Sacramento Municipal Code Ch. 5.148 Affordable Housing Preservation

It is the policy of the city of Sacramento that publicly assisted rental housing affordable to low and moderate income persons and households should be preserved as a long-term resource to the maximum extent practicable. (Ord. 2004-043 § 1)

The intent of this chapter is to protect the availability of publicly assisted affordable housing for low and moderate income households by providing for notice to the Sacramento Housing and Redevelopment Agency and tenants when transitions from current federal project-based assistance programs are planned and providing purchase opportunities for the Sacramento Housing and Redevelopment Agency or other affordable housing organizations or entities to attempt to preserve the affordable housing while respecting ownership interests of building owners. (Ord. 2004-043 § 1)

"Affordable housing" means that the rent is structured so that the targeted tenant population pays no more than thirty (30) percent of their gross household income for rent and utilities. The targeted tenant populations referred to in this section include households up to eighty (80) percent of median income applicable to Sacramento County, adjusted for family size as published and annually updated by the United States Department of Housing and Urban Development.

"Aggrieved person" includes, but is not limited to, a tenant residing in the affected federal preservation project, a person on a waiting list for admission to the affected federal preservation project, an affected qualified entity, the SHRA or the City of Sacramento.

"Contingent sales agreement" means an agreement between an owner and a person or entity other than a qualified entity, for the purchase of a federal preservation project that is contingent upon the right of first refusal provided in section 5.148.070(B).

"Federal preservation projects" means properties having project-based rental assistance contracts for some or all of the units (such as Section 8 and Project Rental Assistance Contracts) including those developed under a variety of HUD mortgage assistance and interest rate reduction programs. Federal preservation projects include properties with loans, contracts, or insurance under the following federal subsidy programs: Section 221(d)(4) of the National Housing Act; Section 202 of the Housing Act of 1959; Section 236 of the National Housing Act; Section 221(d)(3) Below Market Interest Rent (BMIR) and Section 221(d)(3) Market Interest Rent (MIR) of the National Housing Act; Section 811 of the National Housing Act; Project-based Section 8 Contracts (under Section 8 of the United States Housing Act of 1937) administered through HUD, the State of California, or the SHRA; Project Rental Assistance Contracts (PRAC) under the National Housing Act; the Low Income Housing Preservation Resident Homeownership Act (LIHPRHA); Section 42 of the Internal Revenue Code; the Preservation Grant under Section 241(f) of the National Housing Act; Rental Supplemental assistance under Section 101 of the Housing and Urban Development Act of 1965; and Section 515 of the Housing Act of 1949.

"HUD" means the United States Department of Housing and Urban Development.

"Just cause eviction" means evictions for serious or repeated violations of the terms and conditions of the lease or occupancy agreement, violation of applicable federal, state or local law, or other good cause.

"Low income" means low income individuals, households or tenants are those with a gross household income that does not exceed eighty (80) percent of median income applicable to Sacramento County, adjusted for family size as published and annually updated by the United States Department of Housing and Urban Development.

"Moderate income" means individuals, households or tenants with a gross household income that does not exceed one hundred ten (110) percent of median income applicable to Sacramento County, adjusted for family size as published and annually updated by the United States Department of Housing and Urban Development.

"Opt out" means an owner's non-renewal of an available project-based Section 8 contract in a federal preservation project. Owners may consider "opting out" when they contemplate conversion to open market rental housing, other housing or commercial uses, or a sale of the property.

"Owner" means an individual, corporation, association, partnership, joint venture or other business entity that holds title to a federal preservation project.

"Prepayment" means the prepayment prior to expiration of the full, original, stated term of any loan secured by a federal preservation project, which loan was insured or subsidized at its inception by a governmental body or agency, if such prepayment would have the effect of terminating the use restrictions applicable to such project without substitution of substantially similar use restrictions.

"Qualified entity" means a non-profit or for-profit entity or person that SHRA has placed upon the list of Qualified Entities pursuant to section 5.148.070(A).

"SHRA" means the Sacramento housing and redevelopment agency, a joint powers agency, and its constituent entities, the Housing Authority of the City of Sacramento and the Redevelopment Agency of the City of Sacramento. (Ord. 2004-043 § 1)

Subject to approval by the SHRA and their authority, the SHRA will have primary responsibility for implementation of this chapter. This responsibility will include taking any and all actions referenced herein as may be necessary for implementation of the requirements of this chapter. (Ord. 2004-043 § 1)

A. Owners of federal preservation projects must provide SHRA and each affected tenant household residing in the affected federal preservation project with a one year's notice, in such form as required by the SHRA, of an anticipated prepayment, termination of a subsidy contract or termination of rental restrictions. SHRA will notify each owner of federal preservation projects within the city of this notice requirement. In addition, enclosed with the notice required by this subsection, each owner shall provide SHRA with the current rent roll, and a statement of the current income and operating expenses of the federal preservation project. SHRA shall provide a copy of all notices received pursuant to this section to the Board of the Sacramento Housing and Redevelopment Agency, in such form and on such terms as directed by the board.

