Code of Massachusetts Regulations › 760 CMR - HOUSING AND LIVABLE COMMUNITIES, EXECUTIVE OFFICE OF › Title 760 CMR 64.00 - Publicly-assisted Affordable Housing Preservation › Section 64.02 - Definitions

Current through Register 1525, July 5, 2024
(1) Capitalized terms used in
				760 CMR 64.00 and not specifically
				defined in
				760 CMR 64.00 shall have the
				meaning set forth in M.G.L. c. 40T.
Certificate of Compliance
- has the meaning
				set forth in
				760 CMR
				64.08.
Certificate of Exemption
- has the meaning
				set forth in
				760 CMR
				64.07.
Curative Notice
- has the meaning set forth
				in
				760 CMR
				64.03(5).
Defective Notice
- has the meaning set
				forth in
				760 CMR
				64.03(5).
Disposition to an Affiliate
. M.G.L. c. 40T,
				§ 1, excludes certain dispositions to an affiliate of the Owner from the
				definition of Sale that would otherwise initiate the obligation to provide notice
				and seek exemption pursuant to M.G.L. c. 40T, § 6(a)(vi). As excluded from the
				definition of
Sale
in M.G.L. c. 40T, § 1,
Disposition
means:
(a) the transfer of a limited partner interest in a limited
				partnership to an Affiliate of the general partner, provided that any accompanying
				transfer of the general partner interest is also to an Affiliate of the general
				partner;
(b) the transfer of a general partner interest in a limited
				partnership to an Affiliate of the General Partner;
(c) the transfer of a membership interest of an LLC member without
				management rights to an Affiliate of a managing member, provided that any
				accompanying transfer of the managing member's management interest or authority is
				also to an Affiliate of the managing member; or
(d) the transfer of a managing membership interest of an LLC member
				to an Affiliate of the managing member of the LLC.
Due Diligence Materials
- has the meaning
				set forth in
				760 CMR
				64.05.
Equivalent Affordability Restriction
-
				means a continuing or replacement Affordability Restriction that meets the following
				tests:
(a) there is no reduction in the total number of Publicly-assisted
				Housing units or in the number of units made available to each of Low Income, Very
				Low Income, and Extremely Low Income households (to the extent units are required to
				be made available to such households under the existing Affordability
				Restriction);
(b) there is no increase in the maximum rents currently charged to
				Tenants for occupancy of any Publicly-assisted Housing rental unit, as such maximum
				limit may change from time to time pursuant to the Government Program applicable to
				an existing Affordability Restriction;
(c) any requirements to renew Affordability Restrictions that affect
				the Publicly-assisted Housing are maintained;
(d) the Equivalent Affordability Restriction is a written agreement
				recorded or suitable for recording in a registry of deeds or registry district of
				the land court, or other substantially equivalent written agreement acceptable to
				the Department, that is enforceable by the Department or another governmental
				entity, or by any non-governmental entity that has the power to enforce the existing
				Affordability Restriction; and
(e) if the existing Affordability Restriction was subject to the
				approval of the Department under M.G.L. c. 184, the Equivalent Affordability
				Restriction shall be subject to the Department's approval (but solely with respect
				to compliance with the requirements of said M.G.L. c. 184).
(f) A Curative Equivalent Affordability Restriction is imposed in
				conjunction with a Curative Notice in order to cure a Defective Notice, in
				accordance with
				760 CMR
				64.03(5), or to cure material
				noncompliance with the due diligence requirements, in accordance with
				760 CMR
				64.05(3). Its duration shall be
				determined by the Department in accordance with the applicable provision of
				760 CMR 64.00.
(g) An existing Equivalent Affordability Restriction is an
				Affordability Restriction in place and continuing at the time of cessation,
				discharge, or removal of another Affordability Restriction that, as to the
				Affordability Restriction that is ending, meets the requirements of an Equivalent
				Affordability Restriction.
(h) 760 CMR 64.02(1):
Equivalent Affordability
				Restriction
shall not be construed to impose a maximum limit on the
				number of Extremely Low Income, Very Low Income, or Low Income households.
Extended Time Period
- has the meaning set
				forth in
				760 CMR
				64.03(5).
