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D.C. Municipal Regulations (Last Updated: September 13, 2017) |
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Title 14. HOUSING |
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Chapter 14-42. RENT, BASE RENT, RENT CEILINGS AND ADJUSTMENTS |
Section 14-4210. PETITIONS BASED ON CAPITAL IMPROVEMENTS
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4210.1A housing provider may petition the Rent Administrator for a rent ceiling adjustment under § 210 of the Act in an amount sufficient to permit the housing provider to recover in increased rent the cost of a mandated capital improvement or capital improvements approved by the Rent Administrator (a “capital improvement petition”).
4210.2A housing provider shall file a capital improvement petition on a form approved by the Commission. The form shall be accompanied by instructions for completion of the form, which shall include notification to the affected tenants that the petition was filed and notification of the right to claim status as an elderly or disabled tenant.
4210.3A housing provider shall file a capital improvement petition in advance of beginning the capital improvement, except in the following cases:
(a)The capital improvement is immediately necessary to maintain the health or safety of the tenants; or
(b)The capital improvement is required by the provisions of any federal or District law.
4210.4If capital improvements are made in order to maintain the health and safety of the tenant(s), a housing provider shall file a capital improvement petition with the Rent Administrator within ten (10) calendar days after the installation of the improvement(s).
4210.5If capital improvements are made as required by federal or District statute(s), the capital improvement petition may be filed as a certificate of calculation for mandated capital improvements on a form supplied by the Rent Administrator. The certificate shall be accepted without a hearing.
4210.6Receipt and approval of the certificate of calculation by the Rent Administrator shall authorize the housing provider to implement the rent increase calculated on the mandated capital improvement petition form.
4210.7A certificate of calculation for mandated capital improvements filed in support or in lieu of a capital improvement petition shall establish the following:
(a)That the improvement is required by the provision(s) of a federal or District of Columbia law that became effective after November 1, 1980;
(b)The amount of the cost of the improvements;
(c)That the required governmental permits and approvals have been secured. Copies of these permits or approvals shall be attached to the petition form; and
(d)That the improvements have actually been installed and are in operation.
4210.8The Rent Administrator shall approve a capital improvement petition only if the Rent Administrator finds the following:
(a)That the capital improvement would protect or enhance the health, safety, and security of the affected tenants, or the habitability of the rental unit(s) or housing accommodation;
(b)That the capital improvement is depreciable under the United States Internal Revenue Code;
(c)If applicable, that the capital improvement will result in a net reduction in the amount of energy used by the rental unit or costs are passed on to the tenants; and
(d)If improvements are being made to one (1) or more units within a housing accommodation, that the interests of the affected tenants are being protected.
4210.9If a proposed capital improvement requires that the affected tenant vacate the rental unit(s) the housing provider shall serve notice to vacate for alterations or renovations, according to § 501(f) of the Act. No notice shall be served until after the Rent Administrator has approved the capital improvement petition.
4210.10The Rent Administrator shall render a final decision on each capital improvement petition within sixty (60) days after the petition is filed with the Rent Administrator pursuant to § 210(e)(2) of the Act; provided, that a petition filed as a certificate of calculation for mandated capital improvements, pursuant to § 210(h) of the Act, shall be decided within thirty (30) days after it is filed with the Rent Administrator.
4210.11If the Rent Administrator does not render a final decision on a completed capital improvement petition within sixty (60) days after receipt, the petitioner may proceed with the improvement subject to any rent adjustments subsequently ordered by the Rent Administrator pursuant to § 211(e)(2) of the Act.
4210.12The amount of a rent ceiling increase that a housing provider may take and perfect pursuant to final order of the Rent Administrator on a capital improvement petition which affects an entire building or housing accommodation shall be the amount computed in the following manner:
(a)By taking the total cost of the capital improvement excluding interest payments and service charges; THEN--
(b)By dividing the total monthly cost of the improvement by seventy-two (72) to obtain the total cost of the improvement to the entire building or housing accommodation; THEN--
(c)By dividing the total monthly cost of the improvement by the number of units in the building to obtain the dollar amount of the rent increase to each unit in the housing accommodation; provided, that no increase may exceed the current rent ceiling by more than twenty percent (20%).
