jonetta rose barras: Can the rent control wall hold back rising housing prices?

What were they thinking?

The entire DC Council — led by at-large member Anita Bonds, chair of the Committee on Housing and Neighborhood Revitalization — either co-introduced or co-sponsored the Rental Housing Act Extension Amendment Act of 2019. As written, the bill would reauthorize the existing rent control law for 10 years without changes, ignoring indisputable evidence that major reforms are critically needed.

“I am very interested in hearing innovative ideas about improving rent stabilization,” Bonds said last week at a public hearing on the extension legislation, where about 100 individuals — residents, advocates and apartment owners — testified.

Bonds cautioned, however, that she didn’t want to entertain conversations about such changes during that meeting. “[Instead], I want to hear from the public on moving this bill forward without amendments that might complicate the bill’s passage. We can discuss [other issues] at a later date but not during this council session.”

If she is prepared to consider changes during this Council Period 23, which ends Dec. 31, 2020, why not begin the process now? After all, the current rent control bill is set to expire at the same time.

“There is no way to support the current law,” said Ed Lazere, executive director of the policy research and advocacy group DC Fiscal Policy Institute, pushing back when Bonds asked him and other participants in the Reclaim Rent Control Coalition to identify the most important items on the list of improvements they’re demanding. The coalition has advocated for sweeping changes that include revising the formula used to calculate annual rent increases, creating a sunset for any rent increase that’s granted based on hardship or capital improvement petitions filed by apartment owners, and eliminating voluntary agreements between landlords and their renters.

“We need to look at the whole system. … We see this as not a menu but as an ecosystem,” said Elizabeth Falcon, executive director of DC Jobs with Justice and a member of the coalition. She argued that it’s time for the council to “take decisive action to rein in skyrocketing rent increases.”

“For so many District residents, rent control is in fact a critical make-or-break buffer against the devastating impact of unregulated rent increases,” said Johanna Shreve, executive director of the Office of the Chief Tenant Advocate. She has suggested the council reduce increases allowed on vacant apartments and mandate that owners create a reserve fund to cover apartment repairs.

Don’t expect the industry or their representatives to agree. Arianna Royster, a representative of the Apartment and Office Building Association (AOBA), called rent control “an outdated 1985 solution to a 2020 problem.” She said the previous five extensions did nothing more than “kick the can down the road” and did not include any “effort to understand the bill’s impact” on apartment owners. Perhaps to negotiate the wave coming at them with the proposed 10-year extension, AOBA asked the council to reauthorize the law for only five years.

As a longtime DC tenant and a journalist who has covered housing issues since 1986, I agree with advocates that the existing law is sorely lacking. It doesn’t sufficiently protect renters against unreasonable increases and doesn’t adequately preserve a significant pool of decent, affordable housing units.

That reality flies in the face of Bonds’ assertion that the District’s existing rent control law is designed to “eliminate unfair bargaining advantage that providers have over consumers forced to shop for apartments in an overheated, desirable housing market.” If she wants the law to realize that goal, she will have to move to close the many loopholes.

First implemented in DC over 40 years ago, rent control — or rent stabilization as it has come to be called — currently applies to rental units built prior to 1976 and buildings with five or more apartments. Initially, there were between 135,000 and 150,000 units affected by the law, according to Bonds and housing advocates. 

Today, however, only 80,000 units come under the law. That attrition is the result of units being converted into condominiums or cooperatives, or simply being razed to make way for newer developments.

According to the listing service RENTCafé, the average rent for a one-bedroom, one-bathroom apartment in DC ranges from $1,500 to $3,767, depending on the neighborhood. For example, the online rental site lists one-bedrooms of various sizes at the Columbia Uptown at 13th and Fairmont streets NW from $1,804 through $3,767.

In years past, most of the council’s amendments to the underlying rent control law have favored the industry — not the tenants. For example, in 2006, legislators modified the formula for calculating the annual rent increase to include the cost of inflation or Consumer Price Index plus 2%. The hike is currently capped at 5% for seniors and renters with disabilities; for other renters it’s limited to 10%. Tenants had fought against the 2%, which was supposed to be temporary but continues to this day.

There also are myriad carve-outs or incentives: Apartment owners are guaranteed a 12% annual return on their investments. What industry in this country is promised such a profit?

Shreve, the tenant advocate, said that the guaranteed return on investment should be cut to 8%. The reclaim coalition has proposed making it the same as the rate of inflation.

What also should be addressed, however, are the various remedies available when an owner doesn’t meet the guaranteed annual return. At present, a landlord may apply for a hardship petition to ensure the profit promised by the government. 

Owners can use the cost of repairs or improvements as the basis to apply for a capital improvement increase; if approved by the Rental Housing Commission, that also jacks up the rent.

Sometimes, landlords persuade tenants to sign what is called a voluntary agreement with the promise of renovations. That agreement allows for the rent to be increased as much as 70% against future tenants, exacerbating the limited supply of affordable units across the city.

When an apartment becomes vacant, the owner can increase the rent by 10% on a unit occupied by the previous tenant for 10 years, and 20% on a unit that had been occupied for more than 10 years, before placing it back on the market. Shreve, activists and others have cited that benefit as one reason that so many rental units have become less affordable each year.

Despite those advantages, AOBA and its members, like Royster, are unsatisfied. They are focused on their bottom line: how much money their members are spending or reductions in their potential profits. The solutions they propose would seem to convert the industry into a government agency, with taxpayer dollars serving as their desired cushion. Consider that Royster urged the council — if it’s intent on extending the law — to increase the budget for rental subsidies and provide more tax abatements and administrative fee waivers that would benefit landlords.

I consider myself a friend of the DC business community — within reason, of course. The greed of the rental housing industry is breathtaking. 

Undeniably, low- and moderate-income renters are taking a beating, even with the District’s current incarnation of rent control. Many of them are being illegally evicted or harassed. Frequently, they are forced to live in conditions that clearly violate the city’s housing code. Consider the scene recently in Ward 7 at the Park 7 Apartments on Minnesota Avenue NE, which is owned by Chris Donatelli. Residents at that building have complained for months about rodent and bedbug infestation as well as water leaks and other issues.

Across the city, there have been reports of price gouging. People are so desperate they have resorted to living in buildings like the one at 708 Kennedy St. NW, which was not licensed as a rental housing facility; a 9-year-old boy and a 40-year-old man were killed there in a fire over the summer.

Count me on the side of Shreve and the Reclaim Rent Control Coalition. Their agendas should serve as a blueprint for a more robust rent control law. I could not reach Bonds to determine her next step. There is a general view, however, that she likely will introduce a series of bills that address the most significant issues raised by the tenant advocate and the coalition. After additional public hearings some of the demands may ultimately become elements of the final reauthorization legislation.

That would be a good thing. Absent such changes, tenants can expect more of the same. And, five or 10 years from now, when elected officials lament the continued erosion of low-cost rental housing in the city, they can all pull out their mirrors, staring long and hard at the culprits they see.

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jonetta rose barras is an author, a freelance journalist and host of The Barras Report television show. She can be reached at thebarrasreport@gmail.com.