Inspection
- means an examination of the
				condition of the premises generally, including dwelling units, building systems,
				common areas and common grounds, including but not limited to examinations related
				to environmental, engineering, structural and/or zoning matters; and, further, shall
				include minimally invasive actions and/or procedures such as sampling building
				surfaces and collecting soil samples with a narrow gauge auger to establish the
				condition and functionality of building components or systems that are not in plain
				view or to investigate the extent of potential issues such as water infiltration,
				mold and the presence of hazardous materials such as lead paint and asbestos.
Institutional Recipient
- means the
				Department, the Community Economic Development Assistance Corporation (CEDAC), the
				tenant organization (if any) for the affected Publicly-assisted Housing, the chief
				executive officer of the municipality in which affected Publicly-assisted Housing is
				located, and the legal services organization recognized by the Department as
				covering the geographic area of the affected Publicly-Assisted Housing.
LLC
- means Limited Liability
				Company.
Notice
- means a Notice of Intent to
				Complete Termination, a Notice of Intent to Sell to a Preservation Purchaser, a
				Notice of Future Termination, or an Offer to Sell.
Notice of Future Termination
or
Two-year Termination Notice
- means the notice required to
				be given by the Owner under M.G.L. c. 40T, § 2(a).
See
760 CMR
				64.03.
Notice of Intent to Complete Termination
or
One-year Termination Notice
- means the notice required to
				be given by the Owner under M.G.L. c. 40T, § 2(b).
See
760 CMR
				64.03.
Notice of Intent to Sell to Preservation
				Purchaser
- means the notice that the Owner intends to pursue a
				potential Sale of Publicly-assisted Housing to a Preservation Purchaser and to
				request an exemption from M.G.L. c. 40T, §§ 3 and 4, pursuant to M.G.L. c.
				40T, § 6(a)(iv), (v), (vi), or (vii).
See
760 CMR
				64.03.
Offer to Sell
- means the notice and offer
				required to be given by the Owner under M.G.L. c. 40T, § 2(c).
See
760 CMR
				64.03.
Preservation Purchaser
- means a Purchaser
				who commits to Preserve Affordability of Publicly-assisted Housing by:
(a) entering into a Purchase Contract that contemplates a
				transaction that would be exempt from the provisions of M.G.L. c. 40T, §§
				3 and 4, pursuant to M.G.L. c. 40T, § 6(a)(iv), (v), (vi), or (vii); and
(b) upon performance of the Purchase Contract, assumes any existing
				Affordability Restriction(s) and/or enters into one or more new Affordability
				Restrictions to the extent required by the requirements for exemption pursuant to
				M.G.L. c. 40T, § 6(a)(iv), (v), (vi), or (vii).
Preserve Affordability
- has the meaning
				set forth in M.G.L. c. 40T, § 1, as further affected by 760 CMR
				64.02(2).
Purchase Contract
. In addition to the types
				of agreements enumerated in M.G.L. c. 40T, § 1,
Purchase
				Contract
shall include, without limitation, a binding offer to purchase
				or letter of intent between an Owner and a Purchaser.
Purchaser
- means a party who has entered
				into a Purchase Contract with an Owner and who will, upon performance of the
				Purchase Contract, become the new Owner of the Publicly-assisted Housing.
Sale
- as set forth in M.G.L. c. 40T,
				§ 1, shall include:
(a) a transfer, directly or indirectly, of:
1. all or substantially all of the ownership interest in the Owner;
				or
2. of all or substantially all of the management or controlling
				interest of the Owner together with a transfer of some or all the ownership interest
				of such management or controlling interest, whether by transfer of the partnership
				interests of a limited partnership, the member interest of a limited liability
				company (LLC), a class of stock or portfolio of shares of a corporation, the
				beneficial interest in a passive trust, or by other means, but not including:
a. with respect to a limited partnership, the transfer of any other
				limited partner interest not in combination with the transfer of the general partner
				interest, which may include a transfer also qualified as a Disposition to an
				Affiliate under 760 CMR 64.02(1):
Disposition to an
				Affiliate
(a); or
b. with respect to an LLC, the transfer of any other member
				interest not in combination with the transfer of the managing member interest or the
				interest held by the manager or its Affiliate, which may include a transfer also
				qualified as a Disposition to an Affiliate under 760 CMR 64.02(1):
Disposition to an Affiliate
(c); or
c. any transfer similar in substance to the transfers described in
				760 CMR 64.02:
Sale
(a) and (b); and
(b) a transfer of any interest that causes dissolution of the Owner
				under applicable state law governing corporations, trusts, partnerships, or
				LLCs.
