573093 Proposed Rulemaking for Tax Abatement for Nonprofit Organizations Locating in Emerging Commercial Neighborhoods
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OFFICE OF THE DEPUTY MAYOR FOR PLANNING AND ECONOMIC DEVELOPMENT
NOTICE OF PROPOSED RULEMAKING
The Deputy Mayor for Planning and Economic Development, pursuant to the authority set forth in section 7042 (b) of the Nonprofit Tax Abatement Act of 2010, effective September 24, 2010 (D.C. Law 18-223 D.C. Official Code §§ 47-857.13 et seq.) (as amended) (NPTA Act) and Mayor’s Order 2010-165, dated October 12, 2010, hereby gives notice of intent to adopt the following amendment to Subtitle B, Planning and Development, of Title 10 of the District of Columbia Municipal Regulations (DCMR) in not less than thirty (30) days after the date of publication of this notice in the D.C. Register.
The purpose of the rulemaking is to add a new Chapter 63, to be entitled “Tax Abatements for Nonprofit Organizations Locating in Emerging Commercial Neighborhoods,” to Subtitle B of Title 10. Chapter 63 will establish the procedures and standards for operating the tax abatement program, established by the NPTA Act, to encourage non-profit organizations to locate in emerging commercial areas of the District of Columbia.
Subtitle B, Planning and Development, of Title 10 of the District of Columbia Municipal Regulations is amended by adding a new Chapter 63 to read as follows:
CHAPTER 63 TAX ABATEMENTS FOR NONPROFIT ORGANIZATIONS LOCATING IN EMERGING COMMERCIAL NEIGHBORHOODS
Secs.
6300 Purpose; General Program Description
6301 Tax Abatements for Nonprofit Organizations in Eligible Nonprofit Zones
6302 Limitations on Abatement
6303 Application
6304 Post-Application Requirements
6305 Award of Tax Abatement
6306 Abatement Caps
6399 Definitions
6300 PURPOSE; GENERAL PROGRAM DESCRIPTION
6300.1 The purpose of this chapter is to implement the Nonprofit Tax Abatement Act of 2010, effective September 24, 2010 (D.C. Law 18-223 D.C. Official Code §§ 47-857.13 et seq.) (as amended) (NPTA Act).
6300.2 The Nonprofit Tax Abatement Program provides tax abatements to nonprofit organizations to provide an incentive for the organizations to locate their offices in emerging commercial neighborhoods in the District of Columbia.
6301 TAX ABATEMENTS FOR NONPROFIT ORGANIZATIONS IN ELIGIBLE NONPROFIT ZONES
6301.1 Subject to the requirements of this chapter, an annual abatement of the real property tax imposed pursuant to D.C. Official Code § 47-811 shall be allowed for an eligible real property if office space in the property is occupied by a qualified nonprofit organization on or before September 30, 2013, if the office space is in the Capitol Riverfront Nonprofit Zone, Mount Vernon Nonprofit Zone, or NoMa Nonprofit Zone, or on or before September 30, 2016, if the office space is in the Anacostia Nonprofit Zone, a Designated Nonprofit Zone, or Minnesota-Benning Nonprofit Zone.
6301.2 The amount of the tax abatement authorized by this subsection shall be computed as the lower of either the total real property tax liability for the office space that is receiving the abatement or eight dollars ($8) multiplied by the total commercial FAR square footage of the office space as certified by the office space landlord and Deputy Mayor for Planning and Economic Development (DMPED) pursuant to subsections 6303.1-6303.2; 6304.2-6304.3, and 6305.1 of this chapter; provided, that:
(a) If a certificate of occupancy permits the use of only part of the commercial portion of the eligible property, the amount of the abatement shall be computed as the lower of either the total real property tax liability attributable to the portion of the eligible property to which the certificate of occupancy applies or eight dollars ($8) per each commercial FAR square foot of the portion of the eligible property to which the certificate of occupancy applies;
(b) The tax abatement for an eligible real property allowed by this subsection shall expire at the end of the tenth (10th) tax year after the abatement was first reflected in a real property tax bill issued pursuant to subsections 6304.2 and 6304.3 of this chapter or at the end of the tenth (10th) year of the tenant’s lease pursuant to subsection 6304.1; and
(c) The tax abatement shall be subject to the abatement caps described in section 6306 and the availability of funds.
