Loading...
(a) Any owner of an assisted housing development required by this Chapter to give notice of intent to prepay and/or terminate, or to give the notice of expiration required by Section 60.9, below, shall not sell or otherwise transfer the development, or any portion thereof, unless the owner proposing such sale or transfer shall first have provided qualified entities the opportunity as described in this Section 60.8 to purchase the development.
(b) A "qualified entity" within the meaning of this Chapter means an entity that (x) is a government entity; or (y) is described in Section 501(c)(3) and is exempt from taxation under Section 501(a) of the Internal Revenue Code of 1986, and is (A) the tenant association of the development, if any, (B) a nonprofit public benefit corporation or (C) a limited partnership with a nonprofit public benefit corporation as general partner, and which:
(1) Has demonstrated, to the reasonable satisfaction of the Director of Housing, the capability, either by itself or through a management agent, to manage the development for the development's remaining useful life;
(2) Agrees, in a written certification to the owner and to the Director of Housing and through the recording of the document described in Section 60.8(n), to obligate itself and any successors in interest to maintain the assisted housing development, for its remaining useful life, for occupancy either in (x) the same percentage of very low, low and moderate income households that occupied the units on the date the owner gave notice of intent to prepay and/or terminate or (y) the percentages specified in existing use restrictions, whichever yields lower rents, at monthly rents not exceeding the lower of:
(i) The rents specified in the existing use restrictions; or
(ii) (A) The greater of 1/12 of (1) 30 percent of 40 percent of median income, or (2) 30 percent of actual tenant household income, less a utility allowance, for each unit occupied by a very low income household; and (B) the greater of 1/12 of: (1) 30 percent of 70 percent of median income, or (2) 30 percent of actual tenant household income, less a utility allowance, for each unit occupied by a low income household; and (C) the greater of 1/12 of: (1) 30 percent of 90 percent of median income, or (2) 30 percent of actual tenant household income, less a utility allowance, for each unit occupied by a moderate income household;
(3) Has demonstrated, to the reasonable satisfaction of the Director of Housing, a commitment to seek, diligently and in good faith, any additional subsidies that may become available to increase the percentage of units available for occupancy by very low income households at a rent not exceeding the amount specified in Section 60.8(b)(2)(ii) above;
(4) Does not have among its directors, general partners, shareholders or other persons with a financial interest in the entity, a majority of persons who have converted subsidized rental units or have given a notice of intent to prepay and/or terminate; and
(5) Is not a related entity of the owner.
(c) Any person may petition the Director of Housing to determine whether a person claiming to be a qualified entity is a qualified entity. Upon written request of the Director of Housing, any person claiming to be a qualified entity shall submit to the Director of Housing, within 30 days of receipt of such request, written documentation supporting the conclusion that that person is a qualified entity. Such documentation shall include a statement by an authorized officer of the entity attesting under penalty of perjury to the accuracy and completeness of the facts stated in such documentation. Upon receipt the Director of Housing shall make such documentation available for public inspection and copying upon written request by any interested person. The Director of Housing shall promptly make a determination after receiving all relevant information and shall support the determination with public written findings. The determination of the Director may be appealed to the Appeals Board.
(d) Any owner of an assisted housing development who is required to give notice of intent to prepay and/or terminate, or to give the notice of expiration required by Section 60.9, shall not sell or otherwise transfer an assisted housing development, or any portion thereof, without giving, at least 14 months prior to the date of such sale or transfer, notice of intention to sell or transfer the development or any portion thereof ("notice of intent to sell"), to the Director of Housing and to any Qualified Entity which requests in writing such notice from the owner. The notice of intent to sell shall be signed by the owner under penalty of perjury and given by deposit in the United States Mail, first class, certified, return receipt requested and posted in a conspicuous place in the common area of the development.
