PHED Item 6
September 15, 2016
Worksession 4
MEMORANDUM
September 13, 2016
TO:
FROM:
SUBJECT:
Planning, Housing, and Economic
De;l~t:ent
Committee
Josh Hamlin, Legislative
Attomey~
Worksession 4: 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 Planning, Housing and Economic Development Committee worksessions were held on
April 11,2016, June 27, 2016, and August 1, 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
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.
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Background
Chapter 29 of the County Code governs landlord-tenant relations.
It
establishes the
Commission on Landlord-Tenant Affairs (COLTA) 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) 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 of requirements 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 (TWG)2 (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:
(1)
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 circulated a
revised draft of Bill 19-15 for consideration by the Committee in conjunction with the introduced
Bill. The revised draft included several changes to existing provisions of the introduced Bill
related to leases, inspections, and the voluntary rent guidelines.
It
also included two entirely new
provisions requiring landlords to provide meeting space for tenant associations and to provide
information 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 form 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 form 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 term.
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."
2
http://www6.montgomerycountymd.gov/ContentlEXEC/TWG/pdf/twg report 3-201 O.pdf
3
Additional infonnation 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:
1
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The Bill would also require leases to contain provisions that would:
(1)
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 terms unless the landlord has reasonable cause to
offer a different term. Current law generally requires two-year initial terms, but is silent on
renewals. The Bill would also add a new remedy to those available to COLTA in resolving
landlord-tenant disputes. Upon a finding that a landlord has caused a condition that violates the
terms of a lease (a "defective tenancy"), COLTA would be empowered under the Bill to issue an
order permitting 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 information 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 of the 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 Acijustments
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 permit a temmt to ask the Department to
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confinn that a rent increase complies with the law. The section would also pennit 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 ofthe 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 concerns 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 tenns 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).
Prior PHED Worksessions
The PHED Committee convened panels of stakeholders for worksessions on the Bill on
April 11, June 27, and August
1.
Panelists at these worksessions included: Clarence Snuggs,
Director, Department of Housing and Community Affairs; Stacy Spann, Executive Director,
Shauna Sorrells, Director of Legislative and Public Affairs, and Kayrine Brown, Chief Investment
and Real Estate Officer, all of the 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
Bill's sponsor, Councilmember EIrich, also attended all of the worksessions. The Committee and
panelists discussed all of the proposed changes to the law included in the introduced Bill, as well
as a revised draft of the Bill submitted by Councilmember EIrich.
During the worksessions, the Committee reached general consensus on a number of issues
presented by the introduced Bill and revised draft. The provisions to which the Committee
tentatively agreed are reflected in the Committee rewrite of the Bill at ©91-103. Additionally, the
Committee directed staff to provide additional clarification on three specific issues:
(1)
a provision
permitting a tenant to make repairs and deduct the cost from rent; (2) a provision requiring
landlords to provide information to tenants related to electric and gas energy billing; and (3) a
provision requiring certain landlords to provide free meeting space once a month to tenant
organizations discussing landlord-tenant issues. The Committee left the matter of the frequency of
inspections of rental property for this worksession. DHCA will present an alternative proposal to
the provisions of the introduced Bill and the revised draft. Finally, while the Committee at its June
27, 2016 worksession tentatively agreed, with apparent consent of the landlord-panelists, to retain
the requirement of a standard lease to be used in all written leases, Committee Chair Floreen
expressed a desire to revisit that issue.
Issues for Committee Discussion at this Worksession
Council staff suggests that the Committee structure the worksession as follows:
(1)
review
the provisions and amendments to which the Committee tentatively agreed; (2) discuss the matters
for which staff will provide additional clarification; (3) resolve question of the frequency with
which DHCA inspects rental housing; and (4) revisit the standard lease requirement.
1.
Items tentatively resolved at prior Committee worksessions:
As described above, the Committee reached tentative agreement on retaining, modifying,
deleting, or adding to many of the provisions in the introduced Bill. These are described below:
• Require the Director to publish and provide to landlords and tenants a standard form lease,
in multiple languages, which must be used in each written lease for rental housing located
in the County (©92, lines 8-18)
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• Delete references in the introduced Bill to "optional model provisions" (addenda) in
reference to the standard form lease requirements (©92, lines 11-15; ©94, lines 61-62).
• Require the Director to publish and maintain on the County website, in a printable format
and multiple languages, the Landlord-Tenant handbook (©92, lines 19-27).
• Clarify that translation of the standard form lease and Landlord-Tenant Handbook into
additional languages beyond the six identified languages is as deemed necessary by the
Director (©92, lines 17-18; 25).
• Require that the Landlord-Tenant Handbook be reviewed at least biennially, rather
biannually as provided in the introduced Bill (©92, line 26).
• Clarify that the introduced Bill's required 72 hour notice to tenants of scheduled
inspections applies only to inspections as part of DHCA's regular inspection program
(©93, lines 49-50).
• Modify the introduced Bill's provisions making landlords responsible for subsequent
inspections when violations are not corrected to clarify the process (landlord is responsible
for third and subsequent inspections when notified of a violation that is not corrected before
reinspection) and require the amount of the charge to be set by regulation (©93-94, lines
54-58).
• Require the use of a standard form lease in all written leases for rental housing in the
County (©94, lines 61-63).
• Delete the introduced Bill's provision allowing a tenant to rescind a lease within two days
after signing (©94, lines 65-66).
• Generally allow the tenant to convert a one-year lease to a two-year lease within 30 days
after signing the lease (©94, lines 67-69).
• Expand the "tenant notification" requirements of a lease to include notice that DHCA is
available to assist with questions about any addenda to the lease, and notice that the tenant
is entitled to a hard copy of the Landlord-Tenant Handbook and that the Handbook is
available on the County website (©94, lines 70-77).
• Require a landlord to offer a two-year term at each lease renewal, subject to the same
exceptions as the initial lease term ("reasonable cause") (©94, lines 80-82; ©95, lines 99­
100).
• Require that a landlord, at the beginning of a lease term, must provide each tenant with a
hard copy of the Landlord-Tenant Handbook (printed by the landlord), unless the tenant
signs a statement declining the Haridbook upon referral to the electronic version maintained
on the County website (©96, lines 115-119).
• Require a landlord to give a tenant 60 days' notice of the landlord's intent to terminate
tenancy at the lease expiration,
unless the tenant is in breach a/the lease
(©96, lines 120­
123).