B. Owners of federal preservation projects who have decided to prepay, "opt out," fail to renew the existing federal subsidy or otherwise terminate the existing use restrictions applicable to the project without substitution of substantially similar use restrictions must provide to the SHRA a notice, in such form as required by the SHRA, of one hundred eighty (180) days of intent to do so. The notice shall specify, among other matters as directed by the SHRA, the following:

• 1. The nature of the subsidy maintaining the affordability of the project;
• 2. Whether the owner intends to withdraw the property from the Section 8 program;
• 3. Whether the owner intends to convert the participating property to a nonparticipating use; and

4. Whether the owner is involved in negotiations regarding an extension of an expiring contract. SHRA shall provide a copy of all notices received pursuant to this section to the Board of the Sacramento Housing and Redevelopment Agency, in such form and on such terms as directed by the Board.

C. Owners of federal preservation projects who have decided to prepay, "opt out," fail to renew the existing federal subsidy or otherwise seek to terminate the existing use restrictions applicable to the project without substitution of substantially similar use restrictions must consent to reasonable inspection of the property and inspection of the owner reports on file with HUD or the state. These inspections are designed to facilitate the SHRA's ability to assess the fair market value of the property and evaluate status of the tenants, viability of transfer and/or continuation of a Section 8 agreement with HUD and other pertinent information.

D. To the extent allowed by HUD, owners of federal preservation projects with a project based section 8 contract, must maintain an available HUD Section 8 contract in good standing during the notice periods identified in this chapter.

E. Owners of federal preservation projects must refrain from taking any action, other than notifying HUD of the owner's intention to not renew the contract, that would preclude the SHRA or other potential purchaser of the project from succeeding to the contract or negotiating with the owner for purchase of the property during the notice periods identified in this chapter.

F. In addition to any other times, during the notice periods identified in this chapter, the SHRA may pursue preservation of federal preservation projects through negotiation for purchase. To facilitate this process, SHRA shall analyze the feasibility of acquiring each federal preservation project that is the subject of a notice filed pursuant to this chapter and provide that analysis to the Board of the Sacramento Housing and Redevelopment Agency for its consideration. (Ord. 2004-043 § 1)

A. Owners of federal preservation projects who have decided to prepay, "opt out," fail to renew the existing federal subsidy or otherwise terminate the existing use restrictions applicable to the project without substitution of substantially similar use restrictions must provide to each affected building tenant a notice, in such form as required by the SHRA, of one hundred eighty (180) days of intent to do so. The notice shall specify, among other matters as directed by the SHRA, the following:

1. The nature of the subsidy maintaining the affordability of the project;

2. Whether the owner intends to convert the participating property to a nonparticipating use; and

3. Whether the owner is involved in negotiations regarding an extension of an expiring contract.

B. Owners of federal preservation projects who have decided to prepay, "opt out," fail to renew the existing federal subsidy or otherwise terminate the existing use restrictions applicable to the project without substitution of substantially similar use restrictions may not disturb any tenancy other than for a just cause eviction, during the notice period set forth in this section.

C. Owners of federal preservation projects that have prepaid, "opted out," failed to renew the previously existing federal subsidy or otherwise terminated the existing use restrictions applicable to the project without substitution of substantially similar use restrictions may not disturb any tenancy other than for a just cause eviction, for a period of one hundred eighty (180) days after expiration of the use or rental restrictions on the project, if the city or SHRA has paid or arranged to pay to the owner on the first day of each month, the monthly subsidy that the owner was receiving immediately prior to the expiration of the use or rental restrictions on the project. (Ord. 2004-043 § 1)

A. Qualified Entities. SHRA shall develop and maintain a list of qualified entities. Persons or entities may request placement on the list of qualified entities by submitting a written application in such form as may be determined by SHRA, and by demonstrating therein compliance with the following criteria:

1. A history of providing safe and sanitary affordable housing services;

2. Sufficient capacity to provide additional affordable housing services in the city of Sacramento, demonstrated through the adequacy of current fiscal and administrative resources;

3. History of encouraging and facilitating resident participation while providing affordable housing services;

4. History of sound fiscal management of affordable housing services;

5. Adoption of, and compliance with, standards of financial accountability that conform to applicable state and/or federal law.