(e) The notice of intent to sell shall contain all of the following:
(1) The intended date of sale or transfer;
(2) The terms of assumable or seller take-back financing, if any, including, but not limited to, the name and address of the lender, the principal amount of the loan, the interest rate, repayment provisions, the date the loan is due, and the priority of the lien of any instrument securing the loan; the terms of an applicable subsidy contract, if any; and proposed improvements to the property to be made by the owner in connection with the sale or transfer, if any;
(3) A statement that the development or portion thereof is available for purchase by or transfer to a qualified entity;
(4) A statement that the owner will make available to any qualified entity, within 15 days of receiving a written request therefor, itemized lists of monthly operating expenses, capital improvements as determined by the owner made within each of the two preceding calendar years, the amount of project reserves, and copies of the two most recent financial and physical inspection reports on the development, if any, filed with federal, state, or local agencies; and
(5) A copy of the notice of intent to prepay and/or terminate and a statement, signed by the owner under penalty of perjury, of the date the notice of intent to prepay and/or terminate was given.
(f) If, prior to the time by which the owner must give the notice of intent to sell, the owner already has received from a qualified entity an offer to purchase, as defined in Section 60.8(g) below, and the owner has accepted such offer, the owner shall not be required to give the notice of intent to sell; provided, however, that the owner shall be required to submit to the Director of Housing, and to post in a conspicuous place in the assisted housing development, a certification made under penalty of perjury that the owner has received and accepted an offer to purchase from a qualified entity. Such certification shall contain a statement of the terms of the sale or transfer.
(g) Any qualified entity which desires to acquire the development shall send to the Director of Housing and to the owner by United States mail, first class, certified, return receipt requested, an offer to purchase. To be effective for the purpose of Section 60.8(i) below, such offer to purchase shall be received by the owner no later than eight months prior to the conversion date. The offer to purchase shall contain the following information:
(1) The name, address and form of organization of the qualified entity;
(2) The names and titles of the officers, directors, and similar persons in control of and principal investors in the qualified entity;
(3) A statement, signed by an authorized officer under penalty of perjury, that the offeror is a qualified entity within the meaning of this Chapter; and
(4) The terms of the offer to purchase, including the purchase price, the proposed methods and terms of financing, the proposed date for close of escrow, and any other terms of purchase, including the financing and mechanisms by which the qualified entity will maintain the physical integrity and the affordability of the development.
(h) Any owner who is required to give notice of intent to prepay and/or terminate, prior to the date eight months prior to the proposed conversion date, shall not sell or transfer, or enter into an agreement to sell or transfer, an assisted housing development or any portion thereof to any entity other than a qualified entity. If an owner receives an offer to purchase from a qualified entity, the owner shall accept the offer if the purchase price offered is equal to or exceeds the fair return price defined in Section 60.8(i) below and the remaining terms of the offer to purchase are commercially reasonable. If more than one qualified entity submits such an offer to purchase, the owner may accept any such offer; provided, however, that the owner shall be required to accept an offer to purchase by a local qualified entity over a competing offer made by a nonlocal qualified entity. For the purpose of this Chapter, a qualified entity is "local" if it is a tenant's association of the development or if its principal office is located within the City and County of San Francisco.
(i) For the purpose of this Chapter, the "fair return price" shall be the greater of the following two alternative formulas specified in this Section 60.8(i); provided, however, that the fair return price shall in no event exceed the value of the development appraised by standard appraisal methods for the highest and best use, taking into account applicable legal restrictions governing the use of the development. The fair return price shall equal the greater of (1) or (2) below:
(1) The sum of the following amounts:
(i) The owner's actual cash investment in the development, adjusted for inflation by multiplying the historic dollar amount of the actual cash investment by the Consumer Price Index as published by the United States Department of Labor for All Urban Consumers in the Statistical Area, for each year between the date of the investment and the date on which the offer contained in the offer to purchase is proposed to close ("adjusted actual cash investment"). Actual cash investment shall equal the sum of the cash required for closing the owner's purchase and any cash subsequently invested by the owner in improvements to the development. Actual cash investment shall not include any amount expended for capital improvements if such expenditure was paid with funds from a contingency reserve or sinking fund account of the development. For the purpose of this Chapter, a "sinking fund" is any interest-bearing account into which the interest earned is required to be deposited, and from which withdrawal of funds is prohibited until the fund maturity date; plus
(ii) A return on the value of the owner's adjusted actual cash investment calculated as follows: the sum of a 10 percent annual return on actual total cash investment for the 20-year period following the proposed prepayment date increased each year by an annual four-percent inflation rate, which sum shall be discounted to present value by a discount rate of 10 percent; plus
(iii) The total original principal amount of debt, the proceeds of which were used to finance the cost of constructing the development or for subsequent improvements to the development, and which debt is secured by the development at the time of sale, but not including any debt already incurred for prior purchase of existing improvements or for prior seller take-back financing or for refinancing of existing debt; plus
(iv) The federal and state capital gains tax liability of the owner actually paid as a result of the sale of the development pursuant to this Chapter, provided that the owner and the qualified entity shall use good-faith efforts and cooperate with each other to minimize the amount of federal and state capital gains taxes to the extent legally permitted.
