PHEDItem 3
June 27, 2016
Worksession 2
MEMORANDUM
June 23, 2016
TO:
FROM:
SUBJECT:
Planning, Housing, and
Economicw~vent
Committee
Josh Hamlin, Legislative
Attome~
Worksession 2: Bill 19-15, Landlord -Tenant Relations - Licensing of Rental
Housing - Landlord-Tenant Obligations
Bill 19-15, Landlord -Tenant Relations - Licensing of Rental Housing - Landlord-Tenant
Obligations, sponsored by Lead Sponsor Councilmember EIrich and Co-Sponsor Councilmember
Navarro, was introduced on April 21, 2015. A public hearing on the Bill was held on June 18,
2015 and a Planning, Housing and Economic Development Committee worksession was held on
April 11, 2016. Councilmember EIrich, lead sponsor of the Bill, has submitted a memorandum
discussing the objectives and provisions of the Bill (©27-28).
Bill 19-15, as introduced, would:
(1)
provide for annual inspection of certain residential rental properties;
(2) require the use of a standard form lease and applicable optional provisions for certain
residential rental properties;
(3) require the publication of certain information related to rental housing;
(4) require the Department of Housing and Community Affairs to review certain rent
mcreases;
(5) provide for certain remedies to be awarded by the Commission on Landlord-Tenant
Affairs;
(6) provide certain rights to tenants facing rent increases; and
(7) generally amend the law related to landlord-tenant relations.
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Background
Chapter 29 of the County Code governs landlord-tenant relations. It establishes the
Commission on Landlord-Tenant Affairs (the "Commission") as a mechanism for resolving
disputes between landlords and tenants and provides a process for resolving such complaints. The
law also creates a licensing regime for rental housing, including a requirement that each apartment
complex and personal living quarters building
l
be inspected by the Department of Housing and
Community Affairs ("DHCA") at least once every three years. Chapter 29 also imposes certain
requirements on landlords and tenants, and includes a number ofrequirements for leasing practices
and the contents of all rental housing leases in the County. Other key components of the County's
landlord-tenant law are the annual collection by DHCA of extensive data related to rental housing
in the County and the requirement that the County Executive issue voluntary rent increase
guidelines each year.
Bill 19-15 was introduced to address some of the issues raised
in
the 2010 Report of the
County Tenant Work Group (TWGf (see ©29-32).3 The Bill would make several changes to the
landlord-tenant law, principally aimed at enhancing the existing rights of tenants and improving
the quality of rental housing through increased inspections. The amendments fit generally into
three categories:
(l)
leases and landlord-tenant obligations; (2) licensing and data collection; and
(3) rent adjustments.
The Bill was scheduled for a PHED Committee worksession on July 27, 2015, but the
worksession was postponed at the request of the sponsor. Councilmember EIrich has circulated a
revised draft of Bill 19-15 (see ©91-102) for consideration by the Committee. The revised draft
includes several changes to existing provisions ofthe introduced Bill related to leases, inspections,
and the voluntary rent guidelines. It also includes two entirely new provisions requiring landlords
to provide meeting space for tenant associations and to provide infonnation on utility billing in
units without individual meters.
Leases and Landlord-Tenant Obligations
Bill 19-15 would require that the Director ofDHCA publish and provide upon request to
landlords and tenants:
(1)
a standard fonn lease and model optional provisions; and (2) a landlord­
tenant handbook. These documents would have to be available in English, Spanish, French,
Chinese, Korean, Vietnamese, and other languages, as needed. The Bill would require the use of
the fonn lease and any appropriate model optional provisions for all leases of rental housing in the
County, and would require a landlord to provide a tenant with a copy of the landlord-tenant
handbook or, at the tenant's option, a reference to the handbook maintained on the County website,
at the beginning of the lease tenn.
County Code
§
29-1 defines "Personal living quarters building" as "any building or portion of a building that: (a)
contains at least 6 individual living units;
(b)
has cooking facilities that the residents may share; and (c) may also have
shared sanitation facilities."
1
http://www6.montgomervcountvmd.gov/ContentJEXEC/TWG/pdf/twg report
3-20
1O.pdf
3
Additional information and discussion of recommendations of the Tenant Work Group can be found in the packet
for the PHED Committee discussion on February
25,2013,
which can be accessed at:
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cont.~}t!~.@!lci !!Q.Qff.~genda!cl1}l~J)!
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2
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The Bill would also require leases to contain provisions that would: (I) allow a tenant to
rescind a lease within two days after signing the lease; and (2) generally allow a tenant to convert
a one-year lease to a two-year lease within 30 days after signing the lease. It would also require
that a landlord offer lease renewals for two-year tenns unless the landlord has reasonable cause to
offer a different tenn. Current law generally requires two-year initial tenns, but is silent on
renewals. The Bill would also add a new remedy to those available to the Commission in resolving
landlord-tenant disputes. Upon a finding that a landlord has caused a condition that violates the
tenns of a lease (a "defective tenancy"), the Commission would be empowered under the Bill to
issue an order pennitting a tenant to correct the condition that constitutes the defective tenancy
and abating the tenant's rent in an amount equal to the reasonable cost incurred by the tenant.
Licensing and Data Publication
Bill 19-15 also makes changes to the inspection component of the existing rental housing
licensing program. The Bill would require annual inspection by DHCA of all rental housing
consisting of two or more dwelling units, including each apartment complex and personal living
quarters building. However,
it
would permit DHCA to inspect certain properties those whose
owners have a demonstrated history of compliance with applicable laws once every three years.
The Bill would also require a landlord found in violation of applicable laws more than twice in
two consecutive years to pay the cost of the next inspection of the property. Also, while current
law requires a landlord to agree to notify any affected tenant whose unit requires inspection, Bill
19-15 would require that the notice be given at least 72 hours in advance of the scheduled
inspection.
The Bill would require the Director of DHCA to publish, unless the publication is
prohibited under State law, the infonnation collected in the rental housing data survey on the
County website, including a table listing all rental housing consisting of two or more dwelling
units and the average rent increase for each unit by the following categories:
1.
2.
3.
4.
100 percent or less of the applicable rent increase guideline;
greater than 100 percent, up to 125 percent ofthe applicable rent increase guideline;
greater than 125 percent, up to 150 percent of the applicable rent increase guideline; and
greater than 150 percent of the applicable rent increase guideline.
The Bill would require the rent increase guidelines to be based on the increase or decrease in the
Consumer Price Index for all urban consumers (CPI-U), where current law references the
residential rent component of the CPI-U. All rent increases greater than 100 percent of the
applicable rent increase guideline would be reviewed by DHCA under the Bill, to recognize
patterns of increases that particularly harm tenants.
Rent Adjustments
Finally, Bill 19-15 would add protection for tenants facing rent increases. Under the Bill,
a landlord would
be
required to give a tenant at least three months written notice before imposing
an increase of more than 100 percent of the applicable rent increase guideline. The first of two
new sections added by the Bill to Chapter 29 would pennit a tenant to ask the Department to
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confmn that a rent increase complies with the law. The section would also permit a tenant facing
a rent increase that exceeds the applicable guideline to continue occupancy for up to two months
after the lease expiration on a month-to-month basis at the current pre-increase rent. In this
circumstance, the Bill would require the tenant to give at least 15 days' notice to the landlord
before vacating the premises. The second new section would prohibit "rent surcharges," providing
that a landlord must not charge more than the rent charged for the prior lease tenn when a tenant
continues occupancy on a month-to-month basis.
June 18,2015 Public Hearing and Correspondence
A public hearing on the Bill was held on June 18, and there were 23 speakers. Clarence
Snuggs, Director of DHCA, spoke on behalf of the County Executive and expressed general
support for the Bill, but identified several problematic provisions (©33). Specifically, Director
Snuggs identified the Bill's annual inspection requirement, standardized lease and addenda
requirements, tenant lease conversion option, and continued occupancy provisions as areas of
concern for the Executive. State Senator Jamie Raskin spoke in support of the Bill (©34), saying
that it "effectively advances the security and well-being of hundreds of thousands of Montgomery
County residents in their homes."
Nicola Whiteman of the Apartment and Office Building Association of Metropolitan
Washington (AOBA) spoke in opposition to the Bill (©35-46). In AOBA's view, "Bill 19-15
advances unnecessary, duplicative proposals which are codified in current law and/or being
implemented by the Department of Housing and Community Affairs." AOBA stated particular
objection to the prospect of a required standard lease, highlighting landlords' need for flexibility
in lease content. Mitchell Farrah ofthe Washington Metropolitan Chapter Community Association
Institute (WMCCAI) also spoke in opposition to the Bill, raising particular concerils about the
standard lease ,requirement and a perceived imbalance
in
landlord and tenant CUlpability for
violations, and speaking generally against limitations on rent increases (©47-49).
The majority of the speakers at the public hearing spoke in support of the Bill and of these,
both tenants and tenant-advocates were well-represented. The primary concern conveyed by
tenants was that of unfettered rent increases, and they expressed hope that Bill 19-15 would
alleviate this concern (see ©50 and ©52). Advocates spoke more generally ofthe need for housing
stability for renters (see ©53 and ©57). Zorayda Moreira-Smith of CASA offered testimony in
support of the Bill, and requested that the Council ensure that the various notices required under
Chapter 29 be provided in multiple languages, and consider ensuring that required two-year leases
be under the same terms as one year leases (©58-59).
The Montgomery County Renters Alliance submitted a letter dated July 23, 2015
specifically addressing the Fiscal Impact Statement (©60), pointing out that the statement contains
nearly two pages warning of impacts of rent control, which is not a component of Bill 19-15. The
Housing Opportunities Commission of Montgomery County (HOC) submitted a letter dated July
23,2015, outlining HOC's concerns about the impacts of the Bill (©61-63).
In
the letter, HOC
indicates that the three month notice for rent increases would pose problems, as could the provision
making certain landlords responsible for the cost of inspections. HOC also expressed concern
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about the standard form lease requirement and questioned the value shifting the basis for the
voluntary rent guidelines to the CPI-U as a whole (rather than the residential rent component).
April 11, 2016 PHED Worksession
The PHED Committee convened a panel of stakeholders for a worksession on the Bill on
April 11, 2016. Panelists included: Clarence Snuggs, Director, Department of Housing and
Community Affairs; Stacy Spann, Executive Director, Housing Opportunities Commission;
Robert Goldman, Executive Director, Montgomery Housing Partnership; David Hillman, Chief
Executive Officer, Southern Management Corporation; Madiaw Diop, TenantiMontgomery
Housing Partnership Board Member; and Matt Losak, Executive Director, Montgomery County
Renters Alliance. The Committee and panelists discussed several key provisions in both the
introduced Bill and the revised draft.
The April 11 discussion covered the provisions concerning inspections, required standard
leases, and the Landlord-Tenant Handbook. The discussion also included the introduced Bill's
provision giving a tenant the option to rescind a lease within two days after signing, and the revised
draft's substitute provision requiring a landlord to give a prospective tenant 48 hours to consider
signing a lease at the rent offered. Also briefly discussed were the Bill's provisions requiring a
two-year term to be offered at renewal and permitting a tenant to convert a one-year term within
30 days of signing the lease. The Bill's provisions related to rent increases and data disclosure, as
well as other tenant relief and benefits proposed in the Bill and revised draft, were not discussed
at the April 11 worksession.
Issues for Committee Discussion at this Worksession
Council staff suggests that the Committee consider those provisions that were extensively
discussed at the April 11 worksession with the intention of reaching tentative Committee decisions
on those provisions. Those items that were not fully discussed with the stakeholder-panelists can
be addressed, with input from the stakeholders, at a future worksession, after which the Committee
may be prepared to make a recommendation on the Bill. This section of the packet is structured
to cover the matters discussed at the April 11 worksession before reaching those that were not. A
table summarizing relevant sections ofthe current law, the provisions of Bill 19-15 as introduced
and the revised draft, and points raised
in
the discussion at the April 11 worksession is at
©
103­
108.
Issues Discussed at the April 11 Worksession
Leases
Standard Lease Requirement
The TWG Report called for the "provision of a standard lease format." The Report notes
that while the County currently has a model lease available, it is not required to be used, and "is
often not easily understood by the public." Bill 19-15 would require the use of a standard lease,
drafted in clear language,
in
each written lease for rental housing in the County. It would also
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require DHCA to make available model optional provisions that must
be
used where applicable.
The standard lease and model optional provisions would have to be available in English, Spanish,
French, Chinese, Korean, Vietnamese, and other languages as needed. The revised draft circulated
by Councilmember EIrich would add language requiring the standard form lease to
be
established
by method (2) regulation (see ©92, line 7), and would delete all language referring to model
optional provisions (©92, lines 11-14, and ©94, lines 58-59).
Currently, DHCA offers model leases in English and Spanish (see ©76-86). In addition,
Section 29-27 of the County Code (©87-89) requires that all leases for rental housing contain (or
not contain) several specific provisions and meet other specific requirements. The requirement of
using a standardized lease could pose an administrative burden on landlords operating in multiple
jurisdictions, as the landlord would not have a single form lease for all properties unless it used
the Montgomery County standard lease exclusively.
It
may be useful to consider the leases used
by landlords in the County, and how they vary from the County model lease. Additionally,
understanding the reasons for which landlords do not use the CoUnty model lease may assist the
Committee in better assessing the costs and benefits of
requiring
its use.
At the April 11 worksession, the Committee heard from stakeholders about the rationale
for a standard lease requirement, and the problems it would likely create.
As
expressed in the TWO
Report, which recommended a standard lease requirement, leases "are complex legal documents"
and even the existing model lease "is not easily understood by the general public. Matt Losak
shared the story of a tenant who was unaware of a lease provision and ran into trouble with his
landlord. DHCA raised concerns about the burden ofmaking the standard lease available in many
different languages, though the revised FIS does not seem to show a significant fiscal impact (see
©109-117). DHCA also indicated that
it
does review leases, since the law already requires that a
copy of each written lease form used by a landlord must be filed with the Director.
It
was not clear
whether DHCA reviews these leases proactively, or only when requested to do so by a tenant.