• Require a landlord to provide a tenant with certain information related to electric and gas
billing (©96, lines 131-136) - See clarification 2(a) below.
• Require a landlord to post a sign, in a form approved by the Director and in multiple
languages, with information about filing a complaint and the retaliatory practices
prohibited under this Chapter (©96-97, lines 137-143).
• Require a landlord of a building or complex with meeting space to make that space
available without a fee for a tenant organization to discuss landlord-tenant issues, for the
first meeting of each month (©97-98, lines 163-167) - See clarification 2(b) below.
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• Authorize COLTA, upon finding the landlord has caused a defective tenancy, to issue an
order permitting 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
(©99, lines 206-208) - See clarification 2(c) below.
• Require that rental housing data be collected by DHCA annually (©100, lines 222-223),
and include each rental facility's zip code (©100, line 231).
• Require the Director to publish the data collected, unless otherwise prohibited by law, by
unit type and building, but not at the individual unit level. This is consistent with current
DHCA practice ©101, lines 249-261).
.
• Retain reference to the residential rent component of the Consumer Price Index for the
purpose of calculating changes in the voluntary rent guidelines (©101, line 271-272), but
provide for the establishment, by regulation, of an alternative standard better reflecting the
costs of rental housing in the County (©101, lines 273-275).
• Delete the provision in the introduced Bill requiring the Department to review all rent
increases that are more than 100 percent of the applicable rent increase guideline (©102,
lines 279-282).
• Require a landlord to give a tenant 90 days' notice prior to
any
rent increase, regardless of
whether the increase exceeds the applicable voluntary rent guideline (©102, lines 283­
288).
• Delete entirely the introduced Bill's new Section 29-55, which would have allowed a tenant
to ask the Department to confirm that an increase complies with the law and continue
occupancy for up to two months after the expiration of the lease term at the pre-increase
rent (©103, lines 306-314).
• Modify the introduced Bill's prohibition of rent surcharges to provide that a landlord may
not charge a tenant more than the rent offered at renewal when a tenant continues on a
month-to-month basis (©103, lines 315-318).
2.
Provisions needing additional clarification:
Three provisions discussed in the prior worksessions were identified by Committee
members as needing additional clarification by staff. These are: (1) the proposed requirement that
landlords provide information to tenants related to electric and gas utility costs; (2) the proposed
requirement that landlords provide meeting space without charge to tenant organizations; and (3)
the proposed provision authorizing COLTA to issue orders permitting tenants to make repairs and
abate their rent by their reasonable expense in making those repairs.
(a)
Utility billing -
COMAR
provisions - required disclosure to tenants that are
not individually metered
Councilmember EIrich, in the "revised draft" of the Bill provided to the Committee for
consideration, proposed to require a landlord to provide tenants with certain information to give
them an understanding of how their electric and gas utility costs are calculated. State regulation
already requires certain disclosures to tenants related to gas and electric energy billing: COMAR
20.26.03.02 requires a landlord to "disclose in writing to a current or prospective occupant all
material aspects of the energy allocation system including, but not limited to:
(1) The measurement unit recorded by the measuring device;
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(2)
(3)
(4)
(5)
The method for converting measurement units into the approximate energy use and
the energy costs;
The method for calculating the per unit charge for energy consumed;
How questions and complaints of an occupant concerning bills will be answered by
the owner; and
A statement that the energy allocation system:
(a) Approximates the amount of gas or electricity consumed in the dwelling
unit by use of an energy allocation or conversion formula, and
(b)
Does not measure the actual use of gas or electricity."
At the August 1 worksession, the applicability of the State requirements was discussed, and the
Committee was informed that the COMAR provisions do not apply to units in buildings
constructed before July 1, 1978. The Committee directed staff to draft language that would
reconcile the proposed provisions with the COMAR provisions, so that all tenants whose units are
not individually metered will receive the same information as to how their electric and gas bills
are calculated.
Staff recommended language to achieve this end, reflected at ©96-97, lines 125-143, is as follows:
29-30. Obligations of landlords.
(a) Each landlord must reasonably provide for the maintenance of the
health, safety, and welfare of all tenants and all individuals properly on
the premises of rental housing. As part of this general obligation, each
landlord must:
*
ill
*
*
For each unit in a building constructed before July
1.
1978, and
for which units are not individually metered, provide the tenant
with all information required under the Public Utilities Article of
the MaITland Code and applicable COMAR provisions
governmg:
(A)
electric and gas submeters: and
an
(b)
energy allocation systems.
*
*
*
Would requiring a landlord to provide free space for a tenant organizing
group violate fair housing law?
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Bill 19-15 would amend existing law concerning the provision of meeting space to tenants
by landlords. Currently, Section 29-33(b) provides that "tenants and tenant organizations have the
right of free assembly in the meeting rooms and other areas suitable for meetings within rental
housing during reasonable hours and upon reasonable notice to the landlord to conduct tenant
organization meetings." The law permits a landlord to "charge a reasonable fee for the use of the
meeting rooms or common areas, but the charge must not exceed the regular schedule of fees for
the facility to other groups." Bill 19-15 would prohibit a landlord from charging "a tenant
organization a fee for the first meeting of each month held to discuss landlorq-tenant issues." At
the August 1 worksession, panelist David Hillman indicated that this provision would violate fair
housing law; staff was directed to consult with the County Attorney's office to determine the
validity of this claim.
The Fair Housing Act (FHA) (42 U.S. Code §§ 3601-3619 and 3631), the federal law that
bans housing discrimination across the United States, doesn't ban all forms of it. Instead, the FHA
seeks to ensure that applicants or prospective tenants and current tenants don't get treated
differently because of certain characteristics or attributes they have. A group of people who share
such an identified characteristic is collectively known as a "protected class." The FHA, to date,
includes seven protected classes: race, color, religion, national origin, sex, disability, and familial
status. "Familial status" refers to the presence of at least one child under 18 years old, and also
protects prospective and current tenants who are pregnant or in the process of adopting a child.
Council staff spoke with attorneys in the County Attorney's office, and all believe that this
provision would neither discriminate against any protected class, nor would it compel such
discrimination. As such, it would not violate the FHA.
