APPENDIX I – THE HISTORY OF RENT CONTROL LAWS IN THE DISTRICT OF COLUMBIA

The District of Columbia’s rent control laws date back to 1973, following the end of the federal price controls. That year, the federal government authorized the city to enact rent control policies if, after a series of public hearings, the municipal officials concluded it was a necessary measure. Following a year of hearings, the District moved forward with rent control, capping rents at 112.3 percent of the rent charged on February 1, 1973. Rent increases were permitted only to offset changes in inflation levels or if a landlord could demonstrate serious financial hardship.[1]

Rental Housing Act of 1973

When adopting the 1973 law, city leaders saw rent control as a long-term tool for providing housing of minimum quality at reasonable prices for low-income families.[2],[3] In the early 1970s, federal housing assistance was on the decline, and the District did not have the financial resources to replace federal housing aid with local dollars. During the Senate hearing on the Rent Control Act of 1973, then-Vice Chairman of the D.C. Council, Sterling Tucker noted, “the shortage of decent housing at moderate rents has reached crisis proportions in this metropolitan area.” [4] Opponents criticized the bill for its long-term aspirations, arguing that a large portion of the population had no need for rent control, and the bill was a pretext for creating low-income housing.[5]

Rental Accommodations Act of 1975 and Rental Housing Act of 1977

The District’s rent laws were expanded when the city adopted the Rental Accommodations Act of 1975, set to expire two years after its effective date, imposed a rent ceiling that could only be increased under a limited and rare set of circumstances. Technically, landlords were permitted to make an annual return of up to eight percent on rental units, and capped rent increases following renovations to 125 percent of their original rate. The law “[did] not permit landlords to include debt service as an operating expense in calculating the rate of return… [which] reduce[d] the landlord’s rate of actual return, in some cases to nothing.[6]  The severity of these measures was lessened slightly by the next legislative action: The Rental Housing Act of 1977. [7]

Rental Housing Act of 1985

Eight years after the Rental Housing Act of 1977 was enacted, D.C. passed the Rental Housing Act of 1985, which is the basis of the District’s current rent control law. The law capped rent increases, not rents, for units in all multi-family buildings with five or more units built before 1975. Confusingly, when the law first passed, these controls were referred to as “rent ceilings,” suggesting that rents could not be above a certain level. But the law did not define any such level. Instead, the law stipulated various ways rents can be adjusted (including through capital improvements, changes in inflation, and increase or decrease in services provided), leaving the actual increases in rents to the government’s discretion.[8] It was characterized as a “[m]oderate system that explicitly seeks to maintain the profitability of rental housing investments.” [9]

Recent amendments to the District’s rent control law

The Rent Control Reform Amendment Act of 2006 standardized the annual rent increases by capping them by the local Consumer Price Index (CPI) plus 2 percent (CPI+2%).[10] The 2006 law also removed the term “rent-ceiling,” directing the city to replace every instance of this term’s use in the 1985 Act with different, “appropriate,” language. Landlords were allowed to increase rents by 10 percent for vacant units, but could ask for a higher rent if there were an identical unit in the building with a higher rent, so long as this increase were no more than 30 percent.[11] There are further restrictions if a unit is occupied by an elderly tenant or person with disabilities: for these units, rents cannot increase by more than the CPI and, regardless of the CPI change, by no more than 5 percent.[12] The 2006 Act also allowed (as before) overriding these caps through the filing of a “hardship petition” by landlords if they can demonstrate that their rate of return is less than 12 percent. Since then, this clause has been amended twice. In 2017, the city allowed landlords to raise rents if they had not heard back from the government within a set amount of time.[13]The city also adopted a measure to invalidate a landlord’s application if the affected tenant is elderly, disabled, or makes less than 60 percent of the Area Median Income.[14].[15]