Questions were also raised about potential problems with direct translation of terms, and
enforceability of leases in multiple languages.
Mr.
Spann indicated that HOC has certain clauses
that must be incorporated in leases, and that financing partners often must approve leases. Mr.
Hillman added that Fannie Mae and Freddie Mac would be unlikely approve a County standard
lease.
In considering what action to take on this issue it is important to consider what is the
problem that a standardized lease is trying to solve. The TWO Report seemed to focus on the lack
of clarity to tenants of their rights and obligations. At the April 11 worksession, Mr. Hillman
indicated that in his experience, lease problems
boil
down to:
(1)
how much is rent and when is it
due; and (2) what a tenant can or cannot do in an apartment. Both suggest that assisting tenants in
clearly understanding their rights and obligations under the lease, would be valuable.
A number of potential problems with a standard lease requirement were identified at the
April 11 worksession. Also, the likelihood of the inclusion of a number of addenda to address
matters not covered in any standard lease would lengthen an already lengthy document, and could
undermine any intended clarity. Also potentially undermining the attempt at clarity is the
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probability that most tenants do not read through an entire lease document, whether it is written
clearly or not.
Staff believes that an alternative means could be used to assist tenants in understanding
their rights and obligations under a lease, with possibly greater effect than requiring a standard
lease form. A "lease summary sheet," similar in form, if not substance, to a HUD-l settlement
statement,4 could clearly state a tenant's rights and obligations, in a concise format more likely to
be read than even a clearly written lease. Such a summary could include term oflease, amount of
rent, responsibility for utilities, and tenant obligations under the lease. The summary could also
include notice regarding landlord and tenant rights and obligations under the law, the Landlord­
Tenant Handbook, and the availability of DHCA to assist tenants. The summary sheet may be
established by the Director by method (2) regulation, and required as part of each lease in Sec. 29­
27.
Rescission, Conversion, and Renewal
Bill 19-15 would provide a number of additional options to tenants when beginning or
renewing leases. Specifically, it would:
(1)
give a tenant an option to rescind a lease within two
days after signing the lease; (2) allow a tenant to convert a one-year lease to a two-year lease within
30 days of signing the lease, with certain exceptions; and (3) require a landlord to offer a two-year
term at each renewal.
5
The TWG Report recommended both the tenant option to convert to a two­
year term and the two-year term at renewal requirement, and recommended the two-day rescission
option
if
addenda to the standard lease are used
(©86), but did not supply a basis for the
recommendations beyond a general stated goal
to
"simplify and standardize" leases.
Councilmember EIrich's revised draft would delete the provision allowing a tenant to
rescind a lease within two days after signing (©94, lines 62-63), but would instead require a
landlord to give a prospective tenant 48 hours to consider signing a lease at the rent offered before
making the unit available to any other prospective tenants (©95, lines 105-108).
It
would also
require each lease to notify the tenant that DHCA offers assistance regarding questions about any
addenda to the lease and that the tenant is entitled to a hard copy ofthe Landlord-Tenant Handbook
(©94, lines 67-74). Finally, the revised draft includes a transition clause providing that the
standard form lease requirement applies to all leases entered into or renewed after the effective
date of the regulation establishing the standard form lease.
The provisions of the introduced Bill and revised draft respectively giving a tenant two
days to rescind a signed lease, or 48 hours to decide whether to sign a lease, were extensively
discussed at the April 11 worksession.
It
was pointed out that there are rights of rescission for
mortgage and real estate purchase transactions. However, panelists pointed out that either of these
provisions would allow a tenant to tie up mUltiple properties by signing (and rescinding) mUltiple
leases or obtaining multiple lease offers in the two day window. This might allow a tenant
to
get a
better deal, but this sort of activity, aggregated, would result in rental properties remaining vacant
longer, which would present problems for both landlords and prospective tenants seeking a rental.
Additionally,
Mr.
Spann indicated that such provisions could interfere with HOC obtaining
4
https:llportal.hud.govlhudportalldocuments/huddoc?id=l.pdf
5
Current law,
§
29-28(c), only requires the offer ofa two year term for the initial
term.
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financing for its properties. In view of these problems that allowing a tenant to either rescind or
consider signing a lease would likely present, Council staff recommends deleting them.
The provisions of the Bill allowing a tenant 30 days to convert a one-year lease to a two­
year lease did not elicit objections from the panelists. While this would offer tenants some
additional flexibility, the fact that a lease is required to be initially offered for a two-year term
makes its utility unclear. Similarly, panelists did not raise objections to the proposed requirement
that two-year terms be offered at renewal, subject to the same "reasonable cause" exclusions that
apply to the initial offer. '
Landlord-Tenant Handbook
The TWO Report identified "Communication and Information" as a key area of concern
and recommended, among other things, that the currently published Landlord-Tenant Handbook
be given to each new tenant, and be made available in the most commonly spoken languages in
the County. Bill 19-15 would enact both ofthese recommendations. The Bill would require each
landlord to provide a copy of the Handbook to each tenant at the beginning of a lease term, with
an option for the tenant to decline a hard copy upon referral to electronic version of the handbook
on the County website.
6
The Handbook, like the standard lease under the Bill, would have to be
available in English, Spanish, French, Chinese, Korean, Vietnamese, and other languages as
needed.
7
The FEIS appears to misconstrue Bill 19-15's Handbook distribution requirement and
estimates a one-time cost of approximately $209,625 ($215,000 in the revised FIS) to provide the
Handbook to each tenant in the approximately 97,500 (100,000 in the revised FIS) rental units in
the County. Bill 19-15 would not require this one-time expenditure, but would require the
Handbook's distribution by landlords at the beginning of lease terms after the requirement takes
effect. Based on DHCA's 2014 Rental Housing Survey, assuming an annual rental housing unit
turnover rate of 23.4 percent, OMB estimates the ongoing cost of the requirement at $49,052
($50,310 in the revised FIS). The revised FIS estimates the cost of translating the Handbook into
other languages, as Bill 19-15 would require, at between $3,144 and $3,780 per language.
Increased distribution of the Landlord-Tenant Handbook would almost certainly fulfill an
unmet need, as 60.1 percent of respondents in the Rental Satisfaction Survey indicated that they
were not aware of the Handbook, and 61.7 percent were not aware of the Office of Landlord­
Tenant Affairs. Increasing the knowledge of tenants and landlords of their rights and
responsibilities, and the assistance offered by the County could be a cost-effective way of making
a significant improvement in the condition and satisfaction oftenants.
At the April 11 worksession, Councilmember Leventhal suggested that landlords could
bear the cost of printing the hard copies distributed to tenants.
Mr.
Hillman did not object to this
proposition.
It
does not seem that the cost ofprinting these handbooks would be terribly significant
to individual landlords; there would only be an impact when a tenant opted to receive a hard copy,
and at most once per tenant per term. The Bill could be amended to require the Director to publish
6
http://montgomervcountymd.gov/DHCAlResources/Files/housingilandlordtenantlhandbook olta.pdf
7
The Handbook is currently avaHable
in
English and Spanish.
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the Handbook on the County website, make it available in a printable fonnat rather than "provide
on request to landlords" as is currently proposed.
Inspections
72 Hour Notice Requirement
Current law requires, as a condition of receiving a rental license, that a landlord agree to
"notifY any affected tenant whose unit requires inspection" (©3, line 45). According to DHCA,
this notice is provided at least 24 hours in advance, and ifDHCA detennines that adequate notice
has not been provided, the inspection is rescheduled. Bill 19-15 adds to this requirement,
specifYing that the notice be given at least 72 hours in advance ofthe scheduled inspection. At the
April 11 worksession, questions were raised as to whether this requirement is practicable under
the existing inspection process.
When inspecting a rental property, DHCA notifies tenants four weeks in advance by a
postcard that indicates that the property will be inspected within the next few weeks, but does not
specify a date and time of inspection. The postcard directs the tenant to call 311 if the tenant has
questions or, when the building is subject to inspection of a random sample of units, if the tenant
wishes to have their unit inspected. Tenants who call 311 are able to speak to an inspector and
detennine the date and time of the inspection.
The proposed 72 hour notice requirement is intended to allow tenants more time to arrange
to be present for the inspection; under the current process, if a tenant desires to
be
present, or to be
certain that their unit is inspected, they are notified and may make such arrangements well in
advance of the inspection. The Committee may wish to consider whether extending the notice
requirement is disruptive to DHCA's current process.
Increased Frequency of Inspections
The TWG Report identified the concern that "some apartment complexes have ongoing
maintenance problems," and recommended that "buildings with ongoing maintenance problems
should be moved to an annual inspection cycle, and that owners ofbuildings with repeat violations
should pay for the increased inspection schedule." The 2009 Rental Satisfaction Survey (©64-75)
also provided a glimpse into tenants' views as to the condition of their units, among other things.
8
As noted above, the current law requires inspection of each licensed apartment complex and
personal living quarters building at least once every three years. Bill 19-15 would require annual
inspection of
all
rental housing consisting oftwo or more dwelling units, including each apartment
complex and personal living quarters building.
DHCA's current inspection process is described in the Fiscal Impact Statement. The
Department currently inspects approximately 5,700 of the approximately 67,250 licensed
The Rental Satisfaction Survey compiled responses of 588 tenants
in
the County, and is organized into the following
sections:
(1)
Rental Information; (2) Rental Unit and Landlord Satisfaction; (3) Tenant-Landlord Rights
&
Responsibilities; (4) Issues Affecting Tenants; and (5) Demographic Information. While somewhat dated, it does
supply a useful perspective on a number of issues that BiI119-15 seeks to address.
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multifamily units in the County each year. A higher percentage of units to be inspected are
assigned to properties with a history of noncompliance. Approximately 80 percent of properties
have 10 percent oftheir units inspected every three years, five percent ofproperties have 50 percent
of their units inspected, and 15 percent of properties have all of their units inspected (see ©14).
Under Bill 19-15, the starting point for inspections would be the entire stock of approximately
67,250 units, with the Director empowered to reduce the frequency of inspections (to triennially)
for properties of landlords with a demonstrated history of compliance with applicable laws. The
analysis in the FEIS concludes that it is likely that the number of units moved to triennial
inspections would be minimal (see ©14-15). OMB concludes that moving to an annual inspection
schedule for all units would require the addition of97 additional FTEs in DHCA, at an annual cost
of $8,155,631, with an initial operating expense for vehicles, tablets, and phones of $2, 110,596.
Bill 19-15 also includes language that would also require a landlord that is a frequent
violator (more than twice in two consecutive years) to pay the costs of the next inspection. The
Bill currently provides that this cost is "as determined by the Director." Imposing this cost on
landlords could offset the additional cost of inspections somewhat, and the Committee may wish
to consider options in this regard.
The revised draft would change the inspection requirements to remove the language
requiring the inspection of all units, but would retain the annual inspection schedule (see ©93,
lines 28-34). The effect ofthis change would allow DHCA to retain the discretion it currently has
in deciding which units to inspect, but would require the inspections to be done each year rather
than every three years. This change would significantly reduce the Bill's fiscal impact, but the
Bill would still require roughly three times the number of inspections required under existing law.
OMB provided a revised fiscal impact statement estimating the fiscal impact of the revised draft's
inspection requirement (© 109-117). OMB estimates that this schedule would require the addition
of19 FTEs inDHCA, at an annual cost of$1,685,880, with initial operating expenses of$504,027.
The revised Bill also includes language modifying the provisions requiring repeat violators
to pay the costs of subsequent inspections (©93, lines 51-55). Under the revised provision,
landlords notified of a violation would have to correct the violation by the next inspection. If the
violation isnot corrected, the landlord would be required to pay the cost ofthe third and subsequent
inspections. The cost of inspections would be set by regulation.
At the April 11 worksession, the Committee heard from stakeholders concerning this
proposaL The Committee heard that many tenants' fear of retaliation by their landlords makes
them reluctant to complain about problems in their
unit.
Under existing law, the Director may
inspect upon a complaint or request from a landlord, but also has the discretion to inspect properties
more frequently than the current triennial inspections;
§
29-22(b) provides that "the Director may
inspect any other rental housing if the Director receives a complaint or a request from a landlord
or tenant
or believes that the rental housing does not comply with all applicable laws."
(emphasis
supplied)
Mr.
Hillman indicated that the County already inspects rental properties more than other
local jurisdictions. It was suggested that education and outreach to tenants about their rights,
including the ability to anonymously request inspections, might be helpful. Councilmember
Riemer suggested the possibility of requiring informational posters in common areas.
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Director Snuggs will be present at this session to follow up on Committee inquiries about
DHCA's process for responding to and resolving complaints, the rental licensing fee structure, and
information collected by DHCA that may illustrate the scope of rental property maintenance
problems. This information should help the Committee better assess whether the increased
inspection frequency proposed necessary Countywide, and whether there is a way to target
inspections to resolve any problems more efficiently. The Committee may wish to consider
whether it is the best use of resources to increase inspection of properties that all parties likely
agree do not require it. Given the discretion that the Director already has, the issue may be more
one of resource allocation than of mandated inspections.
In
considering this issue, it is also worth
considering that the TWG Report recommendation was that "buildings with ongoing maintenance
problems," not necessarily
all
buildings, be moved to an annual inspection cycle.
Issues Not Yet Discussed
Rent Increases
One of the primary findings of the TWG Report was that many tenants find that rents are
increasing faster than the overall cost of living and their incomes. Current law does not limit rent
increases, but instead provides for the issuance by the Executive ofvoluntary rent guidelines based
on the increase or decrease in the residential rent component of the Consumer Price Index (CPI)
for all urban consumers for the Washington-Baltimore metropolitan area. The law further provides
that that DHCA "should encourage landlords to hold rent increases at the lowest level possible,"
and empowers DHCA to "review any rent increase that appears
to
be excessive and encourage the
landlord to reduce, modifY, or postpone the increase." The Rental Satisfaction Survey includes a
substantial amount of information on rent increases (see ©64-75).