6301.3 The organization receiving a tax abatement must annually certify that it occupies the office space eligible for the tax abatement by submitting a statement attesting to its occupancy in the eligible office space, a copy of its valid, non-expired certificate of occupancy for the office space awarded the abatement in the procedure described in subsections 6303.1 through 6305.4, and through a visual inspection of office space by DMPED.
6302 LIMITATIONS ON ABATEMENT
6302.1 A tax abatement under this chapter shall not be granted:
(a) For a project that is financed in any part by the Tax Increment Financing program established by the Tax Increment Financing Authorization Act of 1998, effective September 11, 1998 (D.C. Law 12-143; D.C. Official Code §§ 2-1217.01 et seq.) (as amended) or by any other form of tax increment financing program issued by the Government of the District of Columbia;
(b) For a property that receives any other real property tax abatement;
(c) For an organization that purchases or leases office space less than five thousand (5,000) square feet or more than one hundred thousand (100,000) square feet in total size;
(d) For an organization that does not occupy at least seventy-five percent (75%) of the leased office space and use that space for the organization’s stated mission;
(e) For an organization whose current office space (its location prior to relocation) is in an Eligible Nonprofit Zone and the proposed office space is also located in an Eligible Nonprofit Zone;
(f) Unless the owner and, if the space is to be leased, the tenant obtain the documents required by subsection 6303.1 of this chapter and submit them to Deputy Mayor for Planning and Economic Development (DMPED) the letter and other documents required by subsection 6303.1 of this chapter prior to September 30 of the calendar year preceding the year for which the organization is applying for the abatement, starting with September 30, 2011. For Fiscal Year 2011, applicants will be accepted until all funds have been allocated, or March 15, 2011; provided, that the Deputy Mayor may extend the date if funds remain unallocated;
(g) Unless the office space is leased to the qualified nonprofit organization at a rate that is net of real estate taxes; and
(h) Unless the owner and, if the space is to be leased, the tenant both sign the submitted application.
6302.2 If an organization vacates the office space that has been certified for the tax abatement prior to the end of the tenth (10th) year of the abatement, the tax abatement will stop and neither the office space being vacated or the organization that is vacating the office space will be allowed to keep, continue, or transfer the tax abatement;
6303 APPLICATION
6303.1 To be considered for tax abatement, a qualified nonprofit organization must submit an application to Deputy Mayor for Planning and Economic Development (DMPED), which shall include:
(a) A letter of intent for the lease or purchase of eligible office space showing the organization’s current rent net of taxes. The letter of intent shall include:
(1) The address of the office space;
(2) The square and lot number of the property;
(3) The total commercial FAR square footage to be leased or purchased by the nonprofit organization;
(b) The annual dollar amount of nonprofit tax abatement requested;
(c) A statement that no financing is being provided under the Tax Increment Financing program or by any other form of tax increment financing referenced in subsection 6302.1(a) of this chapter; and
(d) A statement that no other real property tax abatement is being provided to the property;
(e) A statement that the rent of the proposed office space is no more than the current fair market value of the average rent of similar office space lease or purchase prices commercially available in the respective Eligible Nonprofit Zone;
(f) A statement that the nonprofit organization shall occupy at least seventy five percent (75%) of the office space and will use that space for the organization’s stated mission;
(g) A statement providing information about benefits that are expected to accrue to District residents, non-profit groups and cultural organizations located in the District;
(h) Three (3) dated photographs of the proposed office space taken within the ten (10) day period that precedes the date of submission of the owner’s letter of intent;
(i) Certification of the total commercial FAR square footage certified by the office space landlord;
(j) A copy of the Internal Revenue Service’s determination letter to the organization designating the organization’s status as tax-exempt under sections 501(c)(3), (4), or (6) of the Internal Revenue Code;
(k) An area map showing the eligible area boundary and the office space to be occupied by location arrow;
(l) An area map showing all eligible areas in the District and the organization’s current office space by location arrow;
(m) A scaled site plan with building footprint. The site plan shall be submitted in both full size and eleven inch by seventeen inch (11" x 17″) format;
(n) A calculation of the total commercial FAR square footage of the office space to be occupied by the organization;
(o) A calculation of the annual dollar amount of nonprofit tax abatement being requested, showing total commercial FAR square footage, and tax abatement per square foot of total commercial FAR square footage;
(p) A calculation of the Eligible Nonprofit Zone’s average office lease and purchase prices for the current tax year;
(q) A calculation of the total percent of commercial FAR square footage that will be owned or leased by the organization that will be occupied by the organization;
(r) A calculation of the expected number of jobs based out of the new location by the organization for the District and a calculation of the expected share of those jobs that will be held by District residents; and
(s) A statement on the number of jobs based out of the current location of the organization.