Should the Committee recommend retaining this provision in the Bill, staff recommends
further defining "tenant organization" by reference to the definition of that term in Chapter 53A­
Tenant Displacement. In that Chapter, "tenant organization" is defined as an association of tenants
in rental housing that:
(1)
represents tenants ofat least 30 percent ofthe occupied units in the rental
housing; and (2) is certified by the Department according to Executive regulations.
4
Adding
reference this definition would help ensure that a tenant organization is a bona fide representative
of tenants, and would avoid potential confusion as to what groups might qualify for this benefit.
This change could be made by amending ©97, lines 163-165 as follows:
conduct tenant organization meetings. A landlord must not charge a
tenant organization. as
defined in Chapter
~3A.
a fee for the first
meeting of each month held to discuss landlord-tenant Issues, but
[[The]] the landlord may charge a
*
*
*
4
COMCOR
53A.OO.Ol.02
Certification of Tenant Organization
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(c)
Is there a way to improve the provision authorizing COLTA to issue an
order allowing a tenant to make repairs and abate the tenant's rent in an
amount equal to the tenant's reasonable cost?
At the August 1 worksession, the provision of the introduced Bill that would authorize
COLTA to issue an order upon finding the landlord has caused a defective tenancy, to issue an
order permitting 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. Council staff
pointed out that existing Section 29-47
5
allows the Commission to award, among other things:
• Return of all or part of any rent already paid to the landlord after the landlord was notified
of the condition;
• An
award of damages sustained by the tenant as a result of the defective tenancy, limited
to the actual damage or loss incurred by the tenant. The award must not exceed $2,500 per
affected dwelling unit.
• A reasonable expenditure to obtain temporary substitute rental housing in the area.
Also, under Section 29-l0(b)(3), the Commission on Landlord-Tenant Affairs may "enforce
this Chapter through any appropriate means, including ordering repairs by a landlord or tenant."
In addition to these County law remedies, State laW> provides for payment of rent into escrow
when serious and substantial defects and conditions. It also allows the Court to terminate the lease,
order that the amount of the rent due be reduced, or order the landlord to correct the conditions.
At the August 1 worksession, the Committee heard concerns from landlords that allowing
tenants to make repairs could lead to substandard work and expose landlords to legal liability.
Councilmember EIrich indicated that the intent of the provision was to address situations where a
leaking pipe presents an immediate risk of flooding, or when an air conditioning unit malfunctions
during a heatwave.
It
became clear to the Committee during the worksession that the COLTA
process takes over two months, would not empower a tenant to make repairs to alleviate conditions
needing immediate attention.
It
was suggested that the State law and County code enforcement are the best methods to
address critical problems. In fact, Section 26-15 provides a process for resolving "severe
conditions" arising from violations of County Housing and Building Maintenance Standards and
the County Fire, Electric, and Building Codes. Subsection 26-15(a) provides that "[i]f the
enforcing agency finds that immediate action is needed to protect the public health and safety as a
result of a violation of this Chapter, Chapter 22, Chapter 8, or Chapter 17, the enforcing agency
may, without notice, conference, or hearing, order the owner to correct or abate the violation." The
subsection continues "[i]f the owner does not abate or correct the violation as directed ... the
Staff has included all of subsection 29-47(b) in the Committee rewrite for clarity as to the breadth of COLTA's
authority to award relief upon a finding of a defective tenancy caused by a landlord.
6
Maryland Code, Real Property § 8-211,
Repair of dangerous defects; rent escrow.
"Serious defects" include:
(1)
Lack of heat, light, electricity, or hot or cold running water, except where the tenant is responsible for the payment of
the utilities and the lack thereof is the direct result of the tenant's failure to pay the charges; (2) Lack of adequate
sewage disposal facilities; (3) Infestation of rodents in two or more dwelling units; (4) The existence of any structural
defect which presents a serious and substantial threat to the physical safety ofthe occupants; or (5) The existence of
any condition which presents a health or fire hazard to the dwelling unit.
5
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enforcing agency may take any action reasonably necessary to abate or correct the condition or
may contract to have the necessary action taken." Under this section, the owner is liable to the
County for all reasonable and necessary costs the County incurs in addressing the condition, and
the County may place a lien on the property, collecting the debt as ordinary taxes are collected.
Councilmember Leventhal indicated a desire for staff to come up with alternative language
that would allow a tenant to make repairs and abate rent for the reasonable expense when a landlord
does not make needed repairs in a timely manner. However, due process considerations present an
obstacle to the County giving a tenant the right to effectively spend a landlord's money on a repair.
Staff believes that the above-referenced provision of Chapter 26 as well as the State rent escrow
law, present the best legal means to address critically needed repairs not made by a landlord in a
timely fashion. The provision in Bill 19-15 may be of some use in cases where a landlord is
particularly obstinate in refusing to make less serious repairs that nonetheless create defective
tenancies, but Council staff does not believe that COLTA and tenants will make use of this
provision with great frequency.
3.
DHCA inspections ofrental housing:
Proposed annual 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 of buildings 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.
7
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
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 nwnber of units moved to triennial
inspections would be minimal (see ©14-15). OMB concludes that moving to an annual inspection
The Rental Satisfaction Survey compiled responses of588 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 Bill 19-15 seeks to address.
7
11
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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 $2,110,596.
Bill 19-15 also includes language that would also require a landlord that is a frequent
violator (more than twice in two consecutive years) to pay the costs of the next inspection. The
Bill currently provides that this cost is "as determined by the Director." Imposing this cost on
landlords could offset the additional cost of inspections somewhat, and the Committee may wish
to consider options in this regard.
Councilmember Eirich proposed to change the Bill's inspection requirements to remove
the language requiring the inspection of all units, but would retain the annual inspection schedule.
The effect of this change would allow DHCA to retain the discretion it currently has in deciding
which units to inspect, but would require the inspections to be done each year rather than every
three years. This change would significantly reduce the Bill's fiscal impact, but the Bill would
still require roughly three times the number of inspections required under existing law. OMB
provided a revised fiscal impact statement estimating the fiscal impact of the revised draft's
inspection requirement
111-119).
8
OMB estimates that this schedule would require the addition
of 19 FTEs in DHCA, at an annual cost of$I,685,880, with initial operating expenses of$504,027.
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) While the discretion to inspect more frequently exists in the existing law, there is not a
mandate that properties with chronic violations be subject to increased inspections.
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 County­
wide inspections. In considering this issue, it is also worth considering that the TWO Report
recommendation was that "buildings with ongoing maintenance problems," not necessarily all
buildings, be moved to an annual inspection cycle.
