Code of the District of Columbia

§ 2–218.49a. Equity and development participation.

(a)(1) In all development projects conducted pursuant to a disposition under § 10-801, small investors, disadvantaged investors, or certified equity participants shall invest a minimum of 20% of the total sponsor equity, excluding debt financing, mezzanine financing, or other equity contributions by limited or institutional investors.

(2) Demonstration by a project sponsor of its intent and ability to meet the 20% equity requirement pursuant to paragraph (1) of this subsection shall be a condition precedent to the transfer of any District-owned property for a covered project.

(3) In meeting the equity investment requirement in paragraph (1) of this subsection, a certified equity participant may be a 100% sponsor of a component of a covered project; provided, that the certified equity participant participation totals 20% of the total equity of the covered project.

(b) For each government-assisted project involving development, in addition to complying with the general subcontracting provisions in § 2-218.46, at least 20% of the dollar volume of non-construction development goods and services shall be subcontracted to small business enterprises, and if there are insufficient qualified small business enterprises to completely fulfill this requirement, then the requirement may be satisfied by contracting 20% of that dollar volume to any qualified certified business enterprises; provided, that all reasonable efforts shall be made to ensure that qualified small business enterprises are significant participants in the overall development goods and services work.

(c)(1) No more than 25% of the total 20% equity participation requirement (equal to 5%) set forth in subsection (a) of this section may be met by a certified business enterprise providing development services in lieu of a cash equity investment that will be compensated by the developer in the future at a date certain (“sweat equity contribution”).

(2) The developer and the certified business enterprise shall sign a service agreement describing the following:

(A) A detailed description of the scope of work that the certified business enterprise will perform;

(B) The dollar amount that the certified business enterprise will be compensated for its services and the amount the certified business enterprise is forgoing as an investment in a project;

(C) The date or time period when the certified business enterprise will receive compensation;

(D) The return, if any, the certified business enterprise will receive on its sweat equity contribution; and

(E) An explanation of when the certified business enterprise will receive its return as compared to other team members or investors.

(d) This section shall not apply if the entity that controls the development project is an entity tax-exempt under 26 U.S.C. § 501(c), or other not-for-profit entity.

(e) This section shall not apply to any development project for which a contract for purchase of one or more parcels of real property has been executed prior to March 2, 2007.