(2) The sum of the following amounts:
(i) The owner's adjusted actual cash investment in the development; plus
(ii) A return on the owner's adjusted actual cash investment in the development calculated as follows: an amount equal to 10 percent of adjusted actual cash investment for each year that the owner owned the development, reduced by the amount of the annual dividend permitted by any applicable regulatory agreement or other covenant or condition of public subsidy and received by the owner, and reduced by any loan proceeds received subsequent to the owner's purchase, which loan proceeds do not meet the criteria set forth in Section 60.8(i)(1)(i) above. The number calculated pursuant to this Section 60.8(i)(2)(ii) shall not be less than zero; plus
(iii) The total amount of debt secured by the development, or which the owner is obligated to repay from the cash flow generated from operation of the development, or which is secured against a limited partnership interest or shares of stock in any owner for which the development is the sole significant asset, regardless of the use of the proceeds of such debt; provided, however, that such debt shall not include any debt incurred between the effective date of any applicable amendments to the Internal Revenue Code contained in the Economic Recovery Tax Act of 1981 (P.L. 97-34) and the effective date of any applicable amendments to the Internal Revenue Code contained in the Tax Reform Act of 1986 (P.L. 99-514) if either the debt is not required to be repaid directly from cash flow generated by operation of the development, or the failure to repay the debt will not give rise to the right to foreclose on the real property comprising the development; plus
(iv) The federal and state capital gains tax liability of the owner actually paid as a result of the sale of the development pursuant to this Chapter, provided that the owner and the qualified entity shall use good-faith efforts and cooperate with each other to minimize such taxes to the extent legally permitted.
(j) If the owner accepts an offer to purchase from a qualified entity pursuant to Section 60.8(h) above, an agreement for purchase and sale of the development shall be negotiated in good faith between the owner and the qualified entity, and conditioned upon the reasonable amount of time needed to obtain the necessary government approvals and any necessary financing, and shall include the following:
(1) An agreement by the owner to provide the qualified entity with all existing loan documents and any other relevant documents relating to operation of the development not already provided to the purchasing qualified entity, including but not limited to, regulatory agreements containing any use restrictions, loan agreements, promissory notes, and deeds of trust, within 15 days from the date of the signing of the purchase agreement by all the parties;
(2) An agreement by the qualified entity to make an earnest money deposit or deposits, in a total amount not to exceed one percent of the purchase price, within five days of executing the agreement for purchase and sale, which, together with accrued interest shall be credited against the purchase price at the close of escrow. The deposit shall be refundable only if the qualified entity, after a diligent, good-faith effort, fails to remove all inspection and financing contingencies within a reasonable time; and
(3) A statement that the terms and conditions in the purchase agreement, including, but not limited to, the timetables specified in this subsection, may be extended or otherwise amended only by the mutual consent of the owner and the qualified entity.