The Committee requested that DHCA offer an alternative to the proposals that would
increase inspections across the board. DHCA's alternative proposal was not provided to staff by
the time this packet went to print, but will be provided and discussed in an addendum once it has
been received. The Director will be prepared to discuss DHCA's proposal at this worksession.
4.
The 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
avail~ble,
it is not required to be used, and "is
8
A revised Economic Impact statement on Bill 19-15 was provided on June 24, 2016. See
©
120-125.
12
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often not easily understood by the public." As introduced, 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 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.
Currently, DHCA offers model leases in English and Spanish (see ©76-86). In addition,
Section 29-27 of the County Code (©87-89) requires thatall leases for rental housing contain (or
not contain) several specific provisions and meet other specific requirements. 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 of making the standard lease available in many
different languages, though the revised FIS does not seem to show a significant fiscal impact (see
©111-119). 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 to 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
probability that most tenants do not read through an entire lease document, whether it is written
clearly or not.
At the June 27 worksession, Council staff suggested 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-I settlement statement,9 could clearly state a tenant's rights and
9
https://portal.hud.gov/hudportal/documents/huddoc?id=
1.
pdf
13
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obligations, in a concise fonnat more likely to be read than even a clearly written lease. Such a
summary could include, tenn of lease, 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.
At the June 27 worksession, the landlord-panelists seemed to indicate that a required
standard fonn lease would be workable after all. The Committee, at that worksession, reached
consensus, in the apparent absence of objection from the panelists, to retain the Bill's proposed
requirement that a standard fonn lease be used in all written leases for rental housing in the County.
However, at the conclusion of the August 1 worksession, Committee Chair Floreen expressed a
desire to revisit the issue.
Subsequently, in a letter dated September 2, 2016 (©126-129), attorney Douglas M.
Bregman, who previously served on a Statewide commission tasked with creating a standard fonn
lease for use throughout Maryland, identified problems with implementing a standard lease
requirement. Mr. Bregman indicates that a standard lease requirement is not feasible "due to the
ever changing nature of landlord-tenant law." He points out that a standard lease requirement
would not be applicable in all municipalities, which could cause confusion for tenants.
IO
Mr.
Bregman also suggests that requiring a standard lease may not achieve the goal of increasing
tenants' understanding oftheir rights and responsibilities under the lease.
Council staff continues to believe that an effective alternative to a required standard lease
would be a required summary of rights and responsibilities. The summary could be established by
by method (2) regulation and required as part of each lease in Sec. 29-27, and set forth the tenn of
lease, amount of rent, responsibility for utilities, and tenant obligations under the lease. Bill 19­
15' s proposed notice requirements concerning the availability of the Landlord-Tenant Handbook
and the availability of DHCA to assist tenants could also be included in the document. If the
Committee wishes to take this approach, staffhas drafted an amendment that would accomplish it
at © 130-131.
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
10
Circle #
1
11
12
13
27
29
33
County Code Chapter 29, Landlord-tenant relations, which would impose the standard lease requirement,
does
not apply
in the following municipalities: The Town of Barnesville, Chevy Chase Village, the City of Gaithersburg,
the Town of Garrett Park, the Town of Laytonsville, the City of Rockville, and the City ofTakoma Park.
14
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Sen. Jamie Raskin
Nicola Whiteman, AOBA
Mitchell Farrah, WMCCAI
James C. Perry
Jheanelle 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
Committee rewrite of Bill 19-15
Summary Table
Revised Fiscal Impact statement
Revised Economic Impact statement
Bregman letter, September 2,2016
Possible Lease Summary Amendment
F:\LAW\BILLS\1519 Landlord - Tenant Relations\PHED Memo 09.15.2016.Docx
34
35
47
50
52
53
57
58
60
61
64
76
87
90
91
104
111
120
126
130
15
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Bill No.
19-15
Concerning: Landlord -Tenant Relations
- Licensing of Rental Housing ­
Land lord-Tenant Obligations
Revised:
04/13/2015
Draft No. _7_
Introduced:
April 21, 2015
Expires:
October 21, 2016
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
---,-,-No::::..:n..:..::e~
_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilrnember EIrich
Co-Sponsor: Councilrnember Navarro
AN
ACT to:
(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
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 brackets]]
* * *
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 unaffected 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
8
*
~
standard form
*
*
W
The Director must publish and provide on request to landlords and tenants
lease, drafted in clear language understandable to persons
without legaltraining, 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
~
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.
9
10
11
12
13
14
15
16
17
18
19
ill
The Director must publish and provide on request to landlords and
tenants, and maintain on the County website,
~
Landlord-Tenant
Handbook to
~
as
~
practical guide for landlords and tenants
20
21
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
11
as necessary.
22
23
24
25
26
27
*
29-22. Inspection of rental housing.
(a)
*
*
[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
36
37
38
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.
W
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.
39
40
41
42
43
44
45
46
47
[(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 at least
72 hours in advance of the scheduled inspection.
[(d)]
W
If an inspection indicates that any rental housing does not comply
48
49
50
with all applicable laws, the Director may revoke the license or take other
remedial action under Section 29-25.
ill
A landlord of licensed rental housing found in violation of applicable
laws more than twice in two consecutive years must
~
the cost of the
next inspection as determined
hy
the Director.
51
52
53
54
*
29-27. Contents
of lease.
*
*
o
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BILL
No.
19-15
55
56
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58
59
[Each] A landlord must use the standard form lease and any appropriate model
optional provisions furnished
Qy
the Director for each lease for rental housing located
in the County!. Each lease must:
*
(t)
lease.
*
*
Allow the tenant to rescind the lease within two days after signing the
60
61
(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).
62
63
64
65
(y)
Notify the tenant that general information and assistance regarding
evictions are available from the Department.
66
29-28. Leasing requirements generally.
67
68
69
70
71
72
73
*
(c)
*
*
years~
The landlord must offer each lease for an initial term of
[2]
two
and
~
two year term at each renewal, unless the landlord has reasonable
cause to offer a different [initial] term.
*
(3)
*
*
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
~
two year term at each renewal, unless the
years~
74
75
76
77
78
and
landlord has reasonable
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.
f:\law\bills\1519 landlord -tenant relations\bill7.docx
79
80
81
82
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BILL
No. 19-15
83
84
(B)
The landlord offered me a
[2]
two-year lease term but I
rejected it.
