Common Area Assistance Loan Fund
Program Overview
DHCA is pleased to announce the launch of a new COC Common Area Assistance Loan Fund for homeowner and condominium associations experiencing financial hardship in their efforts to address immediate health or safety repairs, as documented by professional assessments or government citations. Some examples of eligible common area rehabilitation projects may include failing water supply lines, elevators, fire suppression systems, underground and surface stormwater drainage, facades, balconies, sidewalks, pathways, and parking lots. Montgomery County has approved $1.23 million for this loan fund in Fiscal Year 2025 (through June 2025). The loan fund may provide a maximum individual loan of $500,000, and DHCA can only commit the approved funds. Future funding is subject to appropriation.
DHCA will start accepting applications on November 20, 2024. Applications submitted before that date will not be considered.
Terms of the Loan
Loans will be repaid over a period of up to 15 years and secured by a pledge of current and future COC assets. No interest will be charged. However, a 1% loan commitment fee will be required for the total approved loan amount.
Eligible Projects and Activities
Critical repairs or replacements in common areas to address health, safety, or occupancy risks as confirmed by a professionally prepared assessment for a COC that needs funding assistance. The eligible common area rehabilitation projects described above in the program overview are not all-inclusive.
- All funds are provided in the form of loans, up to a maximum of $500,000, with DHCA loans being subordinate to other loans.
- DHCA loans are repayable under terms negotiated based on project need and COC capacity, documented in a promissory note, and secured with a security agreement on association assets and collection.
- COCs will contribute a minimum of 20% of the total project costs toward the repairs and a 1% loan commitment fee for the total loan amount.
- Funding is limited to the rehabilitation of critical capital needs, which may include predevelopment construction-related services.
- Project scope and need requirements must be substantiated by a current reserve study, comprehensive capital needs assessment, and comprehensive budget estimates.
- Funding will be released as progress payments based on invoices.
- COCs may self-manage or procure a third-party project manager. All independent third-party professional project management managers must meet DHCA’s standards to coordinate funding draws based on successful work completion and satisfaction.
Is this loan fund open to all Common Ownership Communities?
Any County regulated COC that is at least 51% owner-occupied and fully compliant with all County regulatory requirements can apply.
What activities are eligible for the fund?
Critical rehabilitation projects to address serious common area health, safety, or occupancy risks including, but not limited to, failing water supply lines, elevators, fire suppression systems, underground and surface stormwater drainage, facades, balconies, sidewalks, pathways, and parking lots.
When is the application period?
DHCA will accept applications on a rolling basis beginning November 20, 2024. Applicants may submit their application online.
What documentation is required to demonstrate the need for critical health and safety repairs in a COC’s common area?
The COC must have a certified engineering or contractor analysis or inspection of the physical issues impacting the property potentially including structural inspections by the Department of Permitting Services (DPS) to identify critical common area repairs or replacements; a reserve study analysis; a professional capital needs assessment to review the property’s condition and concerns; an engineering analysis to define the scope of work needed; and contractor rehabilitation project cost estimates. The COC’s loan fund application must also include a scope of work, cost estimates, and the expected funding sources.
How does a COC demonstrate its financial needs and capacity to fund the complete project?
A complete financial documentation package is required for the loan application. The package must include audited financials, current reserve fund budget reports, an assessment of HOA/Condo fee delinquency, existing loan details, and documented efforts to raise special assessments or loan funding for the critical common area rehabilitation project. The COC must have the capacity to contribute 20% of the total project cost from its own funds. In addition, the COC must maintain its operating budget, adhere to the maintenance schedule, and stay current on all existing loan repayments.
How will DHCA determine project eligibility?
DHCA will review application submissions for eligibility and prioritization. Completed application packages will include information about the COC’s finances, owner occupancy, and regulatory compliance. Documentation to confirm the critical nature of the proposed rehabilitation project will include a capital needs assessment, a currently certified engineering or contractor analysis of the common area’s failing physical elements recommended for repair or replacement, and the necessary project scope with cost estimates. Eligibility determinations will be based on the severity and timeframe of risks addressed by the identified rehabilitation actions, the proposed DHCA loan importance in the project funding structure, and the availability of DHCA funds. The DHCA loan provides gap financing to help address critical health or safety risks to prevent loss of occupancy. DHCA will confirm receipt of the COC’s application package and potential loan funding eligibility within 60 days of submission.
What are the loan terms?
Loans will be repaid over a period of up to 15 years and will be secured by a pledge of current and future COC assets. No interest will be charged. However, a 1% loan commitment fee will be required for the total approved loan amount.