4210.13The amount of rent ceiling increase which a housing provider may take and perfect pursuant to final order of the Rent Administrator on a capital improvement petition that affects one or more, but less than all, rental units in a building or housing accommodation shall be the amount computed in the following manner:
(a)By taking the total cost of the capital improvement excluding interest payments and service charges; THEN--
(b)By dividing the total cost of the improvement by forty-eight (48) to obtain the monthly cost of the improvements to all affected rental units; THEN--
(c)By dividing the total monthly cost of the improvement by the number of rental units in the building to obtain the dollar amount of the rent increase to each affected rental unit in the housing accommodation: provided, that no increase may exceed the current rent ceiling by more than fifteen percent (15%).
4210.14A housing provider shall take and perfect a rent ceiling adjustment to recover the cost of capital improvements in the manner set forth in § 4204.10, and the date of perfection shall be the date on which the housing provider satisfies the notice requirements of § 4101.6.
4210.15Where a housing provider increases the rent for a rental unit to an amount equal to or less than the rent ceiling adjustment permitted by § 4210.1, the housing provider shall comply with the provisions of §§ 4205.4 and 4205.5, and the notice required by §§ 4104.6 and 4205.4(a) may be issued simultaneously on a form of notice approved by the Rent Administrator.
4210.16The purpose of §§ 4210.10 through 4210.44 shall be to implement the Rental Housing Act of 1985 Capital Improvements Amendment Act 1989, D.C. Law 8-48, effective Oct. 19, 1989 (the “Amendment Act”).
4210.17Subsections 4210.1 through 4210.11 shall apply to a capital improvement petition, whether or not the Amendment Act applies to the petition.
4210.18A petition for a rent increase to recover the cost of a capital improvement filed on or before August 18, 1989, shall be decided under the prior law; all other pending petitions shall be decided under the Amendment Act and §§ 4210.16 through 4210.44 of this chapter unless the capital improvements were made before October 19, 1989.
4210.19The amount of a rent ceiling surcharge which a housing provider may take and perfect pursuant to the final order of the Rent Administrator on a capital improvement petition that affects an entire building or housing accommodation shall be the amount computed as set forth in this subsection. In computing the rent ceiling surcharge the housing provider shall do the following:
(a)Determine the monthly payment required to amortize, over a calculation period of ninety-six (96) months, a loan in an amount equal to the total costs of the capital improvements, including service charges as defined in § 4210.40(b), and interest on the loan at the rate determined in accordance with § 4210.41; and
(b)Divide the amount calculated in paragraph (a) by the number of rental units in the building or housing accommodation to obtain the dollar amount of the rent ceiling surcharge for each rental unit in the housing accommodation; provided, that no rent ceiling surcharge may exceed twenty percent (20%) of the rent ceiling of the rental unit in effect at the time the petition is filed.
4210.20The ninety-six (96) month period referred to in § 4210.19(a) and the percentage referred to in § 4210.19(b) shall be solely applicable to the calculation of the monthly amount of the rent ceiling surcharge and are not to be factors in determining the permitted duration of a capital improvement rent ceiling surcharge or rent increase, which shall be determined on the basis of the actual recovery by the housing provider of all costs, including interest and service charges, of the capital improvements, in accordance with §§ 4210.23 through 4210.38.
4210.21The amount of a rent ceiling surcharge that a housing provider may take and perfect pursuant to final order of the Rent Administrator on a capital improvement petition which affects one or more, but less than all, rental units in a building or housing accommodation shall be computed as set forth in this section. In computing the rent ceiling surcharge, the housing provider shall do the following:
(a)Determine the monthly payment required to amortize, over a calculation period of sixty-four (64) months, a loan in an amount equal to the total costs of the capital improvements, including service charges as defined in § 4201.40(b), including interest on the loan at the rate determined in accordance with § 4210.41; and
(b)Divide the amount calculated in paragraph (a) by the number of rental units affected by the capital improvements to obtain the dollar amount of the rent ceiling surcharge for each affected rental unit in the housing accommodation; provided, that no rent ceiling surcharge may exceed fifteen percent (15%) of the rent ceiling of the rental unit in effect at the time the petition is filed.
