By Adam Pagnucco.
As the county council’s Planning, Housing and Parks Committee takes up competing rent control bills, Council Member Kate Stewart (who represents Downcounty’s bowtie district) has put her thoughts on the issue into writing. Stewart’s views are important because she has not co-sponsored either the tough rent control bill introduced by Council Members Will Jawando and Kristin Mink or the weaker rent control bill introduced by six of her colleagues. While the latter bill has a majority of the council on it – for now – it needs a seventh vote to override a veto threat by County Executive Marc Elrich. That extra vote could be gained through amendments toughening up the weak bill, although if it becomes too tough, it might lose an original co-sponsor.
Stewart is the former mayor of Takoma Park, which has had rent control since the 1980s. It’s worth noting that the city has been losing rental units for years and has not seen a new multifamily rental building constructed since the 1970s.
Nevertheless, Stewart supports rent control and her memo lays out what she would like to see. Two other council members – Evan Glass and Laurie-Anne Sayles – have also not co-sponsored either of the competing bills and therefore have votes in play. All of this suggests that the county will ultimately pass a rent control law of some kind with only the details yet to be worked out.
Stewart’s memo to the council appears below.
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June 12, 2023
To: Councilmembers, Council Chiefs of Staff, Montgomery County Council
From: Kate Stewart, Councilmember, Montgomery County Council District 4
Subject: Key points to consider in our upcoming discussions regarding rent regulations
As the Planning Housing and Parks Committee begins formal discussions related to renter regulations—Bill 15-23, the anti-rent gouging bill and Bill 16-23, the rent stabilization bill—I wanted to share my position related to any policy moving forward. First and foremost, any rent regulation policy must benefit our residents and should not impede the building of new housing, which is something that is vitally needed. I will note that as Councilmember representing District 4, which has the most renters in the county, the outcomes of this work will have a significant impact on residents that I represent.
We are facing an unprecedented housing crisis related to the availability of homes and affordability. As we look to address the crisis, the goals of ensuring stable, safe, affordable homes must be front and center. While not the only policy to solve our affordable housing crisis, rent stabilization is a proven tool to address and advance these goals for renters. A well-crafted policy will protect people from excessive rent increases by creating a schedule for reasonable and gradual increases, while ensuring that landlords receive a fair return on their investment. We know rent stabilization is a proven policy that can rapidly stabilize prices, halt rent gouging, and reduce the risk of displacement and homelessness, while increasing housing security and affordability over the long term.
The benefits of putting in place a rent stabilization policy include creating stable communities. Increased housing stability and affordability will have an exponential effect across the county. Renters would be more economically secure, with more resources to spend on other household needs and boost local economies. They would be healthier, since stability and affordability would contribute to improving their mental and physical health. Children would do better in school, since frequent moves hamper education. And our democracy would grow stronger, as stability increases civic and political participation.
However, the eventual policy adopted here in Montgomery County must also provide for landlords and builders, a fair return for their investment. We need to make sure they are able to keep up on the maintenance of their properties. We also need to ensure any policy does not discourage new housing to be built.
The issues we are tackling as we discuss rent regulations are more than just the allowable rates of increase. There are many factors we need to include in these efforts to ensure a successful program that benefits the whole community. As the Committee begins its work, I would like to highlight my current thinking:
- After careful review, I believe that it is important for us to include a measure of inflation in the rate and a cap. This allows for the grounding of rent increases in the fluidity of the economy in rents. Providing a hard cap as a backstop ensures that the rate does not get too high and the predictability to protect tenants from being put out of their homes. As highlighted in the recent OLO report on Rent Regulations and the Montgomery County Rental Housing Market, a number of jurisdictions have caps ranging from 3 to 10 percent. It is important to note that any rent increase over 10 percent is known as a constructive eviction. Constructive eviction is a landlord’s effort to remove a tenant through means other than a formal eviction. However, the end result is the same. We must make sure we cap whatever allowable increase we have well below that threshold, especially without just cause eviction in the county.
- Rate banking is another essential aspect that must be included in a rent stabilization bill. This will afford landlords predictable income over time to manage their properties.
- Because Maryland currently does not allow for just cause eviction, we need to pay close attention to the allowable increase when an apartment becomes vacant. This conversation should include a discussion of who we believe should benefit from a rent regulation policy. We should be looking for a policy that does not just stabilize rents for current tenants but for our entire community. This will get at the heart of maintaining affordability in our county. The bottom line is a vacancy should not automatically mean an increase in rent for that unit.
- Creating a process to ensure a fair return for landlords on their investment will be key to any successful policy. This is a vital component concerning regulation with rent increases being tied to inflation, as it allows landlords to adequately maintain their properties in accordance with the volatility of the economy. DHCA staff should use their expertise to develop a formula and process in regulations to address fair return.
- New development is another aspect that we must take into account during these discussions. I appreciate that both bills exempt new buildings for a period of time and I would emphasize the need in our county for more affordable housing, including new construction. While ensuring rents are predictable and stable, any policy we put in place must also make sure that we continue to encourage and facilitate the building of new homes. An exemption on new buildings for 15 years after the first rented property provides this security.
I look forward to greater discussion on these topics and stress the need to remember our shared goals of predictability, affordability, stability, and safe housing for all. As the two bills work their way through the Planning Housing and Parks Committee I am hopeful that amendments will be introduced to include the above concepts to any legislation that comes to the full council. In closing, I appreciate the thoughtful work of all of my colleagues as you consider both pieces of legislation and the protections needed for renters and for landlords.