Congress is looking at the D.C. Council’s latest version of rent control, which was signed by Mayor Anthony Williams and which shows the result of trying to reconcile the irreconcilable by substituting bureaucratic whim for market’s flexibility. The measure is also, as City Council sponsor Jim Graham, D-Ward 1, told The Examiner, “the single most important tool” for the city in trying to halt the steady erosion of affordable housing, a process often referred to as “gentrification.”
Curiously, Graham’s view was echoed by members of the Apartment and Office Building Association of Metropolitan Washington, who manage more than 40,000 D.C. apartments. They praised the latest overhaul of the Nixon-era rent control law for striking a “balance” between the needs of tenants and landlords. The new law abolishes rent ceilings, streamlines paperwork requirements and caps rent increases at cost-of-living, plus 2 percent per year in the city’s remaining 101,000 rent-controlled units. The elderly and disabled will face only cost-of-living hikes.
Graham noted that the new rent control program simplifies “an extraordinarily arcane system” that frustrated everybody and produces something that tenants’ rights groups and building owners both endorse. Since rent control has been described as the “third rail of D.C. politics,” this may be quite an achievement.
Unfortunately, like any other political solution that seeks to repeal the laws of economics, the new rent control most likely will do what the old rent control law did, which was to produce the opposite effect of what was intended. Owners of pre-1975 apartment buildings — which cost more to maintain and produce less income than newer buildings — will continue to be squeezed until their only recourse is selling or converting to luxury condominiums, further depleting the city’s affordable housing stock.
This government-created “gentrification” process has been evident for most of the District’s many years of trying to make rent control work. As landlords’ expenses — including much higher energy costs and property taxes — increase at rates far beyond what they are allowed to recoup in rental payments, conversion inevitably becomes the more attractive option.
A possible alternative would be tax subsidies for owners of below-market rent buildings to offset their losses and encourage them to maintain their aging properties. Such subsidies might also make it profitable for them to remain in the rental market. Regardless, the best that can be expected under the city’s new rent control law is, possibly, a slower but still inevitable loss of many D.C. residents who will eventually discover they can no longer afford to live in their own rent-controlled city.
Meanwhile, we recall that the definition of insanity is doing the same thing over and over while expecting a different result. When will D.C.’s government understand this fact?