4210.22The sixty-four (64) month period referred to in § 4210.21(a) and the percentage referred to in § 4210.21(b) shall be solely applicable to the calculation of the monthly amount of the rent ceiling surcharge and shall not be factors in determining the permitted duration of a capital improvement rent ceiling surcharge or rent increase, which shall be determined on the basis of the actual recovery by the housing provider of all costs, including interest and service charges, of the capital improvement, in accordance with §§ 4210.23 through 4210.38.
4210.23A housing provider shall take and perfect a rent ceiling surcharge to recover the costs of capital improvements, including interest and service charges, by filing an amended registration form in accordance with § 4204.9 stating the amount of the surcharge for each rental unit. The date of perfection shall be the date on which the housing provider has filed the amended registration form with the Rent Administrator and posted or mailed it in accordance with § 4101.6.
4210.24The rent ceiling surcharge that a housing provider may take and perfect pursuant to final order of the Rent Administrator on a capital improvement petition shall be a temporary surcharge only and shall permit the housing provider to increase the rent for a rental unit by a temporary capital improvement surcharge only until the housing provider has actually recovered, in collected rent, all costs, including interest and service charges, of the capital improvement.
4210.25Capital improvement rent ceiling surcharges granted pursuant to the Amendment Act shall be excluded from the rent ceiling of a rental unit for purposes of calculating percentage increases in the rent ceiling.
4210.26A capital improvement rent ceiling surcharge, while the surcharge remains in effect, shall be added to the rent ceiling of a rental unit for purposes of determining the maximum legal rent which may be charged for a rental unit.
4210.27A capital improvement rent ceiling surcharge shall be in effect from the date of its perfection pursuant to § 4210.23 until the date on which the housing provider has actually recovered in collected rent all costs, including interest and service charges, of the capital improvement.
4210.28Within thirty (30) days after the housing provider has actually recovered in collected rent all costs, including interest and service charges, of the capital improvement, the housing provider shall file with the Rent Administrator an amended registration form reflecting the following:
(a)The abatement of the capital improvement rent ceiling surcharge computed by subtracting the dollar amount of the monthly capital improvement rent ceiling surcharge from the then existing monthly rent ceiling; and
(b)The re-computation and adjustment of the rent charged to reflect the abatement of the capital improvement rent surcharge computed by subtracting the dollar amount of the monthly capital improvement rent surcharge from the then existing rent charged.
4210.29Failure to timely adjust the rent charged shall be a basis for the tenant or an association of tenants to file a tenant petition as set forth in § 4214.3 notwithstanding the provisions of § 4214.5.
4210.30If, at the expiration of the ninety-six (96) month period described in § 4210.19(a) or the sixty-four (64) month period described in § 4210.22(a), as applicable, the housing provider has not actually recovered in collected rent all costs of the capital improvements, including interest and service charges, the housing provider shall be permitted to continue to collect the capital improvement rent surcharge.
4210.31If the housing provider continues to collect the capital improvement surcharge, as provided in § 4210.30, then within thirty (30) days after the expiration of the ninety-six (96) month period or sixty-four (64) month period, as applicable, the housing provider shall file with the Rent Administrator, and post in a conspicuous place in the common areas of the housing accommodation, and mail to each current tenant, on a form approved by the Rent Administrator, a Certificate of Continuation.
4210.32The Certificate of Continuation shall be executed under oath and shall set forth the following:
(a)The total costs, including interest and service charges of the capital improvements, which shall be based upon such costs, interest and service charges as have been approved by the Rent Administrator (including all interest payable on any loan approved by the Rent Administrator, the terms of such loan, including the interest rate set forth in the decision on the capital improvement petition, and any amendment to such decision);
(b)The total amount of rental income actually received in collected rents by the housing provider as a result of the capital improvement surcharge which shall be equal to the difference between the following:
(1)The rental income actually received by the housing provider since the perfection of the capital improvement rent surcharge pursuant to §§ 4204.10 and 4101.6; and
(2)The maximum amount of the rental income the housing provider would have been entitled to receive under the Amendment Act during that same period if the capital improvement surcharge had not been in effect;
(c)The amount of costs, interest and service charges remaining to be recovered by the housing provider; and
(d)An estimate of the remaining number of months required in order for the housing provider to actually recover in collected rent the total costs, including interest and service charges, of the capital improvement.
