2023 District of Columbia Code › Title 47 - Taxation, Licensing, Permits, Assessments, and Fees. [Enacted title] › Chapter 46 - Special Tax Incentives › § 47–4665. Creative and Open Space Modernization tax rebate

§ 47–4665. Creative and Open Space Modernization tax rebate.
(a) For the purposes of this section, the term:
(1) "Directly related entity" means a qualified entity that is closely associated with an occupant, including:
(A) A subsidiary or parent company of an occupant;
(B) A special purpose vehicle of an occupant;
(C) A holding company of an occupant;
(D) An operating company of an occupant;
(E) A flow-through entity of an occupant;
(F) A company otherwise substantially sharing, directly or indirectly, common directors, officers, employees, facilities, or profits with an occupant.
(2) "Eligible building" means:
(A) A nonresidential building; or
(B) A building used for both residential and nonresidential purposes.
(3) "Eligible premises" means a nonresidential, interior portion of an eligible building that is used as an office (including ancillary uses) by a qualified entity under a lease, sublease, or purchase and sale agreement.
(4) "Occupancy commencement" means the date on which an occupant or a directly related entity takes possession of eligible premises or the occupancy date for eligible premises agreed to in a lease, sublease, or purchase and sale agreement by an occupant, whichever occurs first.
(5) "Occupant" means a qualified entity that executes:
(A) A lease or sublease for at least 50,000 square feet of net rentable area of eligible premises within the District for a minimum term of 12 years, under which the qualified entity or a directly related entity occupies and uses the eligible premises, or will occupy and use the eligible premises, on or after the commencement date; or
(B) A purchase and sale agreement for at least 50,000 square feet of net area of eligible premises within the District, under which the qualified entity or a directly related entity occupies and uses the eligible premises, or will occupy and use the eligible premises, on or after the commencement date.
(6) "Public benefit" means an undertaking by an occupant or a directly related entity that the Mayor, in the Mayor's sole discretion, determines will have a material, positive impact on the District. The term "public benefit" may include:
(A) Providing employment or contracting opportunities for District residents and Certified Business Enterprises;
(B) Providing low-income or underserved individuals or communities in the District with reduced-price or free products, services, or commercial or community space;
(C) Providing economic opportunities, training, or jobs for individuals or communities beyond those offered through the normal course of business; or
(D) Providing innovation-and-technology-related educational, training, or internship opportunities for students in the District.
(7)(A) "Qualified entity" means an individual or entity:
(i) Organized for profit and leasing or owning an office in the District;
(ii) Having 2 or more employees in the District; and
(iii) Deriving at least 51% of its gross revenues earned in the District from business operations in one of the following target sectors:
(I) Education and Research, including educational institutions and companies conducting scientific research and development, especially those in the energy and data science fields;
(II) Consulting Services, including management, engineering, and other specialized firms providing informational or strategic consulting resources to clients;
(III) Communications and Design, including firms working in marketing, design, media, and communication, including publishers of written or digital media content;
(IV) Hospitality, Tourism, and Entertainment, including hotels, entertainment, nightlife, arts venues, restaurants, and other firms offering tourism and hospitality services;
(V) Life Sciences and HealthTech, including organizations conducting research, development and manufacturing of pharmaceuticals, biotechnology-based food and medicines, and other products; or
(VI) Technology, including businesses creating, implementing, and connecting technological systems and processes, such as Cybersecurity, Artificial Intelligence, and other emerging industries.
(B) The term "qualified entity" shall not include:
(i) An individual or entity that derives 51% or more of its gross revenues from the operation in the District of:
(I) An on-line or brick and mortar retail store;
(II) An electronic equipment facility that is primarily occupied, or intended to be occupied, by electronic and computer equipment that provides electronic data switching, transmission, or telecommunication functions between computers, both inside and outside the facility; or
(III) A building or construction company; or
(ii) A professional athletic team, as defined in § 47-2002.05(a)(3).
(8) "Qualified occupant improvement" means an improvement to eligible premises made pursuant to a lease, sublease, or purchase and sale agreement by an occupant or a directly related entity that is substantially completed no later than one year after occupancy commencement.
(9) "Total value of qualified occupant improvements" means the amount expended by an occupant or a directly related entity to make qualified occupant improvements.
(b) An occupant that leases, subleases, or executes a purchase and sale agreement for eligible premises taxable under Chapter 8 of this title or § 47-1005.01 may receive to the extent provided by this section, a rebate of the real property or possessory interest tax paid with respect to the eligible premises for the portion of the tax year that the eligible premises are occupied by the occupant or a directly related entity if:
(1) The occupant is liable under the lease, sublease, or purchase and sale agreement for its proportionate share of the real property or possessory interest tax for the tax lot on which the eligible building is located;
(2) The occupant has been certified as eligible for a rebate by the Mayor under subsection (e) of this section;
(3) The real property or possessory interest tax has been paid for the year during which the rebate is sought;
(4) The occupant complies with the requirements of subsection (d) of this section during the tax year for which the rebate is sought; and
(5) No abatement of the real property or possessory interest tax on the eligible building pursuant to § 47-811.03 has been claimed for the tax year for which the rebate is sought.
(c)(1) The amount of the rebate provided pursuant to this section to a single occupant or any directly related entity in a single year shall be equal, subject to the availability of funds, to the least of the following:
(A) 10% of the total value of any qualified occupant improvements substantially completed during the preceding 5 years, as certified by the Mayor pursuant to subsection (e)(3) of this section;
(B) The portion of the real property or possessory interest tax paid during the year for which the rebate is sought, either directly or indirectly, by the occupant or by a directly related entity under the occupant's or directly related entity's lease, sublease, or purchase and sale agreement; or
(C) $1 million.