6303.2 Within twenty-five (25) business days after receipt of the owner’s application, DMPED shall:
(a) Transmit a letter of reservation to the owner stating:
(1) That the property is eligible for the applicable tax abatement;
(2) That the District of Columbia has reserved a tax abatement for the project; and
(3) The authorized annual dollar amount for the property.
(b) If the application is not complete, transmit a letter to the owner requesting the required additional information. The transmittal of the letter shall toll the twenty-five (25) day review period, which shall restart upon the receipt of a complete application;
(c) Transmit a letter of partial reservation and partial non-certification, if the amount of the tax abatement authorized for the property exceeds the amount of abatement remaining under the caps set forth in section 6306 of this chapter or if a portion of the property is otherwise not eligible for certification;
(d) Transmit a letter of non-certification, if the amount of the tax abatement requested exceeds the caps set forth in section 6306 of this chapter, and a notification that the organization has been waitlisted for the second round of fund distribution described in subsections 6303.4 and 6305.3; or
(e) Transmit a letter of rejection, if the property or project is not eligible for the tax abatement.
6303.3 Valid and complete requests for certification shall be reviewed by DMPED pursuant to subsection 6303.2 of this chapter in the order in which they are received beginning thirty (30) days after the date this chapter becomes effective.
6303.4 An organization that submits an application and is deemed eligible pursuant to subsections 6303.1 and 6303.2, but for which abatement funds were not available in the Eligible Nonprofit Zone for which they applied, shall be placed on a waiting list with preference given to the order in which the original applications under subsection 6303.1 were received. This subsection does not apply to organizations who have received a partial reservation and partial non-certification.
6304 POST-APPLICATION REQUIREMENTS
6304.1 The organization shall submit to Deputy Mayor for Planning and Economic Development (DMPED) a notarized copy of the signed leased or office space sales contract within four (4) months after the date of approval of its application; provided, however, that the Deputy Mayor may extend this deadline one (1) time by an additional twenty (20) days.
6304.2 Within fifteen (15) business days after DMPED receives the organization’s lease or sales contract, DMPED shall, if the lease or sales contract meets the requirements of the NPTA Act and this chapter and is consistent with the organization’s application, issue a letter of confirmation to the organization certifying that the organization has met all eligibility and application requirements for the tax abatement. The letter shall also state that the organization shall be eligible to receive a tax abatement after receipt of a certificate of occupancy issued by the Department of Consumer and Regulatory Affairs and confirmation by the District that the organization has moved into the eligible office space on or before September 30, 2013, if the office space is in the Capitol Riverfront Nonprofit Zone, Mount Vernon Nonprofit Zone, or NoMa Nonprofit Zone, or on or before September 30, 2016, if the office space is in the Anacostia Nonprofit Zone, a Designated Nonprofit Zone, or Minnesota-Benning Nonprofit Zone; provided, however, that the Deputy Mayor may extend either deadline one (1) time by an additional forty (40) days.
6304.3 Once the certificate of occupancy has been issued by Department of Consumer and Regulatory Affairs and the District has confirmed that the organization has moved into the eligible office space within the time periods set forth in subsection 6302.1, the owner shall submit the following documents to DMPED:
(a) A copy of the certificate of occupancy;
(b) A calculation of the “as-built” total commercial FAR square footage certified by the office space landlord; and
(c) A schedule of the dollar amounts for the property’s twenty (20) semiannual tax abatements for the ten (10) year tax abatement period beginning with the first full six (6) month period of the tax year (October 1 through March 31 or April 1 through September 30) following the issuance date of the certificate of occupancy.
6305 AWARD OF TAX ABATEMENT
6305.1 After receiving the documents required under subsection 6304.3, Deputy Mayor for Planning and Economic Development (DMPED) shall certify the total commercial FAR square footage and, within twenty (20) business days:
(a) Issue to the organization a letter of award certifying the tax abatement pursuant to D.C. Official Code § 47-8579.03; and
(b) Notify the District of Columbia Office of Tax and Revenue (OTR) of the organization’s eligibility for the annual dollar amount of nonprofit tax abatement, provided that such annual dollar amount shall not exceed the amount reserved under subsection 6303.2, and provide OTR with a schedule of the tax abatement dollar amounts to be reflected on the property’s twenty (20) semiannual tax bills issued during the ten (10) year tax abatement period.