4210.33If the estimated number of months described in § 4210.32(d) and included in the Certificate of Continuation exceeds ten (10) months, the Certificate of Continuation filed pursuant to §§ 4210.31 through 4210.32 shall be subject to audit by the Rent Administrator in accordance with the procedures set forth in § 4209.18, except that the Rent Administrator shall issue a final decision and Order on the Certificate of Continuation within sixty (60) days from the date on which a completed Certificate of Continuation shall be submitted.
4210.34Whenever an audit is conducted, the Rent Administrator shall require the housing provider to provide the documentation as shall be necessary to verify the information set forth in the Certificate of Continuation.
4210.35The capital improvement rent ceiling surcharge and rent surcharge shall continue pending the issuance of a final order on the Certificate of Continuation, subject, however, to the requirements of §§ 4210.28 through 4210.29.
4210.36Any portion of the rent collected which is based on the capital improvement rent ceiling surcharge during the pendency of an audit of a Certificate of Continuation shall be subject to a full or partial refund to be made in full within sixty days (60) after the issuance of a decision of the Rent Administrator.
4210.37Only a capital improvement rent ceiling surcharge which has actually been implemented as a capital improvement rent surcharge shall be counted in determining such recovery of costs, interest and service charges.
4210.38If the housing accommodation is sold to a third party prior to recovery of all costs, interest and service charges, as to the successor owner the capital improvement rent ceiling surcharge and rent surcharge shall continue in effect until the successor has actually recovered in collected rent all costs, including interest and service charges, of the capital improvement incurred by the successor owner and the prior owner to the extent such costs, interest and service charges have not been actually recovered in collected rent.
4210.39If a housing provider increases the rent for a rental unit to an amount that includes all or part of the capital improvement surcharge, the housing provider shall comply with the provisions of §§ 4205.4 and 4205.5, and the notice required by § 4205.4(a) may be issued on a form of notice approved by the Rent Administrator, which shall state the portion of the rent charge attributable to the capital improvement surcharge separately from the portion of the rent charge attributable to the rent ceiling.
4210.40For purposes of §§ 4210.16 through 4210.44 the following terms shall have the meaning ascribed:
(a)“Interest” shall mean all compensation paid by the housing provider to a lender for the use, forbearance or detention of money used to perform a capital improvement. A loan of such money used to perform a capital improvement need not be secured by the housing accommodation.
(b)“Service charges” shall include points, loan origination and loan processing fees, trustees fees, escrow set up fees, loan closing fees, charges and costs, title insurance fees, survey fees, lender’s counsel fees, borrower’s counsel fees, appraisal fees, environmental inspection fees, lender’s inspection fees (however any of the foregoing may be designated or described), and such other charges (other than interest) required by a lender in connection with a loan of money used to perform a capital improvement as to which the housing provider shall provide documentary information to the Rent Administrator. All such service charges shall be includable in a capital improvement petition and recoverable in collected rent by the housing provider.
4210.41The amount of interest which shall be includable by a housing provider in a capital improvement petition for purposes of the calculation under §§ 4210.19(a) or 4210.21(a), as applicable, shall be one of the following:
(a)The amount of interest payable by the housing provider at a fixed rate of interest on a loan of money used to perform the capital improvement or on that portion of a multi- purpose loan of money used to perform the capital improvement as documented by the housing provider by means of the relevant portion of a bona fide loan commitment or agreement with a lender, or by such other evidence of interest as shall be satisfactory to the Rent Administrator; or
(b)In the absence of any loan commitment, agreement or other evidence of interest, the amount of interest shall be calculated at the following rate:
(1)A rate for seven (7) year United States Treasury constant maturities as published by the Federal Reserve Board in Publication H.15 (519) during the thirty (30) days immediately preceding the filing of the capital improvement petition; and
(2)Four percentage (4%) points, four hundred (400 basis points).
4210.42If the term of the loan obtained by the housing provider to pay for the capital improvement exceeds the calculation period for the rent ceiling surcharge in accordance with §§ 4210.19 or 4210.21, the rent ceiling surcharge shall continue until the loan is fully discharged; provided, that the provisions of § 4210.43 shall apply when the housing provider has recovered an amount equal to the sum of the following:
(a)The total costs of the capital improvements;
(b)The allowable service charges; and
(c)The interest payments made up to that time.
