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Anita Bonds is on a mission to reform the District’s rent-control laws for the first time in 10 years. But already, she’s facing serious pushback from industry groups and landlords who say proposals she’s introduced would hamper their ability to operate at a profit and repair decades-old buildings.
The at-large D.C. councilmember chairs the council’s Committee on Housing and Community Development, which is holding a hearing today on just three of half a dozen pieces of relevant legislation. Their backers contend that they would protect tenants from the city’s rising rents. The bills address various aspects of the statutes regulating D.C.’s some 80,000 rent-controlled units in buildings constructed before 1975 that usually have over five units. The most sweeping would cap annual rent increases in such units to the Consumer Price Index (a measure of inflation, now at zero percent) and eliminate 10 to 30 percent jumps that can occur when an apartment becomes vacant.
As of today, landlords can raise rents in rent-controlled units by the CPI plus 2 percent of the rent charged for all but elderly and disabled tenants. Many also take advantage of a 12 percent rate-of-return guarantee on their properties through so-called “hardship petitions.” If the District approves one of these, much more significant rent increases at a building can result.
Affordable housing proponents and property owners disagree about what would constitute the proper balance between allowing rent-controlled units to be economically viable and putting the breaks on the District’s accelerating cost of living. Almost half of all D.C.-area residents are considered “rent-burdened,” meaning they pay more than 30 percent of their income on housing costs, while more than one in five are “severely rent-burdened,” paying more than 50 percent. The District’s rent-control laws were last updated in 2006, abolishing “rent ceilings.”
“Over the past several years, the cost of housing in the District has skyrocketed, but incomes have not kept up,” Bonds said during Wednesday’s hearing. “This trend cannot continue if the District is to remain diverse. It is important not only to me but for the economic wellbeing and growth of our city to ensure that those currently residing in the District who want to stay here are able to afford to do so.”
It’s a politically popular line, the likes of which Mayor Muriel Bowser has adopted in her quest to preserve and produce affordable housing in the city. Another bill before Bonds’ committee on Wednesday seeks to close loopholes that landlords exploit to charge rents higher than what tenants expect upon lease renewal (more about that here), while a third would prevent landlords from taking certain units out of rent control through the provisions of D.C.’s Tenant Opportunity to Purchase Act. The committee marked up two separate measures last week that would limit other associated rent raises.
But local property groups—including the Apartment and Office Building Association of Metropolitan Washington and the District of Columbia Building Industry Association—take issue with the three bills the committee held a hearing on today. They argued in a letter to the council yesterday that the legislation “will undermine our shared goal of preserving the District’s aging housing stock, and could actually harm the very residents the measures are purportedly designed to protect.” The groups say policymakers should not advance such bills until the recommendations of a “housing preservation strike force” that Bowser organized are released in the coming months, because they will contribute to the city’s “comprehensive housing strategy” and could impact the market.
“Piecemeal changes like those proposed in these bills are already creating uncertainty among investors willing to provide critically important financing for improvements to an aging housing stock,” AOBA’s and DCBIA’s executives wrote. “The lack of such investment could have negative long-term consequences on the ability of housing providers to continue to provide safe and habitable homes for the many residents seeking a home in our rental communities.”
The tension over changing the District’s rent-control laws reflects similar conflicts seen between the business community and local government, like an ongoing discussion about the financial impact of instituting a universal paid leave law. Affordable housing advocates noted that the proposed changes could reduce the likelihood of current and future rent-control tenants being displaced or evicted, especially those of low- and middle-income.
During the hearing, the committee’s members seemed skeptical of property owners’ claims that tightening D.C.’s rent-control laws would cause the proverbial sky to fall. Councilmembers pointed out that rents have only increased since the last time the laws were updated—to which industry representatives retorted that maintenance costs are also rising, putting a squeeze on landlords of smaller-sized rent-controlled properties in particular. Some testifiers voiced larger objections to rent control: For example, that regulating housing costs could create a shortage of apartment supply, that it may discourage tenants from buying homes, and that it doesn’t target the neediest people.
“Artificial caps maintain some level—not a high level, but some—of affordability in the District, and without those caps, if we look down the road, the rents would continue to increase, like a bubble, and eventually that bubble would burst,” At-Large Councilmember Robert White said. “What we may ultimately be left with is a situation where we have priced out the people who were here to stay, and then the people who are going to move here have decided to go somewhere else.”