Bill 19-15 would not directly restrict rent increases, but seeks to address the issue of rent
increases in a few ways: (I) requiring that the voluntary rent guidelines be based on the CPI itself,
rather than the residential rent component of the CPI; (2) by requiring the Department to review
all rent increases that are more than 100% ofthe applicable guideline; (3) requiring the Department
to publish a table listing all rental housing containing two or more units, categorized by the amount
of rent increases relative to the guidelines; and (4) permitting a tenant to ask that the Department
confirm that a rent increase complies with the law's requirements regarding rent increases. While
none of these limit the ability of a landlord to exceed the guidelines, it may be useful to the
objectives of at least the first two in assessing their desirability. The Committee may also wish to
consider what DHCA has found with regard to the frequency and amount of increases under its
existing data collection regime.
The revised draft retains the provisions ofthe introduced Bill with some technical changes.
It
also adds language allowing the establishment, by regulation, of an alternative to the CPI as a
basis for the voluntary rent guidelines (see ©100, lines 237-239).
Data Disclosure
Under
§
29-51 of the Code, DHCA collects rental housing data to measure the supply and
availability of rental housing in the County (see ©7, lines 136-149). The reporting process is
11
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mandatory for all landlords of licensed rental housing. Bill 19-15 would require that the data
collected be published on the County website, to the extent permissible under law. As noted above,
this publication would include a table of all properties sorted by the amount of rent increases
relative to the guidelines. The publication ofthis information is recommended in the TWG Report
as a means for allowing the public to better track rent increases in the County. The Committee
may wish to hear from DHCA as to how the survey is conducted and what information from the
survey is currently published.
Additional Tenant Relief and Benefits
Bill 19-15 also includes a few additional provisions that seek to address tenant concerns.
First, the Bill would allow the Landlord-Tenant Commission, as a remedy to a defective tenancy,
to issue an order permitting a tenant to correct a problem and abate the tenant's rent by an amount
equal to the tenant's reasonable cost. This was also a recommendation of the TWG Report, as a
means to address a lack ofresponsiveness oflandlords to requests for repairs. As with other issues
addressed by the Bill, the Committee may want to understand the scope of the problem, as it is
understood by DHCA and other panelists.
Bill 19-15 proposes to provide a tenant with a right to continue occupancy for up to two
months after a lease expires, on a month-to-month basis at the pre-increase rent. The Office of the
County Attorney has indicated that this provision would be in conflict with the State law giving a
landlord a right not to renew a lease upon its expiration. Council staff agrees with this assessment
of the law, and recommends that subsection 29-55(b) at lines 214-219 of the Bill be deleted.
Finally, Bill 19-15 would prohibit rent "surcharges" by prohibiting a landlord from
charging more than the rent charged for the prior lease term when a tenant continues occupancy
on a month-to-month basis. This provision would not (and probably could not, under State law)
require a landlord to allow a tenant to continue after the expiration of a term on a month-to-month
basis. However, it would restrict rent increases in the event that the landlord does allow a tenant
to continue occupancy month-to-month.
The revised draft eliminates the proposed provision allowing a tenant to continue
occupancy after a lease expires (see ©101-1O2, lines 273-277), and changes the proposed
prohibition on rent "surcharges. Under the revised draft, a landlord must not charge a tenant more
than the rent offered for a new term if the tenant opts to continue tenancy on a month-to-month
basis (see ©102, lines 280-282).
The revised draft would also add new benefits to tenants. Landlords not intending to offer
an existing tenant a renewal would be required to give the tenant 60 days' notice of the landlord's
intent to terminate the tenancy at the lease expiration (see ©95, lines 109-111). Landlords would
also be required to provide each tenant billed for utilities all information necessary to determine
how the utility charge is calculated (©96, lines 119-125). Finally, the revised draft would modify
the existing law concerning the provision of meeting space to tenant organizations. It would
prohibit a landlord from charging a fee to a tenant organization for the organization's first meeting
of each month to discuss landlord-tenant issues (©97, lines 145-149).
12
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This packet contains:
Bill 19-15
Legislative Request Report
Applicability of Chapter 29 in Municipalities
Fiscal and Economic Impact Statement
Councilmember EIrich Memorandum
Tenant Work Group Report Executive Summary
Selected Public Hearing Testimony
Clarence Snuggs
Sen. Jamie Raskin
Nicola Whiteman, AOBA
Mitchell Farrah, WMCCAI
James C. Perry
fueanelle Wilkins
Matt Losak, Montgomery County Renters Alliance
Julie Ortman-Fouse
Zorayda Moreira-Smith
Renters Alliance Letter, July 23,2015
HOC Letter, July 23, 2015
Rental Satisfaction Survey
County Model Lease
County Code,
§
29-27
TWG Report - Issue III: Communication and Information
Revised Draft of Bill 19-15
Summary Table
Revised Fiscal Impact statement
Circle
#
1
11
12
13
27
29
33
34
35
47
50
52
53
57
58
60
61
64
76
87
90
91
103
109
F:\LAW\BILLS\1519 Landlord - Tenant Re1ations\PHED Memo 06.27.20J6.Docx
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Bill No.
19-15
Concerning: landlord -Tenant Relations
- licensing of Rental Housing ­
landlord-Tenant Obligations
Revised:
04/1312015
Draft No.l
Introduced:
Apnl21,2015
Expires:
October 21, 2016
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _--:-:_ _ _ _ _ __
.....
Sunset Date:
-,N~o
n:.=;e-:----:-_ _ __
Ch. _ _, laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember Eirich
Co-Sponsor: Councilmember Navarro
AN ACT
to:
(1)
provide for annual inspection ofcertain residential rental properties;
(2) require the use ofa standard form lease and applicable optional provisions for certain
residential rental properties;
(3) require the publication ofcertain information related to rental housing;
(4) require the Department ofHousing and Community Affairs to review certain rent
Increases;
(5) provide for certain remedies to be awarded by the Commission on Landlord-Tenant
Affairs;
(6) provide certain rights to tenants facing rent increases; and
(7) generally amend the law related to landlord-tenant relations.
By amending
Montgomery County Code
Chapter 29, Landlord - Tenant Relations
Sections 29-6,29-22,29-27,29-28,29-31,29-47,29-51,29-53, and 29-54
By adding
Montgomery County Code
Chapter 29, Landlord - Tenant Relations
Sections 29-55 and 29-56
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface bracketsll
* * *
Heading or defined term
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unqffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No. 19-15
1
Sec. 1. Sections 29-6, 29-22,29-27,29-28,29-31,29-47,29-51,29-53, and
29-54 are amended and Sections 29-55 and 29-56 are added as follows:
29-6. Duties of Director.
In addition to any other power, duty, or responsibility assigned in this Chapter,
the Director has the following duties:
2
3
4
5
6
7
*
*
*
W
The Director must publish and provide on request to landlords and tenants
~
standard fonn
8
9
10
lease, drafted in clear language understandable to persons
without legal training, which must be used in each written lease for rental
housing located in the County. The Director must publish and provide
on request to landlords and tenants model optional provisions, drafted in
clear language understandable to persons without legal training, which
may be used in
~
11
12
13
14
15
16
lease for rental housing located in the County. The
Director must make the standard form lease and optional provisions
available in English, Spanish, French, Chinese, Korean, Vietnamese,
and other languages, as needed.
17
18
ill
The Director must publish and provide on request to landlords and
tenants, and maintain on the County website,
Handbook
to
serve as
~
~
Landlord-Tenant
19
20
practical guide for landlords and tenants
summarizing their respective rights and responsibilities. The Director
must make the Landlord-Tenant Handbook available in English, Spanish,
French, Chinese, Korean, Vietnamese, and other languages, as needed.
The Director must review the handbook at least biannually and revise it
as necessary.
21
22
23
24
25
26
*
29-22. Inspection of rental housing.
(a)
*
*
27
[The]
Except as provided in this Section, the Director must inspect all
rental housing consisting of two or more dwelling units, including each
28
V
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BILL
No. 19-15
29
30
31
apartment complex and personal living quarters building licensed as
rental housing". at least once [every three years] each year to determine if
it complies with all applicable laws.
[The Director may inspect an
32
33
34
35
apartment complex or personal living quarters building more often than
the triennial inspection.]
(b)
If
the Director finds that
£!
landlord of licensed rental housing has
£!
demonstrated history of compliance with applicable laws over the most
recent three years, the Director may thereafter inspect the licensed rental
housing once every three years.
f£)
The Director may inspect any other rental housing ifthe Director receives
a complaint or a request from a landlord or tenant or believes that the
rental housing does not comply with all applicable laws.
[(c)]
@
As a condition ofreceiving a license under this Chapter, a landlord
36
37
38
39
40
41
42
43
44
45
46
47
48
49
must agree to:
(1)
allow access to the Department for any inspection required under
this Chapter or Chapter 26; and
(2)
notify any affected tenant whose unit requires inspection at least
72 hours in advance of the scheduled inspection.
[(d)]
W
If an inspection indicates that any rental housing does not comply
with all applicable laws, the Director may revoke the license or take other
remedial action under Section 29-25.
50
51
52
53
54
ill
A landlord of licensed rental housing found in violation of applicable
laws more than twice in two consecutive years must
!mY
the cost of the
next inspection as determined.Qy the Director.
*
29-27. Contents of lease.
*
*
o
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BILL
No. 19-15
55
56
[Each] A landlord must use the standard form lease and any appropriate model
optional provisions furnished
!2y
the Director for each lease for rental housing located
in the County.:. Each lease must:
57
58
59
60
*
(t)
lease.
*
*
Allow the tenant to rescind the lease within two days after signing the
61
62
.ill)
Allow the tenant to convert
!!
one-year lease to
!!
two-year lease within 30
days after signing the lease, unless the one-year lease was offered
Qy
the
landlord consistent with subsection 29-28(c).
63
64
65
66
(y)
Notify the tenant that general information and assistance regarding
evictions are available from the Department.
29-28. Leasing requirements generally.
67
*
(c)
*
*
68
69
The landlord must offer each lease for an initial term of [2] two years.,.
and
!!
two year term at each renewal, unless the landlord has reasonable
cause to offer a different [initial] term.
70
71
*
(3)
*
*
72
73
74
The landlord must include the following statement in each lease,
or as an addendum to an oral lease, and assure that it is signed and
dated by the parties:
Montgomery County law requires each landlord to offer each
prospective tenant a lease for an initial term of [2] two years.,. and
!!
two year term at each renewal, unless the landlord has reasonable
75
76
77
78
79
80
81
82
cause to do otherwise. The tenant may accept or reject this offer.
Before signing this lease, the tenant confirms that (initial and date
one option):
(A)
The landlord offered me a [2] two-year lease term and I
accepted it.
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BILL
No.
19-15
83
(B)
The landlord offered me a [2] two-year lease tenn but I
rejected it.
84
85
86
87
88
89
(C)
The landlord gave me a statement:
(i)
explaining why the landlord had reasonable cause not
to offer me a [2] two-year lease tenn; and
(ii)
telling me that I can challenge the landlord's action
by filing a complaint with the Montgomery County
Department of Housing and Community Affairs.
90
91
92
*
ill
*
*
At the beginning of
~
lease tenn, each landlord must provide each tenant
with
~
fQPY
ofthe Landlord-Tenant Handbook furnished
.Qy
the Director,
unless the tenant signs
~
statement declining
~
hard
fQPY
and accepting
referral to the Landlord-Tenant Handbook maintained on the County
website.
93
94
95
96
97
98
*
29-31. Landlord notice requirements.
(a)
*
*
99
100
101
102
103
Each landlord ofan apartment complex in the County must:
(l)
post [of] a durable notice in an accessible, conspicuous and
convenient place in each building to which the notice applies, or
(2)
distribute [of] the notice directly to all tenants.
The notice must contain the name or title and telephone number ofat least
one responsible representative of the building management who may be
reached at all times in an emergency.
104
105
106
107
*
*
*
*
*
*
29-47. Commission action when violation found.
108
o
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BILL
No.
19-15
109
110
111
(b)
If the Commission or panel fmds that a landlord has caused a defective
tenancy, it may award each party to the complaint one or more of the
following remedies:
112
113
114
115
116
117
*
(6)
housing in the area.
(7)
*
*
A reasonable expenditure to obtain temporary substitute rental
An order pennitting
f!
tenant to correct the condition that
constitutes the defective tenancy and abating the tenant's rent in an
amount equal to the reasonable cost incurred
Qy
the tenant;
118
119
120
121
122
123
124
125
126
127
128
129
lID
After a retaliatory or illegal eviction as defined in Section 29-32,
reasonable attorney's fees incurred by the affected tenant in
defense of the retaliatory or illegal eviction. The award must not
exceed $1,000.00.
*
29-51. Rental housing data collection.
(a)
*
*
The County Executive must establish procedures to collect and analyze
housing data for rental dwelling units in the County, and must make
every effort to centralize the data collection functions to minimize the
burden for landlords.
(b)
The reporting process is mandatory for landlords of licensed rental
housing, including new dwelling units as they come on the market and
all vacant units.
130
131
(c)
The data [collection frequency] must be [on an annual basis] collected
annually.
132
133
134
135
(d)
The Director must use a survey fonn for collecting data designed to
minimize the repeated reporting of unchanged infonnation, while
maintaining an accurate data base.
o
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BILL
No. 19-15
136
137
138
139
(e)
The housing data
collecte~
must be used to [ascertain] measure the
supply and availability of rental housing, as well as other operating
characteristics. Each landlord must provide the following [information
as requested by] to the County:
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
(1)
(2)
(3 )
(4)
(5)
The location of [the] each rental facility.1 including the zip code;
Structure type;
Year built;
Distribution of units by standard bedroom sizes;
The number of units by bedroom size that were re-rented during
the month;
(6)
(7)
(8)
(9)
The number of vacant days applicable to those units;
The rent charged for each rental unit;
The rent. charged for each re-rented unit before vacancy; and
The new turnover rent charged for each re-rented unit.
*
*
*
(i)
The Director is primarily responsible for controlling rental housing data
surveys for the County. The Director must share this information with
other governmental agencies that need it without invading individual
privacy. In this regard, the Director must coordinate survey activities
with other County departments, and make available to the departments
the results of all surveys in accordance with [executive] applicable
procedure.
