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(a) Sales; control period. The sale price of a workforce housing unit must be controlled under this subsection for 20 years after the date of original sale. During the applicable control period, a workforce housing unit must only be sold to an individual with a household income that does not exceed 120% of the area-wide median income or a lower amount set by regulation. Any workforce housing unit offered for sale, or for resale during the control period, must first be offered exclusively for 60 days to the Department and the Housing Opportunities Commission, in that order. The Department and the Commission may buy a workforce housing unit at any time during the control period, and may resell the unit to an eligible person. A resale by the Department or Commission starts a new control period.
(b) Resale price during control period.
(1) Resale price. Except in a foreclosure proceeding, a workforce housing unit constructed or offered for sale under this Article must not be resold during the applicable control period for a price greater than the maximum sale price for a similar new workforce housing unit under applicable regulations on the date of the resale.
(2) Return to seller. The Department must supplement any bona fide price that the seller of a workforce housing unit receives from the buyer under paragraph (1) so that the seller receives a total of the original sale price of the unit plus:
(A) an allowance for closing costs which were not paid by the initial seller, but which will be paid by the initial buyer for the benefit of a later buyer;
(B) the fair market value of any capital improvement that the Director finds was needed to maintain the equity of the unit;
(C) a percentage, set by regulation, of the difference between the unit’s appraised market value (as defined by applicable regulations) when the seller bought the unit and its appraised market value when the seller offered the unit for sale, which must not exceed 50% of the total price appreciation; and
(D) a reasonable sales commission.
The Department may use funds in the Housing Initiative Fund to pay all or part of the amount returned to the seller under this paragraph, to the extent provided in applicable regulations.
(3) Payment to Housing Initiative Fund. If the bona fide price the seller receives is greater than the amount allowable under paragraph (2), the seller must pay the difference to the Fund. The Director must find that the price and terms of a sale covered by paragraph (1) are bona fide and accurately reflect the entire transaction between the parties so that the full amount required under this Section is paid to the Fund.
(c) Resale price after control period ends.
(1) For the first sale of a workforce housing unit after the applicable control period ends that exceeds the allowable price specified under subsection (a), the seller must pay to the Housing Initiative Fund one-half of the excess of the total resale price over the sum of:
(A) the original appraised market value;
(B) a percentage of the unit’s original appraised market value equal to the increase in the cost of living as determined by the metropolitan area Consumer Price Index;
(C) the fair market value of capital improvements made to the unit between the date of original sale and the date of resale; and
(D) a reasonable sales commission.
The Director must adjust the amount paid into the Housing Initiative Fund in each case so that the seller retains at least $10,000 of the excess of the resale price over the sum of the items in subparagraphs (A) — (D).
(2) The Director must find that the price and terms of a sale covered by paragraph (1) are bona fide and accurately reflect the entire transaction between the parties so that the full amount required under paragraph (1) is paid to the Fund. When the Director finds that the amount due the Fund is accurate and the Director of Finance receives the amount due, the Director must terminate the controls imposed by this section and execute a release of all restrictive covenants.
(d) Limits on rents. Unless the unit was previously sold under subsection (c), any workforce housing unit built or offered for rent under this Chapter must not be rented for 99 years after the date of original rental at a rent greater than the rent allowed for workforce housing units under this Article and applicable regulations. Rent may include parking but does not include utilities when they are paid by the tenant. Different rents must be set when utility costs are paid by the owner and included in the rent. During the applicable control period, a workforce housing unit must only be rented to an individual with a household income that does not exceed the limits set under this Article.
(e) Foreclosure. If a workforce housing unit is sold in a foreclosure proceeding begun by a lending institution, the Director must terminate the workforce housing controls and execute a release of all restrictive covenants if all proceeds of the sale, if any, that must be paid to the Housing Initiative Fund have been paid. If a foreclosure sale of a workforce housing unit occurs during the applicable control period, any price paid at the foreclosure sale that exceeds the price established under subsection (b), plus any reasonable costs and fees of foreclosure, must be paid into the Housing Initiative Fund. If a workforce housing unit is foreclosed after the control period, subsection (c) applies. If the unit sold was a rental unit, the Department must calculate the sale price that would have been permitted at the date of original rental as if the unit had been originally offered for sale.
Editor’s noteFormer Section 25B-26, Alternative location agreement, derived from 2006 L.M.C., ch. 23, § 1, was repealed by 2010 L.M.C. ch. 11, § 2.
Former Section 25B-27, Control of sale prices; rent limits; income eligibility; foreclosures, was renumbered 25B-26 by 2010 L.M.C., ch. 11, § 2.