Maryland At Issue - February 2023

State

Maryland General Assembly Kicks into Gear

The Maryland General Assembly convened for its annual legislative session on January 11. The House and Senate have both been slow to introduce and act upon legislation as much of their focus and attention thus far has been dedicated to the inauguration of newly elected Governor Wes Moore, administrative appointments, and appointment of Delegates and Senators to replace those legislators who accepted positions within the new administration. With the transition now complete, the 2023 session is slowly kicking into gear.

We still anticipate the pending introduction of more than a thousand additional bills in the coming weeks. This includes multiple bills of concern, including rent control and “just cause” eviction measures, that we know have been pre-filed but not yet released to the public. We await the formal introduction of those bills and are prepared to advocate strongly against them.

Below is a list of highlighted legislation introduced to this point impacting AOBA members. AOBA’s Maryland Government Affairs Committee meets on Mondays at 11:00 am to take positions and provide feedback on important legislation. We encourage members with a variety of expertise to join the committee. If interested, please contact AOBA VP Brian Anleu to get engaged or learn more about the Government Affairs Committee.
 
HB 34—Failure to Pay Rent Proceedings - Prohibition on Rent Increases and Sealing of Court Records

AOBA Position: Opposed

Previously introduced in the 2022 session, this bill prohibits a housing provider from increasing a resident’s rent solely because a judgment was entered against the resident in a failure to pay rent (FTPR) action. The bill additionally sets forward a process for sealing court records for any FTPR filing that does not result in an eviction. AOBA is opposed to this legislation as it would create potential liability for a housing provider where a tenant exercises right of redemption and the tenancy continues. Additionally, restricting the ability to conduct complete and thorough tenant screening will inevitably result in heightened delinquency and eviction.   
 
HB 36/ SB 100— Real Property – Actions to Repossess – Proof of Rental Licensure

AOBA Position: Favorable with Amendments

Requires housing providers to demonstrate that properties are licensed under applicable local laws when filing a failure to pay rent, breach of lease, or tenant holdover case. AOBA has requested amendments to create an exception for properties that have applied for license renewal but have not received them due to administrative delay on the part of the locality.

HB 42—Courts - Judgments - Exemptions From Execution

AOBA Position: Opposed

Seeks to shield $500 of the debt tenants owe their housing provider from any attempted garnishment.

HB 132 -- Heating, Ventilation, Air-Conditioning, and Refrigeration Services - Journeyman License – Qualifications

AOBA Position: Opposed

Increases the qualifications for HVAC and Refrigeration journeyman licenses, requiring an extra year of apprenticeship and tripling the required hours of training to 6,000.

HB 151—Real Property - Residential Leases - Notice of Rent Increases

AOBA Position: Opposed

This legislation requires housing providers to notify a resident in writing or e-mail at least 120 days before increasing the tenant’s rent by more than 4%. AOBA opposes this measure as introduced and is seeking amendments to limit the required notice period to 60 or 90 days.

Sales and Use Tax – Exemption for Energy for Residential Use – Alteration (No official bill text yet)

AOBA Position: Support

AOBA requested this legislation to exempt the sale of electricity, steam, or artificial or natural gas for residential use in cooperative housing or apartments from the sales and use tax. The bill is still in the drafting phase and is expected to be formally introduced in the coming weeks.

Montgomery County

Council Briefed by Staff, Industry, and Nonprofit Groups on State of Rental Housing

On January 30, the Montgomery County Council’s Planning and Housing Committee held a briefing on rental housing affordability. The panel included representatives from the Planning Department, developers, nonprofit and affordable housing providers, and organizations dealing with rent relief.

AOBA would like to give special recognition to Gabrielle Duval of Southern Management Companies for participating on the panel and providing a comprehensive analysis and discussion on the effects of rent stabilization on the County’s affordable housing stock. In response, Councilmember Will Jawando, a proponent of rent control, expressed openness to an anti-rent gouging bill as an alternative to rent control; however, he wants to determine an appropriate figure at which to cap increases.

While there is no official rent control proposal before the Council, the County Executive and several council members have expressed interest in introducing a bill. However, the Council is unlikely to take up the issue until the Office of Legislative Oversight (OLO) has completed its study on rent regulations. The analysis will include case studies of rent regulations in Maryland and other jurisdictions; a review of literature on the economic impacts of rent regulations, including social equity and social justice issues; and local data analysis on rent trends, tenant complaints, and census data. The study is expected to be completed in late spring.

OLO has begun its stakeholder engagement process for this study and contacted AOBA about meeting with members on Friday, February 10, from 2 – 4 pm. If you are interested in participating, please contact Brian Anleu, Vice President of Government Affairs – Maryland.

