Section 42-3402.04 - Conversion fee(a)Definitions. - For the purposes of this section, the term "low-income" means annual household income, as determined by the Mayor, no greater than 80% of the area median income, as defined in § 42-2801(1) ).(a-1)Amount. -(1)An owner who converts a housing accommodation, including vacant buildings, into a condominium or a cooperative shall pay the Mayor a conversion fee of 5% of the sales price for each condominium unit, or proportionate value of the cooperative residence, within the housing accommodation. (2)An owner who converts a housing accommodation containing more than 3 and fewer than 11 units, each with a separate certificate of occupancy, including vacant buildings but excluding a building that the Mayor has determined to be a blighted vacant building, as that term is defined in section 5(1) of An Act To provide for the abatement of nuisances in the District of Columbia by the Commissioners of said District, and for other purposes, approved April 14, 1906 (34 Stat. 114; D.C. Official Code § 42-3131.05(1)), and thereby reduces the number of units in the housing accommodation, shall pay the Mayor an additional conversion fee of 5% of the appraised value of the most valuable unit in the building multiplied by the net decrease in units. When calculating the net decrease in units pursuant to this paragraph, the Mayor shall subtract one unit for each unit that qualifies for the fee exemption under subsection (b) of this section; except, that the result shall not be less than zero. (b)Fee exemption. - The Mayor shall not require conversion fees under subsection (a-1) of this section, or the proportionate share value of a cooperative residence, that: (1) Is sold or rented to a low-income household;(2)(A) Is sold or rented to a member of a household who, as determined by the Mayor: (i) Has maintained a rental unit in the building complex as the principal place of residence for at least one year prior to the owner's application to the Mayor for conversion of the housing accommodation to a condominium or cooperative;(ii) Is a domiciliary of the District of Columbia; and(iii) Is entitled to the possession, occupancy, or benefits of the rental unit.(B) If an owner seeks an exemption under this paragraph, the member of the household may elect to purchase any unit in the housing accommodation in lieu of her current unit;(3)(A) Is sold or rented to a person who is an elderly tenant or a tenant with a disability.(B) Does not have a total annual household income, as determined by the Mayor, greater than 100% of the area median income, as defined in § 42-2801(1); (4)(A) Is sold as part of a conversion of a property that has been registered as vacant for at least 12 months prior to conversion; and(B) Is part of a building complex not exceeding 10 units; or(5) Gains at least one additional bedroom in the process of the reduction of units.(b-1)Payment. -(1) The conversion fees required by subsection (a-1) of this section shall be paid in full into an escrow account at the time of settlement on the sale of the condominium unit or cooperative share.(2)(A) The escrow agent shall submit the conversion fees to the Mayor within 30 business days of settlement, together with a copy of the recordation and transfer tax form reflecting the sale price of each condominium unit or cooperative share.(B) The name, address, and telephone number of the escrow agent shall be stated on the deed or on a form attached to the deed.(3) The Mayor may impose civil fines, penalties, and fees for failure to submit the conversion fees to the Mayor, any infraction of the provisions of this section, or any rules issued under the authority of this section pursuant to Chapter 18 of Title 2 [§ 2-1801 et seq.]. Adjudication of any infraction of this chapter shall be pursuant to Chapter 18 of Title 2 [§ 2-1801 et seq.].(4) No portion of the conversion fees required under this section shall be included in the purchase price of units exempted from the conversion fee in subsection (b) of this section.