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 term; 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 term, each landlord must provide each tenant
with
~ ~
of the Landlord-Tenant Handbook furnished
.by
the Director,
unless the tenant
~ ~
statement declining
~
hard
~
and accepting
referral to the Landlord-Tenant Handbook maintained on the County
website.
93
94
95
96
97
98
99
*
29-31. Landlord notice requirements.
*
*
(a)
Each landlord ofan apartment complex in the County must:
(1)
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.
100
101
102
103
104
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.
105
106
107
108
*
*
*
*
*
*
29-47. Commission action when violation found.
(j)
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BILL
No. 19-15
109
110
(b)
If the Commission or panel finds that a landlord has caused a defective
tenancy, it may award each party to the complaint one or more of the
following remedies:
111
112
*
(6)
housing in the area.
(7)
An
order pennitting
*
*
113
114
115
A reasonable expenditure to obtain temporary substitute rental
~
tenant to correct the condition that
116
117
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
tID
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.
126
127
128
129
130
131
132
133
134
135
(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.
(c)
The data [collection frequency] must be [on an annual basis] collected
annually.
(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 collected 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:
(1)
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
The location of [the] each rental facility.!. 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;
(2)
(3 )
(4)
(5)
(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.
U)
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
121
the following categories:
ill
100 percent or less of the applicable rent increase guideline;
"0
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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
ill
ill
ill
(k}
greater than 100 percent,
!ill
to 125 percent ofthe applicable rent
increase guideline;
greater than 125 percent,
!ill
to 150 percent of the 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.
(c)
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
(ill
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
--ri)
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BILL
No. 19-15
192
193
194
195
196
197
198
199
200
201
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203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
increase of more than 100 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:
(1)
The amount of monthly 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)
*
*
~
29-55. Rights of tenants facing rent increases.
A tenant may ask the Department to confirm that
complies with this Article.
(h)
rent mcrease
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
U
days' notice to the landlord before vacating
the premises.
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BILL
No.
19-15
220
221
222
223
29-56. Rent surchare:es prohibited.
A landlord must not charge more than the rent charged for the prior lease tenn
when
f!
tenant continues occupancy on
f!
month-to-month basis.
[Sec. 29-55] Sec. 29-57 - 29-65.
Approved:
224
225
Nancy Floreen, President, County Council
Date
226
Approved:
227
Isiah Leggett, County Executive
Date
228
229
This is a correct copy o/Council action.
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
MUNICIP ALITIES:
PENALTIES:
Class A violation
F:\LAW\BILLS\1519 Landlord - Tenant Relations\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
~
Jelmifer A. Hughes, Director, Office of Management .
get
~orL
Joseph F. Beach,
Dire~tor, DepartmentofFinance~,--:-s
FEIS for Bill ] 9-15 LandlOl"d - Tenant Relations- Licensing of
R~al
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 Austill, Offices of the County Executive
Joy Nurmi, Special Assistant
to
the County Executive
Patrick Lacefield, Director, Public Information Office
Joseph F. Beach, Director, Department of Finance
Clarence
J.
Snuggs, Director, Department of Housing 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
BiIl19-15
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 of a standard form lease, requires publication ofcertain information related to
rental housing, requites DHCA to review rent increases, provides for remedies to be
awarded by the Commission on Landlord - Tenant Affairs, 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 is no estimated change in County revenues due to Bill 19-.15. While the bill would
require reimbursement of inspection costs under certain circumstances, that is too
speculative to estini3te.
Bill 19-15 impacts expenditures in three areas: Code Enforcement, publication of the
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 DRCA 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 of multi family housing units are
required to be inspected on an annual ba..<;is. 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 ofullits inspected, 5 percent of
properties have 50 percent of units inspected, and 15 percent of properties
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 triennial.ly inspected. For purposes of this fiscal impact
statement, it is assumed that "in-compliance" relates to a property being free
from any and all 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. The 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 of units 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 (DHeA) would need a total of97 additional FTEs.
II
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 O)de
Enforcement staff.
Total annual personnel and operating cost is estimated to be
$8,155,63l.
Total one-time costs (for 82 vehicles, tablet<; and mobile phones) are
estimated to be $2,110,596.
II
II
o Total estimated full year Code Enforcement cost is $10,266,227
o DHCA estimates that two IT staff positions are needed to provide 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 io fommlate the cost estimates:
2
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~,739.00
: maintenance
. .
.~/41q:~
.
fuel
3!943:Q().ial'lnlJal
repl~c.f!~~n!
.....
~.14.<x.>.
.
:f'!l~r:'t~ly ()y~thead
.
!,.Z~~t)O 'Totaly~~~le
Costs
599.00 .
89:99.
99.99 '.
ta bl{!t iicquisitio n
:tablet case
rrlObilephon~
tic:q\j!sition .
'l1lobil~
ph,?oec:ase ..
49.99 •
315.00 . tablet service ($26.25/mo)
838.97 '
628.68'r:no~ii~;~~~~{$5~}9i~c?)
943.68
,Tota!.
.
,.
One-Time
".
Cost :Total Annual Cost
.
..
'.
..
",.
,.
.
~.
~"
'.
2~/!38~9! '.~,~49.68,
.
~~,€:l?9
. . .
",z~2/0n~
...",, , .
1G~~,li~p/M'2~L~:.:;f.'·":LCl~~:o:}?',I2£:=:L2~i.l;o£!~:,L.,iq217$7a~}J,~~}}g4::j~":~;,2
'.'" ... ;.;;;,
: Grade 25 - PMII
8.0 .
1,q0.9.~~
, ...... " __ "'''' ___ .. _...._., ..__
,.._~.~.:~
..... ___"
... _.......'. Total
C<:l~".~'.;~~~~~!.,,~/;~«>.!.~~~J
~Gra
de. "
.·;ITT
ed1':,:':
·c,;~:".~.~·;c.;:;wX.Q::::~';.,w.'.,~;L."",:~~!9£9;.~:.·
.
2!,1;~!~;:,>~L.: .7.t&g~.·
~~~~~~~ji'~:~~JI~3P~_~_"._."",
..
"'..
1.0'
. . . ___
,.mm~~~ ~J1~l·:·.·
';.;,.±+t;841."
•.
TOTAL
.
.Total
C()~,
...
~~~!~!~,
97 FTEs'
8,~45/3~~
.'.
......
,
"
.,.". ..
