The federal Department of Housing and Urban Development for the first time has removed a city apartment house on which it holds the mortgage from the jurisdiction of the D.C. rent control law.
The 45-unit Charles H. Houston building, at 1712 16th St. NW, was removed from the city's jurisdiction because the slowness of the city's Rent Control Commission in processing a rent increase for the building "jeopardizes the department's economic interest in this project."
"The increased rents are required to meet operationg expenses and debt service and I hereby conclude that the delays of the D.C. Rent Control Commission . . . prevent implementation" of the needed rent increases, Fred Faender, director of HUD's loan management office, wrote in a letter to the D.C. commission.
The owners of the building now can file an application for a rent increase with HUD, whose officials will consider evidence in support of the request and made a decision that will not be subject to review by the city.
Under federal regulations, HUD has the authority to pre-empt any local rent control law when such a law prevents a building with a HUD-insured mortgage from paying its bills.
All federally subsidized buildings already are exempted from the city's rent control law, but federally insured building are not. Subsidization includes either supplementing a tenant's rent or an owner's mortgage payment.
The HUD action, which was taken on May 5, came to light at Tuesday's City Council meeting. Council member Arrington Dixon (D-four) used the incident to exhort Council members to pass emergency legislation allowing city landlords immediate rent increase ranging from 2 to 10 per cent to ease the financial burdens some have encountered because of sharp increase in operationg costs. Dixon later withdrew the bill.
According to Flaxie Pinkett, whose real estate firm managers the building involved, the owners asked the rent control commission for a 9 per cent increase on Nov. 12 because the rents in effect no longer generated enough revenue to pay utility bills and real estate taxes.
Last year, an elderly tenant fell while alighting rom one of the building's elevators, the insurance company subsequently threatened to cancel its policy on the building unless needed rapairs were made immediately.
The owners spent $30,000 to repair the elevator in the eight-story building, and another $25,000 to staff the elevators 24 hours a day - the two conditions imposed by the insurance company to prevent cancellation, Pinkett said.
Now six months later, the commission still has taken no action on the rent increase request and it is uncertain when the so-called "hardship" petition will be heard. So HUD decided to step in, Pinkett said.
At Tuesday's Council meeting, Michael Moorhead, chairman of the rent commission, spoke in favor of Dixon's bill. He said automatic rent increases were needed to stem the flow of hardship petitions to the commission.
Currently, 380 petitions are awaiting action. Moorhead said, adding that it takes about seven months for the commission to decide each petition.
Rents at the Houston were increased by 5 per cent in january, Pinkett said. The law allows such annual increases automatically under certain conditions. This was the first rent increase there since September, 1974. Rents in the building range from $138 for an efficiency to $237.50 for two bedrooms. This includes all utilities and air conditioning, Pinkett said.