor shall agree in a recordable document that:

(1) Not less than 20 percent of the dwelling units will be occupied by households whose gross incomes do not exceed 80 percent of area median gross income as published from time to time by the United States Department of Housing and Urban Development; or if the project is located in a targeted area, not less than 15 percent of the dwelling units will be occupied by households whose gross incomes do not exceed 80 percent of area median gross income, as published from time to time by the United States Department of Housing and Urban Development;

(2) The project will have the applicable percent of occupied dwelling units actually occupied by individuals or families whose gross incomes do not exceed 80 percent of area median gross income as soon as 10 percent of the dwelling units in the project are first occupied;

(3) The applicable occupancy percentage will be maintained until the latest of the:

(a) Date which is 10 years after the date on which 50 percent of the dwelling units in the project are occupied,

(b) Last day of a period starting with the date the first unit is occupied and continuing for half the life of the longest bond issued in connection with the project financing (for a refunding issue, in certain instances when a loan is made from the funds derived from payments or prepayment on loans made with the proceeds of revenue bonds, the life of the longest bond equals the sum of the period the prior issue was outstanding and the longest term of any of the refunding bonds), or

(c) Date on which any assistance provided with respect to the project under Section 8 terminates.

I. If a project is funded with proceeds that are subject to the requirements of either the Internal Revenue Code of 1986 or 1954, a sponsor shall agree to comply with the most restrictive requirement of the Internal Revenue Code which applies to the project or to the sponsor in connection with the financing and as determined by opinion of the bond counsel of the Administration.