Housing Complex

Column Outtakes: Who Should Rent Control Protect?

A rusty pipe from one of UIP's buildings at 2401 Ontario Road.

There's an interesting debate embedded in my column this week about the quick rise of landlord/property manager/construction company Urban Investment Partners: If the city isn't willing to reinvest in rent controlled housing, which is by definition old and in need of substantial upgrades, who should pay increased rents needed to pay for them? Let's expand a bit on that question.

The District's rent control law allows landlords to appeal to raise rents on current tenants as much as it takes to complete renovations and to earn them 12 percent on their investment, via three different kinds of petitions. UIP's Steve Schwat used to do these, but tenants would always challenge them, creating legal expenses and delays. That's why he turned to the voluntary agreement, which raises rents on future tenants, who aren't around yet to protest. 

Are there any limits on how much they can jack up prices? Sort of—the agreements are subject to approval by the District's rent administrator, a quasi-judicial official who's supposed to make sure that the resulting rent scheme is "equitable." The current acting rent administrator, Theresa Lewis, routinely rejects UIP's first version. Then, they negotiate, even setting different prices for individual units. The Office of the Tenant Advocate is still really worried about this, seeing it as just the latest end run around rent control, and a threat to the city's affordable housing stock.

“We just think that the system is way out of balance, and needs to be reined in,” says Joel Cohn, the small agency’s legislative director. “It’s kind of in the nature of the landlord tenant business, where the housing provider side can be very creative in finding ways around the law and through the law in order to get the result they want.”

The problem is, landlords and tenants are usually pretty aligned on this one, and tenants lawyers often advocate strongly for them. Their clients are the people who live there now, after all, not random people looking for an apartment. And besides, says attorney Eric Rome, part of the point of rent control is to allow current renters to live in one place sustainably for the long term, without struggling to pay for the cost of substantial renovation—a form of economic empowerment. "People who are siting in an ivory tower are saying that it’s okay to keep these people in a permanent underclass," Rome says.

It's a similar debate to the one over whether people who buy condos at subsidized prices should be able to capture the appreciation of that real estate and build equity, or whether they should have to re-sell it at the same price, passing on the subsidy to the next owner.

Another argument for not making current tenants pay for renovations is that they have to live through them—and sometimes, UIP is overly optimistic about how fast they'll be able to finish. Tenants at the New Quin, at New Hampshire and Quincy Street NW, picked UIP over another developer on the basis of its offerings, which included construction finishing up within a year of the sale. It's now been a year and four months, and the job's nowhere near finished. The delay may be due to circumstances beyond UIP's control, but tenants are still feeling slighted.

"Communication has broken down incredibly," says Misty Thomas, their pro bono lawyer from the Washington Legal Clinic for the Homeless. "I think the 'too big for their britches' problem has impacted tenants," she goes on, referring to a sense that UIP has expanded too quickly to provide good customer service. "Mine feel very disrespected and feel like they're incidental to haphazard renovation."

Schwat, though, is confident that the dissatisfaction will fade when it's all over. "It’s a business that often has tints of political campaign," he wrote in an email. "When I start a project I am always arm in arm with my clients, the residents. By the end, there are always a few that hate me; that lost patience, that are tired of the intrusion and the workers coming in and out of their apartments to execute the work that we all agreed to only months earlier. In the very end, most of that turns back, the work becomes part of the history and over time, we often laugh or at least commiserate together."

Finally, there are the people who think that rent control is an illegitimate and unfair system entirely—it is one of the few benefits society conveys without means testing its recipients, after all. In fact, the Supreme Court will soon decide whether or not to take up a case challenging the constitutionality of the whole system. In D.C., rent control has too much support to be abolished completely. But eventually, as it composes less and less of the housing stock overall, it may just cease to be meaningful.

UPDATE, May 9 – It's worth noting, even at this late date, that the April 20 D.C. Register included a notice retroactive to April 10th removing Theresa Lewis as rent administrator. She was replaced by Keith Anderson, who held the position before her.

Comments

  1. #1

    Some day people will realize that the goal of making living expenses zero doesn't work economically and that it's the *responsibility* of a population to keep up economically with the world around them. It might not seem fair, but the reality of life and the world isn't fair. The alternative is economic stagnation for the whole city just to preserve the lifestyle of a minority of lazy people.

