The Federal Trade Commission issued a staff report yesterday suggesting that continuation of rent control in the District would harm the city's economy, and would not enhance the chances of the poor and elderly to obtain decent and affordable rental housing.
The city's rent control law expires April 30, and two bills to extend controls are pending before the City Council. The FTC report supports the measure that would lift controls on units as they became vacant and expresses opposition to one that would extend provisions of the current law.
Tenant groups have argued that without rent control, tenants would face rent increases that would force some to leave the city. Landlords, on the other hand, contend that rent control has led to a deterioration of the city's housing stock.
The FTC report was compiled in response to a request by D.C. City Council member John Ray (D-At Large), who introduced the bill to lift controls on units as they become vacant.
The FTC report supports the Ray bill and voices opposition to City Council Chairman David A. Clarke's bill to extend current control protections by retaining provisions in the current law.
FTC spokesman Neal J. Friedman said the commission's staff responded to Ray's request in line with its "intervention" program. "We make comments fairly regularly to state and local governments on issues in which we have some expertise," he said.
"I think the whole idea that rent control is price fixing is a real issue," Ray said. "I think that sooner or later some court or the FTC is going to have to address that issue."
Issuance of the 13-page FTC report, prepared by the FTC's competition, consumer protection and economics bureaus, was authorized by the FTC, but it was noted that the report did "not necessarily represent the views of the commission or any individual commissioner."
The report says rent control made investors favor rental housing in the suburbs and "skewed" investments in the city into the home-owner market and commercial buildings. In addition, the report says rent control can lead to a deterioration of housing stock and "is largely a subsidy for middle-class and well-to-do renters."
"Clearly, some poor would be harmed by immediately removing rent control," the report states. "However, it is much more efficient and cheaper in the long run to directly subsidize those who are hurt by removal than to continue a policy" that has "diminished and deteriorated rental housing stock."
Clarke and Council member John Wilson (D-Ward 2), both strong advocates of continued rent control, have recommended that the council add $10 to $15 million in the proposed fiscal 1986 budget to establish a tenant subsidy program.