How Local Government Infrastructure Financing Works

​​The Maryland Department of Housing and Community Development's Community Development Administration issues bonds, on behalf of counties, municipalities and/or their instrumentalities, to finance projects that serve the community at large. These projects can include, but are not limited to, streetscape improvements, transportation enhancements, and water and sewer treatment facilities.

The Community Development Administration has at its disposal the expertise and resources (including bond counsel and a financial advisor) to manage the details of the bond issuance, and to help local governments navigate successfully through the complexities of a tax-exempt bond financing. Additionally, the program reduces issuance costs through economies of scale and by pooling the local demand.

The Community Development Administration issues tax-exempt bonds as a way of raising capital, and loans those bond proceeds to local governments. The interest rate on the local government loans is subject to market conditions at the time of sale - based upon the rate attained on The Community Development Administration’s pooled bond issue. Local governments are responsible for repaying the debt incurred through the bond financing and for paying their pro-rata share of the costs of issuance of the pooled bonds. To secure payment of the loans and to enhance the marketability of the bonds that are sold to fund the loans, each participant pledges its full faith and credit to make payment on the loan.

Whether funds are needed for a $150,000 effort or a $10 million project, Local Government Infrastructure Financing is a convenient and streamlined resource for those that:

  • Want to secure long-term capital financing with advantageous terms
  • Do not routinely issue bonds, and
  • Have limited resources to initiate a financing on their own

Additionally, the term of the loan is set at the option of the local government, but cannot exceed the useful life of t​he project or thirty years, whichever is less.


All Maryland counties, municipalities and/or their agencies are eligible, provided they have legal authority necessary for:

  • Constructing, operating and maintaining the proposed project,
  • Pledging security for and repaying the proposed loan, and
  • Pledging income tax payments and various other shared revenue from the State.

Local governments must secure local legislative approval(s) to incur the debt, certify the capacity to inspect the project’s construction progress, and agree to submit periodic status reports.  Additionally, they must ensure t​he adequacy and sufficiency of the project’s design and construction. Further, local governments must meet credit requirements sufficient to satisfy rating agencies and secure a favorable credit rating on the pooled bonds.


Projects must support an ​essential physical element of a municipality’s public service system and meet federal tax law requirements. A project must be undertaken by or on behalf of a local government, including its agencies.

Projects may include, but are not limited to:

  • Street lighting, landscaping, sidewalks and public space improvements
  • Public safety vehicles and equipment
  • Water production, treatment, storage and distribution systems
  • Storm water control and sewer collection and treatment facilities
  • Government office and meeting facilities
  • Police, fire, transportation, education, health, recreation, maintenance and other service related facilities
  • Refinancing of existing debt for eligible projects as listed above


The local government is required to complete an application which elicits information similar to that which a bond rating agency would require to evaluate credit worthiness. When bonds are issued is influenced by the volume and frequency of participation by local governments.  - LGIF Application​

Application documents:


The Community Development Administration provides assistance to local governments in the completion of the application for the program. Those requesting technical assistance may submit an Expression of interest form outlining the proposed project or specific questions.


CONTACT: Charles Day
P: 301-429-7891​​​​​​​​​​​​​​​​