As reported in our April 2025 Alert on March 3, 2025, DC Council Chairman Phil Mendelson introduced the Rebalancing Expectations for Neighbors, Tenants, and Landlords (RENTAL) Act (B26-0164), which includes proposed amendments to the DC Tenant Opportunity to Purchase Act (TOPA). Among other things, the RENTAL Act would exempt certain transactions from TOPA. As presently drafted, the RENTAL Act would not require a TOPA Offer of Sale for the following rental housing transfers:
- Newly constructed or substantially improved* buildings within 25 years prior to the transfer, if at least 51 percent of the units have average rents that exceed a rental rate affordable to households earning at or below 80 percent of the area median income (AMI); and
- buildings subject to recorded affordability covenants that require at least 50 percent of the units to be rented at a rate affordable to households earning at or below 80 percent AMI for a period of at least 20 years.
*In order to be considered “substantially improved”, the cost of repairs or alterations must exceed 50 percent of the market value of the building prior to repairs or alterations.
Additional details of the RENTAL Act can be found in our February 2025 Alert. On March 18, 2025, the RENTAL Act was referred to several committees, including the Committee on Housing (COH). Although no hearings have been scheduled for the FY 2026 Budget, the COH held a public hearing on May 28, 2025, on DC housing-related legislation, including the TOPA exemptions proposed under the RENTAL Act. Interested parties can watch the COH hearing via the DC Council website.
Now more than ever, it is important that the mayor and council members hear from stakeholders that changes to TOPA are essential to encouraging investment in housing in the district. Although the RENTAL Act includes some beneficial components, it may not go far enough. If any TOPA reform legislation is enacted this year, it may be difficult to seek further reforms in the future. Therefore, enactment of the most comprehensive reform feasible now is of critical importance. Some additional concerns with the current version of the RENTAL Act include:
- The 25-year exemption limitation may be unnecessary. If an older, well-maintained market rate or luxury apartment building is sold, is there a legitimate public purpose served by limiting the TOPA exemption to newer buildings? Such buildings are seldom, if ever, purchased by tenants because it simply is not feasible for tenants to do so.
- Transfers not subject to a TOPA Offer of Sale requirement should not be subject to a Notice of Transfer requirement. The Notice of Transfer process unnecessarily delays transactions for a minimum of 90 days, creating marketplace uncertainty.
- Properties exempt from TOPA under the RENTAL Act should be permitted to move forward without delays or administrative burdens. If the seller certifies that the exemption requirements are met, the sale should be permitted to proceed.
- We have heard other concerns and questions from stakeholders and these concerns and questions should be brought to the attention of the mayor and council. The underlying goal should be to establish a legal and political framework that encourages investment in DC housing.
Also on the agenda for the COH hearing was the Common Sense TOPA Reform Amendment (CSTRA) Act (B26-0228), an alternative TOPA reform bill introduced by DC Councilmember Brianne Nadeau. DC Councilmember Robert C. White, Chair of the COH, has expressed interest in combining elements of the RENTAL Act and the CSTRA Act. Although the RENTAL Act at least appears to be a step in the right direction, recent stakeholder meetings convened by the DC Building Industry Association (DCBIA), which we attended, identified a number of significant issues with the CSTRA Act:
- The CSTRA Act exempts all new residential construction from TOPA for the first three years after the issuance of a certificate of occupancy. This exemption period would only benefit new construction and is insufficient to incentivize substantial improvement of existing housing or any recapitalization of stabilized properties.
- The CSTRA Act requires owners to provide the DC Department of Housing and Community Development (DHCD) with copies of TOPA buyout and development agreements, which DHCD would in turn publish to a publicly accessible and searchable “TOPA transparency portal.” This requirement to disclose confidential settlement terms, coupled with the ability of unscrupulous actors to abuse this information, would undoubtedly chill sales transactions.
- The CSTRA Act imposes a “cooling off period” that would restrict the ability of a tenant association (TA) to assign its TOPA rights within the first 45 days after TA registration, unless the TA meets with a “tenant support provider” (TSP) certified by DHCD. This cooling off period, and the addition of TSPs and related requirements, may unnecessarily extend the TOPA process in situations where the TA and new ownership are aligned and potentially deprive tenants of their ability to benefit from a speedy settlement.
- The CSTRA Act directs DHCD to create standard templates for buyout and development agreements. Standard templates promulgated by DHCD may limit the flexibility to negotiate settlement terms for TOPA rights, which under TOPA may be assigned or sold “for any consideration which the tenant, in the tenant’s sole discretion, finds acceptable.”
- The CSTRA Act directs DHCD to establish a process for reviewing TOPA submissions for suspected violations or deficiencies. Post-settlement review by DHCD is excessive and may lead to further delays, since the CSTRA Act does not include appropriations for additional DHCD staff.
These are just some of the potential problems with the CSTRA Act. We will continue to work with DCBIA and others for meaningful TOPA reforms.
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