Maryland Historical Trust Loans for Rehabilitation and Acquisition

The Maryland Historical Trust Historic Preservation Loan Program was established by the General Assembly in 1973 as a way to encourage the preservation of historic properties statewide. Preservation loans are provided to nonprofit organizations, local jurisdictions, business entities and individuals for the purpose of acquiring, rehabilitating or refinancing all categories of real property listed in or eligible for listing in the National Register of Historic Properties.  Short term financing (up to two years) for predevelopment work required or recommended by the Trust may also be available.  Loans to individuals and business entities are made only when private financing cannot otherwise be obtained.  Because all loan repayments are used to make new loan commitments, the Trust requires the timely repayment of the loan.  A perpetual preservation easement must be conveyed to the Trust on most loan assisted real property.

For more information on loans for capital projects, to find out if your project is eligible, and to find out how much money is currently available for loans, email or call Anne Raines, RA, LEED AP at araines@mdp.state.md.us or (410) 514-7634.

Eligible Projects

The MHTCapital Loan Program is used to support capital projects.  Eligible uses of loan funds include:  

• Acquisition:  Acquisition of fee title or interest other than fee title of real property. 
• Rehabilitation:  Activities directed to sustain the existing form, integrity, and material of a building, structure, or site.  Includes repair or alteration that makes possible a contemporary use while preserving those features of the property which are significant to its historical, architectural, and cultural values.    
• Refinancing:  Refinancing or consolidation of an existing loan(s) on the property.
• Predevelopment costs:  Short term financing (up to two years) for predevelopment work required or recommended by the Trust, to be undertaken in advance of a construction project being funded with federal or state monies.   Such costs include studies, surveys, plans and specifications, and architectural, engineering, or other special services directly related to pre-construction work for a capital project.

 In addition, please note the following eligibility requirements:

• The project must be listed on or determined eligible for the Maryland Register of Historic Properties.
• The project must be located within a Priority Funding Area.
• Structures used for religious purposes may be eligible for assistance generally for exterior work only and will be reviewed for eligibility on a case by case basis.  Spaces or objects used primarily for religious purposes are not eligible for funding.

• Projects must have an expected useful life of at least 15 years.

• MHT will not provide funds for a combination of acquisition, rehabilitation, and pre-development costs in any one loan.

Applicant Eligibility

Eligible applicants include nonprofit organizations, local jurisdictions, individuals, and business entities. 

Nonprofit organizations and business entities must be in good standing with the State Department of Assessments and Taxation, qualified to do business in Maryland and have the legal capacity and authority to incur the obligations required by MHT.

Business entities and individuals must submit evidence to support their application that they are unable to secure private financing for the requested loan amount.   Please see the program Guidelines for specific instructions.

Loan Amounts & Terms

The maximum loan commitment made for any specific project is limited by:

• the available uncommitted balance in the loan Fund at the time of application. 
• For acquisition projects, the loan amount cannot exceed 80% of the appraised value of the assisted property, or 90% of the purchase price, whichever is less.  If an acquisition loan is requested, but the property requires rehabilitation, the source of rehabilitation financing should be identified in the application.  The Trust requires evidence that the applicant has the financial ability to complete any necessary rehabilitation within a mutually agreed upon time frame, which condition is incorporated in the Mortgage or Deed of Trust. 
• For rehabilitation projects, the loan amount cannot exceed 80% of the after rehabilitation appraised value of the assisted property (minus existing mortgage balances), or 100% of the project costs, whichever is less.
• For refinancing projects, the loan cannot exceed 80% of the appraised value of the assisted property .
• For pre-development projects, the loan cannot exceed 100% of the project costs.  If a pre-development loan is requested, the source of construction financing should be identified in the application.  A pre-development project must be part of a larger capital project to qualify for a loan. The borrower must have evidence of permanent financing to serve as the source of repayment of the loan.
• The maximum loan amount for ANY proposed project is the after-rehabilitation value of the historic property to be assisted, less the outstanding amount of any pre-existing indebtedness secured by the historic property.

The average loan has been in the amount of $100,000, with loans as large as $300,000 having been settled.

Loan terms are negotiable, however, the maximum loan term is 20 years.  For pre-development projects, the maximum loan term is 24 months.

Loans to business entities and individuals bear interest at a fixed annual rate 1/8 percent higher than the most recently sold State general obligation bonds.   Loans to non-profit organizations and political subdivisions may bear interest, if any, at a rate not to exceed that for business entities or individuals. 

Individuals borrowing through the Program should be prepared to make minimum monthly payments (including principal, interest, property insurance and taxes) of at least 20% of monthly gross income, as verified by the borrower's most recent federal income tax return. 

