DHCD Issues District Opportunity to Purchase Act Final Regulations
The District of Columbia Department of Housing and Community Development (DHCD) has issued its final rules for the implementation of the District Opportunity to Purchase Act (DOPA), which were published in the District of Columbia Register on Nov. 16, 2018, and took effect that day. Generally, District properties are considered for DOPA if:
- a property of five or more rental units is offered for sale, and
- 25 percent or more of the rental units are "affordable" at 50 percent of median family income (MFI)
Background and Overview
DOPA was enacted in 2008, but regulations were never issued and the law did not take full effect. In 2015, Mayor Muriel Bowser created the DC Housing Preservation Strike Force, which then made six recommendations in November 2016:
- Establish a Housing Preservation Unit
- Create a Public-Private Preservation Fund
- Create a Small Properties Preservation and Affordability Program
- Implement DOPA
- Advance preservation under the Tenant Opportunity to Purchase Act (TOPA)
- Allow low-income senior renters to age in place through the Single Family Residential Rehabilitation Program (SFRRP)
Subsequently, Mayor Bowser instructed DHCD to develop regulations for DOPA, and DHCD began the rulemaking process in December 2017.
DOPA allows the Mayor, through DHCD, the opportunity to purchase or assign the property if the tenants do not exercise their TOPA rights. Currently there is no budget for DOPA, therefore the District will assign its rights to pre-qualified developers. DHCD sent its Request for Qualifications (RFQ) out on Nov. 16, 2018.
Next Steps and Considerations
Developers must submit their applications no later than Jan. 11, 2019, at 4 p.m. to be considered. There will be a committee at DHCD that will select the pre-qualified developers. Selection criteria includes, but is not limited to, demonstrated capacity and expertise in acquiring, renovating maintaining and owning affordable multifamily rental housing. More specific information can be found in the RFQ.
DHCD Affordable Housing Preservation Officer Ana Van Balen stated that the agency's goal is to have the pre-qualified developers selected by February 2019. Pre-qualified developers that are ultimately selected to purchase a particular property must be able to close within 60 days of the contract being executed. The developer would also have to record an Affordability Covenant on the property, something DHCD has not created yet but is in the process of doing.
This program seems to be best targeted to developers with large capital or quick access to capital who would like to add affordable rental projects to their portfolios without the involvement of tenants in the process. It was stressed that DOPA is still subordinate to TOPA and would only kick in if tenants do not exercise their TOPA rights or TOPA rights have expired. DHCD is still working out some details, but stated that the agency is committed to this program and implementing it in 2019. If you have any questions or need any assistance navigating DOPA or TOPA, contact Holland & Knight's June L. Marshall.
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.