Submitted by: Councilmembers Solomon and Schaible
Submitting Department: Legislative
Agenda Section: Action
Item Title:
title
Rent Stabilization and Affordability Fund
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Suggested Action:
recommendation
I move that the Mayor and Council Authorize the City Attorney to prepare an ordinance on regulating the annual rate of increase in rental prices in the City of Hyattsville.
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Summary Background:
The ordinance shall meet the following rent stabilization goals:
Rental Increase Allowance
This ordinance shall:
● Authorize and require the City Administrator to set and publish a maximum allowable annual rent increase (MAARI). The MAARI shall be the maximum annual allowable percentage increase in price per unit for non-exempt rental properties within the City of Hyattsville.
● The MAARI shall be equal to the annual percentage increase in the Washington-Arlington-Alexandria, DC-VA-MD-WV Consumer Price Index for All Urban Consumers (CPI-U) , from November to November of the two most recent calendar years, rounded to the nearest whole number, and shall be effective for a twelve-month period beginning January 1.
Exemptions
The following classes of rental properties and rental agreements shall be exempt from the limit imposed through the MAARI.
● Rental properties less than 15 years old.
● Buildings with 2 or fewer units.
● Owner-occupied where the tenants share a kitchen or bathroom with the owner.
● Short-term leasing agreements. (Defined as leases for 30 days or less, published via short term leasing platform such as AirBnb) Extensions of leases beyond 120 days will make the unit subject to the Rent Allowance clauses prescribed.
● Federally regulated rental units for which rates are negotiated between the federal government and property owners.
● Accessory apartments and dwelling units.
Rental Registry:
● The City shall create and maintain a publicly accessible rental registry containing all legal rental units within the City of Hyattsville and indicate which units are subject to rent stabilization. The rental registry shall be public and posted on the City’s webpage.
● All rental properties must be on the rental registry. Unregistered properties cannot legally raise the rent and are subject to municipal citations.
● At a minimum, the rental registry must include for each unit 1) the year built, 2) the number of bedrooms, 3) the address of the property, 4) the unit number, 5) the date the current lease began, 6) the rent as of January 1 for each year, 7) the name of the multifamily property; 8) the name, mailing address, phone number, and email address of each owner and manager of a registered property; 9) if the property is rent stabilized.
● Increase occupancy permit fee by $50 per unit to assist in covering City administrative expenses associated with the rental registry and rent stabilization.
● Providing false information to the registration is illegal under this ordinance and subject to municipal citation.
● Yearly notice will be sent to the landlords of all rental properties reminding them to register their rental units and pay the rental license fee, and informing them of the allowable MAARI rate increase for rent stabilization eligible properties.
Administrative Support:
● The cost of implementing this ordinance shall be paid for with revenue generated from the rental registry fee. It is estimated that one full-time employee will be required to implement and administer this program, including maintaining the required registry of rental units, publishing and disseminating the MAARI, answering questions from landlords and tenants, hosting workshops for tenants and landlords, publishing annual reports on program outcomes, and enforcing the requirements imposed on landlords by the ordinance. Fluency in English and Spanish will be essential for this position.
Civil Recourse:
● Any landlord found guilty of a serious violation of the ordinance, shall be required to pay any tenant harmed by any such violation no less than the equivalent of three (3)months of rent, plus any attorney fees paid by the City to enforce the ordinance.
● The City may deny a rental license to, and may impose significant financial penalties on, any landlord who fails to comply with this ordinance.
● Property owners may be sanctioned under this statute if city code finds them in violation: <https://law.justia.com/codes/maryland/2021/real-property/title-8/subtitle-2/section-8-211/>
Staffing and Management:
● Authorize the creation of a staff level Housing Affordability role responsible for implementing this ordinance and other housing affordability initiatives.
● Adjudicate landlord/tenant rental disputes.
● Publish the MAARI and distribute it to all property owners.
● Provide an annual report to Hyattsville City Council on the status of the Rent Stabilization Program.
● Advise Hyattsville City Council on modifications required to the rent stabilization ordinance and additional solutions/recommendations to address affordability.
● Maintain rental unit registry.
Communications and Outreach
The dedicated staff person hired to administer the ordinance shall:
● Conduct public outreach such as development of brochures, ad campaigns, webpage, host public workshops etc.
● Develop and distribute annual rent stabilization notification in English and Spanish. Notifications must be kept posted in the lobby, mailroom, or other public gathering space of every rent stabilization eligible property.
● Develop an online calculator to compute allowable rent increases.
Right to a Fair Return:
● Fair Return Rent Increase. Landlords have a right to petition for a rent increase in order to obtain a fair return. A fair return rent increase is intended to protect tenants from unwarranted rent increases, while allowing rent levels that provide landlords with a fair return.
o Fair return is defined as base year net operating income adjusted by 70% of the percentage increase in the Consumer Price Index (CPI) from the base year until 2007, and 100% of the percentage increase in the CPI since 2007.
o Base Year. The landlord may select any of the following as the base year when petitioning for a fair return rent increase:
▪ 1979, unless the property contains four or fewer dwelling units;
▪ 1987, if the property contains four or fewer rental units;
▪ 1990;
▪ 2000.
Affordability Fund:
● The council shall establish an Affordable Housing Fund overseen by the City Treasurer and Housing Affordability Manager. It shall be funded via the following revenue sources:
○ .01 per $100 of assessed value from the city’s real property tax revenue
○ A municipal recordation tax on home sales of $100 (1%) for every $10,000 above the median home sale price for the prior year in Hyattsville.
Any surplus from rental registry fee
● The affordability fund may be used for any of the following:
○ To support the purchase, development, and renovation of properties which will be affordable for rent to households at or below 60% of area median income (no more than 30% of monthly income paid for housing) or purchase to households at or below 80% of area median income.
○ To assist with closing costs of first time homebuyers in the city of Hyattsville who have lived for at least two years in the city and whose household income is at or below 80% of the area median household income <https://www.huduser.gov/portal/datasets/il/il2022/2022MedCalc.odn>.
○ To offset the cost of repairs or renovations to rent-stabilized units to improve energy efficiency, renewable energy use, hvac/electrical system, electric vehicle charging stations, etc.
Preferential Rent Banking:
Preferential rent is rent a landlord charges that is lower than the legal regulated rent they could lawfully charge. If a landlord uses preferential rent, once the tenancy ends the landlord may increase rent for the new tenant up to the full amount permitted by the MAARI over the full duration of the previous tenancy. This option is available only when there is a change of tenants, and can only span the time between two tenancies (i.e. once a new lease agreement is reached, any past preferential rent usage will become fixed).
To preserve the city’s affordable housing stock; to provide reasonable rent stabilization measures; to define and regulate short-term and residential leases; to provide renter protections.
Next Steps:
Input for Treasurer and Economic Development
Fiscal Impact:
TBD.
City Administrator Comments:
For Discussion.
Community Engagement:
TBD.
Strategic Goals:
Goal 3 - Promote a Safe and Vibrant Community
Legal Review Required?
Pending