The Howard County Council is set to approve new protections this week for lower-income and elderly tenants whose apartment buildings are converted into condominiums. The main impact of the protections would be felt in Columbia, Md., where many of the rural county's apartments are located.
Maryland law already provides that condominium converters must give lower-income elderly and handicapped persons an option to continue renting for three years, a rule that covers up to 20 percent of the units at the conversion. But it also authorizes local jurisdictions to extend those protections.
A bill drafted for consideration by the Howard County Council next Tuesday would provide for:
* Life tenancies to lower-income elderly or handicapped persons at converted projects.
* Three-year leases for other lower-income families with no elderly or handicapped persons.
* Three-year leases for elderly and handicapped persons who do not have low incomes.
Tenants over the age of 62 are considered "elderly." To come within the lower-income categories, family income must be no more that 80 percent of a yet-to-be-established median for the county, or probably in the low-$20,000s.
The life-tenancy provision is controversial, and there probably will be an attempt to amend that part of the draft bill Tuesday. Some form of the bill appears to be virtually assured of passage, however, since three of the five council members are sponsoring it.
Not all persons in the categories designated for protections would get the extended leases, because no more than 20 percent of the project would have to be set aside for them. The bill provides that when more than a fifth of the tenants at a project are eligible, the lower-income elderly and handicapped would get priority, then other lower-income families, then higher-income elderly and handicapped.
Montgomery County last year established life tenancies for lower-income elderly and the handicapped at conversions and provided for three-year leases for non-elderly, lower-income families (those with incomes of up to $29,130).
The Howard legislation would allow only one rent increase a year for the affected tenants on extended leases, and it would be limited to cost-of-living index changes or increases allowed by the area office of the Department of Housing and Urban Development.
To extend the lease provisions in the state law, local jurisdictions first must declare a housing emergency, and the Howard County Council did that about two months ago.
Ruth Keeton, one of the council members sponsoring the lease-extension legislation, said the emergency declaration was justified because of the large number of condo conversions taking place in the county at a time when the rental vacancy rate is lower than 1 percent.
State statistics indicate that more than 900 units of rental housing in the county are to be converted to condominiums under previous state law withfewer tenant protections, Keeton said. Those conversions equal about 10 percent of the county's total rental stock, including nearly 20 percent of those in Columbia, according to a county survey. In addition, there already were about 1,269 units converted in the county in the previous decade.
At the same time,fewer rental units will be built in the county because of the reductions in federal funding for that type of construction.
"The grim reality is that over the last several years, 95 percent of all the multifamily housing in the state -- and all of it in Howard County -- have used HUD assistance of some kind," Keeton said.
Three new rental projects are about to get started, one using some of the last of HUD's low-interest "tandem" financing through the Government National Mortgage Association (Ginnie Mae) and all three of them using financing from county-issued industrial revenue bonds.
Even with these three projects, there will still be a 400-unit rental housing shortage in Columbia alone, Keeton said. Howard County's population increased by 91 percent in the past decade, she noted, putting more strain on housing.
"The pressures are just going to get worse and worse in terms of where people will live," she said, calling the lease-extension bill coming before the council a "small step" to easing the rental housing shortage.
But Keeton also said she probably would not support the life-tenancy provisions in the measure, because she believes it could discourage the building of new rental housing in the county.
Gerald Ryan, president of General American Real Estate Development Corp., a major Howard County developer, said he believes a life tenancy provision would be unconstitutional and said that if it is enacted, it will be tested in the courts.
"It's just a taking of a property right without compensation," he said. Ryan objected to the rest of the proposed bill as unnecessary. State law already protects the low-income elderly and handicapped, and developers have accommodated other needy tenants on their own, he said.
In the end, the cost of the benefits to the tenants will have to be borne by other consumers, he said. Ryan said his firm hascompleted six condo projects already and is converting two more in Columbia now. In addition, the firm has about 2,000 rental apartments in Columbia, including low-income and market-rate rentals, he said.
One project where the tenants would not get the benefit of the new county law is the Timberneck-Treover complex in Columbia. Developers who were able to sell 10 percent of there converted units by May 15 were "grandfathered" in by state law, so they do not have to adhere to the new lease protections for tenants.
The Timberneck-Treover tenants took the case to court, arguing that the developers did not actually have enough "bona fide arm's-length" sales to qualify for the exemption, but their case was dismissed by Circuit Court Judge Robert Fischer. The tenants now have asked for a reconsideration of the case, but many of them already have had to move out.
David Minnis, who was one of the leaders of the Timberneck-Treover tenants group, said that while the bill is not going to help tenants there, he and others at the project have involved themselves in the writing of the lease-extension measure anyway, and have used their experience as an example of what can happen to tenants during a conversion.
In the meantime, the first phase of Timberneck-Treover is about 60 to 70 percent empty now, he said. "It's like a ghost town around here," he said.