Analysis of Rent Increase Complaints

According to the D. C. Rent Increase Survey, over 6 percent of

the D.C. households had increases of à0% or more and over 33 percent had increases between 5 and 10 percent. In an effort to ascertain some detail as to these tenant complaints, DCPIRG conducted its own limited phone survey. The list called was secured from WAFTA. Most of the tenants belonged to tenant associations; most had increases of over 5 percent; and most lived in the central area of the city ("central" Northwest, to be exact).

About twenty indepth interviews were conducted. The following conclusions are drawn by DCPIRG interviewers:

1) Basic services such as maintenance, resident managers, watchmen, trash removal, cleaning (of public areas), etc. are often cited as deteriorating over the past few years. In order to increase their return, landlords (or their management agents) can not only raise rent, they can spend less on the property. A cut in services is equivalent to a raise in rent in terms of what the tenants are getting for their dodlar.

This is very important for any thpe of governmental intervention. Only to impose a statutory rent ceiling upon any class of apartment owners or dwellers could result in service cuts not covered by the rent control. To be effective, some review mechanism on the local government level is necessary to weigh not only the rent side of the coin, but the service side as well.

The process of cutting services is well advanced in many buildings.... it has apparently spread to entire neighborhoods wherein a "blight" effect sets in. One tenant aptly termed the process when he analogized to the

nickel candy bar: the price stays the same, but the product keeps getting smaller and smaller.

2) Leaseholds are prevalently for a monthly period. But this was not the role about three years ago. Apparently, what has happened, is that around 1971, many large management firms simply refused to renew leases and offered only monthly terms. This, of course, gives the management greater flexibility in raising rents. Some tenants reported recently winding back longer term agreements, but this was only after a rent strike.

Mr. STUMBERG. So hopefully, Mr. Chairman, this opportunity for the various interest groups to sit down eye-to-eye and challenge each other's figures and defend their positions before the public will for once generate accurate information on such a crucial problem. Our organization is conducting research now in anticipation of those hearings.

BALANCED RENT COMMISSION

The necessity for a Rent Commission which is balanced and fair cannot be served by existing provisions. With five unpredictable positions being appointed, it is hard to imagine a balanced panel. We believe that the interests of both landlords and tenants would be served by requiring four positions for each respective group.

Another point of importance is the appointing of the Commission staff, and this has been reflected by your questions as to the budget involved with this Commission. I think it is silly to bat around figures of $75,000 or $100,000, when you are really talking about what are the staff needs of the Commission.

Upon the adoption of Council regulations, the Commission can act as an enforcer in its own right; it can inform tenants in the new regu lation; and it can reevaluate and even make changes in policy. The attendant staff work for any one of these activities will be significant: case investigations, information collecting, and information dissemination, so that without strong staff support, any Rent Commission will exist only on paper. And further, if H.R. 4771 passes in its present form, it will be just that-a Commission in ink.

FUNDING

I am referring to the fact that there are no funding authorization provisions in the present bill. We believe that without congressional funding, the Commission will die on the vine. The budget of the District of Columbia government, as I am sure your committee is aware, is set purposefully lean. To take away any money now from other provisions of the District budget, at this late date in the fiscal planning for 1974, will obviously create problems for the District of Columbia. So you are guaranteeing a relatively ineffective Commission by not including budget authorizations in this bill. I would hope this committee does not plan to starve a potentially successful and needed program by denying it funding for essential staff positions.

INFORMATION ACCESS

Now, other parts of my testimony are extraneous to your questions. but are nonetheless important. For one thing, essential information powers are not included in H.R. 4771 as written.