Landlords can also increase rent following capital improvements or the installment of additional services and facilities.[16] This allowance was authorized by the 1985 Rental Housing Act, but was later modified in 1989 to state that increases imposed on a tenant’s monthly rent to pay for capital improvements must be temporary and cannot be included in the base rate used to calculate the allowable rent increase.[17] Finally, landlords and tenants can voluntarily agree to an increase in rents in return for improved services. These voluntary agreements must be signed by at least seventy percent of the tenants, and must specify the rent increases, and the changes in services or additional capital improvements or maintenance that will follow from them. The Department of Housing and Community Development’s Rental Accommodations Division must review and approve the voluntary agreements (but their decision can be challenged and reversed by administrative courts or by the Rental Housing Commission). According to the Department of Housing and Community Development, voluntary agreements are rare. The city receives somewhere between 10 and 30 such petitions each year (and some are for single-family homes), which appears to represent somewhere between 0.4 percent to 1 percent of all the buildings covered by the rent control law. Information is not available on the outcomes of all petitions. Among the 167 petitions where it was possible to track an outcome, 80 percent of the voluntary agreements were approved, about 5 percent were rejected, and 15 percent did not move forward.


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Notes

[1] For a detailed history of this earlier law, see the law review article by Wade Wetherington, “The District of Columbia Rental Housing Act of 1977: The Effect of Rent Control on the Rental Housing Market,” Catholic University Law Review 27, no. 3 (1978): 607–26.

[2] According to Wetherington, rent control laws were unconstitutional if they were not in direct response to an emergency that affected most of a locale’s residents.

[3] The very first federal act that imposed rent control expired in 1953. In its aftermath, New York City was the only jurisdiction with rent control. Several other jurisdictions had established rent review boards and boards to handle tenant grievances and complaints. In 1971, President Nixon imposed a 90-day freeze on prices, wages and rents pursuant to the Economic Stabilization Act of 1970, to reduce inflation from 4 percent to 1.9 percent. The federal price controls ended in 1973, precipitating the current wave of rent controls. See Wetherington (1978).

[4]  Rent Control Act of 1973: Hearing on H.R. 4771 Before the Subcommittee on Public Health, Education, Welfare, & Safety of the Senate. Committee on the District of Columbia, 93rd Cong., 1st Sess. 20 (1973), Statement of Sterling Tucker, Vice Chairman, D.C. Council. Cited in Wetherington (1978).

[5] Ibid.

[6] Ibid.

[7] D.C. Law 2-54, 24 DCR 5334, effective March 16, 1978.

[8]  Section 206 of D.C. Law 6-10, 32 DCR 3089, effective July 17, 1985.

[9] Margery Austin Turner, Housing Market Impacts of Rent Control: The Washington, D.C., Experience (The Urban Institute, 1990).

[10]  D.C Law16-0145, 53 DCR 4889, effective Aug. 5, 2006.

[11] Department of Housing and Community Development “What You Should Know About Rent Control Laws in the District of Columbia,” page 2 (2018).

[12] Brian McCabe, “Rent Control, Explained,” Greater Greater Washington, September 13, 2016.

[13]The Rent Control Hardship Petition Limitation Amendment Act of 2016, D.C. Law 21-197, 63 DCR 15030, effective Feb. 18, 2017.

[14]The Elderly and Tenants with Disabilities Protection Amendment Act of 2016, D.C. Law 21-239, 64 DCR 1588, effective Apr. 7, 2017.

[15] The Elderly Tenant Rental Housing Capital Improvement Relief Amendment Act of 1993 had stipulated a similar set of rules twenty-five years earlier but had exempted tenants earning less than $40,000 per year (as opposed to the now 60 percent of area median income). D.C. Law9-0154, 39 DCR 5673, effective Sept. 26, 1992.

[16] Jonathan Nisly, “DC Has Rent Control, but If Landlords Aren’t Making a 12% Profit They Can File a Hardship Petition and Raise Rent,” Great Greater Washington, 2016.

[17] The Capital Improvements Amendment Act of 1989 D.C. Law 8-48, 36 DCR 5788, effective Oct. 19, 1989.

 

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