Tag Archives: rent control

Back Door Rent Control Bill Introduced at Last Minute

By Adam Pagnucco.

In preparation for months but dropped at the last minute, a local bill now under consideration by the Montgomery County delegation may just bring rent control to the county.  The bill has received scant notice… until now.

MC 15-18 would establish standards of just cause for the eviction of tenants in Montgomery County.  The bill defines just cause as tenant behaviors including not paying rent, breaching the terms of the lease, committing illegal acts on the premises, causing substantial damage, engaging in disorderly conduct, refusing to grant access to the landlord for repairs and inspections and refusing to provide information to satisfy affordable housing agreements.  Just cause would also exist if the landlord is removing the unit from the rental market, recovering it for use by family members or performing work that requires evacuation.  There is also this definition of just cause:

A tenant refuses, after receiving notice, to execute an extension or a renewal of an expired residential lease for a term of like duration and on terms substantially similar to the terms of the prior residential lease.

In other words, a tenant may not be evicted if a lease renewal does not have terms “substantially similar” to the prior lease.  What does that mean?  If a lease contains a rental rate that increases above the prior rate by more than the rate of inflation, is it “substantially similar” or not?  The bill does not say.  It’s possible that if the bill is passed in its current form, a tenant could challenge a new lease with an above-inflation rent hike on the grounds that it is not “substantially similar” to the prior lease.  If the courts agree, MoCo would be effectively subject to rent control.

The circumstances of the bill’s introduction are troubling.  The bill was drafted on October 17.  There was plenty of time for it to be introduced before the delegation’s local bill hearing in Rockville on December 6, which was live streamed and is available for viewing on the county’s video archive.  Instead, the bill was introduced as a late file on February 2 – more than three months after it was drafted.  The hearing in Annapolis seven days later, which was not televised or recorded, had just eight witnesses because there was not enough time to hear everyone who wanted to speak.  (That’s a sharp contrast with the Rockville hearings, which frequently stretch into the wee hours.)

The upper right corner of the bill clearly shows its drafting date as October 17.

We have no position on just cause eviction, but a huge body of research shows that rent control has been a massive policy failure.  Its usage in Takoma Park has coincided with an 18% drop in the number of rental units in the city between 2000 and 2015.  Even a Vietnamese Communist Foreign Minister admitted that rent control there was a mistake, saying, “The Americans couldn’t destroy Hanoi, but we have destroyed our city by very low rents. We realized it was stupid and that we must change policy.”

Bills like this are why we have a legislative process, as lengthy and frustrating as it might be.  It’s entirely possible that this bill’s sponsors do not intend for it to enact rent control.  One of the reasons why we have public input and press scrutiny is to identify unintended consequences in legislation so that they can be remedied and not cause problems later.  When bills are withheld for months and dropped at the last minute, that process is hindered.  Moreover, the delegation needs to consider this: is it fair to ask colleagues to cast a tough vote on something as politically volatile as rent control just months before the election?  And especially under circumstances of introduction such as these?

This bill needs to be withdrawn, reworked and reconsidered next year.  Whatever is done, let’s make sure to get it right.


Should There Be Rent Control Near the Purple Line?

By Adam Pagnucco.

Council Member Marc Elrich, who recently equated potential gentrification near the Purple Line with “ethnic cleansing,” is taking flak for his remarks and is not backing down.  We will leave it to others to judge his choice of words.  But what interests us is the policy proposal he has made: specifically, Elrich would like to see rent control imposed near Purple Line stations.  That’s worth discussing.

Economists tend to disagree on many issues but a huge majority of them oppose rent control.  Liberal New York Times columnist Paul Krugman has written, “Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand.”  A massive review of economic research on rent control found evidence that it encourages conversions of rental units into condos and leads to higher rents in non-controlled units.  Rent control repeal in Cambridge, Massachusetts led to a surge in property values in both controlled and non-controlled units and a 20% increase in housing investment.  Even Communists denounce rent control.  In 1989, Vietnamese Foreign Minister Nguyen Co Thach told a news conference that rent control did more damage to his capital city than American bombs.  “The Americans couldn’t destroy Hanoi, but we have destroyed our city by very low rents. We realized it was stupid and that we must change policy.”