The present act devotes two toothless sentences to information access. Every piece of rent control legislation we compared-including Massachusetts, New York, Connecticut, New Jersey, Pennsylvania. and previous D.C. law-recognized the importance of obtaining information. Perhaps the best suited language is in the D.C. Code, para

graph 45-1607, as amended in 1951, the section to be repealed by this law:

(a) The Administrator may make such studies and investigations, and obtain or require the furnishing of such information under oath or affirmation or otherwise, as he deems necessary or proper to assist him in prescribing any regulation or order under this chapter, or in the administration and enforcement of this chapter, and regulations and orders thereunder. For such purposes the Administrator may administer oaths and affirmations; may require, by subpena or otherwise, the attendance and the testimony of witnesses and the production of documents at any designated place; may require persons to permit the inspection and copying of documents, and the inspection of housing accommodations; and may, by regulation or order, require the making and keeping of records and other documents. No person shall be excused from complying with any requirement under this section because of his privilege against self-incrimination, but the immunity provisions of the Compulsory Testimony Act of February 11, 1893-U.S.C., 1934 edition, title 49, sec. 46-shall apply with respect to any individual who specifically claims such privilege. In the event of contumacy or refusal to obey any such subpena or requirement under this section, the Administrator may make application to the United States District Court for the District of Columbia for an order requiring obedience thereto. Thereupon the court, with or without notice and hearing, as it in its discretion may decide, shall make such order as is proper and may punish as a contempt any failure to comply with such order.

We recite three issues to you with respect to legislation written since 1919 that had much stronger provisions, such as the power of subpena, the legal power to conduct investigations of housing units-things like this.

We have looked over the kind of enabling legislation around the country and we have found that this is by far the weakest bill in any category regarding the ability to get information; likewise, it only mentions criminal enforcement provisions. We feel that the bill should also include that civil justice should also be provided.

TERMINATION DATE

Finally, there is an important point to be made on the termination date. We believe that it is logically inconsistent to conceive an act in response to an emergency situation and then to guillotine its impact with an artificial cutoff date. For one thing, if landlords know when termination is likely, they can simply wait and then recoup their back profits. This has the effect of an economic time bomb. It only postpones and perhaps complicates the problem. This was graphically demonstrated, by the way, in suburban Maryland and Virginia after phase II when rent increases shot as high as 40 percent.

A more sensible approach would be for the Commission to have a self-regulated phasing out in the event of: (1) alleviation of crisis conditions; or (2), demonstrative ineffectiveness of the program. It was on this basis that regulatons were challenged in Philadelphia. The court found that a rise in the vacancy rate from 1.3 percent to 3.4 percent was sufficient indication of alleviated conditions after 5 years of controls. Whatever the appropriate level or measure, it could be mandated for the Commission.

Furthermore, if and when the Commission should terminate operations, the structure should not be dissolved. Rather, a minimal staff

should remain to monitor market development and recommend policy guidelines to the District Council.

DCPIRG POSITION ON RENT CONTROL

I appreciate the opportunity to inform the committee of our views. DCPIRG urges the delegation of rent control authority. Of course. the present bill would be better than nothing; but consider that a bill establishing an understaffed and weak commission can possibly cre ate more confusion than it controls.

Thank you.

Senator TUNNEY. We have about 5 minutes, so if you could capsu lize your answer to this question: You heard Mr. Hahn testify?

HAHN APPROACH

Mr. STUMBERG. Yes, I did.

Senator TUNNEY. Do you think his approach is a correct one to this problem?

Mr. STUMBERG. As I understand his approach, basically he feels the Government now has the authority and the resolution confirming that authority that the Government could commence hearings immediately. Senator TUNNEY. Do you feel that is right?

Mr. STUMBERG. I feel it is an acceptable approach.

The point is that there is an emergency situation.

Senator TUNNEY. There is no question in my mind that you are very well informed on the subject. I wish we had the opportunity to delve into it a little further with you.

We may have some questions which we would like to make part of this hearing.

Thank you very much.

The hearings will be adjourned at this time, and if the Chair feels more testimony is needed, we will reconvene the hearings, and we will hold the record open, at any rate, for 10 days, so that people may submit statements that they want included.

At this point we adjourn the hearing.

[Whereupon, the hearing was adjourned at 11:05 a.m.]