Code of the District of Columbia

§ 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 § 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 fees 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 § 42-2801(1);

(2) Increase the rent by no more, and no more often, than the increases allowed under § 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.

(c) Repealed.

(d) The Mayor shall deposit in the Housing Production Trust Fund, created pursuant to § 42-2802, all fees paid pursuant to this section above $692,000 annually, as of April 16, 2020.

(e) The Mayor, subchapter I of Chapter 5 of Title 2, may issue rules to implement the provisions of this section.