2023 District of Columbia Code › Title 47 - Taxation, Licensing, Permits, Assessments, and Fees. [Enacted title] › Chapter 10 - Property Exempt from Taxation › § 47–1005.03. Nonprofit Workforce Housing Properties

§ 47–1005.03. Nonprofit Workforce Housing Properties.
(a) For the purposes of this section, the term:
(1) "Adjusted median income" means:
(A) For a household of one, 70% of the median income for a household of 4 in the Washington Metropolitan Statistical Area as published by the U.S. Department of Housing and Urban Development most recently prior to the date such household income was determined;
(B) For a household of 2, 80% of the median income for a household of 4 in the Washington Metropolitan Statistical Area as published by the U.S. Department of Housing and Urban Development most recently prior to the date such household income was determined;
(C) For a household of 3, 90% of the median income for a household of 4 in the Washington Metropolitan Statistical Area as published by the U.S. Department of Housing and Urban Development most recently prior to the date such household income was determined;
(D) For a household of 4, 100% of the median income for a household of 4 in the Washington Metropolitan Statistical Area as published by the U.S. Department of Housing and Urban Development most recently prior to the date such household income was determined;
(E) For a household of 5, 108% of the median income for a household of 4 in the Washington Metropolitan Statistical Area as published by the U.S. Department of Housing and Urban Development most recently prior to the date such household income was determined;
(F) For a household of 6 or more, 116% of the median income for a household of 4 in the Washington Metropolitan Statistical Area as published by the U.S. Department of Housing and Urban Development most recently prior to the date such household income was determined.
(2) "Nonprofit owner" means an entity that:
(A) Provides rental housing in land and buildings that it owns; and
(B)(i) Is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code;
(ii) Is a limited liability company, the sole member of which is an entity that is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code; or
(iii) Is a limited-equity cooperative as defined by § 42-2061(2).
(b) Subject to subsection (d) of this section, land and buildings used by a nonprofit owner to provide rental housing shall be exempt from District of Columbia real property taxation as of the date of acquisition by the nonprofit owner; provided, that the land and buildings are acquired by the nonprofit owner in an arm's-length transaction on or after October 1, 2020, or, in the case of a nonprofit owner that is a limited-equity cooperative as defined by [§ 42-2061(2)], on or after October 1, 2021; provided further, that beginning no later than 12 months following the date of such acquisition, each of the following requirements has been certified as having been met pursuant to subsection (f) of this section, and thereafter on an annual basis are recertified as having been met pursuant to subsection (f) of this section:
(1) Not fewer than 50% of the occupied units are occupied by tenants with household incomes, for the year preceding the later of the date of acquisition by the nonprofit owner or initial occupancy by such tenants, not in excess of 80% of the adjusted median income;
(2) The remainder of the occupied units are occupied by tenants with household incomes, for the year preceding the later of the date of acquisition by the nonprofit owner or initial occupancy by such tenants, not in excess of 120% of the adjusted median income;
(3)(A) Rents charged to the tenants described in paragraph (1) of this subsection are not in excess of 30% of 80% of the adjusted median income for a household consisting of the number of persons indicated by the occupancy standard for the unit occupied by such tenant, and rents charged to tenants described in paragraph (2) of this subsection are not in excess of 30% of 120% of the adjusted median income for a household consisting of the number of persons indicated by the occupancy standard for the unit occupied by such tenant; provided, that the total rent paid to the non-profit landlord for any individual unit shall not exceed the greater of the Housing Choice Voucher Program rent for the submarket in which the property is located or in any submarket immediately adjacent to the property, established annually by the District of Columbia Housing Authority;
(B) For the purposes of this paragraph, the term "occupancy standard" means, for a:
(i) Studio/efficiency unit, 1 person;
(ii) One-bedroom unit, 1.5 persons;
(iii) Two-bedroom unit, 3.0 persons;
(iv) Three-bedroom unit, 4.5 persons; and
(v) Four-bedroom unit, 6 persons[;]
(4) Increases to the rents charged to the tenants described in paragraphs (1) and (2) of this subsection are limited to the levels permissible in units subject to rent control;
(5) The nonprofit owner of the property maintains a policy to retain as residents those tenants described in paragraphs (1) and (2) of this subsection who become unable to pay their rent because of financial hardship, and such policy is supported by an indigency reserve set at an amount reasonably determined to provide short-term assistance to tenants maintained by such nonprofit owner or by a nonprofit affiliate thereof; and
(6) Such nonprofit owner, or its sole member if the nonprofit owner is disregarded for income tax purposes, is the subject of a Determination Letter issued by the Internal Revenue Service providing for recognition under section 501(c)(3) of the Internal Revenue Code; except, that this requirement shall not apply to a limited-equity cooperative.