4210.43The amount of the rent ceiling surcharge shall be reduced to equal the average monthly amount of the interest payments on the loan due during the next twelve (12) months; thereafter, the surcharge shall be similarly adjusted at twelve (12) month intervals until the loan is paid in full.
4210.44The housing provider shall file a Certificate of Continuation within thirty (30) days after the commencement of each twelve (12) month period under §§ 4210.42 through 4210.44.
4210.45In accordance with the provisions of § 206(f) and (g) of the Act, the provisions of §§ 4210.46 through 4210.55 shall not apply to the following:
(a)Any increase in the rent charged for a rental unit implemented prior to September 26, 1992 (the effective date of the Relief Act) pursuant to a capital improvement petition approved by the Rent Administrator.
(b)An increase in the rent ceiling for a rental unit (regardless of when implemented) pursuant to a capital improvement petition for which a hearing was held or a decision was issued prior to the effective date of § 4210.45 through § 4210.55 of these regulations.
4210.46Except in accordance with the procedures set forth in §§ 4210.51 through 4210.54 of these rules:
(a)A capital improvement increase in the rent charged shall not be assessed against a tenant found by the Rent Administrator to be an elderly tenant or disabled tenant, who leases and occupies a rental unit regulated under Title II of the Act; and
(b)A tenant found to be an elderly or disabled tenant by the Rent Administrator shall not be assessed an increase in the rent charged for an approved capital improvement notwithstanding the income of any other tenant or co-lessee of the unit.
4210.47The procedures for an elderly or disabled tenant to claim exemption from payment of capital improvement rent ceiling increase shall be as follows:
(a)If the increase in the rent charged is based on an approved capital improvement petition for which the notice of hearing was issued on or after the effective date of §§ 4210.45 through 4210.55 of these rules, the elderly or disabled tenant who claims the benefit of § 4210.46 shall:
(1)File with the Rent Administrator a claim of exemption in writing on a form approved by the Commission, within fifteen (15) days after receipt of the notice of hearing on the capital improvement petition;
(2)State on the form that the tenant is an elderly or disabled tenant, and submit any supporting documents that prove the tenant qualifies as an elderly or disabled tenant, as defined by § 4299.2(a) and (b); and
(3)Serve a copy of the claim and supporting documents on the housing provider named in the petition, or if the housing provider is represented, serve the housing provider’s representative in accordance with § 3911.
(b)The claim for status as an elderly or disabled tenant shall be determined as part of the hearing on the capital improvement petition.
4210.48If the increase in the rent charged is based on a capital improvement petition for which the notice of hearing was issued before the effective date of § 4210.45 through § 4210.55 of these rules, the elderly or disabled tenant must file in writing a claim for the benefit of § 4210.46 with the Rent Administrator stating that the tenant is an elderly or disabled tenant, on a form approved by the Rent Administrator with supporting documents showing that the tenant qualifies as an elderly or disabled tenant, and shall serve a copy of the claim and supporting documents on the housing provider, or if the housing provider is represented, serve the claim and supporting documents on the representative of the housing provider, in accordance with § 3911 of these rules. A claim must be filed within six (6) months after the effective date of § 4210.45 through § 4210.55 of these rules. The procedures for such claims shall be as follows:
(a)The housing provider must file with the Rent Administrator a written objection to the tenant’s claim for status as an elderly or disabled tenant within ten (10) days after service of the claim and supporting documents by the tenant on the housing provider or the housing provider’s representative.
(b)If the housing provider files an objection, the Rent Administrator shall give notice to the tenant and housing provider of the date, time, and place of the hearing and conduct a hearing to determine whether the tenant is qualified as an elderly or disabled tenant. A claim shall be determined solely on the basis of the record of the hearing and may be adjudicated at the hearing on the capital improvement petition.
(c)If no objection is filed by the housing provider, the Rent Administrator shall determine whether the tenant is qualified as an elderly or disabled tenant without holding a hearing, based solely on the claim and the supporting documents submitted by the tenant with the claim.
(d)If the Rent Administrator denies the tenant’s claim for status as an elderly or disabled tenant without a hearing, the tenant may challenge the denial by filing a tenant petition in accordance with § 216(a) of the Act.