Simultaneous Replacement
. As used in the
				definition of Termination in M.G.L. c. 40T, § 1, the term Simultaneous
				Replacement shall include the continuance, by assumption by a Purchaser or
				otherwise, of an Existing Equivalent Affordability Restriction that remains in place
				notwithstanding the cessation, discharge, or removal of an Affordability Restriction
				imposed by a different Government Program.
Successor Designee
- has the meaning set
				forth in
				760 CMR
				64.04(4).
Termination
- has the meaning set forth in
				M.G.L. c. 40T, § 1, as further affected by the definition of Equivalent
				Affordability Restriction in 760 CMR 64.02(1).
Third-party Purchaser
- means a Purchaser
				who is not the Department, a Designee, or an Affiliate.
(2)
Standards for "Preserve Affordability
". In making a determination as to whether a Purchaser has taken the necessary
				actions to Preserve Affordability, the Department shall take the following factors
				into consideration. In each case the burden shall be on the party seeking the
				determination to provide sufficient evidence to support the Department's
				determination.
(a)
Reasonable and Diligent Actions
. In
				making a determination as to whether the Purchaser has undertaken reasonable and
				diligent actions to retain, renew or secure Subsidies affecting Publicly-assisted
				Housing, the Department will consider, in its reasonable discretion, the following
				factors and information.
1. If the opportunity exists to retain or renew Subsidies under an
				existing Government Program, the Purchaser must show either:
a. that it made all necessary filings and took all other necessary
				actions in a complete, timely, and diligent manner, and the Subsidies have been
				retained or renewed; or
b. new equivalent Subsidies have been secured.
2. If a request to retain or renew Subsidies is denied despite
				reasonable and diligent actions, or if the availability of Subsidies under an
				existing Government Program has been reduced or terminated, the Purchaser must show
				that it undertook diligent efforts to identify and secure an alternative source(s)
				of Subsidies. In identifying potential Subsidies, the Purchaser shall show, at a
				minimum, that it consulted with the Department to obtain information about the full
				range of alternative federal and state Subsidy programs, and that it consulted with
				the Affected Municipality to obtain information about the full range of alternative
				local Subsidy programs. A Purchaser who is suspended, debarred, or otherwise
				prohibited from participating in a Subsidy program that is otherwise available,
				shall not be considered to have complied with 760 CMR 64.02(2)(a).
(b)
Quality Housing
. In making a
				determination as to whether the Purchaser has taken into account the need to ensure
				that the Publicly-assisted Housing provides quality housing to its Tenants, the
				Department will consider, in its reasonable discretion, whether a reduction in the
				total number of affordable units or the number of bedrooms per unit is justified by
				the aggregate effect of some or all of the following factors:
1. substandard physical condition of the building that fails to meet
				the requirements of current building, fire, or energy codes;
2. substandard physical condition of the building that fails to meet
				the requirements of current accessibility codes;
3. the need to provide space within the building dedicated to
				programs and facilities directly serving the Low Income Tenant population;
4. the need to improve the quality of life of the Low Income Tenant
				population and/or the marketability of the Publicly-assisted Housing to the Low
				Income Tenant population; and
5. the need to meet regional Low-income housing needs, including the
				need for larger units to accommodate families; provided in each case that units
				should not materially exceed the Department's current minimum dimensional standards
				for affordable housing units found in the Department's Construction/Rehabilitation
				Guidelines for developments that receive state assistance, published on the
				Department's website.