(2) The amount of the rebate calculated pursuant to paragraph (1) of this subsection shall be reduced by the amount of any grant received by the occupant or by a directly related entity pursuant to [§ 1-325.172(c)(4)], as certified by the Mayor to the Office of Tax and Revenue.
(3) No later than December 31 of the year following the tax year for which the taxes to be rebated were paid, payment of the rebate of real property or possessory interest tax shall be made to the person who paid the tax; provided, that the payer is eligible to receive the rebate payment.
(d) No later than September 15 of the tax year in which the tax was paid as provided under § 47-811 or § 47-1005.01, the Mayor shall certify to the Office of Tax and Revenue, in a form and medium specified by the Office of Tax and Revenue, each property or portion thereof eligible to receive the rebate provided by this section and the amount of the rebate. The certification shall be accompanied by a statement from the Mayor specifying the amount of funds available under subsection (f) of this section for real property or possessory interest tax abatement for each property identified in the certification. The rebate paid for any property shall not exceed the amount of tax paid with respect to such property for the tax year, taking into account any other applicable abatements, exemptions, or reductions. Each applicant for a rebate shall furnish to the Mayor:
(1) A copy of the occupant's lease, sublease, or purchase and sale agreement including any provisions requiring the occupant to pay a portion of the property or possessory interest tax for the tax lot on which the eligible building is located;
(2) Documentation that the occupant has paid its proportional share of the real property or possessory interest tax to date, as required under the lease, sublease, or purchase agreement for the eligible premises, to be supplemented by the occupant once it has made its final payment for the calendar year; and
(3) An itemization of the square footage of the eligible premises actually occupied by the occupant or a directly related entity and the period of such occupancy during the tax year.
(e)(1) An occupant who seeks to be considered eligible for a rebate provided under this section shall file with the Mayor on or after June 1, 2016, in a manner and form as the Mayor may prescribe, an eligibility certification application, which shall include:
(A) The identity of the occupant, including the occupant's taxpayer identification number, and the identity of any directly related entity that may be occupying all or part of the eligible premises, including the directly related entity's taxpayer identification number;
(B) A description of the eligible building, by square and lot, parcel, or reservation or possessory interest account number, and of the eligible premises, including floors, location, and square footage;
(C) The estimated cost of making any qualified occupant improvements to the eligible premises;
(D) The date of occupancy commencement and the anticipated duration of the lease or sublease or the holding period if purchased;
(E) A description of the public benefit that the occupant proposes to furnish; and
(F) Any other information that the Mayor considers necessary.
(2) The Mayor shall review the occupant's eligibility certification application. If the Mayor determines that the occupant has proposed to furnish a public benefit and that the tenant is otherwise eligible, the Mayor shall certify the tenant's eligibility to receive a rebate pursuant to this section. The certification shall be made before the date of occupancy commencement or within 45 days after the eligibility certification application is received, whichever is later in time.
(3) Within 60 days following substantial completion of qualified occupant improvements, the occupant shall submit to the Mayor an itemization of the total value of qualified occupant improvements, together with supporting documentation. Within 60 days following the receipt of this submission, the Mayor shall review and certify the total value of qualified occupant improvements.
(4) No later than the date the certification is made as provided in subsection (d) of this section, the Mayor shall certify to the Office of Tax and Revenue whether the tenant has furnished or has made substantial progress toward furnishing a public benefit. If the Mayor certifies that a tenant has not furnished or made substantial progress toward furnishing a public benefit, the Office of Tax and Revenue shall not pay a rebate to the tenant for that calendar year.
(5) If at any time the Mayor determines that an occupant has become ineligible for a rebate under this section, either for failure to make substantial progress toward furnishing a public benefit or for some other reason, the Mayor immediately shall notify the Office of Tax and Revenue and thereafter the Office of Tax and Revenue shall not pay to the tenant any rebate pursuant to this section.
(f)(1) Notwithstanding any other provision of this section, the total combined rebate payments per fiscal year for all occupants under this section, beginning in Fiscal Year 2017, shall not exceed $3 million.
(2) Notwithstanding paragraph (1) of this subsection, the total combined rebate payments for Fiscal Year 2021 for all occupants under this section shall not exceed $580,366.
(Oct. 22, 2015, D.C. Law 21-36, § 2172(b), 62 DCR 10905; Oct. 8, 2016, D.C. Law 21-160, § 2002(b), 63 DCR 10775; Dec. 13, 2017, D.C. Law 22-33, § 7232(c), 64 DCR 7652; Dec. 3, 2020, D.C. Law 23-149, § 2053, 67 DCR 10493; Sept. 6, 2023, D.C. Law 25-50, § 2072, 70 DCR 10366.)
Emergency Legislation
For temporary (90 days) amendment of this section, see § 7232(c) of Fiscal Year 2018 Budget Support Congressional Review Emergency Act of 2017 (D.C. Act 22-167, Oct. 24, 2017, 64 DCR 10802).
For temporary (90 days) amendment of this section, see § 7232(c) of Fiscal Year 2018 Budget Support Emergency Act of 2017 (D.C. Act 22-104, July 20, 2017, 64 DCR 7032).
For temporary (90 days) addition of this section, see § 2172(b) of the Fiscal Year 2016 Budget Support Emergency Act of 2015 (D.C. Act 21-127, July 27, 2015, 62 DCR 10201).