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An urgent debate over how best to protect low-income renters in Montgomery County, where the median household income is $117,345 but 8.5 percent of residents live in poverty, has pitted the interests of tenant advocates against developers and landlords — and has split the County Council.
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The heated dispute over a rent stabilization measure has fractured alliances and forged new coalitions on the council, as powerful real estate interests and vocal tenant advocates have jockeyed to sway the body. If six or more council members vote for a bill to cap rent increases on Tuesday, Montgomery County landlords will only be able to hike rent by up to 6 percent each year — and even less in years with low inflation.
Several council members have said they felt compelled to act after receiving more than 100 complaints of striking instances when landlords raised rents by double-digit percentages, straining tenants’ budgets and forcing some to find new places to live. The proposed legislation could apply to as many as 400,000 Montgomery residents — 40 percent of the county’s population — who rely on rental housing.
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“Certain bad actors were charging egregious increases that were incredibly disruptive,” said the council’s vice president, Andrew Friedson (D-District 1), who co-sponsored one of two competing proposals to address the problem. “No one on council thought that was reasonable.”
But the council’s deliberations over how to address that problem have been fraught with disagreement — over where to set a cap, which landlords to exclude and whether doing too much for tenants will stunt new development in a county that is facing a housing stock crisis.
Bill 15-23, which passed out of committee on a 2-1 vote, would limit rent increases to 3 percent plus CPI, which is a measure of inflation, or 6 percent, whichever is lower. Newly built rental units would be exempt from the restrictions for 15 years.
Montgomery County would join Prince George’s County and the District in passing new protections against rent hikes this year, although Montgomery’s measure would in many ways go further than those adopted in neighboring jurisdictions. The rent stabilization measure passed in February in Prince George’s limited increases to 3 percent within a 12-month period, but the protections sunset in April 2024. The D.C. Council last month passed a 6 percent cap for rent stabilized buildings, which are mostly multiunit developments built before 1976.
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Nationally, cities, counties and states have increasingly turned to rent-control measures to slow the bloating cost of housing. Oregon put a 7 percent plus inflation limit on landlords statewide; California landlords face a 10 percent cap. Boston, San Francisco, St. Paul, Minn., and many other cities have also adopted rent stabilization measures to keep rising rents in check.
The bill on Tuesday’s agenda is an amalgamation of two competing proposals: the HOME Act and the Anti-Rent Gouging Bill. The HOME Act, introduced by council members Will Jawando (D-At Large) and Kristin Mink (D-District 5) and backed by County Executive Marc Elrich (D), would have limited rent increases to no more than 3 percent each year — a cap so low that several council members said it would never pass. The alternate proposal originally co-sponsored by council member Natali Fani-González (D-District 6), Friedson and four other council members offered an 8 percent plus CPI limit, which would have allowed for double-digit increases in years with high inflation despite a consensus among council members that an increase over 10 percent would amount to a constructive eviction for most tenants.
Under the county’s existing rules, landlords can raise rents by any amount, and tenants have little to no ability to contest an unreasonable increase. The county does publish voluntary rent guidelines each year to help landlords determine what a reasonable increase might be. The voluntary cap was set at 5.8 percent in 2023.
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Elrich told The Washington Post in March that he would consider using a veto if the council passes a bill that he views as ineffective.
“Whatever we pass, it will be better than the status quo,” Fani-González said.
Fani-González shifted her vote to support the substantially lower limit as the legislation moved through committee. She said she intended the 8 percent figure to be a starting point for discussion because she believed the competing proposal of a maximum 3 percent cap was far too low and would kill development in the county. But as the Planning, Housing and Parks committee considered the bills, Fani-González said she came to believe that any increase over 6 percent would be too high.
“We live in a county where there’s a lot of poverty,” she said. “There’s a lot of people who are barely making ends meet and whose wages are not increasing.”
