DC and Maryland Rent Control and Local Law Update

As a follow-up to our recent alerts, here is an update on rent control and other local activities in the Washington, DC region:

District of Columbia (DC) Emergency Rent Control Legislation. Not to be outdone by Prince George's and Montgomery County, Maryland, the DC Council may introduce emergency rent control legislation that would be considered next Tuesday, April 4, 2023. The legislation would cap rent growth for all rent-controlled units at 5 percent, as compared to the current cap, which is CPI plus 2 percent. DC has about 72,000 rent-controlled units in approximately 2,150 buildings – approximately 30 percent of all residential rentals in DC.

Montgomery County Rent Control. With rent control recently enacted in Prince George’s County (as noted below), all eyes were on Montgomery County on March 28, 2023, as two rent control bills were considered in public hearings. Tenant advocacy groups showed up in support of the HOME Act, which would cap rent increases at the lesser of (i) 3 percent and (ii) the local residential rent component under a regional Consumer Price Index (CPI). Landlords and industry leaders were more supportive of the Anti Rent Gouging legislation that would limit rent increases to CPI plus 8 percent. The County Council referred both bills to the Planning, Housing & Parks (PHP) Committee for a work session tentatively scheduled for June 15, 2023. The PHP Committee will be accepting input until June 8, 2023.

Proposed Increases in Montgomery County Property and Recordation Taxes. Montgomery County Executive Marc Elrich proposed a budget that includes a 10-cent hike in the property tax rate per $100 of assessed value. The proposed budget now heads to the Montgomery County Council for deliberation. The Council has scheduled public hearings on the budget on April 11 and April 13, before a June 1 deadline for final action.

Separately, Councilmembers Kristen Mink and Will Jawando introduced Bill 17-23, which would increase Montgomery County recordation tax rates on documents recorded in the land records that convey title or grant security interests in real property, including deeds, mortgages and deeds of trust. If passed, total recordation tax rates would increase by 32 percent on real estate sales prices and mortgage amounts up to $500,000 and by 38 percent for amounts over $500,000. A public hearing for Bill 17-23 is scheduled for April 11, 2023 at 1:30pm.

Interested parties may submit advance comments or testimony or register to give live testimony on these Montgomery County rent control, budget and tax increase proposals by 2pm the day before the relevant hearing.

Recently Enacted Laws in Prince George’s County

• Rent Control. The recently enacted Prince George’s County temporary Rent Stabilization Act of 2023, to be effective April 17, 2023, has generated a number of inquiries. The new law limits rent increases to 3 percent or less over a 12-month period (with limited exceptions). We continue to seek clarifications from the County Department of Housing and Community Development (DHCD) and the Department of Permitting, Inspections and Enforcement (DPIE) and understand that they plan to publish a list of rent control FAQs shortly.
• Mt. Rainier Municipal Rent Control Ordinance. The City of Mt. Rainier enacted a Rent Stabilization Ordinance that went into effect February 21, 2023, which restricts landlords from increasing rent by more than 60 percent of CPI (with limited exceptions). We continue to see guidance from the City Clerk on this new law and we will provide updates when available.
• Diversity & Equity Requirements. An Act Concerning Diversity and Equity Policy in Public Subsidized Development Projects (the D&E Act), which became effective in December 2022, establishes diversity and equity requirements for hiring, procurement, and contracts for any project that receives a Prince George’s County subsidy valued at $1 million or more. The definition of “County subsidy” is broad and includes loans, such as subordinate financing through the Housing Investment Trust Fund and the ROFR Preservation Fund, as well as payments in lieu of tax (PILOTs). DHCD has yet to provide formal guidance on implementation of the D&E Act, however, a recent Notice of Funding Availability issued by DHCD includes a brief summary of these requirements.

Florida Bans Rent Control.  In sharp contrast to DC and Maryland, Florida has now banned rent control statewide, under any circumstances.  Florida is addressing affordable housing needs by providing $711M of funding to those needing housing assistance. Given the need to encourage the production of more affordable housing, need-based governmental assistance is considered by many to be a better means to accomplish that goal than rent control mandates.

Thought Leadership Events. Thanks to those who were able to attend our March thought leadership events. 

• On March 6, we explored the impact of the new congress on commercial real estate with an expert roundtable of David Winstead (Ballard Spahr), Jeffrey DeBoer (The Real Estate Roundtable), Lisa Pendergast (CREFC), Cindy Chetti (NMHC), Don Davis (BOMA), Stephanie Milner (Mortgage Bankers Association), and Steven Wechsler (NAREIT).
• On March 23, Adrian Washington (Neighborhood Development Company) shared his insights on starting and growing a commercial real estate development firm in DC with the Young Real Estate Council (YREC).
• On March 28, we hosted Martha Hastings (CBRE), Katie Noonan (Ballard Spahr), and Alastair Smith (Howard County Housing Commission) for breakfast and a conversation about right of first refusal (ROFR) laws and the new and proposed rent control laws. For those that were unable to attend the ROFR & rent control event, the presentation slides and a recording of the panel (password: RoFR101!) are available.

We will continue to provide updates when feasible and remain available to assist with any questions or suggestions.

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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.