DC-Area Multifamily Housing Update

We hope your new year is off to a good start.  Due to several recent developments impacting multifamily properties, we are providing the updates below to our real estate clients and friends. Please let us know if you have any questions or if you are interested in learning more about any of these issues.

Blueprint for Renters. As if fighting rent control at the state and local level is not challenging enough, this week the Biden-⁠Harris administration announced several measures intended to “protect renters and promote rental affordability.” The Federal Trade Commission and the Consumer Financial Protection Bureau announced that they will collect information to identify unfair housing practices, including with respect to tenant background checks, adverse action notices, and source of income requirements. The Federal Housing Finance Agency announced that it will consider actions to increase renter protections and to impose limits on egregious rent increases for future investments. These announcements are guided by the principles outlined in the Blueprint for a Renters Bill of Rights, a white paper published by the White House Domestic Policy Council and National Economic Council that “promotes fairness for Americans living in rental housing.” In concert with the Blueprint, the Biden administration is also launching the Resident-Centered Housing Challenge, a call to action to housing providers and other stakeholders to improve the quality of life for renters. To join the Challenge,  complete this survey by April 28, 2023.

Prince George’s County Rent Control Update. Last week the Health, Human Services and Public Safety (HHSPS) Committee of the Prince George’s County Council held a public hearing on CB-007-2023 – The Rent Stabilization Act of 2023—temporary legislation that seeks to (i) limit rent increases to 3%, and (ii) prohibit notice of rent increases for the six-month term of the legislation, and for 90 days thereafter. View the agenda here and watch a recording of the hearing here. Several entities opposed the bill, including the Prince George’s County Association of REALTORS and the Apartment & Office Building Association (AOBA). Angie Rodgers, Deputy CAO of the County, also proposed amendments to exclude recently completed projects and units that are already subsidized with federal programs, and to extend the time for working-group analysis. However, the bill passed out of the HHSPS Committee with strong support from tenants and advocates. A second reading of the bill is scheduled by the full County Council on January 31, 2023 at 10 a.m. If passed, the bill will have a significant impact on multifamily property owners and economic development in the County. Ballard Spahr attorneys will attend and provide additional updates as appropriate.

New Prince George’s County Diversity, Equity & Inclusion (DE&I) Legislation. On November 9, 2022, the County Executive signed into law the unanimously approved CB-051-2022 – An Act Concerning Diversity and Equity Policy in Public Subsidized Development Projects. Under the Act, development projects that receive subsidies valued at $1 million or more from, or administered by, the County must meet certain diversity and equity requirements for hiring, procurement, and contracts. The definition of “subsidy” is broad and includes tax abatement (including payment in lieu of taxes or PILOTs), tax-increment financing, below-market transfers, and fee/surcharge waivers. Specifically, the new law requires property owners to contract with county-based small and minority-owned businesses for designated projects for some portion of the renovation, construction, and/or design work—depending on the amount of the subsidy. 

New Prince George’s County Councilmembers. The Prince George’s County Council’s new progressive majority used its first formal voting session of the term to repeal a series of zoning text amendments, creating uncertainty for developers and commercial landowners. The self-proclaimed “People’s Council” also introduced a series of other measures that may be considered in the coming months, including restrictions on new construction of self-storage facilities and a “health impact assessment” requirement for land use matters. 

Montgomery County Rent Control Update. The prior rent control law in Montgomery County lapsed in 2022. Last year County Executive Marc Elrich introduced Bill 22-22, which sought to limit rent increases to 4.4 percent and extended emergency rent control measures enacted at the beginning of the pandemic. However, the Montgomery County Council took no action on that bill and referred the matter to the Planning, Housing, & Economic Development Committee, which was recently split into two new committees: the Economic Development Committee and the Planning, Housing, & Parks (PH) Committee. The PH Committee, which will have oversight over rent control matters, is chaired by Andrew Friedson, who has traditionally viewed rent laws with disfavor and has advocated encouraging the construction of more units to address affordable housing challenges. On January 30 at 1:30 p.m., the PH Committee will hold a work session on the “State of Affordable Housing in Montgomery County.” View the work session agenda here and stream the meeting live on the County website.

New Montgomery County Councilmembers. Like Prince George’s County, Montgomery County has several new Councilmembers—the most diverse Council in its history, including two newly elected women, two Latino members, a Black member, and the first openly LGBTQ chair. Some newcomers have yet to take positions on certain issues important to business and real estate interests. For example, earlier this week we attended a Maryland Building Industry Association (MBIA) meeting with new Councilmember Laurie-Anne Sayles. When asked about her position on rent control, Ms. Sayles said she was waiting to see what came out of the PH Committee work session. We continue to work with the PH Committee, MBIA, Empower Montgomery, and others to promote an informed discussion. 

New Cabinet Nominations. Last week Maryland Governor-elect Wes Moore announced several key cabinet nominations for his new administration, including Jake Day (housing and community development), Kevin Anderson (commerce), and Rebecca Flora (planning). Effective Friday, January 29, Day will step down from his role as Mayor of Salisbury, where he was an outspoken advocate for investing in downtown revitalization. Mr. Anderson is the founder of an economic development firm targeting scaled social impact and investment in urban centers, and previously served as D.C. Mayor Anthony Williams’ special assistant to the city administrator and chief of staff at the D.C. Department of Transportation. Ms. Flora founded a sustainable development consulting business and previously served on the board of the U.S. Green Building Council, where she was the first woman to serve as chair. Although cabinet members will take over as acting secretaries in the coming days, nominations must still be confirmed by the Maryland State Senate.

DE&I Events. Last week our D.C. office and the Young Real Estate Council (YREC) hosted a thought-provoking conversation on leadership and housing for our region, with special guest Omar Karim of Banneker Ventures. YREC has a mission to promote the professional and social development of young Black professionals working in commercial real estate. We will be hosting additional events this year, including fireside chats with industry leaders and educational programming and networking to support our work in Baltimore with Project Destined. We hope to see you for our Tenant Opportunity to Purchase Act (TOPA), Right of First Refusal (ROFR) and rent control panel in March (time and date to follow). Ballard Spahr is proud to support YREC, Project Destined, and other great organizations building pathways for diversity in real estate, finance, and the law.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.