MPDU - Process for Developers

In Brief: The MPDU Process for Developers and Builders (“APPLICANTS” 20.30.020 Definitions)

INTRODUCTION:

This summary briefly describes the regulatory process for developing Moderately Priced Dwelling Units (MPDUs) in the City of Annapolis. Please note that the actual laws implementing the MPDU program in City of Annapolis are found in Chapter 20.30 MODERATELY PRICED DWELLING UNITS of the City of Annapolis Code, 1996 edition, as amended. This summary is intended to supplement those sources - please refer to these laws to fully reference and understand the requirements of the MPDU program.

PLANNING AND DEVELOPMENT REVIEW PROCESS:

Minimum Threshold and Percentage Required:

The requirement to provide a certain percentage of Moderately Priced Dwelling Units (MPDUs) applies to any new development in City of Annapolis with 10 or more units. This requirement applies even if the development is phased in over time.

The percentage of MPDUs required is 6% of the total number of units for rental properties and 12% of the total number of units in the development for sale properties. Developments that receive no density bonus are still required to provide the required number of MPDUs unless a waiver is approved by the Planning and Zoning Director in accordance with the requirements of Section 20.30.060 Contribution in Lieu of Developing MPDUs.

The actual percentage and number of MPDUs required is set by the City of Annapolis Planning & Zoning Department as part of the review process for the project.

REQUIRED AGREEMENTS RELATED TO MPDUs:

There are two main agreements the Applicant must execute with the Department of Planning and Zoning (P&Z) relating to MPDUs. The first is the Agreement to Build Moderately Priced Dwelling Units (20.30.040 Application and inclusionary housing plan) which is required before building permits may be obtained. The second is an Offering Agreement, 20.30.050 Compliance, which is submitted to P & Z once the Applicant is ready to make the MPDUs available for sale or rent to eligible MPDU certificate holders.

The Agreement to Build MPDUs:

Once the MPDU requirement has been set as part of the development review and approval process, the Applicant must execute an Agreement to Build Moderately Priced Dwelling Units with the P & Z. This agreement must be executed before building permits will be issued by the Department of Neighborhood and Environmental Programs (DNEP).

Along with the standard form document, the Agreement to Build must include:

  • a listing of the individual addresses of the MPDUs and the market rate units;
  • an unexecuted copy of the standard MPDU restrictive covenants (either for sale or rental, depending on the development)
  • a copy of the final approved site plan with the MPDUs clearly highlighted

Assuming the Applicant submits a complete and acceptable Agreement, P & Z will make every effort to return the executed document within 7 to 14 days so that the Applicant may obtain building permits.

The Agreement to Build is the document that enforces the development requirements of 20.30.040 of Chapter 20 MODERATELY PRICED DWELLING UNITS. Among other things, this agreement must require that:

  • a specific number of MPDUs must be constructed on an approved time schedule;
  • in single-family dwelling unit subdivisions, each MPDU must have two or more bedrooms; and
  • in multi-family dwelling units subdivisions, the number of efficiency and one-bedroom MPDUs each must not exceed the ratio that market-rate efficiency and one-bedroom units respectively bear to the total number of market-rate units in the subdivision

Additionally, the Agreement requires that the construction phasing requirements for building MPDUs comply with the law so that:

  • MPDUs are built along with or before other dwelling units;
  • no or few market rate dwellings are built before any MPDUs are built;
  • the pace of MPDU production reasonably coincides with the construction of market rate units; and
  • the last building built must not contain only MPDUs.
  • Please refer to Chapter 20 to review the full requirements of the law

Amendments to the Agreement to Build:

If at any time the MPDU requirement for a development changes (due to a site plan amendment, for example), or if the construction schedule contained in the agreement changes, the Applicant must notify P & Z and request an amendment to the agreement to build to reflect the changes. Failure to do so may result in sanctions ranging from "stop permitting" orders to civil fines.

MPDU Offering Agreements:

At the time the MPDUs are ready to be offered for sale or rent to eligible MPDU certificate holders, the Applicant must submit an Offering Agreement to P & Z for its review and approval. In "for sale" developments, the Offering Agreement may be submitted no more than 365 days from the expected delivery date of the MPDUs. Larger developments, or developments that are built out over a greater length of time, may require more than one Offering Agreement to make all the required MPDUs available to certificate holders. P & Z staff will work with the Applicant to schedule multiple offerings in the most efficient manner.

For rental developments, the Offering Agreement may be submitted up to 120 days from the date the rental units will be available for use and occupancy by qualified tenants. In the case of staggered unit delivery over a longer period, more than one offering agreement may be required.

At a minimum, the Offering Agreement must contain:

  • the applicable standard form Offering Agreement (either for sales units or rental units) with the number of units indicated;
  • the lot/block, street addresses, and tax account numbers of the MPDUs;
  • a recorded subdivision plat, a copy of the approved preliminary plan and/or site development plan designating the location of the MPDUs;
  • an executed copy of the applicable covenants (in recordable form);
  • a copy of the floor plans for of each unit type; and
  • completed price calculation worksheets for each unit type (for sales units), or approved rent schedule by unit type (for rental units)

If, towards the end of the 90-day priority market period, it appears MPDUs will remain after all the names provided by P & Z have been exhausted, the Applicant must contact P & Z to discuss next steps.

