Our prior Alert discussed the Prince George’s County temporary extension of rent control, Montgomery County rent control updates and the much-anticipated rent control regulations, rental license fee increases, new housing laws in Maryland, eviction delays, SCOTUS, TOPA, and more. We continue to track important legislative and regulatory efforts in the region. Below are some important updates on issues affecting the multifamily industry.
Montgomery County Rent Control. As previously reported, the Department of Housing and Community Affairs (DHCA) issued draft regulations in January to implement the County’s new rent control law. In February, we provided extensive comments to DHCA; DHCA has yet to submit regulations for consideration by the County Council and therefore the rent control law continues in abeyance. The rent control law cannot become effective until the County Council approves the regulations. Although we remain hopeful that DHCD will adopt the changes we have recommended to the regulations, it is likely that problematic provisions will remain. In addition, the regulations cannot change objectionable provisions in the law, such as vacancy control and the cap on rent increases. Similar to the discussion below regarding the Prince George’s County Rent Control Bill, we continue to explore possible legal or legislative solutions.
Prince George’s County Rent Control Bill. On June 4, 2024, the Prince George’s County Council introduced CB 55-24, which includes some of the provisions and concepts in the rent control law in neighboring Montgomery County. If enacted, CB 55-24 would make rent control “permanent” for multifamily properties in Prince George’s County. We previously reported on the emergency extension of temporary rent control measures in our last Alert; although CB 55-24 is billed as being permanent, laws can always be modified or rescinded by subsequent legislation. CB 55-24 would replace the temporary rent cap of 3% with a permanent rent cap equal to the lessor of (i) 3% plus the Consumer Price Index for All Urban Consumers for the Washington-Arlington-Alexandria Area (CPI-U), or (ii) 6%. Banking is permitted, but the total increase may not exceed 10% of the base rent. There are a number of exemptions contemplated, including for renovations and new construction. Provided that a building is not in violation of building or housing codes, rental units are exempt from rent control if they were constructed after January 1, 2000 or if the building was substantially renovated after January 1, 2000. Unlike in Montgomery County, if CB 55-24 is passed, it becomes effective without the requirement for published regulations. The new rent cap (the lesser of 3% plus CPI-U or 6%) would be in effect from October 17, 2024 until July 1, 2025. Adjustments to rent caps in subsequent years would be established by the Department of Permitting, Inspections, and Enforcement (DPIE) and become effective on July 1 of each year thereafter, with notice to the public of the new rent cap by May 1 of each year. The Director of DPIE has until January 1, 2026 to adopt and publish rent control regulations, which would become effective 30 days after publication. Six Council members sponsored the introduced version of CB 55-24; however, at the Committee of the Whole meeting on June 11, 2024, there was discussion of an amendment to add vacancy control to CB 55-24. Council Member Oriadha, who was not a sponsor of CB 55-24, has stated that she plans to introduce her own rent control bill to possibly add (i) a 4% rent increase cap for senior rental facilities, (ii) vacancy control, and (iii) just cause eviction protections. Other Council members, including Council Member Fisher, one of CB 55-24’s sponsors, voiced support for just cause evictions, and potentially having a senior rental facility rent cap. Council Chair Ivey stated at the June 11, 2024 meeting that the bill needed to be passed before the Council is goes on recess in August if the temporary rent cap is to be replaced with permanent rent control. To that end, a hearing has been scheduled for Tuesday, June 18, and further information, including links to the live stream, can be obtained in the Agenda for the Council meeting and the Agenda for the Committee of the Whole meeting. We plan to continue to work with stakeholders impacted by rent control in Prince George’s County on potential legal or legislative solutions.
Building Energy Performance Standards (BEPS). As discussed in a recent Alert, the Maryland State BEPS regulations were temporarily put on hold to give the General Assembly’s Administrative, Executive, and Legislative Review Committee more time to consider the economic impact of the proposed regulations. While this hold has not been extended, a provision in the recently passed Maryland State budget for Fiscal Year 2025 required the Maryland Department of Energy’s (MDE) to withdraw the BEPS regulations and reissue new regulations. Specifically, the budget provision restricted MDE’s use of funding for Site Energy Use Intensity (EUI) standards regulations. This effectively blocks the use of Site EUI as a performance standard until the MDE complies with the new requirements to access the funds. The budget amendment does not change the requirements of the Climate Solutions Now Act, which as we reported on in a past Alert requires buildings to achieve net-zero emissions by 2040. Building owners will also be required to measure and report direct emissions data to the MDE annually, starting in 2025.
As noted in a prior Alert, Montgomery County issued proposed regulations for County BEPS on November 1, 2023, which would establish minimum energy and performance thresholds for many existing buildings. In addition, the County Executive introduced Regulation 17-23 on January 12, 2024, which would, if approved by the County Council, establish the use of Site EUI for setting energy performance targets by major building use types, define how renewable energy will be incorporated into the BEPS performance metric, and provide for an alternative compliance approach where meeting the Site EUI is economically infeasible. Currently, the Transportation and Environment Committee is reviewing Regulation 17-23, and the most recent work session #3 staff report from can be found here. The deadline for the Transportation and Environment Committee to review Regulation 17-23 is September 30, 2024.
DC Condominium Act Amendment. On April 15, 2024, the Association Meeting Flexibility Emergency Amendment Act of 2024 was signed into law by Mayor Muriel Bowser. Certain emergency provisions of the DC Condominium Act established during COVID to allow for virtual meetings and voting were set to expire on April 28, 2024. In response, the DC Council passed the Association Meeting Flexibility Emergency Amendment Act, which made these emergency provisions permanent. As a result, condominium associations will continue to have flexibility to conduct remote meetings and to collect votes by electronic means even if such remote actions are not expressly addressed in the condominium’s governing documents.
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