At a packed and passionate public hearing yesterday, dozens of District apartment renters expressed their worries about surviving in the city's hot real estate market, where the prospect of condominium conversion and rent increases could mean the loss of an affordable place to live.
And many of the 89 scheduled to testify before the D.C. Council's Consumer and Regulatory Affairs Committee were livid as they offered examples of how landlords allegedly cheated them out of an opportunity for homeownership through the use of a loophole.
D.C. Council member Jim Graham said he favors "real rent control that provides for a fair profit and maintains economic diversity."
(Kevin Wolf -- AP)
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"We're all in danger of losing our homes, and our rights have been buried under many layers of manure,'' said D'Marie Morgan, president of the Park Plaza Tenants Association in Adams Morgan.
Council member Jim Graham (D-Ward 1), the new chairman of the committee, is pushing for changes in the city's rent laws that would dramatically shift power from landlords to the city's thousands of renters.
Graham and other council members are proposing to bolster the city's rent control law and abolish the loophole that has allowed landlords to skirt a law giving tenants first refusal to buy their apartments.
Tenant advocates say these efforts could be successful this year because the new makeup of the council is decidedly more pro-tenant when it comes to rental issues after the defeat of three incumbents last year. Affordable housing issues are at the top of the council's agenda this year.
"There are steps that need to be taken, and we are taking them," said council member Kwame R. Brown (D-At Large), a new member who serves on the regulatory committee.
Building owners cautioned lawmakers at the hearing not to tamper too much with market forces that have attracted billions of dollars into the city's housing market and provided incentives for landlords to upgrade and renovate their buildings. They also cautioned that capping yearly rent payments or other restrictive schemes could lead building owners to convert their rental units to lucrative condominiums, resulting in fewer apartments for lease.
The only thing both sides agreed on was that the current system is ineffective and confusing and does not foster the creation of affordable rental housing.
"Building owners say it is ineffective and leads them to conclude that it should be abolished," Graham said. "The facts lead me the other way, [toward] real rent control that provides for a fair profit and maintains economic diversity. We're not about nibbling at the edge of these issues."
Graham proposed eliminating the current system of using rent ceilings -- maximum allowable rents established by formula -- and inviting building owners to testify later this year on creating a new system.
The District's rent control law, enacted in 1975, covers an estimated 101,500 of the city's 160,900 rental housing units, a 2000 study found. Federally funded public housing, buildings constructed after 1975 and buildings that have fewer than five units are exempt. The law is designed to protect longtime tenants from large rent increases.
Many witnesses who testified yesterday favored eliminating the loophole, the so-called 95/5 provision, that allows landlords to sell buildings without giving tenants the right of first refusal to purchase the property, as is the intent of the law. Under current rules, owners who sell 95 percent of a building with the understanding that the other 5 percent will be transferred later do not trigger the tenant-purchase option.
Witness after witness testified about how their chances for homeownership were dashed by legal maneuvers that appear to contradict the intent of the law. And, they said, the city's Department of Consumer and Regulatory Affairs had issued opinion letters supporting some of the transactions.
"Clearly there have been abuses,'' testified Joshua B. Bernstein, president of Bernstein Management Corp., a major landlord in the city. "We are embarrassed by 95/5 sales where the intent is to get around the law.''
But Vincent Policy, a lawyer with Greenstein DeLorme & Luchs, a firm that is involved in many of the 95/5 deals, said the procedure is legal and is used to avoid uncertainty, speed up transactions and avoid small groups of tenants who use the law and potential delays "to extort money [from owners] without any intent to buy the building.''
In written testimony, Patrick Canavan, the acting director of the D.C. Department of Consumer and Regulatory Affairs, said he supports closing the loophole and extending the rent control system.
