The purpose of this division is to protect the tenancies of certain households in rental housing conversions and to allow the County the ability to purchase and rehabilitate rental housing in areas of the County as a means of revitalization. The County Council finds that there is a continuing shortage of quality low and moderate-income affordable rental housing in the County, that the County also finds that it seeks to stabilize and preserve housing opportunities for low and moderate-income households, that tenants can experience hardships when they are displaced by conversion of rental housing and that it is in the best interests of public health, safety and welfare to regulate the conversion of rental housing in the County.

For the purposes of this section, the following terms have the meanings: Area median income means the median household income for the Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area as estimated by the U.S. Department of Housing and Urban Development, adjusted by household size based on the occupancy standard for the unit. Convert and conversion means: subjecting of property to a condominium regime by recording in the County land records that comply with the requirements in Title 11 of the Real Property Article of the Annotated Code of Maryland; changing the use of multifamily rental facility to a nonresidential use; demolishing at least one-third of occupied units in a twelve (12) month period; displacing tenants from at least one-third of occupied units in a twelve (12) month period by raising rents or preparing to rehabilitate the multifamily rental facility; or any other act that ends the use of the property as a multifamily rental facility. Department means the Department of Housing and Community Development. Director means the Director of the Department of Housing and Community Development or their designee. Dwelling Unit shall mean one (1) or more rooms arranged for the use of one (1) or more individuals living together as a single housekeeping unit, within a rental facility. Owner means a person holding title to rental housing. Multifamily rental facility means any building, structure, or combination of related buildings, structures, and appurtenances, operated as a single entity, housing cooperative ("COOP"), or a condominium, in which the landlord provides for a consideration twenty (20) or more rental dwelling units; but shall not be construed to mean any transient facilities such as boarding houses, tourist homes, inns, motels, hotels, school dormitories, hospitals or medical facilities, any other facilities operated for religious or eleemosynary purposes, continuing care facilities regulated by the State pursuant to Article 70B of the Maryland Annotated Code, and projects authorized under 10 U.S.C. 2828, which allows the U.S. Government to lease housing facilities at or near a military installation for assignment, without rental charge, as family housing for members of the Armed Forces. Payment in lieu of taxes ("PILOT") means an authorized payment made by the owner of a qualifying housing development instead of paying the County real property tax, including a County real property tax levied under a special area taxing law, that would otherwise be due. Sale, sell, or selling means: transfer of title to rental housing; transfer in a 12-month period of a majority interest in owner; or lease of rental housing for more than 7 years. Tenant means any person having a leasehold right to occupy a dwelling unit in a rental facility. Title means a legal or equitable ownership interest in rental housing; or a legal, equitable, or beneficial interest in a partnership, limited liability company, limited partnership, corporation, trust or other person who is not an individual, that has a legal or equitable ownership interest in rental housing.

A notice is required as follows: Within five (5) days after an owner enters into a bona fide contract of sale to sell rental housing, the owner must provide written notice of the sale: to each tenant in the multifamily rental facility by hand or by certified mail, return receipt requested; posted in the public areas of the multifamily rental facility; and to the Director of the Department by certified mail, return receipt requested.

An owner shall offer the Department the right to buy a multifamily rental facility before selling the rental housing to another party, except as provided under this section. An offer required by subsection (a) above must: be in writing; be sent by certified mail, return receipt requested, within five (5) business days after the execution of a bona fide contract of sale, to the Department; include substantially the same terms and conditions as a pending bona fide contract of sale from a third party to buy the multifamily rental facility; within seven (7) business days of receipt of the offer, the Department shall make an initial evaluation whether it will exercise its right of first refusal or waiver pursuant to this section and shall notify the owner in writing; if the Department determines that it will exercise its right of first refusal the offer shall remain open for sixty (60) days for a multifamily rental facility after it is received for the Department pursuant to this section. The owner must give the Department: any information about the multifamily rental facility relevant to exercising the right of first refusal, such as architectural and engineering plans and specifications, and operating data; and access to the multifamily rental facility to inspect the property and conduct reasonable tests at reasonable times after reasonable notice within forty-five (45) days of the notice of sale under Section 13-1112 of this division. The Department may exercise the right of first refusal by accepting the offer within the applicable period under subsection (b)(4) above. The owner must sell the multifamily rental facility under the right of first refusal if the acceptance includes substantially the same terms and conditions contained in the owner's bona fide contract of sale with the third party, including any contract term that provides for a bona fide real estate commission payable to an independent broker. Notwithstanding this general requirement or any term of the contract, the Department may condition its acceptance on obtaining financing within one hundred eighty (180) days from the date of the offer. The owner and the Department must complete a sale under this subsection within one hundred eighty (180) days after the Department receives the owner's offer unless the owner agrees to extend the 180-day period. If the Department does not exercise its right of first refusal within the applicable period under subsection (b)(4) above, the owner may sell the multifamily rental facility to the third party buyer under substantially the same terms and conditions offered to the Department. The Department may waive its right to purchase a particular multifamily rental facility or unit, by execution and delivery of an appropriate waiver. The Department may accept an offer to buy rental housing in a municipality only if the municipality approves in writing within one hundred eighty (180) days from the date of the offer. The failure of a municipality to provide written approval to the Department within the timeframe above shall be deemed an approval. The Department or any entity the County assigned the right of first refusal under Section 13-1119 is not liable for any damages incurred by the owner, a third-party buyer, a tenant, or any other person in connection with a decision to exercise or not exercise a right of first refusal under this division.

