At midnight Jan. 31, Montgomery County's controversial rent control law expires and bureaucrats, landlords and tenants' groups in the wealthy suburb are busy grapping over what, if anything, should replace it. A powerful coaliation is determined that controls should die.
Yesterday, the bill's supporters were one vote short of the five needed to enact a bill up for vote in the County Council today that would essentially extend current rent controls -- the only ones still on the books in Washington's suburban counties -- for two years.
County Executive Charles Gilchrist, a firm supporter of decontrol, says he would look closely at any extension bill sent to him "with a view to vetoing it."
Condominium conversions, inflation's effect on low-income families, stalled construction of new apartments -- each of these issues has arisen in council deliberations on controls.
Enacted one year ago, the current law was among a succession of revisions of rent control that the county inaugurated in 1973. It covers about 40 percent of the county's 39,000 rental units and limits annual rent increases to just under 10 percent unless the landlord can demonstrate unusual cost rises.
Currently about 25 percent of the nation's supply of rental apartments in buildings of five units or more is under control, industry sources say, and the number is rising.
In Montgomery County, the coalition determined to kill rent control includes three of the council's seven members, Executive Gilchrist, the county's Office of Landlord-Tenant Affairs, and landlords and developers. They are vigorously disputed by those opposed to decontrol, who argue that those least able to afford higher rents would be hit hard.
Developers argue that by unfairly limiting landlord's income, rent control inhibits new investment in housing and spending on maintenance. Ultimately, it brings long rows of derelict tenements like those in New York, it is said. i
"You end up with a situation where people can't afford to own rental property anymore," said Edward Crowley, vice president of the development firm Kettler Brothers.
Rent control is also partly blamed for condominium conversions. Six thousand units have gone condominium in Montgomery County in the last two years, raising an outcry from government and renters alike.
The county enacted laws to give tenants' groups the right okf first refusal during conversions, and placed a 4 percent tax on sales of converted units. But an appeals court struck down the first-refusal law.
This defeat led some county officials to look to decontrol as the best break on condominium conversions. Gilchrist reluctantly backed the current law when it was passed. Now he says, "it's time to get out of rent control." It would help create a climate of confidence for construction of new rental apartments, he believes. "We ought to shift away from regulation and toward encouragement."
Gilchrist has proposed restoring voluntary guidelines for rent increases, a system used before the current law was enacted. He also favors new measures to assist tenants -- especially senior citizens -- and ease the reversion to noncontrol.
Rich Ferrara, director of the Office of Landlord-Tenant Affairs, argues that hefty rent increases many tenants assume follow decontrol often do not materialize.
Ferrara also says that apartments currently controlled tend to be occupied by upper-income people. If control is extended, he continues, "what the council will be doing is helping those who can most afford rent increases."
Rent control's proponents counter that the housing problems that first brought the laws are by no means solved. "The crisis is worse now," says council member Rose Crenca. "There weren't all those condominums conversions before."
Senior citizens on fixed incomes and middle- and lower-income families already buffeted by rises in the consumer price index deserve protection from punishing rent increases, supporters believe.
Landlords are already benefiting substantially from appreciation in property values and from tax shelters created by owning real estate. Holding back rental income does not harm them unduly, Crenca said.
She also questions allegations that rent control stops new construction.
Moreover, in Montgomery County, new buildings are not covered by the controls at all, she pointed out. And the number of apartments under construction is continually diminishing as old tenants move out and landlords become free to raise rents as they see fit.