(a) A landlord seeking an exemption for a substantial renovation under Code Section 29-60(12) must file an application (“Substantial Renovation Application”) with the Director that includes the following: (1) detailed plans, specifications, and documentation showing the total cost of the renovations, in accordance with Section 29.60.01.02; (2) copies of all applications, if any, filed for required building permits for the proposed renovations or copies of all required permits if they have been issued; (3) documentation of the value of the rental housing building(s), exclusive of land value, as assessed by the State Department of Assessments and Taxation; (4) a schedule showing all regulated rental units in the rental housing to be renovated showing whether the rental unit is vacant or occupied; and (5) a schedule showing the current lawful base rent. (b) Within five days of filing the application with the Director, a landlord must send by first-class mail and electronic mail, a copy of the application (excluding supporting documentation) to the tenants of all units in the rental housing for which the application has been filed with the Director. (c) Substantial Renovation Application Processing. Within 30 days of receipt of a Substantial Renovation Application, the Director must review the Substantial Renovation Application and notify the landlord in writing that: (1) the Substantial Renovation Application is complete; or (2) the Substantial Renovation Application is incomplete, identifying specifically the missing information or documentation. If the landlord fails to deliver the missing information or documentation to the Director within ten business days of receipt of the notice in (b) above, then the Director may deny the Substantial Renovation Application by written notice to the landlord. (d) Decisions on Substantial Renovation Application. The Director must review the Substantial Renovation Application within 30 days of notifying the landlord that their application is complete and notify the landlord of either a Preliminary Substantial Renovation Application Approval or disapproval with reason(s) in the case of disapproval. (e) The landlord must notify all affected tenants of a Preliminary Substantial Renovation Application Approval within ten business days of the receipt of the decision by first-class mail and electronic mail. (f) Substantial Renovation Application Supplement. If there is a material change in the scope, price, or other matter set forth in the Substantial Renovation Application, the landlord must submit the change(s) to the Director as a Substantial Renovation Application Supplement. Within 30 days after receiving a Substantial Renovation Application Supplement, the Director must issue and notify the landlord of a decision stating the approval or disapproval with reason(s) in the case of disapproval. (g) Final Reconciliation. Upon completion of the substantial renovations set forth in the Substantial Renovation Application and approved in a Preliminary Substantial Renovation Application Approval and Substantial Renovation Application Supplement, the landlord must submit a final Substantial Renovation Application Reconciliation Package to the Director identifying the actual costs of the completed substantial renovations with supporting documentation identifying the completion date of the substantial renovations. Within 30 days after receiving the Substantial Renovation Application Reconciliation Package, the Director must issue and notify the landlord of a decision confirming the final approval of the Substantial Renovation Application and the effective date of the exemption. Notwithstanding the foregoing, the Director’s review of the Substantial Renovation Application Reconciliation Package must not contradict any prior approval of a Preliminary Substantial Renovation Application Approval or Substantial Renovation Application Supplement provided that it is consistent with the Preliminary Substantial Renovation Application Approval and Substantial Renovation Application Supplement approval. The total cost of renovations must be the sum of: (a) any costs actually incurred, to be incurred, or estimated to be incurred to make the renovation, in accordance with Section 29.60.01.04; (b) any interest that must accrue on a loan taken by the landlord to make the renovation, in accordance with Section 29.60.01.05; plus (c) any service charges incurred or to be incurred by the landlord in connection with any loan or debt taken by the landlord to make the improvement or renovation, in accordance with Section 29.60.01.06. For the purposes of calculating interest and service charges, “any loan or debt taken by the landlord to make the renovation” is the portion of any loan or debt that is specifically attributable to the costs incurred to make the renovation, in accordance with Section 29.60.01.04. The dollar amount of that portion must not exceed the amount of the portion of that loan or debt that is specifically attributable to the costs incurred to make the renovation in accordance with Section 29.60.01.04. The costs incurred to renovate the rental housing must be determined based on invoices, receipts, bids, quotes, work orders, loan documents, estimates, or a commitment to make a loan, or other evidence of expenses as the Director may find probative of the actual, commercially reasonable costs of the renovations. The interest on a loan taken to renovate the rental housing means all compensation paid by the landlord to a lender for the use, forbearance, or detention of money used to make the renovation over the amortization period of the loan, in the amount of either: (a) the interest payable by the landlord at a commercially reasonable fixed or variable rate of interest on a loan of money used to make the renovation, or on that portion of a multi-purpose loan of money used to make the renovation, as documented by the landlord by means of the relevant portion of a bona fide loan commitment or agreement with a lender, or by other evidence of interest as the Director may find probative; or (b) in the absence of any loan commitment, agreement, or other evidence of interest, the Director may apply the average 52-week Wall Street Journal’s U.S. Prime Rate, as reported by The Wall Street Journal’s bank survey, applied over a seven-year period. The average is calculated as the mid-point between the high and low Prime Rates reported for the 52 weeks immediately prior to application for an exemption for a substantial renovation. For the purpose of Section 29.60.01.05(a), if a landlord has obtained a loan with a variable rate of interest, the total interest payable must be calculated using the initial rate of the loan. The service charges in connection with a loan taken to renovate the rental housing must include points, loan origination and loan processing fees, trustee’s fees, escrow setup fees, loan closing fees, charges, costs, title insurance fees, survey fees, lender’s counsel fees, borrower’s counsel fees, appraisal fees, environmental inspection fees, lender’s inspection fees (in any form the foregoing may be designated or described), and such other charges (other than interest) required by a lender, as supported by the relevant portion of a bona fide loan commitment or agreement with a lender, or by other evidence of service charges that the Director may find probative of the actual, commercially reasonable costs. Any costs, and any interest or fees attributable to those costs, for any specific aspect or component of a proposed improvement or renovation that is not intended to enhance the value of the rental housing, as provided by Section 29.60.01.09, must be excluded from the calculation of the total cost of the renovation. The Director must determine whether a proposed substantial renovation is intended to enhance the value of the rental housing building(s), exclusive of land value, by considering the following: (a) the existing physical condition of the rental housing; (b) whether the existing physical condition impairs or tends to impair the health, safety, and security of any tenant; (c) whether deficiencies in the existing physical conditions could instead be corrected by improved maintenance or repair; and (d) whether the proposed renovations are optional or cosmetic changes. (a) The substantial renovation exemption must be effective on the date of the Director’s approval of the Substantial Renovation Application Reconciliation Package, unless the Department determines that the landlord seeking the exemption is in violation of Chapters 8, 26, or 29 of the Code. In such case, the exemption must be effective on the date that the Department determines that the landlord is not in violation of Chapters 8, 26, or 29. (b) Once a decision approving a substantial renovation exemption has been issued, the exemption must be implemented within 12 months of the approval, but no earlier than the expiration of the current lease, if any, for that rental unit.