(k) The owner shall no longer be subject to the requirements of this Section 60.8 upon submission of a written certification to the Director of Housing, signed by the owner under penalty of perjury, that any of the following has occurred:
(1) The owner met all notice and information requirements pursuant to this Chapter and no offer to purchase was received from a qualified entity within the applicable time period that the owner was required by Section 60.8(h) above to accept; or
(2) Despite good-faith negotiations between the owner and the qualified entity, the parties were unable to agree on the material provisions of the purchase agreement, and no other qualified entity made a timely offer to purchase that the owner was required by this Chapter to accept; or
(3) A qualified entity that executed a purchase agreement (i) terminated the agreement or was unable to meet the terms of the agreement, (ii) that the owner exercised due diligence in carrying out the conditions of the purchase agreement, and (iii) that no other qualified entity made an offer to purchase that the owner was required by this Chapter to accept.
(l) An owner, at any time prior to the conversion date, may decide not to prepay, terminate, sell or otherwise transfer the development and may withdraw the notice of intention to sell, subject to the terms of any accepted offer to purchase or executed purchase and sale agreement, and to the offeror's existing statutory and common law remedies. In such event, the owner shall give written notice of such decision by United States Mail, first class, certified, return receipt requested, to the Director of Housing, to all tenant households in the assisted housing development, and to any offeror qualified entity. However, at any time that the owner again decides to sell, or otherwise transfer the development or any portion thereof, the 14-month notice period and the other requirements of this Section 60.8 shall apply to such sale or transfer.
(m) Prior to the close of escrow, an owner selling or transferring a development, or any portion thereof, to any purchaser, shall certify under penalty of perjury that the owner has complied with all provisions of this Chapter. A copy of the certification shall be sent to the Director of Housing by United States Mail, first class, certified, return receipt requested, 10 days prior to close of escrow. The certification shall be recorded and shall contain a legal description of the property on which the development is located and, to the extent consistent with the practices of the Office of the Recorder, shall be indexed to the name of the owner as grantor.
(n) As a condition precedent to the acquisition of any development by a qualified entity pursuant to this Chapter, the qualified entity shall enter into a regulatory agreement, deed restriction or similar agreement, in form and substance satisfactory to the Director of Housing, which agreement shall be recorded in the official records of San Francisco County to ensure that the covenants of the qualified entity made to comply with this Chapter shall run with the land and be binding on the qualified entity and its successors and assigns. The qualified entity shall submit to the owner and the Director of Housing, concurrently with the delivery of an offer to purchase under Section 60.8(g), its proposed form of regulatory agreement or other enforcement mechanism for review by the Director of Housing.
(Added by Ord. 332-90, App. 10/3/90)
(a) At least 12 months prior to the expiration of the full term of any rent subsidy contract described in Section 60.4 above, the owner shall give notice by United States Mail, first class, certified, return receipt requested, of such impending termination to the Director of Housing, Director of City Planning, and to all tenant households in the development. Such notice shall contain the information required by Section 60.5(b)(1) and (2), and the following information:
(1) The date of expiration of any such rent subsidy contract and a brief description of the owner's plans for the development subsequent to expiration;
(2) The number of subsidized rental units in the development prior to expiration of any such rent subsidy contract, and the number of subsidized rental units occupied by tenant households with persons age 62 or older, with disabled persons, and with persons under age 18;
(3) The current rent schedule for the development;
(4) A brief description of any contracts concerning expiration the owner has made with any governmental agency, tenant household residing in the development, or other interested person;
(5) The anticipated rent schedule after expiration of such rent subsidy contract; and
(6) A statement by the owner signed under penalty of perjury certifying the accuracy of the notice as of the date the notice was given.
(b) No later than 90 days after the receipt of the notice specified in Section 60.9(a) above, the Director of Planning shall request that the Planning Commission hold a hearing on the impending expiration to determine: (i) what action the City can take to prevent the loss of the rent subsidy for the affected units; and (ii) whether the owner has initiated or is likely to initiate a diligent, good-faith effort to obtain a renewal or extension of the expiring contract. The Director of Planning shall give notice of such hearing to the owner, the affected tenant households, the San Francisco Housing Authority ("SFHA"), the regional office of HUD, and any other person or entity who submits a written request for such notice to the Director of Housing or Director of Planning.
