For the past five years, Bertin Pavon has lived at 2724 11th St. NW, a 26-unit red brick apartment building a couple of blocks west of Howard University in Columbia Heights.
Pavon and his neighbors are used to the building’s leaky roofs and the constant presence of rats and other vermin. But they were blindsided when, in 2014, the landlord informed them that rent might go up more than 30 percent.
Pavon’s landlord had filed a hardship petition, a provision of the District’s rent-control law that allows owners to increase rent by more than the standard limit if they are not making a 12 percent return on their investment in the property. These rent increases are often necessary to fund improvements in aging buildings, real estate owners say.
Until late 2014, a landlord who filed a hardship petition could conditionally raise rent by the full amount requested in the petition — more than 30 percent in Pavon’s case — if the rent administrator did not issue a decision within 90 days.
The D.C. Council passed emergency legislation in 2014 capping the conditional increase at 5 percent, and the measure has been kept alive since through temporary acts.
Now, some lawmakers want to make the cap permanent, saying it is necessary to hold down spiking housing costs in one of the most expensive real estate markets in the country.
Council member Anita Bonds (D-At Large), the chair of the council’s housing and community development committee and a sponsor of the bill, says that rent increases place a significant burden on low-income tenants, increasing their chances of displacement and homelessness.
Council members Mary M. Cheh (D-Ward 3), Brianne K. Nadeau (D-Ward 1) and Elissa Silverman (I-At Large) are co-sponsoring the bill, which is to go before the Committee of the Whole on Nov. 1. Bonds is hopeful that it will pass by the end of the year, said her chief of staff, David Meadows.
The bill is part of a slew of interconnected affordable-housing measures introduced by Bonds, including one that would affect the standard method of raising rent in rent-controlled buildings.
Housing providers with rent-controlled units can increase rents through an annual adjustment that is determined by the consumer price index. Each year, the District’s Rental Housing Commission publishes a rent-control CPI, which was set at 0 percent this year. In most cases, landlords can increase rent by no more than this rate plus 2 percentage points. If the tenant is elderly or disabled, rent can be increased only by the rent-control CPI.
Bonds introduced a bill in September that would eliminate the 2 percentage point increase. The same measure would also prevent landlords from raising rent when units become vacant. Building owners currently can raise rent by at least 10 percent and as much as 30 percent when renters leave. Advocates say that the District’s affordable-housing supply is eroding because landlords push out tenants to raise rents.
Two groups that represent real estate owners — the Building Industry Association and the Apartment and Office Building Association — are pushing back against the legislation proposed by Bonds. They sent a joint letter of protest to Bonds and Council Chairman Phil Mendelson (D).
“We simply cannot achieve our shared goal of preserving housing without a cooperative, collaborative and balanced approach,” the letter said. “That means the owners of older apartment buildings must have an economically viable path for maintaining these properties for current and future generations of tenants.”
Tenant advocates see the bills as a step toward establishing a better balance between affordability for tenants and profitability for landlords.
“Nobody wants to put [landlords] out of business, because then tenants wouldn’t have roofs over their heads,” said Joel Cohn, legislative director of D.C.’s Office of the Tenant Advocate. “But rent control has to mean something at the same time.”
Kirsten Williams, vice president of government affairs for the Apartment and Office Building Association, agreed that a balanced approach is necessary. But she said that she is worried that Bonds’s hardship petition bill may tip the scales in favor of tenants in certain cases.
“We understand the intent and the protection that it is seeking to provide to tenants,” she said. “But where’s the balance for those housing providers who are in financial distress and in need of the ability to implement the rent increase?”
She said the 5 percent cap on conditional increases is arbitrary and is not based on any analysis. She also said that the District is already one of the most tenant-protective jurisdictions in the country.
Bonds’s staffers said the 5 percent cap was part of emergency legislation proposed by Muriel E. Bowser (D), at the time a council member, in 2014. Bonds has not heard complaints about the level in the two years it has been in place through temporary legislation, Meadows said.
Rob Wohl, a tenant organizer with the Latino Economic Development Center, said housing providers sometimes file hardship petitions to pressure tenants into vacating the building so they can convert the vacated units into luxury housing.
“The hardship petition exists theoretically to prevent the rent control from forcing landlords out of business,” Wohl said. “But the actual petitions that get filed are filed by landlords who are making money that are often failing to do basic work in their building.”
Williams said this is an unfair characterization.
“A lot of instances we’re talking about homes that are decades old,” she said. “Those properties require extensive reinvestment. So we’re talking boiler replacements, roofs, not just the aesthetics.”
According to data analysis by the District’s Legal Aid Society, 53 percent of the 95 hardship petitions filed between fiscal 2007 and 2015 came from properties with positive net income; 36 percent reported profit margins above 15 percent. But the number of hardship petitions has recently plummeted; just two were filed last year compared with a high of 31 petitions in fiscal 2009.
According to Wohl, the hardship petition has since been withdrawn at 2724 11th St. NW, although the tenants’ rental rates are still uncertain because the landlord is seeking a substantial rehabilitation petition — a type of rent increase landlords may seek to fund major work on a rental unit.
The tenants have filed a petition of their own, claiming that they should be reimbursed for rent increases that they say were illegal due to the poor conditions of the building.
Wohl said that he does not want to eliminate conditions that prevent landlords from going out of business.
“We see how these mechanisms that we have right now are being implemented,” he said. “And they’re being abused by these bottom feeders who make a business out of destroying affordable housing and displacing tenants in gentrifying neighborhoods.”