Bowser Pushes Sweeping Reforms To D.C. Housing And Tenant Laws
Mayor Muriel Bowser on Wednesday introduced a package of legislation intended to stabilize D.C.'s housing system, which is on the precipice of widespread distress.
Among the most significant proposals are measures to accelerate eviction cases in the courts and to exempt market-rate and some mixed-income apartment buildings from D.C.’s Tenant Opportunity to Purchase Act — a law that industry insiders say has crippled the city's multifamily sales market.
Bowser unveiled the legislation, dubbed the Rebalancing Expectations for Neighbors Tenants And Landlords Act, or RENTAL Act, at a press conference Wednesday, describing it as an effort to protect the District's existing affordable housing stock and spur more housing production.
The mayor and the Department of Housing and Community Development also announced that they selected 69 projects spanning nearly 8,000 units to receive roughly $144M in bridge funding to stabilize their finances and prevent foreclosure.
Bowser said Wednesday that the hundreds of millions her administration has invested to develop affordable housing in her decade in office is “at risk” because the city has become a “national outlier” in nonpayment of rent. She said between 15% and 20% of D.C. housing units are either vacant or have tenants not paying rent.
“Because of the people who aren’t paying rent, we see an inability for property owners to invest in those properties, to provide security, and long-term to maintain ownership and affordability of those units,” she said. “So our job as the government is to fix the problems that we have in our system.”
Bowser delivered her remarks flanked by executives from affordable housing operators, including Enterprise Community Development and the National Housing Trust. Landlords hailed the RENTAL Act proposal as a needed step for ensuring the health of the housing industry in the city.
“The RENTAL Act is a critical step toward stabilizing DC’s housing market at a time when affordability and investment are both under significant pressure,” Liz DeBarros, the CEO of the District of Columbia Building Industry Association, said in a statement. “This legislation not only upholds tenant protections but also fosters a much-needed private investment-friendly climate.”
The bill still must pass the council, and Bowser said her staff has briefed staff members in the offices of Chairman Phil Mendelson and Housing Committee Chairman Robert White on the bills. She hopes they will commit to holding a hearing on the bill before she presents her budget in early April.
Spokespeople for Mendelson and White said the lawmakers weren't immediately available to comment to Bisnow on the bill. Tenant advocates critiqued the proposal in the hours after its release as stripping rights away from renters.
“This bill will displace low-income residents if passed,” a spokesperson for Legal Aid DC told Bisnow in a statement. “With sweeping changes to TOPA rights, eviction protections, rental assistance and more, the draft legislation further shifts the blame and burden of DC’s affordable housing crisis onto the lowest-income residents.”
Accelerating Evictions
D.C. housing owners say they have lost millions in income because they can’t evict tenants who aren’t paying rent due to pandemic-era policies and generally slow court timelines for hearing cases.
Bowser’s bill would make permanent the temporary changes to the Emergency Rental Assistance Program that went into law in October. The changes removed the pandemic-era provision that automatically delayed eviction cases for any tenant that applied for ERAP funding, and it gave judges more discretion in those cases.
Landlords and a court spokesperson told Bisnow the effects of the emergency bill have yet to materialize as the court has a massive backlog of eviction cases to work through.
The bill includes a series of provisions to accelerate court timelines. It would require the scheduling of an initial hearing for nonpayment of rent to occur within 45 days of the complaint being filed, a process that currently has no mandated timeframe, according to a fact sheet provided by the mayor's office.
It would also shorten the window in which landlords can send past-due notices from 30 days to 10 days after a missed payment of rent and reduce the time frame between servicing an eviction notice and scheduling a hearing from 30 days to 14 days at the earliest.
“We have an exceptionally long timeline,” Deputy Mayor Nina Albert said at the press conference. “We’re just looking to get back to a market norm.”
A report last summer from D.C. landlord group Apartment and Office Building Association found cases took 12 to 16 months to reach resolution, up from three to five months before the pandemic.
Housing owners told Bisnow this month that the court timelines haven’t improved and they are still sitting on massive amounts of unpaid rent that is threatening the financial health of their properties. One income-restricted housing property, the 435-unit Meadow Green Courts, is heading to a foreclosure auction next month that could lead its affordability covenants to be removed.
Five of the District’s largest housing owners have more than $30M in combined rent delinquencies, Bisnow reported, and landlords say more properties could fall into distress if delinquent rents aren't addressed.
“Rent arrears are at such a high level that if things don’t change soon, I fear that many committed affordable properties will go into foreclosure, losing their affordability covenants,” Steven Palmer, director of public policy at the Housing Association of Nonprofit Developers, said in a statement. “At the root of this crisis is a backlogged court system that the court procedure reforms in this bill will go a long way toward fixing.”
Bowser’s proposal would also expedite evictions if a tenant is arrested or charged with a violent offense within or next to their rental property. It would also help some tenants pay rent by making more affordable units eligible for Local Rent Supplement Vouchers, expanding the eligibility from 30% of the area median income to 50% AMI.
TOPA Reform
To help spur more investment in D.C. housing, the legislation would also reform one of the city’s most controversial housing policies: The Tenant Opportunity to Purchase Act.
TOPA allows tenants of any building that is slated for sale to organize and purchase the building themselves or to assign their purchase rights to a preferred buyer. In practice, developers say it often leads to them paying tenants thousands of dollars to waive their TOPA rights, and they say it slows down the process of selling buildings by more than a year.
Bowser’s bill calls for narrowing TOPA to only apply to housing buildings where more than half of units are reserved for renters making 80% of area median income or less.
This would exempt a wide swath of the District’s newly developed, market-rate buildings, properties that can fetch the highest sale prices on the investment market.
The TOPA process has caused an 18-month delay in sales from going through, Albert said. She said this has discouraged investments in D.C. apartments and reduced the amount of tax revenue the city generates from property sales.
“Market-rate investors in residential real estate are making choices, and they’re seeing that 18-month delay in being able to sell property, and they’re choosing not to invest in D.C.,” she said.
The legislation would also seek to create more affordable housing by restoring the Department of Housing and Community Development’s authority to acquire and reposition vacant properties, according to the summary. It also says it would implement technical measures to allow DHCD to utilize the city’s tax credits for affordable housing projects.
Small Multifamily Owners Association CEO Dean Hunter said he strongly supports the bill, especially the steps to accelerate the court process. He said he is glad the mayor is discussing TOPA reform but thinks the bill should go further to exempt more properties.
“The Council needs to move quickly to pass the RENTAL Act,” Hunter said in a statement. “The current situation is untenable.”
Rescue Funding
In August, DHCD released a request for proposals for distressed properties to apply for bridge funding to stabilize their finances. It diverted all of the money from the Housing Production Trust Fund, which in previous years has been used to finance thousands of units of new affordable housing construction.
The agency on Wednesday announced it is deploying $144M to 69 projects totaling nearly 8,000 units. It didn't release a list of the properties receiving funding.
The $144M includes all $80M that was allocated to the HPTF for this fiscal year plus money that hadn't been spent from prior years.
Additionally, the D.C. Housing Finance Agency has deployed $6.2M from its Portfolio Stabilization Grant program, launched in December, and it has another $3.8M to deploy.
"When we saw the need in the market, we looked to get out in front of this year, so we hope this stopgap measure will be really fruitful in terms of preserving homes for people," DHCD Director Colleen Green said.
UPDATE, FEB. 12, 6:50 P.M. ET: This story has been updated to include commentary from Legal Aid DC.
