Crisis for Rent

Dear Readers,

“I see an affordable housing crisis!”

That’s what an appalled Colleen Clay, Ward 2 council member, said after reading the number of apartments converted to condos in the last two years. 262 were converted, which Clay calculated to be ten times the number of rental units the city lost in a previous 10 year period, when the average was 16 per year.

Under discussion at the Feb. 6th council work session was rent stabilization, “Exemptions and Other Regulations / Current Trends and Rent Increase Upon Vacancy of Rental Unit.” This is part of the council’s continuing scrutiny of the city’s rent stabilization code in preparation for revisions to that code

This discussion was haunted, as were previous ones, by the evil Ghost of Condominium Conversions. Apartments are being sold as condominiums, taking them off the rental market, at an alarming rate. The mayor and council are quick to point out that this is happening throughout the area, not just in the city, lest this be taken as an unintended consequence of rent control. Conversion is the most urgent affordable housing issue to deal with, say several of the council. It seems likely there soon will be legislation proposed regulating the practice.

Compared to the issue of rapidly disappearing rents to control, other rent control issues seem almost beside the point. Yet, they are contentious as always. Arguments about the effects and usefulness of rent control are now raging on local e-mail discussion lists. Landlords hate rent control, of course, but so do others: conservatives (a relative term in Takoma Park), libertarians, and many of the Pro-Cons.

Pro-Cons, if you remember , are the citizen faction which, while generally supporting progressive, liberal principles, also embraces fiscal conservatism, especially in matters of taxation. Their take on rent control is that it is a taxpayer subsidy to all renters. This galls them because renters are not needs-tested, and they assert that people who could afford higher rents are taking advantage of the situation.

Further, they feel that placing a cap on rents lowers landlord profits and denies them the funds and incentive to improve their properties. As a result, their properties are assessed at lower values than they could be, meaning that landlord taxes are lower than they could be, meaning that residents taxes are higher than they should be.

The council can be contentious on the subject, too. Council Member Marc Elrich, whose ward has a large percentage of renters and who has long been a fierce advocate of rent control, suspected at one point that Colleen Clay was blaming the conversion of rental units on the city rent policy. He asserted that condominium conversion was happening throughout the area in places with no rent control as well.

Clay quickly assured him that he misunderstood her, that though she thinks rent control contributes slightly to local conversions, she understands that the city’s rent stabilization code is what gives the city affordable housing, and that providing affordable housing was her goal as well.

Perhaps Elrich was on guard with Clay because she allied in last fall’s election with the Pro-Con mayoral candidate whose position on rent control was that he supported affordable housing principles, but was open to reviewing the law. Supporters of the law see terms such as “review the law” as code for “dismantle the law,” I suspect this is why he has been so jumpy in these discussions – questioning at the last session on rent stabilization why the subject had even come up.

All the council members are careful to at least give lip service to rent stabilization, though it seems as though the term “affordable housing” is heard more and more often in place of “rent control” or “rent stabilization.” To the discerning (or paranoid) listener, support for “affordable housing” is not necessarily support for rent control, It sounds suspiciously like a code phrase meaning the speaker favors replacing rent stabilization with some sort of subsidy for low income renters. “Affordable housing” also means affordable home ownership, as the mayor has pointed out on more than one occasion.

However, little of this was directly confronted at this meeting, which Mayor Porter said was intended to be informational. The mayor said that in coming meetings there would be discussions about how and why to change the law, and opportunity for residents to comment. She would like to take a “two prong strategy,” she said. First , do something about condo conversions. Second, update the city’s policy in a way that takes into account the conversions. She said she is open to other creative strategies, that maintain both affordable rental and affordable ownership, which she admits opens up other problems such as owner equity. The term “rent stabilization” did not cross her lips in this speech.

The information was provided by the Housing and Community Development department staff. Their report compared Takoma Park’s rent stabilization code with those of several other jurisdictions, including: Washington, DC, College Park, MD, Berkley, CA and New Brunswick, NJ.
They also reported on various statistics, including the aforementioned condominium conversion numbers. Other interesting factoids:

• The percentage of renters being charged less than the maximum allowable rate is 48%. This is due to a number of factors. Some landlords want to keep good tenants, so they keep the rent down. Other landlords don’t want to upgrade their properties and the low rent is what the market will bear for lower-standard units. Some tenants organizations have negotiated rent increase agreements with their landlords.

• The discrepancy in rents paid for comparable units in the same building is $78. In non-rent-controlled Silver Spring the discrepancy is $16.

• In 40% of rent-controlled units one or more utilities are covered in the rent.

• Building insurance rates have increased 40% over the last 4 years, driving up operating costs for landlords. They cited one landlord whose insurance cost in 2000 was $3,400 with a $500 deductible, but is now $9000 with a $5000 deductible.

• Utility costs are up over 100% as well.

The staff said it was difficult to get consistent information from landlords about their expenses, but they had an anecdote about one landlord who had re-mortgaged at a variable interest rate and was losing $20,000 annually. Furthermore they said this landlord’s budget was “scary” as it held no provision for management or maintenance other than plumbing services.

They also noted that many new landlords buy city rental properties without knowing they are rent-controlled! This led to proposals that the city find a way to alert potential buyers of this important fact.

Trailgate appears to have ended with about as much noise as a bicycle bell. City Manager Barbara Matthews gave a brief chronology of events concerning the Metropolitan Branch Trail. Indeed, as a number of citizens have complained, the city arborist made an onsite judgment that the contractor could make the section of bicycle trail near a stand of hardwood trees wider than the 8 feet stipulated. He was wrong to do so and the asphalt will be “trimmed’ back to 8 feet wide.
– Gilbert.

About the Author

Gilbert is the pseudonym of a hard-bitten, hard-drinking, long-time Takoma Park resident who maintains the granolapark blog. Gilbert and William L. Brown — Granola Park's mild-mannered chief of staff, researcher, and drink pourer — have never been seen in the same place at the same time.