EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*hb1451*
HOUSE BILL 1451
C9 2lr3181
By: Delegate McIntosh
Introduced and read first time: February 23, 2022
Assigned to: Rules and Executive Nominations
Re–referred to: Appropriations, February 27, 2022
Committee Report: Favorable
House action: Adopted
Read second time: March 10, 2022
CHAPTER ______
AN ACT concerning 1
Housing and Community Development – Business Projects and the Business 2
Development Program – Financial Assistance 3
FOR the purpose of authorizing the Community Development Administration to provide 4
certain forms of financial assistance for business projects; authorizing the 5
Department of Housing and Community Development to provide certain forms of 6
financial assistance under the Business Development Program; authorizing the 7
Department to sell or assign a certain equity interest without approval or execution 8
by the Board of Public Works; and generally relating to financial assistance provided 9
by the Community Development Administration and the Department of Housing and 10
Community Development. 11
BY repealing and reenacting, with amendments, 12
Article – Housing and Community Development 13
Section 4–223, 6–305, 6–308, and 6–310 14
Annotated Code of Maryland 15
(2019 Replacement Volume and 2021 Supplement) 16
BY repealing and reenacting, with amendments, 17
Article – Housing and Community Development 18
Section 4–223 19
Annotated Code of Maryland 20
(2019 Replacement Volume and 2021 Supplement) 21
(As enacted by Section 1 of this Act) 22 2 HOUSE BILL 1451
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
That the Laws of Maryland read as follows: 2
Article – Housing and Community Development 3
4–223. 4
(a) A project qualifies as a business project if the project is: 5
(1) located in: 6
(i) an area designated as a priority funding area under § 5–7B–02 7
of the State Finance and Procurement Article; or 8
(ii) a qualified opportunity zone designated under § 1400Z–1 of the 9
Internal Revenue Code in Allegany County, Garrett County, Somerset County, or Wicomico 10
County; and 11
(2) (i) acquired, owned, developed, constructed, reconstructed, 12
rehabilitated, or improved by a person or an entity for the purposes of carrying on a 13
business whether or not for profit; or 14
(ii) eligible for funding from the Neighborhood Business 15
Development Fund under § 6–310 of this article. 16
(b) Repayment of principal and interest for a business project may be secured by: 17
(1) real property; 18
(2) personal property; 19
(3) bank accounts; 20
(4) certificates of deposit, stocks, and bonds; 21
(5) credit enhancement, assurance, or guaranty; or 22
(6) any other collateral acceptable to the Administration. 23
(C) FINANCIAL ASSISTANCE FOR A BUSINESS PROJECT M AY BE PROVIDED 24
AS: 25
(1) A LOAN; 26
HOUSE BILL 1451 3
(2) A REDUCTION IN THE P RINCIPAL OBLIGATION OF OR INTEREST 1
RATE ON A LOAN OR PO RTION OF A LOAN; 2
(3) A PREPAYMENT OF INTE REST ON A SUBORDINAT E OR SUPERIOR 3
LOAN OR PORTION OF A LOAN; 4
(4) AN ASSURANCE ; 5
(5) A GUARANTEE OR OTHER FORM OF CREDIT ENHAN CEMENT; OR 6
(6) A PROMISSORY NOTE TH AT MAY BE CONVERTED TO AN EQUITY 7
OWNERSHIP INTEREST A ND LIQUIDATED AT THE EARLIEST OPPORTUNITY TO 8
REALIZE THE HIGHEST MARKET VALUE FOR THE ADMINISTRATION . 9
6–305. 10
(a) (1) A small business, nonprofit organization, or microenterprise may apply 11
for financial assistance under the Business Development Program. 12
(2) The Department shall review each application. 13
(b) An applicant may qualify for financial assistance for a project in a priority 14
funding area or an eligible opportunity zone if the application demonstrates that: 15
(1) the financial assistance from the Fund is the minimum amount 16
necessary to make the project financially feasible; 17
(2) the project is ready to proceed when it receives financial assistance from 18
the Business Development Program; and 19
(3) any food desert project includes a plan to seek out sources of 20
Maryland–grown produce and Maryland produced foods. 21
(c) (1) The Department shall provide written notice to the political subdivision 22
in which the proposed project is located. 23
(2) Except as provided in paragraph (3) of this subsection, the Department 24
may not approve an application unless the political subdivision in which the proposed 25
project is located approves the application by: 26
(i) resolution; or 27
(ii) letter, delivered to the Department by the political subdivision’s 28
authorized designee, expressing support of the plan or project. 29
4 HOUSE BILL 1451
(3) If the Department does not receive notice of approval or denial of an 1
application from the affected jurisdictions within 45 days after notice of the proposed 2
project is given in accordance with paragraph (1) of this subsection, the Department may 3
approve the application. 4
(d) Financial assistance under the Business Development Program may be 5
provided to a small business, nonprofit organization, or microenterprise as: 6
(1) a grant; 7
(2) a loan; 8
(3) a reduction in the principal obligation of or interest rate on a loan or 9
portion of a loan; 10
(4) a prepayment of interest on a subordinate or superior loan or portion of 11
a loan; 12
(5) an assurance; 13
(6) a guarantee; [or] 14
(7) any other form of credit enhancement; OR 15
(8) A PROMISSORY NOTE TH AT MAY BE CONVERTED TO AN EQUITY 16
OWNERSHIP INTEREST A ND LIQUIDATED AT THE EARLIEST OPPORTUNITY TO 17
REALIZE THE HIGHEST MARKET VALUE FOR THE DEPARTMENT . 18
(e) (1) The Department shall reserve at least the lesser of $5,000,000 or the 19
annual capital appropriation for the Fund to make financial assistance available to projects 20
located in sustainable communities. 21
(2) The Department may meet the funding obligations for sustainable 22
communities and food deserts by using any financial assistance available to the 23
Department that is authorized to be used for these projects. 24
6–308. 25