..
",
.
~"~'"
...
*Sal~rycosts
a.re ass.umeaat minimum ftJr thegrode
.'
".
••
,.
,"'
~
Jevetx.
~:25perrent,flat
ipsurallce rate, and a
t~taJ
0/15,
7
perce~tforretiremenr.
a.nd
FICA
C05ts
..
,
", "
••••• ,
"'
"
~.'
u"General
Of"
incivdes office supplies, IT supp/ies/licenses,
printing,
production, mailing and other mise OE items
'.
'""'
,"
••• ",
"h··
~
' .
••••• "
,.
","
~
••••••••
"'
••
•••
..
"
••
'"..
••
",.
'".,.
••
,
3
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• Landlord Tenant Handbook Publication (Sections 29-6(t) and 29-28(f)
1. These 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 unknown 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
maiL
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.
• Licensing and Registration IT Improvement" (Section 29-31
(j))
o The ljct.'IlSing and Registration section would be required to add certain
reports to its current IT system and perform data analysis for each of the
67,500 multifam.ily 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
hann
tenants.
o This would require updates to the current database, new reporting
capabilities, and staff time to prepare and analyze these reports.
() In the year that the
bill
is implemented,
nHCA
estimates
it
will take
approximately 180 hours of licensing and registration stafItime(l80 hrs. x
$45 =$8,100) 'and 30 hours of IT 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 time required by IT staff
to
maintain and
update the database.
It
is estimated that
it
v.rill
take approximately 110 hours
of licensing and registration staff time (110 hrs. x $45
=
$4,950) and 90 hours
of IT staff time (90
11t8.
x $63
=
$5,670). Therefore, the ongoing staff cost is
estimated at $lO,620.
4
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3. Revenue and expenditure 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
2,330,211
~
.,.~,.,.,~
_"
~V~'N··
.Summary of Expenses
l
·ttit~1
.......
~9'.26?,~27.;
'...
.........
18~,~?0.
; .
. .....
2q~,625:
9,990 •
10,675,512 :
. 40,778,i?3 .
948,350 ..
245,260
49,950 .
42,021,713 .
.... 5.1,044,380 .
.
~,138,920·
454,885
.............
59,940 .
52,697,225
. landlord
Tenant
. Licensing
and
Registration.
Total
4. An actuarial analysis through the entire amorti7..ation period for each bill that would affect
retiree pension
or
group insurance costs.
Not Applicable
5.
Anestimate of expenditures related to County's infOlmation 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's IT infrastructure. DHCA's IT systems
ate
programmed in ASP.net.
It
is
expected that modifications to the current system would be done in-house and would 110t
require purchasing additional IT hardware or software; however, DHCA anticipates a
need for two additional IT FTEs (see above in #2).
6. Later actions that may affect future revenue and expenditures ifthe bill authorizes future
spending.
The bill does not authorize future spending.
5
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7.
An
estimate of the staffHme needed to implement the hill.
Additional FTEs are required to implement bill
19-15.
For the Code Enforcement section
there is a need to add
95
FTEs. This includes FTEs 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 of licensing and registration staff
time
to
perform
data analysis for each of the 67,500 multifamily units, review
multifamily Wlit rent increases greater than specified amounts/percentages and recognize
patterns of increases .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, DnCA expects that there ¥iill
be
.less time required by
program.
~1aff
but more time required by IT staff to maintain and update the database.
It
is estimated that it will take approximately 110 hours of licensing
and
registration stail
time and 90 hours ofIT staff time.
8.
An
explanation of how the addition of new staff responsibilities would affect other
duties.
This would affect the Licensing and Registration section. These tasks would require
additional temporary support while current staflperiorms 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 of the bill to cover ongoing costs.
10. A
description of any variable that could affect revenue and cost estimates.
The fiscal im.pact statement assumes the bill requires annual inspections of all rental
units. The total cost estimate may be different based on the percentage of units required
to be inspected annually.
It
also assumes the Tenant handbook will be distributed by m.ail.
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.
1ne
follovving contributed to and concurred with this analysis:
Clarence Snuggs, DHCA
Tim Goetzinger, DHCA
Francene Hill, DHCA
Rosie McCray-Moody, DHCA
Dan, McHugh; DHCA
Luann Korona, DHCA
Jennifer Bryant, OMB
~~;e
of
Management
and
Budget
~~2.,m
.
~~--
.
~LB.Ji5
_
Date
7
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Economic Impact Statement
Bill 19-15, Landlord - Tenant Relations - Uccnsing of Rental Housing­
Landlord-Tenant Obligations
Background:
This legislation would:
• Provide
f()r
annual inspection of certain residential rental properties,
• Require the use of a standard fonn lea..<;e and applicable opti()nal provision for
certain residential rental properties,
• Require the publication of certain information related to rental housing;
• Require the Department ofHousillg and Communiiy Affairs (DHCA) to review
certain rent increases,
• Provide for certain remedies to be awarded by the Commission on Landlord­
Tenant Affairs, and
.. Provide certain rights to tenants facing rent increases.
1. The sources of information, assumptions, and methodologies used.
Sources
of
information include:
• Department of Housing and Community Affairs (DHCA),
• Maryland-National Capital Park and Plmming Commission - Montgomery
County, MD Planning Department (Planning),
• Metropolitan Regional InfclImatl0n System, Inc. (MRIS),
.. Greater Capital Area Association of Realtors (GCAAR).
• American Community Survey (ACS), U.S. Census Bureau,
• Bureau of Labor Statistics (BLS), U.S. Department of Labor,
• National Multifamily Housing Council/National Apartment Association.
(NMHCINAA),
• "Rent Control: Do Economists Agree?" Economic
Journal Watch
(EJW),
A
Journal ofthe American Institute
fhr
Economic Research,
Volunle
6,
Nllmber
1, January 2009,
• "Time for Revisionism on Rent Control?"
Journal ofEconomic Perspectives,
Volume 9, Number 1, Winter 1995.
The economic impact statement ,vill focus on the portions of Bill 19-15 that directly
impact the economic performance
ofthe
local rent.<t1 market such as:
• Additional costs incurred by
the
Imldlord as required under
Bi!l19-15,
• Permitting tenants to convert a one-year lease
to
a two-year lease ''rithin
30
days
after
signing
the
lease, and
Page 1 of6
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Economic Impact Statement
Bill 19-15,
Landlord - Tenant Relations -Licensing of Rental Housing ­
Landlord-Tenant Obligations
• Rent increase guidelines based on. the increase or
decrea.~e
in the Consumer
Price Index for all urban consumers (CPI-U) for the Baltimore-Washington
Consolidated Metropolitan Statistical Area (CMSA).
