Column Outtakes: Who Should Rent Control Protect?
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.