Compliance, Year 15, and Maryland's 40-year (competitive) / 30-year (non-competitive) extended-use floor — not 55 — Maryland

Two numbers, not one: Maryland's actual extended-use floor is 40 years (competitive) or 30 (non-competitive)

The QAP's own Introduction states the federal minimum in near-verbatim IRC language: "The housing units must be set aside for low-income residents for a compliance period of fifteen (15) years (Initial Compliance Period). In addition, the Internal Revenue Code requires the project owner to enter into an Extended Low-Income Housing Covenant (LIHTC Covenant) under which the low-income housing set-aside ... must continue for an additional period of at least fifteen (15) years beyond the Initial Compliance Period (together, the Extended Use Period)" (2026 QAP §A.3). Read alone, that describes only the federal 30-year floor under IRC §42(h)(6)(D) — it is not, on its own, evidence of what Maryland's own program actually requires.

The number that actually governs a competitive Maryland award sits in the Multifamily Rental Financing Program Guide, not the QAP's introductory language: "All projects requesting competitive LIHTC, RHFP funds, and/or RHW must agree to at least forty (40) years of low-income occupancy restrictions, unless a structured fifteen (15) year transition to homeownership is presented and accepted. All projects requesting non-competitive LIHTC and/or MBP loan funds must agree to at least thirty (30) years of low-income occupancy restrictions" (2026 MRFP Guide §3.2.3, "Long Term Use Restrictions and Homeownership Opportunities"). That is DHCD's own binding programmatic commitment, not a scoring incentive — the Guide uses "must agree," not "may earn points for."

A second, independent data point corroborates the 40-year figure for the competitive pool specifically. The QAP's Permanent Supportive Housing Set-Aside criteria require a Supportive Services Plan addressing "[s]ources of funding for all supportive services and how the supportive services will be sustained over the 40-year extended use period" (2026 QAP §F.3) — language that only makes sense if DHCD's own working assumption for that competitively-awarded pool is a 40-year term, matching the Guide's §3.2.3 figure rather than the QAP's own 30-year federal-floor restatement.

This research also found an unresolved inconsistency worth flagging rather than silently smoothing over: DHCD's own compliance-monitoring documents — the QAP's recordkeeping section (§H.2) and the dedicated post-Year-15 compliance policy discussed below — describe the "Extended Use Period" only in the federal "at least fifteen (15) years beyond the Initial Compliance Period" terms, and never restate the Guide's 40-year (or 30-year) figure anywhere in that monitoring-focused language. That is most plausibly boilerplate describing the federal floor these documents are built to satisfy, not evidence that the 40-year competitive-pool commitment is optional or has been superseded — but a specific project's actual recorded term should be confirmed against its own Extended Low-Income Housing Covenant, not against either document's general framing language.

Qualified Contracts: no QAP-level waiver, but every partnership agreement must lock out the investor limited partner

The QAP's own Qualified Contract section is purely administrative and imposes no waiver, no scoring penalty, and no anti-QC stance of its own: "If a project owner makes a request to CDA to obtain a 'Qualified Contract' (as defined by the Internal Revenue Code) pursuant to §42(h)(6)(E) and (F), the project owner shall furnish to CDA and/or any other parties to the Qualified Contract with such information as CDA shall require, including, but not limited to: past and current operating expense and occupancy data; evidence of tenant notification; financial statements; environmental assessments; and past, pending, or threatened litigation" (2026 QAP §I.2). CDA "reserves the right to adopt such additional requirements and procedures as are desirable" but the QAP itself neither blocks nor discourages a Qualified Contract request the way some other states' allocation plans now do.

Maryland's actual anti-QC mechanism sits instead in the required contents of every project's limited partnership or LLC agreement. The MRFP Guide requires each applicant to certify, at Commitment or Viability/Commitment submission, that its operating agreement will "[p]revent the project owner's investor limited partner or non-managing member from seeking early termination of extended affordability requirements in accordance with Section 3.2.3" (2026 MRFP Guide §3.6) — alongside a companion requirement barring the investor limited partner from removing the general partner without good cause, and barring use of project reserves to fund an exit payment. This is a materially different mechanism than a blanket Threshold-level QC waiver: it operates through a mandatory contractual covenant that binds the investor limited partner or non-managing member specifically, not through a filing with CDA that forecloses the ownership entity's own §42(h)(6)(E)-(F) statutory right.

This research could not resolve, from the public QAP and Guide text alone, whether that covenant's specific wording — aimed at the "investor limited partner or non-managing member" — would also be read to bind a request initiated by the general partner or managing member itself, since the Internal Revenue Code's Qualified Contract right under §42(h)(6)(E)-(F) belongs to the owner as a whole. That is a real, open legal question for any specific deal's actual partnership agreement language, not something this research resolved by assumption — confirm with transaction counsel.

