County officials cap residential rent increases at 2.6% during pandemic

County officials cap residential rent increases at 2.6% during pandemic

Council members approve renter relief law, but disagree on details

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On Thursday, Montgomery County Council members approved a renter relief bill but did not agree on the details of it.

File photo

Residential landlords in Montgomery County can’t increase rent more than 2.6% during the coronavirus pandemic and 180 days after the state of emergency ends, according to a measure the County Council approved Thursday.

The COVID-19 Renter Relief Act will only apply to residential lease renewals. New leases do not fall under the law.

The rent guideline is set annually by the county executive on March 1 and is based on the Consumer Price Index for All Urban Consumers for the Washington-Arlington-Alexandria Core Based Statistical Area.

Rent increase notices that have been sent and would go into effect during that time period must be brought down to 2.6% or canceled. Landlords still can charge late fees.

Notices of increases must not be sent until 90 days after the emergency ends, meaning, with 90 days’ notice, rent increases would not happen until 180 days after the emergency end point.

Council Member Will Jawando, the lead sponsor of the legislation, brought it forward because of recent reports he heard by residents who have said landlords tried to increase their rent up to 60%.

About 33% of residents in the county are renters.

Local chambers of commerce challenged Jawando’s comments on a local internet talk show, saying they polled their landlord members and none reported having imposed any rent increases during the pandemic.

The letter accused Jawando of “offensive” comments on the show in describing rent gouging as “rampant and widespread.” But Jawando did not describe rent gouging in that way. He said he heard “multiple reports” of rent is going up 20, 30 or 40%.

He has previously used the 60% figure during a council meeting.

Jawando previously introduced the bill to include no rent increases during the pandemic and 120 days after the emergency ended. But several council members disagreed and said a “rent freeze” would have negative consequences. The council debated details of the legislation for more than two hours on Thursday.

“Our renters disproportionately are low income and vulnerable and rent-burdened already,” Jawando said during the meeting.

Council Member Craig Rice said people who are not low income could be having difficulty paying rent, as well.

“Let’s not assume a person’s situation. Let’s not assume what their financial situation is and what their ability is [to pay rent],” he said. “Let’s give this to everybody and give everyone some stability so that we can move forward. We’ll need to come back to this, as well, to ensure our owners, our landlords, also are given that stability they need, as well.”

Six amendments to the bill were introduced during the Thursday meeting.

Council Members Andrew Friedson and Evan Glass proposed capping rent increases to the county’s Department of Housing and Community Affairs, or DHCA, rent guideline of 2.6% during the pandemic and prohibiting increase notices within 30 days after the emergency ended.

Council Vice President Tom Hucker proposed the same restriction, but with an extended time period of 180 days after the emergency ends.

“I do think the bill could be better targeted to achieve the goals of helping tenants without the unintended consequences,” Hucker said, adding that the solution didn’t have to be zero increases across the board.

Hucker said there also was no ability to determine how much the original bill, without amendments, would cost because the county didn’t know how long a recession would continue.

“The longer the recession continues, the more money this bill will cost without amending,” he said. “Making policy when we’re blind to the cost of what we’re doing is not a recipe for good policy, especially when we’re taking action without a fiscal analysis.”

Jawando said the county wouldn’t know how much the cost would be to renters.

“We don’t know what [a rent increase] is going to cost them. … You don’t know what you’re capping, so you can’t calculate that number either,” he said.

The vote on the amendment proposed by Friedson and Glass to cap rent increases at 2.6% during the pandemic and prohibit increase notices until 30 days after the emergency ended failed 7-2. No one else joined Friedson and Glass in supporting it.

Hucker’s amendment — which also proposed capping rent increases at 2.6% but extended the time period of restricted increases to the pandemic and 180 days after it ended — passed 6-3, with Jawando, Navarro and Rice voting against it.

Friedson also proposed allowing the DHCA to permit rent increases of up to 5% on a case-by-case basis. If the DHCA determined that an increase would be justified by financial hardship or increased costs to a landlord, the increase would be allowed.

Under certain circumstances, Friedson’s proposed amendment also would allow landlords to issue one-time fees to recoup increased operational costs if they capped rent increases at 2.6%.

But DHCA staff members who attended the virtual council meeting said implementing a system to evaluate financial hardship would be tough.

“It would be very difficult for DHCA to evaluate or justify any increases based on undefined standards of financial hardship,” Aseem Nigam, the director of DHCA, said. “We do not have any criteria to gauge against this hardship. We do not have the resources to take on this caseload.”

Nigam said any type of rent increase would go against the intent of the bill — DHCA supported no rent increases.

“The last thing we want is to have the tenants worried about any type of rent increase,” he said. “A lot of people have fear and anxiety in their minds.”

Rosie McCray-Moody, manager of landlord-tenant mediation for DHCA, said the office is supposed to be a neutral body for both landlords and tenants.

It’s “unconscionable” to have the staff decide who gets rent increases, she said.

“I think to call it unconscionable is a pretty inflammatory and hyperbolic rhetoric. … The purpose of this is to reflect the fact that there are actual costs that are part of this,” Friedson said, adding that the amendment would provide flexibility.

“Setting up emergency regulations to reflect that [financial hardship], to me, would not be extraordinarily difficult determining what that would entail,” Friedson said.

The amendment to allow up to a 5% increase and possible one-time fees for certain cases failed, with only Council Members Hans Riemer and Friedson voting to approve it.

Jawando proposed an amendment to prohibit late fees for nonpayment or late payments of rent during the emergency and 30 days after it ended.

Riemer, who disclosed that he is a landlord of two apartment units, said the amendment could have broad ramifications for landlords.

“My worry about this one is we don’t want landlords to charge late fees, but if we were to legislate this, then we are basically telling every renter in the county that there are no longer any consequences at all for late payment,” he said. “Who knows what that could mean?”

Jawando said late fees could pile up with renters who can’t pay their rent because they lost their job.

The amendment to prohibit late fees failed 6-3, with Jawando, Navarro and Katz voting in support of it.

Riemer’s proposed amendment to require landlords to amend their rent increase notices to bring any increase down to 2.6% or cancel the notice passed 8-1, with Jawando dissenting.

The bill passed unanimously, along with other amendments to change its name to the COVID-19 Renter Relief Act and apply the law to only lease renewals.

In a Friday release, William Roberts, chair of the Montgomery County Renters Alliance’s Board of Directors, said he was disappointed that the bill didn’t pass with zero rent increases.

“While I would have strongly preferred to halt all rent increases and late fees, I am pleased that the most offensive increases will not move forward and that many of our residents will benefit,” he wrote.

The county executive has 10 days to approve it. If he vetoes the bill, the council has 60 days to approve it over the executive’s veto by at least a vote of 6.

Briana Adhikusuma can be reached at briana.adhikusuma@bethesdamagazine.com.

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For other Bethesda Beat coverage of the coronavirus, click here.

To see a timeline of major coronavirus developments in Maryland and Montgomery County, click here.

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