Delegate proposes optional right-of-first-refusal to help localities preserve subsidized rental housing

Delegate Bennett Parker and the Virginia Housing Alliance presented draft legislation giving localities the option to adopt a right-of-first-refusal to preserve state- or federally-subsidized rental housing when affordability restrictions expire.

Under the draft, localities that adopt an ordinance could require owners of publicly supported multifamily properties (generally 20 or more units and subject to programs such as the low-income housing tax credit) to give written notice to tenants and the locality at least 24 months before affordability restrictions terminate. A locality could then appoint a ‘‘qualified designee’’ (a nonprofit, for-profit, or resident association) to act on its behalf and, if the owner accepts a third-party offer that would not maintain affordability, that entity would have the right to match the third-party offer.

Isabelle McClain, director of policy and advocacy at the Virginia Housing Alliance, said the bill’s timeline balances owner-transactions with preservation goals: owners must notify the locality and the qualified designee within five business days of accepting a third-party offer; the locality or designee then has 30 days to decide whether to match. McClain said that 30 days is on the short end compared with other states but the draft was deliberately conservative to reduce delay for owners and buyers while preserving an opportunity to match offers. The draft defines a ‘‘matching offer’’ as equivalent terms and conditions and sets a down-payment comparability test (matching the third party’s down payment or at least a 4% down payment threshold to prevent extreme-sidestepping offers). It allows the down payment to be refundable for up to 90 days while a locality demonstrates good-faith efforts to obtain financing.

Bennett Parker said the tool is permissive: localities must opt in and could limit how the ROFR applies. She and McClain cited state examples (Oregon, Massachusetts, Maryland) where ROFR programs and negotiated outcomes have preserved more properties than outright purchases in some instances.

Members raised a range of concerns. Joe Lurch and industry representatives urged clarity about who tracks expiration dates and suggested that notices be sent at closing so localities have reliable tracking data. Member Bismar Ahmed and others warned that the notice-plus-30-day-match model could create transaction uncertainty that discourages investment; some urged stronger incentives rather than regulatory steps. Delegate Koiner and others emphasized protecting mixed-income unit mixes and ensuring localities do not convert preserved properties into concentrated low-income housing. McClain said the bill includes reporting requirements and an emphasis on prioritizing properties in areas of opportunity.

Members asked staff and advocates to refine timing and notice mechanics; no formal vote was taken, though the group used the meeting to provide technical feedback to the patron and staff.