6305.2 After receiving notification from DMPED under subsection 6305.1(b), OTR shall reflect the tax abatement in a real property tax bill issued for the first full six (6) month period of the tax year (October 1 through March 31 or April 1 through September 30) following the issuance date of the certificate of occupancy.
6305.3 If, four (4) months after the date when applications begin to be considered as described in subsection 6303.3, there remains any unused abatement funds for any of the Eligible Nonprofit Zones, unused funds may be cumulated and awarded to applicants from any Eligible Nonprofit Zone placed on the waiting list described under subsection 6303.4 in the order of preference based on the date of receipt of the organizations’ original applications under subsection 6303.1 and following the distribution and certification procedures in subsections 6303.2-6305.2. The waitlist will be terminated when all funding is allocated, or April 30, 2011; provided, that DMPED may extend the date of termination to a date after April 30, 2011, if funding remains unallocated.
6306 ABATEMENT CAPS
6306.1 The total abatement granted under this chapter shall not exceed five hundred thousand dollars ($500,000) per year for Fiscal Years 2011 through 2014.
6306.2 The total amount of real property tax abatement approved per year for Fiscal Years 2011 through 2014 for qualified nonprofit organizations in each Eligible Nonprofit Zone shall be limited to:
(1) Forty thousand dollars ($40,000) in the Anacostia Nonprofit Zone;
(2) One hundred seventy seven thousand five hundred dollars ($177,500) in the Capitol Riverfront Nonprofit Zone;
(3) Forty thousand dollars ($40,000) in the Minnesota-Benning Nonprofit Zone;
(4) Sixty five thousand dollars ($65,000) in the Mount Vernon Triangle Nonprofit Zone;
(6 One hundred seventy seven thousand five hundred dollars ($177,500) in the NoMa Nonprofit Zone.
6306.3 For each year starting in 2015 Deputy Mayor for Planning and Economic Development (DMPED) may approve up to eight million four hundred thousand dollars ($8,400,000) per year in annual tax abatements for all Eligible Nonprofit Zones with maximum individual zone tax allocations of:
(1) Six hundred thousand dollars ($600,000) in the Anacostia Nonprofit Zone;
(2) Two million six hundred thousand dollars ($2,600,000) in the Capitol Riverfront Nonprofit Zone;
(3) Eight hundred thousand dollars ($800,000) in all Designated Nonprofit Zones
(4) Six hundred thousand dollars ($600,000) in the Minnesota-Benning Nonprofit Zone;
(5) One million two hundred thousand dollars ($1,200,000) in the Mount Vernon Triangle Nonprofit Zone; and
(6) Two million six hundred thousand dollars ($2,600,000) in the NoMa Nonprofit Zone.
6399 DEFINITIONS
6399.1 When used in this chapter, the following terms and phrases shall have the meanings ascribed:
Anacostia Nonprofit Zone - all real property fronting on:
(a) Good Hope Road, S.E. between the Anacostia Freeway and the 18th Street, S.E.;
(b) Martin Luther King, Jr. Avenue, S.E., between S Street, S.E., and Suitland Parkway;
(c) Howard Road, S.E., between the Anacostia Freeway and Bowen Road, S.E.; and,
(d) Shannon Place, S.E., between U Street, S.E., and Chicago Street, S.E.
Capitol Riverfront Nonprofit Zone - the area described in section 208 (b) of the Business Improvement Districts Act of 1996, effective March 29, 1996 (D.C. Law 11-134; D.C. Official Code § 2-1215.58) (as amended).
Certificate of Occupancy - the certificate of occupancy which permits the use of all or part of the commercial areas of the building.
Certified by the Office Space Landlord - that the landlord has signed and notarized the document.
Commercial Use - has the meaning set forth in 11 DCMR § 1799.1.
DCRA - the Department of Consumer and Regulatory Affairs.
Designated Nonprofit Zone - an area of the District designated by the Mayor as one that will benefit from the location of a nonprofit organization or an area to which a nonprofit organization seeks to locate and for which the Mayor determines that it is in the best interests of the District to offer a tax abatement under this subsection to the nonprofit organization and which the Council approves by act.
DMPED - the Deputy Mayor for Planning and Economic Development or designee.
Eligible Nonprofit Zone - an Emerging Neighborhood Nonprofit Zone or a Designated Nonprofit Zone.