(b-2) To qualify for the exemption under subsection (b) of this section, if the unit is rented, the owner shall: (1) Set the rent at no higher than: (A) If seeking an exemption pursuant to subsection (b)(1), (2), or (3) of this section, the rent level before the conversion or 30% of the tenant's income, whichever is lower; or(B) If seeking an exemption pursuant to subsection (b)(5) of this section an amount, as determined by the Mayor through rulemaking, that is affordable to a household whose income does not exceed 100% of the area median income, as that term is defined in section 2(1) of the Housing Production Trust Fund Act of 1988, effective March 16, 1989 (D.C. Law 7-202; D.C. Official Code § 42-2801(1));(2) Increase the rent by no more, and no more often, than the increases allowed under section 208 of the Rental Housing Act of 1985, effective July 17, 1985 (D.C. Law 6-10; D.C. Official Code § 42-3502.08), for the duration of the tenant's tenancy or 5 years, whichever is longer; and(3) Otherwise maintain the same lease terms as before the reduction in the number of units.(d) The Mayor shall deposit in the Housing Production Trust Fund, created pursuant to the Housing Production Trust Fund Act of 1988, effective March 16, 1989 (D.C Law 7-202; D.C. Official Code § 42-2801 et seq.), all fees paid pursuant to this section above $692,000 annually, as of the effective date of the Housing Conversion and Eviction Clarification Amendment Act of 2020, passed on 2nd reading on February 4, 2020 (Enrolled version of Bill 23-48)..(e) The Mayor, pursuant to Title I of the District of Columbia Administrative Procedure Act, approved October 21, 1968 (82 Stat. 1204; D.C. Official Code § 2-501 et seq.), may issue rules to implement the provisions of this section.Sept. 10, 1980, D.C. Law 3-86, § 204, 27 DCR 2975; Nov. 5, 1983, D.C. Law 5-38, § 2(c), 30 DCR 4866; Sept. 6, 1995, D.C. Law 11-31, § 3(e), 42 DCR 3239; June 5, 2003, D.C. Law 14-307, § 1606, 49 DCR 11664; Mar. 2, 2007, D.C. Law 16-192, § 2162(a), 53 DCR 6899; Mar. 25, 2009, D.C. Law 17-354, § 2(a), 56 DCR 1155; Apr. 7, 2017, D.C. Law 21-239, § 2(e), 64 DCR 1588; Apr. 16, 2020, D.C. Law 23-72, § 3, 67 DCR 2476.Reenactment of Law 3-86: See Historical and Statutory Notes following § 42-3401.01.
Amendment of section by Law 10-144: Section 2(e) of D.C. Law 10-144 purported to amend (b), (b-1) and (c) of this section to read as follows:
"(b) Reduction. The Mayor may reduce the conversion fee to as low as $50 per condominium unit or proportionate value of the cooperative residence if the owner declares the intent to sell or provide a lease or option to lease for at least 5 years to tenants who, at the time of request for an election, are low income and whose continued right to remain a tenant is not required by statute ("qualifying tenants"). To qualify for this reduction, a sale or lease cannot require monthly payments greater than existing rents, as may be increased by the annual adjustment of general applicability provided in § 45-2516(b) or a similar annual adjustment in any successor rent control act, or 25% of gross household income, whichever is greater. The number of qualifying tenants is the number of tenants identified by the Mayor as residing in the accommodation as of the date of the owner's request for an election. The amount of the reduction shall be determined by the Mayor based on factors such as the Mayor may determine, which shall include the percentage of tenants in the accommodation who are qualifying tenants and the percentage of qualifying tenants who purchase or continue renting in accordance with the first sentence of this subsection. The Mayor shall also reduce the amount of the conversion fee of each unit or proportionate value for a cooperative residence that is sold or leased to a low-income purchaser or to a new low-income tenant who leases a unit in accordance with the requirements of this subsection, regardless of where that low-income purchaser or tenant previously lived. In doing so, the Mayor shall consider the lost conversion fee revenue in comparison to the cost of making available the number of low-income units purchased or leased. If the owner does not sell or lease to the percentage of qualifying tenants or outside purchasers or tenants as declared, the unpaid balance of the conversion fee as adjusted by the Mayor in accordance with the actual sales and leases shall be paid by the owner. The Mayor may assert a lien against any unsold units or proportionate value of the cooperative residence by filing a lien against the land. The Mayor shall not attempt to collect any conversion fee which would not have been due if the provisions of this section had been in effect at the time of the conversion.
"(b-1) Payment. The conversion fee required by subsection (a) of this section shall be paid no later than at the time of settlement on the individual units or shares.
"(c) Waiver of lien. The Mayor shall waive a conversion fee lien on a condominium unit or proportionate value of the cooperative residence purchased by a low-income tenant."