Can the County recommend firms that could conduct a capital needs assessment or provide engineering and construction assessments?
DHCA does not provide lists or recommendations for specific contractors, such as building capital needs assessment specialists, architects, engineers, or construction firms. We will review the experience and licensing credentials of the certified professional who prepared the project scope and engineering analysis. We will also review their previous experience with residential rehabilitation projects, local property codes, and permitting procedures, which impact the project design, scope, and cost estimates.
Can a project be eligible for this funding program if it receives funding from other County or State programs?
Yes, COCs should pursue funding from any available sources. State and County programs providing funding assistance for energy or water management, among other needs, can be combined to support the COCs applying for the DHCA loans.
What does a COC governing board need to provide to demonstrate authority to enter into a loan agreement with DHCA?
The COC's governance documents will provide the requirements for boards to enter into financial agreements, including voting requirements and limits on loan amounts and terms. DHCA will work with COCs to ensure the board’s authority and governance compliance.
What can a COC do if the critical repair needs exceed the available funding?
DHCA recognizes that a maximum loan of $500,000 may generally represent only a portion of the funding needed for a rehabilitation project to resolve critical health and safety issues. COCs will need to develop plans for such scenarios.
Which County agencies are responsible for issuing health and safety citations for code violations?
DHCA’s housing code enforcement team and the Department of Permitting Services (DPS) inspect the condition of dwellings or structures to cite code violations and issue civil citations for uncorrected violations. An inspector from either DPS or DHCA may condemn a dwelling or structure if deemed unfit for human habitation or an immediate public safety risk as described on page 35 of DHCA’s Housing and Building Code Enforcement Handbook available in English or Spanish as per Montgomery County Code, Chapter 26, Housing and Building Maintenance Standards, Section 26-13. Designation of unfit dwellings and unsafe nonresidential structures; condemnation.
Can the loan fund be used for a multi-phase capital improvement project?
Yes, the health or safety risk repairs or replacements funded with the DHCA loan can be part of a larger project if the project has sufficient funding to meet the current critical phase and a viable plan for funding other critical health and safety common area repairs in a timely manner.
Any County regulated COC that is at least 51% owner-occupied and fully compliant with all County regulatory requirements can apply.
What activities are eligible for the fund?
Critical rehabilitation projects to address serious common area health, safety, or occupancy risks including, but not limited to, failing water supply lines, elevators, fire suppression systems, underground and surface stormwater drainage, facades, balconies, sidewalks, pathways, and parking lots.
When is the application period?
DHCA will accept applications on a rolling basis beginning November 20, 2024. Applicants may submit their application online.
What documentation is required to demonstrate the need for critical health and safety repairs in a COC’s common area?
The COC must have a certified engineering or contractor analysis or inspection of the physical issues impacting the property potentially including structural inspections by the Department of Permitting Services (DPS) to identify critical common area repairs or replacements; a reserve study analysis; a professional capital needs assessment to review the property’s condition and concerns; an engineering analysis to define the scope of work needed; and contractor rehabilitation project cost estimates. The COC’s loan fund application must also include a scope of work, cost estimates, and the expected funding sources.
How does a COC demonstrate its financial needs and capacity to fund the complete project?
A complete financial documentation package is required for the loan application. The package must include audited financials, current reserve fund budget reports, an assessment of HOA/Condo fee delinquency, existing loan details, and documented efforts to raise special assessments or loan funding for the critical common area rehabilitation project. The COC must have the capacity to contribute 20% of the total project cost from its own funds. In addition, the COC must maintain its operating budget, adhere to the maintenance schedule, and stay current on all existing loan repayments.
How will DHCA determine project eligibility?
DHCA will review application submissions for eligibility and prioritization. Completed application packages will include information about the COC’s finances, owner occupancy, and regulatory compliance. Documentation to confirm the critical nature of the proposed rehabilitation project will include a capital needs assessment, a currently certified engineering or contractor analysis of the common area’s failing physical elements recommended for repair or replacement, and the necessary project scope with cost estimates. Eligibility determinations will be based on the severity and timeframe of risks addressed by the identified rehabilitation actions, the proposed DHCA loan importance in the project funding structure, and the availability of DHCA funds. The DHCA loan provides gap financing to help address critical health or safety risks to prevent loss of occupancy. DHCA will confirm receipt of the COC’s application package and potential loan funding eligibility within 60 days of submission.
What are the loan terms?