(c) If an assisted housing development contains subsidized rental units subsidized under more than one project-based rent subsidy contract, and all such rent subsidy contracts for the assisted housing development do not expire on the same date, as part of any offer to a tenant household already residing in the development to permit such tenant household to move into a different unit in the development, the owner shall disclose to such tenant household in writing the expiration dates for the rent subsidy contracts applicable to both units. The owner shall also send to the Director of Housing and to the Executive Director of SFHA, by United States mail, return receipt requested, a copy of such offer and such disclosure.
(Added by Ord. 332-90, App. 10/3/90)
(a) An owner or qualified entity may petition directly the Housing Preservation Appeals Board ("Appeals Board"), in the same manner as the procedure for appeals specified in Section 60.12(d) through (h) below, for relief from strict compliance with the provisions of this Chapter. Such relief shall be granted only as specified in this Section 60.10, and only upon a finding by the Appeals Board, after a hearing, that the owner or qualified entity has shown by a preponderance of the evidence that relief is warranted.
(b) An owner may be relieved of the obligation to comply with the 18-month notice requirement if imposed by Section 60.5 on the following grounds:
(1) Due to the date this Chapter was enacted, compliance with an applicable provision of federal or state law renders the owner unable to comply both with such federal or State law, and with the 18-month notice requirement; or
(2) Compliance with the 18-month notice requirement would subject the owner's interest in the development to substantial danger of extinguishment by foreclosure or sale in lieu of foreclosure.
(c) An owner may be relieved of the obligation to comply with the requirement to pay relocation benefits, imposed by Section 60.7, on the following grounds:
(1) Payment of the full amount of such benefits will render the owner insolvent. For the purpose of this Section 60.10(c), "insolvent" shall mean that the value of the liabilities of the owner exceeds the value of the owner's assets.
Any order of relief entered pursuant to this Section 60.10(c) shall reduce the amount of relocation benefits due only to the extent necessary to avoid rendering the owner insolvent.
(d) An owner may petition on the Appeals Board for an adjustment in the method of calculating the fair return price. Such relief shall be granted only to the extent necessary to avoid a result which is confiscatory. For the purpose of this chapter, "confiscatory" shall mean that the owner does not receive a fair return on actual cash investment or adjusted actual cash investment as a result of sale to a qualified entity pursuant to Section 60.8 above. Any order of relief pursuant to this Section 60.10(d) shall increase the fair return price only to the extent necessary to avoid a confiscatory result.
(e) An owner may petition the Appeals Board for reduction of the 14-month notice requirement specified by Section 60.8(e). Such reduction may be granted on the following grounds:
(1) Due to the date this Chapter was enacted, compliance with applicable provision of federal or state law renders the owner unable to comply both with such federal or state law, and with the 14-month notice requirement; or
(2) Compliance with the 14-month notice requirement would subject the owner's interest in the development to substantial danger of extinguishment by foreclosure or sale in lieu of foreclosure.
(f) A qualified entity may petition the Appeals Board for relief from the requirements of Section 60.8(b)(2) if maintaining the rents at the levels specified in Section 60.8(b)(2) renders an assisted housing development not financially feasible because the development's operating revenue will not equal or exceed the sum of operating expenses. A qualified entity purchaser shall be entitled to remove one or more units from the rent and occupancy requirements as the Appeals Board finds is necessary for the development to become economically feasible; provided, however, that once the development is again economically feasible, the purchasing qualified entity shall cause the next available units to be units subject to the rent and occupancy requirements until achieving the number and mix of restricted units in the development required by Section 60.8(b)(2)
For the purpose of this Section 60.10(f), "operating revenues" shall include rents, subsidy payments received on behalf of tenant households, interest on contingency reserve or other reserve funds not designated to be a sinking fund, and receipts from operation of laundry, parking or other services. "Operating expenses" shall include all costs and expenses related to operation of the development, including debt service on any loans required to be paid currently, but not including any debt incurred for purchase of the development pursuant to this Chapter unless the proceeds of such debt were necessary to pay the fair return price, or were used to pay the cost of capital improvements or rehabilitation necessary to bring the development into compliance with applicable building, electrical, fire, plumbing, and similar code standards.