G)
The Director must publish, unless the publication is prohibited under
State law, the information collected in the rental housing data survey
on the County website, including
~
table listing all rental housing
consisting of two or more dwelling units and the average rent increase
for each unit by the following categories:
ill
100 percent or less ofthe applicable rent increase guideline;
f:\law\bills\1519 landlord - tenant relations\bill7.docx
o
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BILL No. 19-15
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
(
c)
ill
ill
ffi
greater than 100 percent,!!p to 125 percent of the applicable rent
increase guideline;
greater than 125 percent,!!p to 150 percent ofthe applicable rent
increase guideline; and
greater than 150 percent ofthe applicable rent increase guideline.
®
Any landlord who violates any provision of this Section is liable for
payment of a civil penalty in an amount not to exceed $1,000 for each
violation.
29-53. Voluntary rent guidelines; review of rent increases.
(a)
The County Executive must issue annual voluntary rent Increase
guidelines not later than March 1 of each year. The Executive must
publish the guidelines in the County Register and on the County
website.
(b)
The guidelines must be based on the increase or decrease in the
[residential rent component of the] Consumer Price Index for all urban
consumers for the Washington-Baltimore metropolitan area, or any
successor index, for the preceding calendar year.
The Department should encourage landlords to hold rent increases at
the lowest level possible.
The Department may review any rent
increase that appears to be excessive and encourage the landlord to
reduce, modify, or postpone the increase. The Department must review
all rent increases that are more than 100 percent of the applicable rent
increase guideline issued under subsection
.cru
to recognize patterns of
increases that particularly harm tenants.
29-54. Rent adjustments; notice requirements.
(a)
A landlord must not increase the rent until at least two [2] months after
the landlord gives the tenant written notice of the increase. A landlord
must give the tenant at least three months written notice before an
~
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BILL
No. 19-15
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
increase of more than 10'0' percent of the rent increase guidelines. A
landlord must not impose more than one rent increase on a tenant in any
12-month period. Each written rent increase notice must contain the
following information:
(I)
The amount ofmonthly rent immediately preceding the effective
date of the proposed increase (old rent), the amount of monthly
rent proposed immediately after the rent increase takes effect
(new rent), and the percentage increase of monthly rent.
(2)
(3)
The effective date of the proposed increase.
The applicable rent increase guideline issued under Section 29­
53.
(4)
A notice that the tenant may ask the Department to review any
rent increase that the tenant considers excessive.
(5)
Other information that the landlord deems useful in explaining
the rent increase.
An
otherwise valid notice of a rent increase is not invalid because the
notice contained an incorrect rent increase guideline number if the
landlord reasonably believed that the number was correct.
*
(ill
*
*
~
211
212
213
214
215
216
217
218
219
29-55. Rights of tenants facing rent increases.
A tenant may ask the Department to confirm that
complies with this Article.
rent increase
(hl
When
~
rent increase exceeds the applicable guideline,
~
tenant:
ill
may continue occupancy for
.!:ill
to two months after the lease
term expires on
~
month-to-month basis at the current pre­
increase rent; and
ill
must give at least
12
days' notice to the landlord before vacating
the premises.
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BILL No.
19-15
220
221
222
223
29-56. Rent surcharges prohibited.
A landlord must not charge more than the rent charged for the prior lease term
when
~
tenant continues occupancy on
~
month-to-month basis.
[Sec. 29-55] Sec. 29-57 - 29-65.
Approved:
224
225
Nancy Floreen, President, County Council
Date
226
227
Approved:
Isiah Leggett, County Executive
228
Date
This
is
a correct copy ofCouncil action.
229
Linda M. Lauer, Clerk of the Council
Date
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LEGISLATIVE REQUEST REPORT
Bill 19-15
Landlord
­
Tenant Relations
-
Licensing ofRental Housing
-
Landlord-Tenant Obligations
DESCRIPTION:
Bill 19-15 would make several changes to the County's landlord­
tenant law, principally aimed at enhancing the existing rights of
tenants. The amendments fit generally into three categories: (1) leases
and landlord-tenant obligations; (2) licensing and data collection; and
(3) rent adjustments.
Tenants often face uncertainties as to their responsibilities and rights
under rental housing leases, and often struggle with rent increases that
are above the voluntary guidelines established under the current law;
the current programs for inspection of rental housing and publication
of rental housing data are inadequate.
Improve access to quality rental housing and ensure a better
understanding of landlord and tenant obligations under leases; protect
tenants facing large rent increases.
Department of Housing and Community Affairs
To be requested.
To be requested.
To be requested.
To be researched.
Josh Hamlin, Legislative Attorney,
240-777-7892
To be researched.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Class A violation
F:\LAW\BILLS\lS19 Landlord - Tenant Re1ations\LEGISLATIVE REQUEST REPORT.Docx
f:\law\bills\1519 landlord - tenant relations\legislative
request report.docx
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APPLICABILITY OF CHAPTER
29,
Landlord-Tenant Relations to Municipalities
Source: Montgomery County Code, Appendix F.
County Laws Applicable to Municipalities
Town of Barnesville
Town of Brookville
Chevy Chase Village
Chevy Chase View
Chevy Chase Sec. 3
Town of Chevy Chase
Chevy Chase Sec. 5
City of Gaithersburg
Town of Garrett Park
Town of Glen Echo
Town of Kensington
Town of Laytonsville
Village of Martin's Addition
Village of North Chevy Chase
Town of Poolesville
City of Rockville
Town of Somerset
City of Takoma Park
Town of Washington Grove
no
yes
no
yes
yes
yes
yes
no
no
yes
yes
no
yes
yes
no
no
yes
no
yes
@
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ROCKVILLE, MARYLAND
MEMORANDUM
June 19,2015
TO:
FROM:
George Leventhal, President, County Council"
~
Jennifer A. Hug.hes, Director, Office of Management "
get
~7~
~Ort..
Joseph F. Beach,
Dire~tor.
Department of Finance
FEIS for Bill
19-15
Landlord - Tenant Relations- Licensing of
R~tal
Housing
SUBJECT:
Please find attached the fiscal and economic impact statements for
the
above­
referenced legislation.
JAH:fz
cc: Bonnie Kirkland, Assistant Chief Administrative Officer
Lisa Austin, Offices of
the::
County Executive
Joy Nunni, Special Assistant to the County Executive
Patrick Lacefield, Director, Public Information Office
Joseph F. Beach, Director, Department of Finance
Clarence
J.
Snuggs, Director. Department ofHousing and Community Affairs
Alex Espinosa, Office of Management and Budget
Jenny Bryant, Office of Management and Budget
Felicia Zhang, Office of Management and Budget
Naeem Mia; Office of Management and Budget
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·Fiscal Impact Statement
Bill 19-15
Landlord-Tenant Relations - Licensing of Rental Housing - Landlord Tenant Obligations
1. Legislative Summary
Bill 19-15 provides for annual inspection of certain residential rental properties, requires
the use ofa standard fonn lease, requires publication ofcertain information related to
rental housing, requires DRCA to review rent increases, provides for remedies to be
awarded by the Commission on Landlord - Tenant
Mfairs~
provides certain rights to
tenants facing rent increases, and generally amends the law related to landlord-tenant
relations.
2. An estimate of changes in. County revenues and expenditures regardless of whether the
revenues or expenditures are assumed in the recommended or approved budget. Includes
source of information, assumptions, and methodologies used.
There
1S
no estimated
ch~ge
in County revenues due to Bill 19-15. 'While the bill would
require reimbursement of inspection C()sts under certain circumstances, that is too
speculative to estimate.
Bill 19-15 impacts expenditures in three areas: Code Enforcement, publication ofthe
Landlord Tenant Handbook, and Licensing and Registration (see below).
• Code Enforcement (Section 29-22)
o There are approximately 67,250 multifamily units in Montgomery County
licensed by DHCA. This does not include units in the Cities of Rockville,
Gaithersburg or Takoma Park. These units are inspected either by the local
jurisdiction or via DHCA through. a contractual agreement.
() Based on our current sampling technique (consistent with Montgomery
County Code, Chapter 29)
to
meet the current triennial inspection
requirement, approximately 5,700 units ofmulti family housing units are
required to be inspected on an annual basis. Under the current requirement
properties with a history of noncompliance are assigned a higher percentage
of units to be inspected. Approximately 80 percent of properties receiVIng
triennial inspections have 10 percent of units inspected,S percent of
.
properties have 50 percent of
units
inspected, and 15 percent ofproperties
have 100 percent of the units inspected.
o The proposed bill requires annual inspections of all units. After the most
recent three
years
of demonstrated compliance, annual inspections may revert
back to being triennially inspected. For purposes of this fiscal impact
statement, it is assumed that "in-compliance" relates to a property being free
from
any and aU violations. Since each unit would
be
inspected annually, it
1
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is unlikely a property would be free from any and
all
violations for
all
of its
units
over
three
years.
Thus. it is
more likely
that all
multifamily
properties
would continue
to
require annual inspections. Therefore, for purposes of this
fiscal impact statement, annual inspections of
all
multifamily units are
assumed.
o The average number of
units
inspected
by a Code Enforcement Inspector is
approximately 740
per
year. Th.e
total
number of neW
units
required to be
inspected under Bill 19-15 is 60,612 (67,500 total multi-family units - 6,888
number ofunits inspected in FY14).
o To
increase the requirement of multifamily inspections from the calculated
minimum of5,700 units to 67,500 units annually. the Department of Housing
and
Community Affairs (DHCA) would need a total of97 additional FTEs.
• This includes 82 Housing Code Enforcement Inspectors, 8 Program
Manager II's and 5 Principal Administrative Aides. DHCA would
also need the associated operating expenses associated
with
vehicles,
tablets, mobile phones and general operating expenses for the
Code
Enforcement staff.
• Total annual personnel and operating
cost
is estimated to be
$8,.155,631.
• Total one-time costs (for 82 vehicles, tablets
and
mobile phones) are
estimated to be $2,110,596.
o Total estimated full year Code Enforcement cost is $10,266,227
o DHCA estimates that two IT staff positions are needed
to pro'Vide
technology
operational and maintenance support for the expanded Code Enforcement
activities. 'The cost is estimated at $187,670.
o .Below are the detailed assumptions used to formulate the cost estimates:
2
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.
~,7~9~.o.q
,..
'!I"a.i~tenance
.... .....
._"'"
", ••
,
_••'",: ,,- ,-.
'1,
-h
,_
H ••••
."
~{~~~:!l.q,fuel
3,943.00 annual replacement
d,,"
~
. . _. ,". '-
<.,-,
-I,
"
N
•••
......
24,90f?~
....
114:.
oq:'!I~tl~~!Y
overhead
7,206.00
:
Total
Vehicle Costs
~
,
~
~
"
,', •• T" ••• -, ......,
.,
'C
"
.. , '
,-
--.; -.'. ,
.-
••
599.00 '
89.99
99.99 '
49.99 :
. tablet aC:9u.is.ition
~tablet
case
.'
rnobi!ephon~a:cqyisitiol1
...
838.97 :
.mobil~ p~~,rle ~as~
. ' ....' .
~~?~ .table~.set\lic.e
J$.2,6.25/mo.L
628.68 .
mob,ile
service
(~s.~.39/mo)
943.68 Total
One-Time
"''',
Cost
:
..
Total
Annual Cost
."
.
-..
"".,
'''-.'
"
".,
"-
~,73~~~7 ·~,~4.9.~:
:TOTAL
,
,
,
~
',"
'V"
"
,
_, ...
~
,
-,
v'
~.
' . "• • •
.
*Sa/~ry(X)sts
are
as.s,Utnedat
min!mturllo~ t.~gratlekye/x ~~25p£'rr;ent,flat
{llSurancefate,
(lnd
ato.talof
15.. 7
pe~~tforretitetrJeflt
and RCA
costs ... •
,···Gene:m,OfnindlJdesoUice. supplies,
IT
sl1PP!i~i~!lSes~p~ntin(J, pmdYctjon,.maiJingan~
other
m~
qE items.
. ,....' ,
3
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• Landlord Tenant Handbook Publication (Sections 29-6(f) and 29-28(f))
1. 'fhese sections
require
providing
a
Landlord Tenant handbook
to
every
tenant.
2. There are approximately 97,500 rental units including multifamily, single
family, condominium and accessory apartments. The actual number of
tenants
is
unkno'\\'n so the cost to provide tenant handbooks
is
based on
the
number of rental units.
3. The average cost to produce one book is $1.00 and $1.15 to distribute by
majL
4.
Total one-time
cost is
approximately $209,625
to
provide one handbook per
rental unit.
5.
Based on the
DHCA
2014 Rental Housing Survey. there
is
approximately
a
23.4 percent rental unit turnover rate annually. Therefore, the ongoing cost to
provide Landlord Tenant Handbooks for the 22.815 units (97.500 x 23.4%)
represented
as
turnover is $49,052 including the
cost
to distribute
the
handbook.
• Licen.,>ing and Registration
IT
ImprovemenL<i (Section 29-31(j))
o The
Licen.<;ing and Registration section would be required
to
add certain
reports to its current
IT
system and perform
data
analysis for each ofthe
67,500 multifamily units on an annual basis.
o
Licensing
staff
would
be
responsible to review multifamily
unit
rent increases
greater
than
specified amounts/percentages and recognize patterns of
increases that may particularly harm tenants.
o This
would require updates to the current database, new reporting
capabilities, and staff time to prepare and analyze these reports.
o
In the year that
the
bill
is
implemented,
DHCA
estimates
it
will
take
approximately 180 hours of licensing and registration
st:aff
time
(ISO
hrs.
x
$45
=
$8,100) and
30 hours
MIT
staff time (30 hrs. x
$63=
$1,890). Total
implementation cost
is
estimated at $9,900.
o
Once
the
bill is
implemented,
DHCA expects
that there
will
be
less
time
required by program staffbut more tinle required
by
IT
staff
to
maintain and
update the database.
It
is estimated that
it
will take approximately 110 hours
oflicensing and registration stafftime (110 hrs. x $45
=
$4,950) and 90 hours
ofIT staff time (90 brs. x $63
=
$5,670). Therefore, the ongoing staff cost is
estimated at $10,620.
