The District Opportunity to Purchase Act (DOPA) promotes affordable rental housing by maintaining the affordable status of existing affordable rental units as well as increasing the total number of affordable rental units within the District.
To this end, DOPA requires rental property owners to provide the District of Columbia with the opportunity to purchase housing accommodations consisting of five or more rental units, as long as 25 percent or more of those rental units are deemed as “affordable.”
In the statute, the District’s right to purchase is subordinate to a tenant’s right to purchase under the Tenant Opportunity to Purchase Act (TOPA).
A November 2016 report by the Housing Preservation Strike Force listed the implementation of DOPA regulations as one of six strategies the District should use to preserve affordable housing stock. The report noted that issuing the rules will allow the District to take greater advantage of the DOPA statute through the assignment of ownership to pre-qualified developers on an expedited basis.
Overview of December 2017 Proposed DOPA Regulations
Writing the regulatory language began in early 2017; proposed regulations were published in the DC Register on December 22, 2017, with a 30-day comment period.
Highlights of the proposed regulations included:
- Amount of affordable housing preserved: While at least 25 percent of the units would have to remain affordable below 50 percent of the area’s median family income (AMI), higher numbers of affordable units and units affordable at higher and lower income levels are encouraged.
- When properties can be purchased from poor performing property owners: The Mayor can purchase properties that the owner is offering for sale to other potential buyers and only after the tenants have chosen or have been unable to exercise their TOPA rights.
- Coordination of DOPA and TOPA timelines: The Mayor does not have to wait for the TOPA process to end before starting the DOPA process. The owner informs both the Mayor and the tenants of the decision to sell at a similar time, and the two timelines run simultaneously. However, the Mayor cannot exercise DOPA rights before the tenants have chosen or have been unable to exercise their TOPA rights. The Mayor then has an additional 15 days to negotiate a sale and contract with the owner.
- District management of properties it purchases: The District may assign its purchase rights to a private developer that meets certain standards and selection criteria set by DHCD. The developer would be selected through a competitive process.
- Residents’ access to rental units the District purchases: In most instances the units will already be occupied by low income households. In the case of vacant units and unit turnover, tenant selection would: (1) occur at the property level; and (2) be done based on the funding requirements used to purchase the property and the covenant that the Mayor places on the property.
New Proposed Regulations Issued in June 2018
In response to the earlier proposed regulations DHCD made technical and copy edits, as well as some significant changes, in a second proposed rule June 15, 2018:
- Clarifies that the information that the Mayor may request from an owner includes all liens, mortgages, deeds of trust, pending legal proceedings, including but not limited to tenant petitions, or any other matter affecting the title of the housing accommodation and all warranties and assignable service contracts.
- Defines a bona fide offer of sale as that used elsewhere in TOPA (S. 42-3404.02).
- Further specifies the factors for consideration to be included on the pre-approved developer list, similar to qualifications in other DHCD programs.
- For financing purposes, allows the Mayor’s assignee to seek written permission to further assign the right to purchase the property to another entity it controls.
- Makes an exception for some rent rules to accommodate properties receiving Section 8, LIHTC and similar subsidies.
- To better comply with the statute, differentiates the definition of affordable unit used initially to qualify a property for DOPA from the definition of the rent restrictions used to determine ongoing compliance with DOPA once the Mayor has exercised the opportunity to purchase the property.
- Clarifies how rent and income are determined for current tenants and units in a DOPA transaction and what income levels should be used for eligibility purposes.
- Clarifies that a tenant whose lease at the time of the offer of sale did not contain an obligation to comply with income certification requirements cannot be compelled to provide an income certification and cannot be evicted for a failure to comply with an income certification request, and provides rules for setting rents in these circumstances.
- Explicitly establishes a DOPA Covenant to memorialize the restrictions on rent and income established by the DOPA transaction.
- Expresses rent and income levels in relation to the Median Family Income (MFI) calculated by HUD as is becoming common place in other District housing programs.
- Provides a more explicit definition of maximum rent and a new definition of utilities to be used in implementing the program.
The rules have a 30-day comment period and are expected to be finalized in Summer 2018.
Items of Interest: