Image by Ted Eytan licensed under Creative Commons.

Tenants could be spared from larger-than-expected rent increases under new legislation the DC Council is considering.

Councilmember Anita Bonds (D-At Large) introduced a pair of bills that would update how rent increases are determined under the city’s rent control law. They target a practice called rent concessions some landlords use to offer discounts on rent, then they calculate rent increases on the non-discounted amount.

If you aren’t familiar with rent concessions, I described them last year:

Let's say a rent-controlled apartment is registered with the DC Department of Housing and Community Development as costing a certain amount per month. The landlord may advertise it and rent it out at a lower amount. Then, when it's time for the annual rent increase that's allowed under the rent control law, the landlord may calculate the new rent as a percentage of the higher amount registered with DHCD, rather than as a percentage of the lower amount that the tenant was actually paying.

Bonds’ legislation would clarify that a rent adjustment should be based on the amount a tenant actually pays, rather than some higher amount a landlord says it could charge.

But concessions are beneficial because they let housing providers offer renters a rate lower than the maximum legal rent during periods when market forces allow or require them to drop the price, Kirsten Williams, vice president of government affairs, DC, for the Apartment and Office Building Association, told me earlier this year. If the market changes, housing providers may find increases allowed by the rent control law can’t keep up with expenses associated with operating rental housing, she said.

Bonds’ bills are called the Rent Charged Clarification Amendment Act of 2018 (no. 22-998) and the Rent Charged Definition Clarification Amendment Act of 2018 (no. 22-999).

Tenants should be able to rely on the city’s rent control law for stable rent increases, Bonds says

Sharp rent hikes can be a hardship, Bonds said when she introduced the legislation during a council meeting Oct. 2.

“After these significant increases, tenants are then faced with the stark option of trying to find other affordable housing or just tightening their belts and paying the higher rent,” Bonds said. The legislation “will help bring financial security to our tenants by stabilizing their rent increases to amounts promised by the district’s rent control program,” she said.

Bonds’ legislation would require landlords to calculate a rent increase based on the amount “a tenant must actually pay” for the unit. As an example, she described a situation where the landlord says the unit costs $2,500 and gives the tenant a $500 concession.

Applying the current year’s rent control cap of 3.4% for most tenants, Bonds said a landlord in this scenario might notify the tenant that the rent is going up to $2,585, when the resident expected it to rise no higher than $2,068.

She modeled her bills off a decision by the Rental Housing Commission, which hears appeals of rent control disputes. It determined in January that a rent increase should be based on “the amount actually demanded, received, or charged” by a landlord. The commission overruled an administrative law judge and decided in favor of a Van Ness apartment building tenant.

Washington City Paper’s Andrew Giambrone in 2016 highlighted the rent increases facing residents at 3003 Van Ness. One resident who had been paying $2,000 expected her rent to increase by 1.5% to $2,030. Instead, the landlord told her it would shoot up to $2,783, a 39.15% hike.

3003 Van Ness drew a lawsuit by Attorney General Karl Racine (D), who filed a consumer protection complaint against it in December. Racine says that the way it advertises rental rates and uses rent concessions is deceptive. The case is ongoing in Superior Court.

Landlords could still give rent discounts, but the markdowns couldn’t be rescinded

Landlords would still be allowed to give a tenant a discount on rent. They would be required to calculate rent adjustments based on the discounted amount, and they wouldn’t be allowed to rescind the discount for any reason. If the resident moves out, the landlord could adjust the rent for the next tenant based on the non-discounted price, if the discount was more than 10% of the rent charged.

The legislation would also require landlords to inform tenants and city regulators when they apply concessions, and disclose it to prospective renters when they advertise units. The Apartment and Office Building Association favors disclosure requirements to ensure tenants understand what they’re agreeing to.

The legislation faces uphill odds of becoming law. A hearing hasn’t been announced, and there are other items on the council’s agenda. The council’s legislative period ends in early January, and any pending legislation dies at that time. But the bills could be introduced in the new period, which lasts two years beginning in January.

Councilmembers Mary Cheh (D-Ward 3), Bonds, and Elissa Silverman (I-At Large) introduced a rent concessions bill in the last council period. Bonds convened a housing committee hearing, but the panel didn’t take further action. Cheh and Bonds introduced another concessions bill in the current period but they withdrew it.