4210.49No tenant shall qualify as an elderly or disabled tenant, unless found to be an elderly or disabled tenant by the Rent Administrator in accordance with § 4210.47 or § 4210.48; provided that:
(a)If a determination that a tenant qualified as an elderly or disabled tenant was made by the Rent Administrator without a hearing before the effective date of § 4210.45 through § 4210.55 of these rules, that determination shall remain in effect, unless the housing provider files an objection to the determination within six (6) months after the effective date of § 4210.45 through § 4210.55 of these rules.
(b)If the housing provider does file an objection, the tenant’s claim for status as an elderly or disabled tenant shall be determined in accordance with § 4210.48(b) of these rules.
(c)If a tenant becomes eligible to make a claim for exemption from a capital improvement rent charge increase, after the increase is in effect, the tenant may file a claim in writing with the Rent Administrator stating the change in circumstances and the basis on which the tenant claims eligibility for the exemption. The tenant must serve the housing provider or the housing provider’s representative with a copy of the claim of exemption in accordance with § 3911. If the housing provider does not contest the tenant’s claim of exemption, the Rent Administrator shall determine whether to grant the exemption. If the housing provider contests the exemption, the Rent Administrator shall schedule a hearing in accordance with the procedures in § 4000 through § 4010.
4210.50A housing provider shall be entitled to tax credits as follows:
(a)A housing provider, who is not permitted under these rules and the Relief Act, to collect an increase in the rent charged from an elderly or disabled tenant for a capital improvement rent ceiling increase granted by the Rent Administrator, shall receive a tax credit against real property taxes on the housing accommodation, for each rental unit occupied by an elderly or disabled tenant in the rental housing accommodation.
(b)The amount of the tax credit for each rental unit shall be in the amount per month of $1.00 for each $1.00 of capital improvement rent ceiling increase per month per unit granted by the Rent Administrator and not implemented as rent charged the elderly or disabled tenant by the housing provider.
(c)The tax credit shall commence on the date the Rent Administrator grants the capital improvement petition and the tax credit shall continue until the first of the following occurs:
(1)The expiration of the capital improvement rent ceiling increase pursuant to § 4210.27 of these rules;
(2)The cessation of occupancy of the rental unit by the elderly or disabled tenant, unless the next occupant of the rental unit is an elderly or disabled tenant, as defined by § 4299.2(a) or (b), and as certified to the Rent Administrator, under oath, by the housing provider and the elderly or disabled tenant, or as found by the Rent Administrator after a hearing; or
(3)The elderly or disabled tenant becomes ineligible for an exemption from a capital improvement increase because of a change of income or improvement in health.
(d)The tenant has the duty to notify the housing provider within fifteen (15) days from the date of the change of income or health. The housing provider shall then serve on the tenant a thirty (30) day notice of rent increase based on the capital improvement.
(e)The tax credit shall be taken against the next and each succeeding installment or installments of real property taxes payable to the District of Columbia for the housing accommodation, including the land on which it is located.
(f)If the finding by the Rent Administrator that a tenant is an elderly or disabled tenant is reversed on appeal, no interest or penalty on the real property tax shall apply to the period prior to that date.
4210.51As part of the hearing under § 4210.47 or § 4210.48, the housing provider may request the Rent Administrator to permit the housing provider to implement increases in the rents charged for capital improvements to elderly or disabled tenants of the housing accommodation.
4210.52The Rent Administrator shall approve the request made pursuant to § 4210.51 if the housing provider proves to the satisfaction of the Rent Administrator, in a hearing, that the failure to implement the entire capital improvement rent ceiling increase as rents charged on rental units occupied by elderly or disabled tenants would exceed the aggregate amount of the real property taxes, payable for the housing accommodation for the calendar year.
4210.53For purposes of making the calculation in § 4210.50(b) to determine the aggregate amount that would exceed the amount of real property taxes due in a calendar year, the prohibition in § 4210.46 against imposing increases in the rents charged for capital improvements to elderly or disabled tenants, and the provisions of § 4210.50 providing for a tax credit, shall be disregarded.
4210.54The Rent Administrator shall render a written decision on the request by the housing provider to implement an approved capital improvement as rent charged on the unit occupied by a qualified elderly or disabled tenant.
4210.55Any person who knowingly, willfully, and in bad faith makes a false or fraudulent statement to receive a tax credit for not assessing a capital improvement increase to an elderly or disabled tenant shall be subject to a fine of not more than $5,000 for each violation.