Data provided by NMHC;NAA it)r the Eighth Congressional District (District)
preSl'Tlt the ccoI1omic benefits of the apartment industry. Those benefits include:
• Ibere are 125,100 residents in tbe District that live
in
apartments,
• 111C
apartment indur:.try in the District contributes $2.7 billion to the local
economy, and
• '.The
number ofjobs related to the apartment industry in the District is
approximately 25,100.
Data from
DHCA
as reported in its study entitled
Rental Apartment Vacancy Report
2012
states:
• Ibe countywide vacan.cy rate for all surveyed units (market and subsidized
tmits) "vas 3.5 percent in 2012, the latest date for which data are available - a
decrease of 0.2
perCl~ntage
points from 3.7 percent in 2011 and
a
decrea<.>e 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 1,0 percent for 4+ bedroom units,
• ':nle countywide v.acancy rate for market-rate units wa..;;
3.7
percent in 2012 ...... a
decreao:;e of 0.1 percentage point from 3.8 percent in 2011,
• The vacancy rate for market-rate units varied from a high of 4.0 percent for
efficiency units to
1.7
percent for 4+ bedroom units,
• In
2012, the CotUltywide turnover rate
fix
market and subsidized units was
31.0 percent-- 1.5 percentage points lower than the 32.5 percent
in
2011, and
• Tbe tumover rate for market and subsidized units varied from
a
high of 35,S
percent for efficiency units to a low of 17.7 percent for 4+ bedroom units.
DHC:A
also provided the folloVv1ng infon!lation, definitions, and data regarding the
capitalization rates, return
011
cost, and cost of capital used by DHCA and the
indu.<;try:
• Capitalization Ccap") ratcs are used by the Maryland State Department of
Assessments and Taxation (SDAT)
to
determine
the
value of the property
by divid ing the net income of a property by a "cap" rate,
.. Appraisers, lenders, and investors are currently using "cap"rates for
valuation of multifamily properties in Montgomery County between 4.00
and 6.00 percent.
• Return on cost (ROC) is an industry standard ll';ed
by
lenders and
investors that is applied to the market value of new constmction projects,
Page 2 of6
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](conomic Impact Statement
Bill 19-15, Landlord - Tenant Relations -Licensing of Rental Housing­
Landlord-Tenant Obligations
• CUITently the threshold measure ror ROC averages between 6.50 percent
and 8.00 percent,
• Cost of capital or cost of debt or equity is a mea')ure of profitability
1(1f
a
particular rental property,
• Currently, cost of capital seeks a return from 4.50 percent to
5.75
percent
on
a
property,
• Return all equity and investment debt seeks a return from 8.00 percent to
15.00 percent, and
• Historically, the threshold measures for the "cap" rate,
ROC,
and equity
investment debt exceed the rate of inflation (please seeparagrapb
#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 copy ofthe landlord-tenant handbook
developed
hy DHCA
to
a
tenant,
• The inspection cost to the landlord if there is a violation of applicable laws
more than
hvice
in two consecutive years,
• The current rental. prices for multi-family housing,
• The threshold rate for the capitalization rate, return on cost, and cost of
capital, and retool
OIl
equity and investment debt,
• The percent change in the
CPI-U
for the Wa.'1hington-Baltimore
CMSA,
• The number of the temmts who would convert a one-year lease to a two-year
lea<;e within 30 days after signing the lease, and
• Permitting tenants to extend for up to two months at the originallea'le amount
when the lease renewal amount exceeds the rental increase guidelines
Under Bill 19-15,
D11CA
will
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 determined
by
"production"
costs and the number of tenants who request a copy. At this time, those costs are
unknown, but those costs will ajTect the expenses incurred by the landlord and those
costs are assumed not to be passed on to the tenant.
Bill 19-15 would require the landlord to pay the cost of inspection ifthe landlord
violated applicable laws for two consecutive years. While such costs
~111
vary from
landlord to landlord, it will have an effect on the landlord's income assuming the
landlord's cost avoidance to complying with applicable laws is less than the cost of
the inspection.
Data
pwvided by
MRIS
and
GCAAR
show that rental prices increased
from
the first
quarter of201
0
to the
f:irst quarter
of2015
as follows:
Page 3 of6
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Economic lmpa.ct Statement
Hill
19-15, Landlord - Tenant Relations - Licensing of Rental Housing­
Landlord-Tenant Obligations
Garden
(1-4
HOOfS):
11.90%
Mid-Rise
(5-8
floors):
34.70%
1.62%
Hl-Rise (9+ tJoors):
.
.
Comparing those perc.ent inc.reases with the increase in the CPI-U of9.Cll percent
over the same period, rent increa')cs for h()th garden and mid-rise apartments
exceeded the percent change in the CPI·U. 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 me rent increa')es
for the garden and mid-rise units over the 201 0 to 2015 period and have a negative
impact on revenues received by landlords. While such restrictions would afTect
revenues to landlords, tenants would receive a positive economic benetit by
restricting the increase in rental rates. 1berefore,such restrictions regarding
allow'able rent increases would
have a
zero sum impact on
the
County's economy.
Bill 19-15 would allow
a
tenant to covert a one-year lease to
a
two·year lease v..ithin
30 days after signing the lease. Assuming that the monthly rent
for
the two-year lease
would then he the same
as
for
the initial one·year lease, the tenant would receive a
positive economic benefit of maintaining 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 ofrcntal households who have ·'moved in 2010 or later"
was 64.1 percent or an estimated 201,301 residents countywide.
That
percent steadily
decrea<;cd to 0.1 percent for renters who "moved in 1969 or earlier." "lbcreiore there
are a larger percentage of renters who have recently moved into rental units in the
COlmty
and arc
more
likely
to
convert a one-year lease to a two-year lease.
Finally, BilJ
19-15
allows a tenant io occupy
the
unit at the CUITcnt nite for
a
maximum of two months after the term of the
lease
expires if the rcnt increase
exceeds the applicable guideline.
DIICA
v.ill publish the average rent increase for
each
unit lUlder speciflc guidelines.