    You don't deserve to live in a rent controlled apartment. You don't deserve to have your life frozen and subsidized into eternity no matter who you are or where you came from.

  2. #2

    I havent seen any studies, but my general sense is that rent control is an inefficient way to provide affordable housing, compared to thing like inclusionary zoning, direct subsidies, and supply side solutions. OTOH it can help tenants to avoid the cost and trauma of dislocation. So it seems to me that it SHOULD protect current tenants, but NOT the provision of affordable units for future tenants. Ergo the proposed voluntary agreement that started this discussion is a GOOD thing.

  3. #3

    Rent control was and is a JOKE. Mandating what someone can charge for the use of THEIR PROPERTY is socialism by any definition. No different than telling a gas station owner that he must charge a certain amount for his gas or services, no matter what his economic situation is.

    Of course tenants will whine and demand rent control. But all it does is distort the real estate market and prevent necessary upgrades and rental property sales from occurring.

  4. #4

    lol....

    Rent control does not work and the subsidized housing model in its current state is broken...

    Because it results in concentration of a particular social-economic class.

    So called "academics" and "politicians" have tried for years to solve this problem, with ideas like "HOPE VI", "Housing Choice Voucher Programs", "Public Housing" and "Rent Control".. But they have failed in most cases to integrate people of different social-economic classes as they hypothesized.. Ask yourself why?

    Because they lock people with limited social-economic opportunity (the poor) into areas with others of the same circumstance, with the exception of HOPE VI.

    As "HOPE VI" has result is the displacement/replacement of limited social-economic opportunity (the poor) with those that have greater social-economic opportunity (the rich).

    And these imbalance resonate within the communities in which these conditions are present in the school, recreational/library facilities, and city services... Just compare the quality of life in Ward 8 to that of life in Ward 3..

    Yeah....

    So the millions dollar question, "How do you fix this"

    Require that all rental buildings in the city of 5 units or more, make a minimum of 10% and a maximum of 30% of there units available to the "Housing Choice Voucher Programs" or something similar based on need.

    The effect of this would be two fold:
    1: It would reduce the concentration of the people with limited social-economic opportunity (the poor) to specific area.

    2: It would force property owners/managers to improve the quality of there rental buildings as they would need to compete for tenants to fill there building do to the maximum number of possible subsidized units.

    The Bonus: This would have a dramatic affect on the conditions that are present in the school, recreational/library facilities, and city services... As I hypothesized, that people how are paying market rate for housing and taxes for city service would demand greater equability in how those services are delivered across the city.

  5. #5

    CM Catania said at a hearing yesterday on health care financing that 30,000 income tax filers in the City fund the safetsy net for the areas Md, VA and DC population of 4 million as the free service and support in terms of housing and access to mental health and other health service supports are not available except in DC. It seems to me that its' time to look at all the assistance we provide especially in housing.

  6. #6

    Perhaps if DCRA dedicated selected just one month to inspect those buildings with a 70% Agreement,media could be invited to attend to attest that how violations are ignored from previous inspection visits! Those housing providers who have been caught in the past have a way of avoiding citations for infractions or getting the fines reduced without followup!

    Maybe one way would be to require Proactive Inspections prior to approval of 70% agreements!

    Fraud and corruption is very difficult to measure illicit activity in any organization, particulary since DCRA and DHCD procides a wide variety of service. In recent years only a very limited number of cases of fraud and corruption have been identified that have resulted in disciplinary action. Which can be accomplished by various aspects of strategy including data matching, whistle blowing and financial control.

    Historically there is a high risk of fraud such as revenues and benefits, so the outcome is not unexpected.

    The powers in DCRA and DHCD should remain vigilant, especially in times of recession where risks could increase. High standards of ethical behavior are currently lacking! The DC Councils systems are unsound in the prevention of fraud and corruption needs to be difficult to undertake with a high likelihood of detection, thus reducing the risk of its occurrence.

    Where are the effective controls within the system, the
    monitoring, following of Codes of Conduct and professional obligation, insuring that honest and competent District residents are hired and the care during periods of change?

    Information was readily available during the Williams Administration - where has it all gone?

    With all this in mind the District should be able to close the loss of revenue it is experiencing!

    TIME TO ENFORCE THE HOUSING CODE and put providers no longer can they conduct business with District departments as usual.

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