Sec. 05.05.02.04. Eligible Projects

A. To qualify as an eligible project for a loan, the project shall meet the following requirements:

(1) The project shall provide rental units used primarily for year-round residential use;

(2) If the project is a:

(a) Community development or home improvement project, it shall be constructed or rehabilitated for use as rental housing,

(b) Solar energy or energy conservation project, it shall be rental housing in need of property or energy conservation improvements to improve its habitability, liveability, and energy efficiency, or

(c) Public purpose project, more than half of the project shall be constructed or rehabilitated for use as housing to be occupied in whole or part by families of limited income, unless the Secretary determines in writing that a smaller portion of housing and a greater proportion of public or private facilities such as streets, roads, sewer and water lines, and other public or private facilities intended for commercial, educational, cultural, recreational, community or other civic purpose will promote sound community development;

(3) The project shall be owned by an eligible sponsor;

(4) The Secretary shall have issued a determination that the improvements constitute a community development project, public purpose project, energy conservation project, solar energy project, or home improvement project within the meaning of the Act;

(5) The project shall comply, if necessary, with the notice, public hearing, and public approval requirements of the applicable Internal Revenue Code;

(6) The project shall conform to the statutory definitions and criteria for a community development project, public purpose project, home improvement project, solar energy project, or energy conservation project;

(7) If the project is a public purpose project, it either shall be:

(a) Qualified for federal low income housing tax credits, or

(b) Located in a distressed area designated by the Secretary in accordance with Regulation .09 of this chapter;

(8) The sponsor is capable of and can be expected to achieve successful completion of the project;

(9) Other than construction financed by the proceeds of revenue bonds issued on behalf of a county, the project shall be eligible only if:

(a) The Department has complied with COMAR 05.01.06.06, and

(b) The Secretary has issued the written determination required under COMAR 05.01.06.07;

(10) The project conforms or will conform to all applicable State and local laws, codes, and regulations, including zoning, building, and housing regulations;

(11) The project is economically feasible so that the loan reasonably can be expected to be repaid in full on such terms and conditions as determined by the Administration;

(12) The project has a useful life of a length satisfactory to the Administration with reasonable maintenance;

(13) The project promotes the purposes of the Act and these regulations; and

(14) The project is located within a priority funding area identified under State Finance and Procurement Article, §5-7B-02, Annotated Code of Maryland, unless, for existing construction, the Secretary determines in the Secretary's sole discretion that the project is necessary to:

(a) Protect public safety or health;

(b) Alleviate personal economic hardship in an emergency situation;

(c) Promote economically integrated housing;

(d) Avoid a conflict with federal law; or

(e) Relieve an inequity or carry out the purposes of the Program, consistent with the purposes of State Finance and Procurement Article, Title 5, Subtitle 7B, Annotated Code of Maryland.

B. Establishment of Limits.

(1) The Secretary shall establish upper income limits for households of limited income taking into consideration factors including:

(a) The amount of the total annual income of the households available for housing needs;

(b) The size of the household;

(c) The cost and condition of housing facilities available;

(d) The ability of the households to compete successfully in the normal private housing market; and

(e) Standards and definitions established for pertinent federal housing programs.

(2) Limits may be established by household size. Limits also may be established from time to time on a regional basis. Income eligibility criteria, within limits lower than the regional limits, may be established for particular projects.

C. The Secretary may determine, from time to time, the percentage of units in a project which are occupied by families of limited income in order to qualify as an eligible project. The Secretary shall take into consideration such factors as the Secretary may deem appropriate, which may include:

(1) Housing needs in the region within which the project is to be located;

(2) Availability and cost of alternative housing within that region; and

(3) The economic feasibility of the project.

D. Community development and home improvement projects shall be required to be occupied by families of limited income in not less than 51 percent of the total dwelling units in a project, unless the project is financed with taxable bonds, in which case at least 20 percent of the dwelling units shall be occupied by families of limited income.

E. Public purpose projects which are eligible for federal low income housing tax credits shall be occupied and rented in accordance with all federal requirements governing the continuing qualifications for the tax credits. Public purpose projects located in distressed areas shall be occupied in whole or in part by families of limited income. The percentage of dwelling units to be regulated for each particular project shall be determined by the Secretary in writing.

F. Solar energy and energy conservation projects are not subject to income or occupancy requirements unless otherwise determined by the Secretary.

G. Project Selection. The Administration may, in its sole discretion, finance particular projects and decline to finance otherwise eligible projects, based on its assessment of the project's overall merit and its merit relative to competing alternatives.