Finally, some potential good news for multifamily property owners and developers in DC. It appears that the discussions on reforming the Tenant Opportunity to Purchase Act (TOPA), as well as the Emergency Rental Assistance Program (ERAP), which we previously reported on in our prior Alert, have made an impact. On February 12, 2025, Mayor Bowser unveiled the Rebalancing Expectations for Neighbors, Tenants, and Landlords Act (RENTAL Act), which includes important proposed changes to TOPA and ERAP.
As currently drafted, the RENTAL Act would add new exemptions to TOPA for the sale or transfer of properties, including:
- An exemption for buildings that were built or substantially improved within 25 years of the sale (i.e., a rolling exemption), if at least 51 percent of the units in the building have average rents that exceed a rental rate affordable to households earning 80 percent or less of the area median income during the most recent six-month period for which rent data was available. The mayor must certify that the property meets these requirements and landlords of properties subject to this TOPA exemption must give tenants written notice that the property is exempt from TOPA before the tenant signs a lease.
- An exemption for properties subject to recorded affordability covenants that require at least 50 percent of the units in the building to be rented at a rate affordable to households earning 80 percent or less of area median income for a period of at least 20 years. At the time of the sale or transfer, the remaining term of the affordability covenants must be at least five years to qualify for this exemption. Landlords of properties subject to this TOPA exemption must give tenants written notice that the property is exempt from TOPA before the tenant signs a lease.
- An exemption for properties allowing limited partners or investor members who made capital contributions to the property to enter or exit as owners of the property.
The RENTAL Act would also make the previously enacted temporary ERAP reforms permanent (see our prior Alert). Other provisions include streamlining eviction proceedings, allowing the district to acquire abandoned and deteriorated properties to convert the properties into affordable housing, and amending the implementation of inclusionary zoning. While the RENTAL Act appears to be a significant step in the right direction, the DC council will need to enact the RENTAL Act for it to become law (we understand that one or more alternative TOPA bills may be introduced, too). We will continue to monitor this bill and provide updates in future Alerts.
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