(c) A tenant described in paragraph (1) or (2) whose income rises after initial occupancy shall be deemed to continue to have income below the limit set forth in paragraph (1) or (2), respectively; provided, that if the tenant's prior year income exceeds 140% of the adjusted median income, the nonprofit owner shall rent the next unit of comparable size that becomes vacant to a tenant with prior year income not in excess of the income limit set forth in paragraph (1) or (2) that previously was applicable to the tenant whose income now exceeds 140% of the adjusted median income;
(d) In the event that a rental unit in a building owned by a nonprofit owner is occupied by a tenant whose prior year income exceeds the income limit set forth in subsection (b)(5) of this section as of the date of acquisition by the nonprofit owner or initial occupancy by such tenant, or by a tenant whose income increases above 140% of adjusted median income during the course of his or her tenancy, that fact shall not render the remainder of the land or building where the rental unit is situated ineligible for exemption from District of Columbia real property taxation pursuant to this section; provided, that the rental unit itself occupied by such tenant shall not be exempt from such taxation.
(e) Deeds to property for which a certification as to both the property and owner has been made pursuant to subsection (f)(1) of this section, shall be exempt from the tax imposed by [Chapter 11 of Title 42], and the transfer of any of property by a nonprofit owner for which a certification has been made pursuant to subsection (f)(1) of this section, shall be exempt from the tax imposed by Chapter 9 of Title 47. Unless waived by regulation, a copy of the certification shall accompany the deed at the time it is submitted for recordation in order to claim an exemption.
(f)(1) The non-profit owner shall cause an independent compliance monitor to certify under penalty of perjury, to the Department of Housing and Community Development and to the Office of Tax and Revenue ("OTR") each property eligible for an exemption under this section. The certification to OTR shall identify:
(A) The property to which the certification applies by square and lot, or parcel or reservation number;
(B) The full legal name of the owner, including taxpayer identification number, that is eligible;
(C) The tax or taxes to which the certification applies;
(D) The number of units in the property that are eligible;
(E) The effective date of the exemption, which shall be the date on which the organization acquired the parcel, or October 1, 2019, whichever is later; and
(F) Any other information OTR shall require to administer the exemption.
(2) For purposes of the certification required under paragraph (1) of this subsection, a determination of whether a particular property or unit is eligible for an exemption under this section shall be based upon income certification or similar information provided by the applicable tenants.
(3)(A) OTR shall administer the exemption from District of Columbia real property taxation provided under this section using the same procedures as are used for the exemptions provided under § 47-1002.
(B) Properties exempted from District of Columbia real property taxation under this section shall be subject to §§ 47-1007 and 47-1009, except that an owner shall not be required to file an application with OTR to qualify for an exemption.
(4) Properties exempted from District of Columbia real property taxation under this section shall not be subject to § 47-1005 to the extent leased to entities otherwise entitled to exemption under this chapter if such leasehold were owned by such tenant.
(g)(1) The grant of a tax exemption as provided in this section shall be in addition to, and not in lieu of, any other tax relief or assistance from any other source applicable to either the real property or its owner.
(2) A tax exemption granted pursuant to this section shall be available from the date initially exempted; provided, that the property owner remains eligible for such exemption.
(h) This section shall apply for real property tax years beginning after September 30, 2019.
(i)(1) Notwithstanding any eligibility for an exemption from the rent stabilization program pursuant to [§ 42-3502.05(a)], any property covered by this section shall be subject to the requirements of [§§ 42-3502.05(f) through 42-3502.19] after the expiration or termination of a tax exemption provided by this section.
(2) Upon the expiration or termination of the tax exemption, rent charged for a unit may not exceed one of the following:
(A) If a unit is not vacant, the rent charged shall be the rent charged on the date of the expiration or termination of the tax exemption; or
(B) If the unit is vacant, the maximum rent charged shall be the rent charged on the date of the expiration or termination of the tax exemption, plus a single vacancy increase authorized by [§ 42-3502.13(a)].
(3) For the purposes of this section, "rent charged" shall have the same definition as in [§ 42-3501.03(29A)].
(Sept. 11, 2019, D.C. Law 23-16, § 7132(b), 66 DCR 8621; Mar. 19, 2020, D.C. Law 23-68, § 12(b), 67 DCR 743; Nov. 13, 2021, D.C. Law 24-45, § 2062(b), 68 DCR 010163.)
Emergency Legislation
For temporary (90 days) amendment of this section, see § 2062(b) of Fiscal Year 2022 Budget Support Emergency Act of 2021 (D.C. Act 24-159, Aug. 23, 2021, 68 DCR 008602).
For temporary (90 days) amendment of this section, see § 12(b) of Fiscal Year 2020 Budget Support Clarification Second Emergency Amendment Act of 2019 (D.C. Act 23-201, Jan. 22, 2020, 67 DCR 731).
For temporary (90 days) amendment of this section, see § 4(a) of Fiscal Year 2020 Budget Support Clarification Emergency Amendment Act of 2019 (D.C. Act 23-165, Nov. 20, 2019, 66 DCR 15351).
For temporary (90 days) creation of this section, see § 7132(b) of the Fiscal Year 2020 Budget Support Congressional Review Emergency Act of 2019 (D.C. Act 23-112, Sept. 4, 2019, 66 DCR 11964).
For temporary (90 days) creation of this section, see § 7132(b) of the Fiscal Year 2020 Budget Support Emergency Act of 2019 (D.C. Act 23-91, July 22, 2019, 66 DCR 8497).
Temporary Legislation
For temporary (225 days) amendment of this section, see § 5(a) of Fiscal Year 2020 Budget Support Clarification Temporary Amendment Act of 2019 (D.C. Law 23-48, Jan. 28, 2020, 66 DCR 16179).