Section 10-B4508. LAND PURCHASE/LEASEBACK TRANSACTION

 

4508.1DHCD may acquire property under the LAHDO Program through one of the following methods:

 

(a)Direct purchase of the land from an owner-applicant;

 

(b)Acceptance of assignment of an applicant's right to purchase the property from a third party; or

 

(c)Purchase of land or land and building(s) from an applicant immediately following the applicant's purchase of property from a third party.

 

4508.2DHCD shall purchase the property for a price which is equal to the lesser of one of the following:

 

(a)The sale price specified in the applicant's sales contract or agreement or purchase option agreement; or

 

(b)The appraised value accepted by DHCD after its review of the appraisal submitted as part of the LAHDO Program application.

 

4508.3The land shall be leased to the applicant under the specific terms and conditions of the LAHDO Program Lease Agreement, which shall include all applicable requirements of this chapter and any other necessary operating and enforcement provisions as determined by DHCD.

 

4508.4DHCD shall set the annual land lease payment at a below market rate which shall be thirty-eight dollars and sixty-four cents ($38.64) per annum per one thousand dollars ($1,000) in land purchase price paid by DHCD under the LAHDO Program.

 

4508.5DHCD may, in its sole discretion, establish a different lease rate than that provided in §4508.4 if it determines that a different rate is needed to ensure the economic feasibility of the project.

 

4508.6In addition to the annual land lease payment provided for in §4508.4, if DHCD acquires site improvements from the applicant in accordance with §4501.2, the LAHDO Program Lease Agreement shall also provide that DHCD's increased costs related to its purchase of site improvements shall be paid in the form of additional rent over the term of the lease, on terms comparable to those established for the overall lease.

 

4508.7The LAHDO Program Lease Agreement shall have a term of not less than fifty (50) years, but DHCD may approve a longer term if DHCD determines in its underwriting of the project, that the terms and conditions of Private financing, mortgage insurance or other costs shall make the project otherwise infeasible.

 

4508.8DHCD may, at its sole discretion, allow the applicant to purchase the land leased under the LAHDO Program; Provided, that the applicant meets conditions for sales as established by DHCD which shall include, but not be limited to, the requirements of §§4508.9 through 4508.15.

 

4508.9An option to purchase shall only be available to the applicant five (5) years after the date of completing the rehabilitation or construction required by DHCD under the LAHDO Program.

 

4508.10Except as provided for in §4508.15, the price of the land shall be set at its fair market value at. the time of purchase from DHCD (as determined by a current appraisal acceptable to DHCD); Provided, that the price shall not be less than the price paid by DHCD at the time of acquisition under the Program.

 

4508.11If DHCD acquired site improvements from the applicant as provided in §4501.2, the purchase price for the land shall also include the cost of those improvements, less any amounts already paid to DHCD as additional rent for the site improvements under the terms of the LAHDO Program Lease Agreement.

 

4508.12The applicant shall submit, in a form prescribed by DHCD, an assessment of the impact of the sale on any tenants living in reserved units, and shall agree that as regards its exemption from the rent ceiling controls of the Rental Housing Act of 1985 pursuant to D.C. Code §45-2515(a) (1990 Repl. Vol.), the following shall apply:

 

(a)If exemption was obtained pursuant to D.C. Code §45-2515(a) (1) (1990 Repl. Vol.), that DHCD will advise the Department of Consumer and Regulatory Affairs that the District subsidy for units in the property will terminate as of the date of acquisition of the land, and that the provisions of D.C. Code §45-2519 (1990 Repl. Vol.) concerning rent levels shall then be applicable;

 

(b)If exemption was obtained pursuant to D.C. Code §45-2515(a) (2) or (4) (1990 Repl Vol.), that the applicant shall agree that any lower income tenant occupying reserved units shall receive assistance for a period of forty-two (42) months following land acquisition in the same manner as required in §4507.12; or

 

(c)If exemption was obtained pursuant to D.C. Code §45-2515(a)(7) (1990 Repl. Vol.), the provisions of that section concerning rent levels shall be applicable.

 

4508.13The applicant shall agree that as regards its exemption from real property taxes with respect to the land, that DHCD will advise the Department of Finance and Revenue that the basis for the exemption will terminate as of the date of acquisition of the land.

 

4508.14The applicant shall agree to execute a covenant in the deed enforcing the conditions of DHCD's agreement to sell the land.

 

4508.15DHCD may, in its sole discretion, negotiate a sale price and terms for the land, which price is less than the land's fair market value, if all of the following conditions obtain:

 

(a)The applicant agrees, upon terms and conditions which are legally binding and enforceable as determined by DHCD, to maintain the reserved units consistent with the requirements for reserved units in §4503 for an additional period of not less than ten (10) years from the date of the sale of the land;

 

(b)DHCD makes a written finding based on information provided by the applicant and upon DHCD's own research, that the difference between the price agreed upon by DHCD and the fair market value of the land does not exceed the amount required to maintain the reserved units for the additional ten (10) years while maintaining the economic viability of the development; the burden of proof shall be upon the applicant to justify such finding by DHCD; and

 

(c)In no event shall the price negotiated by DHCD be less than the price paid by DHCD at the time of acquisition under the LAHDO Program, including both the price of the land and any site improvements acquired by DHCD.

 

4508.16The applicant shall agree that any site improvements which attach to the land acquired by DHCD shall be owned by the District, regardless of whether the District acquires the site improvements as provided in §4501.2. Buildings on the land shall not be considered a site improvement.

 

source

Final Rulemaking published at 36 DCR 8507, 8525 (December 22, 1989).