4
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3. Revenue and eA']Jenditure estimates covering at least the next 6 fiscal years.
There is no estimated change
to
County revenues.
One-Time
Cost
Vehicles, tablets and mobile phones
Production
and
dIstribution of the handbook
Staff time to
implement
reporting and analysis tools
Total One-Time Cost
2,110,596
209,625
9,990
:landlord Tenant
~"
...
..
.
,
"
.
'.
'"
~.:
:Ucensing and
Registration:
~Total
10.675,512 :
, ",948,350., , "
,1!~3~'~20
245,260 •
45~,885:
49,950 '
59,940 '
42,021,713 ,
52,697,225 '
4. An actuarial analysis through the entire amortization period for each bill that would affect
retiree pension or group insurance costs.
Not Applicable
5.
An
estimate ofexpenditures related to County's infonnation technology (IT) systems,
including Enterprise Resource Planning (ERP) systems.
Bill 19-15 would not impact the County's Enterprise IT systems, but it would affect
DHCA'g IT infrastructure. DHCA's IT systems are programmed in
ASP.net
It
is
expected that modifications
to
the currentsystern would be done in-house and would not
require purchasing additional IT hardware or software; however. DHCA anticipates a
need
for two additional JT FTEs
(see
above in
#2).
6. Later actions that may affect future revenue and expenditures if the bill authorizes future
spending.
The bill does not authorize future spending.
5
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7. An estimate of the
stafftin~e
needed to implement the bill.
Additional FTEs are required to implement bilI
19~
15. For the Code Enforcement section
there
is a
need
to
add 95
FTEs.
This
includes FIEs for inspectors, program managers
and administrative aides (see above in #2). In the year that the bill is implemented,
DHCA estimates
it
will
take approximately 180 hours oflicensing and registration staff
time
to
pertbnn
data
analysis for each oftlle 67,500 multifamily
units,
review
multifamily unit rent increases greater than specified amounts/percentages and recognize
patterns ofincreases that may particularly have an impact on tenants; and 30 hours of IT
staff
time
to update the current database. and develop new reporting capabilities.
Once the bill is implemented, DHCA expects that there
\\-ill
be
less
time required by
program
staffbut
more
time
required by IT staff to maintain and
update
the database. It
is estimated
that
it
\\-ill
take approximately 110 hours of licensing and
regi.~tration
staff
time
and 90 hours of
IT
staff
time.
8.
An
explanation of how the addition ofnew staff responsibilities would affect other
duties.
This would affect the Licensing and Registration section.
These
tasks would require
additional temporary support while current staff performs the necessary analysis.
9.
An
estimate of costs when an additional appropriation is needed.
DHCA would require $10,675,512 for the staffing and associated costs listed above in the
fiscal year the bill is enacted for implementation and $8,404.973 per year, each year
after
implementation
ofthebill
to cover ongoing costs.
10. A descriptiQn of any variable that could
affect
revenue and cost estimates.
The
fiscal impact statement assumes the
bill
requires annual inspections of all rental
units. The total
cost
estimate may be different based on the percentage ofunits required
to be
inspected annually.
It
also assumes the Tenant handbook
\\-ill
be distributed
by
maiL
Cost
would
be
less
if
the handbook
were
distributed electronically.
11. Ranges of revenue or expenditures that
are
uncertain or difficult to project.
Not
Applicable
6
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12. If a bill is likely to have no fiscal
impact,
why
that is the case.
Not
Applicable
13. Other fiscal impacts or comments.
Not Applicable
14. The follo\\-ing contributed to and concurred with this analysis:
Clarence
Snuggs,
DHCA
Tim
Goetzinger,
DHCA
Francene HiB, DHCA
Rosie McCray-Moody, DHCA
Dan, McHugh, OHCA
Luann Korona, OnCA
Jennifer Bryant, OMB
c!
i
Direct
.
."ni"feilHuJIs,
f\J!A
db-'..........
~--
.. ffice of Management and
Budget
7
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.:conomic Impact Statement
Bill 19-15, Landlord - Tenant Relations - Ucensing
of
Rental Housing­
Landlord-Tenant Obligations
Background:
This legislation would:
• Pnwide fhr
annual inspection of certain residential rental propt.'Ities,
• Require
the use of a standard fonn lease and applicable optional provision fur
certain residential rental properties,
• Require
the publication
of
certain information related
to rental
housing,
• Require the Department of Housing and Community Affairs (DHCA) to review
certain
rent
increases,
• Provide for certain remedies to be awarded
by
the Commission on. Landlord­
Tenant Affairs, and
• Provide certain rigbts to tenants facing rent
increases.
1.
The sources of information, assumptions, and metllOdologies
used.
Sources of
irdbnnation include:
• Department of
Housing
and Community Affairs
CDHeA),
• Maryland-National Capital
Park
and
Planning
Commission - Montgom(;,'l)'
County,
MD
Planning
Department
(planning)~
• Metropolitan Regional Information System, Inc.
(MRIS).
..
Greater Capital Area Association of Realtors (GCAAR),
American Community Survey
(ACS),
U.S. Census Burean,
Bureau of Labor Statistics (BLS),
u.s.
Department of Labor,
National Multifamily
HOll.'ling
CounciL'National Apartment Association
(NMHCINAA),
.. "Rent Control: Do
ECODQmists
Agree?" Economic Journal Watch (EJW),
A
Journal ofthe American Institute
fiJr
Economic Research,
Volume 6, Number
1,
January 2009,
• "Time fbrRevisionism on Rent
COlltrol?'~
Journal ofEconomic Perspectives,
Volume 9, Number 1, Winter 1995.
The economic impact statement .....rill focus on the portions of Bill 19-15 that directly
impact the economic perfbnnance ofthe local rental market such a'S.:
• Additional costs incurred
by
the landlord as required under Bi II 19-15,
• Permitting tenants to convert a
one-year
lease to a u¥o-year lease\\ithin 30
days after signing the lease, and
Page 1 of6
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Bm
19-15, Landlord -
Tenant
Relations
-Licensing
of
Rental Housing­
Landlord-Tenant Obligations
Economic Impact Statement
• Rent increase bruideJines based on
the
increase or decrease in the Consumer
Price Index for aU urban consumers (CPI-U) for the Baltimore-Washington
Consolidated Metropolitan Statistical .Area (CMSA).
Data provided by NMHCrNAA for the Eighth Congressional District (District)
present the economic benefits
of
the apartment
indu.~try.
Those benefits include: .
• Ibere are 125,100 residents in tbe District that live in apartments)
• Ibe apartment industry in the District contributes $2.7 billion to the local
economy, and
• Tbe number ofjobs related to. the apartment industry
in
the District is
approximately
25~lOO.
Data from
DHCA
as report{;'>d in
its
study entitled
Rental Apartment Vacancy Report
2012
states:
• The countyvvide vacancy rate for all surveyed units (market and subsidized
units) was 3.5 percent
in
2012, the latest date for which data are available - a
decrease of 0.2
percentage points fmm
3.7 percent
in
2011 and a decrea-se of
1.8 percentage points from
4.3
percent
in.
2008,
• The vacancy rate in 2012 varied from a high of3.9 percent for efficiency units
io
LO
percent
lor
4+ bedroom units)
• The countywide vacancy rate for market-rate units
wa..~
3.7 percent in 2012 . . . a
decrea<;e of 0.1 percentage point
from
3.8
pen.'.Cnt
in
2011,
• The vacancy rate for market-rate units varied
fTom
a high of 4.0 percent for
efficiency units
to
1.7 percent
for
4+
bedroom
units,
• In 2012, the CotUltywide turnover rate for market and subsidized units was
31.0 percent 1.5 percentage poin.ts lower than the 32,5 percent in 2011, and
• The turnover rate
for
market and subsidized unit.') varied from a high of35.5
percent for efficiency units
to
a
low
of 17.7 percent
for
4+ bedroom units.
DHCA also provided the follo\\<1ng infomlatiOl1, definitions. and daia regarding the
capitali7..ation rates, rentm on cost, and cost of capital used by DHCA and the
industry:
• Capitalization
("cap'~)
rates are used by the Maryland State Department of
Assessments and Taxation (SDAT) to determine the value
of
the pmperty
by dividing the net income of a property by a "cap" rate,
• Appraisers, lenders, and investors
are
currently using "cap" rates for
valuation ofmulti family properties in MontgomeIY County between 4.00
and 6.00 percent.
• Return on cost (ROC) is an industry standard used
by
lenders and
investors that is applied to the market value of new constnlction projects,
Page 2 of6
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Economic Impact Statement
Bill 19-15, Landlord - Tenant Relations -Licensing of Rental HOllsing­
Landlord-Tenant Obligations
• Currently the threshold measure for ROC averages between 6.50 percent
and 8.00 percent,
• Cost ofcapital or cost of debt or equity is a measure of profitability
for
a
particular rental property.
• Currently,
cost
of capital seeks
a
return from
4.50
percent to 5.75 percent
on a property,
• Return on equity and investment debt seeks a retum from 8.00 percent to
15.00 percent, and
• Historically, the threshold measures for the "cap" rate, ROC, and equity
inve&iment debt exceed the rate of inflation (please see paragraph #2).
2. A description of any variable that could affect the economic impact estimates.
The variables that could affect the economic impact estimates are:
• The cost to the landlord for providing a
C(JPY
of the landlord-tenant handbook
developed
by DHCA
to a tenant,
• The inspt.'Ction cost to the landlord
if
there is a violation of applicable laws
more than t¥.-1ce in two consecutive years,
• The current rental prices
tOr
multi-family honsing,
• The threshold rate
for
the capitalization rate, return on cost, and cost of
capital, ru1d retum
011
equity and investment debt,
• The percent chru1ge in the CPI-U
for
the Washington-Baltimore eMSA,
• The number of the tenants who would convert a one-year lease to a two-year
lea.')e within 30 days after signing the lease, and
• Permitting tenru1ts to extend
for
up to two months at the origina11ea'Sc amount
when the lease ren.ewal amount exceeds the rental increase guidelines
Under Bill 19-15, DHCA ",ill develop and distribute a copy of the landlord-tenant
handbook to landlords and require a landlord to provide a copy to a tenant upon
request, Finance assumes that the cost to the landlord is detennincd by "production"
costs and the number of tenants who request a copy. At this time, those costs are
unknown, but those costs will affect the expenses incurred
by
the landlord and those
cost~
are assumed not to be passed on to the tenant.
Bill 19-15 would require the landlord to pay the cost ofinspection
if
the landlord
violated applicable laws for two consecutive years. While such c.osts will vary from
landlord to landlord, it ,,\lill have an effect on the landlord's incom.e assuming the
landlord's cost avoidance to complying \vith applicable laws is less than the cost of
the inspectiori.
Data provided by MRIS and GCAAR
show
that rental prices increased from the first
quarter
0[2010
to the first quarter
of2015
a~
follows:
Page 3 of6
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Economic Impact Statement
BiH
19-15, Landlord - Tenant Relations - Licensing of Rental
Housing­
Landlord-Tenant Obligations
11.90%
• :tvtid-Rise (5-8 floors):
34.70%
1.62%
• Hi-Rise (9+ floors):
• Garden
(1-4
floors);
Comparing those percent increases with the increase in
th~
CPI-U of 9.01 percent
over
the
same period, rent increases
for both
garden
and
mid-rise apartments
exceeded the percent change in the CPI-V. Comparing the rent increases with the
increase in the CPI's rental equivalent index of 14.97 percent, the only percent
increase that exceeded that index occurred with mid-rise units.
However,
by
setting the proposed guidelines for rent increases to the CPI-U rather
than the CPI rental equivalent would have resulted in a reduction in the rent increases
fQr the garden and mid-rise units over the 2010 to 2015 period and have a negative
impact on revenues received by landlords. While such restrictions would
affect
revenues to landlords, tenants would receive
a positive
economic benefit by
restricting the increase in rental rates. Therefore,sllch restrictions regardiIlg
allowable rent increases would have
a
zero
Stun
impact on
the
County's economy.
Bill 19-15 would allow a tenant to covert a one-year
lea.~e
to a two-year lease vlithin
30 days after signing the lease. Assuming that the monthly rent for the two-year lease
would then be the same as for the initial one-year lease, the tenant would receive a
positive economic benefit ofmaintaining the same monthly rent for a two-year period
While the landlord would experience a negative economic benefit.
Planning provided data from the 2013 American Community Survey (ACS), U.S.
Census Bureau that show the tenure of households that rent in Montgomery County.
From that data, the percent of rental households who have "moved
in
2010 or later"
was
64.1
percent or
an estimated 201,301 residents countywide. That percent steadily
decrea'5ed to 0.1 percent for renters who "moved in 1969 or earlier." IberefQre there
are a larger percentage of renters who have recently moved into rental units in the
County and are more likely to convert a one-year lease to a two-year lease.
Finally, Bill
J
9-15 allows a tenant to occupy the unit at the current rate
tor
a
maximllll of two months
aner
the
tClm
of the
lease
expires
if
the
rent
increase
.
exceeds the applicable guideline.
nHCA
will publish the average rent im.
'Tea..~e
for
each unit under specific guidelines. If those guidelines are based on inflation. and
since data in #2 indicate that fQr both garden and mid-rise units
the
rent increase is
greater than themte of inl1atiol1, while
it
is less than
for
high-rise units,
it
is uncertain
at this time, 'what the economic cost to the landlord and the economic benefit to the
tenant
would be.
3.
Tbe
Bill's positive or negative effect,
if
any on employment, spending, savings,
investment, incomes, and property values in tbe County.
Page 4 of6
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.Economic Impact Statement
BiU 19-15, I.andlol'd -Tenant Relations - IJicensing of Rental Housing­
Landlord-Tenant Obligations
Bill 19-15 would have
a
negative
effect
on landlord's business revenue through
reduced allowable increases in monthly rents, additional expenditures incurred
by
providing a handbook to tenants requesting
it,
and costs
for
those inspedions
ill
violation of applicable laws. With the restriction on rents and the additional operating
cost.<J, those factors may have
a
negative impact on employment and economic
contributions to the County's economy as presented
by
the data cited by
NMHC/NHA.