Loans will be repaid over a period of up to 15 years and will be secured by a pledge of current and future COC assets. No interest will be charged. However, a 1% loan commitment fee will be required for the total approved loan amount.
Can the County recommend firms that could conduct a capital needs assessment or provide engineering and construction assessments?
DHCA does not provide lists or recommendations for specific contractors, such as building capital needs assessment specialists, architects, engineers, or construction firms. We will review the experience and licensing credentials of the certified professional who prepared the project scope and engineering analysis. We will also review their previous experience with residential rehabilitation projects, local property codes, and permitting procedures, which impact the project design, scope, and cost estimates.
Can a project be eligible for this funding program if it receives funding from other County or State programs?
Yes, COCs should pursue funding from any available sources. State and County programs providing funding assistance for energy or water management, among other needs, can be combined to support the COCs applying for the DHCA loans.
What does a COC governing board need to provide to demonstrate authority to enter into a loan agreement with DHCA?
The COC's governance documents will provide the requirements for boards to enter into financial agreements, including voting requirements and limits on loan amounts and terms. DHCA will work with COCs to ensure the board’s authority and governance compliance.
What can a COC do if the critical repair needs exceed the available funding?
DHCA recognizes that a maximum loan of $500,000 may generally represent only a portion of the funding needed for a rehabilitation project to resolve critical health and safety issues. COCs will need to develop plans for such scenarios.
Which County agencies are responsible for issuing health and safety citations for code violations?
DHCA’s housing code enforcement team and the Department of Permitting Services (DPS) inspect the condition of dwellings or structures to cite code violations and issue civil citations for uncorrected violations. An inspector from either DPS or DHCA may condemn a dwelling or structure if deemed unfit for human habitation or an immediate public safety risk as described on page 35 of DHCA’s Housing and Building Code Enforcement Handbook available in English or Spanish as per Montgomery County Code, Chapter 26, Housing and Building Maintenance Standards, Section 26-13. Designation of unfit dwellings and unsafe nonresidential structures; condemnation.
Can the loan fund be used for a multi-phase capital improvement project?
Yes, the health or safety risk repairs or replacements funded with the DHCA loan can be part of a larger project if the project has sufficient funding to meet the current critical phase and a viable plan for funding other critical health and safety common area repairs in a timely manner.
Eligibility Criteria
COC Eligibility- 51% of the total COC units must be owner-occupied.
- The Governing Board must be fully compliant with regulatory requirements.
- COCs experiencing an urgent expense hardship in their efforts to address critical replacement or repairs that threaten habitability or safety in the property’s common areas only, as documented by professional assessments and/or government citations.
- COCs in areas of need, such as Equity Focus Areas.
- Repairs/replacement to address an immediate health or safety risk that is needed to maintain occupancy
- Financial need based on efforts to fund the project through other options, including past, current, and future assessments, special assessments, applying for government grants, and bank loan products.
- Governance capacity to manage financial and construction requirements.
- Financial capacity to provide 20% of total project cost, a 1% loan commitment fee for the total loan amount, and capacity to repay the DHCA COC Common Area Assistance Loan while maintaining operational and reserve study required assessments.
- COCs should contact the Office of Common Ownership Communities (OCOC) to discuss needs, eligibility requirements, and procedures.
- COCs should develop documentation and analysis required for review by OCOC as described in the loan fund application and document checklist.
- DHCA reviews and discusses the application with the COC and makes lending decisions based on eligibility, priority of need, and available funds at its sole discretion and criteria.
Application Process
- COCs should contact the Office of Common Ownership Communities (OCOC) to discuss needs, eligibility requirements, and procedures.
- COCs should develop documentation and analysis required for review by OCOC as described in the loan fund application and document checklist.
- DHCA reviews and discusses the application with the COC and makes lending decisions based on eligibility, priority of need, and available funds at its sole discretion and criteria.
Start the Application Process
- Download and review the document checklist.
- Prepare all required documents.
- Fill out the loan application.
- Upload all required documents into the application.
Townhall Webinar Schedule
Who should attend?
COC governing board leadership, managers, and owner members should attend to learn more about loan fund availability, eligibility, loan priorities, and the application process. Advanced registration is required.
- Wednesday, November 6, 2024 at 4:00-5:30 pm – Common Area Assistance Loan Fund Overview/ Session One
- Thursday, November 7, 2024 at 6:00-7:00 pm – Common Area Assistance Loan Fund Overview/ Session Two
For those who were unable to attend the townhall webinar please review the slide deck presentation. If you have additional questions please call the Montgomery County customer service center at 240-777-0311.