Summary

Rent control remains a hot topic around the beltway, and counties in Maryland are pursuing new laws limiting rent increases.

The Upshot

• Legislation being considered in Prince George’s County would prohibit rent increases in excess of 3 percent (with certain limited exceptions).
• The Planning, Housing & Parks (PHP) Committee of Montgomery County Council is considering proposing rent control legislation.
• Earlier this month, the D.C. Council proposed an amendment to the D.C. Tenant Opportunity to Purchase Act (TOPA) that would confer a right of refusal to Community Land Trusts (CLT).

The Bottom Line

The already time-consuming and expensive process for buyers and sellers of DC and Maryland multifamily properties is in a state of flux. Stakeholders should consult with legal counsel and public officials to ensure their property interests are protected.

In case you missed our recent alert, rent control continues to be a hot topic around the beltway. Below are updates on the evolving situation in Prince George’s County and Montgomery County, Maryland. We also continue to monitor proposed legislation and other incentives and programs in the region that may be of interest 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.

• For reference, this CBRE analysis discusses the impacts of the rent control law on new construction.
• Prince George’s County Rent Control Update. Last month the Prince George’s County Council introduced CB-007-2023. If passed, the bill would prohibit rent increases in excess of 3 percent for 12 months – except for properties (i) subject to certain affordable covenants, or (ii) with use and occupancy permits issued in the last five years. A public hearing on the bill is scheduled for February 28, 2023, at 10 a.m. Anyone who wants to speak must register in advance by 3 p.m. on the day before on the County website. Please feel free to reach out to us if you wish to discuss talking points. The agenda and meeting details for the hearing have yet to be published. We will attend the hearing and provide further updates as appropriate.
• Montgomery County Rent Control Update. Last month the Planning, Housing & Parks (PHP) Committee held a work session on The State of Affordable Housing in Montgomery County. The PHP Committee did not provide any recommendations or findings, however, a video of the work session is available for view here. Work session testimony included a review of rent control efforts in other parts of the country and the associated costs. It is our current understanding that legislation may be introduced that is focused on “rent gouging.” We are working with the PHP Committee and several stakeholders to ensure that any proposed legislation is narrow in scope.
• D.C. Community Land Trust Proposal. TOPA gives multifamily tenants a first right of refusal to purchase the property under the same terms and conditions as a bona fide third-party sale contract. In addition, under the District Opportunity to Purchase Act (DOPA), the Mayor has a secondary right of refusal to purchase the property. Earlier this month, the D.C. Council proposed an amendment to TOPA that would provide a third right of refusal to Community Land Trusts. CLTs are nonprofit entities established for the sole purpose of ensuring community stewardship of property and providing long-term housing affordability for low- and moderate-income D.C. residents. If passed, this amendment could further complicate an already time-consuming and expensive process for buyers and sellers of D.C. multifamily properties. For the time being, the matter has been referred to the Committee on Housing.
• D.C. Housing In Downtown Tax Abatement. Last year D.C. Mayor Muriel Bowser proposed the Housing In Downtown (HID) program to encourage new residential development. For projects that produce at least 10 new housing units, the 20-year tax abatement can be obtained in exchange for renting at least 15 percent of units to households earning 60 percent of the Median Family Income (MFI). $2.5 million has been appropriated for the current fiscal year with more funding allocated for future years. The Deputy Mayor of Planning and Economic Development (DMPED) is inviting feedback from stakeholders on the HID program until February 28, 2023, via email at olivia.jovine@dc.gov. Pending any legislative changes, DMPED will issue regulations and advance program implementation. The HID program is designed to accelerate D.C.’s Comeback Plan, which seeks to revitalize downtown over the next five years by growing and supporting the tax base, strengthening neighborhoods, and supporting economic mobility of D.C. residents.

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