The most significant impact to the rental housing market in Montgomery County is
the provision to limit rent increases by the rate ofinfiation. Otherwise knoVfn as
rental regulation or rent control, the National Multifamily Housing
COlmcil
(NMHC)
states that this provision could have a negative. impact on new construction ofrental
housing, reduce property tax revenues through a reduction in the capitalization rates,
reduce consumer mobility, cause a dedine in the quality of housing stock, and reduce
maintenance and repair. According to an article from EJW, the author states that
"my
reviews of the rent-controlliterattlre finds
that
economic research quite
consistently
and
predominantly frowns
on
rent control." 'I11e author's findings
covered both empirical and theoretical research on issues including housing
availability, maintenance, and housing quality.
According to an article in the
Journal ofEconomic Perspectives,
the author states that
"economists
have been
virtually unanimous
in their
opposition to rent control."
He
cites a survey conducted
by
the American Economic Association on its members and
the overwhelming response (93.5%) agree with the statemerlt that "ceiling on rents
reduces the ,}mmtity and
quality
of housing available," However; the author
proposes a revision to
that.
survey vvhich was conducted in 1992. He proposes an
alternative economic model for judging the impacts of rent controls,
and
suggests that
the housing market is imperfectly competitive rather than one that is perfectively
competitive. As such, he suggests that under the
"revised'market
model "whether
such controls (rents) are harmful or helpful depends on the particular package of
regulations adopted, which is the outcome ofthe political process." He compares the
current revisionist debate
on rent
controls
to the
revisionism
'"that
has
occurred
concerning the effects of the minimum wage."
Data provided
by
OHCA suggest that capping the increa')e in monthly rents to the
consumer price index could result in keeping those
rates
below the threshold return
on cost and retmn on capital and below the current capitaiizatioll11:lte for property
assessments. Regarding the effect on returns on cost and capital, capping rental rates
to the rate of innation may have a negative impact on investment in new rental
housing c'().llstruction.
Those potential
negative
effects on housing supply, the quality of
hOl.l.<;illg
stock, and
business income and the threshold f'dtes for property values
and
investment could be
partially off.<;et by positive impacts for tenants
by
restricting rent increases.
It
is
uncertain without
specificity
of data ifthc
nCg'dtive
effects experienced by the
Page 5 of6
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Economic Impact Statement
Bill 19-15, Landlord - Tenant Relations -Ucensing of
Rental
Housing ­
Landlord-Tenant Obligations
landlord and the rental market industry are identically offset
by
the positive economic
benefits
to the tenant. If such
effectS
are
not identically ofrset,
that
is,
the
costs
to the
landlords and rental market
industry
are greater than the benefits to the tenants, there
would
be
a negative impact on property values, business
income,
investment
and
employment
in
the County. Also,
if
BiH 19-15 discourages
investment
in new rental
property~
it
c.ould have a negative impact
011
the portion of recordation
tax
revenues
that are used.
to
support
rental assistance for
the same residents
affected
by this
legislation.
4.
If
a
Bill
is
likely
to
have no
economicimpact~
why
is that the case
The sut>,jcct legislation will have an economic impact on
the
County, however,
as
mentioned in paragraph #3, without specific
data on the
economic impact.;;
to
landlords and tenants, a quantitative measurement of the impact on savings,
investment, employment and property values is not
feasible.
5. T-.c following contributed to or concurred with this analysis: David Platt, Mary
Casciotti,
and Rob
Hagedoorn, Finance; and Lawrence Cager, DHCA
J(
·'c
11, Director
Department of Finance
.-~.-+-~-
-,,-bJ-~~-
Date
Page 60f6
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MONTGOMERY COUNTY COUNCIL
ROCKVILLE, MARYLAND
To: Members of the PlIED Committee
From: Councilmember Marc EIrich
July 23,2015
Date:
Bill 19-15, Landlord-Tenant Relations - Licensing of Rental Housing
Re:
I
am writing in advance of committee consideration of my legislation, bill 19-15,
regarding Landlord-tenant issues. After listening to comments from the public and the
Department of Housing and Community Affairs,
I
want to clarify the intent of this
legislation and reiterate that my goal with this legislation is to address some of the
existing problems in rental housing, and
I
believe that many, if not all, of the concerns
expressed can be successfully addressed.
Increased inspection schedules:
The Fiscal and Economic Impact Statement review concludes that this legislation would
require every unit in the county be inspected, which would require hiring 95 new
employees at an annual cost of more than $8 million to inspect every single unit in the
county. That is not my intent, and the legislation as drafted does not require that. Our
current inspection process is too limited, and is often complaint driven, which is not
sufficient. In our many interactions with tenants across the county, we have heard from
many who will not file complaints for fear of being labelled a "troublemaker" and facing
retaliation. While retaliation is illegal, landlords could choose not to renew a lease and as
long as they don't offer comments on a tenants behavior, it is not retaliation. I also
understand that the current definition of excessive violations may need adjusting, and I
agree that we may need some rewording. I have been talking with people in the county,
and I think that many of the issues can be addressed. I am confident that we can find a
solution that improves the inspection process and does not require the hiring of anywhere
near 95 new employees.
Addenda to leases:
Upon conversation with Department of Housing and Community Affairs (DHCA), I
understand the concerns with the legislation as proposed. I would instead propose that
any addenda must have specified language explaining to the perspective tenant that
DHCA is available to provide additional information on these issues and provide contact
information for DHCA.
Voluntary Rent Guidelines:
We have met with Montgomery Housing Partnership about their concerns about the
proposed change to the VRG. We have given them some alternatives to review and are
awaiting their comments. Again, I think we can find a successful conclusion. While the
Consumer Price Index (CPI) may not adequately reflect changes in operating costs,
COUNCIL OFFice BUILDING, ROCKVILLE, MARYLAND 20850 • 240/777-7966 -
TTY
240/777-7914
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neither does the current reliance on the rental component of the CPI, which merely
reflects the inflation
in
housing prices and has little to do with the costs of operating a
building.
Continued occupancy beyond the lease date.
We understand that this provision needs to be reworded to be consistent with state law.
I am confident that these and other issues can be addressed in a manner that improves the
current situation for tenants in a fair and reasonable manner.
COUNCIL OFFICE BUILDING, ROCKVILLE, MARYLAND 20850 • 2401777·7966· TTY 2401777.7914
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Executive Summary
While owning a home has long been seen as an integral part of "The American Dream,"
the reality for thousands of Montgomery County residents is that renting a home is the
most viable - and, in many cases, preferred - option for housing. This is particularly
true for young people living on their own, for individuals and/or families who may be new
to the area or may not have the finances required to purchase a home, and for senior
citizens who have made
th~
transition to rental living, among others who choose to rent.
The Montgomery County Tenants Work Group (TWG), appointed and first convened in
2008 by County Executive Isiah Leggett, recently completed a thorough review and
analysis of the primary issues impacting renters in the community. In conducting its
work, the group divided into four subcommittees and focused specifically on issues
related to:
1. Affordability and security;
2. Code updates, enforcement and complaints;
3. Landlord-tenant communication and tenant advocacy;
4. Particular needs of senior citizens and special needs populations.
Among the group's key findings and recommendations in each of these areas:
Issue I: Affordability and Security
1. Tenants, especially seniors and those with fixed or modest incomes, report that rents
are increasing faster than the cost of living and outpacing their incomes. Rent increases
are only tracked through an Annual Rental Facility Report produced by the County's
Department of Housing and Community Affairs, and this is based on results of a
voluntary rent survey.
Recommendations:
• Make the survey process mandatory and publish results into a verified and valid
annual report, with detailed information that is easily accessible via the Internet
and can be sorted in various ways.
2. Montgomery County issues an annual Voluntary Rent Guideline, but as its title
suggests, this endeavor is not mandatory. Owners may raise the rent each year by
any amount, although they may only impose an increase once per year.
Recommendations:
• Standardize County responses, with regard to the handling
of
al/ calls or
communications regarding rent increases; and improve the requirement process
that landlords must follow, with regard to rent increase notification.
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3. Tenants face annual rent increases that sometimes significantly exceed the
voluntary rent guidelines.
Recommendations:
• To maintain reasonable and predictable rent increases, the TWG recommends
enactment
of a
rent stabilization law for Montgomery County, which would
provide'
a
fair rate
of
return for property owners and reasonable rent adjustments
for tenants.
4. Many tenants in Montgomery County express frustration about being forced at
theend of their lease term to choose between either committing to a new year-long
lease or having to pay higher monthly rent in exchange for going month-to-month on
their rentals.
Recommendations;
• Pass
legislation to limit
or
ban rent surcharges
for
month-to-month tenants. To
increase predictability for landlords regarding unit occupancy, month-to-month
tenants under this law should be required to give at least two months' notice
before vacating
a
unit and be fully liable for rent obligations during this period.
5. Some tenants express concern that their landlords may choose to end the tenancy
at the end of the lease term, without having to specify any rationale for the eviction.
RecommendationS:
• Pass a
just-cause" eviction law in Montgomery County, which would only allow
for evictions for
reasons
that would be specified under the law, such
as
delinquent payment; criminal activity involving the tenant, on the property;
substantial damage to the rental unit;
or a
move by the owner to permanently
remove the unit
from
the rental market
so
they
or a
family member might occupy it.
6. Some tenants indicated they were concerned that if they were to partiCipate in or
form tenants' associations and/or raise code enforcement or other issues regarding
their rental units, they could be subject to reprisal, including eviction.
Recommendations:
• To protect tenants' ability to lodge housing code complaints and to organize
tenants'
associations
free from retaliation by landlords, the TWG urges the
passage
of
retaliatory eviction legislation by Montgomery County
7. Once ownership transfers to a new party as the result of a foreclosure sale, the new
owner is under no obligation to continue honoring existing rental leases for the
property. Should the new owner choose to create a new lease with existing tenants
on the property, the new owner is also under no obligation to grant tenants the same
conditions as in the previous lease.
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Recommendations;
• Recently passed federallegislalion (Helping Families Save Their Homes Act)
adequately protects tenants living in foreclosed properties, but legislation should
be enacted at the locqllevel to ensure that these protections extend beyond the
end of2012, when the federal statute is set to expire).
8. Tenants are displaced when rental buildings are converted to condominiums.
Recommendations;
• The TWG recommends that
a
majority
of
tenants would need to vote to approve
a
condo conversion; that tenants should be provided with sufficient notice and
detailed information about the conversion process; and that relocation assistance
should be made available to
a
wider pool
of
tenants.
9.
According to the list of complaints filed with the Landlord-Tenant Commission, the
highest number of complaints filed concern security depOSits.
Recommendations;
• Lease language should be clear about the use
of
the security deposit and the
interest paid, and the law should be modified
so
that
a
tenant has
a
less
cumbersome process for requesling to be present at the move-out inspection.
Issue II: Code Updates, Enforcement and Compliance
1.
Some apartment complexes have ongoing maintenance problems. Code inspectors
inspect multifamily facilities every three years.
Recommendations;
• Among
a
series
of
recommendations, the TWG concluded that buildings with
ongoing maintenance problems should be moved to an annual inspection cycle
and that owners
of
buildings with repeat violations should pay for the increased
inspection schedule.
2. Complaints seldom rise to the level of individuals filing a complaint and completing
the process, resulting in a two-track process for complaints: informal and formal.
Recommendations;
• Several recommendations have been offered to clarify and streamline the
complaint-filing process, including
a
call for aI/ information sources to clearly
explain that landlords and tenants would not be required to file
a
formal
complaint in order to access help for resolving an issue.
3. State and County law require information that must be included in a lease. While
Montgomery County has a model lease available, it is not required to be used by
landlords and, often, not easily understood by the general public.
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Recommendatjons:
• Among
a
series of recommendations, the TWG calls for provision of
a
standard
lease format and
a
Landlord-Tenant Handbook to be provided to all tenants.
4. Some tenants have reported difficulty identifying someone who will assume
responsibility to resolve their concerns. Other tenants have reported difficulty getting
past the agent to reach the owner.
Recommendations;
Rental licenses should be clearly displayed with valid contact information and
information should be provided in the Landlord-Tenant Handbook and
on
the
County web site to clarify procedures regarding repairs.
Issue III: Communication and Information
1. Montgomery County has a number of resources available for tenants, from both
government and non-government organizations, but the information is often hard to
find and there is no central source for accessing the information.
Recommendations:
• The TWG makes several recommendations for better use, dissemination and
translation of the Land/ord-Tenant Handbook; and for better communication
through use of the County's new,
311
information system. Also, for greater
outreach via media outlets and community organizations.
2. Renters in Montgomery County are culturally diverse. Although Montgomery County
has some government programs of interest and applicability to tenants,
communication about these programs to the diverse public is inconsistent.
Recommendations;
• Montgomery County should vigorously promote equal access for tenants who are
blind, deaf,
or
have limited language
or
technology access; and should convene
a
housing language access task force to address concerns and gaps with regard
to reaching various populations.
Issue IV: Tenant Advocacy
1. Although there are some groups that include some measure of tenants' rights and
advocacy regarding tenant/landlord issues in the county, there is no existing county­
wide advocacy or coordination structure.
Recommendations:
• The County should provide leadership in forming
a
Tenant Advocacy (TA)
structure funded by
a
landlord-tenant fee and it should exist independently from
County government.
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TESTIMONY ON BEHALF OF THE COUNTY EXECUTIVE
ON BILL 19-15, LANDORD-TENANT LEGISLATION RELATIONS­
LICENSING OF RENTAL HOUSING-LANDLORD TENANT OBLIGATIONS
Good evening, my name is Clarence Snuggs. I am the Director of the Department of Housing and
Community Affairs (DHCA). I am testifying today on behalf of County Executive Isiah Leggett in
support of Bill 19-15.
The production and preservation of quality affordable, special needs and workforce housing have
been top priorities for the County Executive throughout his tenure. The County Executive is
supportive of the bill's efforts to provide greater protections and transparency for County tenants.
In
2008, County Executive Leggett established a Tenant Work Group to provide a forum for county
renters to study and discuss issues and concerns of the growing renter population in the county.
