Submitted by: Holly Simmons
Submitting Department: Community & Economic Development
Agenda Section: Presentation
Item Title:
title
Rent Stabilization Policy Analysis - Enterprise Community Partners Presentation
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Suggested Action:
recommendation
For Presentation and Discussion
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Summary Background:
In 2021, the City of Hyattsville adopted its first Housing Action Agenda, a 10-year plan to address the city’s most pressing housing needs. The plan included a commitment to create four new tools - a dedicated local funding source for housing, development of public land, expansion of tenant rights, and creation of rent regulations. In 2022, leadership began exploring what a rent stabilization policy could look and in April of 2023, via HCC-324-FY23, City Council authorized the City Attorney to prepare a rent stabilization ordinance in line with their recommended policy framework. Soon after, the City engaged Enterprise Community Partners to conduct a study on the proposal and provide recommendations to strengthen the policy.
Across the DC metropolitan region and beyond, jurisdictions are adopting locally tailored policies as part of their housing affordability, stability, and equity toolboxes. Several counties, including Prince George’s County, have adopted temporary anti-gauging policies while contemplating more nuanced long-term solutions. It is in this context that the Enterprise team produced this report.
As the name of the policy implies, rent stabilization policies are designed to support a more stable housing market. They are not intended to solve a jurisdiction’s housing affordability challenges; rather, they are developed to regulate rental increases over time and to prevent significant increases for tenants. Rent stabilization policies, while locally tailored, include five core components:
• Included and exempted rental units - the units that are and are not covered under a rent stabilization policy
• Allowable rent increases - the relative or absolute amount landlords can increase rent
• Exceptions - scenarios in which landlords are able to request permission to charge more rent than what is typically allowed
• Decontrol - routes through which otherwise non-exempted units become fully or partially deregulated
• Related tenant protections - laws that protect tenants from harassment and ensure that tenants have a safe, clean place to live
The City Council’s proposal outlined in HCC-324-FY23 includes four of these five components, as well as stipulations for staffing and compliance. In analyzing this proposal, the Enterprise team examined the city’s rental housing stock, analyzed recent rent trends, conducted interviews and focus groups with relevant stakeholders, studied other policies in the region, and researched how comparably sized jurisdictions approach administration and enforcement. Ultimately, the Enterprise team recommends that the City of Hyattsville consider a few modifications to the initial proposal, which are outlined in the Hyattsville Rent Stabilization Study report produced by Enterprise.
To effectively administer a proactive compliance approach where the City would actively track tenants’ rent (as opposed to relying on tenant complaints alone), coordination across City functions (i.e., Permits & Licensing, City Planning, Code Enforcement, Information Technology, Public Information/Communications), will be essential. The City should also develop administrative and technological systems; while costly, they will optimize staff time and resources, increase effectiveness of the policy, and allow the City to have a clear understanding of the impact of the policy over time.
In centering the policy goal of promoting housing stability for renters, the Enterprise team recommends that the City of Hyattsville consider its regional policy context, local housing stock, market and affordability trends, and administrative capacity before making a decision on legislating and enacting a rent stabilization policy.
Next Steps:
This item is anticipated to be scheduled for Action on October 2, 2023.
Fiscal Impact:
Anticipate significant start-up and legacy impact, including expenses related to drafting ordinance, new staff person to administer a program, and software/database management needs; as well as draws on existing resources to communicate/message the program to a variety of stakeholders (Communications), enforce the program in the field (Code Enforcement), and adjust/expand data collection (Business Licensing & Permitting).
City Administrator Comments:
As the Enterprise team recommends, it is important to consider the regional policy context. As Council is aware, the County is seriously exploring rent stabilization. They have convened a workgroup chaired by Councilmember Oriadha and the Director of the County’s Department of Housing & Community Development and comprised of leaders working in this space (advocates, housing experts, developers, etc.). The first workgroup meeting was held on August 14. The video of Prince George’s County’s August 14 Rent Stabilization Workgroup meeting can be viewed here: <https://www.youtube.com/watch?v=jdNlkaxjX20&t=2s> to get a sense of the work they are undertaking. The video includes a commitment from Councilmember Oriadha to have a rent stabilization bill presented to the County Council from her office. Recommend the Council consider allowing the County to lead this effort and draft our ordinance to support the County work on this important topic. This will avoid unnecessary costs to the City. The start-up costs and expenses related to drafting ordinance, new staff and software/database management needs; as well as draws on existing resources to communicate/message the program to a variety of stakeholders (Communications), enforce the program in the field (Code Enforcement), and adjust/expand data collection (Business Licensing & Permitting). Many of these costs could be handled by the County and reduce the financial impact to the City.
Community Engagement:
The Enterprise team conducted stakeholder interviews and focus groups with stakeholders including but not limited to multifamily property owners of varying sizes, Hyattsville city officials, Takoma Park city program administrators, housing advocates, housing developers (market-rate and affordable), and renters within the City. The primary purpose of stakeholder engagement was to understand the effects - intended and unintended - of rent stabilization policy models on the operation of multifamily rental properties and rental market broadly.
Strategic Goals:
Goal 4 - Foster Excellence in all City Operations
Legal Review Required?
N/A