If
those guidelines are
based
on inflatiol1? and
since data in #2 indicate that for both garden and mid-rise units the rent increase is
greater than the rate of inflation, 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 bene1it to
the
tenant would be.
3. The Bill's positive or negative effect,
if
any on employment, spending, savings,
investment, incomes, and property values iu the County.
Page
4
of6
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:Kconomic Impact Statement
BiH 19-15, Landlord -Tenant Relations - Licensing 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 cost'> for those inspections in
violation of applicable
laws. With
the restriction on rents and
the
additional operating
coste:;, those factors may have
a
negative impact on employment and economic
contributions to the County's economy
a..<J
presented by the data cited by
Nt-.U{ClNHA.
The most significant impact to
the
rental housing market
in
Montgomery County is
the provision to limit rent increases by the rate of inflation. Otherwise
YJ10Vvil
a..'i
rental regulation
or
rent control, the National Multifamily Housing Council (NMHC)
states that this provision could have a negative impact on new construction of rental
housing, reduce prop(,'I1:y tax revenues through a reduction in the capitalization rates,
reduce consumer mobility, cause a decline in the quality of housing stock, and reduce
maintenance and repair. According
to
an article from EJW, the author states that
'"my reviews ofthe rent-control literature finds that economic research quite
consistently and predominantly frowns
on
rent control." The author's f1ndings
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 unanimoll..,) in their opposition to rent control." He
cites
a
survey conducted
by
the American Economic Association
011
its members and
the overwhelming response (93.5%) agree
"vith the
statement that "ceiling on rents
reduces the quantity and quality of housing available," However, the author
plOposes a revision to that survey which
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 of the political process." He compares the
current revisionist debate
011
rent controls to the revisionism "that has occurred
conceming the effects of the minimum wage."
Data provided by DHCA suggest that capping the increase in monthly rents to the
conSllmer price index could result in keeping those rates below the threshold retum
on cost and return on capital and below the current capitalizatilm rate for property
assessments. Regarding
the
effect on returns on cost and capital, capping rental rates
to the rate of inflation may have a negative impact on investment in new rental
housing construction.
Those potential negative efiects on hOll..e:;ing supply, the quality of housing stock, and
business income and
the
threshold rates for property values and investment could
be
partially
offset by positive impacts
for
tenants
by
restricting rent increases.
It
is
uncertain \\-ithout specificity of data ifthe negative effects experienced
by
the
Page 5
of6
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Economic Impact Statement
Bill 19-15, Landlord - Tenant Uelations -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 offset, 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
Bill 19-15 discourages investment in new rental
property,
it
could have a negative impact
011
the portion of recordation
tax
revenues
that arc used to support rental assistance for the same residents affected by this
legislation.
4.
If
a
Bill
is likely to have no economic impact,
why is
that the
case
The sUQject legislation
will
have an economic impact on the County, however, as
mentioned in paragraph
#3,
\\Iithout specific data on the economic. impacts to
landlords and tenants, a quantitative measurement of the impact on savings,
investment, employment and property values is not feasible.
5.
The
following contributed
to
or concurred with this
analysis:
David Platt, Mary
Casciotti, and Rob Hagedoom, Finance; and Lawrence eager,
nnCA
cll, Director
Department
of
Finance
Page 60f6
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MONTGOMERY COUNTY COUNCIL
ROCKVILLE, MARYLAND
To: Members of the PHED Committee
From: Councilmember Marc EIrich
Date:
July 23,2015
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
2401777-7914
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neither does the current reliance on the rental component of the CPl, 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 • 240/777·7966 •
TTY
240/777.7914
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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 the 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 all 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
the end 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.
?
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 federal legislation (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 of 2012, 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.
Recom mendatjons:
• 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 requesting 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 all 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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Recom mendations:
• 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 Landlord-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 (TAJ
structure funded by
a
landlord-tenant fee and it should exist independently from
County government.
4
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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 of tenants 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 premises.
J
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 COMMITTEE
ON COUNTY BILL 19-15
JUNE 18, 2015
Chairperson Floreen, Council President Leventhal and Council member 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
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
B19-15, 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 provideritenant relationship We all
benefit when the housing community is duly informed of the County's various laws and
regulations. As the Council considers proposals 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. gOY/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.orglwp-contentluploads/20 l2/04ITenant_Work_Group_­
_DHCA_Response_Mar_l2_20l21.pdf)("Model lease and other landlord/tenant information
available in English and Spanish.)
II.
SEC.
22
INSPECTION OF RENTAL HOUSINGITENANT 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 function 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
lSee also Montgomery County Code § 29-27 Contents of lease. "(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 DHCA's Housing 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.
vermin. 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 of rodents
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 of the 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.
ID.
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 infonned 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.
2
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
§
29-31(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 of the 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.montgomeryplannine:.org/departmentJwinter20
J
4speakers/lisa sturtevantJ2014 jan 30 lisa sturtevant slides.
pM.
(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.)
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must notify tenants that each housing provider must offer an initial term of 2-years and tenants
must confinn 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 law requires housing providers to offer a mmmlUm 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 County Commission on
Landlord-Tenant Affairs, 100 Maryland Avenue, 4th 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. T errants 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
4
term that is responsive to their housing needs. The Council should not mandate one standard
that will apply to all rental housing units and tenants.
4See,
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
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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 of the Handbook.
v.
SEC. 29-47. PROPOSAL TO EXPAND ENFORCEMENT POWERS OF
COMMISSION ON LANDLORD-TENANT AFFAIRS (COLTA) TO ALLOW
TENANTS TO ABATE CONDITIONS IN THEm UNIT
Current
la~
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 filing 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
§
29-51(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 [DHCA] 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 information 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 of rental 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
Montgomery County Code Sec. 29-51(e).
It
has the authority to require
such information and should do so only on an as-needed basis and for a specific purpose, e.g.
complaint investigation.
It
will be costly and administratively burdensome for housing providers
to provide such information for every unit covered in the Rental Facility Survey, and for the
County to maintain it and protect its confidentiality.
Finally, the Director may be unable to publish the "average rent increase" for each unit in
the County. The use of dynamic pricing which relies on the use of technology to respond to
demands in the market makes
it
difficult, if not impossible to calculate the "average rent increase
for each unit" since the rent increase calculation may change hourly, daily, or weekly. Dynamic
rent pricing can allow a housing provider to lower the asking rent to secure a new tenant, avoid
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