4267726 Zoning Commission Notice of Final Rulemaking & Order No. 04-33F (Text Amendments: PUDS & Inclusinary Zoning - Termination of Affordability Controls upon Foreclosure)

ZONING COMMISSION FOR THE DISTRICT OF COLUMBIA

NOTICE OF FINAL RULEMAKING

AND

Z.C. ORDER NO. 04-33F

Z.C. Case No. 04-33F

(Text Amendments: PUDs and Inclusionary Zoning – Termination of Affordability Controls upon Foreclosure)

March 28, 2013

 

The Zoning Commission for the District of Columbia (Commission), pursuant to the authority set forth in § 1 of the Zoning Act of 1938, approved June 20, 1938 (52 Stat. 797; D.C. Official Code § 6-641.01 (2008 Repl.)) hereby gives notice of its adoption of amendments to §§ 2409, 2602, and 2603 of the Zoning Regulations of the District of Columbia, Title 11 (Zoning) of the District of Columbia Municipal Regulations (DCMR).

 

The amendments were referred to the National Capital Planning Commission (NCPC) pursuant to § 492 of the Home Rule Act.  The Executive Director of NCPC, by delegated action dated January 31, 2013, found that amendments were not inconsistent with the Federal Elements of Comprehensive Plan for the National Capital.

 

A Notice of Proposed Rulemaking was published in the D.C. Register on February 22, 2013 at 60 DCR 2183.  No comments were received. At a properly noticed special public meeting held on March 28, 2013, the Commission took final action to adopt the text amendments, making no changes to the text as proposed.

 

The amendments shall become effective upon the publication of this notice in the D.C. Register.

 

Description and Rationale for the Amendments

 

The amendments add a new § 2409.11 that provides for the automatic termination of affordable housing controls imposed by an order granting a planned unit development (PUD) if title to the mortgaged property is transferred following foreclosure by, or deed-in-lieu of foreclosure to, a mortgagee in the first position, or a mortgage in the first position is assigned to the Secretary of the U.S. Department of Housing and Urban Development (HUD). The automatic termination of the PUD’s affordability requirements is contingent upon the prior execution of the monitoring and enforcement documents described in new § 2409.10.  The execution of these documents is also made a precondition to the issuance of a certificate of occupancy for the PUD.  The monitoring and enforcement documents must bind the owner and all successors in title to abide by such terms as the District considers necessary to ensure that the affordable housing will be constructed, marketed, sold, re-sold, rented, and occupied, so as to be affordable to the target households during the specified control period and safeguarded regarding foreclosure. 

 

A new § 2602.10 provides for the automatic termination of the Inclusionary Zoning (IZ) controls set forth in Chapter 26 under the same circumstances.  However, that subsection does not require the prior execution of monitoring and enforcement documents, because the decision whether to require such agreements must be made by the District agency entrusted with the administration of that aspect of the IZ Program.  In addition, the Commission adopted new § 2603.6, which permits the Mayor or the District of Columbia Housing Authority (Authority) to acquire title to any inclusionary unit in a for-sale inclusionary development if the title to that unit is at risk of being transferred or has been transferred by foreclosure, deed-in-lieu of foreclosure, or the unit’s mortgage is at risk of being assigned or has been assigned to the HUD Secretary.  Existing § 2603.5 grants the Mayor or the Authority the right to purchase up to twenty-five percent (25%) of inclusionary units in a for-sale inclusionary development.  This right to purchase also serves as a cap.  The new amendment will allow the Mayor or the Authority to negotiate the purchase of any inclusionary unit under the circumstances described.

 

The amendments were petitioned for by the Office of Planning in response to a decision by HUD to begin implementing 24 CFR § 203.41(b), which provides that a mortgage is ineligible for insurance underwritten by HUD if “the mortgaged property is subject to legal restrictions on conveyance.” (24 CFR § 203.41(b).)  However, the regulation allows an exception for eligible government programs if the “restrictions will automatically terminate if title to the mortgaged property is transferred by foreclosure or deed-in-lieu of foreclosure”.  (24 CFR § 203.41(c)(2).)  Because this exception is not contained in the Zoning Regulations, many of the affordable units produced as a result of PUD orders and the IZ regulations do not qualify for mortgage insurance and therefore have become effectively unmarketable.  These amendments were adopted to remedy this problem.

