The District of Columbia's three-year experiment with rent control has produced more than its share of horror stories, inequities and ironies, but there is little doubt that the D.C. City Council will pass another control law before the present statute expires Nov. 1.
Led by Nadine Winter, chairwoman of the council's housing committee, the city's legislative body is not expected to end controls on vacant apartments or luxury units - the two kinds of rental accomodations that could be decontrolled without social or economic dislocation. Total decontrol of all rental buildings in the city appears to be out of the question.
Both Winter and council member Arrington Dixon have introduced rent control bills and there will undoubtedly be some compromises along the way as the housing committee drafts final legislation for council consideration.
The Apartment and Office Building Association of Metropolitan Washington (AOBA) is supporting the Dixon bills, which allows 2 to 10 per cent rent increases during the first year after the bill goes into effect, ties future increases to the consumer price index, ends registration requirements for landlords and sets up a Fair Rents Commission to handle complaints arising from the proposed law.
The Dixon bill also creates a rent subsidy program for eligible low and moderate income tenants, allowing landlords to reduce their rents by up to 10 per cent and then deduct the subsidy from their property taxes.
The Dixon bill continues exemptions for newly constructed units and allows decontrol of substantially rehabilitated apartments. Under the bill, landlords, must, however, provide relocation assistance and give tenants 90 days notice before eviction.
Despite a powerful and well-financed lobbying operation, the most city landlords can realistically hope for this year - barring a major and unexpected turnaround by the council - is a continued exemption of newly constructed units and automatic rent increases next year on existing apartments ranging from 2 to 9 or 10 per cent.
The council will probably order another study on decontrol on vacant and luxury units but no action should be expected before next year at the earliest. Winter said this week that it is still premature for the council to begin decontrol without further study.
"I do feel an obligation to my consituents," she said. She added that decontrol of vacant units would probably decrease the number of "low rent" apartments in the city, adversely affecting those who vote for her. As for luxury units, "We have no way of identifying high rent buildings," Winter said.
The Winter bill also provides for acres the board increases next year of 2 to 9 per cent (depending on the amount of services provided and whether or not utilities are furnished by the landlord). Future increases would be limited to 1 to 4.5 per cent.
Winter describes her bill as an improvement over the current law. But Ray Howar, a landlord member of the rent control commission, terms it an "administrative nightmare" worse than the present statute. Her bill continues the hardship petition for owners whose buildings do not return 8 per cent on assessed value before debt service.
Under her proposal, however, an owner whose building does not return 8 per cent "may" be granted an increase by the rent control commission. Under the current law, the commission does not have a choice.
Both Winter and Dixon have come under fire by the citywide Housing Coalition and the D.C. Tenants Congress because both tenants' groups oppose across-the-board rent increases and demand even closer scrutiny by the city of landlords' profits and their operating statements.
Velva Spriggs, spokeswoman for the Tenants Congress, said this week that her group has not yet come up with an alternate proposal to the Winter and Dixon bills. But, she added, the congress has developed some basic principles that it thinks should be included in any new legislation.
Spriggs said the congress favors an end to depreciation deductions, penalties for landlords who decrease services or allow their buildings to deteriorate, strong enforcement of the D.C. housing code and provision by the city of legal counsel for tenants involved in disputes with landlords.
"We do recognize that rents will go up like anything else," Spriggs said. But she said a new formula should be developed that is more equitable than the present formula to both tenants and landlords.
While it is undoubtedly true that some landlords have been badly squeezed, it is difficult to assess the overall impact of rent control on the industry over the past several years. For example:
The building owners association and individual landlords predicted two years ago that rent control would lead to wholesale abandonment of apartment buildings in the city. It hasn't happened.
Supporters of the current law said landlords were crying wolf, that most of them were earning so much money that the number of hardship petitions (to get pre-debt service returns up to 8 per cent) would be relatively few. Not so. The rent control commisssion now has 340 petitions in process, more than 200 of them filed in the past three months. The backlog keeps growing.
The building owner's group said no new apartments would be constructed in the city as long as there was rent control. Several new buildings are under construction or ready to go.
Winter said she thought exemption of newly constructed buildings from rent control would give developers the incentives they need. Clearly, there has been no boom in rental construction. Land costs, high interest rates and construction costs have as much to do with that as the current "negative climate" developers believe exists toward them in the District.
Meanwhile, condominium conversions continue at a fast clip, removing more and more buildings from the rental market. Tax assessments of rental buildings in the city continue to go down, not up. This would seem to indicate that rental buildings are less than desirable investments - except that some rather sophisticated investors have recently bought apartment buildings in the city with the intention of keeping them as rental properties.
Despite these contradictions, cities such as New York and Boston have found to their dismay that rent control does have a negative impact over the long term. Eventually, if owners are not able to recapture their increased costs and if their return on investment is insufficient, buildings will be left to deteriorate badly and new construction will stop altogether.
The answer, according to landlords and independent economic consulting firms that have looked at the situation here and elsewhere, is a rent subsidy program that helps the poor and lower middle class without controls that destroy the industry. On the federal level, the Department of Housing and Urban Development has its Section 8 rent subsidy program and, on the local level, Dixon is advocating an assistance plan.
Winter says she supports the rent subsidy concept, but cannot agree to decontrol before 1980, when her bill would possibly allow decontrol of luxury units.
Chairman Sterling Tucker and some other members of the council have indicated that some form of decontrol might come before then. But it now appears that a more likely outcome of the current debate over the future of rent control in the District is that landlords will receive increases less than they say they need - and tenants will have to pay more than theirrepresentatives say they can afford.