An owner may sell a multifamily rental facility without providing any right of first refusal under Section 13-1113 if the Department approves a written agreement that: prohibits the buyer from converting the multifamily rental facility for at least three (3) years after the sale; or at least twenty (20) percent of the units in the multifamily rental facility as rental units for fifteen (15) years from the date of acquisition for households do not exceed the applicable income eligibility figures established under Section 11-138 (b)(4)(ii) of the Real Property Article of the Annotated Code of Maryland; and the Department received the written agreement from the prospective buyer at least thirty (30) days before the sale. The Department may approve or reject an agreement with the buyer under this subsection only after considering the: physical condition of the multifamily rental facility, including any rehabilitation necessary to correct dangerous defects; tenants' ability to afford rent increases; and the need to preserve quality low- and moderate-income rental housing in the County; An owner does not have to provide a right of first refusal for a sale or transfer: in a multifamily rental facility with less than twenty (20) rental dwelling units; under the terms of a bona fide mortgage or deed of trust; to a mortgagee in lieu of foreclosure or any other proceedings, arrangement or deed in lieu of foreclosure; under a court order or judicial sale; from one co-tenant to another co-tenant by operation of law; under a will or descent or intestate distribution; to the State or a local government; to a spouse, son or daughter; made pursuant to the liquidation of a partnership, limited liability company, or corporation; or into a partnership, limited liability company, or corporation wholly owned by the person(s) so contributing.

The Department must issue a certificate of compliance for a multifamily rental facility to the owner, the buyer, or any other interested party, in a form appropriate for recordation in the land records, when the Department determines that the requirements of this division have been satisfied. The certificate is conclusive evidence of compliance with this division.

Any person harmed by an owner, buyer, or any other person who violates this division may file a written complaint with the Department. The Department may enforce this division by: investigating any alleged violation; issuing a summons or subpoena to compel the attendance of a person or the production of documents or other evidence; enjoining a violation; revoking a rental license issued under this Subtitle; reporting a violation to any other appropriate government agency; informal conciliation between a complainant and an alleged violator; dismissing a complaint when the Director of the Department determines that there is insufficient evidence of a violation; obtaining injunctive or other appropriate judicial relief, such as an order to: require compliance with a summons or a subpoena; require an alleged violator or witness to attend a Department meeting or other proceeding concerning the alleged violation; require production of documents or other evidence; require transfer of documents or other evidence to the Court; or prohibit the destruction of documents or other evidence; recovering costs and fees of an investigation or a lawsuit if the Department finds a violation occurred, and prevails in any appeal; ordering any appropriate financial, legal, or equitable relief to a tenant injured by a violation of this subdivision; any other applicable enforcement action that the Department could take to enforce a violation of this Subtitle; developing, conducting, or assisting in educational and information programs concerning the requirements of this subdivision; and adopting regulations to implement this subdivision. Any sale of a multifamily rental facility in violation of this subdivision is void. This division does not limit any other legal right or remedy otherwise available to a person.

A violation of this division or a regulation adopted under this division is a violation under Section 28-221 of the County Code. A violation may be punished as a separate violation for each unit in the multifamily rental facility affected by the violation for each day the violation exists.

By December 31 of each year, the County Executive or Department shall report to the County Council on activities under this division for the prior fiscal year, including: any offer of a right of first refusal received by the County; any agreement not to convert that the Department approved; and any conversion of rental housing in the County.

The Department shall promulgate such regulations necessary to implement the requirements of the division by January 1, 2014 and may amend them as needed pursuant to the County Code. The Department may partner with or assign its right of first refusal by written agreement to a non-profit, governmental agency, tenant organization, or other third-party entity, to acquire or finance the purchase of rental housing under this division.

Section 13-1113 and Section 13-1114 shall only apply to properties located entirely within an area specifically designated by resolution of the County Council with concurrence of the County Executive.

The Director shall grant payment in lieu of taxes for qualifying housing development projects acquired through the Right of First Refusal or an Exception as designated in this section. The Director may refuse a PILOT agreement to an otherwise eligible project under this section if that project received a prior PILOT agreement under any other Section of the Code. Requirements for PILOT eligibility. The property must be acquired in accordance to section 13-1113 or 13-1114 of the Right of First Refusal Code; and The Director shall determine a financial necessity for the PILOT as a result of established economic feasibility reviews and underwriting; and The property must be located in a geographic area that has been identified by the County as an area of focus or priority for the preservation of affordable rental housing. Required PILOT Agreement Terms. All PILOT agreements shall meet the requirements of Section 7-506.1 of the Tax Property Article of the Annotated Code of Maryland; and All terms shall be memorialized in writing; and All properties receiving PILOT assistance must agree to Affordability Covenants for a period of at least 15 years for at least 20% of the total units in the property with rents that are affordable to households with incomes that do not surpass 80% of the Area Median Income; and PILOT agreement may be structured to assist up to 100% of units within each property; and The term of PILOT agreements shall be equal to the affordable housing covenant period which is expected to be 15 years or greater. Annual Amount of PILOTs. The Director shall facilitate PILOTs for ROFR projects as follows: The Director may grant PILOT agreements that total an aggregate reduction of annual County real property taxes not to exceed $1,500,000 (One Million Five Hundred Thousand dollars) per fiscal year; unless The Director does not grant an aggregate reduction of annual County real property taxes of $1,500,000 under this section in a given fiscal year, then the remaining balance may be used in future fiscal years on a rolling basis. Advance Notice to the County Council. At least 14 calendar days prior to the execution of a PILOT agreement, the Director shall provide written notice of the impending PILOT Agreement, including a description of the project, proposed PILOT amount, and summary of the terms and conditions of the proposed agreement, to the Clerk of the County Council for immediate distribution to the Members of the County Council. The Director shall consider any feedback from the Members of the County Council in the Director's final decision about whether to grant the PILOT.