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She said many of her constituents are lucky to get even a 2 percent raise each year, which is slightly lower than the average rent increase in recent years in Montgomery, which averaged about 2.1 percent per year between 2012 and 2022, according to an analysis by the Montgomery Planning Department. But after the onset of the pandemic, some renters in Montgomery County and across the nation saw much steeper increases that far outpaced their earnings during a time of economic turmoil. The average rent increase in 2021 was 9 percent, according to the Montgomery planning report.
As the committee received more data on average rent increases, wage growth and the disproportionate impact large rent hikes have on Black and immigrant residents, Fani-González said she was swayed to support a lower cap.
“To keep the spirit of anti-rent gouging, everything after 6 percent is crazy,” Fani-González said.
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Tenant advocates say rent stabilization measures protect residents from unsustainable housing costs, but developers and landlords claim the approach makes it impossible for them to recoup investments and turn a profit.
The bill comes at a time when Montgomery officials are facing a growing affordable housing crisis. The county does not have enough affordable rental units at any price point — and it is seeking to expand its supply of housing by 41,000 units by 2030, with most of that new housing designated for low- and middle-income residents. A report from the Metropolitan Washington Council of Governments said that the county is already short 24,590 units for residents who make less than 100 percent of the area median income and may lose an additional 7,000 to 11,000 units of naturally occurring affordable housing by 2030.
Many county officials say they are hesitant to take any action that might jeopardize the development of those sorely needed housing units.
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The Maryland Building Industry Association sent testimony to the Montgomery County Council opposing any cap, saying solutions to the lack of affordable housing “should be aimed at increasing housing supply rather than controlling rent prices.” Developers and property management companies, including Saul Centers, Halpine Park, Oakwood Properties and Rose Valley Management, also urged the council to focus on bolstering the housing stock and said the proposed legislation would be a burden on the companies that provide rental units in Montgomery.
Several council members have publicly said that they are sensitive to those concerns and worry a too-low cap will damage Montgomery’s ability to attract new development. Some of the members who previously backed the anti-rent gouging proposal say they plan to vote against the compromise bill.
“While I understand that many renters are currently rent burdened, I believe we are making things worse,” council member Marilyn Balcombe (D-District 2) said in a statement after Bill 15-23 advanced out of committee. She said she could not support the compromise bill.
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Although Friedson voted against the compromise bill in committee and said he has grave concerns that the 6 percent cap is too low and will exacerbate the county’s housing shortage, he said he will wait to make a final decision about the legislation until Tuesday, when at least 14 amendments will be debated.
Council members on both sides of the issue have proposed changes that include adding a sunset clause that would lift the rent cap after three years, including a longer 20-year exemption for new buildings to recoup investment, incorporating language that would allow landlords to bank unused increases and adopting a clause that prevents landlords from pushing tenants out to raise rents without limits.
“My goal has always been that we pass something that was meaningful protection,” Jawando said, noting that some of the weakening amendments could change his vote Tuesday.
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Tenant advocates who pushed for a 3 percent cap have been receptive of the compromise and said they are hopeful that the current version of the bill will pass with minimal alterations.
“We are heading in the right direction,” said Alex Vazquez, lead community organizer for Montgomery County at CASA, which helped draft the HOME Act. “We believe this compromise bill is still going to end up benefiting thousands of renters, especially CASA members in Montgomery County.”
But a few of the proposed amendments would weaken the tenant protections in the bill too much for some advocates and the council members who side with them.
Matthew Losak, executive director of the Montgomery County Renters Alliance, said the group does not support amendments that would cause the bill to sunset, exempt buildings built after 2000 or exempt small landlords with four or fewer rental units. The sunset clause in particular is troubling to Losak, who said it would incentivize developers to temporarily pause investment in the county to manufacture an impression that rent stabilization hurts housing supply.
“We don’t in any way want to discourage new investment, and we hope that landlords will make back their investment and some profit,” Losak said. “[But] I think there’s a real possibility that these amendments may be poison amendments in terms of the members who have been advocating for rent stabilization as well as the veto of the county executive.”
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