One more contrast worth noting: DHCD's own January 2026 Multifamily Program Fees schedule contains no line item at all for a Qualified Contract eligibility determination, request, or inspection fee — unlike some other states' published fee schedules. Whether that reflects Qualified Contract requests being rare enough in Maryland's portfolio that CDA has not needed to publish a standard fee, or simply that CDA prices it case-by-case outside the published schedule, this research could not determine from the public documents.

Compliance monitoring: the federal floor through Year 15, then a materially looser DHCD-specific policy

During the Initial Compliance Period, Maryland's monitoring standards track the federal minimum under Treasury Regulation §1.42-5 closely. CDA inspects all buildings in a project by the end of the second calendar year following the year the last building is placed in service, and thereafter "[a]t least once every three (3) years throughout the Extended Use Period" (a phrase the QAP uses even for what is really Years 1-15 monitoring cadence) — inspecting the buildings and reviewing tenant files and rent records for at least 20% of the project's low-income units (2026 QAP §H.4). Noncompliance triggers a Correction Period "not to exceed ninety (90) days," extendable up to six months for good cause, with Form 8823 filed with the IRS no later than 45 days after that period ends (2026 QAP §H.6).

The currently effective post-Year-15 policy is dated "Updated Effective January 1, 2026" and is a distinct document from an earlier "DRAFT-v4" version of the same policy that remains separately posted on DHCD's website — the two differ in small but real ways (for example, the finalized version routes correspondence through each project's Procorem workcenter rather than a mailing address, and clarifies that all units in non-exempted buildings, not just exempted ones, still need initial-and-first-recertification income verification). Rely on the version titled "Updated Effective January 1, 2026," not the draft, for a currently governing deal.

Record retention spans well past the Compliance Period itself: general project records must be kept "for at least six (6) years after the due date (with extensions) for filing the federal income tax return for that year," while first-credit-year records must be retained "for at least six (6) years beyond the due date ... for filing the federal income tax return for the last year of the Compliance Period" (2026 QAP §H.2) — in practice, roughly the full 15-year Compliance Period plus six more years for that first year's records.

Fees that follow the property past Year 15

The QAP treats the compliance monitoring fee as functionally mandatory for staying in the program: "[N]onpayment of fees by a project owner may cause CDA to fail to meet its obligations under the Internal Revenue Code, [and] CDA may treat the nonpayment of compliance monitoring fees as a decision on the part of that project owner to withdraw the project from the Maryland LIHTC Program, and CDA may report the withdrawal to the IRS" (2026 QAP §H.8). The post-Year-15 policy separately confirms "[a]t this time, DCA does not charge fees for non-compliance/failure to correct compliance" during the Extended Use Period, while reserving the right to add one later.

Property tax: no blanket exemption, three overlapping negotiated statutes, and Baltimore City's own path

Maryland gives no LIHTC property an automatic property-tax break. Relief runs instead through negotiated Payment-in-Lieu-of-Taxes agreements under the Tax-Property Article, and the statute a given project uses depends partly on whether it sits in Baltimore City.

Baltimore City's own practice illustrates the negotiated, deal-specific nature of these agreements: in January 2025, Baltimore's Board of Estimates approved a 20-year PILOT for the Westview redevelopment, preserving 204 apartments restricted at or below 50% of area median income, with city finance staff describing the PILOT as necessary to make the redevelopment financially feasible. This research relied on secondary reporting for that example — Baltimore City DHCD's own "Affordable Housing PILOT Summary of Qualifications and Process" document, previously published at a dhcd.baltimorecity.gov URL, now returns a 404 (the URL redirects to the city's homepage), so the city's own internal qualification and approval-committee process beyond the state statutes above could not be independently confirmed from that primary document during this research.

The federal baseline underneath all of it

Every Maryland-specific number above sits on top of the same federal floor every state shares. The Compliance Period is 15 taxable years beginning with the first year of the credit period (IRC §42(i)(1)); the Extended Use Commitment adds a minimum of 15 more years, running from the start of the Compliance Period (IRC §42(h)(6)(D)) — 30 years combined, before any state or DHCD-specific enhancement. The Qualified Contract mechanism itself is entirely a creature of federal law, IRC §42(h)(6)(E)-(F): after the 14th year of the Compliance Period, an owner may request that the state agency find a buyer at a statutorily-defined price, and if none is found within one year, certain low-income restrictions terminate — subject to a three-year post-termination period during which existing tenants cannot be evicted or have rents increased above the statutory cap (§42(h)(6)(E)(ii)). Treasury Regulation §1.42-5 sets the floor for on-site inspection frequency and sample size that Maryland's own Initial Compliance Period rules track directly.