 

The Rulemaking Actions Taken:

 

Chapter 24, PLANNED UNIT DEVELOPMENT PROCEDURES, § 2409, IMPLEMENTATION, is amended by adding new § 2409.10 and 2409.11 to read as follows:

 

2409.10           The Zoning Administrator shall not approve an application for a certificate of occupancy for a PUD if the order approving the PUD includes a condition requiring the provision of affordable housing unless the owner has executed monitoring and enforcement documents with the District of Columbia, which will bind the owner and all successors in title to abide by such terms as the District considers necessary to ensure that the affordable housing will be constructed, marketed, sold, re-sold, rented, and occupied, so as to be affordable to the target households during the specified control period and safeguarded regarding foreclosure.

 

2409.11           A condition in an order approving or modifying a PUD that requires the provision of affordable housing shall automatically terminate if title to the mortgaged property is transferred following foreclosure by, or deed-in-lieu of foreclosure to, a mortgagee in the first position, or a mortgage in the first position is assigned to the Secretary of the U.S. Department of Housing and Urban Development provided the owner has executed monitoring and enforcement documents per the requirements of § 2409.10.

 

Chapter 26, INCLUSIONARY ZONING, is amended as follows:

 

Section 2602, APPLICABILITY, is amended as follows:

 

By amending § 2602.4 to add a reference to new §§ 2602.10 and 2603.6, so that the provision will read as follows:

 

2602.4             Except as provided in §§ 2602.5, 2602.10, 2603.5, 2603.6, and 2607.1(c) or the Act, all inclusionary units created pursuant to this chapter shall be leased or sold only to eligible households for so long as the inclusionary development exists.

 

By adding a new § 2602.10 to read as follows:

 

2602.10           The requirements of this chapter shall automatically terminate if title to the mortgaged property is transferred following foreclosure by, or deed-in-lieu of foreclosure to, a mortgagee in the first position, or a mortgage in the first position is assigned to the Secretary of the U.S. Department of Housing and Urban Development.

 

Section 2603, SET-ASIDE REQUIREMENTS, is amended by adding a new § 2603.6 to read as follows:

 

2603.6             Notwithstanding § 2603.5, nothing shall prohibit the Mayor or the District of Columbia Housing Authority to acquire title to inclusionary units in a for-sale inclusionary development if any of the following circumstances exist:

 

            (a)        There is a risk that title to the units will be transferred by foreclosure or deed-in-lieu of foreclosure, or that the units’ mortgages will be assigned to the Secretary of the U.S. Department of Housing and Urban Development; or

 

(b)        Title to the units has been transferred by foreclosure or deed-in-lieu of foreclosure, or the units’ mortgages have been assigned to the Secretary of the U.S. Department of Housing and Urban Development.

 

On January 24, 2013, at the conclusion of the public hearing upon the motion of Commissioner Miller, as seconded by Vice Chairman Cohen, the Zoning Commission PROPOSED the amendments by a vote of 5-0-0 (Anthony J. Hood, Marcie I. Cohen, Robert E. Miller, Peter G. May, and Michael G. Turnbull to propose).

 

On March 28, 2013, upon the motion of Commissioner Turnbull, as seconded by Vice Chairman Cohen, the Zoning Commission ADOPTED the amendments as proposed at its special public meeting by a vote of 5-0-0 (Anthony J. Hood, Marcie I. Cohen, Robert E. Miller, Peter G. May, and Michael G. Turnbull to adopt).

 

In accordance with the provisions of 11 DCMR § 3028.9, this Order shall become effective upon publication in the D.C. Register; that is, on April 5, 2013.