The tenants at Hampshire Tower Apartments in Takoma Park were pleased when the new owners began making repairs to the 11-story building, once in such bad shape that residents were barred from the balconies because of loose railings and crumbling concrete.
Then the bill came due: rent increases of up to 70 percent to be phased in over several months. That is far beyond what many tenants say they can pay.
“Where is that kind of money going to come from? Whoever is responsible has a cold heart,” said Loretta Rice, an accountant who has lived there for 23 years. She said she will see her monthly rent jump to $1,600 from $1,098 if she stays.
The outcry from Rice and other tenants — many of them immigrants from West Africa and Central America — reflects a growing concern over affordable housing for low- and moderate-income residents of this affluent region.
Montgomery County, where the Hampshire Tower building is located, will need 33,000 to 50,000 more housing units over the next decade for families making $100,000 or less, according to data from the Center for Regional Analysis at George Mason University. About half of those units should be affordable to households earning less than $50,000 a year.
Unlike the District, the county does not have strong rent-control laws — a reflection, critics say, of the political clout enjoyed by landlords and real estate developers. And although the city of Takoma Park has a rent-stabilization statute, the owners of the Hampshire Tower complex won an exemption after agreeing to renovate the property.
But with housing prices on the rise, and a growing gap between the county’s poor and its very wealthy, the County Council this fall will consider legislation that imposes new rent restrictions — especially at certain affordable properties, such as Hampshire Tower, that are located near mass transit.
What is happening at Hampshire Tower “is going to happen in spades when the Purple Line comes in,” said bill sponsor Marc Elrich (D-At Large), referring to the light-rail line that will connect New Carrollton and Bethesda and have a stop less than a 10-minute walk from the apartment building.
Without some sort of control on the cost of housing, Elrich said, low- and middle-income renters are at risk of being priced out.
The history of what is now Hampshire Tower Apartments is tangled, involving multiple owners and government agencies.
Tenacity Group, a D.C. real estate company that specializes in converting rental properties to condos, purchased the 1960s-era property, a two-building complex, from investors for $15.3 million in 2006. Takoma Park and the county agreed to exempt the site from the city’s rent stabilization law, in exchange for a pledge from Tenacity to make improvements to the property.
The firm converted one tower into more than 200 condominiums, moving some tenants into the other building. But the condition of the rental building continued to deteriorate, said Clarence Snuggs, Montgomery’s director of housing and community affairs. In 2011, Tenacity was accused of defaulting on the agreement. (Tenant advocates in the District have made similar complaints about Tenacity-owned buildings there.)
Mike Postal, the company’s managing partner, said Tenacity put about $3 million into the rental tower and made all the promised improvements. When Tenacity sold the property to the Laurel-based Orlo Fund in March for $20 million, the county and Takoma Park agreed to extend the rent-control exemption to the new owner.
Elrich calls the county’s arrangements with Tenacity and Orlo a “sham deal” that allowed the conversion of more than 200 affordable housing units to market-rate condos without protecting tenants. Snuggs defended the agreement as an attempt to improve the property while “preserving some level of affordability going forward.”
Under a deal negotiated with the county and the tenants association, Orlo agreed to set rents based on what would be affordable to households making 60 percent of the area’s median income, which is $109,200. Critics say that formula ignores other housing guidelines, which stipulate that no household should pay more than 30 percent of its income in rent. In five years, Orlo will be permitted to raise rents to what would be affordable to a household earning 80 percent of the area median.
Jeff Shinensky, Orlo’s director of acquisitions, said the company has voluntarily agreed to stagger the hikes into next year. “This wasn’t done in secret,” Shinensky said. “This was all hands on deck.”
But many residents say the tenants association leadership that signed the deal with Orlo didn’t reflect their views — and some say the company has repaired only the exterior of the building, not the apartments. The former tenants association president was replaced last week by acting president Margaret Buraimoh, who accuses Orlo of “unchecked rent increases” that are part of a plan for “gentrification and displacement of tenants.”
Shinensky said the gentrification fears are unfounded. But a description of Hampshire Tower Apartments on Orlo’s Web site calls Takoma Park “a highly desirable area that is on the verge of dynamic growth and development” and says “the building is primed to generate significant rent growth over the next few years.”
Tenants recently rallied outside the building to protest the rent increases, holding signs that showed how much more each of them would have to pay.
The urgent need for inexpensive housing in Montgomery was on display late last month. In the first 24 hours after a new wait-list offered by the Housing Opportunities Commission — the county’s public housing authority — went live, more than 7,000 people completed online applications.
While the county recommends an annual cap on rent increases — it was 2.3 percent in 2015 — the limit is voluntary and often ignored by landlords. County figures show that rents have risen about 5 percent, on average, in recent years. Tenant advocates say government policies cater to homeowners, pushing renters — whose numbers are growing — to the margins. “We still have a problem in Montgomery, where the culture of the government is that it is still a house-and-garden community,” said Matthew Losak, executive director of the Montgomery County Renters Alliance.
With 60 days’ notice, landlords can decline to renew a lease without explanation, a power that advocates say is sometimes used to intimidate renters into silence about poor conditions. Some tenants pay surcharges as high as 60 percent if they elect to remain in an apartment on a month-to-month lease.
The legislation proposed by Elrich would eliminate those fees, require landlords to justify any rent increases that exceed the recommended guidelines and cap the rent at certain properties near mass transit. The bill, co-sponsored by council members Nancy Navarro (D-Mid-County) and Tom Hucker (D-Eastern County), is to be taken up by the council this fall.
In the meantime, the county, Orlo and tenant leaders are discussing how the rent increases at Hampshire Tower Apartments might be further staggered to ease some of the sting.
“This is home to me. My kids were born and raised in this building,” said Leeroi Boker, an immigrant from Liberia, who said one elderly tenant left after her rent was raised to $1,704. “They’re putting us out.”