DETERMINING SALES PRICES AND RENTS FOR MPDUs:

Applicants may hold initial discussions with P & Z staff to explore sales prices and rents at any time during the development and planning phases. However, the final sales prices and rents for MPDUs are set at the time the Applicant submits, and P & Z approves, an Offering Agreement for a specific number of MPDUs in a development. The methodology used to determine sales prices and rents for MPDUs is outlined in 20.30.040 of Chapter 20 MODERATELY PRICED DWELLING UNITS.

THE SALES/RENTAL PROCESS FOR MPDUs:

The sales or rental process for an MPDU is a private transaction between the Applicant and the MPDU certificate holder. While P & Z certifies program participants as eligible and provides names to the Applicant P & Z does not act as an intermediary, or involve itself in the process except in the rare case of a dispute between the two parties.

P & Z does not provide financing, financial assistance, or rental assistance to MPDU purchasers or renters. Each MPDU purchaser must qualify for and secure mortgage financing. Every MPDU renter must meet the necessary credit checks and income tests as other rental applicants, and must have the resources (which may include rental assistance from third parties) to pay the monthly rent.

The sales and rental agent is a partner in helping P & Z enforce the MPDU program rules. P & Z does its best to qualify applicants as “eligible” under the law, but the sales agent is an invaluable resource to help ensure the MPDU program serves the households it is intended to serve. Each household certified as “eligible” receives an MPDU Eligibility Certificate (for sales, for rental, or for both). The primary eligibility criteria are below; if the sale agent discovers a potential purchaser no longer meets these eligibility criteria, please notify P & Z right away:

“Eligible” means a person or household (20.30.020 Definitions):

    1. Whose income is one hundred percent (100%) or less than the family median income for the Baltimore Metropolitan Statistical Area (MSA), with adjustments for household size, as reported by the United States Department of Housing and Urban Development (HUD);
    2. Who holds a valid certificate of eligibility that entitles the person or household to buy or rent an MPDU;
    3. Who does not currently own a home; and (a) Is a city resident or has been employed within the City for at least the past twelve months prior to applying for a certificate of eligibility under Section 20.30.100, or (b) Is in the employ of the City of Annapolis beyond their probationary period, or (c) Is a teacher or staff member in an elementary, middle or high school within the City limits or in any school that is included in the Annapolis Senior High School district as defined by Anne Arundel County Public Schools.

MPDU Sales and Rentals:

Before offering any MPDUs for sale or rent, the Applicant must notify P&Z of the proposed offering and the date on which the Applicant will be ready to begin marketing to eligible persons. The notice must include:

  • whether the units will be sold or rented
  • the number of units offered
  • the number of bedrooms
  • the floor area for each unit type
  • a description of the amenities offered in each unit and a statement of the availability of each unit for sale or rent
  • a vicinity map of the offering; and
  • other information or documents as P&Z finds necessary to determine compliance with this chapter

Within 30 days of receiving the notice, P&Z staff will work with the sales agent to begin marketing the units. P&Z will mail an interest form to MPDU certificate holders. From the interest form mailing, P&Z will generate a list of names that will be immediately forwarded to the Applicant's sales agent. P&Z will pick 2 to 2.5 times as many names as there are MPDUs available to send to the sales agent. The sales agent then contacts the MPDU certificate holders in the order that their names appear on the list to arrange for a sales meeting. If the sales agent has MPDUs left over after the initial list is exhausted, the agent must contact P&Z to request more names. This process is repeated as often as necessary during a 90 day marketing period.

Sales and Rental Forms:

To enforce the MPDU program's rules and requirements, P & Z requires several forms for each MPDU purchaser or renter. Some of the forms are generated by the MPDU program, while others are copies of forms signed at contract signing, leasing date, or settlement.

Sales: The following forms are required for each purchaser of an MPDU; some must be signed at contract signing, and some are due after settlement has occurred:

After Contract Signing, (the following must be received at least 30 days prior to settlement):

  • the original copy of the Purchaser's Certification form
  • the original copy of the purchaser's Acknowledgement of Receipt of Covenants
  • the purchaser's original Certificate of Eligibility from the MPDU office
  • the purchaser's original Homebuyer's Seminar Certificate
  • a copy of the initial sales contract or agreement

After Settlement (within 45 days):

  • a copy of the two-party deed
  • a copy of the financing statement recorded against the proceeds of sale
  • a copy of the final settlement sheet

Rental: The following documents must be sent to the MPDU office within 14 days of the date of lease ratification on an MPDU rental unit:

  • a copy of the lease
  • the renter's original Certificate of Eligibility from the MPDU office
  • the MPDU Renters Certification form

CONTACT INFORMATION:

For more information on the MPDU program's requirements for Applicants and sales agents, the process of Offering MPDUs for sale or rent, please contact please contact Theresa Wellman, MPDU Program, tcw@annapolis.gov