2009-02-20, 09:53

D.C. Grants Itself the Right to Purchase Certain Multi-Family Properties

By: Chris Iavarone
In late 2008, Washington, D.C. enacted the District's Opportunity to Purchase Amendment Act of 2008. The Act amends the Tenant's Opportunity to Purchase Act ("TOPA") to provide the Mayor, on behalf of the District, with a right to purchase certain "housing accommodations" consisting of 5 or more rental units. The Mayor’s right to purchase is subordinate to the rights of tenants to purchase under TOPA.

The Mayor’s right to purchase only applies to properties that meet certain criteria, including a requirement that at least 25% of the units qualify as “affordable units.” Affordable units are rental units for which the existing monthly rent, including utilities, paid by the tenant is equal to or less than 30% of the monthly income of a household with an income of 50% of the area median income (as determined by HUD).

The HUD area median income for 2008 is $99,000. A quick "back of the napkin" calculation suggests that rent, including utilities, would need to be less than approximately $1240 a month for at least 25% of the units in order for the property to be subject to the Act.

Pursuant to the Act, the seller must provide the Mayor with a notice of sale. This is the same notice that is already required under TOPA. The Mayor has 30 days to notify Seller of an interest to purchase the property. Thereafter, the Mayor has 150 days to negotiate a contract, subject to certain rights to extend both of these time periods.

The Mayor’s right to purchase the housing accommodation may be assigned. If the Mayor or an Assignee exercises the right to purchase the property, the housing accommodation must be maintained as affordable units.

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