(a) The Department shall: 26
(1) administer the Business Development Program; 27
(2) adopt regulations to carry out the Business Development Program, 28
including a process to designate an area as a food desert under subsection (c) of this section; 29
and 30
HOUSE BILL 1451 5
(3) make a reasonable, good faith effort to make 25% of the Business 1
Development Program loans and grants to microenterprises. 2
(b) The Department may: 3
(1) sell, assign, or otherwise dispose of a Program loan or revenue from a 4
loan on terms and conditions acceptable to the Department, including selling loans at a 5
discount, if the maximum sale proceeds in any fiscal year do not exceed limits that the 6
Department sets by regulation; 7
(2) apply the proceeds received from a sale, assignment, or other 8
disposition under item (1) of this subsection to the Fund; [and] 9
(3) pledge a Program loan as security for any: 10
(i) business project loan, bond, or security that is issued, made, or 11
purchased by the Community Development Administration under Title 4 of this article; or 12
(ii) insurance, guaranty, or credit enhancement on a Program loan 13
or business project under § 4–223 of this article; AND 14
(4) WITHOUT APPROVAL OR EXECUTION BY THE BOARD OF PUBLIC 15
WORKS, SELL OR ASSIGN ANY E QUITY INTEREST ACQUI RED UNDER § 6–305(D) OF 16
THIS SUBTITLE. 17
(c) The Secretary, on the recommendation of the Interagency Food Desert 18
Advisory Committee established under § 6–308.2 of this subtitle, may designate an area as 19
a food desert after considering the following factors: 20
(1) availability of fresh fruit, vegetables, and other healthy foods in the 21
area; 22
(2) income levels of local residents; 23
(3) transportation needs of local residents and the availability of public 24
transportation; 25
(4) comments from local governments; and 26
(5) any other factors that the Department considers relevant. 27
6–310. 28
(a) There is a Neighborhood Business Development Fund. 29
(b) The Department shall use the Fund to: 30
6 HOUSE BILL 1451
(1) operate and pay expenses of the Program; and 1
(2) provide financial assistance to small businesses, nonprofit 2
organizations, and microenterprises. 3
(c) (1) The Department shall administer the Fund. 4
(2) The State Treasurer shall hold and the Comptroller shall account for 5
the Fund. 6
(d) The Fund is a continuing, nonlapsing special fund that is not subject to § 7
7–302 of the State Finance and Procurement Article. 8
(e) The Fund consists of: 9
(1) money appropriated in the State budget for the Program; 10
(2) any repayment or prepayment of financial assistance under this 11
subtitle or under the State Action Loans for Targeted Areas Program under former Article 12
83B, Title 4, Subtitle 6, of the Code; 13
(3) money transferred to the Fund from any other fund as provided in this 14
article; 15
(4) money received from the sale, assignment, or other disposition of 16
Program loans AND EQUITY INTERESTS ; 17
(5) other money received by the Program under this subtitle or from the 18
Community Development Administration under Subtitle 2 of this title; and 19
(6) investment earnings of the Fund. 20
(f) The Fund shall be invested in the same way as other State money. 21
(g) With the approval of the Legislative Policy Committee and, subject to § 7–209 22
of the State Finance and Procurement Article, after the first 8 months of a fiscal year, the 23
Department may transfer unencumbered money in the Fund to: 24
(1) any other fund established under this title; 25
(2) the Community Development Administration to provide financial 26
assistance to business projects; and 27
(3) the Maryland Housing Fund under Title 3 of this article to provide 28
insurance, credit enhancement, or a guaranty on: 29
(i) a Program loan; or 30 HOUSE BILL 1451 7
(ii) a business project loan, bond, or security that is issued, made, or 1
purchased by the Community Development Administration under Title 4 of this article. 2
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 3
as follows: 4
Article – Housing and Community Development 5
4–223. 6
(a) A project qualifies as a business project if the project is: 7
(1) located in: 8
(i) an area designated as a priority funding area under § 5–7B–02 9
of the State Finance and Procurement Article; or 10
(ii) a qualified opportunity zone designated under § 1400Z–1 of the 11
Internal Revenue Code in Allegany County, Garrett County, Somerset County, or Wicomico 12
County; and 13
(2) (i) acquired, owned, developed, constructed, reconstructed, 14
rehabilitated, or improved by a person or an entity for the purposes of carrying on a 15
business whether or not for profit; or 16
(ii) eligible for funding from the Neighborhood Business 17
Development Fund under § 6–310 of this article. 18
(b) Repayment of principal and interest for a business project may be secured by: 19
(1) real property; 20
(2) personal property; 21
(3) bank accounts; 22
(4) certificates of deposit, stocks, and bonds; 23
(5) credit enhancement, assurance, or guaranty; or 24
(6) any other collateral acceptable to the Administration. 25
(c) Financial assistance for a business project may be provided as: 26
(1) a loan; 27
8 HOUSE BILL 1451
(2) a reduction in the principal obligation of or interest rate on a loan or 1
portion of a loan; 2
(3) a prepayment of interest on a subordinate or superior loan or portion of 3
a loan; 4
(4) an assurance; OR 5
(5) a guarantee or other form of credit enhancement[; or 6
(6) a promissory note that may be converted to an equity ownership 7
interest and liquidated at the earliest opportunity to realize the highest market value for 8
the administration]. 9
SECTION 3. AND BE IT FURTHER ENACTED, That Section 2 of this Act shall take 10
effect July 1, 2026. 11
SECTION 4. AND BE IT FURTHER ENACTED , That, except as provided in Section 12
3 of this Act, this Act shall take effect July 1, 2022. 13
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.