One need not go to a Communist nation to observe the effects of rent control.  MoCo has a good example of that policy right here at home: the City of Takoma Park, which passed a rent control law in 1981.  We examined U.S. Census data to analyze how the city’s housing stock compares to the county’s.  Below we show that just 10% of the city’s housing was built in 1980 or later, much lower than the county’s percentage of 47%.  That’s not a fair comparison since the city is much older than the vast majority of areas in the county.  However, other older areas inside the Beltway like Downtown Bethesda (27%), Chevy Chase (20%) and Downtown Silver Spring (26%) have much higher percentages of their housing built in 1980 or later than Takoma Park.

It gets worse.  Takoma Park has been losing rental housing units for years.  Below we show the city’s total, owner-occupied and renter-occupied housing units in 2000, 2010 and the five year period of 2011-2015.  During that time, the city’s total housing units fell by 4% and its renter-occupied units fell by 18%.  Owner-occupied units increased by 10% and vacancies rose by 30%.  No housing policy that produces double-digit losses in rental units can be described as good for renters.

Takoma Park’s housing decline is not going to turn around soon.  According to the site plans, preliminary plans and sketch plans listed on the MoCo Planning Department’s development tracking map, only two housing projects with a combined seven units are pending in Takoma Park.  Those units are all single family, which are exempt from the city’s rent control law.

This extract from the Planning Department’s site plan map shows the huge contrast in development plans between Takoma Park and Downtown Silver Spring.

The implication of all this is clear: housing developers are steering clear of Takoma Park’s rent control law.  These folks are not going to be any more enthusiastic about rent control near Purple Line stations.  Why does that matter?  When it comes to building new housing, there are basically three options.  First, you can build it near transit.  Second, you can build it away from transit, thereby incurring the associated congestion and environmental costs.  Or third, you can try to block it from being built, and that’s one probable effect of rent control.  But that won’t stop population growth – instead, it will result in overcrowded housing, unsafe living conditions and code violations.  (Such phenomena are not unknown in some areas of the county.)  Rent control near the Purple Line just encourages options two and three.

Finally, the Purple Line is a huge investment, costing at least $2.65 billion to construct.  Only an insane society would pour billions of dollars into a transit project and then stop new housing from being built next to it.  Even Vietnamese Communists would agree.

Disclosure: Your author is a long-time supporter of the Purple Line and is a publicly listed supporter of Council Member Roger Berliner for Executive.


Elrich: Without Rent Control, Purple Line Will Cause “Ethnic Cleansing”

By Adam Pagnucco.

In response to a question about just cause eviction and rent control at the Progressive Neighbors County Executive forum, Council Member Marc Elrich stated that the Purple Line would cause “ethnic cleansing” without a rent control law.  Elrich said:

I support rent stabilization and I think we need to be honest with ourselves about this.  If we throw up our hands about this and say the market will determine the price of housing and the market alone will determine that, then we are going to wipe out neighborhood after neighborhood in Montgomery County.  If you did that, then if you did not put rent stabilization around the Purple Line stops, for example, then the neighborhoods around the Purple Line will not continue to exist.  They will be bought, they will be repurposed and they will go to other people.

When we did the Long Branch plan, and Park and Planning came in and said we want to rezone all the existing housing in Long Branch, I accused the Planning Board of ethnic cleansing.  And I said some people do it with the gun, you guys are doing it with the pen but the truth is those folks would be gone and they would be gone forever…

Elrich’s remarks begin at the 2:29 mark of this video taken by Ryan Miner.

Disclosure: Your author is a long-time supporter of the Purple Line and is a publicly listed supporter of Council Member Roger Berliner for Executive.