RENOVATIONS NEEDED? Rent control could get a makeover this year
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Tenant advocates want reforms designed to preserve the District’s low-cost housing
Hola Cultura maps by Nicholas John, Elvis Herrera and Byron Marroquin
With the D.C. Council poised to reexamine the issue of affordable housing during this fall’s legislative session, D.C. tenant organizers and their allies are launching a campaign to reform rent control.
An estimated 80,000 or 90,000 units of housing, more than half of the city’s total, could be governed by rent control, depending on how the rules are interpreted, activists say. So stakes are high.
“We’re working on a campaign to strengthen rent control and we’re doing it in two parts,” says Philip Kennedy, tenant-organizing manager at Latino Economic Development Center. “We’re working on making sure the D.C. Council knows that this is important—that it effects a lot of tenants. We’re also trying to get tenants really involved in the campaign. So they can tell their own stories.”
In addition to Latino Economic Development Center, the coalition spearheading the campaign includes Housing Counseling Services, Legal Aid of Washington D.C., AARP, Bread for the City, Jews United for Justice, and Coalition for Nonprofit Housing & Economic Development.
Activists plan emails, phone calls and public appearances, as well more creative actions to get the attention of Mayor Muriel Bowser and D.C. Councilmembers this fall as they deliberate on what else can be done to help lower-income residents keep their homes and remain in the city. The District’s Office of the Tenant Advocate will also discuss reforms at its 8th Annual Tenant and Tenant Association Summit on Sept. 26 at Gallaudet University.
The District already has several strong tenant protections on the books. Among them are the Rental Housing Act of 1985 and the Tenant Opportunity to Purchase Act (TOPA), and the District Opportunity to Purchase Act (DOPA). But those laws also have a growing chorus of critics who say they often fail to provide the intended protections in the face of market pressure for more upscale housing.
The Rental Housing Act limits annual rent increases to the rate of inflation plus 2 percent, which translates into annual rent hikes in the ballpark of 3.5 percent to 5 percent a year. While the law only covers D.C. rental buildings built before 1975 (the year the first rent-control law passed) with more than four units, it remains a major presence in D.C.’s rental market. The Urban Institute, last year, estimated that more than 90,000 apartments citywide should be subject to rent control, about half of the city’s total of nearly 178,000 units. Other estimates put the figure slightly lower today.
But the number of rent-controlled apartments has declined steadily in recent years as many longtime building owners cash out—sometimes selling to their own tenants via the TOPA law. Other times, tenants associations have used TOPA to assign their purchase rights to private developers. This has led many formerly rent controlled apartments to end up as market-rate condos. But increasingly new owners keep the buildings as rentals after performing upscale makeovers and convincing existing tenants to sign Voluntary Agreements allowing for market-rate rent increases on vacant units.
The coalition for rent control reform has drafted proposed legislation that would limit the ways landlords can seek rent increases beyond the small annual rent hikes, add stronger protections for the elderly and disabled, and reduce the profits owners are guaranteed each year, among other safeguards for renters.
The law guarantees a minimum annual profit of 12 percent to the owners of rent-controlled buildings. Activists say that percentage is too high in today’s economy.
“That’s crazy-high profits. Not even Apple (Computer) makes that much,” LEDC’s Wohl says.
Activists also say city officials should take into account building conditions, particularly health code violations, whenever building owners seek special dispensation to raise rents.
When profits slip below the 12 percent guaranteed by law, landlords have two principal strategies to push through rent hikes above the annual rent control increases: voluntary agreements and hardship petitions. Voluntary agreements, which require a majority of tenants to sign off, are often used to raise the rent on vacant units. Hardship petitions can raise the rents on all building tenants. Until the D.C. Council passed emergency legislation last year, the law allowed landlords to demand steep rent hikes pending a ruling by the city’s Rent Administrator on any petition not ruled on within 90 days of filing. Since hardship petitions are almost never decided before the 90-day deadline, the law set up a perverse incentive for landlords to file multiple hardship petitions, using initial rent increases to force out low-income tenants regardless of the final ruling on each petition, according to organizers at LEDC and Housing Counseling Services.
