Reservoir District Tax Exemption Amendment Act of 2026

26th Council Period (2025-2026) Introduced by Zachary Parker

Aligns Reservoir District tax exemptions with HUD 80% AMI limits to preserve financing and delivery of affordable housing and a grocery tenant.

Public Hearing on B26-0700

Overview

Bill: B 26-0700 | Session: 26 | Jurisdiction: District of Columbia

Title: Reservoir District Tax Exemption Amendment Act of 2026

Purpose: On an emergency basis, adjust the tax-exemption framework for the Reservoir District to align its financing TAFA with HUD’s 80 Percent Income Limit category, ensuring the project remains economically feasible and able to deliver planned affordable housing and a grocery tenant.

Main purpose and intent

Correct a drafting incompatibility between DC’s Inclusionary Zoning (IZ) rates and HUD’s Multifamily Tax Subsidy Project Income Limits used in the Reservoir District’s Tax Abatement Financial Analysis (TAFA).

Permit the Reservoir District to operate using HUD’s 80 Percent Income Limit Category for the 80% AMI (Area Median Income) limit, as contemplated in the TAFA, rather than the DC IZ rates alone.

Protect the project’s financing, schedule, and promised community benefits (affordable housing units and a grocery tenant) by preserving its economic feasibility.

Key provisions

Section 47–4683 amended (b)(2):

Requires the project to set aside one-third (1/3) of the operating rental housing units as affordable.
Affordability defined per 26 U.S.C. § 42(g)(2)(A) and aligned with HUD’s 80 Percent Income Limit Category for the Washington-Arlington-Alexandria, DC-VA-MD HUD Metro Fair Market Rent Area.
Compliance and designation must be made in a manner consistent with IRC § 142(d)(2)(B).

Section 2 codifies the amendment to designate the Reservoir District parcels as affordable housing with Fair Market Rents (FMR) calculated by HUD, used for affordability determinations.

Section 3: Fiscal impact statement adoption by the Council (per Budget Director).

Section 4: Effective date language:

Takes effect after mayoral approval (or Council action to override a veto), followed by a 30-day congressional review and publication in the DC Register.

Who/what is affected

Reservoir District Parcels 2 and 4 (the targeted project area within the Reservoir District).

Residents and households occupying or seeking rental housing units within the project, specifically those at or near the 80% AMI threshold.

The project’s financing structure, including tax exemption eligibility under DC Code § 47–4683, and the TAFA framework.

The District’s IZ program administration and its interaction with HUD income limits.

Procedural and timeline aspects

Emergency basis designation: The bill is introduced as an emergency measure to promptly address financing feasibility.

Action history:

Introduced: June 3, 2026
Referred: June 23, 2026 (Committee of the Whole)

Effective date: Follows mayoral approval (or veto override) plus a 30-day congressional review and DC Register publication.

The bill mirrors substance of emergency/temporary versions adopted May 5, 2026 and June 2, 2026, indicating rapid legislative action to stabilize financing.

Potential impact

Maintains or accelerates delivery of affordable housing units within the Reservoir District (one-third of rental units designated affordable).

Supports the project’s broader benefits, including a planned grocery tenant and mixed-use development.

Reduces risk of delays or cancellations due to misalignment between IZ rates and HUD income limits, preserving public-private partnership goals.