Sec. 05.15.01.08. Terms and Conditions of Financial Assistance

A. The local jurisdiction in which a project is located shall make a material and substantial contribution to the project which may take the form of:

(1) Cash;

(2) A site for a project;

(3) Provision of or improvements to on-site project-related facilities;

(4) Provision of or improvements to off-site facilities such as related streets, utilities, or other public improvements;

(5) Payment of predevelopment costs such as market studies, preliminary architectural or site plans, engineering studies, or feasibility studies; and

(6) A tax abatement or waiver of taxes or fees imposed by a local jurisdiction.

B. The Department will determine on a case-by-case basis what constitutes a material and substantial contribution by a particular local jurisdiction and what form the contribution may take.

C. Security. The security or collateral to assure repayment of financial assistance shall be acceptable to the Department and may be:

(1) A mortgage lien;

(2) A cash escrow;

(3) A letter of credit;

(4) A pledge of depository accounts;

(5) A pledge of accounts receivable;

(6) An assignment of income;

(7) A pledge of syndication proceeds; or

(8) Any other form of security or collateral acceptable to the Department.

D. Repayment. The principal and interest of a loan made or guaranteed under the Program shall:

(1) Be repayable out of revenues specified by a sponsor;

(2) Bear interest at a rate determined to be necessary and reasonable for the project which in exceptional circumstances and at the discretion of the Secretary may be as low as zero percent; and

(3) Be repayable in accordance with a schedule determined by the Department and may, at the discretion of the Secretary, be on a deferred payment schedule.

E. Default. In the event of default, the Department shall have the right to modify the rate of interest, the time or amount of payment, or any other term of financial assistance in order to ensure repayment and achieve the purposes of the Program.

F. Insurance.

(1) Multi-Peril Insurance. The sponsor shall maintain fire and extended coverage insurance on the project both during and after construction or rehabilitation. The insurance coverage shall include such endorsements as the Department may require, including:

(a) Collapse;

(b) Explosion;

(c) Loss of rents; and

(d) Vandalism.

(2) Liability Insurance. Comprehensive general liability insurance shall be maintained with such endorsements as the Department may require, both during and after construction or rehabilitation of a project.

(3) Flood Insurance. If the project is located on real property which is in the 100-year flood plain, as designated by the United States Department of Housing and Urban Development, the project shall be covered by a flood plain insurance policy. Before closing of financial assistance for a project, permits shall be secured from the Maryland Department of Natural Resources and the political subdivision in which the project is located.

(4) Contractor's Insurance. If a project involves construction or rehabilitation of a building or improvements of any kind, the general contractor shall provide insurance coverage for comprehensive public liability, property damage, and workers' compensation in form and amounts required by the Department.

(5) Other Insurance. The sponsor shall provide at closing of the financial assistance such other insurance as the Department may require, including builder's risk, boiler insurance, comprehensive automobile liability, and broad form workers' compensation.

(6) Terms and Conditions. Insurance coverage shall meet the following minimum requirements plus any additional requirements which may be set by the Department:

(a) Be provided by:

(i) Companies or other legal entities which are authorized to transact business in the State and which are reputable and financially sound, as determined by the Department, or

(ii) With respect to local jurisdictions, self-insurance programs acceptable to the Department;

(b) To the extent applicable, be in force upon the closing of the financial assistance;

(c) To the extent applicable, contain a standard mortgagee endorsement attached to or printed in the policy naming the Department as mortgagee;

(d) To the extent required by the Department, name the Department as loss payee and additional insured;

(e) Provide for notification to the Department before termination; and

(f) Contain terms and coverage satisfactory to the Department.

(7) Projects seeking financial assistance for minor rehabilitation may not be required to maintain multi-peril insurance, liability insurance, or flood insurance unless the Department, in its discretion, feels that the insurance is necessary.