Eligible Real Property - real property that:
(a) Is in the Eligible Area;
(b) Is classified, in whole or in part, as Class 1 or Class 2 property under section 4 (b) of the “Nuisance Properties Abatement Reform and Real Property Classification Amendment Act of 2008,” effective August 15, 2008 (D. C. Law 17-216; D.C. Official Code § 47-813(c-7)) (as amended); and
(c) Is improved by new structures or by previously uninhabitable structure(s) which undergo substantial renovation for commercial use.
Emerging Neighborhood Nonprofit Zone – the Anacostia Nonprofit Zone, Capitol Riverfront Nonprofit Zone, Minnesota-Benning Nonprofit Zone, Mount Vernon Triangle Nonprofit Zone, and NoMa Nonprofit Zone.
Gross floor area - has the meaning set forth in 11 DCMR § 199.1.
Letter of intent - a letter submitted by an organization stating the organization’s desire and intent to lease or purchase qualified property for the tax abatement.
Mayor - the Mayor of the District of Columbia.
Minnesota-Benning Nonprofit Zone - the area bounded by a line beginning at the intersection of Hayes Street, N.E. and Minnesota Avenue, N.E., continuing northwest to the intersection of Hayes Street, N.E., and Kenilworth Avenue, N.E., continuing northwest along Hayes Street, N.E., to Anacostia Avenue, N.E.; continuing due west to the eastern shoreline of the Anacostia River; continuing south along the eastern shoreline of the Anacostia River to Benning Road, N.E.; continuing east along Benning Road, N.E., to Anacostia Avenue, N.E.; continuing southerly along Anacostia Avenue, N.E., to Dix Street, N.E.; continuing east along Dix Street, N.E., to 34th Street, N.E.; continuing north along 34th Street, N.E., to Eads Street, N.E., ; continuing southeast along Eads Street, N.E., to 36th Street, N.E.; continuing south along 36th Street, N.E., to Kenilworth Avenue, N.E.; continuing southeast along a straight line to the intersection of 35th Street, N.E., and Clay Place, N.E.; continuing southeast along Clay Place, N.E., to Minnesota Avenue, N.E., continuing northeast along Minnesota Avenue, N.E., to Clay Place, N.E., continuing southeast and then east along ClayPlace, N.E., to 40th Street, N.E.; continuing along 40th Street, N.E., to Benning Road, N.E. (and including the area to the immediate east of 40th Street, N.E., that is zoned C-3-A); continuing northwest along Benning Road, N.E., to Minnesota Avenue, N.E. (and including the area to the immediate north of Benning Road, N.E., that is zoned C-3-A); continuing northeast along Minnesota Avenue, N.E., to Hayes Street, N.E., (and including the area to the immediate east of Minnesota Avenue, N.E., that is zoned C-3-A), the starting point.
Mount Vernon Triangle Nonprofit Zone - the area described in section 205 of Business Improvement Districts and Anacostia Waterfront Corporation Clarification Amendment Act of 2004, effective March 17, 2005 (D.C. Law 15-257; D.C. Code § 2-1215.55) (as amended).
NoMa Nonprofit Zone - the area described in section 207 of the NoMa Improvement Association Business Improvement District Amendment Act of 2006, effective March 8, 2007 (D.C. Law 16-245; D.C. Code § 2-1215.57 (b)) (as amended).
NPTA Act - the Nonprofit Tax Abatement Act of 2010, effective September 24, 2010 (D.C. Law 18-223; D.C. Official Code §§ 47-857.11 et seq.) (as amended).
OTR - the District of Columbia Office of Tax and Revenue.
Owner - the property owner or person authorized by the owner.
Qualified nonprofit organization - an entity that is exempt from taxation under section 501(c)(3), (4), or (6) of the Internal Revenue Code of 1986, approved August 16, 1954 (68A Stat. 163; 26 U.S.C. § 501(c)(3), (4), and (6)).
Total commercial FAR square footage - the total gross floor area of the project that is devoted to commercial uses, including common areas and areas devoted to accessory uses to the commercial use of the building or a portion thereof, based on the plans and drawings submitted in conjunction with the building permit application. (The terms “gross floor area” and “commercial use” shall have the meanings set forth in 11 DCMR §§ 199.1 and 1799.1, respectively.)
All persons desiring to comment on the subject matter of this proposed rulemaking should submit comments, in writing, to the Office of the Deputy Mayor for Planning and Economic Development, 1350 Pennsylvania Avenue, NW, Suite 317, Washington, D.C. 20004. Comments must be received no later than thirty (30) days after the date of publication of this notice in the D.C. Register. A copy of this proposed rulemaking may be obtained at the same address.