After more than a year of work, the Tenant Work Group presented the County Executive with a
comprehensive report identifYing areas of common concern among renters; a listing of best
practices for tenant engagement and advocacy; a comprehensive listing of available resources for
tenants; and potential solutions for problems identified by the work group. The County Executive is
grateful to the members of this work group for their effort and vision. The County Council was
represented on this work group by Councilmember Marc EIrich, the bill's lead sponsor.
The legislation before you implements several recommendations of the Work Group.
It
also
responds to the significant growth in the County's tenant population which in 2008 was 25% of the
county population and grew to 36% in 2013, with significant additional apartment construction in
progress. Renters are an important segment of our residential population and deserve a voice in
County government.
While the County Executive supports the legislation generally, there are provisions with which he
disagrees. For example, the costs to implement annual property inspections, as required in the bill,
are significant and go well beyond that which could be addressed by the department's current
budget as well as projected future budget levels.
In
addition, the County Executive concurs with having DHCA develop some sample addenda to
_~
...... support the current standard form lease; however, the bill should allow for room for landlords and
tenants to draft their own addenda to address the specific issues that cannot be fully anticipated by
DHCA.
Also, the bill's provision which allows a tenant to convert a one-year lease to a two:.year lease
within 30 days of execution is unduly burdensome for landlords.
Finally, Section 29-55 of the bill, which describes, "rights oftenants facing rent increases," is in
conflict with State law, specifically provisions relating to continued occupancy for up to two-
months past lease expiration and requiring a minimum of 15-day notice before vacating premise-:d
4
County Executive Leggett and I look forward to working with the Council in shaping this bill into
final legislation that will provide greater protection for county tenants and address these issues.
Thank you.
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TESTIMONY OF SENATOR JAMIE RASKIN
BEFORE THE PLANNING, HOUSING AND ECONOMIC DEVELOPMENT COMMITIEE
ON COUNTY BILL 19-15
JUNE 18, 2015
Chairperson Floreen, Council President Leventhal and Councilmember Riemer:
Despite a scheduling conflict, when I learned of your hearing, I felt strongly about coming to
testify for three minutes. Thank you for hearing me, and I will be happy to provide further written
testimony if you have questions.
This bill is of great importance.
As
you know, one in three people in our County is a tenant and,
in my legislative district, it is closer to one-half. Before I became Senator, I represented dozens of
tenants who faced illegal eviction orders and dysfunctional living conditions.
As
the Senator from Silver
Spring and Takoma Park for nearly a decade, I have often gotten involved in supporting tenants who
have been burdened with hazardous, unsanitary or unfair conditions or harsh lease terms. I have also
gotten involved in helping new apartment buildings to locate here to meet the growing demand for
affordable rental housing. I have worked with both tenants and landlords.
My involvement led to my appointment to the 2010 Montgomery County Tenant Work Group
where I was represented often by my Chief of Staff Alice Wilkerson. County Bill 19 is a strong bill that
embodies the work product of that lengthy and involved process.
This bill avoids controversial proposals like rent control, but effectively advances the security
and well-being of hundreds of thousands of Montgomery County residents in their homes. It builds
impressive predictability and consistency into the law. For example, it provides for use of a standard
lease that will be made available in English, Spanish, French, Chinese, Korean, Vietnamese and other
languages as needed. It allows a tenant to rescind within two days after signing a lease much as
homeowners get the same option for several days after purchasing a house or taking out a mortgage.
The bill fosters transparency by requiring publication of important information about rental
housing and better compliance through more frequent inspections. It introduces some semblance of
fairness to our constituents who have faced skyrocketing rental increases way outside of the guidelines
by requiring three months written notice before imposition of an increase of more than 100 percent of
the applicable rent increases guideline and by permitting tenants facing rent increases beyond the
guideline to continue occupancy for up to two months after lease expiration on a month-to-month basis
at the existing pre-increase rent level.
To be sure, rental apartment living is a commodity and the rental market will obviously continue to
operate and thrive here. But it is also a way of life for more than one-third of our people, and we must
protect and improve their quality of life, their sense of security. I know you will pay close attention to all
the details here, but this bill overall is a great contribution.
*******
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-APARTMENT AND OFFICE­
BUILDING ASSOCIATION OF
METROPOLITAN WASHINGTON
·B'~
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all.
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BI9-15, Landlord-Tenant Relations-Licensing of Rental
Housing-Landlord-Tenant Obligations
JUNE
18, 2015
Good evening members of the Council and staff. My name is Nicola Whiteman, and I am
the Senior Vice President of Government Affairs for the Apartment and Office Building
Association of Metropolitan Washington (AOBA), a non-profit trade association whose
members are owners and managers of more than 112,000 apartment units and over 33 million
square feet of office space in suburban Maryland, including over 24 million square feet of office
space and more than 57,000 apartment units in Montgomery County. I appear today to testify on
BI9-15, Landlord-Tenant Relations-Licensing of Rental Housing-Landlord-Tenant Obligations.
B19-15 advances unnecessary, duplicative proposals which are codified in current law and/or
being implemented by the Department of Housing and Community Affairs. I will highlight
various concerns as a framework for discussions on the important issues and have included
detailed comments on specific provisions in the legislation for your consideration.
AOBA wants
to
commend the County Executive and Department of Housing and
Community Affairs (DHCA) for their demonstrated commitment to implementing polices and
procedures designed to promote fair and balanced rental housing policies. Critically important
has been the publication of information designed to inform tenants and housing providers of their
respective rights and responsibilities. DHCA has published various forms online, including
sample leases and the Landlord-Tenant Handbook (Handbook), all designed to address the
multitude of issues relating to tenancy and the housing provider/tenant relationship We all
benefit when the housing community is duly informed of the County's various laws and
regulations. As the Council considers propos8.ls to mandate the availability of certain
information, AOBA encourages the Council to first review the information currently being made
available.
If
the information is already being provided, then further legislative action is not
warranted. The Council must also consider whether any legislative proposal is consistent with
the stated statutory purpose. Consider, for example that housing data is collected to "ascertain the
supply and availability of rental housing and other operating characteristics." Montgomery
County Code Sec. 29-51(e). The Council should also question
who
will benefit from a legislative
proposal.
If
the purported goal is to protect tenants in need, those who are rent burdened or at
risk of being rent burdened, how will a proposal that is applicable to all tenants, regardless of
need, allow the County
to
achieve this goal?
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AOBA members share a commitment to providing safe and quality housing to the
numerous tenants residing in our communities. We note, for example, the County's vigorous
enforcement of the inspection program which includes responding to tenant complaints and
inspection requests when warranted. As the Council considers various proposals in the bill
relating to, for example, abatement of housing conditions by tenants or the expansion of existing
inspection protocols, the Council should review the existing policies which afford tenants
sufficient protections and remedies. These same laws and polices provide tenants with various
mechanisms for filing complaints should the need arise and empower the DHCA director with
the necessary authority and flexibility to enforce the County's housing laws. Note, for example,
that the law vests the director with the authority to subject rental housing to more frequent
inspections. Exercising this discretionary authority, when warranted allows for an efficient use of
limited agency resources by directing additional inspections and enforcement activity in a
targeted manner.
As the County faces a shortage of available housing amid reports that the pace of
production will need to increase to meet the need, the Council should carefully consider any
policy which might negatively impact the availability of housing. Allowing tenants the ability to
rescind a lease within two days will limit the availability of rental units, as prospective tenants
continue to shop for other options thus obligating several otherwise available units. The Council
should also be
mindful
that housing providers need the flexibility to address changes in local or
federal law or in the market. Housing providers will need to revise leases in a timely manner in
response to such changes. There are a myriad of issues that are addressed in lease addendums
and this may change based on market conditions and demand, property management company or
tenant community. Housing providers and tenants are not uniform and the Council should
hesitate before mandating uniform standards applicable to much of the rental housing stock.
Thank
you for the opportunity to testify and AOBA looks forward to working with the Council
on this important issue.
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BILL 19-1S0VERVIEW
I.
SEC.
29-6
PROPOSAL TO DIRECT DHCA TO PUBLISH STANDARD LEASE
FORM AND LANDLORD-TENANT HANDBOOK ONLINE
The standard lease language and the Handbook are currently available via the DHCA
website. Further, the model lease language in English and Spanish. As to model lease provisions,
while it might be prudent to post examples online, it will be impossible for the County to publish
an exhaustive list of sample provisions which address every scenario that might arise in the
leasing context.
It
might be advisable to instead focus on the most commonly used lease
addendums and post examples on the County's website. Notably, it is mostly smaller housing
providers and their tenants who benefit from the availability and guidance provided by sample
forms as larger housing providers have the staff and other resources necessary to generate the
necessary leasing documents and ensure compliance with all applicable laws and regulations.
BACKGROUND:
COLTA-Sample Leases:
http://montgomerycountymd.gov/DHCA/housing/landlordtenant/leases.html
Landlord-Tenant Handbook:
http://montgomerycountymd.gov/dhca/resources/files/housing/landlordtenantlhandbook olta.pdf
DHCA Response to
2012
Tenant Working Group (TWG) Recommendation No. #39
(http://www.rentersalliance.org/wp-contentiuploads/20
l2/04/Tenant_
Work_Group_­
_DHCA_Response_Mar_12_20l21.pdf)("Model lease and other landlord/tenant information
available in English and Spanish.)
II.
SEC.
22
INSPECTION OF RENTAL HOUSINGffENANT NOTIFICATION
A.
MANDATING ANNUAL INSPECTIONS
AOBA members are committed to providing quality housing and support the County's
efforts to ensure that tenants are residing in rental units that are maintained in habitable and
livable conditions and remain supporters of the housing inspection program. DHCA continues to
aggressively implement the program to protect the health, safety, and welfare of our residents.
The Council can and should continue to exercise its oversight ftmction to help ensure that the
program which requires the automatic inspection of every multifamily building in the County
continues to be a success.
Current administrative processes including triennial inspections, ensure that the County's
renters are residing in safe and habitable rental housing and provide tenants with a mechanism
for filing complaints should the need arise.
1
The law vests the DHCA director with the authority
ISee also Montgomery County Code
§
29-27 Contents oflease. "(m) Contain a covenant that the landlord
will
deliver the leased premises and
all
common areas
in
a clean, habitable and sanitary condition, free of rodents and
3
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to subject any apartment complex or personal living quarters to more frequent inspections.
Exercising this discretionary authority, when warranted, allows for an efficient use of limited
agency resources by directing additional inspections and enforcement in a targeted manner.
Tenants also have a statutory right to request an inspection and may utilize the County's 311
service to report housing complaints, even anonymously, to DRCA's Rousing Code
Enforcement division. Per DCHA's website, inspections
are
typically conducted within 5
business days (dependent on urgency, existing schedule, and caseload). Of course tenants can
and should notify the housing provider if they believe there is a housing code violation. Alerting
the housing provider to conditions in the unit, which may be unknown to management, is surely
the most expeditious means of providing notice so that the condition can be corrected. And in
those instances where a housing provider is not responsive, tenants can and should report the
alleged violations to DCHA, as noted, and request an inspection which may result in an action
before the Commission.
BACKGROUND:
Sec. 29-22. Inspection of rental housing.
(a) The Director must inspect each apartment complex and personal living quarters building
licensed as rental housing at least once every three years to determine if it complies with all
applicable laws. The Director may inspect an apartment complex or personal living
quarters building more often than the triennial inspection.
(b)
The Director may inspect any other rental housing
if
the Director receives a
complaint or a request from a landlord or tenant or believes that the rental housing does
not comply with all applicable laws.
(c) As a condition of receiving a license under this Chapter, a landlord must agree to:
(1) allow access to the Department for any inspection required under this Chapter or
Chapter 26; and
(2) notify any affected tenant whose unit requires inspection.
(d) If an inspection indicates that any rental housing does not comply with all applicable laws,
the Director may revoke the license or take other remedial action under Section 29-25.
Sec. 29-27(P): Lease must inform tenants that landlords may enter dwelling unit after due notice
and tenant has not reasonably objected.
Sec. 29-32. Prohibited Actions
(b)(A
landlord must not evict or attempt to evict, or take any
other retaliatory action against any tenant who exercises any rights conferred upon the
tenant by this Chapter or any tenant who assists another tenant in exercising those
rights. As used in this subsection, "other retaliatory action" includes any unreasonable rent
increase, threat, coercion, harassment, or violation of privacy, and any reduction in the quality or
level of services available to the tenant that is not authorized by this Chapter or state law.
Evictions or attempted evictions prohibited by this subsection are "retaliatory evictions."
Sec. 29-36. Tenants' complaints. (Statutory right to request inspection.
ven:nin. and in complete compliance with all applicable laws.
In
a condominium or cooperative housing structure,
the landlord is required
to
deliver only the dwelling unit in a clean, habitable and sanitary condition, free ofrodents
and vermin, and in complete compliance with all applicable laws." Montgomery County Code
§
29-30 Obligations
ofhousing providers.
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(a) If any affected tenant has reason to believe that a defective tenancy exists,
has
given the
landlord notice of the tenant's complaint alleging a defective tenancy, and the landlord does not
make a bona fide effort to rectify the defective condition within one week after the notice
has
been given, the affected tenant may file with the Director a complaint in writing. The complaint
must state the name and address of the landlord, the premises in question, and the particulars of
the alleged defective tenancy.
(b) If any prospective tenant believes
that
a landlord has violated Sections 29-27 or 29-28, the
prospective tenant may file a written complaint with the Director stating the name and address of
the landlord, the premises in question, and the details ofthe alleged violation.
Landlord-Tenant Guidebook, p. 32: ''NOTICE OF DEFECTS .... If the landlord fails to make
the repairs in a timely manner, the tenant should call Housing Code Enforcement at 240-777­
0311 to file a complaint and request an inspection by County Housing Code Enforcement staff."
DHCA Response to TWG Recommendation No. #18: "A blanket requirement to inspect all
buildings every year is not programmatically or fiscally practical.... No evidence has been
provided that the current administrative process is not working. Therefore, the Executive
does not support the change ..."