B. Right of First Refusal.

1. During the one hundred eighty (180) days following the notice required pursuant to Section 5.148.050(A), an owner may not sell, or solicit or accept any offer to sell a federal preservation project to any person or entity other than a qualified entity.

2. During the one hundred eighty (180) day period following the notice required pursuant to 5.148.050(B), an owner may not sell a federal preservation project to any person or entity other than a qualified entity, without having complied with the provisions of this section.

a. During the one hundred eighty (180) day period specified in subsection 5.148.070(B)(2), an owner may negotiate with any potential purchaser. Any agreement of sale with any person or entity other than a qualified entity during the one hundred eighty (180) day period specified in subsection 5.148.070(B)(2), shall be contingent upon the right of first refusal provided in this subsection. Once an owner executes a contingent sales agreement, the owner shall immediately provide a written copy thereof to SHRA.

b. Upon receipt of a contingent sales agreement pursuant to subsection 5.148.070(B)(2)(a), SHRA shall immediately make it available to qualified entities for their review and consideration. The contingent sales agreement shall be a public record.

c. If, within sixty (60) days after the date that SHRA received a contingent sales agreement from an owner pursuant to subsection 5.148.070(B)(2)(a), a qualified entity offers to purchase the federal preservation project from the owner on terms that are economically substantially identical to the terms of that contingent sales agreement, the owner shall sell the federal preservation project to the qualified entity upon those terms. If more than one qualified entity submits a conforming offer to purchase the federal preservation project the owner must select from among the offers and must sell pursuant to the terms of the selected offer. Notwithstanding any other provision of this code, no owner shall be compelled to extend any form of owner financing to a qualified entity.

d. If, after sixty (60) days have elapsed from the date that SHRA received a contingent sales agreement from the owner pursuant to subsection 5.148.070(B)(2)(a), no conforming offer to purchase by a qualified entity has been received, the owner may sell the federal preservation project pursuant to the terms of the contingent sales agreement. Any substantial deviation in the terms of the sale from those of the contingent sales agreement, shall require the resubmission of the new terms of sale to SHRA pursuant to subsection 5.148.070(B)(2)(a). A substantial deviation shall include, but not be limited to, any substitution of parties to the agreement, any change in sales price of greater than two percent, any change in the terms of any owner financing, any change in the allocation of escrow or other fees or costs amongst the parties or any other substantive change to the terms of sale that alters the relative financial positions of the parties. (Ord. 2004-043 § 1)

A. Regulations. SHRA shall develop and implement regulations as necessary to implement the provisions of this chapter. Such regulations shall specify the form and content of all notices, should provide for the adequate and timely dissemination of information to affected persons and the public through postings, publications and public meetings, and require, where feasible, record notice of the applicability of this chapter to affected properties, filing of liens to enforce the provisions of this chapter, procedures designed to facilitate the orderly transition of projects sold to qualified entities and other provisions necessary or appropriate to implement this chapter.

B. Compliance with Regulations. Each owner of a federal preservation project and qualified entity shall comply with the regulations promulgated by SHRA pursuant to this chapter. (Ord. 2004-043 § 1)

A. Administrative Penalties. An owner who fails to comply with any of the requirements specified in this chapter, including any requirement imposed pursuant to regulations promulgated by the SHRA pursuant to section 5.148.980, shall be subject to the imposition of an administrative penalty. Imposition, enforcement, collection and administrative review of administrative penalties imposed shall be conducted pursuant to Chapter 1.28 of this code.

B. Civil Action. Any aggrieved person may enforce the provisions of this chapter by means of a civil action in which the court may provide injunctive relief or award actual damages and costs.

C. Unless otherwise expressly provided, the remedies, procedures and penalties provided by this chapter are cumulative to each other and to any others available under state law or other city ordinances. (Ord. 2004-043 § 1)

A. This chapter shall not be construed to restrict the city's existing authority to exercise powers of eminent domain through condemnation as outlined in state law.

B. If any part or provision of this chapter, or application thereof to any person or circumstance, is held invalid, the remainder of this chapter and the application of the provision or part thereof, to other persons not similarly situated or to other circumstances, shall not be affected thereby and shall continue in full force and effect. To this end, provisions of this chapter are severable. (Ord. 2004-043 § 1)