Standards & Requirements

• Rehabilitation projects must conform with the Secretary of the Interior’s Standards for the Treatment of Historic Properties (Insert Link). 
• For acquisition projects the Trust requires evidence that the applicant has the financial ability to complete any necessary rehabilitation within a mutually agreed upon time frame, which condition is incorporated in the Mortgage or Deed of Trust. 
  For pre-development projects, the borrower must have evidence of permanent financing to serve as the source of repayment of the loan.
• Business entities and individuals must submit evidence to support their application that they are unable to secure private financing for the requested loan amount.  Loans to business entities and individuals bear interest at a fixed annual rate 1/8 percent higher than the most recently sold State general obligation bonds.  Individual borrowers must be prepared to make minimum monthly payments (including principal, interest, property insurance and taxes) of at least 20% of monthly gross income, as verified by the borrower's most recent federal income tax return. 
• Loans to non-profit organizations and political subdivisions may bear interest, if any, at a rate not to exceed that for business entities or individuals. 

Loan Terms and Conditions

Loan Terms & Conditions
All loan projects must be carried out in accordance with the terms and conditions noted below.  Please refer to the MHT Capital Loan Program Guidelines for full terms and conditions, as well as the project requirements outlined in the separate document “MHT Capital Loan Program Requirements”.

• Disbursements
  • Loan funds will not be disbursed "up front" (before the work is completed), except for loans for acquisition or refinancing, in which case a check is available at settlement.  Disbursements will be made as the project progresses.
  • Loan funds will not be disbursed until the Easement is recorded.
  • 10% of the loan amount will be retained against Borrower’s submission of an acceptable Completion Report.

• Procurement / Bidding
  • All contractors, architects, craftspeople, etc. whose services are to be paid for (or partially paid for) with State funds will need to be selected by a process approved by the Trust. This requires those services to be publicly advertised or widely solicited. 
• Approval of Proposed Work
  • Plans and specifications for rehabilitation projects must be reviewed and approved by MHT prior to the work being undertaken. 
  • Rehabilitation projects must conform with the Secretary of the Interior’s Standards for the Treatment of Historic Properties. 
• Easement
  • A Perpetual Preservation Easement must be conveyed to the MHT or an entity acceptable to MHT on all historic real property assisted by the Program. If MHT currently holds an easement on the property, a modification to the easement may be required.
  • A sample easement, and a checklist of documents required from the borrower, is available for applicant's reviewon the How to Convey an Easement page of the MHT website. 
  • The easement requirement may be waived for contributing properties located within a locally-designated historic district provided that:
    • The loan funds are used for exterior work only; and
    • Changes to the exteriors of properties located within this district are subject to review and approval by the local Historic Preservation Commission or equivalent.
• Loan Closing
  • MHT’s fee for loan processing, which must be paid at closing, is equal to the lesser of $1000 or 10% of the loan amount, minus the already-paid application fee of $250.
  • Borrower is responsible for all closing fees.  Closing is handled by a title attorney retained by the Borrower.
• Borrower’s Responsibilitie
  • Borrowers must comply with the responsibilities and requirements detailed in the document “MHT Capital Loan Program Requirements”.  

All loans must comply with the Maryland Historical Trust Historic Preservation Loan Program statute and regulations (COMAR 34.04.02).

Eligible Expenses

Loan Funds CANNOT be used to pay for:

• Insurance
• Appraisals
• Non-capital expenses  such as research, studies, or predevelopment activities that are NOT part of a capital project
• Equipment that is not inherent to the capital project
• Indoor or outdoor exhibits with an expected useful life of less than 15 years
• Legal fees
• Employee salaries
• Project management, if it can be reasonably included in staff job duties
• Any work that is not properly bid.  Contracts to be paid out of grant funds CANNOT be sole-sourced.
• Landscaping that is not related to necessary work scope
• General office expenses
• Work to any area of a site or building, or a building element, that is used predominantly for religious purposes, unless the work is required to make repairs to the building structure

Evaluation Criteria

In accordance with the Project Selection Criteria, as provided for in COMAR 34.04.02.06(E), loan applications will be reviewed using the evaluation criteria listed below.

1. Relative historical or cultural significance of the resource to be treated;
2. Urgency of the need for financial assistance for the project;
3. Extent to which the project will contribute to the cumulative equitable Statewide geographic distribution of funds based on the concentration of historic properties;
4. Inclusion of long term preservation measures that will protect the resource to be treated;  
5. Comprehensiveness of the scope of the project;
6. Readiness of the project to initiate activity and to be completed within an established time frame;
7. Administrative capability of the applicant and project sponsor;
8. Extent to which the project stimulates or promotes other historic preservation activities;        
9. Informational and educational value of the project;
10. Demonstration and innovation value of the project;
11. Extent to which there is any proposed contribution by the appropriate local jurisdiction to support the project proposed to be financed; and
12. Additional criteria which the Trust considers to be appropriate.

Application Process and Timeline

MHT accepts loan applications at any time provided that the loan amount does not exceed the available uncommitted balance in the MHT Loan Fund at the time of application.  Prior to submitting an application, please contact MHT to determine if loan funding is available.  Loans are made on a first come, first served basis, as monies are available.  The period from time of application until time of settlement generally averages six to nine months.

A complete MHT loan application with all required supporting documentation must be submitted before a project can be fully processed.  An application fee of $250 is also required.