Responding to mounting public pressure last year, the D.C. Council passed emergency legislation that capped immediate rent increases at 5 percent. Tenants organizers want the emergency legislation made permanent law, warning that if it’s allowed to expire tenants again could face rent increases as high as 50 percent or 100 percent of their rent more while awaiting an official ruling on their landlord’s petition.
Tenant Opportunity to Purchase Act (TOPA)
When a rent-control building goes up for sale, it triggers the Tenant Opportunity to Purchase Act or TOPA. The law is designed to give residents a say in what happens to their building when the owner puts the property up for sale. The idea is to allow tenants to form an association and either buy the building themselves or assign their rights to a real estate developer.
While tenant associations have used TOPA to take control of the purchase process, often succeeding in purchasing their homes, the law has attracted considerable criticism over the years and has been the focus of scandals and newspaper exposés detailing the ways landlords have circumvented the law in Ward 1 and elsewhere in the city.
The TOPA process can take a couple of years to complete and involves housing counselors, lawyers, developers, and property owners, in addition to tenants who must work together to form a tenants association in order to use the TOPA law. Opinions differ as to what part of the process is most difficult.
“There are cases in which tenants just don’t necessarily see the value in organizing, or they just don’t have experience with taking collective action and getting good results from it,” says LEDC’s Wohl, who says a major challenge is convincing tenants that the TOPA process is worth their time. “Getting people to be able to visualize and understand what it means to go through the process of buying and running their own building can be difficult. It takes some getting used to and some training of tenants.”
Property owners often offer cash “buy-outs” to tenants in exchange for vacating the building. When faced with the choice between accepting the money and embarking on the complicated TOPA process, residents may find the quick cash tempting, politicians and policymakers say.
Ward 1 Councilmember Brianna Nadeau says she sees this happen a lot.
“The biggest challenge facing TOPA execution is the reality that a company will come in and offer a buy-out and people will take that money thinking that’s their big pay day when in reality, that money will only cover their rent for six months somewhere else at the most,” Nadeau says.
Nadeau is also critical of lawyers who take advantage of tenants in the TOPA process in order to maximize the money they make from these multi-million dollar real estate transactions.
“There are people that we call TOPA predators: lawyers who swoop in when they see a TOPA notice, tell the tenants they’ll get them a good deal, convince them to take the buyout and we lose that affordable housing forever,” Nadeau says.
District Opportunity to Purchase Act (DOPA)
In an attempt to ensure that the city can preserve its affordable housing without unfairly burdening tenants who do not wish to go through TOPA, there is a policy that shifts responsibility to the District government: the District Opportunity to Purchase Act, also known as DOPA.
According to the law, DOPA requires rental property owners to provide the District of Columbia with the opportunity to purchase buildings consisting of five or more rental units, as long as 25 percent or more of the apartments are deemed “affordable units” (see the chart below).
“In the event that tenants are not able to purchase their building or there’s a greater public good that needs to be reached, DOPA provides the opportunity for the District government to purchase buildings or buildings that are up for sale where there may be issues of displacement of the affordable units by virtue of the sale,” according to Polly Donaldson, director of the Department of Housing and Community Development.
In other words, when tenant leadership is lacking, the government can step in and use DOPA to purchase and preserve affordable housing.
According to Nadeau, DOPA allows the government to act “more nimbly because we don’t have to first organize a tenant association and then get everybody on the same page and then try to hold on to that coalition.”
The D.C. Council passed DOPA in 2006 but it has never been fully implemented. The city’s Department of Housing is now writing the regulations. These new rules will be subject to a public comment period expected at the end of 2015. But there is still a fair amount of skepticism from tenants advocates that DOPA will achieve its mission.
Until DOPA is put into action, TOPA is the most visible tool tenants have to preserve affordable housing. Wohl says it is important for tenants embarking on the TOPA process to understand that they are not alone.
“It’s not just tenants on their own taking over and managing a building,” Wohl says. “There are institutional supports in the form of funding from the government, community financial institutions, pro-bono lawyers and tenant organizers who can help make that transition work.”
—Emily Birnbaum
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