Changes to the local approval and contribution requirements under the Maryland QAP

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Proposed changes under the Maryland Qualified Allocation Plan (QAP) would eliminate the “local approval” requirement and replace it with an opportunity for the political subdivision in which the project is located to comment on a proposed project. In addition, a local financial contribution to a project would make the project eligible for points in the “leveraging” category, but would not be a threshold requirement as it currently is for the Rental Housing Production Program. 

The current local approval requirement provides that if a local government adopts a resolution disapproving a project competing for low income housing tax credits, the project could not receive an award of tax credits or other financial assistance from the Maryland Department of Housing and Community Development (DHCD). Because there is no standard of review related to such approval, the local approval requirement was thought of by some as a way for local governments to practice “NIMBYism” by rejecting affordable housing projects in their jurisdictions.

Under the proposed QAP, the local approval requirement would be abolished in favor of a review and comment period. DHCD would be required to provide notice of an application for funding to the political subdivision in which the project is located. The political subdivision would have 45 days to comment on the project, and, if it does so, DHCD would be required to consider the comments in its review of the application. The project, however, would not be automatically rejected based on the comments. Developers are curious to see how this new process would impact DHCD’s award of tax credit allocations.

In addition to the elimination of the local approval requirement, there is a proposal to change the treatment of financial contributions from local governments. Currently, a financial contribution from the political subdivision in which a project is located is required for a project to receive Rental Housing Production (RHP) funds. Under the proposed changes to the QAP, local contributions that reduce development costs, reduce operating expenses or otherwise support a project (e.g. through the allocation of rental subsidies, the provision of guarantees or the provision of social services) will qualify the project for points in the leveraging category, but will no longer be a “threshold” requirement for the RHP program.

At a public hearing held at DHCD last week to review the proposed changes to the QAP, there were no comments made in opposition to the changes. While written comments were submitted to DHCD, by all indications, the proposed changes have been well received and it is anticipated that they will be implemented with no or minimal changes in time for the fall funding round, for which applications are due by September 9, 2014.

More information on all of the proposed changes to the QAP can be found here and will be available at a Pre-Round Information Session to be held at DHCD on July 15, 2014 from 10 am to noon.

 

Topics:  Housing Market, Residential Leases, Tax Credits

Published In: Finance & Banking Updates, Residential Real Estate Updates, Tax Updates, Zoning, Planning & Land Use Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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