TWG - Table of Recommendations, Feb 25, 2013, p. 11:
"Yearly inspections are not practical and there is not evidence that the current process is not
working. Newer buildings may not need to be inspected as frequently as older buildings.
Current procedures to provide for more frequent inspections of building with a history of
violations. DHCA will explore the option of increased fees for increase inspections for buildings
with repeat violations. Tenants are notified by postcard of inspections and can remain
anonymous. County Code requires that a landlord grant access for an inspection after reasonable
notice to the tenant. If a tenant requests to be present, code enforcement staff will make
arrangements. Inspections can be scheduled outside normal business hours.
TWG - Table of Recommendations, Feb 25, 2013, p. 12: "Inspections can be scheduled
outside of normal business hours."
B.
NOTICE TO TENANTS OF SCHEDULED INSPECTIONS
Montgomery County law directs housing providers to provide due notice to tenants
before entering a unit and vests tenants with the right to reasonably object to such standard.
Notably, this language must be memorialized in any rental housing lease.
See
Montgomery
County Code
§
29-27(P). These provisions are designed to balance the housing providers'
ability to access to the unit when needed, especially for necessary maintenance and repairs with
tenants' right to privacy and quiet enjoyment. Notably, there is no restriction on the ability of an
individual tenant to ask for more advance notice. A tenant's reasonable objection, for example,
can include a request that the housing provider give 72-hours notice. If the Council elects to
impose minimum notice requirements for the DHCA inspection, then AOBA encourages the
Council to mirror existing notice periods in the law. Housing providers and,tenants alike benefit
from uniform, predictable regulatory requirements.
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BACKGROUND:
Excerpt - Apartment/Condominium Sample Lease: Landlord!Agent Access to Premises
18.
a. The Landlord/Agent may enter the dwelling unit after giving
due notice (24 hours) to the
Tenant
and the Tenant
has
not unreasonably objected, to: make necessary repairs, decorations,
alterations or improvements; supply services only by mutual agreement during normal business
hours, except in an emergency; or exhibit the dwelling unit to prospective purchasers, mortgages,
or tenants only during normal business hours, including weekends, except as the Landlord/Agent
and Tenant otherwise agree. Landlord/Agent may enter the··dwelling unit immediately without
notice to Tenant in an emergency situation.
b. Landlord/Agent may enter the dwelling unit after providing due notice to the Tenant
(24
hours)
when the Landlord is required to allow access to the Department of Housing and
Community Affairs for an inspection; or when the Landlord has good cause to believe that the
Tenant may have damaged the dwelling unit or may be in violation of County, State, or Federal
law. Any requests for service from Tenant will be construed to mean that permission to enter the
unit has been granted for the purpose of making requested repairs.
c. During the last 60 (sixty) days of the term of this Lease or any extension thereof,
Landlord/Agent may enter the premises to exhibit the same to other persons. Tenant agrees to
cooperate with Landlord or his Agent in showing the property. Tenant is advised that on
occasion he/she may be asked to exhibit the premises
on less than twenty-four (24) hours'
notice.
III.
SEC. 29-27 - PROPOSAL TO AMEND LEASE PROVISIONS IN THE LAW AND
MANDATE USE OF STANDARD LEASE AND MODEL OPTIONAL
PROVISIONS
A.
MANDATING SAMPLE LEASES AND MODEL OPTIONAL
PROVISIONS
Mandating standard lease and model proVIsIOns is unncecessary given existing
protections
in
the law and would handicap housing providers' ability to respond to changes in
the law or market. Housing providers must have the flexibility to revise leases in a timely
manner in response to changes to federal or local law, tenant needs or market demands.
Moreover, insurance companies may also have standards for language that must be included in
leases. As to current law, Montgomery County subjects housing providers to numerous
disclosure requirements designed to ensure that tenants can make informed decisions about
whether to rent a dwelling unit and are knowledgable about available rights and applicable law
during the tenancy. Current Sec.
29-27,
for example enumerates the minimum contents of
residential leases? The required information, includes, but is not limited to: (1) housing
2Housing providers must also provide prospective tenants with copies of laws and restrictions applicable to the unit
Montgomery County Code
§ 29-3
1(c)(Before a tenant executes a lease for an initial term of
125
days or longer, the
6
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providers' obligation to maintain rental housing; (2) management of security deposits; (3)
notifying tenants that general information and assistance regarding evictions is available; and (4)
access to units by housing providers for neessary repairs. Perhaps even more important is
statutory language dictating the exclusion of illegal provisions. A lease cannot, for example,
contain an agreement by a tenant to waive the right to a
jury
trial or require a tenant to pay late
fees in excees of 5%.
Notably, a lease, unlike other government reqirements, is essentially a private contract
between two parties. Mandating use of a government-issued sample contract, may amount to a
taking as the ability to negotiate lease terms is a fundamental right of property ownership.
Further, AOBA questions whether a standard form can set forth the entirety of the private party
relationship, including restrictions on a housing provider's responsibilities. Will such leases
include provisions on mandatory background checks? Sex offender registry notification? What
are the risks to tenants and housing providers if the County fails to include certain provisions in
the mandatory lease form? The Council would need to also amend the law to indemnify housing
providers from any and all actions that arise out of, or in relation to, use of a county-mandated
lease agreement.
B.
EXPANDING LIST
OF MANDTORY LEASE PROVISIONS;
AUTHORIZING EARLY LEASE TERMINATION; AND CONVERSION
OF ONE-YEAR LEASES
The bill seeks to expand the exhaustive list of some 20 requirements that afford tenants
various protetions to include the ability to rescind a lease within two days of signing and convert
a one-year lease to two-years within 30 days of signing unless a I-year lease was offered
pursuant to Montgomery County Code Section 29-28(c). Allowing tenants two days to rescind a
lease without penalty would allow individuals to obligate several apartments until they make
their final selection.
In
the interim, those units would be unavailable to prospective tenants in
need of housing and ready to sign and commit to a lease. The proposal will encourage tenants to
obligate multiple apartments without penalty. Given the existing challenge the County faces
regarding the demand for housing outpacing the supply, the Council should encourage not
discourage the availability of rental housing units.
3
Finally, the current statutory requirement
directing housing providers to provide an initial lease-term of two years obviates the need for
any amendments authorizing the conversion of one-year leases to two years. Notably, any lease
owner ofthe dwelling unit must give the tenant a copy of any rule, regulation, declaration, or covenant that binds the
owner and affects the use and occupancy of the unit or any common area associated with the unit. The lease must
expressly state that any obligation of the owner that affects the use and occupancy of the unit or any COmmon area
associated with the unit is enforceable against the tenant."
3Housing demand in the County: By
2032, 83,829
more housing units will be needed. Currently, the pace of
production will need to increase to meet the need. Sturtevant., PhD, Lisa, Vice President for Research, National
Housing Conference Executive Director, Center for Housing Policy,
A Conversation About the Housing Needs of
Montgomery
County's
Current
And
Future
Residents,
January
30,
2014,
www.montgomeryplanning.org/departrnentJwinter20 14speakers/lisa sturtevantJ2014 jan 30 lisa sturtevant slides.
Pill.
(See page
11
for chart showing housing demand and page 13 which includes a chart which demonstrates that
historic building rate currently insufficient to meet future needs.)
7
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must notify tenants that each housing provider must offer an initial term of 2-years and tenants
must confirm by initializing the lease that they accept or reject the offer.
BACKGROUND:
TWG - Table of Recommendations, Feb 25, 2013, p. 3: Executive does not support a 2-day
rescission period.
Current la,! rf!quires housing . providers to offer a mlDIIDum initial 2- year lease.
Montgomery Co. Code § 29-28 (c) requiring landlord to offer initial 2-year term and allowing
tenant and landlord to negotiate longer or shorter term after tenant is offered and rejects 2-year
term. Housing providers/tenants not prohibited from negotiating a lease for a term longer or
shorter than 2-years after tenant after prospective tenant offered and rejects 2-year lease term.
See sample apartment and condominium lease: #36 (2-year term language).
TWO-YEAR LEASE OFFER. 36. Montgomery County law requires landlords, unless there is
a reasonable cause otherwise, to offer all prospective tenants lease agreements for initial terms of
two (2) years. Such an offer may
be
accepted at the option of the prospective tenant. Prior to
entering this lease, the tenant hereby acknowledges that: (initial and date one of the following
options)
a
I was offered and accepted a two-year lease term by the landlord.
b. I was offered but rejected a two-year lease term by the landlord.
c. I received a copy of a written statement in which the landlord asserts
and explains a reasonable cause for failing to offer me a two-year initial
lease term and was advised of my rights to challenge such statement by
filing a complaint with the Montgomery
Coun~
Commission on
Landlord-Tenant Affairs, 100 Maryland Avenue, 4 Floor, Rockville,
Maryland 20850, (240) 777-0311.
IV.
SEC. 29-28 MANDATORY MINIMUM 2-YEAR TERM AT RENEWAL AND
DISTRIBUTION OF LANDLORD-TENANT HANDBOOK
A.
MANDATING 2-YEAR TERM AT LEASE RENEWAL IS HARMFUL TO
TENANTS
The proposal seeks to unnecessarily introduce rigidity into the lease renewal process and
fails
to
meet the needs of tenants and housing providers. Tenants and housing providers must be
be able to negotiate the leasing period at renewal that meets their specific needs. A tenant who
intends to relocate, for example, after the initial 2-year term, may not want a two-year lease
extension. Tenants can elect to request annual extensions of the lease or negotiate a longer lease
term that is responsive to their housing needs.
4
The Council should not mandate one standard
that will apply to all rental housing units and tenants.
4S
ee, for example, Landlord-Tenant Handbook, p. 37
("A
tenant who remains
in
a rental property after the initial
lease expires is considered to be a month-to-month tenant. All of the provisions of the lease still apply, except that
8
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BACKGROUND:
Sample apartment lease: "Copies of the Montgomery County Landlord-Tenant Handbook are
available upon request (240) 777-0311."
DHCA Response to TWG Recommendation No. #37: Handbook is available online and
landlords will be encouraged to make copies available and/or provide information as to
availability.
B.
MANDATORY DISCLOSURE OF LANDLORD-TENANT HANDBOOK
TO PROSECTIVE TENANTS
The Handbook is available online and housing providers are encouraged to provide
copies to tenants. Additionally, the standard lease provides instructions to tenants on how to
access a copy. See sample apartment lease: "Copies of the Montgomery County Landlord-Tenant
Handbook are available upon request (240) 777-0311." DHCA also encourages housing
providers to distribute the Handbook. Online access allows housing providers and tenants to
easily and quickly obtain copies ofthe Handbook.
v.
SEC. 29-47. PROPOSAL TO EXPAND ENFORCEMENT POWERS OF
COMMISSION ON LANDLORD-TENANT AFFAIRS (COLTA) TO ALLOW
TENANTS TO ABATE CONDITIONS IN THEIR UNIT
Current law and administrative processes, including current housing code enforcement
efforts and the ability to pay rent into an escrow account, provide tenants with adequate remedies
should a housing provider fail to repair defects in a rental
unit.
See
Md. Real Property
§
8-211.
Repair of dangerous defects; rent escrow (a) Purpose.... provide tenants with a mechanism for
encouraging the repair of serious and dangerous defects which exist within or as part of any
residential dwelling
unit,
or upon the property used in common of which the dwelling unit forms
a part." Additionally, the Handbook outlines the rent escrow procedures and process for filip.g a
complaint with COLTA.
BACKGROUND:
DHCA Response to TWG Recommendation No. #24: The current State rent escrow
procedure coupled with action by code enforcement to ensure that rental units are in compliance
with Chapter 26 are adequate to address legitimate concerns of tenants in this area. The
Executive does not support this recommendation."
the rental agreement is automatically renewed on a month-to-month basis. The wording of the lease determines the
length of notice given by either the landlord or the tenant in order to terminate the tenancy. Landlords of multi­
family properties are required to give month-to-month tenants at least a two months' notice to vacate. Landlords of
single-family rental units are required
to
give month-to-month tenants at least a one month notice to vacate. Under
these circumstances, it is not necessary for the tenant or the landlord to give a reason for termination.
In
lieu of being
a month-to-month tenant, to ensure a stable housing situation, tenants are encouraged to request annual
extensions of the lease agreement. If your lease is not clear or different from the notice period described above,
please call Landlord-Tenant Affairs at 240-777-3636 for clarification.")
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TWG - Table of Recommendations, Feb 25, 2013,
p.
12:
The Executive does not support the
recommendation to allow tenants to deduct the cost of repairs and believes that current escrow
and code enforcement can address legitimate concerns of tenants.
VI.
SEC. 29-51 PUBLICATION OF RENTAL UNIT SPECIFIC HOUSING SURVEY
DATA
Any
proposal to amend the law should be viewed
in
the context of whether
it
meets the
stated statutory purpose. The intent of the rental housing survey is to collect housing data "to
ascertain the supply and availability of rental housing and other operating characteristics.
See
Montgomery County Code
§
29-5 1(e)." The agency's receipt and analysis of the data provided
by housing providers allows the County to achieve this goal.
Further, if the County's intent is to make unit-specific rent information public, AOBA
believe it has no lawful authority for doing so exists, and that doing so would violate current law
regarding both tenant privacy and the purposes of rental housing data collection. County law
states that "The [DRCA] Director must share [rental housing data survey] information with other
governmental agencies that need it
without invading individual privacy"
Montgomery County
Code, Sec. 29-51 (i). There is no authorization to publicly share survey-specific information,
such as individual rent increases. AOBA also believes that requiring housing providers to
provide such infonnation would be costly to both housing providers and to the County.
Doing so would also clearly violate the Director's statutory duty to protect tenant privacy.
Tenant identification is easily discernible from a building'S rent roll. A rent increase is a change
in lease terms; and a lease is a contract between two private parties-neither of whom is the
County government, another tenant in the same building, or the general public. Moreover, public
dissemination of the data for ostensible "affordability" determinations is not an authorized use
and inconsistent with statutory language limiting use of this information to ascertain the supply
and availability ofrental housing.
While AOBA recognizes that unit-specific rents charged and increases must be provided
by housing providers "as requested by the County," the County has not, to date, done so on a
County-wide basis.
See