(c)
Comparable Replacement Units
. In making
				a determination as to whether the Purchaser has replaced lost units with comparable
				deed-restricted Publicly-assisted Housing units at an alternative site to the extent
				of available Subsidies and to the extent feasible, the Department will consider, in
				its reasonable discretion, the following factors and information. The Purchaser
				shall provide with respect to the proposed replacement the following information, to
				the extent applicable:
1. plans of the alternative site and the housing units to be
				provided and the number of units (to be further categorized by the number of
				bedrooms per unit) covered by each Affordability Restriction;
2. a copy of the Affordability Restriction(s) to be imposed on the
				replacement units;
3. a development and/or construction schedule;
4. a financial pro forma and preliminary financing commitment(s);
				and
5. satisfactory evidence that zoning and all other required
				approvals have been issued or may reasonably be expected to issue in due course. If
				the proposed development will not provide the full number of replacement units, the
				Purchaser must show that it complied with the standards of 760 CMR 64.02(2)(a) in
				trying to obtain available Subsidies. The Department shall make continuing
				compliance with this requirement a condition of a Certificate of Exemption, unless
				the Department or another governmental entity has imposed substantially equivalent
				requirements. Such conditions may include, at the Department's discretion, the power
				to impose a lien on the alternative site, not to be released except with the
				Department's consent upon full compliance.
(d)
Minimum Expectations
.
1. The Department expects a request for a Certificate of Exemption
				on the basis of Preserving Affordability to include Affordability Restrictions
				meeting all of the following requirements to the extent applicable:
a. If an Affordability Restriction pursuant to project-based rental
				assistance under M.G.L. c. 40T, § 1, Publicly-assisted Housing(i) or (xiii)
				currently applies to the Publicly-assisted Housing, the Owner and Purchaser must
				commit to enter into a binding written agreement with the Department suitable for
				recording in a registry of deeds or registry district of the land court to renew,
				either at the time of the Sale or at such time as the existing Subsidy contract
				expires if it remains in effect after the Sale, the current Subsidies imposing such
				Affordability Restrictions on substantially equivalent terms and conditions for the
				longest term permissible by the agency administering the applicable Subsidies, and
				to continue to request such renewals on similar terms up to such time as is
				necessary to cover the date 30 years from the date of sale.
b. If an Affordability Restriction that does not qualify under 760
				CMR 64.02(2)(d)1.a. currently applies to the Publicly-assisted Housing, the Owner
				and Purchaser must assure through a combination of existing, renewable, and new
				Affordability Restrictions that such Affordability Restrictions on the affected
				property will be maintained for at least thirty years from the date of the
				applicable Sale for the same total number of Publicly-assisted Housing units and the
				same number of units restricted to each of Low Income, Very Low Income, and
				Extremely Low Income households as are covered by Affordability Restrictions at the
				time of the Sale.
c. If a request for a Certificate of Exemption on the basis of
				Preserving Affordability concerns Publicly-Assisted Housing subject to Affordability
				Restrictions covered by both 760 CMR 64.02(2)(d)1.a. and b., the Minimum
				Expectations applicable to both such provisions shall apply.
2. If a request for a Certificate of Exemption on the basis of
				Preserving Affordability does not meet the requirements of 760 CMR 64.02(2)(d)1.a.
				and b., to the extent applicable, the Owner and Purchaser must:
a. demonstrate that exceptional circumstances exist preventing them
				from meeting the requirements of 760 CMR 64.02(2)(d)1.a. or
b., as applicable, including, but not limited to, demonstration of
				taking extraordinary diligent action to determine that Subsidies meeting the
				requirements of 760 CMR 64.02(2)(d)1.a. or b.,were not available or were available
				only on terms that are economically unfeasible; or b. in the case of an interim or
				bridge Sale based on the Purchaser's representation that a subsequent Sale or
				financing transaction will provide for extending existing Affordability Restrictions
				or additional Affordability Restrictions, submit a plan acceptable to the Department
				indicating how they will meet the requirements of 760 CMR 64.02(2)(d)1.a. or b., as
				applicable, prior to securing a Final Certificate of Exemption.
3.
a. For property subject to the provisions of M.G.L. c. 40T, §
				6, during the four-year period covered by M.G.L. c. 40T, § 10, the Department
				shall determine appropriate Minimum Expectations on a case-by-case basis, in its
				sole discretion, depending on the circumstances.
b. The Department may issue administrative guidance in regard to the
				application of Minimum Expectations pursuant to 760 CMR 64.02(2)(d).