Prince George’s County
 

Prince George’s County Rent Stabilization Bill Update 

On January 31, the Prince George’s County Council voted on the amended version of CB-7-2023, the Rent Stabilization Act of 2023. This bill would prohibit housing providers from increasing rent over three percent and issuing a notice of rent increase, late fees, or penalties for the twelve (12) month period that the Act is in effect. CB-7-2023 passed the Council with six votes and five abstentions from Councilmembers Franklin, Watson, Fisher, Hawkins, and Harrison.
 
The amendments offered by the County Executive’s office and accepted by the committee include the following:

• Extending the rent cap from six months to a year;
• Exempting affordable housing units that receive state and federal funding;
• Removing the 90-day prohibition on rent increases after the bill expires;
• Exempting units built in the last five years from the bill;

The amendments that were offered and did not make it into the current version of the bill include the following:

• Increasing the limit on rent increases to the Consumer Price Index (CPI) plus three percent.

Councilmember Mel Franklin recently proposed an alternative bill to CB-7-2023. This bill is focused on rent gouging and prohibits housing providers from increasing rent that exceeds twenty percent with the following exemptions:

• The property receives major renovations, and at least 50% of the rental units are renovated before a rent increase;
• At least 50% of the units are rebuilt before an increase;
• An entity designated by the County Executive certifies in writing that property improvements meet or exceed the requirements before a rent increase.

The alternative proposal also would establish a rental assistance program for residents to help with payments. Eligibility requirements include establishing residence in the County, receiving a monthly rent increase of more than five percent, and earning the equivalent to or less than 50% of the Area Median Income.

AOBA will continue working with stakeholders to prevent this bill’s passage ahead of second reading and a public hearing in the coming weeks. Do not hesitate to contact Ryan Washington, Manager of Government Affairs, MD, with any questions.

City of Mount Rainier to Consider Rent Stabilization Bill

Following multiple discussions with Mount Rainier residents and other interests, the City Council will vote on February 7 on a new rent stabilization ordinance. The ordinance seeks to cap rent increases at 3% annually, establishes a rent registry, and assesses a $50 registration fee on housing providers to cover city administrative costs. The City must also develop a process for housing providers to request exceptions for rent increases based on reasonable return on investment and demonstrate that such adjustments are necessary under the following factors:

• Increases or decreases in property taxes;
• Housing provider’s inability to provide adequate housing services or comply with state and local rental housing laws;
• A pattern of recent rent increases or decreases;
• The cost of planned or completed capital improvements to the unit.

AOBA provided comments highlighting the harmful economic impacts of rent control at the last Council meeting on January 17. Contrary to most academic and real-world evidence, Councilmember Luke Chesek stated that rent stabilization does not deter new housing creation. Unfortunately, many councilmembers support the bill.

AOBA is working with Prince George’s County Councilmember Mel Franklin on adding provisions to his anti-rent gouging bill to block local municipalities in the County from enacting their own rent stabilization ordinances. This language is critical to preventing the creation of a patchwork of rent control regulations county-wide.

In the Media

Coverage Synopsis: State of Public Housing in NYC a Window Into How Rental Housing Operates

The NYT wrote up a profile on the struggles of NYCHA and public housing in general across the country last week. The below passage caught our eye.

“More than 1,600 public housing agencies nationwide — from those in Richmond, Va., to San Francisco — have faced a “significant decrease” in collections since the onset of the coronavirus pandemic, according to the Department of Housing and Urban Development, as tenants lost work or spent more on cleaning supplies and other safety measures. When evictions were put on hold, people could miss payments without fear of losing their homes. Aid to help cover the mountain of back rent was sometimes confusing to access or left people in public housing out entirely, leaving local agencies to deal with the consequences.

But nowhere has the phenomenon been as dire as in New York. The New York City Housing Authority collected just 65 percent of the rent it charged in the 12 months leading up to December, the lowest percentage in the agency’s nearly 100-year history and an alarming slide from the annual prepandemic numbers of 90 percent or higher.

“It’s really just a recipe for disaster,” Lisa Bova-Hiatt, who took over as chair of NYCHA on an interim basis in September, said in an interview.

She added, “Without money, we can’t do anything else. We can’t fund the much-needed repairs. We can’t handle emergencies.”

That last sentence is a simple concept that should be self-evident. Whether you are a mom-and-pop, a corporation, or the government, properties deteriorate when rent doesn’t cover expenses. And yet, it is challenging to convince policymakers that rental housing is a low-margin business, despite the stark example public housing provides. Worse still, they routinely fail to see how layers of regulations in various policy areas create significant financial burdens for housing providers. 

Articles like these put the financial realities of rental housing in plain view for all to see. Our job is to hammer that message home to policymakers repeatedly, using examples like this one.

Stories That Caught Our Attention