This is our Red Dawn - Rent Control in the Legislature

As you are probably aware there are several bills that although euphemistically labeled “Rent Stabilization” are, in fact, rent control. Three bills, HB 1388, HB 1389, and SB 5435 all attempt to create a statewide cap on rent increase. HB 1625 and SB 5615, the nuclear option, would remove the statewide preemption on rent control at the local level.

HB 1388 and 1389 were heard in the House Housing Committee on Tuesday, January 24 at which time public testimony (video) was given.  Over 100 representatives from RHA and WMFHA packed the committee room and an overflow room far outnumbering tenant advocates and bill supporters. Also there were almost as many citizens who signed in opposition (CON) to the bill as there were those signing in, in support (PRO). Although this may not sound great, traditionally our side has been drastically outnumbered in these areas as well as oral testimony.

In addition, a number of industry representatives and housing providers gave testimony as well as real estate, construction, finance and pro-business association highlighting the problems with the bill.  Some of the highlighted issues are; limiting the ability for housing providers to maintain their properties, increasing the cost of new construction due to increased capital costs for financing, disincentivizing new construction, capital flowing to state with less restrictive rules, forcing small landlords (mom and pops) out of the market as well the complexity of complying with the laws as written.

SB 5435 the Senate companion (twin version filed in the senate) to HB 1389 was heard in Senate Housing on Friday January 28. Once again RHA and WMFHA brought members to the capitol to show our opposition to the bill with over 40 in attendance, once again vastly outnumbering the advocates. A similar slate of testifiers participated (video) on behalf of the industry including testimony by WMFHA Dir. of Government Affairs Ryan Makinster.

HB 1625 and SB 5615 have not yet been scheduled for a hearing.

HB 1388

• Applies to both residential housing and manufactured home communities
• Prohibits a landlord from increasing rent more than the rate of inflation (CPI-U) or 3%, whichever is greater, up to a maximum or 7% above existing rent if the rent increase:
• Is not justified by costs necessary to maintain the dwelling unit
• Is substantially likely to lead to the displacement of the tenant, or
• Is used to avoid other tenant protections
• Creates a private cause of action for a tenant to recover actual damages, punitive damages equal to 3 months' rent and fees, and reasonable attorneys' fees and costs
• Provides that a violation of the RLTA or MHLTA is a violation of the Consumer Protection Act
• Prohibits charging a higher rent or including terms of payment or other material conditions in a rental agreement that are more burdensome to a tenant for a month-to-month rental agreement than for a longer-term rental agreement
• Rent increase provisions do not apply to:
  • Dwelling units that are less than 10 years old
  • Tenancies for which the landlord is required to reduce rent to 30% or less of the tenant's income because of a federal, state, or local program or subsidy

HB 1389 and SB 5435 (senate companion)

• Applies to both residential housing and manufactured home communities
• Prohibits a landlord from increasing the rent more than the CPI-U or 3%, whichever is greater, up to a maximum or 7%. Commerce is required to calculate and publish the maximum annual rent increase percentage
• Contains a VERY complicated "banking" process to carry forward the ability to give an increase later if not given in that year.
• Prohibits a landlord from increasing the rent in the first 12 months of a tenancy
• "Rent increase" is defined to include any new charges added to a rental agreement that were not identified in the initial rental agreement:
  • new parking
  • utility
  • other charges
• Requires a landlord that increases rent above the limit to include facts supporting the exemption in the written notice of the rent increase
• Creates a private cause of action for a tenant to recover actual damages, punitive damages equal to 3 months' rent, and reasonable attorneys' fees and costs
• Provides the following exemptions from the maximum annual rent increase limit:
  • Dwelling units that are less than 10 years old
  • Tenancies for which the landlord is required to reduce rent to 30% or less of the tenant's income because of a federal, state, or local program or subsidy
• If a landlord has paid for improvements to the dwelling unit that cost more than 4 months' rent and the improvements were made during the 12 months preceding the notice of the rent increase, then the landlord may increase rent for the following calendar year by up to 7%, or 4% + the maximum annual rent increase percentage for the calendar year, whichever is greater
• If a landlord is experiencing significant hardship in complying with rent control for the current calendar year due to a disparity between the local costs for providing housing and the statewide costs for providing housing, the landlord may request an individual exemption from Commerce

HB 1625 and SB 5615

• Removes statewide preemption on local rental control
• Would allow local towns, cities, and counties to create their own rent control laws
• No minimum rent cap
• No state parameters on what the program could or couldn’t do

Follow What’s Happening with These and All Priority Bills