(g) Any owner may petition the Appeals Board for a reduction in the 12-month notice requirement specified by Section 60.9(a). Such reduction shall be granted on the following grounds:
(1) Due to the date this Chapter was enacted, compliance with applicable portions of federal or state law renders the owner unable to comply both with such federal or State law, and with the 12-month notice requirement; or
(2) Compliance with the 12-month notice requirement would subject the owner's interest in the development to substantial danger of extinguishment by foreclosure or sale in lieu of foreclosure.
(Added by Ord. 332-90, App. 10/3/90)
(a) Whenever an owner (i) fails to give the notice of intent to prepay and/or terminate as provided in this Chapter; (ii) fails to comply with the provisions of this Chapter concerning purchase by a qualified entity; (iii) attempts to convert or converts subsidized rental units in violation of this Chapter; or (iv) otherwise fails to comply with the provisions of this Chapter, the City, any tenant household of the affected development, any affected qualified entity, or the tenant association of the development may institute a civil proceeding for injunctive relief to restrain the owner from such violation and/or money damages, or for any other remedy available at law or in equity.
(b) Upon proof that the owner has willfully or in bad faith violated any provision of this Chapter, any affected tenant household shall receive a judgment of treble the tenant household's actual damages.
(c) In any action in which the City is a party, which action is brought to enforce the provisions of this chapter, upon proof that the owner willfully or in bad faith converted a subsidized rental unit, such owner shall be required to pay to the City a sum at least equal to the cost of constructing or acquiring a replacement unit for each subsidized rental unit unlawfully converted, including, for construction, the per-unit cost of land acquisition. Any money received under this Section 60.11(c) shall be used for the development or preservation of housing units affordable to and to be occupied by very low and low income households.
(d) The prevailing party in any civil action brought under this Section 60.11 shall be entitled to recover reasonable attorney's fees and costs. Reasonable fees of attorneys of the City's Office of City Attorney shall be based on the fees regularly charged by private attorneys with an equivalent number of years of professional experience in the subject matter areas of the law for which the City Attorney's services were rendered and who practice in the City in law firms with approximately the same number of attorneys as employed by the Office of City Attorney.
(Added by Ord. 332-90, App. 10/3/90)
(a) Any owner who negligently or intentionally violates any provision of this Chapter shall be liable for a civil penalty not to exceed $5,000 for each separate violation. Such violations shall include, but are not limited to, the making of a false statement or representation in any notice or other document required by this Chapter.
(b) Any interested person may petition the Director of Housing to investigate an alleged violation of this Chapter. Upon receipt of such petition, or upon his or her own motion, the Director of Housing shall give the owner 21 days' written notice by United States Mail, first class, certified, return receipt requested, of the date, time and location of a hearing before the Director of Housing, and the nature of the alleged violation. The Director of Housing shall hear the evidence and shall determine whether any violation was negligent or intentional. The Director of Housing shall issue a written decision with findings in support of the decision that state the nature of any violations and any appropriate penalties.
(c) The owner or any other party to the hearing may appeal the decision of the Director of Housing to the Housing Preservation Appeals Board ("Appeals Board") by filing with the Appeals Board a written notice of appeal within 30 days of the date of the decision by the Director of Housing. The notice of appeal shall state the grounds for objection to the decision of the Director of Housing.
(d) The Appeals Board shall hold a public hearing on the appeal within 45 days of the filing of the notice of appeal and shall decide whether to reverse or affirm the decision of the Director of Housing within 15 days of the hearing. The Appeals Board shall give the owner and any person requesting notice at least 14 days' notice of the date, time and location of the hearing.
(e) The Appeals Board shall adopt written findings in support of its decision.
(f) The decision of the Appeals Board shall be a final order reviewable by any court of competent jurisdiction.
(g) The Appeals Board shall adopt rules governing conduct of its hearings. Such rules shall provide that parties shall have the right to be present, to be represented by counsel, to present evidence and to cross-examine witnesses.
(h) The Appeals Board shall have three members appointed by the Mayor.
(Added by Ord. 332-90, App. 10/3/90)
Loading...