Fair Return

Dear Readers,

Apparently you all took Gilbert’s warning to hide in your bunkers much too seriously. Despite the predictions of a large and unruly turnout, only one lawyer showed up to address rent control at the Nov. 20 Takoma Park City Council session. The pitchfork- and torch-wielding hordes of landlords and tenants are presumably sharpening their tines and trimming their wicks for the December 11th public hearing on the proposals that were unveiled Nov. 20.

The proposed revisions to the city’s rent stabilization ordinance were made by Berkley, California consultant Kenneth Baar, Ph’ D, attorney, expert on rent control, and author of such urban-planning page-turners as “Hungarian land use policy in the transition to a market economy with democratic controls (From planning to markets : housing in eastern Europe).”

The mayor was so pleased with the proposed revisions she did six cartwheels across the council podium. Actually, she just smiled, but for our reserved Mayor Kathy Porter that’s almost the equivalent of 6 cartwheels. She praised Dr. Barr for delivering what she felt was a fairer, simpler, more cost effective plan, as the council had requested.

In a nutshell. Dr. Baar recommends that the city’s rent stabilization ordinance be revised like so:

1. Raise the amount landlords can base annual rent increases on from 70% to 100% of the Consumer Price Index.
2. Conduct a study of utility cost increases incurred by local landlords so rents can be adjusted accordingly.
3. Eliminate the complicated capital improvement rent increase petition process.
4. Allow limited rent increases upon the vacancy of a rental unit.
5. Create a “uniform interest allowance” which repeals current complex and unfair adjustments for landlords’ various mortgage financing terms
6. Establishment and assess of an annual registration fee on rental units – which will be passed on to renters and used to defray city costs of rent control.
7. Change the exemption landlords have for owning one building to one based on the number of units they own (this does not affect the accesory apartment exemption).
8. Ditch the rule that says a landlord who chooses not to implement a rent increase in the year in which it is permitted can’t increase the rent later until the unit becomes vacant.
9. Allow the use of the year 2000 as the base year for hardship rent increase petitions.
10. Require sellers and brokers to inform potential buyers of rental property that Takoma Park has rent control.

Dear Readers, you can download a pdf of the proposals here.

Baar proposes, and the council embraced, making an important semantic change. He points out that what the city labels a “hardship” on landlords (as when they file a “hardship petition”) is really a “fair return.”

Fair return is a concept that, in Gilbert’s opinion, has not been mentioned enough (if at all) in the council’s deliberations. As much as we all want to keep rental housing at a fair price for renters, landlords should get a fair return as well. This is the idea behind dumping the Capitol Improvement Rent Increase Petitions. The thinking goes that landlords, if allowed a fair return (which they would get if rents are allowed to rise with the Consumer Price Index), would be able to cover the expenses that the Capitol Improvement petitions were supposed to. So, landlords would not be in a position of having to plead for such ordinary improvements such as slapping a new coat of a paint on the walls, and having to wade through bureacracy to do it.

That’s how Gilbert understands it, anyway. As plainly as Dr. Baar laid out his proposals, there were still some mind-fogging terms and concepts, especially for Your Gilbert who declares himself not liable for any misunderstandings, misstatements, or misinterpretations in this post.

Councilmember Joy Austin-Lane urged the rest of the council to take action on those provisions she wanted to see enacted into law immediately, numbers 1, 3, 9, and 10. Dr. Baar said that numbers 1, 2, 3, and 4 were interrelated and should be passed together. Austin-Lane conceded that 4 could be in her preferred group.. The mayor said she thought it should all be done at the same time, but other council members started calling for their own favorite numbers until it started to sound like a large, argumentative family bickering over a Chinese menu.

Sarah Daines of the Housing and Community Development Office cautioned that it would be problematic to enact the revisions piecemeal, as there might be unintended consequences to have a mix of old and new laws in effect at the same time. She was seated next to Dr. Baar and was beaming like a lantern. Gilbert speculates that she was getting a kick out of seeing someone besides herself in the rent-control hot seat for a change, especially since he was doing so well at it.

So, the question is, what will tenants and landlords think? Will these revisions mollify them? Or will they turn out to vilify these revisions on Dec. 11th? Stay tuned!

Ward 5
With only one week left before he leaves the city council to join the county council, Marc Elrich’s mind was already on county issues, even as he addressed city rent control. While warning that vacancy decontrol, as advocated by many landlords, would soon mean the end of affordable rental housing in the city, he segued into describing the upcoming challenges the county council faces preserving affordable housing for the region’s working and lower-middle classes.

As for who will be running to take his place on the city council, there is no official word yet, as official petitions will not be available until today (Nov. 22). However, City Clerk Jessie Carpenter says there have already been two requests for petitions. Reliable sources say that Rueben Snipper plans on running. There is a rumor that “a guy named Joe” will also run. Former Ward Three councilmember Hank Prensky, now a Ward Five resident, assures us he will not run.

– 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.

2 Comments on "Fair Return"

  1. Thomas Kenny | November 27, 2006 at 4:49 pm |

    I happen to have it on good authority that Eric Hensal, Parliamentary Vice Chair of the Silver Spring Region Citizens Advisory Board, will be filing for the Ward 5 seat.

  2. Angie Abraham | December 22, 2006 at 4:42 pm |

    My family has been on both sides of the Takoma Park rent stabilization coin. In December 2002 we moved from Florida to Takoma Park into a 2-bedroom apartment, paying $1100 a month plus electric, and $50 each per month for each of our two cats. We resided there four months until we moved to Beltsville where we could afford to purchase a house. We did not know Takoma Park had a Rent Stabilization law.
    Fast-forward to May of 2005, when we actually purchased the twin building to the one in which we resided previously. While researching allowable rents on my building, I looked at the record for the apartment we had rented. The allowable rent was something like $680. And of course, at TP Landlord School you learn that pets are only worth $25 per month. So our family was charged almost double the allowable rent and pet fee. AND the city knew about it; in the sense that when that landlord (new to her job) submitted a rent report showing that she was charging me $1100 a month, the city wrote back to her saying that it was wrong. So she simply resubmitted the rent report with the allowable rent filled in. Our rent was not decreased nor were we offered any compensation. The city was satisfied and all was well in the Park. By the time I found out, that landlord was long gone and the building was under new ownership.
    We are small investors. We expect a fair return on that investment. As of right now, Takoma Park doesn’t get affordable housing out of our facility because we can’t afford it. In order to pay the mortgage, up keep, and utility fees, we live in our building and rent out one unit at market rate.
    I am also an honest and ethical landlord. I would never submit a falsified rent report or break the ordinances of the city. Because the only current option we have is dishonesty, we’ve met with a real estate agent to sell the place and get out of Takoma Park. We‘ll take our ethics and funds and find a more willing host.
    There are many ways to address the need for affordable housing in a community. Holding a very few citizens responsible for the welfare many is not fair or reasonable. The current Rent Stabilization Law is unconstitutional (thus prompting the proposal at hand). I do understand that half the population of the city will be affected if rent stabilization in abolished without replacing it with another solution. I believe very strongly that another solution must be found and implemented as quickly as possible. In the mean time, in order to plug the hole in the dike, the city needs to provide immediate relief to owners of small buildings like mine. We would like to be a part of the solution, but time is running out. Small building owners cannot continue to operate with the losses we are forced to endure. Most are selling; many converting buildings to single family homes.
    I do hope that we don’t have to wait until the council addresses the full proposal. It would not be difficult at all for them to enact an exemption for small buildings of 3-5 units or less. They could do it quickly for non-profits; they should be able to do it quickly for us.

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